Art. 1 Applicable provisions

Deliveries will be effected under the present terms of sale and delivery. If terms are presented by the
buyer, they will only be binding on the seller provided that they are confirmed by the seller in writing.
The following terms do also apply if the seller delivers his goods to the buyer without reservation,
although he has knowledge of terms of the buyer which deviate from or are opposed to his terms of

The terms mentioned hereinafter also apply to all future business transacted with the buyer.
In addition, the provisions of the German Yarn Manufacturers’ Agreement in its current version do

It is furthermore agreed that the law of the Federal Republic of Germany is exclusively applicable. The
Vienna U.N. Convention on Contracts for the International Sale of Goods dated April 11, 1980 shall
not apply.


Art. 2 Conclusion of contract

All offers are without obligation. An order will only materialize after the seller’s confirmation in writing
or shipment of the goods and invoicing.


Art. 3 Time for delivery, delivery scheduling/disposition of yarns

If no delivery date has been fixed, the seller has the right to ship the goods on any day to be deter-
mined by him.

The delivery date confirmed by the seller is ex works. All contracts concluded have to be performed
within the time limits agreed. If partial shipments have been agreed and no scheduling of the yarn
counts and qualities to be delivered in each of these partial shipments (blank order) has been provided
when placing the order, the buyer is bound to provide such a delivery scheduling within a reasonable period
of time set by the seller according to his reasonably exercised discretion. In the case of dyed and
bleached yarns as well as fancy and special-purpose yarns, this delivery scheduling has to be made
eight weeks prior to the start of the delivery month.

If the buyer is in default with his obligation to provide such a delivery scheduling, the seller is en-
titled to make it himself according to his reasonably exercised discretion, taking the buyer’s previous
purchases or the general conditions prevailing into consideration.

If the buyer fails to comply with a time agreed upon for delivery scheduling or taking delivery, the seller
is entitled to modify his prices at his reasonably exercised discretion in accordance with the changes
in his list prices or his material and labour costs.

In the case of greige yarns the seller reserves the right to effect excess or short deliveries of up to 5 %,
in the case of dyed and bleached yarns as well as fancy and special-purpose yarns of up to 10 %.


Art. 4 Technical bases of delivery

The admissible moisture regain on the dry weight of yarns and twists corresponds to the values stipu-lated in
the German Yarn Manufacturers’ Agreement, part 2, item 1.

In the case of blended yarns and twists made of spun fibres in accordance with the German Yarn Manufacturers’
Agreement, part 2, item 1, sub-paragraph 2, the moisture regain is calculated on the basis of the percentages
applied for unblended yarns, according to the proportion of each fibre in the blend.

The percentages determined that way shall be rounded up to the nearest 0.5 per cent.

The seller is entitled to mark raw white yarn lots with water-soluble dyestuffs. The running length of
twists is regarded as fulfilled, if it is produced of the same count of the single yarn, in consideration of
the count variations the spinner is permitted to have. Twist contractions and variations resulting from
any finishing process are at the buyer’s expense. With regard to twists, it is, as a matter of principle,
considered that only the last 50 cm of the thread reserve have the nominal twist and are thus ap-propriate for knotting.

Neither colour deviations that are customary in trade, nor unavoidable fibre fly and in the case of
special-purpose, fancy and twist yarns an irregular final appearance, including an uneven distribution
of neps and slubs within the tolerances in keeping with the latest state of the arts are considered as
defects. Special-purpose, fancy and slub yarns must be processed on multi-space looms. Whatever
the type of spun yarn, one may only process yarns and twists with the same lot identification together.


Art. 5 Passing of risk, shipment and packing

The risk passes to the buyer as soon as the goods leave the seller’s supply depot. This also applies, if
the goods are, in particular cases, insured by the seller against transport risks.

The tubes are charged as yarn or twist yarn and are not taken back. The tare of the tubes which
exceeds 2.5 % of the total weight in the case of yarn supplied on cops and cones and 3 % of the total
weight in the case of twist yarn supplied on cones is not billed.

Heavy tubes, charged before at the yarn price, will be credited at the price of the charged yarn, if they
are returned in good condition. Wrapping paper and polyethylene bags will be charged at the yarn or
twist yarn price and will not be taken back.


Art. 6 Reservation of title

The seller retains title to the goods supplied until payment in full of all claims resulting from the business
relationship with the seller, including all subsidiary claims and possible claims for damage. If settlement
of the purchase price by combined cheque/bill payment has been agreed, the reservation also includes
the buyer’s payment of the bill accepted by the seller, and does not expire when a cheque received
from the buyer is credited.

The goods delivered by the seller with reservation of ownership are always processed and transformed
by order of the seller without any obligations arising therefrom for him. If the object of purchase is pro-cessed
together with other objects not belonging to the seller, the seller thus acquires a co-ownership
of the new object in the proportion of the value of the object of purchase to the value of the other objects processed
at the moment of treatment. By the way, the same applies to the object originating from the processing as to the
object of purchase delivered with reservation. In case of an inseparable blending
of the object of purchase with other objects not belonging to the seller, the seller acquires the co-owner-ship
of the new object in proportion of the value of the object of purchase to the other objects blended at
the moment of blending. If the blending is done in that manner that the buyer’s object is to be conside-red as
the principal object, it is agreed that the buyer transfers a proportional co-ownership to the seller.
The buyer keeps the exclusive ownership or co-ownership thus created in custody for the seller.

The buyer is entitled to resell the object of purchase in the ordinary course of business. The authoriza-tion
to resale is not granted, if the buyer is unable to assign the claim resulting from such a resale. The
assignment or sale of the claims arising from the sale of the goods with reservation of ownership, also
within the scope of a factoring contract, requires the seller’s explicit consent; it is given, if it is assured
that the total balance resulting from the business relations will thereupon be settled by the buyer or the
factor. To secure all of the seller’s claims, the buyer assigns to the seller in advance all the claims with
all ancillary rights he has against his customers on the basis of the resale of the goods with reservation
of ownership. This also applies to goods that are sold in a processed state. When reselling the goods
for which the seller has acquired a co-ownership according to the provisions mentioned above that
portion of the buyer’s claims against the purchaser of the goods which corresponds to the co-owner’s
share will be assigned. The seller accepts this assignment.

The buyer is entitled to collect the sum due even after the assignment. The seller’s authority to collect
himself the sum due remains unaffected by that. However, he commits himself not to collect the sum
due as long as the buyer uses the profits realized in order to meet his obligation to pay, is not in default
of payment and, in particular, has not instituted bankruptcy or composition proceedings or as long as
there is no cessation of payment. However, if this is the case, the seller may demand from the buyer
to provide a detailed statement of all claims the seller may assert including customers’ names and
addresses, amount of the individual claims, date of invoices as well as any other information required
to assert the claims assigned to him and to notify the debtors (third parties) of the assignment. In this
case, the seller is also entitled to disclose the assignment to the debtors. On the seller’s request, the
buyer has to allow the seller in such a case to have an authorized representative draw up, on the basis
of the buyer’s accounting records, an inventory of all claims assigned.

In the event of an attachment or any other interference by third parties, the buyer has to notify the
seller without delay in writing, so that the latter may institute an action pursuant to § 771 ZPO (German
Code of Civil Procedure). If the third party is not able to reimburse the seller for the judicial and extra-judicial
costs of an opposition by a third party, the buyer is liable for the loss suffered by the seller.

If the buyer acts in violation of the contract, especially if he is in default of payment, the seller is
entitled to take the object of purchase back. However, the taking back of the object of purchase by
the seller does not constitute a rescission of the contract, unless the seller had expressly stated this
in writing. The attachment of the object of purchase through the seller always constitutes a rescission

of the contract. After having taken the object of purchase back, the seller is entitled to make use of
it. The proceeds from such an utilization is to be credited against the buyer’s debts, less reasonable
utilisation costs.

The seller commits himself to release at the buyer’s request that portion of the securities to which he
is entitled to and only insofar as the value of its securities does not exceed the claim to be secured by
more than 20 %; the choice of securities to be released is incumbent on the seller.


Art. 7 Warranty

The rights of the buyer based on warranty imply that he has made a claim in respect of possible
defects in good time. Complaints about the gross weight have to be made within three business days
after arrival of the shipment at destination. Complaints about other defects may only be made within
two weeks after arrival of the shipment at destination, in so far as the buyer has not yet started with
the processing of the goods. Excluded from that are defects that become only noticeable upon or after
processing; claims in respect of these defects can be made within three months after arrival of the
shipment at destination.

If the seller is responsible for a defect of the object of purchase, the buyer has the right to a substitute
delivery of goods free of defects against return of the yarns and twists in their original state. More
extensive rights of the buyer, whatever may be the legal ground, are excluded subject to the following
provisions. This also applies to damages that have not been caused at the object of purchase itself; in
particular the seller is not responsible for lost profits or other financial damages suffered by the buyer.
If the seller is not prepared or able to effect a substitute delivery, in particular, if the substitute delivery is
delayed beyond a reasonable period of time for reasons for which the seller is responsible, or if it fails in
any other way, the buyer has the right to opt for rescission of sale or reduction of the purchase price.
If the replacement of the delivered yarns or twists is not possible, since the defects have only become
noticeable upon or after processing, the buyer can only demand a fair reduction of the purchase price
for the faulty quantity delivered.

The foregoing exemption from, or limitation of liability does not apply if the cause of damage results
from intention or gross negligence; however, in these cases the liability for damages is limited to the
foreseeable damage.

If the seller is liable for damages, the following obligations according to § 254 BGB (German Civil Code)
apply to the buyer’s obligation to minimise the damage:

If yarn lots are intended for goods that are dyed or bleached in the piece, the buyer has to carry out
sufficient dyeing or bleaching trials on the greige goods prior to the processing of the yarn lots. At any
rate, prior to working off these yarn lots, the buyer has to test the dyed yarns for stripiness and/or raw
white and dyed yarns, when processed together, for uniform shrinkage.


No liability is assumed for defects which could have been avoided, if the goods had been produced
properly, for instance on multi-shuttle looms. Whatever kind of spun yarns are used, one may only
process yarns and twists together with the same lot denomination.

The warranty period is 12 months from the date the risk has passed. This period is a period of limitation
and also applies to claims for replacement of consequential harms caused by a defect, if no claims
resulting from tortious act are asserted.


Art. 8 Terms of payment

Unless specified otherwise in the order confirmation, the prices are quoted “ex works”. The purchase
price is calculated on the basis of the weight of the goods determined at the time of shipment.

The seller reserves the right to increase his prices accordingly, if there are cost increases after the
conclusion of the contract, especially as a result of the conclusion of collective agreements or higher
material costs. Proof of this will be made available to the buyer on demand. This price adjustment will
not apply to contracts which have to be performed within 6 weeks.

The prices of the seller do not include the statutory value-added tax; the day the invoice is issued, it
will be indicated separately on the invoice, at the statutory rate.

Bills of exchange will only be accepted after prior agreement and only as mode of payment, not in lieu
of payment. The bank, discount and collection fees are at the buyer’s expense. Accepted bills and bills
of exchange may only have a maximum maturity of 3 months and must, in all points, comply with the
requirements of the Landeszentralbank (Central Bank of the Land Rhineland-Palatinate).

The buyer has the right to set-off only if his counterclaims are recognized by declaratory judgement,
uncontested or acknowledged by the seller; contested counterclaims do not give the buyer a right of
retention either.

If payments are made after the due date, interests of 4 % above the base rate of the European Central
Bank are charged. The assertion of a further proved damage is expressly reserved.

If the buyer is in arrears with any payment due or with the acceptance of the goods or if the seller
gathers disadvantageous information about the buyer’s financial circumstances after the order confir-mation,
the seller may demand immediate payment in cash of all invoices still outstanding, abolishing
any term of payment perhaps allowed.

In this case, the seller is not bound to make any further shipment to meet any current contract.


Art. 9 Delay in delivery by the seller

If delivery is delayed for reasons the seller has to answer for, the liability for damage in the event of a
slight negligence is excluded. If the buyer grants the seller, after he has already come in default, an ad-itional
period of time of reasonable length on pain of rejection, he is then entitled to withdraw from the
contract after lapse of the extension granted. The buyer may only be entitled to claims for damages due
to non-execution in the amount of the foreseeable damage, if the default was caused intentionally or
by gross negligence. In this case, the liability for damage is limited to 50 % of the damage incurred.
As a rule, the grace period is at least 4 weeks; in the case of dyed and bleached yarns as well as of
fancy or special-purpose yarns the grace period is at least 8 weeks.

All statements made in compliance with these provisions are to be sent by registered letter.


Art. 10 Default in acceptance by the buyer

If the buyer is in default of acceptance or if he fails to perform other duties of cooperation, the seller has
the right to demand reparation of the damage he incurs, including any additional expenditure. In this
case, the risk of an accidental perishing or accidental deterioriation of the object of purchase passes
to the buyer at the time he comes in default of acceptance.

The seller is entitled to grant an additional period of time of a reasonable length of normally no more
than 4 weeks and after lapse of the extension granted to withdraw from contract or claim damages
because of non-performance.

The seller is entitled to enforce his rights resulting from a default in acceptance without having to send
a reminder or to fix a period of time, if the buyer files a petition for institution of judicial composition
proceedings or if he or one of his creditors files a petition in bankruptcy.

If the seller claims damages because of non-performance, he has the right to claim 10 % of the agreed
purchase price as damages, unless the buyer provides evidence that no damage has occurred at all
or that the damage is considerably lower than the lump sum. The seller reserves the right to claim a
higher damage.


Art. 11 Joint and several liability

A liability of the seller for damages that is more extensive than provided for in the preceding provisions
is excluded, irrespective of the legal nature of the claim asserted.

If the seller’s liability is excluded or restricted, this also applies to the personal liability of his salary and
wage earners, fellow workers, representatives and auxiliary persons.

The limitation of liability claims, no matter against whom they are asserted, conforms to the provision
made in § 7.


Art. 12 Place of jurisdiction

The place of jurisdiction for all disputes arising out of this contract, its performance, conclusion and
validity as well as for all actions established in special procedures deciding claims arising out of bills
of exchange and summary procedures relying entirely on documentary evidence shall be Kaisers-lautern,
Germany. If the buyer’s place of business is situated abroad, the seller may also choose the
capital of the country concerned as place of jurisdiction.