Working Translation of deed no 293/2004 as signed on 5 December 2004
EXHIBIT 10.23
Deed No 293/2004
PURCHASE CONTRACT
Today, December 5th, two thousand and four
- December 5, 2004 -
appeared before me, Etienne Petitpierre
Notary public with official place of business in Basel, Switzerland
in my office premises in Gerbergasse 1, 4001, Switzerland
1. Mr. Ulrich Wuseke,
born 8 December 1955
with business address Merkurallee 1- 15
D-32339 Espelkamp, Germany
acting not in his own name, but according to powers of attorney
dated 26 November 2004 and 3 December 2004 presented to the notary
in the originals and taken to the files as photocopies on behalf of
a) Mr. Paul Gauselmann
born 26 August, 1934
residing at Alter Moorweg 11,
32339 Espelkamp, Germany
- henceforth also called "Seller I" -
And
b) Mr. Michael Gauselmann,
born 28 November, 1955
residing at Frotheimer Weg 54,
32339 Espelkamp,
Germany
- henceforth also called "Seller II" -
- Seller I and Seller II together henceforth also called "Sellers" -
2. Dr. Bernd Meyer-Witting,
born 2 July 1960
with business address at Mainzer Landstr. 46
60325 Frankfurt am Main,
Germany,
acting here not in his own name, but as representative with sole power of
representation for GTECH Corporation, 55 Technology Way, West Greenwich,
Rhode Island, 02817 USA,
- henceforth also called "Buyer" -
The persons present regarding Nos. 1 and 2 identified themselves by presenting
their identity cards.
Based on the official document submitted to me today and which bears the
authentication of the Secretary of State of the State of Delaware, I, the
undersigned notary public, certify that the person who appeared under No. 2 in
accordance with the power of attorney dated 29 November 2004 has sole power to
represent the Buyer.
The Notary Public asked each of the persons appearing whether he or any other
persons linked with him for the joint exercise of their profession had already
acted or presently acts in the following recorded matter other than in an
official capacity. Those appearing declared that this was not the case.
At the request of the persons appearing before me, I herewith certify the below
-2-
PURCHASE CONTRACT
SECTION 1 OBJECT OF THE CONTRACT
The Sellers I and II own indirectly or directly almost all shares of the
companies of the "Atronic Group," as shown in APPENDIX SECTION 1, which is a
part of the "Family Gauselmann Group". Members of the Family Gauselmann Group
include all entities ("juristische Personen, Personengesellschaften") which are
either directly or indirectly controlled by one or more members of the Family
Paul Gauselmann (Paul Gauselmann, Katrin Gauselmann, Michael Gauselmann, Armin
Gauselmann und Karsten Gauselmann).
1.1 The Sellers I and II are the owners of the shares of ATRONIC INTERNATIONAL
GMBH, registered under HRB 8573 in the commercial register of the district
court Bad Oeynhausen, with registered seat in Borsigstra(beta)e 26, 32312
Lubbecke (henceforth also called "AI"). The share capital of AI currently
amounts to EUR 301,730.00 and is divided into two shares, owned by the
Sellers as follows:
1.1.1 Seller I owns a share in the company with the nominal amount of EUR
120,680.00; 1.1.2 Seller II owns a share in the company with the nominal
amount of EUR 181,050.00.
1.1.2 Seller II owns a share in the company with the nominal amount of EUR
181,050.00.
1.1.3 The share capital will shortly be increased up to EUR 302.000,00. As a
consequence, Seller I will own a share in AI with a nominal value of EUR
120,800.00, and Seller II will own a share in AI with a nominal value of
EUR 181,200.00.
1.2 The current articles of association of AI are dated 23 October 2002.
1.3 AI on its part owns shares in the following companies and their subsidiary
companies (henceforth also called "AI-Subsidiaries" as a whole), as is
evident from APPENDIX SECTION 1.3:
1.3.1 AI is the owner of all issued shares with a total nominal amount of EUR
18,000.00 (Geplaatst Kapital - 180 shares at EUR 100 each) of ATRONIC
SYSTEMS B.V., with registered seat in NL 2132 DP Hoofddorp, Tuinweg 6-10,
registered with the Kamer van Koophandel Amsterdam in Amsterdam with file
number 34181376, whose issued share capital is fully paid up.
Atronic Systems B.V. in turn owns shares in the following subsidiary
companies:
-3-
(a) Atronic Systems B.V. directly owns 960 shares with a nominal value of EUR
150.00 each and thus 96 % of the share capital of EUR 150,000.00 of MONACO
INFORMATIQUE SYSTEMES S.A.M., registered with the Repetoire du Commerce et
de l'Industrie a Monaco under number 91 S 02723, with registered seat in
Fontevielle, Gildo Pastor Center 7, Rue du Gabian, MC 98013 Monaco. Messrs
Christian Fabre, Julien Cohen, Ludwig Beckmann and Gerhard Burda each own
1 % of the share capital (= 10 shares with a nominal value of 150.00 EUR
each) in trust as managers for Atronic Systems B.V. The share capital has
been fully paid up.
Monaco Informatique Systemes S.A.M. in turn owns 700 shares with a nominal
value of 230.00 EUR each and thus 70 % of the share capital in MIS
EUROPEAN ALLIANCE S.A.M. with registered seat in Fontevielle, Gildo Pastor
Center 7, Rue du Gabian, MC 98013 Monaco, which has been founded in Monaco
but has not yet been registered. Further shareholders, each with a 10 %
(100 shares at 230.00 EUR each) share are the Austrian Gaming Industrie
GmbH, Universal Desassarollos Electronicus S.A. and Atronic International
GmbH.
(b) Atronic Systems B.V. owns all shares of the MIS INTERNATIONAL FRANCE SAS
with registered seat in 1300 Rue des Cretes, 06560 Valbonne, registered at
the RCZ de Grasse with file number B 439651684. This company has a share
capital of EUR 40,000.00 (400 shares with a nominal value of EUR 100.00
each). The share capital has not been paid up. Mr. Christian Fabre is its
president.
(c) Furthermore, Atronic Systems B.V. owns all shares of the ATRONIC SYSTEMS
INC. (formerly known as Monaco Information Systems USA, Inc), a company
established under the laws of Nevada, USA with registered seat in 16537 N.
2 Street, Scottsdale, Arizona 85260 which has an authorized share capital
of 500,000 shares with no par value.
(d) Furthermore, Atronic Systems B.V. owns all of the shares of GRIPS
MANAGEMENT GMBH, with registered seat at Parkring 12, A-8074 Grambach
(Austria) and registered in the commercial register of the Republic of
Austria with file-number FN 35723I. GRIPS Management GmbH has a share
capital of EUR 83,100.00, which is fully paid up. An up-to-date excerpt
from the Commercial Register is attached hereto as APPENDIX SECTION
1.3(d).
-4-
GRIPS Management GmbH owns the entire share capital of ATRONIC SYSTEMS
GMBH, with the same registered seat and registered in the commercial
register of the Republic of Austria with file-number FN 48990, with one
share with a nominal value of EUR 36,400.00 which is fully paid up.
Furthermore, GRIPS Management GmbH is the sole shareholder of GRIPS SYSTEM
USA Inc., with registered seat at PO Box 3675 Walnut Creek, CA 94598 USA.
Furthermore, GRIPS Management GmbH owns 100 % of the shares of GRIPS RSA
with registered seat at 33 Wessel Road, Rivonia, 2128 Republic of South
Africa.
(e) Atronic Systems B.V. owns 70 % (= 700.00 AUS $) of the total share capital
of 1,000.00 AUS $ of MIS INTERNATIONAL ASIA PACIFIC PTY. LTD. The other
shareholder owning the remaining 30 % (= 300.00 AUS $) is Universal
Distributing of Nevada Inc.
The MIS International Asia Pacific Pty. Ltd. in turn is the sole
shareholder of MIS INTERNATIONAL ASIA PACIFIC (AFRICA) PTY. LTD. The
capital of this company amounts to 100.00 ZAR.
1.3.2 AI owns 98 % of the total share capital of 1,000.00 Soles (98 registered
shares at 10.00 Soles) of ATRONIC PERU S.A., registered in the commercial
register of Lima with registration number 138679 and with registered seat
at Matir Oaja 201, Oficina 401, Lima 18, Mira Flores, Peru; 1 % (1
registered share at 10 Soles) each are owned by Messrs Paul Gauselmann and
Michael Gauselmann.
1.3.3 AI directly owns 80 % of the registered share capital in the total amount
of Pesos 30,000.00 of ATRONIC ARGENTINA S.R.L., with registered seat in
Buenos Aires and registered under 2286, Book 57, Volume B Registro Publico
de Comercio. Furthermore, AI indirectly and by means of a trustee
relationship with Dr. M. Jebsen owns also the further 20 % in the share
capital (one share with a nominal value of Pesos 6,000.00) of this
company.
1.3.4 AI is the owner of the entire share capital amounting to 175,000.00 Rubel
of ATRONIC RUSS OOO with registered seat in Moscow, which is registered in
the Unified Register for Foreign Legal Entities in Moscow with
registration number 1047796756193.
This company was registered on 8 October 2004 and is not yet operationally
active.
-5-
1.3.5 Finally, AI owns all shares with a nominal value of EUR 300,000.00 in
ATRONIC AUSTRIA HOLDING AG, a joint stock company established on 25
November 2004 with registered seat in Seering 13 - 14 in A-8141
Unterpremstatten and a fully paid up share capital of EUR 300,000.00. The
establishment of this company was notified on 29 November 2004 but is not
yet registered in the Companies Register of the State court of Graz.
Atronic Austria Holding AG in turn owns the only share with a nominal
value of EUR 300,000.00 in ATRONIC HOLDING GMBH, a company established on
25 November 2004 as limited liability company and immediately reorganized
into a joint stock company with registered seat in Seering 13 - 14 in
Unterpremstatten; the establishment of this company was notified to to the
Companies Register of the Local Court of Graz on 29 November 2004 but is
not registered yet.
1.4 The Sellers I and II furthermore hold all shares in the following two
companies (henceforth called "the Sister Companies") as well as indirectly
in their subsidiary companies, as evidenced in APPENDIX SECTION 1.4 (AI
and its Sister Companies henceforth also called "Parent Companies"):
1.4.1 The Sellers I and II own all shares in ATRONIC AUSTRALIEN GMBH with
registered seat in Espelkamp (henceforth called "ATRONIC AUSTRALIEN"),
registered under HRB 8835 in the commercial register of the Bad Oeynhausen
District Court. The share capital totalling DM 1,120,000.00 is divided
into three shares as follows: Seller I owns a share with a nominal value
of DM 448,000.00 and Seller II owns two shares, one with a nominal value
of DM 560,000.00 and the other with a nominal value of DM 112,000.00. The
share capital has been fully paid up.
Atronic Australien in turn is the sole shareholder in ATRONIC AUSTRALIA
PTY. LIMITED, registered under ACN 082 236 217 with a share capital of AUS
$ 2,000,000.00. The company's registered seat is at South Melbourne 3205 /
Victoria.
1.4.2 Seller I and II - in equal parts - own all interests in ATRONIC AMERICAS,
LLC (henceforth called "ATRONIC AMERICAS") whose initial capital
contributions amounted to US$ 13,300,000.00, and which is registered in
the State of Nevada.
Atronic Americas in turn is the sole shareholder in ATRONIC NEVADA LLC
with an initial share capital of US$ 10,000.00, which is registered in the
state of Nevada.
-6-
1.5 There exists an "ATYPICAL SILENT PARTNERSHIP" between AI and the
Sellers I and II ("Atypical Silent Partnership"). The participations
(capital accounts) are, according to Section 4 No. 1 of the partnership
agreement, dated 25 December 1994, with changes dated 16 February 1996,
13 June 1997, 08 December 1997, 19 December 1998, 23 December 1999, 21
December 2000, and a further increase of the capital as yet to be
carried out, owned as follows:
Atronic: EUR 302,000.00
(2 %)
Seller I: EUR 5,919,200.00
(39,2 %)
Seller II: EUR 8,878,800.00
(58,8 % -----------------
Total: EUR 15,100,000.00
(100 %)
1.6 A description of the equity structures as of 31 December 2003 of the
companies belonging to the Atronic-Group is attached as APPENDIX SECTION
1.6.
1.7 The Sellers I and II are entitled and required to liquidate or dispose of
(without any assets) the following no longer operating companies without
incurring costs for the Buyer if possible by the Closing Date:
- - MIS European Alliance S.A.M.;
- - GRIPS System USA Inc.;
- - GRIPS RSA;
- - MIS International Asia Pacific Pty. Ltd.; and
- - MIS International Asia Pacific (Africa) Pty. Ltd.
SECTION 2 PURCHASE STATEMENTS
2.1 Statements regarding AI:
2.1.1 The share indicated in Section 1.1.1 after the increase of the share
pursuant to Section 1.1.3 has to be split into two shares with a nominal
value of EUR 45,300.00 (in words: EUR forty-five thousand three hundred)
and a nominal value of EUR 75,500.00 (in words: EUR seventy-five thousand
-7-
five hundred). Seller I sells a partial share with a nominal value of EUR
45,300.00 to the Buyer.
2.1.2 The share indicated in Section 1.1.2 after the increase of the share
capital pursuant to Section 1.1.3 has to be split into two shares with a
nominal value of EUR 105,700.00 (in words: EUR one hundred and five
thousand seven hundred) and a nominal value of EUR 75,500.00 (in words:
EUR seventy-five thousand five hundred). Seller II sells a partial share
with a nominal value of EUR 105,700.00 to the Buyer.
2.1.3 The Sellers shall approve the sale/purchase provided for above and the
future transfers at a shareholders' meeting of AI to be held on the
Transaction Date (as provided for in Section 17.1). Furthermore, they
shall make all statements und take all actions necessary in order to
consummate this contract pursuant to this contract.
2.1.4 AI has irrevocably agreed to the split of the shares mentioned in Section
1.1.1 and Section 1.1.2 and the sale of parts of the shares with the
statement attached as APPENDIX SECTION 2.1.4 to this document.
2.1.5 The profits until the Transaction Date, at least, however, until the
Closing Date, which are realized on the shares mentioned in Section 1.1.3,
belong to the Sellers, provided the profits do not belong to the atypical
silent partners according to the partnership agreement of the Atypical
Silent Partnership. Prior to the Transaction Date, the Sellers are
entitled to pay out balance sheet profits from expired financial years.
The Sellers are furthermore entitled to declare and pay out reasonable
interim dividends with respect to an ongoing financial year until the
Transaction Date. If the interim dividends exceed the profit to which
Sellers are entitled to, then the Sellers have to repay such amounts to
the distributing company and to indemnify the Buyer immediately from all
claims by the company to repay the received dividends.
2.2 Statements regarding Atronic Australien:
2.2.1 The share of Seller I indicated in Section 1.4.1 with a nominal value of
DM 448,000.00 has to be split into two shares with a nominal value of DM
168,000.00 (in words: DM one-hundred sixty-eight thousand) and a nominal
value of DM 280,000.00 (in words: DM two-hundred eighty thousand). Seller
I sells a partial share with a nominal value of DM 168,000.00 to the
Buyer.
2.2.2 The share of Seller II indicated in Section 1.4.1 with a nominal value of
DM 560,000.00 has to be split into two shares with a nominal value of DM
280,000.00 (in words: DM two-hundred eighty thousand) each. Seller II
sells one of these partial shares with a nominal value of
-8-
DM 280,000.00 to the Buyer.
2.2.3 Beside the above, Seller II sells his other share mentioned in Section
1.4.1 with a nominal value of DM 112,000.00 as well to the Buyer.
2.2.4 The Sellers shall approve the sale/purchase provided for above and the
future transfer at a shareholders' meeting of Atronic Australien to be
held on the Transaction Date. Furthermore, they shall make all statements
und take all actions necessary in order to consummate this contract
pursuant to this contract.
2.2.5 Atronic Australian has irrevocably agreed to the split of the shares
mentioned in Section 2.1.1 and Section 2.2.2 and the sale of parts of the
shares with the statement attached as APPENDIX SECTION 2.2.5 to this
document.
2.2.6 The profits until the Transaction Date, at least, however, until the
Closing Date, which are realized on the shares mentioned in Section 1.4.1
belong to the Sellers. Prior to the Transaction Date, the Sellers are
entitled to pay out balance sheet profits from expired financial years.
The Sellers are furthermore entitled to declare and pay out reasonable
interim dividends with respect to an ongoing financial year before the
Transaction Date. If the interim dividend exceed the profits to which the
Sellers are entitled to, then the Sellers have to repay such amounts to
the distributing company and to indemnify the Buyer immediately from all
claims by the company to repay the received dividends.
2.3 Statements regarding Atronic Americas:
2.3.1 The Seller I agrees to sell 50% of his membership interest in Atronic
Americas to the Buyer.
2.3.2 The Seller II agrees to sell 50% form his membership interest in Atronic
Americas to the Buyer.
All profits and losses of Atronic Americas for the period beginning
January 1, 2004 until Closing Date shall be allocated to the Sellers as
regulated in the operating agreement and such allocations shall be taken
into account under in Sellers' capital accounts in the company.
For this purpose, profits and losses and capital accounts shall be defined
and maintained in accordance with the regulations under Section 704(b) of
the Internal Revenue Code of 1986, as amended.
-9-
Upon the sale of 50% of the Sellers' interest in the company, the
Purchaser shall assume 50% of the capital account associated with the
interest in the company that it acquires.
At any time until the Closing Date, the Sellers may at their sole
discretion cause the company to make distributions to the Sellers but not
in excess of the aggregate profits that have been allocated to the
Sellers' capital accounts in the company since the end of 2003.
In addition, the Sellers may at their sole discretion at any time until
the Transaction Date cause the company to make distributions to the
Sellers in excess of the post-2003 profits that have been allocated to the
Sellers' capital accounts through the end of the year preceding such
distribution as long as the aggregate amount of such the allocated profits
exceeding distributions does not exceed a reasonable estimate of the
profits the company will realize during the year in which such
distributions are made.
At any time prior to the Transaction Date, Sellers may in their sole
discretion make loans to the company out of distributions described in the
preceding two sentences of this section. Sellers are free to set any
reasonable terms for such loans, including a schedule for the repayment of
principal.
2.4 Statement regarding Atronic Peru S.A.: The Seller I sells registered share
with a nominal amount of 10 Soles to the Buyer.
2.5 Statement regarding the Atypical Silent Partnership:
2.5.1 The Seller I agrees to sell from his participation (capital account) in
the Atypical Silent Partnership amounting to EUR 5,919,200.00 a
participation amounting to EUR 2,219,700.00 to the Buyer.
2.5.2 The Seller II agrees to sell from his participation (capital account) in
the Atypical Silent Partnership amounting to EUR 8,878,800.00 a
participation amounting to EUR 5,179,300.00 to the Buyer.
2.5.3 After consummation of the sale of the participations pursuant to Section
2.5.1 and Section 2.5.2, the participations in the Atypical Silent
Partnership (capital accounts) will be as follows:
-10-
AI: EUR 302,000.00
Seller I: EUR 3,699,500.00
Seller II: EUR 3,699,500.00
Buyer: EUR 7,399,000.00
-----------------
Total: EUR 15,100,000.00
-----------------
2.5.4 These sales do not comprise the claims of Sellers I and II on their loan
accounts. All other rights and obligations in connection with the
transferred participations are deemed to be sold together with the
participations.
2.5.5 The Sellers I and II are entitled to claims on the profits realized until
the Transaction Date, at least, however, until the Closing Date, in
accordance with the partnership agreement of the Atypical Silent
Partnership; these profits have to be credited to their loan accounts.
Profits realized after the Transaction Date, however, not earlier than
after the Closing Date, belong to the Sellers and the Buyer in accordance
with the partnership agreement and the participation ratio after
consummation of this contract. Losses shall be treated respectively.
2.5.6 The management of AI has irrevocably agreed to the sale/purchase of
participations provided for in Section 2.5.1 and Section 2.5.2 by means of
shareholder resolution in a statement attached to this document as
APPENDIX SECTION 2.5.6.
2.6 The shares and participations together with all rights connected therewith
as sold under this Section 2 are in the following also referred to as the
"Sold Shares".
SECTION 3 CONDITIONS, CLOSING DATE
3.1 The Parties shall consummate their obligations pursuant to Section 2 by
making all statements and taking all necessary actions in course of the
consummation as provided for in Section 17 with effect as of 31 December
2006, 24.00 hours ("Closing Date"). The Parties shall be only obliged to
do so, if all closing conditions pursuant to Section 3.2 ("Closing
Conditions") are fulfilled by 29 December 2006.
3.2 The Closing Conditions are the following:
3.2.1 Issue of regulatory approvals pursuant to Section 3.3;
3.2.2 Antitrust clearance pursuant to Section 3.4, Section 3.5 and Section 3.6;
-11-
3.2.3 Amendments to all contracts listed in APPENDICES, SECTION 10.2.3, SECTION
11.2 and SECTION 11.3 between companies belonging to Atronic-Group on the
one hand and companies belonging to the Gauselmann-Group and/or relatives
of the Sellers in accordance with Section 15 AO on the other hand by
providing for an extraordinary termination right exercisable within the
first three months after the Transaction Date with a three months term and
effective as of the end of a calendar quarter. The same applies with
respect to contracts entered into between the date of signing this
contract and the Transaction Date. There is one exception with this
respect: the distribution agreement between AI and Dieckhaus Electronic
GmbH as of 12 September 1996 as amended as of 4/18 August 1998 which
provides for a termination period of three months prior to the end of a
calendar year shall not be amended.
3.3 The issue of the following regulatory approvals ("Regulatory Approvals")
is a condition as provided for by Section 3.2.1:
3.3.1 valid issue of licences, regulatory approvals and declarations of
suitability for the benefit of the Buyer by the authorities as specified
in the "List of Regulatory Approvals" as attached as APPENDIX SECTION
3.3.1 parts (A), (B) and (C). The Regulatory Approvals specified in part
(A) must have been issued completely. The Non-issue of the following
Regulatory Approvals, however, shall not be considered a failure to occur
of this Closing Condition:
- up to 3 out of the ones referred to in part (B);
- up to 5 out of the ones referred to in part (C);
- up to 2 out of the ones referred to in part (B) and at the same time
up to 3 referred to in part (C); or
- 1 out of the ones referred to in part (B) and at the same time up to
4 out of the ones referred to in part (C).
3.3.2 Regulatory Approval to the transfer of the Sold Shares by the regulatory
authorities (Gaming Commissions and respective authorities) of the States
of Nevada, New Jersey, Louisana, Mississippi and Illinois.
3.4 Antitrust clearance in Germany by means of the occurrence of one of the
following alternatives is a Closing Conditions pursuant to Section 3.2.2:
-12-
3.4.1 Notice by the Federal Cartel Office that the purchase of the Sold Shares
by the Buyer does not fulfill the conditions for prohibition according
Section 36 Paragraph 1 GWB; or
3.4.2 Expiry of a period of one month since notification of the purchase of the
Sold Shares by the Buyer as an intent of merger with the Federal Cartel
Office according to Sections 39 GWB, provided that before the expiry of
this period the Federal Cartel Office does not prohibit the merger
proceedings or advises that it has entered into an examination of the
intended merger; or
3.4.3 Expiry of a period of four months since the notification of the purchase
of the Sold Shares by the Buyer as an intent of merger with the Federal
Cartel Office, if the Federal Cartel Office does not prohibit the intended
merger before expiry of this period.
3.5 Expiry or termination of all waiting periods (including any extension
thereof) under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder
applicable to the sale of the Sold Shares, without an objection having
been made or other obstacles to Closing having been established in
connection therewith.
3.6 Non-issue of an prohibition order by the Federal Antitrust Agency of the
Russian Federaion.
3.7 In case the Closing Conditions pursuant to Section 3.3, Section 3.4,
Section 3.5 and Section 3.6 have not occurred until 29 December 2006, the
Sellers shall be entitled to delay the Transaction Date two times for
three months by unilateral written statement to the Buyer, i.e. until 31
March 2007 and the 30 June 2007, respectively. In case the Closing
Conditions pursuant to Section 3.3, Section 3.4, Section 3.5 and Section
3.6 still have not occurred on 30 June 2007 and provided that the Parties
do not agree on a further prolongation of the term by written agreement,
the Closing Conditions cannot any longer occur.
SECTION 4 PURCHASE PRICE
4.1 The purchase price ("Purchase Price") for the Sold Shares is calculated
according to the following formula:
Company Value - Net Financial Liabilities + or = Working Capital Changes
------------------------------------------------------------------------
2
-13-
4.2 In case the calculation of the Purchase Price in accordance with the
formula results in a negative purchase price, the Purchase Price shall
amount to one Euro (EUR 1.00).
4.3 In addition to the Purchase Price, the Buyer shall pay an "Earn-Out
Payment" to the Sellers under the conditions and in the amount as provided
for in Section 7. In case the Buyers have to make such earn-out payment,
such Earn Out Payment shall increase the Purchase Price.
4.4 The company value is calculated as eight times (8 x) the EBITDA-value,
which will result from an audited financial report ("Closing Report") to
be prepared in accordance with Section 8 for the financial year 2006
("Pre-Closing Phase").
4.5 The EBITDA-value shall be calculated in accordance with the following
definitions and provisons:
4.5.1 EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation and
Amortisation and is defined as a company's operating result prior to any
additions or deductions for income from interest, interest paid, taxes on
earnings, depreciation of fixed assets and goodwill amortisation.
4.5.2 The EBITDA represents the result from a company's ongoing operating
activities and does not include any material extraordinary factors.
"Extraordinary" here relates to material, unusual (betriebsfremd) or
non-recurring factors, or non cash transactions - including changes in
accounting practices (rein buchtechnisch).
4.5.3 The EBITDA does not include any effects relating to other accounting
periods which result from balance sheet valuations of assets and
liabilities made as of the respective key date of the annual financial
statement. Any factor not deemed to have been caused during the fiscal
year in question shall be considered as relating to another accounting
period. Similarly, unusual (betriebsfremd) and one-off factors relating to
such valuations are not included when calculating the EBITDA.
4.5.4 Gauselmann AG's share of the general administrative and overhead costs
does not form part of the EBITDA. The costs asserted by Gauselmann AG
against the Atronic Group and calculated using cost allocations and
individual invoices are only included in the EBITDA if services are
actually rendered and the Atronic Group derives a direct benefit from
such.
4.5.5 The expenses incurred by the Atronic Group as regards any of the measures
proposed and initiated by the Buyer concerning the reorganisation of
accounting, reporting and planning
-14-
procedures are not included in the EBITDA and may not be included when
calculating the Purchase Price.
4.5.6 The provisions of the German Commercial Code (Handelsgesetzbuch, HGB) and
those of US GAAP set out differing accounting procedures with regard to
the valuation and conversion of foreign currencies. The effect of such
differences on a company's operating result should be included in the
EBITDA up to a value of EUR 500,000.00, unless there are extraordinary
circumstances involved or factors relating to other accounting periods as
described above.
4.5.7 The EBITDA is calculated from the audited consolidated annual financial
statement of the Atronic Group in accordance with the provisions of the
German Commercial Code. This is done on the basis of the fiscal years
running from 1 January to 31 December 2006 and from 1 January to 31
December 2007.
4.5.8 If and insofar Regulatory Approvals are still missing, but the respective
Closing Condition has nevertheless occurred pursuant to Section 3.3.1, the
EBITDA-value for the financial year 2006 shall be adjusted as follows: the
average gross margin ("Rohergebnis") achieved in the non-licenced
territories in the financial years 2005 and 2006 shall be added to the
EBITDA-value. The net turnover shall be the turnover minus material costs.
4.5.9 The calculation scheme for the establishment of EBITDA is scheduled as
APPENDIX SECTION 4.5.9.
4.6 The Net Financial Liabilities shall be calculated in accordance with the
following definitions:
4.6.1 The "Net Financial Debt" represents the balance of all interest-bearing
asset and liability items shown in the Closing Report.
4.6.2 Interest-bearing asset items include securities held as fixed assets,
loans, lendings and other interest-bearing claims against third parties,
the Sellers, or against other members of the Family-Gauselmann-Group, as
well as cash in bank and cash in hand.
4.6.3 Interest-bearing liability items include amounts due to banks and other
financial institutions, other interest-bearing liabilities owed to third
parties or the Sellers, or against other members of the
Family-Gauselmann-Group, as well as interest-bearing liabilities resulting
from drawings from the Cash Pool of Gauselmann AG.
-15-
4.6.4 Interest-bearing accounts receivable and accounts payable shall also be
part of the Net Financial Debt.
4.6.5 The items to be considered for determining the Net Financial Debt are
shown in APPENDIX SECTION 4.6.5.
4.7 The impact of the Working Capital and of changes of the Working Capital on
the Purchase Price shall be established in accordance with the following
definitions and provisions:
4.7.1 The "Net Working Capital" represents the balance of all
non-interest-bearing items included in the current assets (with the
exception of cash in hand and bank deposits), minus any
non-interest-bearing, short-term items included in the liability reserves
or in the liabilities.
4.7.2 Non-interest-bearing assets that are part of the working capital include
inventories, non-interest-bearing accounts payable, non-interest-bearing
"other" claims and asset items payable by third parties, the Sellers or
other members of the Family-Gauselmann-Group, as well as prepayments and
accrued income.
4.7.3 Non-interest-bearing liabilities forming part of the working capital
include short-term provisions, non-interest bearing accounts payable,
non-interest-bearing "other" liabilities owed to third parties, the
Sellers, or other members of the Family-Gauselmann-Group, as well as
deferred income.
4.7.4 Tax-related claims and liabilities as well as provisions for taxes are not
part of the Net Working Capital if they have any direct relation to the
sale of the Sold Shares contemplated in this Agreement and to Sellers I
and II.
4.7.5 The "Net Working Capital" is calculated from the audited consolidated
annual financial statement of the Atronic Group in accordance with the
provisions of the German Commercial Code (HGB).
4.7.6 The items to be considered for determining the Net Working Capital are
shown in the APPENDIX SECTION 4.6.5.
4.7.7 The Sellers expect that by the Closing Date the Working Capital will have
reached a level that is in line what is currently customary and generally
accepted within the Atronic Group. The amount of the Working Capital
anticipated by the Buyer at the Closing Date is referred
-16-
to as "Target Working Capital".
4.7.8 The "Target Working Capital" is the average amount of the Working Capital
determined as of the cut-off date (31 December) of the Financial years
2004, 2005 and 2006.
4.7.9 The Target Working Capital shall be compared to the Working Capital
determined as of the Closing Date and the difference will constitute the
"Change in Working Capital". If the Working Capital determined as of the
Closing Date is above the amount of the agreed Target Working Capital, the
Purchase Price will be increased by an amount equivalent to 50% of the
difference. If the Working Capital as of the Closing Date falls short of
the amount of the agreed Target Working Capital, the Purchase Price will
be decreased by an amount equivalent to 50% of the difference.
4.8 Potential effects of the - allowed - sale of the building in Scottsdale,
Arizona, and the subsequent lease of this building on the Purchase Price
(EBITDA-value or Net Financial Liabilities) have to be neutralized.
SECTION 5 PAYMENT AND DUE DATE FOR PAYMENT OF PURCHASE PRICE
The Purchase Price is to be paid as follows:
5.1 On the Transaction Date the Buyer pays to the Sellers a preliminary
Purchase Price in accordance with Section 6 ("Preliminary Purchase
Price").
5.2 The difference amount between (i) the Purchase Price as calculated in
accordance with Section 8 on the basis of the Closing Report and (ii) the
paid Preliminary Purchase Price is payable by the Buyer or repayable by
the Sellers jointly, as the case may be, 15 "Banking Days" (days on which
the banks in Boston and Dusseldorf are open for business) after binding
and final calculation in accordance with Section 8.
5.3 An Earn-Out payment by the Buyer to the Sellers, if due, becomes payable
15 Banking Days after binding and final calculation in accordance with
Section 7.
5.4 The Buyer shall make purchase price payments to the Sellers with debt
settling effect for both Sellers to the following account:
Account number: 59683 (Gauselmann AG) with Stadtsparkasse Rahden (BLZ 490
510 65).
-17-
5.5 Any repayment of a difference amount in accordance with Section 5.2 from
the Sellers to the Buyer shall be made to the following account of the
Buyer:
Account number 07718069
Fleet Bank
Boston, MA
ABA no.011000390
SECTION 6 CALCULATION OF THE PRELIMINARY PURCHASE PRICE
6.1 The Sellers will select an independent auditor ("Auditor"). The Auditor
will review the consolidated monthly reports (January - October 2006 or in
case the Transaction Date is after the 31 December 2006, the monthly
reports available until this point of time) and will on this basis make an
estimate of the Purchase Price.
The review of the monthly reports shall be made in accordance with the
standards "PS 900 IDW" as described in APPENDIX SECTION 6.1.
In case the Transaction Date is after 30 April 2007, the Preliminary
Purchase Prices shall be determined on the basis of the audited yearly
accounts for 2006 by the auditor preparing the yearly accounts.
6.2 Not later than 25 days before the Transaction Date the Auditor according
to its instructions has to present to the Buyer and to the Sellers a
well-founded estimate of the Purchase Price in written form.
6.3 Provided that no Party proves to the other Party/Parties within 15 days
that the estimate presented by the Auditor contains evident mistakes or
that the Parties do not come to an agreement prior to the Transaction Date
how to amend the estimate respectively, the Preliminary Purchase Price
payable as of the Transaction Date shall amount to 90% of estimated
purchase price.
6.4 In addition the Buyer has the right to take part on its own costs in the
estimate procedure (pursuant to Section 6.1 subparagraph 1 and 2) by an
auditor selected by the Buyer. The Auditor has to be instructed, to duly
inform the auditor selected by the Buyer at the beginning of the review
procedure on the intended organization of the review procedure. The
results of an additional review by an auditor selected by the Buyer shall
have no impact on the determination
-18-
of the Preliminary Purchase Price.
SECTION 7 EARN-OUT
7.1 Buyer shall make an earn-out payment to the Sellers calculated according
to the following formula:
6 X (EBITDA - EBITDA 2006)
-------------------------
2
In case the EBITDA-value for the financial year 2006 as finally
established in the Closing Report is below EUR 25,000,000.00, not the de
facto EBITDA-value but an EBITDA-value in the amount of EUR 25,000,000.00
shall be deducted from the EBITDA-value for the financial year 2007.
7.2 An Earn-Out Payment shall only become due, if the EBITDA-value for the
financial year 2007 exceeds EUR 25,000,000.00 or, if higher, the
EBITDA-value for the financial year 2006. Otherwise, the Purchase Price
remains unchanged.
7.3 The EBITDA-value for the calculation of an earn-out shall be taken from
the annual financial report to be established and audited in accordance
with Section 8 ("Post Closing-Report") .
7.4 APPENDIX SECTION 7.4 contains two examples for the calculation of the
Purchase Price in accordance with the formula under Section 4 and in
accordance with the formula for the calculation of the Earn-Out payment in
accordance with Section 7.1.
SECTION 8 REPORTS
8.1 The Closing-Report (as of 31 December 2006) and the Post-Closing Report
(as of 31 December 2007) are Consolidations as of the relevant cut-off
date of the annual accounts of all companies of the Atronic Group listed
in APPENDIX SECTION 8.1 as well as all companies which become a member of
the Atronic-Group in the future ("Consolidation Group") audited by the
Auditor.
The auditor for the financial year 2006 shall be selected by the Sellers;
the auditor for the financial year 2007 shall be selected by the Buyer.
8.2 The Closing Report shall be prepared having regard to the German
commercial regulations for groups of companies (Sections 290 ff. HGB -
without appendices and progress report), in par-
-19-
ticular with adherence to the principles of proper accounting as well as
preserving the continuity of accounting and valuation standards and with
consideration for industry-specific issues.
The Buyer is entitled, to take part at its own costs in the audit for the
financial year 2006 insofar, as an auditor selected by the Buyer shall
have the right to be present without limitations at the audit conducted by
the auditor; the auditor selected by the Buyer shall have access to the
books and documents of the companies. The Sellers shall agree on these
rights with the auditor selected by them. Prior to the beginning of the
audit, the auditor selected by the Sellers shall be obliged to inform the
auditor selected by the Buyer on the beginning of the audit. At the
request by the Buyer, the auditor alternatively will disclose to the Buyer
or to persons appointed by the Buyer the yearly accounts and the working
papers prepared in connection therewith at the business place of the
company or of the auditor.
The auditor shall then reconcile the Closing-Report to US-GAAP.
8.3 The Post Closing-Report will be prepared in accordance with US-GAAP and
subsequently reconciled to the German trade law provisions applicable to
group enterprises (Sections 290 HGB). The Sellers at their own costs shall
have the right under Section 8.2 second paragraph which shall apply
mutatis mutandis.
8.4 The shareholders of the companies of the Consolidation Group shall procure
that the respective companies prepare the individual annual accounts
within six weeks after the Transaction Date and to present these accounts
to the auditor for auditing purposes and to the Parties immediately
thereafter.
8.5 If no Party raises objections to either the Closing Report or the
Post-Closing Report within one month from its receipt, then the respective
report(s) is/are deemed to be accepted and shall be final and binding for
the Parties.
8.6 If one of the Parties has objections against the contents of the Closing
Report and/or the Post-Closing Report and the proposal for the calculation
of the Purchase Price and/or the Earn-Out payment derived therefrom, i.e.
in particular against the calculation of the EBITDA and Net Financial
Liabilities as well as against the calculation of the Working Capital,
then the objecting Party will advise the other Party within four weeks
after receipt of the objectioned report with written explanations of the
objection and with a calculation of the consequences of the objections.
Objections against a Report are only to be considered, if assuming their
correct-
-20-
ness they would result in a reduction or increase of the Purchase Price
pursuant to Section 4.1 or the Earn-out pursuant to Section 7 by at least
EUR 200,000.00 in each case.
8.6.1 If one of the Parties raises objections within the agreed time limit, then
the Parties, together with the Auditor and their consultants, will strive
to come to an agreement within one month of receipt of the objections. If
an agreement is reached, then the result is final and binding for the
Parties.
8.6.2 If no agreement is reached within the mentioned period of one month, then
the Parties will strive to agree on an expert arbitrator within two (2)
weeks. If the Sellers and Buyer do not agree on an expert arbitrator
within the period of two (2) weeks, then the Sellers jointly as well as
the Buyer are entitled to request the Institut der Wirtschaftsprufer in
Deutschland e.V., Dusseldorf to nominate an auditor as an expert
arbitrator. The expert arbitrator in conclusion decides on the objections,
which form the object of the disagreement. The expert arbitrator has to
explain his decision in writing. In his decision, the expert arbitrator is
not allowed to make assertions, which are out of the scope, which is set
by the respective report and the objections raised by the objecting Party.
The costs of the expert arbitration are borne by the Sellers and the Buyer
in relation to their respective exposure, Sections 91 et seq. ZPO. The
results of the expert arbitration including the adjustments of the EBITDA,
Net Financial Liabilities and/or Working Capital determined by the expert
arbitrator are final and binding for the Parties of this contract.
SECTION 9 GUARANTEE STATEMENTS ON THE SOLD SHARES
9.1 The Sellers declare that the following statements regarding the Sold
Shares except of the participation in the Atypical Silent Partnership are,
at the time of signing of this deed, true and accurate. They declare that
9.1.1 they are the unrestricted legal and economic owners of the Sold Shares;
9.1.2 they are not and none of the Parent Companies are bound by restriction
order of third parties regarding the Sold Shares and the sale of the Sold
Shares does not trigger rights of third parties;
9.1.3 the Sold Shares are free from claims of third parties, in particular, but
not limited to, liens, beneficial rights, subsidiary interest, income
rights, profit sharing cessions and comparable claims or rights;
-21-
9.1.4 except with respect to Atronics Americas, the Sold Shares are fully paid
up for in cash and a repayment of the subscribed share capital has not,
not even partially, taken place, that the share capital of AI but not of
the other Parent Companies is available in its full amount; concealed
contributions in kind or concealed repayments of the share capital do not
exist at the level of AI and Atronic Australien; the capital contributions
to Atronic Americas agreed by the Sellers in their capacity as
shareholders have been rendered in the agreed amount in cash.
9.1.5 upon purchase of the Sold Shares all necessary affirmations regarding the
disposal by the Sellers were available and also all formalities, whether
provided by law or by contracts, were complied with;
9.1.6 the Sold Shares do not represent the entire assets of the Sellers
according to Section 1365 German Civil Code;
9.1.7 there are, with the exception of the interests referred to in Section 2,
no further company shares or other form of shares or participation rights
in the companies mentioned, nor are there any rights of purchase;
9.1.8 the Sellers are the sole legal and economic owners of their shares,
partial shares and participations which remain after the consummation of
this contract and that they are not subject to right of third parties; and
9.1.9 there were no share certificates issued for the Sold Shares.
9.2 The Sellers declare that the following declarations in relation to the
sold participations in the Atypical Silent Partnership, are true and
accurate at the time of the notarial recording. They declare that
9.2.1 they are the unrestricted legal and economic owners of the participations
sold;
9.2.2 they are not bound by restriction order of third parties regarding the
participations sold and the sale of the participations does not trigger
rights of third parties;
9.2.3 there are no other partners in the Atypical Silent Partnership and there
are no third parties' rights with respect to the Atypical Silent
Partnership
9.2.4 the Sellers I and II respectively are the sole legal and economic owners
of their participations
-22-
which remain after the consummation of this contract and that they are not
subject to right of third parties;
9.3 The Sellers declare that, as at the time of signing this deed the Parent
Companies and the Atypical Silent Partnership represent directly or
indirectly, 100 % of the business of Atronic-Group.
9.4 Furthermore, the Sellers declare that the information provided under
Section 1 is true and complete as of the date of signing this deed and
that the Parent Companies neither directly nor indirectly participate in
any other company not referred to under Section 1.
SECTION 10 GUARANTEE STATEMENTS ON THE PARENT COMPANIES
The Sellers declare that the following statements with regard to the Parent
Companies are true and accurate at the time of signing this deed.
10.1 The Sellers declare that:
10.1.1 AI and Atronic Australian were validly founded and exist under the
jurisdiction of German limited liability company law as companies with
limited liability; the certified Commercial Register excerpts which are
appended to this contract as APPENDIX SECTION 10.1.1 Part A are up to
date and accurately reproduce the current relationships of the
companies; the articles of association appended to this contract as
APPENDIX SECTION 10.1.1 Part B are currently valid in this form and
have not been altered; and no shareholders' resolutions or judicial or
administrative decisions have been made that could alter the legal
situation of the companies, particularly no resolutions pursuant to the
Law Regulating the Reorganisation of Companies or concerning
liquidation of one of the companies;
10.1.2 Atronic America was founded and exists under the jurisdiction of the
law of the State of Nevada as a "Limited Liability Company"; the
notarized Certificate of Incorporation appended to this contract as
APPENDIX SECTION 10.1.2 PART A as well as the notarized Certificate of
Good Standing appended to this contract as APPENDIX SECTION 10.1.2 PART
B accurately reproduce the current relationship of the company; the
articles of association appended to this contract as APPENDIX SECTION
10.1.2 PART C are currently valid in this form and have not been
altered; and no shareholders' resolutions or judicial or administrative
decisions have been made that could alter the legal situation of the
company;
10.1.3 the 2003 audited annual financial reports of the respective Parent
Company which are
-23-
appended as Appendices SECTION 10.1.3, reproduce the asset, financial
and revenue situations of the companies accurately and fully according
to accounting and valuation methods as provided for and recognized by
applicable law (as applicable to the respective company) with the
exercise only of permissible accounting and valuation options as well
as depreciation methods; the principle of reasonable commercial
assessment - insofar as applicable - has been strictly observed in the
formation of reserves, particularly in warranty cases, in the valuation
of the objects of current assets, and in the valuation of outstanding
receivables;
10.1.4 the Parent Companies have given no guarantees, bonds, or other
securities or promises exceeding an amount of EUR 50,000.00 for the
protection of liabilities of third persons (including to the Sellers,
their spouses and living companions, or relatives), which survive the
Closing Date, or fall due on the Closing Date;
10.1.5 there exist no powers of representation for AI and Atronic Australia
other than those recorded in the Commercial Register and no powers of
representation for Atronic Americas other than those scheduled in
APPENDIX SECTION 10.1.5; and
10.1.6 with the exception of the Atypical Silent Partnership there exists no
silent participation in, or loan or trust relationships of parties with
the Parent Companies, and the Parent Companies have not entered into
any substantive participations, organizational tie-up or profit
transfer agreements or other commitments under corporate law, other
than those listed in APPENDIX SECTION 10.1.6.
10.2 The Sellers declare that:
10.2.1 there are no judicial, arbitration, mediation or dispute related
administrative or regulatory proceedings with a disputed value of more
than EUR 25,000.00 that are pending or impending against the Parent
Companies or their corporate bodies, unless otherwise disclosed in
APPENDIX SECTION 10.2.1;
10.2.2 the Parent Companies dispose of all the public licenses that are
required under public (regulatory) law including those for the
operation of their trade and business and including those specified in
APPENDIX SECTION 3.3.1 except for those which are not of minor
importance for the operation of the business, and no circumstances have
arisen that would justify the fear of a withdrawal of these licenses;
10.2.3 all arrangements, agreements, understandings or other legal or de facto
connections with proximate persons of the Sellers as defined in Section
15 AO (Abgabenordnung) or companies
-24-
belonging to the Family Gauselmann Group are designated in APPENDIX
SECTION 10.2.3 with the exception of those which do not provide for and
will not provide for after the Closing Date for a consideration ;
10.2.4 the intellectual property rights (including but not limited to
trademarks, patents, utility models, registered designs, copyrights
and/or domain names, "IP rights"), belonging to the Parent Companies as
a result of respective inventions and on the basis of use or
registration are specified completely and accurately in APPENDIX
SECTION 10.2.4 PART (A) (patents, trademarks and copy rights) and part
(B) (other intellectual property rights). The rights referred to in the
APPENDICES SECTION 10.2.4 comprise all IP rights which are required by
the Parent Companies for their ongoing business and for the further
operation of their business.
The IP rights exclusively and without limitations belong to the Parent
Companies with the sole exception of the patent "Gaming machine having
means to change the brightness of its lights", which was filed in the
US under the no. 2003/0144051 and in Australia under no. 2002306367.
This patent is restricted insofar as the same patent is registered in
Germany and several other countries for the benefit of adp Gauselmann
GmbH.
The IP rights are free from third party rights and other legal defects,
unless otherwise provided for in APPENDIX SECTION 10.2.4. All payable
fees have been paid and all other measures in order to uphold the IP
rights have been undertaken.
10.2.5 According to the Sellers' best knowledge, the Parent Companies conduct
their business in accordance with all applicable law (including, for
clarification purposes with respect to an anglo-american law context:
statutes, ordinances, regulations, rulings, and orders) and in
particular neither the companies nor their shareholders or managing
directors violated or have been violating German, EU, or US export or
import laws, anti-corruption laws, or money laundering laws.
10.3 The Sellers declare that APPENDIX SECTION 10.3 is a complete and
accurate record of the insurance policies procured by the Parent
Companies for the benefit of their business operations or their
subsidiaries, with the exception of the insurance for business-use
automobiles; the pertinent policyholder is not in arrears with regard
to his duties under the insurance policies.
SECTION 11 GUARANTEE STATEMENTS ON THE SUBSIDIARIES
The Sellers declare with regard to the AI-Subsidiaries and to Atronic
Nevada LLC and Atronic Australia Pty. (hereinafter together referred to
as "Subsidiaries") that the following statements are
-25-
true and accurate at the time of signing this deed, unless otherwise
described in Section 1.3.
11.1 The Sellers declare that:
11.1.1 Directly or indirectly, the Parent Companies are the unrestricted legal
and economic owners of all shares in the Subsidiaries;
11.1.2 the shares in the Subsidiaries are free from rights of third parties,
and in particular, but not exclusively, are free from liens, usufruct
rights, sub-shareholding, purchase rights, profit concessions and
comparable rights;
11.1.3 neither the Parent Companies nor the Subsidiaries are subject to
restrictions (for the benefit of third parties) with regard to the
disposal of shares;
11.1.4 except to the extent APPENDIX SECTION 11.1.4 provides otherwise, the
shares were fully paid in cash or by contribution in kind, and a
repayment of the accepted capital stock has not, even partially,
occurred, and the full amount of the capital stock is therefore
available; there exist no hidden contributions in kind or hidden
repayments of capital stock,;
11.1.5 upon the acquisition of the shares by the respective shareholder, the
alienator had all necessary approvalsfor the transfer and otherwise all
formalities prescribed by law or any contract were observed,
particularly but not exclusively the rules of representation;
11.1.6 no share certificates were issued for the shares;
11.1.7 neither the Sellers nor third parties have any type of claim or options
for a participation in the Subsidiaries or their results;
11.1.8 the Subsidiaries were each effectively founded under the jurisdiction
of their respective national laws, no shareholders' resolutions were
adopted that could alter the legal situation of the Subsidiaries,
particularly no resolutions pursuant to transformation regulations or
liquidation of the Subsidiaries;
11.2 The Sellers, in addition, declare that the statements regarding the
Parent Companies under Section 10.1.3 (insofar as available), Section
10.1.4 to Section 10.1.6, Section 10.2 and Section 10.3 are true and
accurate also with respect to the following companies: Monaco
Informatique Systemes S.A.M., Atronic Systems Inc., Atronic Systems
GmbH, Atronic Russ OOO, Atronic Austria GmbH and Atronic Australia Pty.
-26-
11.3 The Sellers, finally, declare that the statements regarding the Parent
Companies in Section 10.1.4, Section 10.2.3 and Section 10.2.5 are
mutatis mutandis true and accurate also with regard to all Subsidiaries
unless APPENDICES SECTION 11.3 parts (A) to (C) provide expressively
otherwise.
In case any of the APPENDICES SECTION 11.2 and Section 11.3 is not
complete this shall not entail legal consequences if the missing
information is contained in the respective Appendix under Section 10.
The same applies vice versa.
SECTION 12 LEGAL CONSEQUENCES
12.1 Sellers and Buyer agree that the declarations of the Sellers provided
in Section 9, Section 10 and Section 11 are neither quality guarantees
in the sense of Section 443 and Section 444 of the German Civil Code
nor quality agreements in the sense of Section 434 Paragraph 1 Section
1 of the German Civil Code, but rather independent guarantees which are
not expressly governed by law. To the extent that the legal
consequences for untrue quality guarantees and quality agreements as
provided by law are limited in this contract, these are no exclusions
or limitations in the sense of Section 444 of the German Civil Code.
Instead, the matter is governed by integral parts of the given
independent guarantees. Section 444 of the German Civil Code is thus
inapplicable to the independent guarantees given in Section 9, Section
10 and Section 11.
12.2 If a guarantee statement is untrue, the Buyer can demand that the
Sellers, within a reasonable period but at the latest within a period
of 45 days after receiving the demand, produce the condition that would
exist if the statement or statements were true. If the Sellers, within
the established period, do not produce the contractual condition, or if
the production of the contractual condition is impossible, the Buyer
can demand money damages of the Sellers as joint debtors.
12.3 If the liability of the Sellers depends on the knowledge or imputed
knowledge of particular facts or circumstances, the knowledge and
imputed knowledge of the managers and "officers" and other persons in
comparable rank in accordance with the applicable legal regime of the
Parent Companies and of the Subsidiaries as well as of those members of
the Compliance Committee of the Atronic-Group which are employed by a
company of the Atronic-Group, is attributable to them.
12.4 The Buyer can claim compensation based on non-performance under Section
9, Section 10 and Section 11 of this contract of guarantees given by
the Sellers only if a single claim exceeds EUR 45,000.00, and the sum
of the individual claims exceeds EUR 500,000.00 ("Basket"). In the case
the li-
-27-
ability of the Sellers exceeds the Basket, compensation for the whole
amount (i.e. including EUR 500,000.00) can be claimed.
12.5 Except for cases under Section 13, the liability of the Sellers is
limited to half of the amount of the Purchase Price (including
Earn-Out).
12.6 Any liability of the Sellers shall be excluded if and to the extent
that any damage has been rectified by the relevant company or the
Sellers by the Closing Date or if the (potential) damage is
appropriately reflected by a reserve, liability or otherwise accounted
for in the Closing Report.
12.7 Section 442 BGB (German Civil Code) shall not apply.
12.8 The Buyer shall be entitled to claim for damages under Section 12 only
after the transfer of the Sold Shares on the Closing Date.
12.9 To the extent permitted by law and subject to Section 13, all other
rights arising from warranties and assurances, which may exist
according to the legal provisions or otherwise in addition to the
rights provided for in this contract, are excluded. Rights in
connection with intentional conduct are not excluded.
SECTION 13 TAXES, SOCIAL CHARGES AND OTHER PUBLIC CHARGES
13.1 The Sellers hereby guarantee in the form of an independent guarantee
that as at the Transaction Date all statements and/or applications
concerning taxes and/or social charges (including those for the
combined and separate determination of tax bases) that are required for
their respective business, particularly but not exclusively those
relating to corporation tax, trade tax, wage tax, and value added tax
have been properly submitted, or will be submitted in due time after
execution of the contract in respect of the Parent Companies and the
Subsidiaries (hereinafter for the purposes of Section 13 together the
"Companies") as well as for the atypical silent partnership, if
required.
All domestic and foreign taxes, tax liability amounts, fees,
contributions and other levies, duties, social insurance contributions,
and interest, default surcharges, coercive payments, civil penalties,
criminal penalties, and other supplementary payments (Section 3 Abs. 4
AO) (hereinafter "Taxes") that become due and payable by the Companies
until or on the Closing Date ("Closing Date") and that relate to the
period up to the Closing Date are either fully paid by the Closing Date
or are adequately provided for in the Closing Date balance sheet, or
respect-
-28-
ively, disclosed as a liability.
13.2 If the statements in Section 13.1 prove to be incorrect and this
results in Tax liabilities of the Companies for the period until the
Closing Date, or if audits by the tax authorities or other
circumstances for periods until the Closing Date lead to liabilities of
the Companies with regard to Taxes which exceed the liabilities shown
and reserves or accruals formed for the relevant type of Tax in the
Closing Report ("Additional Tax Liabilities"), the Sellers must
compensate all disadvantages arising therefrom. Furthermore, in the
case of a subsequent disclosure of hidden distributions of profits the
Sellers must make a compensation payment in the amount of the
corporation tax increase, if any, applicable to the respective hidden
profit distribution plus any withholding tax assessed.
13.3 All Taxes that become due or payable by the Companies until the
Transaction Date of that relate to this period or are a result of the
consummation of this Agreement, shall be borne by the Sellers. Given
the above, the Sellers shall indemnify the Companies and the Atypical
Silent Partnership (to the extent it is tax subject) from all Taxes
relating to the period between the Closing Date and the Transaction
Date that become due or payable by the Companies until the Transaction
Date or that relate to this period or are triggered by consummation of
this Agreement. The indemnification and release obligation is excluded
to the extent (i) that the respective Taxes are accounted for in the
Closing Report or the annual statements of the Companies or adequate
deferments (Ruckstellungen) are created in the Closing Date balance
sheet or the annual statements of the Companies, or (ii) that the
Sellers have already paid or economically borne such Tax. Interest on
Taxes that the Sellers bear and that are not paid immediately shall be
paid by the Sellers at 6 % per annum.
13.4 Trade tax triggered by the sale of the interests in the Atypical Silent
Partnership by this Agreement at the level of AI shall (to the extent
not deferred in the Closing Date balance sheet of AI) be deferred in
AI's balance sheets of the following fiscal years and shall be
recognised in full against the Sellers and to the benefit of the Buyer
and AI.
Given this, it is hereby agreed with regard to the profit allocation
rule in the Atypical Silent Partnership that the Buyer and AI shall
have a right to receive a preferential profit in the amount of the
trade tax assessed with regard to the profit starting that fiscal year,
in which the Transaction Date falls. The preferential profit right also
exists in case the sales profit does not trigger trade tax due to
losses incurred in the period between the Transaction Date and year
end; in this case, the preferential profit amount shall be the
construed trade tax amount attributable to the sales profit (after
set-off with any trade tax loss carry forwards
-29-
and/or losses incurred for trade tax purposes in the period until the
Transaction Date). To the extent a profit is not realised and the
preferential profit allocation pursuant to the above cannot be achieved
in a fiscal year, the corresponding amount shall be allocated in the
following years; the respective outstanding amount shall bear interest
at 6 % per annum..
13.5 The fiscal deposit account within the meaning of sec 27 paragraph 1 of
the Corporate Income Tax Act (Korperschaftsteuergesetz, "KStG") and the
tax-burdened or unburdened partial amounts in accordance with sections
36 to 40 KStG of the Companies as per 12. December 2002 are completely
and accurately shown in APPENDIX SECTION 13.5. If it turns out, for
example on the basis of an audit by the tax authorities, that the
composition of the equity capital is different, the Sellers must
compensate the disadvantage arising as a result assuming a full
distribution of the distributable equity capital to the extent that
this disadvantage is not already to be compensated pursuant to Section
13.2.
13.6 Each Company that is treated as a partnership of U.S. federal income
tax purposes will make a timely election under Section 754 of the
(US-)Code with the U.S. federal income tax return of such Company for
the period that includes the Transaction Date with respect to the
interests. In the event a Company is not required to file a U.S.
federal income tax return for the period that includes the Transaction
Date, such Company shall take all necessary actions to make a valid
timely election under Section 754 of the (US-)Code with respect to the
interests.
13.7 To the extent that the Sellers must compensate disadvantages under this
Section 13 or are obliged to release or indemnify, this must be made by
payment to the Buyer or, at the Buyer's request, to the respective
Company.
13.8 Claims of the Buyer based on breach of warranty or on release in
relation to Taxes can, contrary to the Statute of Limitations of
Section 20 be asserted up to 6 months after the time at which there is
a legal bar to changing the tax ruling on which the claim is based. If
claims based on this provision were asserted in time against the
Sellers, the asserted claims become statute-barred with the passage of
an additional 6 months after the Sellers acknowledge the claim, but at
the earliest after the expiration of the legal limitations periods of
German Civil Code Sections 194 ff..
13.9 The respective Company shall notify the Sellers immediately of the
beginning of tax examinations and/or other audits, which relate to
business of the Companies and the period up to the Closing Date or the
later Transaction Date, and shall give the Sellers the opportunity to
participate in these examinations. Namely, the Sellers can pursue
judicial remedies and/or file
-30-
an appeal against the determinations of the finance or other
governmental authorities or have the company pursue such remedies
and/or file such appeal to the extent that the determination is adverse
and relates to periods prior to the Closing Date or the Transaction
Date, respectively, whereby such actions shall be at cost of the
respective Company provided it is legally and economically justified.
13.10 Claims of the Buyer against the Sellers according to the provisions of
Section 13 herein do not exist in so far as Taxes relating to the
period up to the Closing Date are assessed based on an audit performed
by the fiscal authorities at a level exceeding the amount disclosed in
the Closing Report as a liability or deferment, only because expenses
of the company are shifted from one taxable period to another period up
to and including a maximum of five years following the Closing Date
(including such after the balance sheet date) or because revenue of a
company from a taxable period of 5 years after the Closing Date to
taxable periods before the Closing Date.
13.11 This Section 13 shall apply accordingly to Taxes arising in respect or
at the level of Companies, which are non tax-resident in the Federal
Republic of Germany.
13.12 With respect to claims of the Buyer under this Section 13 only a right
of withdrawal shall be excluded. All other statutory claims remain
unaffected.
13.13 The de minimis amount provided for in Section 12.4 does not apply with
respect to claims under this Section 13.
SECTION 14 PERIOD BEFORE TRANSACTION DATE
14.1 The Sellers shall procure that the business of the Parent Companies and
the Subsidiaries will be operated with the care of a prudent
businessman and consistent with prior operations until the Transaction
Date. In particular, the Sellers shall use their best efforts to
preserve intact the assets of the Parent Companies and the Subsidiaries
and to preserve the employment relationships with key employees and the
contractual relationships with important customers, suppliers of goods
and suppliers of services.
14.2 In particular, during the period between the signing of this deed and
the Transaction Date, Sellers shall not and shall procure that each of
the Parent Companies and of the Subsidiaries shall not, - unless
otherwise provided by statutory law, this contract or the Master
Agreement entered into on the date of signing this deed, do any of the
following:
-31-
14.2.1 acquisition or long term rent (term exceeding 31 December 2008 and with
a minimum contractual value of at least EUR 2,000,000.00) any real
estate or rights equivalent to real estate or encumber any real estate
or rights equivalent to real estate with charges;
14.2.2 sale of the real estate in Scottsdale, Arizona, provided that the Buyer
is not informed about the sale at least 4 weeks in advance and that the
real estate is not subsequently leased back (sale and lease back);
14.2.3 Conclusion of contracts that have both a term extending beyond 31
December 2008 and a value of EUR 2,000,000.00 or more; and
14.2.4 Purchase and lease of enterprises (share and asset deals).
14.3 The Parties shall use their best efforts and act as good business
partners in order to achieve the fulfilment of the Closing Conditions
in accordance with this contract. For this purposes, the Sellers shall
procure that the companies belonging to Atronic-Group and their
management in particular makes available all necessary information and
materials and introduce contact persons. The Buyer as well will provide
necessary information and introduce contact person. Each Party shall
bear its own costs with this respect.
In case of problems, the Parties shall use common efforts in good faith
in order to accommodate these problems. In particular, in cases where a
necessary antitrust/merger control approval or expiration of the
applicable waiting period has not been given or occured, the Parties
will work together as to resolve the problem as soons as possible
and/or mutually agree as to any necessary and reasonable arrangements
to be made to acommodate the problem.
14.4 Within 14 days after signing of this deed the Parties will jointly
instruct a law firm with the task of obtaining - or co-ordinating - the
antitrust clearances. The costs incurred in connection with the
procedures in Germany, the US and Russia shall be borne in equal parts
by the Parties. Costs incurred by all other procedures in other
countries are solely borne by the Buyer. In case the Parties cannot
agree on a law firm within 14 days, the Sellers are entitled to choose
the law firm.
14.5 The Sellers shall be free during the time period from signing this deed
and the Transaction Date to establish new companies, to reorganize
existing companies and to transfer assets within the group. The Sellers
shall inform the Buyer in advance on such measures in due time. In
connection with the implementation of such measures, the Sellers shall
take into con-
-32-
sideration in good faith the interests of the Buyer.
14.6 In case one Party breaches its obligations under Section 14.1 to
Section 14.3, any liability for simple negligence shall be limited to a
maximum amount of EUR 250,000.00. In case of gross negligence the
maximum liability amount is limited to EUR 500,000.00. Liability for
intentional actions shall be unlimited. Other claims shall be excluded.
SECTION 15 FURTHER DISCLOSURES AND CONSEQUENCES
15.1 Sellers shall inform Buyer immediately in written form with
confirmation of receipt (by registered letter, courier or likewise) in
case (i) a claim or several claims in the (aggregate) amount of EUR
25,000,000.00 or more is/are brought against one or several companies
belonging to the Atronic-Group and/or (ii) a company belonging to the
Atronic-Group looses one of the Regulatory Approvals referred to in
APPENDIX SECTIONS 3.3.1 Part (A).
15.2 For a term of one month after receipt of the information pursuant to
Section 15.1 the Buyer shall be entitled to withdraw from this contract
by written statement to the Sellers. In this case there shall be no
further claims for any of the Parties.
15.3 Six weeks before the Transaction Date at the earliest but not later
than four weeks before the Transaction Date, Sellers shall send to
Buyer drafts of revised guarantee statements (including new appendixes)
in order to inform the Buyer, in which form the Sellers will make the
guarantee statements pursuant to Section 9, Section 10 and Section 11
on the Transaction Date. In case the last Closing Conditions occurs
only after 15 November 2006, the period for the submission of drafts is
shortened to two weeks. The appendices may be revised only insofar as
the respective facts have occurred after the signing of this deed. If
and insofar the Sellers have informed the Buyer already by means of
reporting to the Interim Due Diligence Committee, the appendixes do not
have to be updated.
Prior to the Transaction Date these drafts shall only be amended if and
insofar the respective facts have occurred after they were initially
presented to the Buyer.
15.4 Buyer shall be entitled to refuse the consummation of this contact by
written statement to the Sellers given not later as on the Transaction
Date only in the following cases:
15.4.1 Sellers have not in due time delivered all drafts of the guarantee
statements (including appendixes) to be made pursuant to Section 15.3;
-33-
15.4.2 Sellers do not make the guarantee statements under Section 9, Section
10 und Section 11 (including appendixes) on the Transaction Date
pursuant to Section 15.3;
15.4.3 Sellers make the guarantee statements on the Transaction Date pursuant
to Section 9, Section 10.1.1 and Section 10.1.2 but the disclosures
reflect amendments (except for amendments referring to management
authorities and general proxies (Prokuren));
15.5 The refusal to consummate this contract pursuant to Section 15.4 shall
be regarded as a withdrawal pursuant to Section 15.2.
15.6 In case that within 6 months after the consummation of this contract it
should be revealed that:
- The guarantee statements pursuant to Section 9, Section 10.1.1
and Section 10.1.2 (including the appendixes) were untrue
and/or inaccurate; or
- the Sellers have breached their obligation under Section 15.1
prior to the consummation of this contract,
the Buyer shall be entitled within a term of month to withdraw from
this contract by written statement to the Sellers.
15.7 Additionally, the Sellers shall be liable for the correctness and the
accurateness of the guarantee statements made on the Transaction Date
only pursuant to Section 12.
SECTION 16 SELLERS' WITHDRAWAL RIGHTS AND BREAK-UP FEE
16.1 The Sellers shall be entitled to withdraw from this contract by written
statement to the Buyer only in the following situations and only
commonly:
16.1.1 Buyer fails to initiate filing the applications necessary in order to
achieve the approvals provided for in appendix Section 3.3.1 Part (A)
within 9 months after signing this contract;
16.1.2 Buyer after having filed for the approvals provided for in appendix
Section 3.3.1 Part (A), withdraws a respective filing; and
-34-
16.1.3 The approvals pursuant to appendix Section 3.3.1 Parts (A), (B) and (C)
have not been issued in the extent provided for by Section 3.3.1 by 29
December 2006 or upon expiry of a prolongation term pursuant to Section
3.7.
16.2 In case the Sellers validly withdraws from this contract in accordance
with Section 16.1, the following shall apply: Buyer shall pay the
Sellers a break-up fee in the amount of EUR 15,000,000.00 as sole and
final remedy.
SECTION 17 CLOSING
17.1 The Parties shall consummate this contract by notarial deed ("Closing
Deed") on the Transaction Date with effect as of Closing Date
("Consummation"). "Transaction Date" shall be the last day of the
calendar month which follows the month when the last of the Closing
Conditions is fulfilled, however, not before 29 December 2006. The
Transaction Date shall be brought forward to the 15th day of the
following month in case at least four weeks have passed since the
fulfillment of the last Closing Condition.
17.2 At the Consummation the Sellers shall
17.2.1 Make the transfer statements and all other necessary statements
including shareholders' resolutions with respect to the consummation of
the statements made under Section 2 of this contract;
17.2.2 Deliver all existing share certificates, if any, directly sold under
this contract; and
17.2.3 Make the guarantee statements pursuant to Section 9, Section 10 and
Section 11 as provided for by Section 15.4.
17.3 At the Consummation the Buyer shall:
17.3.1 Accept the transfer statements of the Sellers in accordance with
Section 17.2.1 of this contract;
17.3.2 Accept delivery of all existing share certificates, if any, directly
sold under this contract;
17.3.3 Effect payment of the Preliminary Purchase Price by wire transfer
pursuant to Section 4; and
17.3.4 Equalize the existing shareholder financing (shareholder loans, surety
ships or other securities) of the Atronic-Group as specified by the
Sellers as of the Transaction Date (i.e. effecting a ratio of 50 : 50
shareholder financing between the Sellers on the one hand and the Buyer
on the other hand) either by (i) granting respective financing or (ii)
assumption of
-35-
existing shareholder financing or (iii) a combination of (i) and (ii).
An example calculation hereof is attached as APPENDIX SECTION 17.3.4.
17.4 The obligations of Sellers and the Buyer under paragraphs Section 17.2
to Section 17.3 above shall be fulfilled concurrently (Zug um Zug).
17.5 Insofar as the Closing Report of AI as of the Closing Date contains
reserves with respect to trade tax payable on the profits realized by
the Sellers I and II as a result of the sale, the following shall
apply: such reserves shall not be taken into account when calculating
as part of the Purchase Price the difference in Working Capital.
Insofar as the loan accounts of the Sellers I and II with AI are
affected by the creation of reserves for trade tax on the profit
realized by the Sellers I and II as a result of a distribution of
profits (i.e. the distribution of the profits after tax), such effect
is to be added to the amount of the Net Financial Liability. This
provision is intended to prevent the full or partial transfer to the
Buyer of the trade tax burden in connection with the profits by the
Sellers I and II as a result of the sale, respectively, a double trade
taxation of the Sellers I and II with respect to the profits realized
by them by the sale.
SECTION 18 ATYPICAL SILENT PARTNERSHIP
18.1 Notwithstanding the assignment in Section 2.5, Sellers I and II shall
not have the right to convert wholly or partly their participation in
the Atypical Silent Partnership (capital accounts) into shares in AI or
into reserves at the AI.
18.2 Likewise, Sellers I and II do not have the right to convert their loan
accounts with the Atypical Silent Partnership wholly or partly into
shares.
18.3 Section 18.2 shall not apply insofar as book profits resulting from the
contribution of the permanent establishment of AI in Austria into
Austria Holding AG/Atronic Holding GmbH are credited to the loan
accounts. 50% of the shares acquired by such means shall be transferred
to the Buyer on the Transaction Date in accordance with applicable law.
The consideration for this transfer is contained in the Purchase Price.
SECTION 19 CONFIDENTIALITY AND PUBLICITY
19.1 The Parties agree to treat as strictly confidential the information
about one another and about the respectively associated business
establishments that they have learned in connection with the
negotiation and execution of this contract.
-36-
19.2 No Party will publish a press release or similar statement in relation
to this contract without a prior written understanding with the other
Party except to the extent such a press release or similar statement is
provided by law or the rules of any competent Stock Exchange.
SECTION 20 TIME LIMITATION ON ALL CLAIMS ARISING FROM THIS CONTRACT
Claims under the guarantee statements at the date of signing this deed and at
the Closing date pursuant to Section 9, Section 10.1.1 and Section 10.1.2 in
connection with Section 12 shall be time barred ten (10) years after the
Transaction Date. Claims under Section 13 shall be time barred pursuant to
Section 13.8. All other claims arising from this contract, shall be time barred
two (2) years after the Transaction Date.
SECTION 21 ASSIGNABILITY
21.1 This Agreement is personal to the parties hereto and none of the
parties hereto may in whole or in part assign any of its rights or
obligations hereunder without the prior written consent of the other
parties.
21.2 Irrespective of Section 21.1 the Buyer shall be entitled to - revocably
- specify within 60 days after signing of this deed which
company/companies shall acquire in parts or in total the Sold Shares
provided that such company/companies is controlled by 100% by the
Buyer.
21.3 In case the Buyer makes use of his right under Section 21.2, the
following shall apply:
- Obligations of the Buyer pursuant to Section 17.3 may be
fulfilled also by the respective company/companies;
- The company/companies determined by the Buyer must receive the
respective antitrust and/or regulatory approvals in order to
achieve that the Closing Conditions are fulfilled;
- When establishing whether the Closing Condition pursuant to
Section 3.3.1 is fulfilled the Regulatory Approvals missing
for the Buyer and for the company/companies determined by the
Buyer have to be added; however, if the same Regulatory
Approval is missing for both the Buyer and a company
determined by the Buyer, only one regulatory approval shall be
deemed to be missing; and
-37-
- With respect to the withdrawal right pursuant to Section 16 it
shall be sufficient if the respective conditions are fulfilled
either with the Buyer or with the company determined by the
Buyer.
SECTION 22 SPECIAL PROVISION ON TRADE MARK RIGHTS
22.1 APPENDIX SECTION 22.1 is a copy of a contract between adp Gauselmann
GmbH and AI providing for the use of the trademarks identified therein
("AI Trademarks") by companies belonging to the Atronic-Group. The
Sellers shall procure that AI prior or on the Closing Date exercises
its right to claim the transfer of the AI Trademarks pursuant to
Section 5.1 of the referred contract and undertakes all steps necessary
for the consummation of such transfer and, finally, does not terminate
this contract or sets a reason for the termination of this contract by
the counter-party.
22.2 The Sellers shall procure that the management of adp Gauselmann GmbH
undertakes all necessary actions and makes all necessary statements
with respect to the transfer fo the AI Trademarks.
SECTION 23 MISCELLANEOUS
23.1 The Appendixes to this contract (except for the ones listed in the
following) have to be prepared by the Sellers truly and accurately with
respect to the date of signing this deed and to be submitted to the
Buyer within 60 days after signing this deed. The Buyer may within a
term of 15 days ask questions in written form which have to be answered
by the Sellers within a term of further 15 days. Within a term of
further 15 days the Parties are obliged to incorporate the appendixes
as prepared by the Sellers in form of a notarial deed into this
agreement. In addition the Buyer has no further rights exceeding those
pursuant to Section 12.
The following appendixes were already available at the date of this
agreement and thus become an integral part of this agreement already at
this point of time:
- APPENDIX SECTION 1 ("Atronic Gruppe")
- APPENDIX SECTION 3.3.1 Teil (A), (B) und (C) ("Lizenzen")
- APPENDIX SECTION 4.5.9 ("EBITDA")
- ANLAGE SECTION 4.6.5 ("Netto Finanzverschuldung/Working
Capital")
-38-
- APPENDIX SECTION 7.4 ("Kaufpreis")
- APPENDIX SECTION 10.2.4 Teil (A) with respect to IP-Rights
("Marken, Patente, Urheberrechte")
23.2 The cost of the notarial recording of this contract and of the deed
with the appendices shall be borne by the Buyer
23.3 Each Party bears the costs of the advisers retained by that Party.
23.4 Amendments and modifications of this contract including this provision
require notarization.
23.5 If one or more provisions of this contract are ineffective, this shall
not affect the validity of the remainder of the contract. The Parties
promise that, in such an event, the invalid provision shall be replaced
by a provision that corresponds to the economic outcome of the invalid
provision, in other words, a provision which comes closest to what the
parties intended to agree.
23.6 This contract is governed by the law of the Federal Republic of Germany
under exclusion of UN-Sales Convention. Only the German language
version of this contract is definitive. In the event of disputes
between the parties based on this contract, they agree to non-exclusive
jurisdiction in Dusseldorf.
23.7 All communications subsequent to this purchase contract and its
exhibits are to be sent by registered mail, telefax or by hand to the
delivery addresses below:
(a) Delivery to Seller I:
Paul Gauselmann
Alter Moorweg 11
D-32339 Espelkamp
(b) Delivery to Seller II:
Michael Gauselmann
Frotheimer Weg 54
D-32339 Espelkamp
Copy to:
-39-
Rechtsanwalt Wolfgang Diewitz
BDPHG
Elsa Brandstrom Str. 1/3
33602 Bielefeld
(c) Delivery to Buyer:
Marc A. Crisafulli
Senior Vice President
GTECH Corporation
55 Technology Way
West Greenwich, Rhode Island
USA 02817
Copy to:
General Counsel
GTECH Corporation
55 Technology Way
West Greenwich, Rhode Island
USA 02817
[SIGNATURES]
[APPENDICES OMITTED[
-40-