GENERAL CONDITIONS OF PURCHASE

1. Scope

1.1 These Conditions of Purchase apply exclusively between entrepreneurs, towards legal persons under public law or special funds under public law in terms of Paragraph 310 (1) of the German Civil Code and to all orders placed and contracts concluded by us - hereinafter referred to as “order” -, governing the purchase of goods, services and work performance - hereinafter referred to as “deliveries”. Any conditions set by our suppliers that are deviating from or are supplementary to these Conditions of Purchase will not be accepted and shall not be binding for us. Our Conditions of Purchase shall also be exclusively valid if we do not object to the incorporation of our supplier’s conditions in a particular case or if, in recognition of contrary or supplementary terms and conditions by the supplier, we accept his delivery without reservation.

1.2 These Conditions of Purchase also apply to any and all future business relations with the supplier, even if not explicitly and separately stipulated.

1.3 If any one clause of these Conditions of Purchase is or becomes invalid or unenforceable, the validity of the remaining stipulations - shall not be affected. In such case the invalid or unenforceable provisions shall be replaced by lawful which come as close as possible to the purpose pursued by the invalid or unenforceable provisions.

2. Completion of contract

2.1 Any agreement with the supplier and all orders shall be considered binding for us only if they are set forth in writing. Any modification, addition or subsidiary agreement before, at or after the conclusion of the contract also requires our written consent. The writing - requirement may only be waived in written form. Fax, email or remote data transmissions shall be deemed tantamount to written form.

2.2 An order shall become binding, if within two (2) working days following receipt of the order, the CONTRACTOR does not submit a written objection or CORTECO does not revoke the order in writing (each respectively by fax, e-mail or EDI). If the supplier does not accept our order within two weeks of receipt in writing, we shall be entitled to revoke the order. Delivery on call shall be deemed binding unless the supplier objects within two (2) working days of receipt. Any modification of, supplement to or deviation from our orders shall only be effective if explicitly and separately indicated as deviation, modification or supplement and expressly approved by us.

3. Prices and payment conditions

3.1 Prices specified in the order are fixed prices. Prices include “free delivery” as well as any packaging, transport, insurance and other costs of delivery, unless stipulated otherwise in writing. VAT must be shown separately, otherwise it will be deemed to be included in the price.

3.2 In the event that the supplier is responsible for erection, assembly and/or commissioning and no other provisions have been agreed upon in writing, the supplier shall bear all necessary costs, such as travel expenses and provision of tools.

3.3 Invoices will be processed only if we receive them by separate mail. Each individual order must be invoiced separately. Invoices must - include the order number specified in our order, order date, supplier number and our item number, all highlighted for easy readability.

3.4 Invoices must be made out in EURO, payments will be made in EURO only.

3.5 Payments will be made subject to our own discretion by bank transfer or check and/or bill of exchange after acceptance of delivery and receipt of an orderly invoice as well as after receipt of all documents pertaining to the delivery. Unless otherwise agreed upon in writing, we shall pay either within 14 days with a 3% discount, within 30 days with a 2% discount, or within 90 days without discount.

3.6 The supplier shall not be entitled to assign or otherwise dispose of his claims wholly or partly against us without our prior written consent.

3.7 We shall be entitled to claim statutory setoff and retention rights.

4. Delivery times and conditions

4.1 Delivery dates specified in the order or otherwise agreed upon are binding and must be strictly met. The supplier shall promptly notify us in writing of emerging delays in meeting delivery dates and deadlines, explaining the reasons for the delay and specifying as to how long they are expected to prevail.

4.2 Deliveries by installments and premature deliveries shall be allowed only with our express consent. Payment claims, however, shall be due no earlier than on the delivery date originally agreed upon.

4.3 Unless otherwise agreed upon, deliveries must be accompanied by a delivery note and a works test certificate according to EN 10204 - or any other equivalent internationally recognized test certificate specifying the details as mutually agreed upon with the supplier. An initial sample test report must be furnished with first-time deliveries.

4.4 Deliveries are only possible at previously arranged times.

4.5 In the event of delayed delivery we shall be entitled to impose a contractual penalty of 1% for each commenced week of delay, but no more than a total of 10% of the order value, while the supplier shall have the right to furnish evidence that no or only slight damage was caused. The right to assert additional damages shall be reserved. We shall be obligated to declare a reservation of contractual penalty no later than upon payment of the invoice following the delayed delivery.

4.6 Acts of God that render a delivery by our supplier or the acceptance or use of delivery in our or at our supplier’s business impossible or substantially more difficult shall postpone our acceptance duty, as is appropriate with respect to our actual demand. In cases of Acts of God concerning us or our supplier we shall also have the choice to entirely or partly cancel the contract.

5. Place of performance, passage of risk, acquisition of ownership

5.1 The place of performance shall be the place to which, according to the order, the goods have to be delivered or where the service is to be performed. Place of performance for our payments is our registered office.

5.2 On supplier’s account and at supplier’s risk the delivery shall be properly packed and made, free “place of delivery”, to the address named by us and/or performed there. The risk of accidental perishing or accidental deterioration of delivery will pass on to us only upon receipt of delivery by us or by a forwarding agent appointed by us at the place of performance or following the final acceptance of the delivery, whichever comes later, even if we have agreed to pay the freight charges.

5.3 With the passage of risk at the place of performance or with delivery to a forwarding agent independently appointed by us we shall acquire ownership of the goods without reservation of any rights for the supplier.

6. Liability for defects and other liability

6.1 We will inspect the delivered goods on the basis of accompanying documents only for identity and quantity as well as for visible transport damage. We will notify the supplier of any defects of the delivery once discovered in the ordinary course of our business within an appropriate time of at least 5 working days after the defect has been detected. If we comply with the aforesaid, the supplier hereby waives his right to object to the notification of defects on grounds of delay pursuant to Sec. 377 German Commercial Code (HGB).

6.2 Unless stipulated otherwise in this paragraph, the supplier shall be liable according to the applicable legal provisions, in particular for defects of the delivery, whereas this liability is in no way limited or disclaimed with respect to cause or amount, and insofar shall indemnify and hold us harmless from and against any third party‘s claims.

6.3 We shall in principle be entitled to choose the type of subsequent performance. Under the conditions of Sec. 439, Par. 3 German Civil Code (BGB) the supplier may refuse the type of subsequent performance chosen by us.

6.4 If the supplier fails to remedy the defect promptly upon our request, we shall - in urgent cases, in particular to avert danger or major damage - have the right to rectify the defects ourselves at the supplier’s cost or have this done by a third party without any obligation to grant a grace period.

6.5 Unless otherwise agreed upon or governed by legal provisions that call for extended periods, claims for defects shall lapse 24 months after selling the final product to the consumer, but no later than 30 months after the delivery was received by us. For work performances this period shall be 30 months after the written final acceptance. Is the delivery consistent with its common application used in buildings and has caused the latter’s defectiveness; claims shall lapse after 5 years. Our rights from Sec. 478, 479 German Civil Code (BGB) shall remain unaffected by this provision.

6.6 In addition, the supplier shall exempt us from any third-party claims related to deficiencies in title. For deficiencies in title a limitation period of 10 years shall apply.

6.7 If a defective delivery necessitates extra work in the incoming inspection process, the supplier shall bear the expense of such additional inspection.

7. Product liability

7.1 Supplier assumes full responsibility for, indemnifies and holds us harmless from and against any liabilities and third party claims arising out of the death of or injury to any person or damage to property, if and to the extent the causes for this lie in the supplier’s domain. Within the scope of this provision the supplier is also obligated to reimburse to us all expenses according to Sec. 683, 670 German Civil Code (BGB) that are incurred by or in connection with a recall action or any other measure initiated by us.

7.2 The supplier shall undertake to keep extended product liability and recall cost insurance, each with a blanket coverage of at least EUR 2,500,000.00 (two million five hundred thousand Euros) per personal/property damage claim; however, our claims shall not be limited to the amount insured.

8. Industrial property rights and regulations

8.1 The supplier ensures that neither his delivery nor its use infringe upon industrial property rights or any other rights of third parties nor violate legal or official regulations of whatever kind. The supplier also guarantees that the goods delivered by him do not contain CFC, PCB or asbestos. The supplier undertakes to provide, at our request, any relevant IMD system data at no charge.

8.2 The supplier shall indemnify us from all and any claims lodged against us by third parties for reasons of or in connection with the delivery or its use. Section 6.6 sentence 2 shall be applicable.

8.3 The supplier’s obligation of indemnification shall also cover all expenses arising from or in connection with claims by a third party.

9. Reservation of ownership, tools

9.1 We shall reserve the ownership of goods provided by us (e.g. parts, components, semi-finished goods).

9.2 Reservation of ownership shall also apply to goods resulting from the processing, mixing or combining of our goods in their full amount, whereas these processes are performed on our part so that we are considered as manufacturer. If third-party ownership rights extinguish after processing, mixing or combining with goods from those parties, we shall acquire joint ownership at a ratio of the objective value of those goods.

9.3 Tools made available to the supplier as well as tools manufactured by the supplier himself or ordered at a third party on our behalf, to the costs of which we have contributed, shall remain our property or shall pass into our ownership upon manufacturing and/or acquisition by the supplier and must be clearly indicated as our property.

9.4 The supplier is obligated to hold our tools in custody on our behalf at no extra charge, insure them adequately and furnish evidence of insurance cover at our request. The supplier shall use the tools exclusively for the purpose of manufacturing parts for us, unless otherwise agreed upon. We herewith grant our approval to manufacture parts based on orders placed by other companies of the Freudenberg Group.

9.5 The supplier shall ensure proper maintenance and repair of the tools at his own cost. At the end of contract the supplier shall surrender the tools without delay at our request while no right of retention may be derived by him. Upon surrender, the tools must be in apparent good order and condition corresponding to their earlier use. Maintenance costs shall be borne by the supplier. Under no circumstances may the supplier scrap the tools without our prior written approval.

10. Quality assurance

10.1 The supplier shall during the entire business relation maintain a quality management system according to DIN EN ISO 9000 ff. that ensures the proper quality of deliveries, monitor the system by internal audits in regular intervals and promptly take action if any deviation has been detected. We are entitled to inspect the supplier’s quality assurance system with prior notice. The supplier shall at our request permit us to examine certification and audit reports as well as inspection procedures including all test records and documents relevant to the delivery.

10.2 Part of any order placed by us or agreement between us and the suppliers are our “Quality Standards” in their current version which shall be sent to our suppliers on request.

11. Confidentiality, documents

11.1 Any information, formulations, drawings, models, tools, technical records, procedural methods, software as well other technical and commercial know-how made available by us or acquired by the supplier through us, and also any work results thus obtained (hereinafter referred to as “confidential information”) shall be maintained in secrecy by the supplier towards third parties, may be used in the supplier’s business exclusively for deliveries to us and be made available only to such persons as need to have access to confidential information in connection with the business relation and have therefore been obligated to maintain secrecy. This provision also extends beyond the duration of contractual relations so long as the supplier fails to prove that the confidential information was known to him already or was in public knowledge at the time it was acquired or was made public later without his fault.

11.2 Any documents (e.g. drawings, figures, test specifications), samples, models, etc. made available by us to the supplier throughout the business relationship will remain in our ownership and must be surrendered to us upon our request at any time, no later than at the end of the business relationship (including any copies, extracts and replicas), or by our choice must be destroyed at supplier’s cost. The supplier thus has no right of retention.

11.3 The disclosure of confidential information and any possible transmission of documents, samples or models shall establish no right for the supplier to industrial property rights, know-how or copyrights and constitutes no prior publication and no right of prior use according to the Patent and Utility Model Law.

12. Applicable law, place of jurisdiction and compliance

12.1 Supplier guarantees not to deal with or otherwise cooperate with any terrorist, terrorist organizations or any criminal or unconstitutional individuals or organizations. Supplier will in particular establish reasonable organizational measures to implement the EC directives no. 2580/2001 and 881/2002 as well as other respective requirements under US or international laws and regulations. Such measures shall include – without limitation- adequate software solutions. As soon as a good has left our facilities, supplier alone shall be responsible for the aforesaid compliance and shall indemnify us for any claims or related costs, including reasonable attorney or consultant fees or administrative penalties and/or damages resulting from the violation of the respective laws and regulations by the supplier, its affiliates, employees, officers and/or any of its agents.

12.2 Supplier acknowledges that we are as a manufacturer of products a downstream user in means of the EC-regulation No. 1907/2006 (“REACH”) and warrants to comply with any and all obligations REACH imposes on supplier, or which are – with regard to REACH – necessary to sell, process or trade the goods sold by us within the EC, including without limitation: (a) necessary pre-registration, registration or authorization of chemical substances or preparations, (b) implementation of internal organizational measures to document REACH compliance, (c) coverage of any use(s) of chemicals or preparations in the goods (as well as in any packaging materials) specified by us or any of our customers towards the supplier within (a) and (b), (d) information without delay whether a substance or preparation which has been- pre-registered will not be finally registered or authorized within the respective transition period and (e) no sale of any good containing prohibited Substances of Very High Concern (SVHC) ((a) to (e) together "Warranties"). Supplier acknowledges that any breach of a Warranty is in terms of the applicable laws assumed to result in a defect of the respective substance, preparation or other good and supplier will hold us harmless against, and will defend and indemnify us against and will support at suppliers expense any respective proceedings regarding any and all claims, liabilities, expenses and damages caused by the Supplier as a result of breaching the aforesaid Warranties.

12.3 The business relations with our suppliers shall be exclusively governed by the laws of the Federal Republic of Germany to the exclusion of its private international law as far as it refers to the applicability of another legal system. The UN Convention on the International Sale of Goods (C.I.S.G.) and other international conventions on uniform law on the sale of goods shall not be applicable.

12.4 For all claims from business relations with our suppliers, in particular the delivery, the contract or its validity, the place of jurisdiction shall be, of our choice, the place of performance (Point 5.1) or Weinheim/Bergstraße. We shall, however reserve the right to proceed - against the supplier in any other general or special legal venue.

12.5 If a supplier’s place of business is located out of Germany, we shall be entitled to have all claims, disputes or differences arising out of, or in connection with business relations finally settled under the rules of arbitration of the Zurich Chamber of Commerce by one or more arbitrators appointed in accordance with said rules.. The place of arbitration shall be Zurich, Switzerland. The arbitration proceedings shall be conducted in the English language. The award rendered by the arbitrator(s) shall be final and binding upon the parties concerned.