General conditions of sale and works contract of DOCERAM Ingenieurkeramik GmbH, 44309 Dortmund, Germany

I. Scope of validity, conflicting terms and conditions of purchase (order)

[1] The present conditions shall apply to all our deliveries, works deliveries and commission processing transactions. They shall also apply to the initiation, conclusion and processing of all – also future – transactions with the client.  Any conflicting terms and conditions of purchase or order of the client shall be contradicted. These shall also not be binding for us if they claim exclusivity or if they are included in a declaration of intent by the client following one of our offers or order confirmations and we do now contradict these again. At the latest on acceptance of our delivery (the contractual goods), the present conditions shall be deemed as having been accepted by the client.

[2] A renunciation of the validity of these conditions or individual clauses of these, or the recognition of conflicting terms and conditions of the client or individual clauses of these shall only be legally valid if we have confirmed this in writing in our order confirmation. Even in case of a renunciation of these conditions or recognition of purchase/order conditions of the client, the provisions of these conditions governing the reservation of title (no. XII, para.  1-5), the exclusion of claims in case of operational stoppages for which we are not to blame and the failure of self-delivery (no. IV, para. 1, sentence 2), the applicable law and the legal venue (no. XII, para. 1-2) shall form part of the contract unless we have also renounced these referring expressly to these
clauses in writing.

[3] Should both contractual parties insist on the exclusive validity of their own terms and conditions of business, and if it is not possible to assume the approval of the present conditions by the client from his behaviour on conclusion or implementation of the transaction or from the circumstances pertaining to the running business relations, if the contractual parties nevertheless carry out the transaction by means of delivery/execution of works production and its acceptance, the contract
shall be deemed concluded subject to the exclusion of the mutual terms and conditions in accordance with the provisions included in our order confirmation and the statutory purchase and works contract provisions. Also in such cases, the transfer of ownership of the goods delivered shall still be subject to the payment in full of the purchase price.

II. Written form

In so far as these conditions require written declarations, this form shall also be satisfied within the framework of the usual telexes, fax and printed computer messages.

III. Formation of contract

Our offers are always without obligation. The contractual conditions shall not become valid – also subject to prior telephone agreement on a transaction – until receipt of our written order confirmation by the client. Our sales staff are authorised purely to initiate business, not to conclude contracts.

IV. Term of delivery, delivery disruption, partial deliveries, passing of risks

[1] Terms of delivery are stated in the order confirmation in weekly schedules. They shall only be binding if we assure this in writing. In case of operational stoppages of any kind for which we are not to blame, or insufficient self delivery of primary materials for which we are not to blame, the delivery dates will be hindered. In case of lengthy delays in delivery periods – following the prior setting of new deadlines – we and the client shall be entitled to withdraw from the contract. There shall be no compensation for damages resulting from delayed or failed delivery or other claims to
refunds – except in cases of intent or gross negligence. If, for the completion of a delivery/works order, designs, models, patterns or similar documents are required from the customer, the term of delivery shall commence on their receipt.

[2] We shall be entitled to make part deliveries. In case of delivery of a variety of representative things (generic goods, in particular small parts), we shall be entitled to deviate by up to ten percent from the designated quantity. In case of quantities which are short, it shall not be possible to claim
insufficient fulfilment of contract. If delivery on call is agreed, the client shall grant us appropriate production periods from the date of the call.

[3] The risk of chance loss or chance impairment to the goods delivered or to goods entrusted to us for contractual processing (finishing) – even if the transport is carried out by us or by forwarders commissioned by us – shall transfer to the addressee on dispatch from our works in Dortmund.

V. Prices, payment dates, transport costs, payment terms

[1] The purchase price or processing fees are set out in our order confirmation. For domestic transactions, the statutory V.A.T. is always added – even if we fail to show this in our order confirmation - and is listed separately in our invoice in accordance with the requirements of § 14 of the German law on Sales Tax. If statutory levies or fees which affect the sale of goods or make works services more expensive (in particular V.A.T., customs charges, compensation contributions, currency exchange, freight charges) or wage scales increase within four months of conclusion of
the contract but prior to contract implementation, we shall be entitled to raise our price by the additional cost calculated and demonstrated by us. The same shall apply to the purchasing of the necessary primary materials for contracts, the processing or part processing of which is planned for seven months after conclusion of the contract.

[2] Invoices shall be due for payment in full thirty days after the invoice date. In case of arrears, we shall charge interest at a rate of 2 % p.a. above the respective base rate ( § 1 of the German law governing the central bank discount rate (DÜG)), but at least 7.5 % p.a. In place of the respective base rate, on 01.01.2002, the statutory successor rate enters into force. We reserve the right to assert further claims resulting from arrears. Commission processing transactions and repair works shall be paid immediately on receipt of the invoice (without granting a discount).

[3] Provided delivery has not been agreed free house, our prices shall not include transport costs and insurance of the goods to be transported, which shall be charged to the client. Where no specific instructions are given, we shall have the choice of the means of transport. We shall only insure the goods to be transported on request by the client and at his expense.

[4] Bills of exchange shall only be accepted subject to special agreement. Cheques shall only be accepted as conditional payment subject to their being honoured. All exchange and discount charges shall be borne by the client. Except in cases of gross negligence, we shall not be liable for the delayed presentation of bills of exchange or cheques.

VI. Material and processing deficiencies, requirements to give notice of defects, guarantee, limitation of liability

[1] Following arrival of the goods delivered or the goods processed by us, the client shall inspect these to the usual extent and notify us in writing of any material or processing deficiencies immediately – at the latest within eight workdays. Hidden defects shall be reported at the latest within eight workdays after the discovery of the defect. Material deficiencies shall include deviations in quantity, dimensions and kind (§ 378 of the commercial code (HGB)). Any possibility to object to deficiencies shall end, at the latest, on the statutory expiry of purchase or works-contract guarantee entitlements.

[2] On our request, the client shall allow us to examine the goods objected to, and shall not make any changes to them by means of further processing, installation or other operational use until we have reached a decision regarding the recognition/rejection of the objection. Should the client wilfully violate these duties, there shall be absolutely no guarantee cover. In cases of doubt, the client shall demonstrate the identity of the goods delivered (processed) by us as that of the goods objected to.

[3] Given demonstrable material or processing deficiencies, we shall be entitled to choose between replacement delivery, reworking, or payment of a credit to cover the lack in value or the reworking. Only after failure of the replacement delivery or reworking the client shall be entitled to assert other statutory guarantee claims. If payment of damages is a possibility due to non-fulfilment or delayed fulfilment or due to positive violation of the contract, except in cases of intent or gross negligence, we shall only be liable up to the level of the purchase price of the goods to be delivered, or up to three times the level of the processing costs. There shall be no payment of damages not directly relating to the goods delivered or processed by us (consequential damage) provided there is no mandatory liability for this as based on the statutory requirements of the product liability law.

[4] Damage to the items delivered or processed by us caused by inappropriate use, incorrect assembly or improper commissioning by the client shall not be covered by the purchase guarantee or the works contract guarantee, neither shall damage caused by normal wear and tear, excessive strain, the use of inappropriate equipment or other circumstances in the operating sphere of the client which cannot be influenced by us.

VII. Warranted qualities, consultation, materials testing

[1] Special properties of the purchased items shall only be warranted by us on the specific request of the customer, and only if we have mentioned this specifically in our order confirmation. If delivery in accordance with DIN (German industrial standards) has been agreed, then (without the assurance in accordance with sentence 1) this is merely a quality description.

[2] Testing of the suitability of the delivered or processed items for the client’s own operational use or further processing purposes and the selection of the items is entirely the responsibility of the client. Any consultation or recommendations made by us are without liability. We shall not take on any subsidiary contractual obligations in this regard.

[3] If an extra chemical analysis or technical physical data from materials testing are required by contract, we shall be liable for the reliability of these only within the testing capabilities or our company laboratory.

[4] For claims of damages by the client due to the absence of assured qualities (§§ 463, 480 para. 2, 635 of the civil code (BGB)) or in case of claims arising from the violation of our duties in accordance with para. (3), the liability limitations of no. VI para. 3 sentence 3 of these conditions – except in cases of malice or gross negligence – shall apply accordingly.

VIII. Reservation of title

[1] All items delivered shall remain our property until complete payment of our purchase price
or processing fee claims (also pertaining to previous or subsequent transactions) by the client, as well any subsidiary claims (e.g. interest on arrears, collection fees). This reservation of title shall also apply to those amounts not yet due or deferred, as well as claims which we hold or acquire against the client for other legal reasons than a purchase or works delivery or works contract, in particular in case of the replacement of the above mentioned claims with abstract bills or cheques receivable. The client shall be entitled to dispose of the reserved goods in proper business transactions, in particular by way of further sale or further processing until this right is revoked by us. The further sale of the reserved goods shall not be deemed to have been carried out by way of a proper business transaction if the client excludes the transferability of his claims on the secondary client (§399 of the civil code (BGB)), if he makes this dependent on the agreement of the secondary client, or if he subjects his claim to the secondary client’s authorisation to set off claims. The client’s authorisation to dispose of the reserved goods shall, in the above cases, not be granted by us from the very start. It shall also be deemed revoked if the client is bankrupt, or insolvency proceedings have been filed on his assets. We reserve the right to withdraw the authorisation to dispose of the goods for such reasons – which do not require justification. If the client’s authorisation to dispose of the goods is or counts as withdrawn, we shall be entitled to assert our claim to possession based on ownership without any need for prior warning or notice. The client shall renounce in advance the objection that he has any conflicting rights of possession existing from the preceding sales/works delivery contract.

[2] Processing or finishing of the reserved goods at the client’s premises shall be carried out without the client attaining any entitlement to compensation for work from us. If, by means of joining the reserved goods with other parts which are not our property, another item or group of  assets is formed, we shall acquire a co-ownership share in the production or purchase value of the other parts in relation to the value of our invoice for the reserved items. With regard to the client’s authorisation to sell on the items (groups of assets) in which we have a co-ownership share, the provisions of the above paragraph (1) sentences 3 – 6 of these conditions shall apply accordingly.

[3] Those claims on the second client arising from the further sale of reserved goods shall be ceded to us in advance by the client – in case of co-owned goods, proportionately in accordance with para. (2) sentence 2 (extended reservation of title). If, as a result of processing or other finishing, the reserved goods have increased in value whilst with the client, the advance assignment shall be limited to the amount of our invoice plus 10 % of this. The client shall not use those parts of claims which are not assigned to our disadvantage. The client shall remain authorised to collect the claims previously assigned to us by way of proper business transactions subject to possible withdrawal of this authorisation at any time and without justification or our notifying the secondary client of the assignment. If the client has passed on the claims arising from the sale of the reserved goods (co-owned goods) to a third party (in particular lending banks) before they are assigned to us, this shall be deemed as a sale in the ordinary course of business. If the client wishes to sell the claims arising from the further sale of the reserved goods (co-owned goods) to a third party which takes on collection risks (real factoring), the effectiveness of this sale shall depend on our prior written agreement, otherwise, the disposal – also always in the case of the sale of claims involving claims
previously assigned by us to a third party which does not take on the collection risk, or only takes it on partially (unreal factoring) – of the claim owing to us shall not be deemed to have taken place by way of proper business transactions. All those claims assigned to us from the further sale of reserved goods (coowned goods) by the client shall not only serve as security for the reserved goods sold in individual cases, but also to secure all those entitlements mentioned in para. (1) sentence 1-2.

[4] The client shall inform us immediately of any seizure of or other impairment to our reserved goods or of any claims (part claims) assigned to us in advance arising from their further sale by third parties. On request, the client shall allow us to enter his premises in order to determine, label, separately store or remove reserved goods. The client shall undertake to give us the information necessary for us to assert our claims as previously assigned to us against secondary clients and to provide us with copies of those documents of evidence required from his business records.

[5] In so far as our rights arising from simple or extended reservation of title in connection with
any other material securities granted to us exceed our claims from the business relations
in value by over ten percent, on request of the client, we shall release securities of our choice.

IX. Offsetting, right of retention

There shall be no offsetting against our payment entitlements unless these are counter claims of the client which are recognised by us or legally determined. The client shall not exercise any right of retention based on counter claims from anything other than the concrete contractual relation.

X. Non-applicability of the advance performance obligation

In case of agreed deliveries (part deliveries), we shall be entitled to demand contemporaneous performance in return for  cash payment or the provision of sufficient securities if, after conclusion of the contract, circumstances become known which lead us to fear that our payment claim is endangered. Cheque and bill protests and payment arrears on the part of the client after two futile
reminders by us shall be seen as endangering our claim. In these cases, all claims which we hold against the client shall become valid immediately. If the buyer refuses to accept contemporaneous performance or the granting of securities, we shall be entitled to withdraw from the contract or to demand compensation for damages as a result of non-performance as we choose.

XI. Applicable law, legal venue

[1] The contractual relations to the client shall be subject to the law of the Federal Republic of Germany excluding the law on the international purchase of moveable goods.

[2] The legal venue for all disputes arising from bilateral trading business (including bill and cheque proceedings) shall, at our choice, be Dortmund. If, on the request of the client, we
do no exercise our right to choose the legal venue within ten workdays, Dortmund shall be the legal venue. We shall also be entitled to take legal action against the client at the court responsible for his seat of business.

latest stage: 01/2006