General Delivery and Payment Terms and Conditions

1. General Terms – Application
(1) Sellers General Terms and Conditions shall apply exclusively. Seller does not recognize conflicting or deviating terms of Customer, unless expressly agreed to in writing. Seller General Terms and Conditions shall also apply in case Seller effects a shipment to customer without reservation, although it has knowledge of conflicting or deviating terms and conditions.

(2) All agreements made between Seller and Customer for the performance of this contract shall be set forth in writing in this contract. In particular, this shall apply to agreements between Customer and one of Seller sales representatives. Oral side agreements shall only be valid if confirmed by Seller in writing.

(3) Seller General Terms and Conditions shall apply to any future business with Customer.

(4) Seller expressly advises Customer that Seller refuses all jobs with xenophobic contents or contents glorifying violence or of radical right-wing contents. The same applies to jobs of such contents that might be deemed to insult a religious denomination, a church congregation, other religious or ethic groups, their facilities, or customs and traditions. In the event that we accept such a job while unaware of its contents, we reserve the right to rescind the contract for the promised goods and services, in which case Customer would not be entitled to any claims against Seller.

(5) The parties agree that the contract is governed by German law.

(6) For the purpose of credit assessment, Bürgel Wirtschaftsinformationen GmbH & Co. KG, P.O. box 500116, 22701 Hamburg, Germany, will furnish us with any address and credit particulars that are stored in the database of such firm in connection with you, including any data ascertained using mathematical statistical methods, provided, however, that we substantiate our legitimate interest in such data.

2. Offer
(1) If the order may be identified as an offer pursuant to 145 German Civil Code, we are entitled to accept this offer within 4 weeks.

3. Material-Tools
(1) Customer shall enclose the material required for the manufacture of audio or data media and printed material free of charge. Information must be provided in writing and in a clear form. If the material cannot be directly used in the manufacturing process chosen by Seller, Seller reserves the right to perform any additional work at the applicable hourly rate at Customers expense and for his account – without consulting Customer. If additional costs are incurred in the manufacture of the audio and data media and/or printed material which are due to incorrect, unclear, or delayed information by Customer, Customer shall bear these costs.

(2) Tapes, artwork, lithographs, films, and data which Customer provides to Seller for the purpose of manufacturing the audio and data media, may be returned to Customer after use at Customers expense and risk. In case Seller is responsible for the loss of tapes, artwork, lithographs, and films which are the property of Customer, Seller shall reimburse the material value of the lost items; liability is restricted to intentional wrongdoing and gross negligence. Seller shall not be responsible for the manufacturing costs of new material or other, exceeding damages. Customer shall be responsible for making backup copies.

(3) Tapes, artwork, films, lithographs, and tools created by Seller in the manufacture of audio or data media shall remain Sellers property and are not included in the production price.

4. Prices – Payment Terms
(1) Prices are subject to change in case of price increases or price reductions, e.g., due to price increases for raw material, after execution of this agreement. At customers request Seller shall furnish evidence of these changes.

(2) The statutory value added tax is not included in Sellers prices. Value added tax shall be shown in the invoice at the statutory rate as applicable on the date of invoice.

(3) Any deduction of a discount for prompt payment must be agreed to in writing.

(4) Unless otherwise agreed to in the order acknowledgement, the net purchase price (i.e. without deduction) is promptly payable. Unless agreed otherwise, all invoices for audio or data media shall be paid in advance. If Customer is in default, Seller shall have the right to claim interest on late payments in the amount of 8 per cent p.a. above the applicable interest rate of the ECB. In case Seller is able to prove higher damages resulting from late payment, Seller shall have the right to claim these damages. Customer shall, however, have the right to prove to Seller that Seller did not incur any damages or has significantly lower damages as a consequence of the late payment.

(5) The acceptance of a bill of exchange is subject to Sellers approval. Charges and costs and the risk of timely presentation and protest run at Customers risk and cost.

(6) Customer shall only be entitled to offset his claims if his counterclaims were determined by a final court decision, and are undisputed or recognized by Seller. Customer shall not have the right to withhold monies based on disputed counterclaims.

(7) If orders are cancelled, Seller will charge a cancellation fee of 15% of the contract volume, but no less than EUR 50. Customer shall, however, have the right to prove to Seller that Seller did not incur any damages or has significantly lower damages.

(8) Customer shall take in the goods immediately after completion or on the previously advised shipping date, respectively. Customer shall ensure that the goods may be shipped to the receiving party at the specified shipment address and on the shipment date(s). If this requirement is not met, Customer will be charged for subsequent attempts at delivery.

(9) In the event that shipment ex work should not be possible on the specified shipment date(s), because Customer has not fulfilled or has only partly fulfilled the respective requirements for shipment, Seller shall charge a storage fee in the amount of EUR 50 per month plus value added tax effective from the first day of storing or readiness for shipment. The first fee will be charged when the goods are available for shipment and more than 4 weeks have passed since the advised shipment date. The shipment date indicated on the invoice shall be authoritative.

5. Shipment – Risk of Loss
(1) Unless otherwise agreed, shipment shall be made ex work.

(2) If delivery prepaid to Sellers premises has been agreed upon, the purchase price must be received by Seller before shipment is made. Shipment shall be made by the least expensive form of shipment.

(3) Seller reserves the right to make partial shipments.

(4) In case of justified return shipments, the delivery costs for the least expensive form of shipment shall be assumed by Seller.

6. Delivery Period
(1) The delivery period indicated by Seller does not start until all technical issues are resolved and the complete production documents have been received by Seller.

(2) If Seller is in default of delivery for reasons for which it is responsible, liability for damages shall be excluded in cases of slight negligence.

(3) If Customer grants Seller a grace period when Seller is in default, Customer shall have the right to rescind the agreement upon expiration of the grace period. Customer shall only be entitled to damages for non-performance in the amount of the foreseeable damages, if the default is due to intentional wrongdoing or gross negligence. Liability for damages is limited to 50% of the incurred damages.

(4) Limitation of damages pursuant to par. 2 and par. 3 shall not apply to contracts where time is of the essence. The same shall apply if Customer can show that his interest in the performance no longer exists due to Sellers default. Seller does not assume any liability for damages that were not foreseeable.

(5) Even if binding dates and periods were agreed upon, Seller shall not be liable for default of delivery caused by force majeure and due to contingencies which make delivery significantly more difficult or impossible – these are circumstances which cannot be prevented by a properly and duly managed business operation, in particular, technical problems or default on the part of our suppliers or their subcontractors, for which Seller is not responsible. In such cases, Seller has the right to postpone delivery during the time of inability to perform plus an appropriate time for the resumption of its business or to rescind the agreement in whole or in part with regard to those parts of the agreement which are still pending.

(6) If the inability to perform continues for 3 months or more, Customer shall have the right – after an appropriate grace period has expired – to rescind the agreement with regard to those parts of the agreement which are still pending. If the delivery period is extended or if Seller is released from its obligations, Customer may not assert any claims based thereupon. A condition precedent for invoking the above-mentioned circumstances shall be that Customer is immediately notified.

7. Quantity and Manufacturing Tolerances
(1) In case of small shortfalls, Customer does not have the right to rescind the agreement, provided the delivery tolerances are within a reasonable limit. Customer will not be charged for shortfalls.

(2) Small additional quantities shall be supplied to Customer and Customer shall be charged for these quantities, provided the delivery tolerances are within a reasonable limit.

(3) Delivery tolerances are within a reasonable limit if they do not exceed 20% for order quantities of less than 1000 pieces and 10% for order quantities of 1000 pieces and more. Delivery tolerances must be due to the manufacturing process.

(4) Deviations of the finished goods from the artwork and master tapes provided by Customer which are due to technical reasons are also considered as complying with this agreement to the extent that these deviations are within the industry standard limits.

8. Warranty- Damages
(1) Customer shall immediately inspect the goods for defects when the goods are received. Complaints shall only be accepted if they are made in writing within 8 days of receipt of the goods – in case of hidden defects after discovery, however, no later than 6 months after receipt of the goods. Complaints must be accompanied by evidence of the defect.

(2) Rejected goods may only be returned to Seller with Seller´s consent.

(3) If ordered goods are not received, Customer shall notify Seller in writing within 8 days after receipt of the invoice.

(4) Liability for defects other than manufacturing and material defects shall be excluded. A technical manufacturing defect exists in Compact Discs when the discs deviate from the technical data contained in the Phillips specifications (e.g., Redbook). Sellers liability for the goods and services provided is restricted to such properties and qualities that were expressly warranted in the order confirmation. Seller does not warrant that the goods or services provided have any other properties, features, or qualities, or that the goods and services are fit for a certain kind of use, including all cases where such properties, features, or qualities may be assumed based on the design and finish of goods or performance of services.

(5) In the case of warranty claims, Seller shall provide at its discretion either a replacement or a credit note.

(6) If the delivery of replacement goods is delayed beyond a reasonable time for reasons for which Seller is responsible, Customer shall have the right to rescind the contract.

(7) Unless otherwise indicated below, any further claims of Customer, irrespective of the legal cause, shall be excluded. Seller shall not be liable for damages which do not affect the subject matter of this agreement itself. In particular, Seller shall not be responsible for lost profit or for other pecuniary damages of Customer.

(8) The foregoing exclusion of liability does not apply to the extent that the damage is due to intentional wrongdoing or gross negligence. In addition, it does not apply in case of a health damage, bodily harm, or death of Customer, that may be attributed to negligence on the part of Seller or of a vicarious agent.

(9) If Seller negligently violates a cardinal duty or a material obligation arising out of this contract, Sellers obligation to pay damages shall be limited to the foreseeable damages that are typical for this type of agreement.

(10)The warranty period shall be 2 years, or 1 year for used goods, starting from the time the risk of loss passes.

9. Retention of Title
(1) Seller retains title to the goods sold until full payment has been received for Sellers claims arising out of all business transactions with Customer. Customer has the right to dispose of the purchased goods in due course of business.

(2) Customer assigns any claims it may have against third parties arising from the sale of the goods to third parties in whole or in the amount of Sellers joint ownership as a security to Seller. Customer is entitled to collect these claims for Sellers account until further notice, or until it stops payments to Seller. Customer does not have the right to assign these claims for factoring purposes, unless at the same time, the factor is instructed to effect payment directly to Seller in the amount of Sellers claims which Seller may have against Customer.

(3) Customer shall notify Seller immediately by registered mail of third party attachments of goods and claims which are Sellers property.

(4) If ownership rights are asserted by Seller, the agreement is not canceled.

(5) The goods or claims in lieu of the goods shall not be pledged to third parties or transferred by way of security or assigned by Customer until Sellers invoices are fully paid.

(6) If the value of the securities exceeds Sellers claims by more than 20%, Seller may release securities at its own discretion at Customers request.

10. Copyrights, Identification of Goods, Licenses, Rights, Patents, and Rejection of Contracts
(1) Customer warrants that the manufacture and reproduction of the audio or data media which are the subject matter of this agreement do not violate any statutory provision or prohibitions and no third party rights, in particular, copyrights and proprietary rights of a publisher or artist, and trademarks and rights to registered designs. Customer shall hold Seller harmless against any claims which are asserted against Seller arising from a violation of the above-mentioned rights. This provision shall also apply to attorney and court fees arising in connection with these claims.

(2) Copyright licenses, copyright fees, royalties, and the like must be paid by Customer for all ordered and manufactured audio or data media to the parties entitled to these payments, in particular, to copyright collecting societies. Customer releases Seller from any such responsibility. If third party claims are asserted against Seller, Customer shall hold Seller harmless and defend Seller against any such claims and the resulting damages and costs. Customer warrants that it is the owner of all copyrights and rights to use (with regard to music, text, or artwork) in all material submitted for manufacture as well as in the contents stored therein or thereon or with regard to the requested (commissioned) design, finish, or performance, and/or the owner of all other necessary license or trademark exploitation rights, or has obtained the prerequisite consent from third parties. Seller is under no obligation to verify whether the product or its design or finish or a service rendered could possibly infringe on third party rights, but reserves the right to verify such rights on a case by case basis. Upon Sellers request, Customer shall provide evidence that it has obtained the appropriate consent. Customer declares its consent that Seller may submit job-related information to the extent the protection of copyrights and related property rights are concerned to the respective copyright societies or to any other organization that is engaged in the protection of such rights if necessary to clarify ownership in such rights. In the event that Seller submits a specific inquiry in connection with a production, or if Seller demands specific evidence of the rights in this production (license agreement) and in case that Customer is not able or willing to submit evidence, Seller has the right to refuse performance and to rescind the contract. The same applies when there is reason to suspect that the contents of a production might violate a statutory provision. In the event that Seller withholds a production job based on such statutory provisions, or ships with a delay, fails to perform a production job, and refuses performance in its entirety, Customer shall be responsible for any detrimental consequences, in particular, Customer shall be liable for any delivery dates that may not be complied with and for all cost and expenses incurred in connection therewith. Seller does not assume any liability for lost profits or other monetary disadvantages that Customer may suffer through non-compliance with the delivery date. Customer shall pay the production cost accrued, including when the production job is rejected and the manufactured goods are not shipped. Customer is fully liable for all demands and other third party claims arising from a violation of the foregoing terms and conditions and shall indemnify and hold Seller harmless from and against any claims, expenses, and actions, including any costs incurred in the investigation and defense against such claims.

11. Customer’s Rights of Use of Song Material for HOFA-Training
(1) The customer’s use of material provided by the artists is limited to teaching purposes as part of distance learning courses and workshops by HOFA-Training, HOFA-Training MIXES. HOFA-Training shall only make the song and track material available to customers as raw versions, excerpts or similar, so that they may edit these songs for teaching purposes and return them to HOFA GmbH for evaluation of their performance. The customer is forbidden to use the mix-downs produced in this way, extracts thereof or parts of songs/individual tracks or similar for any other purpose than in the intended form of editing within distance learning courses and workshops by HOFA-Training. A breach of this user agreement constitutes a breach of the artists’ copyrights and the customer may be liable for damages. Any joint and several liability of the customer and of HOFA GmbH is excluded. However, if the customer and HOFA GmbH are made joint and severally liable for a breach of copyright, the customer shall be fully liable to pay compensation within the relationship with HOFA GmbH and thus carries the sole liability in the relationship with HOFA GmbH. Notwithstanding any further claims and rights, the customer shall release HOFA GmbH from any claims against it from third parties due to the use of sound, image and data recordings under this order including the appropriate legal expenses. In particular, this also includes claims and legal action from national or international artists, copyright associations or corresponding organisations due to an alleged or actual breach of rights including any legal and court fees.

12. Liability for Defective Master Tapes
(1) Prior to submission of all data media intended for replication to Seller, Customer shall inspect such data media thoroughly and ensure that such master tapes are virus-free and without any other quality problem. Customer is responsible for any damage and consequential damage caused to Sellers systems by virus-infected or damaged data media submitted by Customer.

13. Venue – Place of Performance
(1) To the extent that Customer is a business entity, Seller´s place of business shall be the place of jurisdiction. However, Seller shall also have the right to sue Customer at the court having local competence.

(2) Unless otherwise agreed in Sellers order confirmation, Sellers place of business shall be the place of performance.