General terms and conditions of business

consisting of WTZ Roßlau gGmbH and WTZ Motorentechnik GmbH

§ 1 Scope of application

The following terms and conditions apply to all deliveries, services and offers of WTZ for use in business transactions with companies. This shall also apply to all future business relationships, even if they are not expressly agreed again. These terms and conditions shall be deemed to have been accepted at the latest upon acceptance of the deliveries or services.

Deviating, conflicting or supplementary terms and conditions of the client are hereby rejected, unless WTZ agrees to their validity in writing.

Insofar as the following General Terms and Conditions do not provide for other regulations, the statutory provisions of the German Civil Code applicable to the respective contractual relationship shall apply.

§ 2 Offer and subject matter of the contract

(1) The subject matter of the order shall be the tasks described in the offer of WTZ or in the specifications in the form of the written declaration of acceptance of the client and the written order confirmation of WTZ; drawings, illustrations, dimensions, weights or other performance data shall only be binding if they have been expressly agreed in writing in the above form. The qualities defined in these agreed service descriptions conclusively determine the characteristics of the services.

(2) The agreement of binding or non-binding execution deadlines and delivery dates must be made in writing. WTZ shall not be responsible for delays in delivery and performance, even in the case of bindingly agreed deadlines and dates, if they are caused by force majeure or by events that make delivery or execution significantly more difficult or impossible for WTZ not only temporarily, in particular official orders, strikes, lockouts, etc., even if these occur at WTZ’s suppliers or their subcontractors. In such a case, WTZ shall be entitled to postpone the deliveries and services for the duration of the delay plus a reasonable disposition period or to withdraw from the contract in whole or in part due to the unfulfilled obligations. In the event of a delay of longer than three months, this shall entitle the client to withdraw from the contract with regard to the part of the service not yet fulfilled after setting a reasonable grace period. If the delivery time is extended or WTZ is released from its obligations, the client shall not be entitled to any claims for damages. WTZ can only invoke this if it notifies the client immediately.

§ 3 Price and remuneration

(1) The remuneration shall be calculated as a fixed price. Notwithstanding the above, the parties may agree that invoicing shall be based on time and effort with a fixed upper cost limit. The applicable statutory value added tax shall be added to the remuneration.

(2) WTZ shall notify the client immediately if it is foreseeable that the intended development result cannot be achieved with the contractually agreed remuneration.

At the same time, WTZ shall propose an adjustment of the agreed price to the client. However, if this becomes necessary for reasons that were neither foreseeable for WTZ when the order was placed nor for which WTZ is responsible and no other agreement is reached with the client, WTZ shall be entitled to withdraw from the contract.

§ 4 Payments

(1) Payments are due in accordance with the agreed payment schedule. The client shall be in default 10 days after the due date without further declaration by WTZ if he has not paid.

(2) In the absence of a payment plan, WTZ’s invoices shall be payable without deduction 14 days after invoicing and receipt; here too, the client shall be in default 10 days after the due date without further declaration by WTZ if he has not paid.

(3) The client shall only be entitled to set-off or reduction, even if notices of defects or counterclaims are asserted, if the counterclaims have been legally established or are undisputed.

(4) In the event of the existence of defects, the client shall only be entitled to a right of retention if the service or delivery is obviously defective or if the client is obviously entitled to refuse acceptance of the work; in such a case, the client shall only be entitled to withhold payment if the amount withheld is in reasonable proportion to the defects and the anticipated costs of subsequent performance (in particular rectification). The client is not entitled to assert claims and rights due to defects if the client has not made due payments and the amount due is in reasonable proportion to the value of the defective delivery or service.

§ Section 5 Research and development result and rights of use

(1) The research and development result shall be made available to the client after completion of the order in accordance with the order content and specifications. The client shall receive a non-exclusive, royalty-free right of use to the inventions and scientific findings created during the execution of the order and to the industrial property rights registered by WTZ and granted to it for the application purpose on which its order is based. The client shall reimburse WTZ for an agreed share of the costs of maintaining the property rights and shall pay a lump-sum employee inventor remuneration, the amount of which shall be agreed separately for each individual case.

(2) The granting of an exclusive right of use against payment for the underlying application purpose of the client requires a separate agreement. The client must notify WTZ in writing of its request to conclude such an agreement within three months of becoming aware of the invention. In the event that such an agreement is concluded, WTZ expressly reserves a non-exclusive, royalty-free right of use for research and development purposes.

(3) The client shall receive a non-exclusive, free-of-charge right to use the copyrighted works, databases and know-how created during the execution of the order for the purpose on which the order is based. The granting of an exclusive right of use for a specific purpose requires a separate agreement.

(4) Inventions which are jointly achieved by the contracting parties (co-inventions) during the performance of the contract may be used and licensed by each contracting party individually without any mutual financial compensation being agreed in favor of the other party.

The contracting parties shall each bear an agreed share of the costs for the maintenance, defense or registration of the respective property right. No financial compensation will be paid for copyrighted works that are jointly created during the execution of the order (joint copyrights).

(5) If existing industrial property rights of WTZ are used during the execution of the order, which are necessary for the marketing of the development results by the client, the client shall receive a non-exclusive right of use for a fee to be agreed separately, insofar as this does not conflict with any other obligation of WTZ.

§ 6 Third-party property rights

(1) WTZ shall inform the client of any third-party property rights which become known during the execution of the order and which could conflict with the rights of use agreed in accordance with § 5. The contracting parties shall jointly decide how these property rights are to be taken into account in the continued processing of the order.

(2) WTZ shall indemnify the client and its customers against claims arising from infringements of copyrights, trademarks or patents, unless

1. a) the client has decided to continue processing the order unchanged despite having been informed by WTZ;
2. b) the design of a delivery item originates from the client itself. The indemnification obligation of WTZ is limited to the amount of the foreseeable damage.

A further prerequisite for indemnification is that WTZ is left to conduct legal disputes and that the alleged infringement is exclusively attributable to the construction of WTZ’s delivery items without combination or use with other products.

(3) WTZ may choose to exempt itself from the indemnification obligation set out in paragraph (2) by either

1. a) procured the necessary licenses with respect to the allegedly infringed patents or
2. b) provides the customer with a modified delivery item or parts thereof which, in the event of replacement with the infringing delivery item or part thereof, eliminate the allegation of infringement with regard to the delivery item.

§ 7 Liability

(1) Statements made by WTZ in connection with this contract (e.g. service descriptions, reference to DIN standards etc.) do not contain any assumption of a guarantee in case of doubt. In case of doubt, only express written declarations by WTZ regarding the assumption of a guarantee shall be authoritative.

(2) WTZ shall be liable in cases of intent or gross negligence on its part or on the part of its representatives or vicarious agents in accordance with the statutory provisions. Apart from that, WTZ shall only be liable according to the Product Liability Act, for injury to life, body, health, which are based on an at least slightly negligent breach of duty by WTZ or an intentional or grossly negligent breach of duty by its representatives or vicarious agents and for the culpable breach of essential contractual obligations. However, the claim for damages for the breach of essential contractual obligations shall be limited to the direct average damage which is foreseeable and typical for the type of contract; this limitation shall also apply to the liability of WTZ in cases of gross negligence if none of the exceptional cases listed in sentence 2 applies.

(3) However, liability for damage caused by the delivery item to legal assets of the client, e.g. damage to other items, is completely excluded. This shall not apply in the event of intent or gross negligence or in the event of liability for injury to life, limb or health.

(4) The provisions of the above para. 2 and para. 3 shall extend to damages in addition to performance and damages in lieu of performance, irrespective of the legal grounds, in particular due to defects, breaches of duty arising from the contractual obligation or from tort. They also apply to the claim for reimbursement of futile expenses. The liability for delay and for impossibility shall be determined in accordance with paras. 5 and 6.

(5) WTZ shall be liable for delays in performance in cases of intent or gross negligence on its part or on the part of one of its representatives or vicarious agents in accordance with the statutory provisions. However, WTZ’s liability in cases of gross negligence shall be limited to the direct average damage which is foreseeable and typical for the contract according to the nature of the subject matter of the contract, if none of the exceptional cases listed in sentence 5 of this provision applies. In all other respects, WTZ’s liability for damages in addition to and/or in lieu of performance shall be limited to 0.5 % for each full week of delay, but in total to a maximum of 10 % of the order value.

Further claims of the client are excluded – even after expiry of any deadline set for WTZ to perform. The above limitations shall not apply in the case of liability for injury to life, limb or health.

(6) If delivery is impossible, WTZ shall be liable in cases of intent or gross negligence on its part or on the part of one of its representatives or vicarious agents in accordance with the statutory provisions. However, in cases of gross negligence, WTZ’s liability shall be limited to the direct average damage that is foreseeable and typical for the type of contract, unless one of the exceptions listed in sentence 5 of this provision applies. In all other respects, the Customer’s claim for damages and for reimbursement of futile expenses shall be limited to 10% of the value of that part of the delivery which cannot be used due to the impossibility. Further claims of the customer due to impossibility of delivery or performance are excluded. This limitation shall not apply in cases of liability based on intent, gross negligence or injury to life, body or health. The right of the client to withdraw from the contract remains unaffected.

§ 8 Warranty period

(1) The limitation period for claims and rights due to defects in deliveries and services – regardless of the legal grounds – is one year. However, this does not apply in the cases of § 438 Para.1. No. 1 BGB, § 438 para. 1 No. 2 BGB, § 479 para. 1 BGB or § 634 a para. 1 No. 2 BGB, which are subject to a limitation period of three years.

(2) The limitation periods according to paragraph (1) shall also apply to all claims for damages against WTZ in connection with the defect – irrespective of the legal basis of the claim. Insofar as claims for damages of any kind exist against WTZ which are not related to a defect, the limitation period of paragraph (1) sentence 1 shall apply to them.

(3) The limitation periods under paragraph (1) and paragraph (2) shall apply with the following proviso:

1. a) The limitation periods generally do not apply in the case of intent.
2. b) b) The limitation periods shall also not apply if WTZ has fraudulently concealed the defect or if WTZ has assumed a guarantee for the quality of the deliveries and/or services. If WTZ has fraudulently concealed a defect, the statutory limitation periods which would apply in the absence of fraudulent intent shall apply instead of the periods specified in paragraph (1), to the exclusion of the extension of the period in the event of fraudulent intent pursuant to Sections 438 (1) and (2) of the German Civil Code. 3 or 634 a para. 3 BGB.
3. c) Furthermore, the limitation periods shall not apply to claims for damages in cases of

injury to life, body or health or freedom, in the case of claims under the Product Liability Act, in the case of a grossly negligent breach of duty or in the case of breaches of material contractual obligations.

(4) The limitation period for all claims shall commence upon delivery, in the case of research and development services – if agreed – upon acceptance, otherwise upon handover.

(5) Unless expressly stipulated otherwise, the statutory provisions on the commencement of the limitation period, suspension of expiry, suspension and recommencement of time limits shall remain unaffected.

§ 9 Claims for defects

(1) If WTZ’s operating or maintenance instructions are not followed, changes are made to the products, parts are replaced or consumables are used that do not comply with the original specifications, claims for defects in the products shall lapse if the client does not refute a corresponding substantiated claim that one of the circumstances caused the defect.

(2) The client must notify WTZ in writing of any defects immediately, but at the latest within one week of receipt of the delivery item. WTZ must be notified in writing of any defects that cannot be discovered within this period, even after careful inspection, as soon as they are discovered.

(3) WTZ is under no circumstances obliged to make a new delivery or manufacture a new product within the scope of subsequent performance. Rather, WTZ may, at its option and expense, demand that

1. a) the defective product is sent to WTZ for repair and subsequent return;
2. b) the client keeps the defective part ready and is repaired by WTZ technicians on site at the client’s premises. If the customer should request that the rectification work be carried out at a location specified by him, WTZ may comply with this request, whereby replaced parts shall not be charged, but working time and travel expenses shall be paid at WTZ’s standard rates.

(4) If the rectification fails after a reasonable period of time, the client may, at his discretion, demand a reduction in the remuneration or withdraw from the contract.

(5) In all other respects, the right to withdraw from the contract is excluded in the event of a breach of duty for which WTZ is not responsible and which does not consist of a defect.

(6) Only the direct customer shall be entitled to claims for defects against WTZ and such claims shall not be assignable.

§ 10 Retention of title

(1) Until the fulfillment of all claims (including all current account balance claims) to which WTZ is entitled against the customer now or in the future for any legal reason, WTZ shall be granted the following securities, which it shall release at its discretion upon request, insofar as their value exceeds the claims by more than 20% on a sustained basis.

(2) Ownership of the R&D result or the manufactured product as well as the rights of use mentioned under § 5 shall only pass to the client upon full payment of all secured claims. Processing or transformation shall always be carried out for WTZ as the manufacturer, but without any obligation on its part. If WTZ’s (co-)ownership expires due to combination, it is hereby agreed that the client’s (co-)ownership of the uniform item shall be transferred to WTZ in proportion to its value (invoice amount). The client shall store the (co-)property of WTZ free of charge. Delivery items to which WTZ is entitled to (co-)ownership are hereinafter referred to as reserved goods.

(3) The client is entitled to process and sell the reserved goods in the ordinary course of business as long as he is not in default. Pledges or transfers of ownership by way of security are not permitted. By way of security, the client hereby assigns to WTZ in full all claims arising from the resale or any other legal grounds with regard to the goods subject to retention of title (including all current account balance claims). WTZ revocably authorizes the client to collect the claims assigned to WTZ for its account in its own name. This direct debit authorization can only be revoked if the client does not properly meet his payment obligations.

(4) In the event of access by third parties to the goods subject to retention of title, in particular seizures, the customer shall draw attention to WTZ’s ownership and inform WTZ immediately so that WTZ can enforce its ownership rights. If the third party is not in a position to reimburse WTZ for the judicial or extrajudicial costs incurred in this connection, the client shall be liable for these.

(5) In the event of a breach of duty by the client, in particular in the event of default in payment, WTZ shall be entitled, even without setting a deadline, to demand the return of the delivery item and/or to withdraw from the contract; the client shall be obliged to return the item. The demand for the return of the delivery item does not constitute a declaration of withdrawal by WTZ unless this is expressly declared.

§ 11 Confidentiality / Publication

(1) During the term of the contract and for a period of five years after termination of the contract, the client shall not disclose to third parties any information of a technical or commercial nature that is worthy of secrecy. However, this does not apply to information that was known or accessible to the client or the public prior to the disclosure by WTZ or became known or accessible to the public after the disclosure by WTZ without the cooperation or fault of the client or information that was disclosed or made accessible to the client by an authorized third party or was independently developed by an employee of the client who had no knowledge of such information. Third parties within the meaning of this provision are not subcontractors of WTZ who have been entrusted by WTZ within the framework of the fulfillment of the order and who have been obliged to maintain confidentiality. If the client invokes one of the above exceptions, he shall bear the burden of proof.

(2) For each case of culpable breach of the confidentiality obligation, WTZ shall be entitled to assert a lump-sum claim for damages of € 50,000.00. The client shall be entitled to prove that WTZ has not incurred any damage or that the damage incurred is significantly lower. WTZ shall be entitled to prove that a higher loss has been incurred.

(3) After prior consultation with the WTZ, the client has the right to publish the R&D result with reference to the author. The coordination must be carried out in such a way that diploma theses, dissertations or applications for industrial property rights are not impaired. The client may only use WTZ’s name for advertising purposes with WTZ’s express consent. WTZ publications relating to a specific area of application shall be coordinated with the client in good time, provided that the client has acquired the exclusive rights in accordance with § 5.

§ 12 Final provisions

(1) Subsidiary agreements, amendments and additions to the contract must be made in writing to be effective.

(2) The law of the Federal Republic of Germany shall apply to the exclusion of the UN Convention on Contracts for the International Sale of Goods. The place of performance and jurisdiction for contracts with merchants shall be the registered office of WTZ.

(3) Should a provision in these terms and conditions or a provision within the framework of other agreements be or become invalid, this shall not affect the validity of all other provisions or agreements.