SERKEM GmbH General Terms and Conditions

1. Scope of Application

All contracts, deliveries, and other services, including consulting services, are subject to these general terms and conditions unless otherwise agreed in writing on a case-by-base basis. These terms and conditions shall also apply to all future business transactions even if they are not expressly agreed upon again. Any terms and conditions of the ordering party that are in contradiction with these terms and conditions shall be non-binding for the selling party, even if they have been used as the basis for an order and the selling party has not objected expressly to their contents.

2. Orders

The selling party will accept orders by means of a written confirmation or through the performance of said orders. Oral subsidiary agreements and commitments, regardless of their nature, require written confirmation on behalf of the selling party in order to be legally effective. The ordering party, which can set an appropriate period for the acceptance of its order, agrees to be bound to its order until said period expires, even if said order has been placed orally.

3. Quotations and Entering into Agreements

Quotations are always subject to change, provided that they have not been expressly designated as binding upon submission. If not entered into directly by management, contracts and other agreements entered into shall become binding only once they are confirmed in writing. If salespeople or sales agents enter into oral subsidiary agreements or agree to commitments that extend beyond the relevant written sales contract, said agreements and/or commitments shall require a written confirmation in order to become effective. SERKEM GmbH’s title and copyrights to cost estimates, service and quotation descriptions, proposals, test programs, and the corresponding documents are not transferred to the customer. They remain the intellectual property of SERKEM GmbH, may not be disclosed to third parties without the consent of SERKEM GmbH, and must be returned to the selling party.

4. Delivery and Goods Being Delivered

The goods are shipped at the ordering party’s risk. The risk shall be transferred to the ordering party, at the latest, with the delivery to the carrier, freight deliverer, or other shipping company of the goods being delivered. In the case of deliveries ex works, including those effected with the selling party’s own vehicles, the risk of loss or deterioration of the goods shall be transferred to the ordering party upon the completion of loading onto the transport vehicle. Prepaid deliveries and freight cost reimbursements shall have no effect on this provision. These only affect pricing.

In regard to program developments by SERKEM GmbH, these correspond to the descriptions in the corresponding documentation, and SERKEM GmbH shall have no obligation of providing functionalities additional to those in said documentation. Graphics and visual elements in documentation, test programs, product descriptions, project descriptions, etc. do not constitute agreements regarding features. Agreements regarding features require express and written confirmation on behalf of SERKEM GmbH.

5. Partial Deliveries

Partial deliveries shall be admissible if the ordering party does not provide evidence, by way of exception, that said party takes no interest in a partial delivery in financial terms. Partial deliveries will be billed independently and their payment shall be due accordingly. Payments will be allocated to the individual deliveries of an overall transaction.

6. Prices and Payment

Unless fixed prices have been agreed upon, the services and deliveries performed shall be billed in accordance with the correspondingly applicable current prices of the selling party. Prices are specified without shipping and handling costs. The respectively applicable value-added tax will be added to the prices. The selling party shall be entitled to request advance payments in the form of checks.

The selling party shall also be entitled to ship goods COD and to demand payment upon delivery/performance of services. If the selling party does not exercise this right, payment must be received within 10 days of the invoice date unless otherwise contractually agreed. In the case of service contracts and contracts for work and services, the selling party shall be entitled to request appropriate installments. Extended payment dates and/or cash discounts will only be granted following a written agreement. Even if cash discounts have been agreed upon, these shall only be granted if the customer, upon payment, is not in arrears with the payment of earlier services.

Credit notes shall be issued only provided that the corresponding payment has been received, and shall be issued for the corresponding amount, less expenses, in accordance with the value date on which the ordering party can dispose of the items for which the credit notes are being issued. Independently of the maturity date of any received checks, accounts receivable shall be due immediately if payment terms are not complied with or facts that allow the customer’s creditworthiness to be put into doubt become known.

In the event of late payments or payment term extensions, the selling party shall be entitled to charge interest at 3 percentage points higher than the base rate pursuant to §1 para. 1 Diskontsatzüberleitungsgesetz [German Discount Rate Transition Act], as well as in the event of default, in which case the selling party may opt instead to bill actual interest lost and other damages caused by said default. Starting January 1st, 2002, a possibly legally defined successor interest rate will come into effect instead of the base rate or – in the event that such a rate is not defined – the European Central Bank’s control mechanism that best corresponds to the base rate in terms of its objective, frequency of change, and function shall come into effect instead.

Cancellations and Delivery Date Postponements

If the customer cancels confirmed orders totally or partially and there are no conditions for a return pursuant to the general terms and conditions for returns, or if the customer agrees on delivery date postponements with SERKEM GmbH for which the customer is responsible, SERKEM GmbH shall be entitled, without special evidence, to claim compensation for damages in accordance with the order’s list price.

Agreements regarding the postponement of delivery dates must be in written form. In the event of delays in acceptance, SERKEM GmbH shall be entitled, in addition to a claim for payment, to optionally define a new delivery date or to withdraw from the contract. Orders can only be cancelled within eight (8) business days following delivery in accordance with our general terms and conditions for returns.

7. Retention of Title and Copyrights

All deliveries are made exclusively under an extended retention of title and under the provision that all accounts must be current. The delivered goods shall remain the property of the selling party, regardless of where the goods are stored, until the corresponding purchase price and all present and future accounts receivable that the selling party has for the ordering party as a result of the business transaction have been paid in full.

This also applies in the event that the selling party has included individual or all accounts receivable for the ordering party in a running account and the balance has been struck and acknowledged. If the delivered good is processed by the ordering party into a new item, the processing shall have taken place on behalf of the selling party. Acquisition of ownership by the ordering party pursuant to paragraph 950 of the German Civil Code is hereby excluded.

Obligations arising from said processing, however, shall only affect the ordering party or processing party. In the case of processing with other goods that are not the property of the selling party, the selling party shall acquire co-ownership of the new item in accordance with the proportion between the values of the goods delivered by it and the other goods at the time of processing. The value of the good delivered by the selling party shall be determined according to the relevant final invoice amount, based on the selling party’s invoice serving as the basis for the relevant delivery.

The new item acquired through the processing performed by the ordering party shall be considered as a good subject to retention of title in terms of these terms and conditions. The ordering party hereby transfers all its claims from the resale of the good subject to retention of title to the selling party. If said resale occurs together with other goods that do not belong to the selling party for a lump sum price, the ordering party hereby transfers, to the selling party, all its claims from the resale in the amount that corresponds to the full invoice value of the good subject to retention of title.

In the event that a good subject to retention of title that is co-owned by the selling party is resold, the ordering party hereby transfers, to the selling party, all its claims from the resale in the amount that corresponds to the selling party’s part of the co-owned good. The ordering party shall be entitled and authorized to resell the good subject to retention of title provided that the claim for the outstanding purchase price is transferred to the selling party. The ordering party shall not be entitled to dispose of the good subject to retention of title in any other way – including its use in secured transactions –, nor of the claim that the ordering party has transferred or must transfer to the selling party pursuant to the preceding terms and conditions – including its transfer, assignment for security, or pledging –. Subject to revocation, the selling party hereby authorizes the ordering party to collect the sum due from the resale.

The selling party will not make use of its own collection authority as long as the ordering party complies with its payment obligations. Upon request, the ordering party must disclose the debtor of the transferred claim to the selling party and to notify said debtor of the transfer. The selling party is hereby authorized to notify the debtor of the transfer on behalf of the ordering party. In the event of attachment or of other events that endanger the selling party’s rights, the ordering party shall notify the parties that are taking or plan to take said action of the supplier’s rights; independently thereof, the ordering party shall immediately notify the selling party of said endangerment by telephone or by telex.

If the value of the securities granted to the selling party exceeds its claims by more than 20%, the selling party shall be obligated, upon request from the ordering party, to reassign or release them, according to its choice, in this respect. Upon full payment of all of the selling party’s claims resulting from the business transaction, the property of the good subject to retention of title will be transferred to the ordering party. Simultaneously, the ordering party will acquire the claim that it had transferred to the ordering party as security for the latter’s claims pursuant to the preceding terms and conditions.

In relationship to the ordering party, all rights to the software created by SERKEM GmbH, especially full copyrights, and the respective powers, to all programs, documents, and information relinquished within the scope of the contract formation process and the performance of the contract, including warranty, support, and maintenance services, are held exclusively by SERKEM GmbH, even if these objects are created as a result of specifications of or cooperative work on behalf of the ordering party. Software copies that are not expressly allowed, any passing on of the software that is not expressly allowed, and the development of similar software based on SERKEM GmbH software as a template are legally and contractually prohibited in particular.

8. Liability

Claims for damages made by the ordering party due to negligence upon entering a contract, due to breach of contractual accessory obligations, due to tort, or due to any other basis for a claim are hereby excluded unless the selling party or vicarious agent are charged with intent or gross negligence. The preceding claims become statute-barred half a year after receipt of the goods or performance by the ordering party.

The selling party’s liability is hereby limited to half of the respective invoice value, up to a maximum of €25,000. Pursuant to §69 c No.2 UrhG [German Copyright Law], the ordering party may alter the programs and make the software modifications and expansions that are shown as permitted in the price and conditions list. SERKEM GmbH hereby points out that even minor changes may lead to significant, non-foreseeable errors in the application flow of the affected program and of other programs. Because of this, the ordering party is hereby emphatically advised against making changes to programs without authorization; any such changes will be made at the risk of the ordering party.

9. Warranty

The ordering party must check the good or service immediately after its arrival or performance for correctness and in terms of quantity and condition/features. The ordering party must give the selling party notice of defect for obvious deficiencies, within a week at the latest, with a written notification. If products or services are returned or provided for subsequent improvements under warranty, and it arises that the complaint has been wrongly issued, the selling party shall be entitled to bill the ordering party for the expenses involved in the corresponding inspection or test, including daily allowance expenses. The customer can first demand subsequent improvements under warranty. In this case, the selling party may deliver a replacement item instead of making subsequent improvements.

The ordering party shall give the selling party an appropriate amount of time and an appropriate opportunity to perform subsequent improvements. If the subsequent improvements fail, the ordering party may demand to cancel the contract or a reduction in price. All other ordering party warranty claims are hereby excluded, provided they are not based on intent, gross negligence, or a specific guarantee made by the selling party.

10. Place of Performance and Place of Jurisdiction

The place of performance and the place of jurisdiction shall be Passau. This does not preclude the selling party from raising claims in a different place of jurisdiction. The relationship between the two contracting parties shall be governed solely by the applicable laws of the Federal Republic of Germany.

11.  Information

The ordering party hereby authorizes the selling party to obtain credit and bank information regarding its company and regarding any and all persons involved in the transaction.

12. General

In the event of invalidity of any of the provisions in these general terms and conditions and/or the existence of loopholes in the wording of this contract, the contracting parties shall replace or amend the invalid or incomplete provisions with suitable provisions in such a way that the new provisions correspond to the original intended financial purpose as much as possible. The validity of the remaining provisions shall remain unaffected.