General Terms of Delivery - FOC-fibre optical components GmbH

I. General Provisions

1. For the scope of the deliveries or services (hereinafter referred to as "Deliveries") the mutual written declarations shall be decisive. However, any general terms of business of the customer shall only apply in so far as the party supplying the goods or services (hereinafter referred to as the "Supplier") has expressly accepted them in writing.

2. The Supplier reserves his absolute right of exploitation with a view to his title to and copyright protection for any quotations, drawings or other records (hereinafter referred to as "Records"). These Records may be disclosed to any third party only after prior consent by the Supplier and, if the order is not placed with the Supplier, shall be returned immediately to the Supplier on the Supplier`s request. Clauses 1 and 2 shall apply accordingly to any Records of the customer. However, these may be disclosed to such third parties, to which the Supplier was permitted to subcontract Deliveries.

3. Partial deliveries shall only be admissible, if they can reasonably be accepted by the customer.

II. Prices and Terms of Payment

1 Prices are ex works excluding packing plus applicable statutory VAT.

2. Payments are to be made free paying office of the Supplier.

3. The customer may only set off with such claims which are unchallenged or recognized by declaratory judgement.

III. Retention of Title

1. The items of the Deliveries (conditional commodity) shall remain the Supplier`s property until all claims have been satisfied, which he is entitled to against the customer and which result from the commercial relation. As far as the value of all security interests to which the Supplier is entitled exceeds the amount of all secured claims by more than 20 per cent, the Supplier shall release a corresponding part of the security interests upon request of the customer.

2. During the existence of the retention of title the customer is not allowed to pledge or assign the Deliveries as a security. Resellers shall only be allowed to resell the Deliveries in their ordinary course of business and only on condition that the reseller receives payment from his customer or makes the reservation that the property shall pass to the customer only when he has fully fulfilled his financial liabilities.

3. a) If the customer resells any conditional commodity, he even now assigns his future claims against his customers resulting from the resale with all additional rights (including any balance claims) for security purposes to the Supplier without the need of any later declaration to this purpose. If the conditional commodity is resold together with other items without having agreed on a unit price for the conditional commodity, the customer shall assign the share of the overall claim to the Supplier, with priority over the remainder of the overall price claimed, which corresponds to the price invoiced by the Supplier for the conditional commodity.

b) If the Supplier is able to prove any legitimate interest the customer shall provide the Supplier with any information required by the Supplier to assert his rights against the customer, and to supply the required records.

c) Until recalled the customer shall be entitled to collect the assigned claims resulting from the resale. In the event of good reason, in particular in case of default of payment, cessation of payment, opening of insolvency proceeding, protest of a bill, or if comparable well-founded indications exist which suggest the insolvency of the customer, the Supplier shall be entitled to recall the customer`s right to collect. Moreover, after prior warning of disclosure of the assignment for security purposes and/or of the utilization of the assigned claims, after observation of a reasonable period of time, the Supplier may disclose the assignment for security purposes, utilize the assigned claims as well as demand the customer to disclose the assignment for security purposes to the customer.

4. a) The Customer is allowed to process, convert or combine the conditional commodity with other items. Any processing, conversion or combination shall be performed for the Supplier. The customer shall keep the new item for the Supplier with the attention of a conscientious businessman. The processed, converted or combined item shall be considered as a conditional commodity.

b) In the event of processing, conversion or combination with other items which are not the Supplier`s property the Supplier shall be entitled to a proportionate ownership in the new item to the level of the share based on the proportion of the value of the processed, converted or combined conditional commodity to the value of the other processed commodity at the time of the processing, conversion or combination. If the customer acquires exclusive title to the new item, the Supplier and the customer agree that the customer shall grant the Supplier co-ownership in the new item created by processing, conversion or combination in the ratio of the value of the processed, converted or combined conditional commodity to the remaining processed, converted or combined goods at the time of the processing, conversion or combination.

c) In the event of a resale of the new item the customer herewith assigns his claim against his customer, resulting from the resale, with all additional rights for security purposes to the Supplier without the need of any later declaration to this purpose. However, this assignment shall only apply to the amount of the debt which corresponds to the value of the processed, converted or combined conditional commodity invoiced by the Supplier. The share of the claim assigned to the Supplier shall be satisfied with priority over other claims. Concerning the authority to collect as well as the conditions of its recall Clause 3. c) shall apply accordingly.

d) If the conditional commodity is combined by the customer with real estate or movable property, for security purposes the customer also assigns his claim, which is due to him as remuneration for the combination, to the Supplier without the need of any further declaration to this purpose, with all additional rights to the level of the ratio of the value of the combined conditional commodity to the other combined commodities at the time of their combination.

5. In the event of attachments, seizures or other dispositions or interventions by third parties the customer shall immediately inform the Supplier.

6. In case of a non-accidental breach of essential stipulations of the contract by the customer, in particular in case of delay in payment, the Supplier shall be entitled to recover the Deliveries after prior reminder. The customer shall be obliged to return the said Deliveries. The taking back and/or the assertion of the retention of title or the attachment of the delivery item by the Supplier does not imply any rescission of contract, unless the Supplier has expressly declared this. After prior warning the Supplier shall be entitled to make use of the returned conditional commodity and to satisfy the debt out of its sale while deducting the proceeds from the outstanding claims.

IV. Delivery Periods; Default

The compliance with the times of delivery requires the on-time reception of all records, approvals and releases needed, in particular of plans, which are to be delivered by the customer, as well as the compliance with the agreed terms of payment and of any other obligations by the customer. If these preconditions are not met on time, the delivery periods shall be reasonably extended. This does not apply if the Supplier is answerable for the delay.

If the non-compliance with the times of delivery is due to force majeure, e.g. mobilization, war, riot, or similar events such as strike or lockout, these periods shall be reasonably extended.

If, at the request of the customer, shipment or delivery is delayed by more than one month after the notification that the goods are ready for dispatch, the customer may be charged storing charges to the amount of 0.5% of the price of the delivery items for each new month, however not more than a total of 5%.

The contracting parties are free to prove higher or lower storing charges.

V. Passing of Risk

1. Also in case of a carriage-paid delivery the risk shall pass to the customer as follows:

For deliveries without erection or assembly, at the time of their shipment or collection. At the customer`s request and expense the Supplier will insure the deliveries against the usual risks of carriage.

2. If shipment, delivery, commencement and execution of the erection or assembly, the acceptance of the goods in his own factory or the trial operation are delayed for reasons the customer is answerable for, or if the customer delays acceptance for any other reason, the risk passes to the customer.

VI. Acceptance

The customer may not refuse acceptance of the deliveries for trivial defects.

VII. Defects of Quality

The Supplier`s warranty of quality is as follows:

1. At the Supplier`s discretion any parts or services, which within the period of limitation (without consideration of the operating lifetime) reveal a defect of quality, shall only be repaired, replaced or re-rendered free of charge, if its cause has already existed at the time of passing of risk.

2. Any claims for defects of quality are subject to a limitation period of 24 months. This shall not apply if § 438, subsection 1 No. 2 (fixed constructions and items for fixed constructions), §479, subsection 1 (right of recourse) and §634a, subsection 1 No. 2 (constructional defects) of the German Civil Code (BGB) stipulates longer periods of limitation as well as in cases of a violation of life, of body or health, in case of an intentional or grossly negligent breach of duty by the Supplier and in case of fraudulent concealment of a defect. The legal provisions regarding the suspension of expiration of prescription, interruption and resumption of the periods shall not be affected.

3. The Customer shall notify the Supplier immediately of any defect of quality.

4. First, the Supplier shall be afforded the opportunity of renewed performance within a reasonable period of time.

5. Any claims on the part of the Customer for expenses, in particular transportation, travelling, labour and material costs, are excluded, if these expenses increase because the delivery item has later been removed to a different site than the Customer`s branch establishment, unless its removal is in line with its proper use.

6. Rights of recourse on the part of the Customer according to § 476 of the German Civil Code (BGB) (recourse of the entrepreneur) exist only in as far as the customer has not concluded an agreement with his client which exceeds the legal warranty claims. Furthermore, as far as the scope of the customer`s right of recourse against the Supplier according to § 478 subsection 2 of the German Civil Code [BGB] is concerned, No. 5 shall apply accordingly.

7. In other respects Article IX (Other Claims for Damages) shall apply for claims for damages. Any more far-reaching or different claims by the Customer against the Supplier and his agents for defects of quality than those stipulated in the present Article VII are excluded.

VIII. Industrial Property Rights, Copyrights and Deficiencies in Title

1. Unless otherwise specified, the Supplier shall be obliged to provide the delivery free from third parties` industrial property rights and copyrights (hereinafter referred to as "Property Rights" in the country of the place of delivery only. If any third party lodges legitimate claims against the customer for violation of Property Rights caused by deliveries which have been provided by the Supplier and used in accordance with the contract, the Supplier shall be liable as follows to the customer within the period of time stipulated in Article VII No 2:

a) The Supplier shall at his own discretion and at his own expense either obtain a usufructuary right for the deliveries in question, change them in such a way that the Property Right is not violated or exchange them. If the Supplier is not able to comply on reasonable conditions, the customer shall be entitled to exercise his legal right to rescind the contact or to reduce the purchase price.

b) The Supplier`s obligation to pay damages follows the provisions laid down in Article XI.

c) The above mentioned obligations of the Supplier shall only apply if the customer immediately informs the Supplier in writing on any third party`s claim, repudiates any violation and leaves all protective measures and negotiations for settlement to the Supplier. If the Customer discontinues the use of the Deliveries for reasons of reduction of damage or for other important reasons, he shall be obliged to point out to the third party that this discontinuation does not imply any acknowledgment of a violation of property rights.

2. Any claims on the part of the customer for violations of property rights he himself is answerable for are excluded.

3. Furthermore any claims by the customer are excluded, if the violation of property rights has been caused by specific conditions set up by the customer, by any application which was not foreseeable for the Supplier or by any modification to the Deliveries by the customer or use of the Deliveries by the customer together with products not delivered by the Supplier.

4. In the event of a violation of a Property Right the provisions of Article VIII No. 4, 5, and 9 shall apply in other respects accordingly for the Customer`s claims stipulated in No 1 a).

5. In the event of other deficiencies in title the provisions of Article VIII shall apply accordingly.

6. Any more far-reaching or different claims by the customer against the Supplier and his agents for deficiencies in title than those stipulated in the present Article VIII are excluded.

IX. Other Claims for Damages

1. Any claims for damages and for reimbursement of expenses by the customer (hereinafter referred to as "Claims for Damages"), no matter on what legal ground, in particular for violation of duties resulting from the contractual obligation and from tort, are excluded.

2. This shall not apply for any mandatory liability, e.g. under the German Product Liability Act, in cases of intent, of gross negligence, for violation of life, of body or health, for violation of essential contractual obligations. However, the claim for damages for violation of essential contractual obligations shall be limited to the contract-typical foreseeable damage, unless in cases of intent or gross negligence or liability for violation of life, of body or health. The above provisions do not imply any change in the burden of proof to the detriment of the customer.

3. If the customer is entitled to damages in line with the present Article IX, these shall become statute-barred with the expiration of the period of limitation according to Article VII No. 2. For claims for damages under the German Product Liability Act the legal periods of limitation shall apply.

X. Place of Jurisdiction and Applicable Law

1. If the customer is a merchant, the sole place of jurisdiction for all disputes arising directly or indirectly from the contractual relation shall be the Supplier`s registered office. However, the Supplier shall also be entitled to take legal action at the customer`s place of business.

2. German substantive law shall apply to the legal relations in connection with this contract. The terms of the United Nations Convention on Contracts for the International Sale of Goods (CISG) do not apply.

XI. Binding force of the Contract

The legal invalidity of individual provisions of this contract shall not affect the validity of the other provisions of the contract. This shall not apply if the adherence to the contract would constitute an unreasonable hardship for a party.

Revision: 01 July 2003

Special terms of contract for connectorizing supplied components (active and passive fibre- optical components)

1. The following special terms shall be valid additionally to and have priority over our Terms of Sale and Delivery, and in any case also if these exceptionally should not apply.

2. The attention of the Customer is drawn to the fact that for singlemode connectors an optimum centering can only be ensured if it is possible to inject light either via an opposite end of the component (free fiber end, connector, optical system, etc.) or via the so-called secondary coating. This is the reason why prior to the reception of the supplied components and the execution of a feasibility examination, FOC-fibre optical components GmbH (hereinafter called FOC) can only give a preliminary order confirmation with the reservation of feasibility.

3. The procedure shall be as follows:
 a) Prior to shipment the Customer shall subject the respective components to a complete functional test and produce an outgoing report mentioning the steps of the test, the person completing the test and the result of the test.

 b) Furthermore the Customer shall arrange for the proper packing and shipment of the components.

 c) Upon reception of the goods FOC shall perform a separate inspection of its own which only covers the visual inspection (detection of visible damage to the packing or the components). The goods received date and a box number shall be indicated on the delivery note which shall be signed by the employee. Any damage shall be mentioned on the note. The box number shall be indicated on the external packaging.

 d) At the same time FOC shall perform a feasibility examination with a view to the possibility of injecting light in singlemode connectors. In case of a required connectorization on supplied passive fiber-optic components and devices (couplers, isolators, optical switches, etc.) the continuity of the light path is checked (on a random basis).

4. If the feasibility examination provides a negative result, FOC shall immediately inform the Customer. The Customer shall then immediately inform FOC whether FOC shall perform the connectorization to the exclusion of warranty.

5. The attention of the Customer is drawn to the fact that usually the customer-supplied components are not insured, in particular not against fire, theft, damage by the elements, etc. If the Customer desires in the individual case to have the goods insured, he shall expressly inform FOC and additionally pay the resulting insurance premiums.

6. If FOC is not able to perform a functional test, the scope of performance and thus the scope of warranty shall only cover those items which FOC was able to assess within the framework of the standard manufacturing control (test of the mechanic function of the external parts and inspection of the fiber surface; for singlemode connectors: measuring the residual eccentricity of the fiber core) and the visual final inspection (100%) of the connector end face.

7. The attention of the Customer is drawn to the fact that §644 (2) of the German Civil Code (BGB) shall apply to the return shipment of the goods, i. e. the risk shall pass to the Customer as soon as FOC has handed over the goods to the forwarder, carrier or any other person or entity designated for shipping. Failing specific instructions the shipment shall be made using the original packing in which the components were sent to FOC. This shall not apply if the packing is not (any longer) in a proper state due to damage or if the customer expressly requires a different or new packing. In these cases the resulting packing costs shall be invoiced to the Customer. In any case the shipping costs shall be charged separately.

8. After reception of the processed components the Customer shall immediately perform a full functional test and inform FOC about errors, defects or damage, if any, within 30 days after receipt of the goods, at the latest. If no agreement can be reached on whether the damage or defect has been caused by FOC or in the area of responsibility of FOC, the Customer shall bear the burden of proof. This applies in particular to such damage or defects, which FOC was not able to assess within the framework of the limited controls mentioned under Items 3c) and 6.

9. The Customer shall be obliged to remunerate the work done also if the parts assembled by FOC do not show any defect themselves; but the components nevertheless do not function properly because the parts provided by the Customer are defective or for some other reason do not function properly. However, this does not apply, if FOC is responsible for the cause, in particular if this condition would have been detectable upon proper execution of the incoming inspection as per Item 3c.

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