General Terms of Supply of MAH

I. General Provisions

1. The legal relations existing between Münchner Autostoff Handel GmbH (in the following “MAH“) and its clients with respect to deliveries and/or services provided by MAH (in the following “Supplies”) shall be exclusively governed by these Terms of Supply. The Client’s Terms of Supply shall only apply to the extent that they have been expressly accepted by MAH.

2. Partial deliveries shall be admissible insofar as they are acceptable for the Client. They will be invoiced separately.

3. Under these General Terms and Conditions the term “damages“ also comprises claims regarding the compensation of futile expenditures.

4. Formal and written declarations of intent may be presented by post, fax or electronically.


II. Prices, payment terms, delay of payment caused by the Client

1. Prices are ex MAH warehouse, excluding packaging, shipment, customs and other official fees, plus the locally applicable value added tax.

2. From clients that have no regular business relationship with MAH or have not fulfilled their obligations under former contracts on time or failed to perform such duties, MAH may demand payment in advance.

3. The purchase price shall be immediately due and payable within 30 days from the date of invoicing and delivery or acceptance of goods. 2% cash discount shall be granted if payments are made within a period of 10 days from the date of invoicing. Upon the expiry of the due date set forth in sentence 1, the client shall be in delay. Payment terms shall be considered as kept when the purchase price is credited.

4. The setting-off against counter claims by the Client shall only be permitted if such claims are undisputed or legally determined without further recourse.


III. Terms of delivery; delay

1. Periods of delivery shall only be binding if agreed in writing. A prerequisite for compliance of these periods of delivery shall be the timely receipt of all documents to be provided by the Client as well as compliance of all agreed payment terms. If these prerequisites are not fulfilled on time, the deadlines shall be appropriately extended, unless MAH is responsible for such delay.

2. Prior to the payment of payable and uncontested invoiced amounts, including expenses and interests, as well as in case of unjustified rejections of former deliveries by the client, MAH shall not be obliged to execute further deliveries under any current contract. In this context, all periods of delivery shall be discontinued until payments are made.

3. Where MAH has entered into a hedging transaction and MAH’s suppliers fail to fulfill their obligations the contract shall be concluded under the reservation of correct and timely delivery of MAH’s suppliers. In such cases, the Client’s claims for damages shall be excluded; MAH shall be entitled to rescind the contract.

4. All unexpected events and obstacles beyond MAH’s control causing the delay of deliveries (in particular strikes, unexpected operative disorders in MAH’s enterprise or in its pre-supplier’s enterprise, unavoidable raw material scarcity, destruction of already finished goods and services by third parties), all conditions resulting from events of force majeure or restraints owing to the Client’s action shall entitle MAH – after having notified the Client of such restraint - to extend the period of delivery according to the period such restraint is lasting. If such restraint lasts longer than three months, the Client shall be entitled to rescind from the contract if a reasonable grace period of at least three weeks has been granted by the Client in writing and this grace period has lapsed fruitlessly. Further claims of the Client shall be excluded, in particular regarding claims for damages.

5. If MAH is in delay, the client shall be entitled – inasmuch as the Client is able to satisfactorily demonstrate the damages suffered in this context – to claim a compensation for damages of 0.5% for every completed week of delay, but in no case more than a total of 5% of the price corresponding to the part or the delivery which is not usable as a result of such delay.

6. Client’s claims for damages due to delayed deliveries and claims for damages in lieu of performance exceeding the limits specified in No. 5 above shall be excluded in all cases of delayed deliveries even upon expiry of the deadline set to MAH to effect such deliveries. This shall not apply inasmuch as there exists any responsibility in cases of intent, gross negligence or due to injury of life, body or health. The Client shall be only entitled to rescind this contract within the framework of legal provisions if MAH is responsible for such delay of the deliveries. The above provisions do not imply a change in the burden of proof to the detriment of the Client.

7. At MAH’s request, the Client shall declare within a reasonable period of time whether the Client rescinds this contract due to delayed delivery or insists that the delivery of the goods is to be carried out.


IV. Passing of risk

The risk of an accidental loss or impairment of the delivery items passes to the Client as soon as they have been transferred to the person carrying out their transport or the Client is in delay of acceptance.


V. Retention of title

1. All delivered goods remain the property of MAH (in the following “Retained Goods“) until the Client has met all the requirements and claims including the settlement of all outstanding current account balances to which MAH – for whatever legal reasons – is entitled against the Client. If and to the extent to which the securities MAH is entitled to exceed the claims of all secured claims by more than 20%, MAH shall release part of them upon the Client’s request; the decision as to which securities shall be released is at MAH’s discretion.

2. For the duration of the retention of title, the Client may not pledge the Retained Goods or use them as security. Resale shall be possible only for resellers in the ordinary course of their business and only on the condition that the reseller receives payment from its client or reserves the right that the transfer of property to the client depends upon the client fulfilling its obligation to effect payment.

3. As a precaution, in case that the Client resells the Retained Goods, it cedes its future claims and accessory claims from this reselling activities against its clients to MAH, including all balance claims. Where the Retained Goods are resold together with other items without having agreed an individual price for these Retained Goods, the client shall cede such part of the total claim to MAH which corresponds to the price of the Retained Goods invoiced by MAH.

4.a) The client shall be entitled to process the Retained Goods and to combine or connect them with other items. Such processes shall be performed for MAH. The new goods resulting thereof shall be considered as Retained Goods.

b) MAH and the client agree that in the event that the Retained Goods are combined with or connected to other items not belonging to the client, MAH shall be entitled to co-ownership of these newly created items in the proportion of the value that the so combined or connected Retained Goods add to the value remaining goods at the time of being combined or connected. Insofar, the new item shall be considered as Retained Goods.

c)  The provision regarding the assignment of claims under No. 3 shall also be applicable to this newly created item. Assignment shall also be applicable to the newly created item, it shall, however, be according to the value represented by the so processed, combined or connected Retained Goods on our invoice.

5. The Client shall keep the Retained Goods on behalf of MAH with the due commercial care of a prudent business man; it shall insure them at its own expense.

6. The client shall be entitled to collect all ceded claims until such authorization is revoked. In cases of the existence of solid reasons (e.g. suspension of payments, signs of over-indebtedness, etc.), MAH shall be entitled to revoke such authorization for collection. After having threatened with the execution of such action, MAH shall be entitled to disclose such security assignment itself and utilize such assigned claims.

7. In case of attachments or other interferences of third parties, the Client shall inform MAH immediately. For the assertion of its claims, it shall furnish MAH with all the required information and documents.

8. In case of violation of this contract by the Client, in particular in case of payment arrears, MAH shall be entitled to rescind the contract and demand the surrender of the Retained Goods - after the fruitless expiry of an appropriate deadline for the Client to perform; the statutory provisions that a time limit is not needed shall remain unaffected. The client shall be obliged to surrender the goods.

9. The retrieval, the assertion of the retention of ownership or the forfeiture of Retained Goods by MAH shall not constitute a rescission of this contract, unless such rescission is expressly declared by MAH. MAH shall be entitled to sell the Retained Goods in the open market.


VI. Defects as to quality

1. Advertising statements and product specifications in MAH’s catalogue shall not be regarded as statements to as to the product qualities. The intended quality shall only conform the statements of the data sheet provided to the Client after its order has been received. No guarantees shall be granted. Customary or standard deviations from samples do not constitute any defect in this line of business. Deviations from colors, differences in structure, pore size, etc. are typical in this field of natural products (leather, furs) and do not constitute any defect.

2. Claims based on defects shall be excluded if the Client uses or repairs delivery items in an improper manner without MAH’s written consent or if the Client executes other activities even though it should have recognized the existence of such defect.

3. In order to preserve warranty rights, wrong deliveries, deviations in quantity and obvious defects shall be reported to MAH without undue delay in writing, at the latest one week after the handover of the delivery items concerned. Non-obvious defects shall be reported in writing immediately after having been discovered, at the latest six months after the handover of the delivery items concerned. Packaging damages shall be immediately reported to the carrier during the acceptance of such goods. If pursuant to sentence 1 and/or sentence 2, no report is made, all warranty claims against MAH shall be excluded.

4. All items and services with defects shall be either remedied free of charge, re-delivered or newly executed at MAH’s discretion, provided that the cause for such defects was already present at the time of transfer of risks.

5.All claims regarding supplementary performance shall be subject to a limitation period of 12 months after the goods have been handed over at the Client’s premises; the same shall apply to the rescission of contract and the reduction of price. This limitation shall not apply in case of intent, malicious concealment of the defect as well as non-compliance of the guaranteed qualities of the goods. The provisions regarding suspension of expiration/restart of limitation shall remain unaffected.

6. In case of notification of a defect, the Client’s payments may be withheld only to a reasonable extent by taking proportionally into account the actual defects. Prerequisite of the aforementioned is that no doubts as to the entitlement to such claims exist and guarantee claims have not yet expired. If warranty claims were unjustified, MAH may claim restitution of the expenses incurred from the Client.

7.MAH shall be granted the possibility to supplement its performance within a reasonable period of time. If such supplementary performance is unsuccessful, the client shall be entitled – irrespective of any

claims for damages it may have according to No. 10. – to rescind the contract or reduce the remuneration.

8. The client shall not be entitled to claims with respect to expenses incurred in the course of supplementary performance - particularly costs of travel and transport, labor, and material shall be excluded - to the extent that expenses are increased because the subject matter of the delivery had to be brought subsequently to a location other than the client’s branch, unless this transport complies with the intended use of the goods.

9. The Client’s right of recourse against MAH pursuant to Sec. 478 of the German Civil Code BGB (Recourse of the Company) is limited to cases where the client has not concluded an agreement with its customers exceeding the scope or the statutory provisions for claims of defects. Moreover, No. 8 shall apply mutatis mutandis as to the scope of the Client’s right of recourse against MAH pursuant to Sec. 478 para. 2 BGB.

10. Client’s claims for damages due to defects in quality shall be excluded. The aforementioned shall not apply in case of malicious concealment of a defect, non-conformance of the guaranteed quality, damages to life, body or health including cases where MAH intentionally or negligently violates its duties. The above provision shall not result in a change of the burden of proof to the disadvantage of the Client. All further claims or claims of the Client based on defects in quality ruled under Sec. (VI.) shall be excluded.


VII. Industrial property rights and copyright; defects in title

1. Unless otherwise agreed, MAH shall provide the delivery free from third parties’ industrial property rights and copyrights (in the following IPR) only with respect to the country of the place of destination. If a third party asserts a rightful claim against the Client based on an infringement of an IPR with respect to deliveries made by MAH and used in conformity with the contract by the Client, MAH shall be liable to the Client within the deadlines stipulated in VI. No. 5 as follows:

a)   MAH shall at its option and costs either obtain a user right for the concerned deliveries, change them in such a fashion that the copyright is not violated or replace them. If MAH cannot achieved this at reasonable conditions, the Client shall be entitled to the statutory right of rescission or price reduction.

b)  MAH’s duty concerning the indemnification of damages shall be governed according to Sec. VIII.

c)   The aforementioned duties of MAH only exist if the Client immediately notifies MAH in writing about the claims filed by a third party, if the Client does not acknowledge any violation and if MAH has all the required rights to execute defensive measures and negotiate settlements. If the Client stops using the delivery items in order to reduce the damage or for other good reasons, it shall be obliged to point out to this third party that discontinuing the use of such deliveries does not constitute the acknowledgement of any IPR infringement.

2. Claims of the Client shall be excluded if it is itself responsible for this IPR infringement.

3. Claims of the Client shall also be excluded if this IPR infringement is either caused by specific targets of the Client, a type of use not foreseeable by MAH or because the Client effected changes in the deliveries or used them together with products not delivered by MAH.

4.In addition, with respect to claims by the Client pursuant to No. 1a) above, Sec. V. Nos. 6, 7 sentence 1 and 9 shall apply mutatis mutandis in the event of an infringement of an IPR.

5. Where other defects in title occur, Sec. VI shall apply mutatis mutandis.

6.Any other claims of the Client against MAH exceeding the claims provided for in this Sec. VII, based on a defect in title, shall be excluded.


VIII. Other claims for damages

1. Unless otherwise agreed in these Terms of Supply, any claims for damages the Client may have, based on whatever legal reason, in particular infringement of duties arising in connection with this contractual obligation or tort, shall be excluded.

2. The above shall not apply in case of mandatory liability according to the German Product Liability Act, intent, gross negligence of owners, legal representatives or officers, in the case of malicious behavior, non-compliance of a granted guarantee, culpable injury of life, body or health or culpable breach of essential contractual duties. However, claims for damages arising from a breach of a fundamental obligation shall be limited to the foreseeable damage which is intrinsic to the contract, unless caused by one of the aforementioned cases.

3. The above provisions do not imply a change in the burden of proof to the detriment of the Client.


IX. Jurisdiction, applicable law, binding force of this contract

1. This contract, including its interpretation, shall be governed by German law. The provisions of the UN Convention on Contracts of the International Sale of Goods (UN Sales Convention) shall not apply The place of performance for all deliveries related to this contract shall be MAH’s main establishment.

2. Exclusive place of jurisdiction – including international – for any disputes arising directly or indirectly in connection with this contractual relationship shall be MAH’s headquarter. However, MAH shall be entitled to bring an action at the Client’s place of business.

3. The legal invalidity of one or more provisions of this contract shall in no way affect the validity of the remaining provisions. This shall not apply if adhering to this contract would lead to unreasonable hardship for one of the parties.