General terms and conditions of sale, delivery and payment of FATH Inc.

Section 1 Scope of application and general provisions

1. The general terms and conditions, which follow (hereinafter: “Terms of Business”), shall apply to all current and future business with our customers (hereinafter: “Purchaser”). The Terms of Business shall only apply if the Purchaser is an entrepreneur within the meaning of section 14 of the German Civil Code (BGB), a pubic law legal entity or special public law trust or estate.

2. The Terms of Business shall particularly apply to contracts for the sale and/or delivery of goods (hereinafter: “Goods”) without consideration of whether the Goods are manufactured by ourselves or purchased from other suppliers (sections 433 and 651 of the German Civil Code (BGB)). The Terms of Business shall apply as amended as a framework agreement to future contracts for the sale and/or delivery of goods with the same Purchaser without the need in each case to incorporate them by reference.

3. Our Terms of Business shall apply exclusively. Any different or additional general terms and conditions from our contractual partner shall only then apply if and to the extent their applicability to the contract has been expressly agreed to in writing. This requirement of consent shall apply in each and every case even when, for instance, we are aware of the Purchaser’s general terms and conditions and deliver without reservation or otherwise accept goods and services without reservation.

4. Specific agreements executed with the Purchaser including any ancillary supplements and amendments shall have priority over the Terms of Business in every case. In order for this to apply to such agreements they must be made in writing or we must have otherwise consented to or acknowledged their contents in writing.

5. Legally relevant statements, declarations and notices, which the Purchaser furnishes us after the execution of the contract (e.g. time limit, notice of nonconformity, rescission or abatement) must be made in writing in order to be legally valid and effective.

6. References to the applicability of statutory provisions are only made for reasons of clarity, and in the event no reference to legal provisions is made, this shall not in any way impact their applicability, provided that they are not otherwise specifically modified or expressly excluded in these Terms of Business.

Section 2 Offer and contractual execution

1. Our offers are not binding and are subject to change at any time, provided we have not made them binding. This applies even when we have furnished the Purchaser catalogues, technical documentation (e.g. drawings, plans, computations, calculations, references to DIN-standards), other product descriptions or documents–even in electronic form–upon which we reserve proprietary rights and copyrights.

2. When the Purchaser places an order for a Good it shall be considered a legally binding offer. Unless otherwise apparent from the order we shall be entitled to accept the contractual offer within 3 weeks of its receipt by us.

3. Acceptance may be made either in writing (e.g. Order Confirmation) or by shipment of the Good to the Purchaser.

4. We reserve without limitation all proprietary rights as well as all copyrights to the use and exploitation of our drawings, constructions and other documents. The Purchaser may not disclose these items to third parties. If we are not awarded the contract, all drawings and other documents, which are a part of the offer, shall be promptly returned upon request. The same shall apply correspondingly to customer documents. We may, however, disclose such to third parties, which we have permissibly engaged for the delivery of products and services.

Section 3 Prices and payment terms

1. Unless otherwise specifically agreed to, our current prices and surcharges applicable at the time the contract is executed shall apply. Prices apply ex warehouse in Spalt, Germany. Prices are listed in Euros before the addition of legally applicable value added tax, packaging and custom duties for export deliveries as well as any fees and other public duties. If the stipulated period of delivery is longer than four months after execution of the contract we shall be entitled to calculate prices and surcharges at the rates valid at the time of delivery. Any possible reduction in costs as a result shall be passed along to the customer. For non-standard commercial units we reserve the right to deliver and charge for original packages or to levy a reasonable small volume surcharge.

2. For purchases that are to be shipped (section 5 (1)) the Purchaser shall bear the transportation expenses ex warehouse and any expenses for freight insurance the Purchaser may desire. In any given case if we do not invoice carriage charges actually incurred, then a flat rate for transportation expenses shall be considered agreed to (exclusive of any freight insurance) according to our respective shipping cost table. The Purchaser shall pay any duties, fees, taxes and other public charges.

3. Unless otherwise agreed to our invoices are due and owing within 30 days of the invoice date and delivery or acceptance of the Goods. Significant for the date of payment is the date payment is received. Payments made by cheque are considered paid when the check is honoured. Payments made within 10 days of the issuance of the invoice may receive a 2% discount. Any discounts, rebates and other allowances shall become null and void in the event of payment default.

4. The Purchaser shall be in default if payments are not made within the aforementioned payment period. Legally applicable default interest shall be charged to the purchase price during the period of default. We reserve the right to assert additional claims of loss for default. As far as merchants are concerned any claims that we might have to claim interest from the date payment becomes due (section 353 of the German Commercial Code (HGB)) shall remain unaffected.

5. In the event of payment default we shall be entitled to refuse further deliveries or only dispatch deliveries upon prepayment as well as declare all outstanding and deferred invoice amounts as immediately due and owing.

6. The Purchaser shall only have a right to setoff or retention insofar as he has a valid judgment against us or his claim is otherwise undisputed. For nonconforming deliveries section 7 (7) shall remain unaffected.

7. If after execution of the contract reasonable grounds for insecurity arise indicating that the Purchaser will be unable to pay the purchase price (e.g. a petition in bankruptcy), we shall then be entitled to refuse performance according to legal provisions and, where applicable, after a time set for adequate assurance of performance, terminate the agreement (section 323 of the German Civil Code (BGB)). For contracts for the manufacture of customized goods (specially manufactured goods) we may immediately rescind the contract – statutory provisions concerning the dispensability of setting a time to cure shall remain unaffected.

Section 4 Time of delivery and delay in delivery

1. Delivery times shall be agreed to for each order or rather indicated by us upon acceptance of the order. If shipment of the Goods has been agreed to, then delivery times shall refer to tender to the forwarding agent, carrier or other party commissioned with transporting the Goods ex warehouse in Spalt, Germany. For drop shipments made directly from the manufacturer, delivery times shall refer to the time of dispatch ex works.

2. If we are unable to meet binding delivery times for reasons due to no fault of our own (non-availability of product) we shall inform the Purchaser of this immediately and provide a new tentative date of delivery. If the product is still not available to be delivered within the new date set for delivery, either in whole or in part, we shall be entitled to rescind the agreement, whereupon any consideration already paid by the Purchaser shall be refunded without undue delay. In this regard non-availability shall mean the untimely or unseasonable delivery by our suppliers or subcontractors, if we have executed a congruent covering transaction; acts of God; business disruptions of any kind; difficulties in the acquisition of materials or energy; delays in transit; strikes; lawful lockouts; lack of employees, energy or raw materials; difficulties in obtaining requisite approval from government agencies, government agency measures; and the failure of suppliers to tender or otherwise a supplier’s improper or untimy tender. Our statutory rights of rescission or termination as well as the statutory provisions concerning settling the contract upon impairment of performance (e.g. impossibility or impracticability of performance and/or cure) shall remain unaffected. The Purchaser’s rights of rescission and termination pursuant to section 8 of these Terms of Business shall likewise remain unaffected.

3. Delays in delivery shall be determined according to statutory provisions. In any event the Purchaser shall be required to provide a notification reminder thereof. If we should be late with the delivery, the Purchaser may demand liquidated damages for delay at a flat rate. The liquidated damages shall amount to 0.5% of the net price (value of the goods to be delivered) for each full calendar week of delay, however, in no event higher than 5% of the value of the goods yet to be delivered. We shall be entitled to prove that the Purchaser suffered no damage or loss or that it suffered a considerably lower damage or loss than is accounted for by the aforementioned liquidated damages provision.

Section 5 Delivery, risk of loss, acceptance, untimely rejection and return

1. Tender of delivery shall occur ex warehouse in Spalt, Germany, which is also the place of performance for all obligations arising from this contractual relationship, provided nothing else has been agreed to. Upon the Purchaser’s request and at its cost, Goods will be shipped to a particular destination (Goods purchased for shipment). Unless otherwise provided for, we shall be entitled to determine how goods are shipped (in particular the carrier, forwarding route, packaging).

2. The risk of loss or damage to the Goods in the absence of breach shall pass to the Purchaser at the latest upon their delivery. Where the contract requires shipment of the Goods by carrier the risk of loss or damage to the Goods in the absence of breach as well as any risk of delay shall pass to the Purchaser when the Goods are duly delivered to the forwarding agent, carrier or particular person or business commissioned with the execution of the transportation of the shipment. This risk shall pass upon the commencement of loading the Goods. If acceptance of the goods has been agreed to then the risk of loss shall pass upon acceptance. The German statutory provisions governing agreements for work and services (Werkvertrag) shall otherwise apply respectively to a right of acceptance, which has been stipulated to. Risk of loss shall be deemed to have passed upon delivery or acceptance of the Goods, if the Purchaser has not timely rejected the Goods after their tender. The risk of loss shall immediately pass to the Purchaser in cases of shipping carriage prepaid and drop shipping.

3. If the Purchaser fails to timely reject the Goods, fails in good faith to properly cooperate or causes a delay of our delivery, then we shall be entitled to demand reimbursement for losses resulting therefrom including any additional expenses (e.g. warehousing costs). For such breaches we calculate liquidated damages at a flat rate in the amount of 0.5% of the invoice amount per calendar week, but no more than 5% of the invoice amount. We shall be entitled to prove that we have suffered damage or loss in excess of such liquidated damages and our statutory claims (in particular reimbursement for additional expenses, reasonable compensation for loss, termination) shall remain unaffected. Any liquidated damages amount shall be credited to any other monetary claims for loss or damage. The Purchaser is free to provide proof that we have suffered no damage or loss or that we have only suffered a considerably lower amount of damage or loss than is accounted for under the liquidated damages provision.

4. Instalment shipments are permissible within a reasonable scope; if the instalment delivery is practicable for the Purchaser within the scope of its intended purpose under the contract; if the delivery of the outstanding Goods ordered is guaranteed; and the Purchaser shall not incur any material additional or supplemental costs (unless we have agreed to bear such expenses).

5. We reserve the right to reasonably alter the technical design, colour and form of our Goods as well as any quantities, provided, for instance, the value and usability of the Goods offered for sale are not in any way impaired. For specially manufactured goods ordered amounts may vary from actual amounts by +/-10%.

6. Only upon the express request of the Purchaser and at its expense will Goods be insured by us against theft, breakage, damage during transport, fire, water or any other insurable risks.

7. We shall not take back any packaging used for transportation or any other type of packaging used in accordance with the provisions of the German Packaging Regulation, except for Euro pallets. Packaging shall become the property of the Purchaser.

8. Returning shipments shall require our prior written consent. We reserve the right to claim for a loss of profit in the amount of 25% of the net invoice amount of the Goods without freight charges in addition to expenses for transportation for taking back conforming Goods. The Purchaser is free to provide evidence that we have suffered no loss or that we have suffered damage or loss to a lesser extent than provided for above.

Section 6 Reservation of title

1. We shall retain title to the Goods sold until full payment of the price specified in the purchase agreement or from an on-going business relationship (secured transaction) is made. The Purchaser is under a duty to treat the Goods with reasonable care. If maintenance or inspection work is required, the Purchaser shall conduct these periodically at its own expense.

2. Goods that are subject to a reservation of title may not be pledged to third parties or assigned as a security interest before complete payment of the debt, which they secure. The Purchaser shall immediately inform us in writing, if and to what extent some third party wishes to execute on Goods belonging to us or if the Goods have been damaged or destroyed. Insolvency administrators, persons or officers responsible for execution and attachment, or other third parties attempting to execute on the property are to be informed about our property rights.

3. If the Purchaser breaches this contract, in particular fails to pay the purchase price, we shall be entitled pursuant to statutory provisions to terminate this agreement and demand a return of the Goods because of our reservation of title in them and a termination of the agreement. If the Purchaser does not pay the purchase price we may only assert these rights if we have set a reasonable time for the Purchaser to cure its payment default and the Purchaser has not done so within the time specified, unless such a deadline may be dispensed with according to statutory provisions.

4. The Purchaser is authorized to resell and/or process the Goods subject to a reservation of title in the ordinary course of business. In such event the following provisions shall apply:
a) The reservation of title shall extend to the resulting product processed, intermixed or combined with our Goods in its full value and we shall be deemed the manufacturer thereof. If our Goods are processed, intermixed or combined with the goods from third parties who similar to us also have retained title then we shall acquire a joint property right in the goods so processed, intermixed or combined proportional to the invoice values, otherwise the same reservation of title shall apply to the resulting product as does to Goods supplied.
b) Proceeds or debts arising from the sale of the Goods or product due from third parties shall be assigned to us herewith as security in the amount of the debt owed to us for the delivery of the Goods pursuant to the aforementioned paragraph. We hereby accept the assignment. The Purchaser’s obligations specified in section 6 para. 2 herein shall also apply to claims of debt, which have been assigned.
c) The customer shall assign to us as security for the debt it owes to us its debt that accrues against a third party by reason of the Good becoming affixed to real estate. We hereby accept the assignment.
d) The Purchaser shall retain the right in addition to us to collect the debt. We promise not to institute collection proceedings on the debt so long as the Purchaser discharges its payment obligations to us, does not default on making payments, does not petition for bankruptcy or other insolvency proceedings and there is no other failure or breach of performance or obligation. If, however, this is the case, then we may demand that the Purchaser disclose the debtor and debt assigned to us; provide us with all required information in order to institute collection proceedings; deliver to us all associated documents and records; and inform the debtor (third party) about the assignment.
e) If the realisable value of the security exceeds our debt claims by more than 10%, then upon the request of the Purchaser we shall at our discretion release security interests.

Section 7 Purchaser warranty claims

1. The statutory provisions shall apply to the Purchaser’s rights regarding nonconformity of goods and defects in legal title (including nonconforming delivery and delivery shortfalls as well as improper assembly or defective instructions for assembly), unless otherwise provided for below. The special statutory provisions for the final delivery of goods to a consumer (supplier recourse pursuant to sections 478 and 479 of the German Civil Code (BGB)) shall in any event remain unaffected.

2. The basis of our warranty liability is primarily the quality of the Goods agreed upon. Product descriptions shall be considered to be made part of the basis of the bargain concerning the quality of the Goods (including manufacturer descriptions), which have been provided to the Purchaser by us before placing its order or have otherwise been incorporated into the agreement by reference in the same or similar manner as these Terms of Business. Public remarks, commendations or advertising by the manufacturer do not establish a contractual basis for warranty.

3. With respect to the nature and quality of goods, if no express warranties have been agreed to, then whether the Goods are conforming or not shall be determined according to statutory provisions (section 434(1) sentences 1 and 3 of the German Civil Code (BGB)). We shall not be held liable for any public remarks made by the manufacturer or other third parties (e.g. advertising slogans).

4. Within the legal sense the customer shall not receive guarantees from us. All references in our acknowledgments or Order Confirmations or offers to manufacturer guarantees do not mean a limitation of our warranty in excess of the aforementioned limitations. They merely represent a reference to additional rights the customer has against the manufacturer, which we are merely passing along for informational purposes. In this regard they do not represent an expansion of warranty rights that the customer has against us. The manufacturer guarantee given to the customer is not affected by our aforementioned limitations on warranty.

5. Claims brought by the Purchaser for breach of warranty presuppose that it has discharged its legal duties of inspection and notification of nonconformities (sections 377 and 381 of the German Commercial Code (HGB)). If upon inspection or at a later time a nonconformity or defect is discovered, we are to be notified of this fact in writing without undue delay. Immediate notification shall be considered given if it is carried out within 7 working days, whereby the timely dispatch of the notification suffices to comply with the time limit. Independent of the obligations of inspection and notification, the Purchaser must report obvious nonconformities or defects (including incorrect delivery and delivery shortfalls) in writing within 7 working days of delivery, whereby the timely dispatch of the notification suffices to comply with the time limit here as well. We shall not be liable for any nonconformities or defects not properly reported because the Purchaser fails to properly inspect and/or notify us about such.

6. If the delivered goods are nonconforming, we may first choose whether we shall cure the nonconformity by rectifying the defect (rectification) or by the delivery of conforming goods (substitute delivery). Our right to refuse either alternative pertaining to cure pursuant to statutory prerequisites shall remain unaffected.

7. We are entitled to make any possible attempts at cure dependent upon whether or not the Purchaser has properly paid the purchase price. However, the Purchaser is entitled to withhold a reasonable portion of the purchase price in relation to the defect or nonconformity.

8. The Purchaser must allow us the necessary time and opportunity to cure and in particular furnish us the Goods rejected because of nonconformity for inspection. If a substitute delivery is undertaken then the Purchaser shall return the nonconforming goods to us pursuant to statutory provisions.

9. If a defect or nonconformity is actually determined then all requisite expenses, in particular, transportation, work and material costs for inspection and substitution shall be borne by us. If, however, no defect or nonconformity can be determined and the Goods have been wrongfully rejected by the Purchaser, then we may demand that the Purchaser indemnify us for costs incurred.

10. In urgent cases for example in cases of endangerment of operational safety or to prevent disproportional loss the Purchaser shall have the right to rectify or remedy any defect or nonconformity itself and request indemnification of the reasonable expenses incurred therefore. Depending on practicability thereof, we are to be promptly informed before such self-help is undertaken. There shall be no right to undertake corrective measures by means of self-help, if we would have been entitled to have refused any corresponding cure pursuant to statutory provisions.

11. If substitute performance is unsuccessful or is unable to be made within the reasonable time set for cure by the Purchaser or such reasonable time for substitute tender may be dispensed with according to statutory provisions, the Purchaser may terminate the purchase agreement or reduce the purchase price. However, in cases of immaterial defects or nonconformities there shall be no right to termination for breach.

12. The Purchaser’s right to assert a claim for damages or restitution for useless expenditures shall be subject to the provisions contained in section 8 hereto and are otherwise excluded.

Section 8 Liability

1. Provided not otherwise specified in these Terms of Business including any supplemental provisions, we shall be liable for contractual and noncontractual breaches of obligations pursuant to the pertinent statutory provisions.

2. We shall be liable for damages in cases of intentional breach and gross negligence regardless of the legal basis therefor. In cases of simple negligence we shall only be liable for
a) losses affecting loss of life, bodily injury or health,
b) losses from a breach of a material contractual obligation – (Meaning an obligation, the performance of which being vital to the proper execution of performance obligations under the contract and the performance of which the contractual partner would reasonably expect to be performed in order to derive the benefit anticipated under the contract.) – Our liability in such a case shall be limited, however, to the reimbursement of foreseeable and customary losses that occur.

3. The limitations to liability specified in section 8 para. 2 herein shall not apply to defects that have been maliciously concealed or for a guarantee with respect to the quality of the Goods, which we have assumed. The same applies to Purchaser claims pursuant to the German Product Liability Act.

4. The Purchaser may only rescind or terminate the contract in the event of a material breach by us, which is not related to a defect or nonconformity. An open right of contractual rescission by the Purchaser is excluded (in particular pursuant to sections 651 and 649 of the German Civil Code (BGB)). Otherwise all other statutory provisions and legal consequences shall apply.

5. Our liability shall dissipate, if the delivered Goods are processed or altered, unless the Purchaser is able to prove that processing or transformation did not cause the damage or loss. Section 9 Limitations period 1. In deviation to section 438(1)(3) of the German Civil Code (BGB) the general period of limitations for the assertion of claims due to nonconformity or legal defects in title shall be one year from the date of delivery. If the acceptance of Goods has been stipulated to, the limitation period shall.

Section 9 Limitations period

1. In deviation to section 438(1)(3) of the German Civil Code (BGB) the general period of limitations for the assertion of claims due to nonconformity or legal defects in title shall be one year from the date of delivery. If the acceptance of Goods has been stipulated to, the limitation period shall begin to run upon acceptance.

2. If the Good at issue is a construction work or an item, which is typically used for construction works, which has been attributed to have caused a defective state (building material), then the legal statute of limitations shall be 5 years from the date of delivery (section 438(1)(2) of the German Civil Code (BGB)). The special legal provisions for the in rem right of replevin by third parties shall remain unaffected (section 438(1)(1) BGB), for fraudulent concealment by the Seller (section 438(3) BGB) and for claims of supplier recourse upon final delivery to a consumer (section 479 BGB).

3. The above statute of limitations periods found in German Sales Law shall apply for contractual and non-contractual Purchaser claims for damages that are based on claims of nonconformity and defect, unless the application of the standard statute of limitations periods (sections 195 and 199 of the German Civil Code (BGB)) would lead to a shorter period of time in which to bring a claim in a specific case. The statute of limitations provided for in the German Product Liability Act shall in no event be affected. The legal statute of limitations periods shall otherwise exclusively apply to Purchaser’s damages claims brought pursuant to section 8 of these Terms of Business.

Section 10 Software

To the extent software is contained in a delivery, the customer shall be granted a non-exclusive and non-transferable right to use the delivered software together with any documentation included with it. The software may only exclusively be used for intended purposes associated with the article of sale. Use, duplication, adaption or translation of the software as well as a conversion of the object code in the source code for other purposes is prohibited, unless otherwise permitted according to the provisions of section 69d of the German Copyright Act.

Section 11 Protection of privacy

1. The Purchaser hereby agrees and is herewith informed that all information about the Purchaser from the business relationship may be stored by our electronic data processing system, including any personally related and invoice related data within the meaning of the German Federal Data Protection Law and forwarded exclusively to commissioned service providers and credit reference agencies (e.g. credit checks) within the scope of processing an order.

2. Our business partners oblige themselves not to transmit the relevant data incoming in the context of the business relationship to unauthorized third parties and to safely protect and store them from access and misusage by unauthorized people.

Section 12 Governing law, venue and final provisions

1. The law of the Federal Republic of Germany shall be used to govern, construe and interpret these Terms of Business and all legal relationships between ourselves and the Purchaser, excluding all international and supranational (contractual) laws; in particular, the United Nations Convention on Contracts for the International Sale of Goods. However by contrast, as a condition to and the legal effectiveness of the reservation of title contained in section 6 of these Terms of Business shall be subject to the law of the locality where an item is located, inasmuch as such local law does not permit the applicability of German law or the choice of law is otherwise not legally effective.

2. If the Purchaser is a merchant within the meaning of the German Commercial Code, a public law legal entity or special public law trust or estate, exclusive and international legal venue for any and all disputes arising from or in connection with the contractual relationship shall be the court(s) located in Nuremberg, Germany. We are, however, also entitled to bring suit in the court(s) having personal jurisdiction over the Purchaser.

3. Should a term or provision of this agreement / Terms of Business be held to be invalid or unenforceable, this shall not affect the remaining valid and enforceable terms or provisions. In lieu of the invalid or unenforceable term or provision a provision shall be deemed as agreed to within the confines of the law, which comes closest to the original intent and purpose sought by the contractual parties in the invalid or unenforceable term or provision. The same shall apply to any possible gap in the agreement.

Status as of: 1 April 2011

Managing directors: Wido Fath (President) Armin Fink (CEO)

FATH Inc.
6533 Hazeltine National Drive
Orlando, FL 32822 USA
Phone: 1-407-601-5900
Fax: 1-407-601-5905
E-mail: info.us@fath.com
Web: www.fathinc.com