Purchasing Terms and Conditions

valid from 1. October 2007

The following terms and conditions govern purchase agreements and other contracts relating to goods and services made, or agreed to by the company Auer Lighting GmbH or any of its German Holding Companies (hereafter named Auer Lighting). These terms are not applicable for construction, construction services or employment contracts.

1. Applicability

Unless otherwise individually agreed in writing, the legal relationship between the Supplier and Auer Lighting with respect to the transactions described below will be based exclusively on the following terms and conditions. Any conflicting terms and conditions or terms and conditions, which are in any way inconsistent herewith provided by the Supplier shall not apply, even if Auer Lighting fails to expressly reject such terms and conditions in any given case, specifically when ordered goods are accepted without objection, unless with Auer Lighting’s explicit prior written consent.

2. Writing requirement

All orders, together with any modifications or supplements thereto, must be made in writing. Any derogation from this requirement must likewise be agreed by both parties in writing.

3. Revocation

Auer Lighting has the right to revoke its order free of cost if the Supplier fails to confirm such order verbatim within two weeks following its receipt thereof.

4. Delivery dates

a) Any agreed delivery dates for goods or services are binding. If any delays are anticipated or in fact occur, the Supplier shall promptly notify Auer Lighting thereof.

b) If, as a result of the Supplier's fault, the delivery date deadline is not met (default), then Auer Lighting may demand compensatory damages, without prejudicing its other rights.

c) If the Supplier fails to perform its contractual duties within a reasonable time period of grace stipulated by Auer Lighting, then Auer Lighting will have the right, following the expiration of such period, to commission a third party to perform the Agreement and to demand that the Supplier reimburse Auer Lighting for necessary expenses and additional costs incurred as a result. Auer Lighting also has the right to demand compensatory damages in lieu of specific performance. Upon expiration of the  grace period, the Supplier’s right to cure and Auer Lighting’s obligation to accept such performance will lapse as soon as Auer Lighting procures substitute performance on its own in lieu of specific performance, or if Auer Lighting demands compensatory damages in lieu of specific performance.

5. Prices

The prices are firm. These prices include all expenses connected with the goods and services to be provided by the Supplier.

6. Processing and delivery

a) The Supplier may sub-contract only with the consent of Auer Lighting, unless such sub-contracts relate simply to the supply of marketable components. Any supply requests concerning the type and quantity of the requested goods and the delivery schedule are binding. Instalment deliveries require the consent of Auer Lighting.

b) A delivery note must accompany every delivery, and must indicate the order number of Auer Lighting and describe the contents according to type and quantity.

c) A technical description and a user manual must accompany devices and is free of charge. Software products will be deemed duly delivered only after all documentation (system-technical and user) has been delivered. With respect to any programs specifically written for Auer Lighting, the program should also be delivered in source code format.

d) The Supplier will be liable to Auer Lighting for all required due and proper labelling/marking of all consignments and especially for the indication of any customs charge numbers from the German export list. Such labelling/marking shall also be repeated in confirmations of order and all shipping documents. Especially the supplier will point out in the a.m. documents and invoices the items requiring an export license or which are subject to US re-export regulations and apart from that to indicate the relevant export list number and the customs code number.

e) All goods shall be packaged properly to avoid any damage in transit. If packaging is charged separately, such charges (acceptable cost prices only) shall be quoted in a separate line both in the offer and the invoice.

7. Invoices, payments

a) Invoices must be submitted to Auer Lighting in duplicate. They must include Auer Lighting's order number and correspond verbatim with the order descriptions of Auer Lighting. They shall evidence the exact description of the department emiting the order and the date of the order.

Invoices that fail to include all of the above information will be returned. They will be deemed not received and thus do not become due and payable, nor may they be used by the Supplier as evidence of any Auer Lighting’s failure to pay.

b) The invoice payment period commences upon receipt of a proper, verifiable invoice (stamped date of receipt, not date of invoicing!), or on the work day following the date on which delivery of the goods or service was taken, whichever is later.

Invoices that are defective or that contain errors do not become due and payable and Auer Lighting may send these back at any time. In the latter case, the obligation shall only become due and payable upon receipt of the corrected invoice. The payment period will be extended, if delivery documents are missing, or if the invoice was addressed to a department other than the one named in the order, or it contains incomplete or incorrect information, for whatever number of days it takes to eliminate the errors caused by the Supplier. Supplier has to take into consideration the duration of the stay of the invoice audit when substantiating any failure to pay and/or Supplier may not use such contested invoices as evidence of Auer Lighting’s failure to pay.

Any payments made will not constitute a recognition that the good or service is contractually conforming. In the event any good or service is non-conforming or incomplete, Auer Lighting is entitled – without prejudicing its other rights – to withhold any payment for any and all claims arising from the business relationship with the Supplier in a reasonable scope and without compensation obligation for Auer Lighting until the proper supplementary performance has been completed by Supplier, without losing any rebates, cash discounts, or similar payment benefits.

c) Payment shall be made in the payment period immediately following the date the invoice becomes due and payable by the payment method of Auer Lighting's choice.

d) The standard payment condition of Auer Lighting is 14 days 3 % / 45 days net.

8. Statutory requirements

a) For all goods and services, the rules concerning hazardous substances as well as the safety recommendations of German professional bodies and associations - such as VDE, VDI, DIN - must be observed. Any relevant certifications, testing reports and evidence must be furnished free of charge along with the goods and services.

b) With respect to any goods or the provision of any services, the Supplier shall be solely responsible for adhering to the rules on accident prevention. According to these rules, the required safety provisions and any other manufacturers' guidelines must be furnished free of charge along with the goods and services.

9. Passage of risk, acceptance, title retention rights

a) Irrespective of the agreed indemnification provisions, the risk of loss on the delivery of goods not involving installation or assembly shall pass to Auer Lighting upon receipt of such goods at the address of delivery stipulated by Auer Lighting and, with respect to the risk of loss on the delivery of goods involving installation or assembly, it shall pass upon the successful completion of such installation or assembly, which will be documented in an acceptance record.

Auer Lighting’s mere operational start-up or use shall in no way constitute a formal acceptance.

b) With respect to the delivery of goods subject to title retention, Auer Lighting may resell such goods in the ordinary course of business. Auer Lighting shall become the owner no later than upon payment of the full purchase price.

10. Duties of inspection and complaints, inspection expenses

a) Auer Lighting shall promptly notify the Supplier regarding any obvious defects in the goods or services supplied, as soon as such defects are identified in the ordinary course of business. With respect to any defects that Auer Lighting notifies within four weeks, the Supplier agrees to waive any expenses arising from a delayed notice of defect.

b) Goods will be inspected upon receipt, and such inspection shall be done on a random sampling basis. If the benchmark quality levels set by Auer Lighting are not met, then Auer Lighting will have the right to completely reject the goods or carry out a full inspection (100%) at the Supplier's expense.

c) If Auer Lighting returns defective goods to the Supplier, then Auer Lighting will have the right, regardless of the amount of the expenses incurred, to charge the Supplier the invoice amount plus a flat-expense charge of 5% of the price of the defective goods. In any case, however, the flat-expense charge shall not exceed EUR 550.00 for each returned shipment. Auer Lighting expressly reserves the right to provide evidence of higher expenditures.

11. Warranties against defects in quality and in title

a) Any defective goods must be promptly substituted with conforming goods, and any defective services must be repeated in a conforming manner. In the event of a substitution or repeat of services, the supplementary performance shall be deemed to have failed (§§ 440, 636 BGB) in those cases where the defect in quality has still not been eliminated even after a second attempt to remedy has been made. In the case of any errors occurring in development or construction, a supplementary performance by Supplier shall be deemed unreasonable (§ 440 BGB) and Auer Lighting reserves the right to promptly enforce the rights set forth in Section 11 d).

b) During the period in which the subject matter of the goods or services is not in Auer Lighting’s custody, the Supplier shall bear any risk of loss.

c) In emergency situations (specifically where operational safety is in jeopardy or to avoid extraordinarily high damages), and also in order to eliminate minor defects, Auer Lighting shall, after having given information and after having set a deadline respectively to the Supplier, have the right to remedy the defect and any damages resulting therefrom itself at the Supplier’s expense or to have a third party remedy such defects. The foregoing shall also apply in other cases, to the extent a reasonable time period set by Auer Lighting has expired without result.

The aforementioned shall also apply if the Supplier is late in delivering the goods or services and Auer Lighting is required, as a result of such defect, to immediately remedy the defect to avoid its own delivery default.

d) To the extent Auer Lighting does not elect to remedy the defect itself, Auer Lighting shall otherwise have the option - after expiry of the reasonable time period set by Auer Lighting without result - either to rescind the contract or to reduce the contractually agreed purchase price (price reduction). In addition to the two aforementioned options, Auer Lighting reserves the right to demand compensatory damages.

e) Any goods delivered must be free and clear of third party rights, for which the Supplier is liable. In the event that computer programs are delivered, the Supplier warrants that it will have all the necessary rights – specifically intellectual property rights – for delivering the program to others.

f) Unless individually agreed otherwise, the warranty period for any defects in quality will be 24 months following the passage of risk in accordance with Section 9 a). The warranty period will be tolled for the period from Auer Lighting’s despatch of any defect notice to its receipt of any conforming good or service. With respect to any remedied or substituted part of the good or service delivered or repeated, the period defined in sentence 1 above will recommence for those to run upon the receipt of the conforming good or service.

g) Auer Lighting reserves any statutory claims or rights, which it may have as a customer.

12. Repeated impairments of performance

If the Supplier provides goods or services of substantially the same or similar nature which, despite repeated written notices by Auer Lighting, are again defective or late, the right to perform supplementary shall be deemed unreasonable and Auer Lighting will be entitled to immediately rescind the agreement, namely also with respect to such goods or services that the Supplier will be obligated to render based on previous or other contractual relations to Auer Lighting in the future.

13. Indemnification in the event of quality or title defects

The Supplier shall indemnify Auer Lighting with respect to any and all claims that third parties – for whatever legal reason – may have against Auer Lighting based on defects in the quality or title of the good or service or any other defects, and agrees to reimburse Auer Lighting for any necessary costs arising from the enforcement of such claims.

14. Insurance obligation

The Supplier is obliged to set up and to keep an adequate and sufficient insurance for all his main and collateral performances of his contractual duties during the contract period with Auer Lighting. The Supplier will provide Auer Lighting upon request with an according insurance certificate.

15. Technical documents, tools, manufacturing resources

a) Any technical documents, tools, drawings, plant specifications lists, sketches etc. stemming from Auer Lighting constitute the intellectual property of Auer Lighting and are subject of rights of authorship or copyrights held by Auer Lighting. To the extent required for executing and settling the order, Auer Lighting grants the Supplier for a limited term a non-exclusive license to the aforementioned rights of authorship or copyrights, which shall terminate once the order has been settled.

Auer Lighting shall retain exclusive ownership of any technical documents, tools, plant specifications list, sketches, work instructions, manufacturing materials, etc., which it has made available. Auer Lighting shall likewise retain all authorship or copyrights therein. Such material, together with any duplicates made, shall be returned to Auer Lighting immediately after executing the order without Auer Lighting having to request the Supplier to do so. In this respect, the Supplier will have no right to enforce any right to withhold performance vis-à-vis Auer Lighting. The Supplier may use the aforementioned items only in connection with carrying out the order and may not disclose such items to unauthorised third parties or otherwise provide access thereto. Any copying or reproduction of the aforementioned items may be carried out only to the extent that it is absolutely necessary for discharging the order placed by Auer Lighting.

b) If, in order to execute the order, the Supplier produces technical documents, tools, plant specifications list, sketches, work instructions, manufacturing materials, etc. then section 15a) will apply accordingly, and Auer Lighting will acquire title to these types of items, which the Supplier shall gratuitously hold in custody on Auer Lighting’s behalf until repossession is demanded. If Auer Lighting shares in the production costs on a pro rata basis only, then Auer Lighting will acquire co-ownership rights in the relevant items, which the Supplier shall gratuitously hold in custody on Auer Lighting’s behalf. Auer Lighting may at any time, however, acquire the Supplier’s rights related to the items, subject to reimbursement of any item production expenses not yet amortised and demand repossession of the items from the Supplier.

16. Materials set aside

a) Auer Lighting shall retain ownership in any materials it has set aside, and the Supplier shall gratuitously hold such materials in accordance with the standard of care exercised by reasonable business persons and must segregate such materials from the Supplier’s own property and identify them as Auer Lighting's property. Such materials may be used only for the purpose of carrying out the order issued by Auer Lighting.

b) In the event the Supplier processes the material set aside by Auer Lighting or restructures such material, then any such action shall be deemed to have been made exclusively for Auer Lighting. Auer Lighting will become the direct owner of any new item of property created therefrom. If the material set aside comprises only a part of the new item of property, then Auer Lighting will become co-owner in this new property item in accordance with the share representing the value of the material set aside by Auer Lighting.

17. Confidentiality

a) The Supplier covenants to treat as a trade secret any and all information and knowledge he receives in connection with the submission of an offer or with the issuance of an order by Auer Lighting and agrees not to disclose such information or knowledge to third parties, unless the Supplier can prove to Auer Lighting that it was aware of such information at the time the offer was submitted or that such information was subsequently made available to it by an authorised third party not subject to a confidentiality covenant or that such information had become generally subsequently available without the Supplier having caused or being responsible for such disclosure.

b) The manufacturing for third parties, the presentation of products specifically manufactured for Auer Lighting – including those made on the basis of Auer Lighting designs or manufacturing specifications, any publication relating to the goods and services for which the order was given, and a reference to an order issued by Auer Lighting to a third parties is subject to the prior express written consent of Auer Lighting.

18. Severability

Should any provisions of this contract be or become invalid, then such invalidity shall not in any way affect the validity of the purchasing terms and conditions set forth above.

19. Place of performance, judicial forum, governing law

a) Place of performance is the place indicated in the delivery address.

b) If the Supplier is a merchant, then at Auer Lighting's option the judicial forum will be the competent court in Frankfurt am Main. In addition, Auer Lighting is also entitled to institute legal action in the judicial forum of the Supplier.

c) The substantive law of the Federal Republic of Germany shall govern this contractual relationship, except for the reference rules under its provisions relating to private international law. The provisions of the UN-Convention on Contracts for the International Sale of Goods (CISG) are excluded.