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General Terms of Business

(As of 1 January 2005)

1. Virthos Systems GmbH (hereinafter “Virthos”) does not recognize any variances from the conditions outlined below unless Virthos has explicitly agreed to them. These General Terms of Business retain their validity even if Virthos has made delivery, without any stated reservations, to the customer in full knowledge of any such discrepancies or variances. Any supplementary or divergent stipulations have no effect unless confirmed in writing by Virthos. The terms of sale also remain in effect for any future sales to the purchaser.

2. The proposals that Virthos makes are non-binding and subject to change until confirmed in a confirmation of sale. The proposals and order confirmations given by Virthos are always dependent on prompt and accurate deliveries by Virthos’ suppliers. In case of non-availability of goods, the purchaser will immediately be informed. In such a case, any consideration provided will be immediately refunded.

3. Prices apply to delivery from Bremen. Value-added taxes and other legally imposed fees in the country of destination, and costs of shipping and handling and mandatory recycling fees are the responsibility of the purchaser and will be calculated at the time of delivery from the prices then in effect. Virthos retains the right to apply moderate price increases if, after conclusion of the sale, it is subjected to higher costs because of increased costs by its vendors or fluctuation in exchange rates. Virthos will inform the purchaser of such events on request. Payments are due upon receipt of the invoice, and are not subject to discounts.

4. Terms of delivery are established based on Virthos’ anticipated ability to perform its obligations, are not binding on Virthos, and are subject to timely availability of materials (in the case of unavailablity, the terms under (2) apply) and may not apply in the event of unforeseen circumstances such as acts of God, national emergency, withdrawal of official permits, labor disputes of any kind, sabotage, lack of raw materials, delayed delivery of materials, etc. Events of this nature will result in postponement of delivery even if they occur within a previous period of postponement. If Virthos is unable to effect delivery within four weeks, the purchaser has the right to rescind the contract after giving sufficient written notice, to the exclusion of any other rights of redress. Virthos expressly reserves the right to deliver and invoice for reasonable partial shipments.

5. As a rule, shipments will be made from Bremen. Unless an agreement is made to the contrary, delivery will be made from the production site.

The risk for damages is transferred to the purchaser as soon as the goods are transferred to the shipping company, its representatives, or other persons. This applies even when Virthos is responsible for shipping charges. Any claims for damages due to transport must be made by the purchaser directly to the shipping company within the applicable period. The responsibility for obtaining insurance for shipping or other purposes lies entirely with the purchaser. This applies to return shipments, as well (see (9).

6. Virthos remains the legal owner of the goods after delivery as long as there are amounts owing to it from invoices generated as the result of current or pending business relations. Virthos retains an irrevocable right to access the goods in question until all amounts owed have been paid. The purchaser relinquishes his rights to resell the goods delivered by Virthos. He grants us an irrevocable right to access the goods as long as full payment has not been made. If the purchaser has recorded data on media suppplied by us that our still legally ours, our property rights are not relinquished. Until payment is complete, the goods may not be mortgaged to third parties or pledged as security. As long at the purchaser fulfills all his obligations to Virthos, he is permitted to collect on his own receivables.

When the value of pledged securities exceeds 20 percent of the purchaser's obligations to Virthos, Virthos pledges to release that amount of securities. The choice of which securities to release remains Virthos'.

If the purchaser does not fulfill his obligation to accept delivery, Virthos is permitted to demand, without documentation, damages of ten percent of this amount unless the purchaser can show evidence of lesser damages. Even higher damages are not excluded, as long as Vithos can produce documentation to substantiate them. The purchaser will carry out, at Virthos' expense, any required disposal of the delivered goods and their packaging.

7. Invoices are payable in cash immediately after receipt of the merchandise. The shipping date will be considered to be the invoice date.

A payment will be considered timely only if the medium of payment, such as a check, is presented to use within a period of seven days from the invoice date. Checks or foreign exchange are accepted only conditionally, pending final collection.

When terms have been given for payment within a fixed period of time, a payment will only be considered to be timely if the payment medium, such as a check of foreign exchange, has been received by Virthos by the payment date, or the agreed invoice amount has been transferred to our account.

The burden of proof of timely payment lies with the debtor. The purchase price is established with the expectation that the payment due date will be observed. If the payment due date is not observed, the parties agree that the purchase price will be increased by five percent. We will make use of credit provided by banks. As long as we do not substantiate the case for a greater damages, an additional one percent per month interest will be charged in compensation for delayed payment. In case of delayed payment, all other amounts receivable will be considered immediately due, including those pending collection, and any future shipments will be made only against receipt of cash in advance. Goods sent on approval (rentals) that are not returned within the agreed period of time are to be considered purchased as of the expiration of the approval period. At the expiration of the period, the rental invoice is to be considered a purchase invoice.

Any agreements that vary from the terms stated here are only valid if they confirmed in each individual confirmation of sale and if they are specifically noted on the invoice.

The purchaser is not permitted to make any charges against Virthos or to claim any right to withhold payments to Virthos unless the right to make such claims is undisputed or has been legally upheld.

8. Representations concerning missing items, incorrect items, or incorrect quantities, are to be submitted to Virthos in writing immediately, to the extent that these can reasonably be determined, but in no case later than eight days after receipt of the merchandise.

In the case of a justified claim, Virthos may, at its option, choose to deliver additional quantities, exchange the merchandise, take it back, or offer the purchaser a rebate. Virthos has, in principle, the right to two opportunities to correct the failure.

Claims of any sort for damages are not allowed in cases like these. However, in the case of a grave deficiency in Virthos' responsibility to perform, the purchaser agrees that any claim to damages will not exceed the purchase price of the particular product or service that has been found to be faulty.

A processing fee of at least 50 Euros will apply to any returns of merchandise after expiration of the warranty period. This fee will apply even if the item cannot be repaired or if it was not obtained from us.

9. Returns of products are accepted only conditionally, pending our verification. In any case, the return shipment, and any loss resulting therefrom, are solely at the purchaser's risk. The purchaser agrees that a restocking fee will apply, especially, but not exclusively, in the case of non-acceptance of a shipment.

10. If any of the above terms should prove to be inapplicable, the validity of the remaining terms remains unaffected. The latest revision of the terms and conditions of sale are always automatically in effect.

11. The place of delivery and payment, and the site of legal jurisdiction is Bremen. The legal framework for all obligations arising from this agreement is Bremen. The law governing this agreement is exclusively that of the Federal Republic of Germany. Applicability of the United Nations agreement regarding contracts for international sales of goods is explicity excluded.

© 2005 Virthos Systems GmbH. Subject to change. All rights reserved.