Terms and Conditions of Auction Sale

The following

AUCTION SALE CONDITIONS
- hereinafter also referred to as “General Auction Sale Conditions” -

apply to the auction sale of third party real property, parts of real property and third-party real property equivalent rights to be conducted by me, Kai Rocholl, as a publicly appointed and certified Real Property Auctioneer, other Auctioneers or the Auction House, on behalf of Mr Hans Peter Plettner, in his capacity as a publicly appointed and certified Real Property Auctioneer – hereinafter referred to as the “Auctioneer“.

1. Every Vendor who appoints the Auctioneer for the auction sale of a real property, part of a real property or a property-equivalent right - hereinafter referred to as the “Object” – will be obligated to keep the sales offer open until the end of the last auction date indicated in the catalogue. The auction sale will take place at the locations identified by the Auction House. The Auction House will determine the Auctioneer who will actually be in charge of selling the Object at auction. If the Object of the auction sale is a partial area which so far has not been surveyed, the Vendor shall have the right to determine the price/performance with regard to the area to be specifically surveyed but he shall only be entitled to exercise this right in his own fair judgment according to § 315 BGB (German Civil Code Book). The Object will be described in the auction sales text by reference to the cadastral map.

2. For the Objects which are put up for auction sale, a minimum price (limit) has been agreed with the Vendor, at the announcement of which the auction sale for the Object begins unless the Auctioneer announces a higher minimum bid made in writing.

3. From case to case, the Auctioneer reserves himself the right to determine the sums for each Object by which a new bid has to exceed previous bids (rates of increase) by the minimum. The rates of increase amount to € 500.00 provided the Auctioneer does not announce another sum. This rate of increase may also be changed during the auction.

4. Every bidder shall be bound to a given bid until it is outbid by a higher bid of another bidder. If several persons submit the same bid only that bid shall be valid of which the Auctioneer has first taken notice. With regard to possible doubts or unclearness on the validity of a bid, the Auctioneer decides at his discretion whether he accepts a bid and whose bid he accepts or whether he repeats the auction sale. He may also cancel the acceptance of the bid in the latter case and ask previous bidders whether they hold open their bid, and he may repeat or continue the auction sale as from the highest bid held open. These regulations apply likewise to subsequent sales.

5. The Auctioneer may also admit bids in writing and bids by telephone submitted during the Object’s call provided the bidder has granted a representative present at the auction authorisation in time before the call and this authorisation is presented to the Auctioneer in time and in written form before the call. The conditions of the auction are fully acknowledged by such bids. Persons present at the auction shall be informed by the Auctioneer about the sum of bids submitted in writing at the beginning of the Object’s auction sale following the announcement of the limit. By the submission of a written bid, the bidder authorises the Auctioneer and the authorised representatives of the latter to inform about the bid and to accept the highest bid.

   The bidder undertakes to confirm this authorisation promptly in a form certified by a notary. If a bidder himself has acted on the basis of a concealed authorisation, bid acceptance may be cancelled unless the bidder has, at the same time, assumed joint and several liability for the fulfilment of the duties arising from bid acceptance together with the person represented by him. In such a case, the Auction House expressly points to the incurrence of double the tax on acquisition of real estate.

   Should the bidder be a legal person, the Auctioneer may request that, in addition to the legal person, the legal representatives of the legal person assume joint and several liability for the fulfilment of obligations with regard to the payment of the highest bid and the commission under the contract.

6. The highest bidder’s obligation to pay the tax on acquisition of real estate and to provide a possibly required confirmation of power of attorney in a form which is, according to § 29 GBO [Land Register Act] (possibly together with evidence of representation in due form) and to release of identification characteristics according to § 139 a ff. Abgabenordnung (German Fiscal Code) suitable for the Land Register constitute main contractual duties. In the case of non-fulfilment, the relevant party to the contract will thus be entitled to the rights on the grounds of non-fulfilment of a main contractual duty (damages instead of performance §§ 280, 281 BGB [German Civil Code] and/or withdrawal according to § 323 BGB).

7. Withdrawal can be declared in writing vis-à-vis the Notary notarizing the bid acceptance and the land register declarations. In acknowledgement of these auction sale conditions, the Notary is herewith authorized by all the participants to accept declarations of withdrawal with regard to parts of the contract governed by the law of obligations. The Vendor and the Highest Bidder are obligated to immediately inform the Auction House, the Notary who is notarizing the bid acceptance and the land register declarations and the relevant party to the contract about every change of their address.

8. Unrestricted domestic authority in the auction hall and in the anterooms is exclusively with the Auction House/the Auctioneers. It/they may, in its/their sole discretion, prohibit visitors and/or bidders to participate / to continue to participate in the Auction.

9. Neither the Auction House nor the Auctioneer assumes any liability for the realisation of telephone connections in the case of telephone bidding.

1. According to § 156 BGB (German Civil Code) in conjunction with § 311 b BGB, the contract results through the highest bid, bid acceptance and their notarisation. The General and Special Auction Sales Conditions and the notarisation of the highest bid and bid acceptance on this basis establish the content of the Agreement.

   • 1.1. In this respect, following the Auctioneer’s bid acceptance, bid and bid acceptance and the required land register declarations have to notarised before one of the notaries present in order to take effect.

   • 1.2. Every Highest Bidder shall be bound to pay a bidding security amounting to ten per cent (10%) of the highest bid, but at least €2,000.00 unless he is exempted from this payment in whole or in part in writing. The bidding security shall be paid to the Auction House either in cash or by cheque immediately after the notarisation of the highest bid and bid acceptance. Cash has to be deposited by the Auction House in an escrow account and to be transferred to the Notary’s trust account within 14 calendar days provided that such an account has been agreed upon. Cheques have to be transferred to the Notary’s trust account within 14 calendar days as well.In the individual case, the Auction House may either waive or reduce the bidding security. The bidding security shall be credited against the purchase price. If the highest bid is not fully deposited in cash and if the contract is not fulfilled for this reason, the bidding security first serves the payment of the Auction House’s commission claims and secondly the satisfaction of possible claims for damages by the Vendor. In such a case it shall be disbursed in accordance with the concordant instruction of the Vendor, the Highest Bidder and the Auction House; in the absence of such an instruction, the bidding security may be lodged with the depositing place of the Local Court at the place of the auction or it may be held in trust by the Auction House until a legally valid judgment is available by which the person authorised to disburse the money is determined.

   • 1.3. Highest Bidders without a residence or a business office in Germany are obligated to deposit an additional cost security of ten per cent (10%) of the highest bid, at least, however, € 2,000.00, with the Auction House or an Auctioneer appointed by it provided the Auctioneer does not waive this security or lowers it in the individual case. At first, this security serves the satisfaction of the payment of the Notary’s costs, then the payment of tax on the acquisition of real property and finally for all other costs and fees for the execution of the Agreement. The Auction House and/or the Auctioneer are instructed to satisfy these claims out of the mentioned security. Upon completion of the transaction, account has to be rendered with regard to the cost security, and a possibly resulting credit balance has to be refunded to the Highest Bidder. Until that time this assignment is irrevocable. The Notary, the Auction House and the Auctioneer will be irrevocably authorised to request submission of the notice on the tax on the acquisition of real property and other cost accounts and notice on fees and – if requested – accept them.

   • 1.4. The Highest Bidder undertakes vis-à-vis the Vendor:

     • a) to promptly pay the bidding security as provided for in the Agreement
       b) to pay the highest bid on time,
       c) that no trust conditions will be imposed on the Notary within the context of payment into the escrow account which cannot
       be fulfilled in accordance with the conditions of the Agreement,
       d) to promptly pay all costs incurred – charged also in the form of advance payments – at court and at the Notary whereby prompt payment is the Highest Bidder’s main contractual duty to perform.
       As far as the financing institute requires the entry of encumbrances on the auction sale object, prompt cooperation relating to their creation is the Highest Bidder’s main contractual duty as well, to the extent to which an encumbrance authorization was possibly given by the Vendor within the scope of the Agreement.

   1.5. If the highest bid has not been fully deposited in cash, the Highest Bidder agrees that measures of immediate compulsory execution be taken against his assets in consideration of the highest bid.

2. 1.6. The agreements contained in the auction sale text read out (Special Auction Sale Conditions) take precedence over these General Auction Sale Conditions. The auction sales text read at auction is, in particular, decisive for the description of the subject matter of the contract.

1. On behalf of the Vendor, the Auctioneer has the following determined by the Auction House with regard to the Object:

   • 1.1. Entries in Sections I, II, and III of the Land Register and the size of the real property according to the entry in the Land Register Index;

   • 1.2. Possible provisions imposed by the competent Office for Building and Dwelling Supervision and by the master chimney sweep of the district;

   • 1.3. In case of tenanted Objects: the last determined rent receivable (rent exclusive of heating costs).

   • To the extent to which the above mentioned details under 1.1 through 1.3 will be communicated by the Auctioneer, neither he nor the Auction House assume any liability for their correctness. As far as the Auction House has not received the above details from the competent bodies by the auction sales date, they will be announced by the Auction House in the auction sales text. Between the auction sale date and the date of the economic transfer of benefits and burdens, details regarding rents and operating costs can change due to vacancy or re-letting.

2. If Objects are put up for auction sale with regard to which the Auctioneer himself participates as a co–owner or with regard to which he is a partner of the Owner, this has to announced at the beginning of the auction sale.

1. The Object sold at auction is not always acquired in a condition suitable for immediate use; it may be in a condition in need of rehabilitation and/or renovation, and the Object thus is, unless something to the contrary results from the auction sales text, acquired in its ‘as-is’ condition at the time of the knockdown, i.e. under exclusion of all claims and rights of the Highest Bidder on the grounds of a defect of quality of the real property or the building. According to the circumstances, the Highest Bidder has to expect, in such cases, considerable additional expense to make the Object suitable for use.

   • The following is excluded from the above exclusion of liability:

     1.1. Claims and rights for damages based on the intentional violation of duties by the Vendor.

   • 1.2. Claims for damages arising from death, injury to body or health if the Vendor is answerable for the failure to comply with his duty and for any other damage based on the intentional or grossly negligent violation of duties by the Vendor.

   • 1.3. A legal representative’s or vicarious agent’s violation of duty shall be equal to the Vendor’s violation of duty.

2. If movable things are sold at a public auction sale together with real property according to § 383 para 3 BGB, comprehensive exclusion of claims and rights applies as is the case when selling immovable objects according to 1.1. to 1.3.  As far as other movable objects are sold together with real property, the legal regulation applies, however, claims for damages put forward by the Highest Bidder on account of a defect in quality are excluded (with the above exceptions according to items 1.1. to 1.3.), and the period of limitation is reduced to one (1) year.

3. The Auction House and the Auctioneer will be liable towards the Vendor and the Highest Bidder for the preparation and conduct of auction sales in accordance with legal regulations. As far as the Auctioneer or the Auction House relies on representations and documentation of third parties, he/it shall be answerable only for the correct transmission of the mentioned documentation but not for its objective correctness. This also applies to a possible transmission of identification characteristics according to § 139 a ff. Abgabenordnung (German Fiscal Code). Facts with regard to which there is a duty to furnish particulars will be passed on by the Auction House merely as a messenger. Their disclosure in due time for inclusion in the auction sales text shall be exclusively incumbent on the Vendor. Claims and rights of the Highest Bidder, the Vendor and of bidders as well as of parties interested in bidding by reason of a failure of the Auction House or the Auctioneer to comply with their duties – especially on the grounds of consulting with regard to assessment issues and on the grounds of defects as to the quality of the Object.

   Excluded are claims for damages put forward on account of death, injury to body or health should the Auctioneer/the Auction House be answerable for the failure to comply with his/its duties, and for the payment of any other damage based on the intentional or grossly negligent violation of duties by the Auctioneer/the Auction House. A legal representative’s or vicarious agent’s violation of duty shall be equal to the Vendor’s violation of duty.

4. The Vendor will be obligated to procure the Highest Bidder the real property free from encumbrances and restrictions recorded in the land register, to the extent to which they are not taken over in the Agreement by the Highest Bidder. Public dues and easements which are not recorded in the land register will be taken over by the Highest Bidder; however, the Vendor is not aware of any such public dues and easements.

Regardless of anything mentioned to the contrary in the action sales text, the transfer of the Object will take place on the first of the month following the contractual depositing of the full cash purchase price with the Notary and/or the Auctioneer.

Provided nothing has been agreed contractually to the contrary, § 446 BGB (German Building Code) shall apply. According to this section of the Building Code, all dues, including all obligations under civil and public law in respect of the object to make land and premises safe for persons or vehicles as from the time of the transfer, shall be at the expense of the Highest Bidder and exempts the Seller from fulfilling them. Dues and/or costs which the Vendor has advanced shall possibly be refunded to him on a pro-rata basis. To the extent to which the Vendor has paid dues and fees for any period after the transfer, the Highest Bidder shall, at the Vendor’s request, refund these dues and fees to the latter.

The Highest Bidder has to reimburse the Vendor for heating oil or other fuel possibly available on the fixed transfer day upon the presentation of individual evidence.

Development contributions for development systems such as roads, sewerage, etc. and other one-time public dues concerning the real estate sold which are executed in nature by the auction date and for additional measures which have actually been executed by the auction date will be for the Vendor’s account independent of the origin of the liability of contribution and their due date. Any such contributions and public dues for measures executed from the auction date will be for the account of the Highest Bidder.

Provided that nothing has been included in the auction sales text to the contrary, the Highest Bidder, on the basis of § 9 Grundbuchbereinigungsgesetz (Land Register Correction Act), shall take over the limited personal servitudes to be established and registered in favour of public utilities old law and not registered in the land, easements without setoff against the highest bid for further toleration. If the auction sales text announces the takeover of existing liens by means of their deduction from the highest bid, the Vendor, the Auctioneer and the Auction House do not assume any liability for the approval of the assumption of indebtedness by the creditors. If the approval for taking over debts is refused, the Highest Bidder shall be obligated to pay for the relevant portion of the highest bid with other outside funds or his own funds within a period of four (4) weeks after having received the refusal concerning the assumption of indebtedness approval. The mortgage money balance of such encumbrances - to be determined by the Auction House - at the fixed transfer date shall form the basis for the final settlement of the highest bid. Possible difference sums resulting thereafter between the deposited and the actual cash portion have to be settled by means of direct payment between the Highest Bidder and the Vendor.

1. Regardless of anything specified to the contrary in the action sales text, the highest bid to be possibly deposited shall be paid into an escrow account of the Notary to which primarily the special rules under Chapter XI ‘Custody’ apply. The bidding security collected and held in trust by the Auctioneer has to be paid into this account as well. Agreements with the Vendor deviating from this after bid acceptance will be at the Highest Bidder’s own risk.

2. Provided nothing has been provided for to the contrary in the Agreement, the depositing of the highest bid shall take place within one (1) month from the notarisation of the highest bid and bid acceptance by setting-off the paid bidding security.

   Payment will be effected

   • 2.1. when the correctly ranking registration of the priority notice for the object of Agreement in favour of the Highest Bidder and the possible registration of required financing liens – to the extent to which their creation took place by using the encumbrance authorization possibly granted - has taken place and

   • 2.2. when official and other approvals and certificates, consents and evidence required for the registration of the transfer of title in the land register are available – with the exception of evidence on continuation of the land registry, the tax clearance certificate and possible confirmations of power of attorney by the Highest Bidder  – and

   • 2.3. when possible deeds on the cancellation of liens and mortgages which can be used for the land register are available for encumbrances which are not to be taken over, and

   • 2.4. when the amount deposited is sufficient for the cancellation of encumbrances in the land register which are not to be taken over by the Highest Bidder.

   • If the Highest Bidder has to cancel encumbrances in the land register which are, according to the conditions, not to be taken over, the amounts required for the cancellation, including court and notarial fees incurred, may be withdrawn from the amount deposited as soon as all the above conditions for disbursement have been fulfilled. Possible bank charges for depositing shall be borne by the Vendor.

3. The Auction House confirms that it has taken out insurance cover as is standard practice for safe custody accounts kept by the Auctioneers. If the parties to the contract agree on the depositing in the escrow account of a Notary, the rules included in the Auction Sale Conditions on trust/escrow accounts apply mutatis mutandis with the deviations under Chapter XI ‘Custody’.

4. If the Highest Bidder does not pay on the due date, he will default without reminder and the Vendor shall be entitled to all claims resulting from this, and the latter shall especially be entitled to claim default interest according to § 288 BGB. Additionally, every Highest Bidder shall be obligated to agree in the Purchase Agreement vis-à-vis the Vendor that measures of immediate compulsory execution be taken against all his assets on account of the highest bid together with five (5) percentage points, and eight (8) percentage points in the case of non-consumers, above the basic discount rate on same as of the date of the Agreement’s notarisation and on account of the commission that, what has been aforementioned, shall apply likewise vis-à-vis the Auction House (in each case together with interest for default) and to irrevocably instruct the officiating Notary to deliver an enforceable copy to the Vendor and/or the Auction House.

5. In acknowledgement of these auction sale conditions, the Vendor and the Highest Bidder authorize the Auction House to accept the possible fixing of deadlines according to §§ 280, 281, 323 BGB. If deadlines are fixed by using this power of attorney, the additional respite has to cover a period of at least three (3) weeks. The Auction House has to pass on every fixed deadline submitted to it to the last address of the addressee which was communicated to it.

1. The Highest Bidder shall bear the following costs:

   • 1.1. The commission owed by him to the Auction House because of bid acceptance (surcharge). Including value added tax at the relevant applicable statutory rate, this commission amounts to

     • 1.1.1. at a highest offer of up to € 9,999.00 17.85 per cent

     • 1.1.2. at a highest offer of up to € 10,000.00 up to € 29,999.00 11.90 per cent

     • 1.1.3. at a highest offer of up to € 30,000.00 up to € 59,999.00 9.52 per cent

     • 1.1.4. at a highest offer of up to as from € 60,000.00 7.14 per cent

   • 1.2. Costs of bid acceptance notarisation together with all required declarations, land register entries and the cancellation of the priority notice, authorities’ fees, land register extract fees, land acquisition tax and all other possibly required approvals according to § 12  WEG (Home Ownership Act).

2. 1.3. Costs and expenses of the Notary for the Agreement and its entire execution, as well as costs and expenses incurred at court, especially the costs of and expenses incurred for conveyance and execution including depositing costs. Costs incurred for keeping the escrow account of the Notary shall be borne by the Highest Bidder.

3. 1.4. For the avoidance of having to take recourse to the Vendor, costs will be charged – with the exception of costs of conveyance and depositing - as advance payments directly after bid acceptance by the Notary, and they have to be paid promptly by the Highest Bidder. This constitutes the main contractual duty to perform. Only upon the Notary’s receipt of the costs charged, the latter shall be permitted to start land register execution.

4. The Vendor has to bear the following costs:
   The Vendor’s commission bases on an individual agreement made with him. All costs in conjunction with the cancellation of encumbrances have to be borne by the Vendor. In particular, the Vendor shall bear the costs of the cancellation of encumbrances in the land register which are not taken over and possible balance collection charges resulting from disbursements in partial amounts in the case of multiple payments.

5. The commissions under items 1) and 2) above are earned, due and payable after notarisation of the highest bid and bid acceptance and they are independent of further handling. A claim for the repayment of the commissions shall be excluded unless an official or court approval which is required for the Agreement to take effect is definitely refused.

1. It is pointed out that the conveyance of the real property in the land register may be dependent on various official approvals and negative certifications as indicated by the Notary in the Deed. Central notaries at the place of the auction sale whose names will be provided in the relevant purchase agreements will obtain the certificates and approvals required for this.

2. The conveyance of property has to be applied for by the Notary at the time the deposited highest bid has reached maturity of disbursement and/or evidence of direct payment of the highest bid to the Vendor is available to the Notary, however, not before all other documents to be provided by the Highest Bidder for the conveyance of the property are available.

   Conveyance may not be declared before the Notary has accepted the escrow conditions possibly imposed on him upon receipt of the posting document relating to the highest bid deposited.

   The Notary shall file the application for the entry of the priority notice of conveyance only after payment of the Notary’s fees and after him having gained certainty that the highest bid has been deposited in the escrow account and that at this point of time no conditions are associated with the payment which prevent enforcement in the land register. In case the Highest Bidder is a company that has been entered in the register, the filing of the application is dependent on the presentation of evidence of representation as required for the land register.

   The occurrence of the conditions required for the application of the priority notice of conveyance and/or of the transfer of title does not have to be checked by the Land Registry.

   The Notary is authorised to obtain land register extracts.

In case rights of pre-emption exist and a pre-emptor exercises his possibly existing legal and/or his right of pre-emption secured by the land registry, the Vendor shall be entitled to rescind that part of the agreement governed by the law of obligations vis-à-vis the Highest Bidder by written declaration.

The assertion of claims for damages on the basis of circumstances which provided for the entitlement to rescission shall be excluded. In other respects, legal rescission conditions apply. A copy of the statement of rescission has to be sent to the Notary for his information.

1. Additionally, the following regulations apply to the custody of the highest bid in a notary’s escrow account:

   Validation with retrospective effect is not permissible. The Notary is not entitled to accept cash. The Notary is instructed by all parties to discharge creditors’ claims entered in the land register out of the highest bid in accordance with the balances to be communicated by them plus possible prepayment penalties and costs. In this context, the Notary does not have to individually check entitlement to the claim. The Notary shall be entitled to request, to his attention, consents to the cancellation of mortgages, lien release declarations, assignments and letters for providing the commitment of the creditors to the termination declaration according to § 875 (2) BGB and to accept them on behalf of the participating parties.

   The Notary may refuse performance of the fiduciary order if obligations, imposed on him by the creditors to be redeemed or by the financial backers of the Highest Bidder which have to be secured by means of land register entry, interfere with the smooth handling of the escrow order. This will, in particular, be the case if the escrow order of a creditor on the Highest Bidder’s side is too short in time. He may also turn down the trust order if it becomes subsequently apparent that the handling of the agreement is, altogether, for example, frustrated due to inconsistent escrow conditions. The Vendor shall be entitled to interest accruing for custody. Should the deposited amount be repaid to depositors because a transfer of title has not taken place, the Highest Bidder shall be entitled to any interest accrued.

   Payments from the escrow account will be transferred from bank to bank within the period which is normal in the usual course of business. The claim to the payment of the highest bid will be fulfilled only at the time the amount has been disbursed by the Notary or when it is kept in the escrow account at the request of the Vendor after disbursement maturity. In consideration of the deposited amount, setoff or retention is excluded as a consequence of the escrow commitment.

1. The participating parties (Auction House, Auctioneer, Vendor, Highest Bidder, Purchaser) agree that each of the above provisions shall continue to be valid also in case that one of the provisions of this Deed and/or of the Bid Acceptance Document are null and void or cannot be executed. An invalid provision shall be replaced with a provision which produces an economic result which comes as close to the original economic result as possible. A contractual provision which is possibly not clear or possible contractual gaps shall be interpreted and/or filled in the same manner.

2. Seller and Highest Bidder shall be obligated to promptly inform the Auction House, the Notary notarising the Contract, and the Partner to the Contract about every change of their address. In addition, they shall be obligated to promptly communicate the Notary notarising the Contract their identification characteristic according to § 139 a ff. Abgabenordnung (German Fiscal Code).

3. Place of jurisdiction is the Local or Regional Court of the relevant place of the auction unless another place of jurisdiction is imperatively prescribed by law.

Rostock, 6nd January 2011

The above document was read out loud by the Notary, it was approved by the persons appearing and signed jointly together with the Notary as follows:

signed by: Kai Rocholl

I.S. signed Körner, Notary

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