General Terms and Conditions

Powertrain Engineering Division

1. Scope

1.1 These General Terms and Conditions apply to all deliveries of work, services and goods (the „Project“) supplied by AVL Power¬train Engineering Division. The work, services and/or goods to be supplied pursuant to the Project are referred to as „Products“. In case of software licensing, deliveries and installations, specific AVL Conditions for Software, Licences and Installations are appli¬cable.
1.2 Any modification of these Terms and Conditions must be agreed to in writing.

2. Offer

2.1 Offers by AVL are made without obligation, except if stated to the contrary.
2.2 Specifications and quotes in catalogues, brochures, etc., are only binding if expressly referred to in the offer or order confirmation.
2.3 The project concept and content of the offer is AVL’s intellectual property. Therefore, the offer and/or project documentation must neither be reproduced nor disclosed to third parties without AVL’s consent.
2.4 Likewise, AVL will not disclose the content and existence of the offer to third parties without the buyer’s consent.

3. Conclusion of Contract

3.1 The contract is effective only upon the signature of the contract by both parties, or the buyer’s receipt of AVL’s written confirmation of a purchase order issued by the buyer, and, if agreed upon, AVL’s receipt of the down payment and/or notification of the (confirmed) letter of credit to AVL.
3.2 No contract may be cancelled or altered by the buyer except on terms and conditions acceptable to AVL, as evidenced by AVL’s written consent.
3.3 Any costs of a modification requested by buyer or caused by circumstances not known to AVL at the time of the signing of the contract shall be priced separately and are buyer’s responsi¬bility.

4. Prices

4.1 The prices quoted are ex AVL’s plant or warehouse, exclusive of packaging, shipping and VAT. Any fees, taxes, duties and other expenses are buyer’s responsibility.
4.2 The prices quoted are based on the assumption that
a) the Project work will commence at the date confirmed by AVL and will be performed according to the time schedule set forth in AVL’s offer, and
b) in case the start or execution of the entire Project or parts thereof is delayed for reasons outside AVL’s control the prices will be adjusted according to any increases reflected in the latest Austrian Consumer Price Index published by the Central Office for Statistics in Vienna and/or the wage index of the applicable collective labour agreement, whichever is higher.
4.3 The prices quoted do not include, unless stated otherwise,
a) Licence and/or engineering fees levied by component or system supplier(s)
b) Materials and components supplied by component or system supplier(s)
c) Unforeseen and unplanned charges due to delays or addi¬tional work caused by buyer and/or component or system supplier(s)
d) Effect(s) of revisions of the Project requested by buyer and agreed to by AVL
e) Travel, accommodation and subsistence costs for buyer’s personnel participating in Project meetings and witnessing of results in Graz
f) Travel, accommodation and subsistence costs for any AVL personnel travelling beyond the scope of the Project
4.4 All prices quoted are payable in EURO.

5. Payment

5.1 Unless agreed otherwise, the contract price shall be paid as fol¬lows:
a) A down payment of 25 % of the total price shall be made within 30 days after the effective date of the contract (as per 3.1) or, if agreed, against submission of a bank guarantee by AVL’s bank. Payments for the remaining 75 % are due in monthly instal¬ments over the duration of the Project.
b) The payments for the amount of 75 % of the total contract price shall be secured by an irrevocable, confirmed letter of credit, to be issued by a prime bank within 30 days after the effective date of the contract or the buyer’s signing of the order, which shall provide for payment against AVL’s in¬voice, and shall be in form and substance satisfactory to AVL.
5.2 All payments for AVL’s Products supplied pursuant to the con¬tract are due within 30 (thirty) days net upon receipt of AVL’s in¬voice. Interest will be charged on overdue accounts at the rate of 4 (four) % over the EURIBOR 12 Months in effect at the time a payment is due. In case of delayed payment AVL is, in addition to the interest charge, entitled to postpone its own obligations until receipt of the pay¬ments due.
5.3 The buyer shall not be entitled to withhold or reduce any pay¬ments due because of alleged claims against AVL.
5.4 Until the buyer has fulfilled all financial obligations, the Products supplied shall remain AVL’s property. The buyer shall be obliged to meet all legal requirements in order to safeguard AVL’s property or security interest. In case of attachment or other kinds of sei¬zure the buyer shall evidence AVL’s title and notify the latter im¬mediately. The retention of title shall not affect the passing of risk under 6.1.

6. Delivery, Passing of Risk

6.1 Delivery of Products to a carrier by AVL shall constitute delivery to buyer; all risk of loss or damage in transit shall be borne by buyer. This also applies if, after arrival at the buyer’s site, AVL still has to perform installation work.
6.2 If delay in delivery is caused by any of the circumstances men¬tioned in Clause 12 or by an act or omission of the buyer, including the failure to procure any required permits for delivery in buyer’s country, the time for delivery shall be extended by a period which is reasonable considering all the circumstances.
6.3 If delivery of Products ready for shipping is not possible or not desired by the buyer, the Products can be stored at the buyer’s cost and risk, and delivery shall then be considered as performed.

7. Intellectual Property Rights

7.1 Any existing ideas, know-how and patents (and applications thereof) owned by AVL, not resulting from work carried out under the contract, but introduced into the Project by AVL, shall remain AVL’s exclusive property.
7.2 Any ideas, know-how and inventions made by AVL’s employees as a result of work carried out under the contract shall be AVL’s ex¬clusive property.
7.3 Any drawings and technical documents relating to the Project in any manner submitted by one party to the other, prior or subse¬quent to the conclusion of the contract, shall remain the exclu¬sive property of the submitting party and shall be treated as confidential information by the receiving party, and may be util¬ised only for work performed pursuant to the contract.
7.4 Notwithstanding the provisions of 7.1 through 7.3, upon fulfilment of its financial obligations under the contract, the buyer acquires
a) a non-exclusive license to use the ideas, know-how and inventions, whether pat¬ented or not, described in 7.1 and 7.2 for all purposes in¬cluded in the subject matter of the Project, but for no other purposes, and
b) the right to use the results and documentation of the Pro¬ject, it being understood that the buyer is obligated to treat any Project documentation it receives from AVL as confi¬dential in¬formation.

8. Third Party Patents, Trademarks, Copyrights

8.1 AVL shall use reasonable efforts that Products designed and developed pursuant to the contract will not infringe any intellectual property rights of third parties.
8.2 In the event the normal intended use of a Product leads to a claim alleging infringement of a third party’s intellectual property right, buyer shall give AVL immediate notice in writing of any such suit. AVL shall provide the buyer with reasonable assistance in the defence of any such claims. If the use of a Product is permanently enjoined by reason of an in¬fringe¬ment of a valid third party’s intellectual property right, AVL will use rea¬son¬able efforts to
a) modify the Product to render it non infringing, or
b) get a license from the third party who is the owner of the intellectual property right.
AVL’s obligation as set out above is conditional upon being notified of an infringement claim within the periods set forth in 9.6.
8.3 Notwithstanding the foregoing, AVL shall not be responsible for any compromise or settlement made without its written consent, or for infringements of combination- or process patents covering the use of the Products in combination with other goods or materials not furnished by AVL. The foregoing 8.2 states the en¬tire liability of AVL for infringement, and in no event shall AVL be liable for
a) any consequential damages attributable to an infringement,
b) buyer’s cost of litigation and/or negotiation, or
c) for compensation of any damages awarded to third parties.
8.4 AVL shall not be liable, and buyer shall indemnify and hold AVL harmless against all losses and expenses incurred by AVL as a result of any claim for infringement of any proprietary right of third parties relating to
a) any Products furnished by AVL to buyer, based on draw¬ings, designs or specifications proposed or supplied by buyer, or
b) any claim of contributory infringement resulting from the implementation of AVL’s Products by the buyer.

9. Warranty

9.1 AVL warrants that any technical targets set out in its offer will be achieved, provided that
a) technical specifications of the Products suggested by AVL within the limits of state of the art are accepted by buyer, and
b) any systems or components supplied by buyer or its desig¬nated component or system supplier meet and perform within their specifica¬tions.
9.2 AVL warrants that it will execute the Project work in a profes¬sional and competent manner according to state of the art. The Products will be in compliance with Austrian laws, stan¬dards, and regulations as well as with those regulations in countries per¬tinent for buyer’s purposes to the extent they have been communi¬cated in writing to and accepted by AVL. No warranty is made for the compliance with any law, standard, regulation or any condition imposed by a foreign authority not communicated in writing to AVL and confirmed by AVL prior to the formation of the contract. All documen¬tation for work rendered pursuant to the contract will be according to the existing general practice for comparable engine design and development projects in the engine and vehicle industry.
9.3 The buyer shall examine Products provided under the contract upon receipt and shall notify AVL in writing of any defect within reasonable delay but not more than ten working days. Unless this duty of examination and immediate written notification is ad¬hered to, warranty claims are forfeited.
9.4 The buyer shall arrange for the recording of all required operat¬ing conditions, characteristic data and results of analyses for the du¬ration of the warranty period to be able to document any warranty claim under 9.1. In case of deficiencies of Products (including incomplete or incorrect documentation) AVL will either repair such deficiencies (complete or correct documentation) or replace deficient goods (parts) by new ones. Any warranty claims shall be forfeited if a Product is modified or repaired without AVL’s prior written consent.
9.5 THE WARRANTY CONTAINED IN THIS CLAUSE 9 IS EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED. SPECIFICALLY EXCLUDED ARE DAMAGES CAUSED BY NON-OBSERVANCE OF INSTRUCTIONS FOR USE AND MAINTENANCE OF Products, WARNING, SAFETY AND OTHER REGULATIONS PROVIDED BY AVL, AND IMPROPER HANDLING OF Products. AVL SHALL NOT BE LIABLE FOR FURTHER (CONSEQUENTIAL) DAMAGES RESULTING FROM DEFICIENT Products, UNLESS AVL IS HELD RESPONSIBLE FOR INTENT OR GROSS NEGLIGENCE. FURTHER, AVL DISCLAIMS ANY LIABILITY FOR DAMAGES OR MALFUNCTION THE CAUSE OF WHICH DOES NOT LIE WITHIN THE SCOPE OF WORK TO BE PERFORMED BY AVL UNDER THE CONTRACT.
9.6 Unless provided otherwise, the duration of the warranty will be 12 (twelve) months after the signing of the acceptance protocol under Clause 10, if applicable, or delivery of the Products as provided in 6.1, which ever is earlier. Any warranty claims not re¬ceived by AVL within seven working days after the expiration of such period are forfeited. The per¬formance of a warranty obliga¬tion does not prolong the original warranty period.

10. Fulfilment of Contract

10.1 The contract is fulfilled on one or both of the following events, depending on the scope of the Project:
a) AVL’s delivery of the reports and documentation containing the results of the Project as well as any hardware that may be agreed upon between buyer and AVL, subject to the terms of Clause 6,
b) Performance of a formal acceptance test conducted at AVL’s plant.
10.2 Conditions for a formal acceptance test and warranted technical targets to be achieved shall be defined in the contract. AVL shall notify the buyer of the acceptance test in sufficient time to permit buyer to be represented at the test. A protocol stating the results of the acceptance test will be drawn up and signed by authorised representative(s) of AVL and buyer. If the buyer is not repre¬sented, the protocol will be sent to buyer and accepted as accu¬rate. If the warranted technical targets are met, a particular phase of the contract or the entire contract, as the case may be, is ful¬filled.

11. Liability

11.1 AVL SHALL BE LIABLE FOR DAMAGES ONLY IF AVL IS HELD RESPONSIBLE FOR INTENT OR GROSS NEGLIGENCE. ANY LIABILITY FOR INDIRECT AND/OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF PROPERTY OR PROFIT, COSTS OF PRODUCT RECALL, IS SPECIFICALLY DISCLAIMED.
11.2 AVL SHALL NOT BE SUBJECT TO ANY OBLIGATIONS
ARISING FROM STRICT LIABILITY CLAIMS AND SHALL BE INDEMNIFIED BY BUYER AGAINST ANY AND ALL LOSSES, LIABILITIES, DAMAGES AND EXPENSES THAT AVL MAY INCUR AS A RESULT OF ANY PRODUCT LIABILITY CLAIM.

12. Force Majeure

In the event AVL or one of its component or system suppliers is subject to an event of force majeure or an event beyond the control of AVL or its component or system suppliers, such as war, acts of God, governmental interventions and bans, en¬ergy and raw-material shortages, strikes, civil unrest, transport damages or delay, AVL shall be entitled to extend the time of delivery set forth in AVL’s offer, provided AVL notifies buyer within 10 days in writing of such event.

13. Premature Termination of Contract

13.1 Either party may immediately terminate the contract by giving written notice to the other party if any of the following occurs:
a) a bankruptcy proceeding is instituted against either party’s assets, or such proceeding is not instituted because of insuf¬ficient assets;
b) such other party materially breaches the contract and fails to remedy such breach within 60 days after written notice is given.
13.2 In addition to the circumstances set forth in 13.1 AVL may immediately terminate the contract by giving written notice to the buyer, if
a) delivery or performance becomes impossible for reasons attributable to the buyer, or is delayed due to such reasons beyond a reason¬able period of grace established in writing;
b) the buyer’s financial situation has worsened notably after signing the order and the buyer is unable or unwilling to pro¬vide adequate security for payment of its financial obli¬gations under the contract;
c) due payments are not received from buyer despite AVL’s fulfilment of its obligations and buyer fails to pay within a reasonable period of grace established in writing; or
d) a change of buyer’s ownership takes place which has a
substantial impact on AVL’s interests.
13.3 In case of premature termination, all performances or parts thereof, which have already been fulfilled by AVL, shall be settled and paid according to the contractual provisions. This also applies to deliv¬eries and performances not yet accepted by buyer as well as to any preparatory work undertaken by AVL. Any other conse¬quences resulting from a premature termination of contract are excluded.

14. Applicable Law and Jurisdiction

14.1 The contract shall be construed and interpreted according to Austrian law. It is mutually agreed that the United Nations Con¬vention on Contracts for the International Sale of Goods (UNCITRAL) does not apply.
14.2 In case of controversies or disputes between AVL and buyer the competent courts for AVL’s seat in Graz, Austria, shall have juris¬diction. AVL shall, however, also have the right to bring a claim be¬fore another court which has jurisdiction for the buyer’s seat or domicile.

April 2006

General Terms and Conditions