Terms and Conditions of Purchase

(version 1/2015 from 01.10.2015)

1. Scope of application

1.1 These general terms and conditions of purchase apply to all enterprises within the SCHLENK Group (currently Carl SCHLENK AG, SCHLENK Metallic Pigments GmbH, SCHLENK Metallfolien GmbH & Co KG). The respective enterprise of the SCHLENK Group which enters into a contract is referred to in the following as “Principal”.

1.2 These general terms and conditions of purchase apply exclusively. Contrary or deviating conditions of our contractual partners (in the following “Contractor”) shall not apply, unless we accept them explicitly in writing. Unconditional performing of contractual services despite of knowledge of contrary or deviating conditions of the Contractor shall not constitute any acceptance of those. Any contrary or deviating terms are herewith purely precautionary objected.

1.3 Deviating individual agreements between the contracting parties shall have priority. In this case these Terms and Conditions of purchase apply subordinately and complementarily.

1.4 These Terms and Conditions of purchase only apply towards companies, legal entities and special funds under public law as defined in section 310 paragraph 1 German Civil Code (§310 I BGB).

2. Conclusion of contract and offers

2.1 Offers and quotations of the Contractor are binding and not to be compensated for, unless explicitly stated and agreed upon differently. Unless in individual cases noted and agreed upon otherwise, the Principal will bear no expenses and will pay no remuneration as to visits, planning and other advance contributions by the Contractor in connection with any tendering or bidding therewith involved.

2.2 Orders, bargains and call-offs shall require written form. The Contractor shall instantly point out obvious errors (e.g. misspelling or miscalculations) and/or incomplete orders to the Principal for correction/completion. The Contractor is obliged to accept the order within 14 (fourteen) days and to submit written and legally valid confirmation to the Principal. Call-offs become binding within the scope of planning of order-scheduling and call-off orders unless the Principal contradicts within three working days after receipt. Other delayed as well as differing confirmations by the Contractor shall be deemed to be a new offer and therefore require an approval by the Principal.

2.3 Verbal agreements of any kind – inclusive of subsequent alterations and amendments – are only binding if confirmed by the Principal in writing.

2.4 Also a fax as well as an email meets the criteria of the written form.

2.5 All contracts are being concluded under the condition subsequent that the purchaser has been fully licensed by authority.

3. Delivery and Performance

3.1 Unless otherwise agreed, partial delivery and performance are excluded.

3.2 The Incoterms 2010 shall apply. Unless otherwise agreed, deliveries are processed according to the Incoterm-clause DDP to the place stated in the order.

3.3 Place of performance is either the location of the principal or any destination chosen by the Principal via the order.

3.4 The risk of accidental destruction and/or accidental deterioration in the Products shall pass to the Principal upon delivery at the place of performance. Insofar acceptance is agreed on this shall be authoritative for the passing of risk.

3.5 All drawings, tolerances, norms, grades etc. being set by the principal basically apply. Any aberrant data or statements, e.g. illustrations, drawings, dimensions or weight specifications, handed over by the Contractor, need to be accepted by the Principal.

3.6 Unless otherwise stipulated in the purchase order, the Contractor has to deliver into the charge of the freight carrier the ordered products or materials packed in compliance with statutory provisions or prescriptions. The condition of the packaging material shall conform respectively.

3.7 If the ordered products or materials are subject to the regulation no. 1907/2006/EG (REACH) in its current effective version, the Principal postulates the Contractor to fully implement or fully have implemented this regulation. If this is not the case, the Contractor is obliged to notify the Principal explicitly in writing in the confirmation of order or prior to delivery respectively.

3.8 Invoicing fully depends on the net-weight ascertained by the Principal. Axle-load weighing or the determination of shipload-weight by full-load and empty gauging in the port of discharge are admissible. Stipulated en bloc deductions as to contamination, moisture and/or the weighing or gauging of bulk will be deducted from the determined weight to ascertain the invoice weight.

3.9 The Contractor ensures the delivered goods to be free of ionizing radiation which exceeds the characteristic radiation. Ionizing radiation originates when suitable measurement equipment observes parameters exceeding the surrounding background radiation.

3.10 The engagement of subcontractors shall be subject to the prior written consent of the Principal. The Contractor has to assure that all of his obligations towards the Principal will be fulfilled by the subcontractor as well.

4. Date of delivery

4.1 Agreed dates of delivery and deadlines are binding. The punctuality of delivery depends upon time of entry at the destination determined by the Principal via the order.

4.2 If agreed deadlines are not met, legal regulations come into effect. The Contractor is obligated to immediately advise the Principal in writing if circumstances occur or become foreseeable which offer that the agreed deadlines will not be met. The Contractor has to explain the reason and expected duration of the delay in delivery.

4.3 The unreserved acceptance of any delayed delivery or performance by the Principal does not constitute any waiver of any compensation claims due to delayed delivery or performance

4.4 The Contractor can only invoke the lack of necessary documents to be forwarded by the Principal if having reminded in writing and not having received these documents within a reasonable timeframe.

4.5 If the Contractor does not meet the delivery deadline, he shall have to compensate the Principal per business day exceeding the deadline to the amount of 0.2% of the total of the order (net), however, not more than a maximum 5% of the total amount (net). In such case the Contractor can only avoid a contractual penalty if he provides proof not to be responsible for the missed deadline, and if he has notified the Principal instantly in writing. If no notice is submitted, the Contractor shall have to pay the contractually agreed fine. Further compensation claims shall remain unaffected. Yet the penalty as such will be added to these claims.

5. Terms of secrecy

5.1 The Principal holds all rights of property and copyright of all documents handed over to the Contractor in connection with the order, e.g. evaluations, calculations, draft versions, formulations, product compositions etc. The Contractor is obliged not to analyze or disclose these documents to third parties, unless the Principal has provided explicit agreement in writing. All documents and information are to be used exclusively in connection with the production for the Principal. The documents have to be returned immediately to the Principal, unless the Contractor has accepted the order within the period of time determined under article 2 (Conclusion of contract and offers). Has the order been taken on, all documents have to be returned unsolicited to the Principal by the finalized processing of the order at the latest.

5.2 Property rights and the right of use and enjoyment as to samples, quotations, drawings, documentations and similar pieces of information of any corporeal or incorporeal kind, that have been caused by the Contractor on behalf of the Principal, will pass to the Principal.

5.3 The Contractor shall not be entitled to use the name of the Principal or the underlying business relationship in any form as reference without the prior written approval by the Principal.

5.4 The terms of secrecy also apply after the execution of this contract. They expire when and if all manufacturing know-how within the forwarded illustrations, drawings, calculations and other documents has become general knowledge.

6. Prices and terms of payment

6.1 The price stated in the order is binding.

6.2 Unless otherwise stated in the order all prices are applicable inclusive any ancillary services and costs (e.g. packaging, shipping and transport to the place of delivery) plus the respective sales tax.

6.3 Unless otherwise agreed in writing, the Principal settles the purchase price within 14 (fourteen) days/net upon receipt of invoice at 3 (three) percent discount or within 30 (thirty) days/net upon receipt of invoice.

6.4 The payment term shall commence upon receipt of invoice of the Contractor, however, not prior to complete delivery of the goods ordered by the Contractor, or acceptance of the goods by the Principal respectively. Partial payments or invoicing of partial performance need the written confirmation of the Principal.

6.5 For bank transfers payment shall be deemed in time if the transfer order is placed at the bank of the Contractor before the payment term is expired; the Principal shall not be responsible for any delays due to the participating banks.

6.6 Payments shall not constitute any acknowledgement of delivery or performance to be contractual.

6.7 In case of advanced services by the Principal (especially deposits) the Contractor shall be obliged to present an absolutely and directly enforceable guarantee in the amount of the deposit to the Principal to secure entitlement and deposit.

7. Set-off rights and rights of retention; retention of title

7.1 The Principal shall be entitled to offset against the claims of the Contractor by any debts due that are shared by all enterprises connected to the Principal according to §§15 ff. AktG (German Stock Corporation Act). Furthermore, the Principal shall be entitled to offset his claims against any counterclaims that any of the enterprises connected to the Principal according to §§ 15 ff. AktG holds against the Contractor. This shall apply even if maturities differ and one party has agreed upon payment in cash and the other party upon payment via draft or any other form of payment for processing only.

7.2 The Contractor may only offset his counterclaims against the claims of the Principal or refuse or withhold performance, if these counterclaims have explicitly been accepted by the Principal in writing or established as final and absolute or are related to a synallagmatic relationship to the Principal’s claim. Eventually the contractor shall neither be entitled to offset nor to deny performance or execute the right of retention.

7.3 The delivered goods immediately become absolute property of the principal upon delivery. The Principal does not acknowledge any retention of title.

8. Defects and damages

8.1 The Contractor ensures that all deliveries or performances meet the agreed specifications and are free from any defects which would minimize or annihilate their value or suitability according to standard or contractually assumed consumption. Quality characteristics or features of samples, specimens or any other analytical data potentially submitted to the Principal shall be considered as quality description, unless they are contractually or in any supplemental agreement excluded in writing.

8.2 Incoming goods inspections on site of the Principal are only processed with regard to obvious defects, transport damages, completeness and identity of the delivered goods. Such defects will be notified by the Principal immediately within 10 (ten) business days. The Principal reserves his right to process further incoming goods inspections. In addition the Principal will notify hidden defects immediately within 10 (ten) business days, once such defects are identified during a duly processed course of business. In this respect the Contractor waives any objection due to delayed notification of defects.

8.3 The Principal is entitled to full compensation as legally stipulated. The Principal is in either case entitled to claim removal of defects of his own choice or delivery of new goods from the Contractor. The right of compensation of damages, especially the right of compensation for damages instead of performance, shall explicitly be reserved.

8.4 Defect claims – no matter their legal ground – prescribe 36 months after delivery. Longer contractual or legal statutory periods of limitation remain hereby unaffected. The period of limitation comes into effect with passing of the risk.

8.5 If the Contractor fulfills his obligation of supplementary performance by compensation delivery, the period of limitation for the delivered goods of compensation starts anew after their delivery, unless the Contractor - when complying with the missing requirements - has explicitly and appropriately reserved his right to process the compensation delivery by mere good-will or for reasons of amicable settlement ex gratia.

8.6 If the Principal has to cope with occurring costs due to faulty delivery of the subject-matter of the contract, in particular costs of transport, infrastructure, labor or material exceeding those usually charged for receiving inspections, the Contractor has to bear these costs.

9. Product Liability

9.1 As far as the Contractor is responsible for any product damage he shall be obliged to exempt the Principal from all claims of third parties upon first demand, if the cause of the claim originates from his domain and area of organization and if he is liable himself externally.

9.2 In this context the Contractor shall also be obliged to refund any expenses that may occur from or are linked to a product recall by the Principle. The Principal will inform the Contractor about content and extent of the recall as far as possible and reasonable prior to it and also offer him the chance to response. Any other legal claims remain hereby unaffected.

9.3 The Contractor shall be obliged to take out a sufficient public and product liability insurance and to maintain this insurance throughout the duration of the contract including the periods of limitation. If the Principal is entitled to any further claims for damage, these will remain unaffected. The Contractor has to provide proof of conclusion and existence of the insurance to the Principal on demand.

10. Industrial property rights

10.1 If during joint developments or during the contractual relationship industrial property rights, copyrights and/ or defined as confidential know-how respectively trade and business secrets are developed, the Principal shall, upon payment of the purchase price, have the sole and exclusive right of usage and exploitation not limited in time and/or in place.

10.2 Through delivery and processing by the Principal no industrial property rights of third parties within the Federal Republic of Germany (FRG) shall be violated. Any claims by third parties will be forwarded from the Principal to the Contractor. The Principal will not accept any such claims spontaneously. Thus the Principal authorizes the Contractor to process any legal or extrajudicial dispute against the third party.

10.3 In case of culpable breach of industrial property rights of third parties the Contractor will defend and hold the Principal harmless at his own costs. Therefore the Contractor shall bear all costs arising out of claims by third parties which these might bring forward relating to deliveries and performances by the Contractor to the Principal causing infringement of protective rights. The Contractor shall exempt the Principal from any such claims upon the usage of industrial property and/or protective rights if responsible.

10.4 If processing of the delivered goods by the Principal is affected by existing third-party protective rights, the Contractor must at his own expense either acquire adequate permit or alter and/or exchange the affected parts of the delivery in such way that the processing of the delivery will no longer be hindered by any third-party industrial property or protective rights and at the same time contractual agreements are kept.

11. Supply and tools

11.1 Any materials supplied by the Principal remain his property. These shall only be used according to the terms of the contract. In case of using up or mixing the Principal automatically gains co-ownership in the new good in the ratio of the value of the Principal’s good and the other used up materials at the time of the processing and during storage with the Contractor.

11.2 The Contractor shall be obliged to check and store the supplied materials accurately. Aberrations, e.g. quantity, quality, etc., shall instantly be forwarded to the Principal. The Contractor is responsible for any loss or damage due to negligence or willful intent.

11.3 The Principal reserves the right of property as to samples and workshop facilities (such as tools, forms, jigs or positioning devices); the Contractor shall be obliged to use the tools exclusively for the manufacture of the goods ordered by the Principal. The Contractor shall also be obliged to insure the Principal’s tools at his own expense against all possible damages (inter alia damages due to fire, water and theft).

12. Packaging

All packaging as well as any other kinds of waste (expendable and auxiliary materials) have to be reusable or recyclable free of charge for the Principal pursuant to the regulations of the German packaging ordinance effective at time as well as any other prescriptions.

13. Termination of the contract

If the Contractor ceases delivery, a preliminary liquidator is nominated, or the insolvency proceedings against the assets of the Contractor are opened, the Principal shall be entitled to partly or totally reject the execution of the contract and claim compensation for default. In case of imminent or de facto insolvency the Principal shall be entitled to keep a reasonable security deposit for the duration of the relevant limitation period in each case.

14. Severability clause

In case an individual provision of this contract or these terms and conditions is or becomes completely or partly invalid, it shall in no way affect the validity of the rest of the contractual provisions. The contracting parties commit themselves to immediately establish a legally binding regulation resembling the economically intended purpose of the invalid provision. This shall also apply if any supplementation might be required in the course of the execution of the contract.

15. Place of jurisdiction and applicable law

15.1 Exclusive place of jurisdiction for all disputes resulting from this contract shall be Nuremberg, Germany. However, the Principal shall be entitled to bring an action against the Contractor also at the venue of the Contractor’s headquarters.

15.2 The Law of the Federal Republic of Germany shall exclusively apply; UN Conventions on the International sale of Goods shall be excluded (CISG).

These Terms and Conditions of Purchase exist in a German and an English version. In cases of discrepancies or ambiguities the German version shall prevail exclusively.