EXHIBIT 2.6
NUMBER 84 OF THE ROLL OF DEEDS FOR 2004
[LOGO]
TRANSACTED
in Berlin
on April 29, 2004
BEFORE ME
Dr. Dirk Lentfer, Rechtsanwalt
acting as the officially appointed substitute of
Notary
JOHANN PETER SIEVEKING
in the district of the Appellate Court Berlin,
having his officially registered office
in 10117 Berlin, Charlottenstra(beta)e 57
appeared today:
1. Mr. Rudolf Freiherr von Moreau, Rechtsanwalt, born March 31, 1969 place
of business St.-Martin-Stra(beta)e 53, 81609 Munich, Germany
2
acting not in his own name, but as Attorney-in-fact pursuant to Power
of Attorney for
INFINEON TECHNOLOGIES AG,
ST.-MARTIN-STRA(BETA)E 53,
81609 MUNCHEN, GERMANY,
registered in the commercial register at the local court of
Munich, register number HRB 126492.
The original of the Power of Attorney dated 28 April 2004 has been
presented to the Substitute of the Notary of which a certified copy was
attached to this deed.
The Substitute of the Notary confirms the said proxy due to inspecting
the commercial register (docket number HRB 126492) at the local court
in Munich as of today. The appeared declares that the Power of Attorney
has not been revoked until the signing of this deed.
2. Mr. Dr. Peter Hellich, Rechtsanwalt, born November 3, 1966, place of
business Konigsallee 92 a, 40545 Dusseldorf, Germany,
acting not in his own name, but as Attorney-in-fact pursuant to Power
of Attorney for
FINISAR CORPORATION,
1308 MOFFETT PARK DRIVE,
SUNNYVALE, CA 94089,
U.S.A.
The original of the Power of Attorney dated 29 April 2004 has been
presented of which a certified copy was attached to this deed.
The parties appearing identified themselves by valid ID cards.
The Substitute of the Notary asked the appeared person whether he or
any of his partners or fellow lawyers had already become active in this
matter prior to the notarization (Section 3 subsection 1 No. 7 German
Notarization Act [Beurkundungsgesetz]). The appeared persons declared
that such activity had not been carried out.
3
The Substitute of the Notary understands and speaks English fluently,
he ascertained that the parties appearing understand and speak English
fluently. The parties appearing waived the option of an interpreter.
The parties appearing requested the notarization of the following and
asked that this should be done in English.
The Exhibits and Schedules referred to in this deed have been notarized
in a separate deed on this same day (UR-Nr. 83/2004 of the Notary
Johann Peter Sieveking, Berlin, "Separate Deed"). Ms. Birgit Ress
acting for Finisar Corporation but without Power of Attorney. Finisar
Corporation herewith agrees on and approves (Genehmigung) any of Ms.
Ress' declarations made in the Separate Deed.
The Parties to this deed refer to the Separate Deed pursuant to Sec. 13
a German Notarization Act. The appeared parties said that they know the
content of the Separate Deed. They waive the option that the Separate
Deed shall be read out to them and be attached to this deed. The
Original of the Separate Deed was presented to the parties appearing
while notarizing this deed.
MASTER
SALE AND PURCHASE AGREEMENT
regarding the
sale and purchase of the
INFINEON FIBER OPTICS BUSINESS
{LOGO]FRESHFIELDS BRUCKHAUS DERINGER
5
TABLE OF CONTENTS
A. STATUS..................................................................................... 14
1. CURRENT STATUS......................................................................... 14
B. SALE, PURCHASE AND ASSIGNMENT, PURCHASE PRICE.............................................. 17
2. SALE, PURCHASE AND ASSIGNMENT OF THE SHARES AND THE ASSETS............................. 17
3. PURCHASE PRICE......................................................................... 20
4. TERMINATION OF INTERCOMPANY FINANCING ARRANGEMENTS AND DEPOSITS........................ 25
C. EFFECTIVE DATE BALANCE SHEET, SIGNING DATE, EFFECTIVE DATE, CLOSING DATE AND CLOSING....... 25
5. EFFECTIVE DATE BALANCE SHEET AND ADJUSTMENT STATEMENT.................................. 25
6. SIGNING DATE, EFFECTIVE DATE, SCHEDULED CLOSING DATE, CLOSING DATE AND CLOSING......... 28
D. GUARANTEES, REMEDIES, INDEMNITIES AND COVENANTS............................................ 33
7. SELLER'S GUARANTEES.................................................................... 33
8. PURCHASER'S GUARANTEES................................................................. 48
9. REMEDIES............................................................................... 59
10. ENVIRONMENTAL INDEMNITY................................................................ 64
11. TAX INDEMNITY.......................................................................... 69
12. SELLER'S COVENANTS..................................................................... 72
13. EXPIRATION / LIMITATION OF SELLER'S CLAIMS............................................. 74
14. PURCHASER'S COVENANTS.................................................................. 76
15. OTHER INDEMNITIES...................................................................... 81
E. MISCELLANEOUS.............................................................................. 82
16. NON-COMPETE UNDERTAKING................................................................ 82
17. AGREEMENTS BETWEEN SELLER AND IF FO GMBH............................................... 84
18. RESTRICTION OF ANNOUNCEMENT / COOPERATION / CONFIDENTIALITY............................ 87
19. NOTICES................................................................................ 89
20. MISCELLANEOUS.......................................................................... 90
6
DEFINITIONS
Adjustment Payment Date Section B, 3.4.1
Adjustment Statement Section C, 5.1
Adjustment Shares Section B, 3.2
AEMtec Section A, 1.3
Affiliate Section A, 1.8.6
Agreement Recitals (B)
Ancillary Agreements Section D, 7.1.1
Antitrust Clearances Section C, 6.2.1
Asia / Pacific Assets Section A, 1.5
Asia / Pacific Asset Purchase Agreement Section B, 2.4
Assets Section A, 1.8.4
Board Recommendation Section D, 8.1.16
Best Knowledge of Purchaser Section D, 8.3
Best Knowledge of Seller Section D, 7.3
BMBF Section D, 14.3
Business Section A, 1.8.5
Business Financial Statements Section D, 12.4
Cash Section B, 3.1.3
Claim Notice Section D, 9.2
Closing Section C, 6.7
Closing Conditions Section C, 6.2
Closing Date Section C, 6.1.4
Closing Events Section C, 7
Companies Section A, 1.8.1
Company Section A, 1.8.1
Competing Business Section E, 16.2
Consideration Shares Section A, 1.8.8
Consistency Principle Section C, 5.1
Contribution Agreement Section A, 1.2
Contribution Effective Date Section D, 7.1.13 (a) (i)
Currency Conversion Rate Section B, 3.2
Czech Share Transfer Instrument Section B, 2.2
Deductible Section D, 13.3
7
De Minimis Claims Section D, 13.3
Deposits Section A, 1.6
Disclosure Schedules Section D, 7.2
Draft Settlement Section D, 15.2.2
Effective Date Section C, 6.1.2
Effective Date Balance Sheet Section C, 5.1
Environmental Laws Section D, 10.2.3
Environmental Liabilities Section D, 10.2.1
Environmental Matters Section D, 10.2.5
EURIBOR Section B, 3.5
Exchange Act Section D, 8.1.1
Exchange Rates Section E, 20.11
Existing Environmental Condition Section D, 10.2.2
Financial Debt Section B, 3.1.2
Financial Statements Section D, 7.1.14
Fixed Shares Section B, 3.1.1
FO Business Unit Recitals (A)
Foreign Asset Purchase Agreements Section B, 2.4
Foreign Business Section A, 1.5
Foreign Share Transfer Instruments Section B, 2.2
Foreign Shares Section A, 1.4
German Shares Section A, 1.2
Hazardous Materials Section D, 10.2.4
IF AP Section A, 1.5
IF FO Deposit Section A, 1.6
IF FO-Employees Section D, 7.1.13 (a) (i)
IF FO GmbH Section A, 1.2
IF FO GmbH Subsidiaries Section A, 1.3
IF FO Transferred Business Section D, 7.1.13 (a)
IF FO GmbH Exclusive IP Rights Section D, 7.1.7 (a)
IF FO GmbH Exclusive Know-How Section D, 7.1.7 (c)
IF FO GmbH Exclusive Software & Material Section D, 7.1.7 (e)
IF FO GmbH Non-Exclusive IP Rights Section D, 7.1.7 (b)
IF FO GmbH Non-Exclusive Software & Material Section D, 7.1.7 (f)
IF BV Section A, 1.4
IF Japan Section A, 1.5
8
IF NA Section A, 1.5
IF Trutnov Section A, 1.4.1
IF FO Loan Section A, 1.6
Infineon Accounting Principles Section C, 5.1
Intercompany Financing Arrangements Section A, 1.6
Interim Loss / Profit Section B, 3.1.7
IP Rights Section D, 7.1.7 (a)
Japan Asset Purchase Agreement Section B, 2.4
Japan Assets Section A, 1.5
Key Employees Section D, 7.1.13 (b) (iii)
KPMG Section C, 5.1
Know-How Section D, 7.1.7 (c)
Losses Section D, 9.1
Material Adverse Effect Section D, 7.1.9
Material Adverse Effect on FO Business Unit Section C, 6.3
Material Adverse Effect on Purchaser Section C, 6.4
Material Agreements Section D, 7.1.5
Material Assets Section D, 7.1.10
Material Intellectual Property Rights Section D, 7.1.7 (f)
Neutral Auditor Section C, 5.4
NNM Section B, 3.2
Objections Section C, 5.4
OpTun Section A, 1.3
Other Know-How Section D, 7.1.7 (d)
ParoLink Section A, 1.4.2
ParoLink Shares Section A, 1.4.2
Parties Preamble
Party Preamble
Pension Commitments Section D, 7.1.13 (b) (xi)
Permits Section D, 7.1.11
Pertaining Assets Section B, 2.6
Plans Section D, 7.1.13 (b) (viii)
Preliminary Adjustment Section B, 3.2
Preliminary Purchase Price Section B, 3.2
Preliminary Share Consideration Section B, 3.2
Proprietary Information Section E, 18.5
Purchase Object Section B, 3.1
9
Purchase Price Section B, 3.1
Purchase Price Adjustment Section B, 3.4
Purchaser Preamble
Purchaser Claim Section D, 9.2
Purchaser Common Stock Section D, 8.1.3
Purchaser Disclosure Schedules Section D, 8.2
Purchaser Material Intellectual Property Rights Section D, 8.1.18
Purchaser Material Adverse Effect Section D, 8.1.5(b)
Purchaser Material Agreements Section D, 8.1.16
Purchaser Material Assets Section D, 8.1.20
Purchaser Permits Section D, 8.1.21
Purchaser Preferred Stock Section D, 8.1.3
Purchaser Shares Section D, 8.1.3
Purchaser's Account Section B, 3.7
Purchaser's Auditor Section C, 5.2
Purchaser's Guarantees Section D, 8.1
Proxy Statement Section D, 14.6.1
Purchaser Stock Issuance Section D, 14.6.1
Purchaser Stockholders' Meeting Section D, 14.6.1
Real Estate Section D, 10.2.2
Restricted Activities Section E, 16.1
Revised Adjustment Statement Section C, 5.3
Revised Effective Date Balance Sheet Section C, 5.3
Rights Section C, 8.1.3
Rights Agreement Section C, 8.1.3
Scheduled Closing Date Section C, 6.1.3
Shares Section A, 1.8.3
Share Price Section B, 3.2
SEC Section D, 8.1.1
SEC Reports Section D, 8.1.5(a)
Securities Act Section D, 8.1.5(a)
Seller Preamble
Seller's Account Section B, 3.6
Seller's Affiliate Section A, 1.8.7
Seller's Auditor Section C, 5.1
Seller's Guarantees Section D, 7.1
Seller's Inventories Transfer Instrument Section B, 2.5
10
Seller's Liability Cap Section D, 13.4
Signing Date Section C, 6.1.1
SIPA Section A, 1.4.2
Seller's Inventories Section A, 1.5
Subsidy Section D, 14.3
Taiwanese Share Transfer Instrument Section B, 2.2
Tax Returns Section D, 11.6
Taxes Section D, 7.1.17
Third Party Claim Section D, 9.5
Time Limitations Section D, 13.1
Transferors Section D, 7.1.1
Transition Agreements Section E, 17.1
Trutnov Deposit Section A, 1.6
Trutnov Letter of Comfort Section A, 1.7
Trutnov Loan Section A, 1.6
Trutnov Shares Section A, 1.4.1
US Asset Purchase Agreement Section B, 2.4
US Development & Marketing Assets Section A, 1.5
US Distribution Assets Section A, 1.5
US GAAP Section C, 5.1
Wholly-Owned Companies Section A, 1.8.2
Wholly-Owned Company Section A, 1.8.2
Working Capital Section B, 3.1.4
11
EXHIBITS
Legal Structure of FO Business Unit Exhibit 1.1
Shareholdings in AEMtec and OpTun Exhibit 1.3
Seller's Inventories Exhibit 1.5
Czech Share Transfer Instrument Exhibit 2.2-1
Taiwanese Share Transfer Instrument Exhibit 2.2-2
US Asset Purchase Agreement Exhibit 2.4-1
Japan Asset Purchase Agreement Exhibit 2.4-2
Asia / Pacific Asset Purchase Agreement Exhibit 2.4-3
Form of Seller's Inventories Transfer Agreement Exhibit 2.5
Subsidiary Equity Adjustment Exhibit 3.1.6
Purchase Price Allocation Exhibit 3.3
Stockholder Agreement Exhibit 3.9-1
Registration Rights Agreement Exhibit 3.9-2
Release and Hold Harmless Letter Exhibit 5.2
Individuals resigning as board members Exhibit 6.7.6
Options, warrants, conversion rights, Exhibit 7.1.2
pre-emptive rights or similar rights and agreements
Material Agreements Exhibit 7.1.5
IF FO GmbH Exclusive IP Rights Exhibit 7.1.7-1
IF FO GmbH Non-Exclusive IP Rights Exhibit 7.1.7-2
IF FO GmbH Exclusive Know-How Exhibit 7.1.7-3
Other Know-How Exhibit 7.1.7-4
IF FO GmbH Exclusive Software & Material Exhibit 7.1.7-5
IF FO GmbH Non-Exclusive Software & Material Exhibit 7.1.7-6
ParoLink Intellectual Property Rights Exhibit 7.1.7-7
Proceedings relating to Material Intellectual Property Rights Exhibit 7.1.8
Insurance Exhibit 7.1.9
Litigation Exhibit 7.1.12
Employees of IF FO GmbH Exhibit 7.1.13 (a) (iii)- 1
FO employees not being transferred Exhibit 7.1.13 (a) (iii) - 2
Key Employees Exhibit 7.1.13 (b) (iii)
Legal proceedings with employees of Wholly-Owned Companies Exhibit 7.1.13 (b) (iv)
12
Legal proceedings with works council or unions and labour strikes Exhibit 7.1.13 (b) (v)
Benefit Plans Exhibit 7.1.13 (b) (viii)
Collective bargaining agreements, Shop agreements Exhibit 7.1.13 (b) (x)
Pension Commitments Exhibit 7.1.13 (b) (xi)
Purchaser Material Agreements Exhibit 8.1.16
Voting Agreement Exhibit 14.7.3
Indemnified Claims Exhibit 15.2.1
Draft Settlement Exhibit 15.2.2
Employees of the Foreign Business Exhibit 15.2.3
Post Closing Service Agreement Exhibit 17.2.1
Press Release Exhibit 18.1
13
MASTER SALE AND PURCHASE AGREEMENT
by and between
1. Infineon Technologies AG, St.-Martin-Stra(beta)e 53, 81541 Munchen,
Germany
- herein "SELLER" -
2. Finisar Corporation, 1308 Moffett Park Drive, Sunnyvale, CA 94089
U.S.A.
- herein "PURCHASER" -
- Seller and Purchaser herein also referred to
individually as a "PARTY" and collectively as "PARTIES" -
RECITALS
(A) WHEREAS, Seller is, among other activities, engaged in developing,
producing, marketing and selling fiber optics products and systems for
the datacom, telecom and automotive industries through its fiber optics
business unit and certain of its direct and indirect subsidiaries
(herein "FO BUSINESS UNIT").
(B) WHEREAS, Seller after a strategic review of its business portfolio, has
concluded that it wishes to sell and transfer the FO Business Unit to
Purchaser upon the terms and conditions of this master sale and
purchase agreement (herein "AGREEMENT").
(C) WHEREAS, Purchaser wishes to purchase and acquire the FO Business Unit
from Seller upon the terms and conditions of this Agreement.
14
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
A. STATUS
1. CURRENT STATUS
1.1 The legal structure of the entities engaged in the FO Business Unit
held directly or indirectly by Seller is shown as of the Closing Date
in Exhibit 1.1.
1.2 Infineon Technologies Mantel 14 GmbH (in future: Infineon Technologies
Fiber Optics GmbH) is a limited liability company (Gesellschaft mit
beschrankter Haftung) organized under the laws of Germany, registered
with the commercial register (Handelsregister) maintained at the lower
court (Amtsgericht) of Munich under registration number HRB 139462 and
having its corporate domicile (Sitz) in Munich, Germany (herein "IF FO
GMBH"). Seller holds two (2) shares (Geschaftsanteile) in the nominal
amount of EUR 25,000.00 and EUR 5,000,000.00 (herein collectively
"GERMAN SHARES"), representing 100 % of the nominal stated capital
(Stammkapital) in IF FO GmbH in the aggregate amount of EUR
5,025,000.00. Under the notarial deed of the notary public Dr. Patrick
Wamister, Basel, Switzerland, dated March 26, 2004 (roll of deeds no.
2004/44), (herein "CONTRIBUTION AGREEMENT"), Seller contributed a
certain part of the FO Business Unit which formerly was conducted
directly by Seller, including, but not limited to, the IF FO GmbH
Subsidiaries (as defined in Section 1.3 below), into IF FO GmbH against
issuance of a new share in IF FO GmbH (Sachkapitalerhohung). The
capital increase in kind of IF FO GmbH was filed with the commercial
register (Handelsregister) for registration on 27 April, 2004.
1.3 IF FO GmbH holds shareholdings in AEMtec GmbH, Berlin, (herein
"AEMTEC") and OpTun Inc., Delaware, United States of America, (herein
"OPTUN") as set forth in Exhibit 1.3 (herein collectively "IF FO GMBH
SUBSIDIARIES").
1.4 Infineon Technologies Holding B.V., Rotterdam, The Netherlands, (herein
"IF BV") a wholly-owned subsidiary of Seller, holds shareholdings in
the following subsidiaries (herein collectively "FOREIGN SHARES"):
15
1.4.1 100 % of the issued share capital in the aggregate amount of
CZK 175,100,000.00 (herein "TRUTNOV SHARES") in Infineon
Technologies Trutnov s.r.o., a limited liability company
organized under the laws of the Czech Republic, registered
with the commercial register maintained at the Regional Court
in Hradec Kralove under registration number C 14095, company
identification no. 2529 8208, and having its corporate
domicile in Trutnov, Czech Republic (herein "IF TRUTNOV"); and
1.4.2 17,640,000 shares of common stock with a par value of TWD
10.00 each, and 5,880,000 shares of preferred stock with a par
value of TWD 10.00 each (together herein "PAROLINK SHARES")
representing 56 % of the issued share capital in the aggregate
amount of TWD 420,000,000.00 in ParoLink Technologies Co.
Ltd., a limited liability company organized under the laws of
the Republic of China (Taiwan), registered by the Science
Industrial Park Administration (herein "SIPA") in Hsinchu
under registration number 12 800421 and having its corporate
domicile in Hsinchu, Republic of China (Taiwan) (herein
"PAROLINK").
1.5 Infineon Technologies North America Corp., San Jose, California, United
States of America, (herein "IF NA") a wholly-owned subsidiary of
Seller, holds certain tangible and intangible assets relating to the
marketing and development of the products of the FO Business Unit
(herein "US DEVELOPMENT & MARKETING ASSETS").
Furthermore, IF NA, Infineon Technologies Japan KK, Tokyo, Japan,
(herein "IF JAPAN") and Infineon Technologies Asia Pacific Pte., Ltd.,
Singapore, (herein "IF AP") hold certain tangible and intangible
assets, customers, contracts and liabilities relating to the FO
Business Unit in the United States of America (herein "US DISTRIBUTION
ASSETS"), in Japan (herein "JAPAN ASSETS") and in the Asia / Pacific
region excluding Japan (herein "ASIA / PACIFIC ASSETS "), respectively,
excluding, in each case, trade accounts receivables (the US Development
& Marketing Assets, the US Distribution Assets, the Japan Assets and
the Asia / Pacific Assets herein together also the "FOREIGN BUSINESS").
In addition, Seller owns certain inventories of the FO Business Unit.
Such inventories and their location as of 26 December 2003 are listed
in Exhibit 1.5. (Such inventories, as adjusted for additions and
subtractions in the ordinary course of busi-
16
ness of the FO Business Unit between 26 December 2003 and the Closing
Date, herein the "SELLER'S INVENTORIES") .
1.6 IF BV provides financing to IF Trutnov on the basis of a master loan
agreement dated 23 September 1999 (herein "TRUTNOV LOAN"). Seller
provides financing to IF FO GmbH on the basis of a master loan
agreement dated 31 March 2004 (herein "IF FO LOAN", together with the
Trutnov Loan herein "INTERCOMPANY FINANCING ARRANGEMENTS").
IF BV and IF Trutnov furthermore have concluded a master deposit
agreement dated 13 November 2003 on the basis of which IF Trutnov from
time to time deposits cash amounts with IF BV as a loan (herein
"TRUTNOV DEPOSIT") and, similarly, IF FO GmbH from time to time
deposits cash amounts with Seller as a loan on the basis of a master
deposit agreement dated 31 March 2004 (herein "IF FO DEPOSIT", together
with the Trutnov Deposit herein "DEPOSITS").
1. Seller has issued a letter of comfort dated 1 April 2000 to Bayerische
Hypothekenund Vereinsbank AG, Munchen, to the benefit of IF Trutnov
in order to enable IF Trutnov to provide security for customs duties
(Zollavale) (herein "TRUTNOV LETTER OF COMFORT").
1.8 Companies, Wholly-Owned Companies, Shares, Assets, Business, Affiliate,
Seller's Affiliate and Consideration Shares shall have the following
meaning in this Agreement:
1.8.1 "COMPANIES" and each individually "COMPANY" shall mean IF FO
GmbH, OpTun, AEMtec, IF Trutnov and ParoLink;
1.8.2 "WHOLLY-OWNED COMPANIES" and each individually "WHOLLY-OWNED
COMPANY" shall mean IF FO GmbH and IF Trutnov;
1.8.3 "SHARES" shall mean the German Shares and the Foreign Shares;
1.8.4 "ASSETS" shall mean the Foreign Business and the Seller's
Inventories;
1.8.5 "BUSINESS" shall mean the Assets and the Wholly-Owned
Companies;
17
1.8.6 "AFFILIATE" shall mean any entity within the meaning of
Section 15 German Stock Corporation Act (AktG);
1.8.7 "SELLER'S AFFILIATE" shall mean any Affiliate of Seller
excluding any of the Companies;
1.8.8 "CONSIDERATION SHARES" shall mean shares of Purchaser Common
Stock (as defined in Section 8.1.3 below), issued as
consideration under Section 3.2 of this Agreement.
B. SALE, PURCHASE AND ASSIGNMENT, PURCHASE PRICE
2. SALE, PURCHASE AND ASSIGNMENT OF THE SHARES AND THE ASSETS
2.1 Seller, upon the terms and conditions of this Agreement, hereby sells
with commercial effect (mit wirtschaftlicher Wirkung) as of the
Effective Date (as defined in Section 6.1.2 below) and hereby assigns,
subject to all of the Closing Conditions (as defined in Section 6.2
below) having been fulfilled or having been duly waived and all of the
Closing Events listed in Sections 6.7.1 through 6.7.6 below having
taken place or having been duly waived, with in rem effect (mit
dinglicher Wirkung) as of the Closing Date (as defined in Section 6.1.4
below) to Purchaser the German Shares with all rights and obligations
pertaining thereto, in particular the right to receive profits
(Gewinnbezugsrecht). Purchaser hereby purchases from Seller the German
Shares and hereby accepts the assignment thereof in accordance with the
foregoing sentence.
2.2 Seller, upon the terms and conditions of this Agreement, hereby sells
with commercial effect (mit wirtschaftlicher Wirkung) as of the
Effective Date
(i) the Trutnov Shares and
(ii) the ParoLink Shares
to Purchaser and undertakes to procure that IF BV shall on the
Scheduled Closing Date (as defined in Section 6.1.3 below)
18
(i) assign to Purchaser the Trutnov Shares with all rights and
obligations pertaining thereto with in rem effect (mit
dinglicher Wirkung) as of the Closing Date on the basis of a
share transfer agreement substantially in the form as set
forth in Exhibit 2.2-1 (herein "CZECH SHARE TRANSFER
INSTRUMENT") and
(ii) assign to Purchaser the ParoLink Shares with in rem effect as
of 14 November 2004 and hold the ParoLink Shares in trust as
trustee for the Purchaser from the Closing Date until 14
November 2004, on the basis of a share transfer and trust
agreement substantially in the form as set forth in Exhibit
2.2-2 (the "TAIWANESE SHARE TRANSFER INSTRUMENT", together
with the Czech Share Transfer Instrument herein individually
or collectively "FOREIGN SHARE TRANSFER INSTRUMENTS").
Purchaser hereby undertakes to purchase from Seller the Foreign Shares
and to accept on the Scheduled Closing Date the assignment thereof and
such other provisions as provided for under the respective Foreign
Share Transfer Instruments by executing the Foreign Share Transfer
Instruments in accordance with the foregoing sentence.
2.3 The sale of the Shares shall include the rights to any undistributed
profits for any periods after the Effective Date.
2.4 Seller hereby agrees to procure that IF NA shall sell and transfer the
US Development & Marketing Assets and the US Distribution Assets to
Purchaser under an asset purchase agreement to be executed on the
Scheduled Closing Date substantially in the form as attached hereto as
Exhibit 2.4-1 (herein "US ASSET PURCHASE AGREEMENT").
Seller furthermore hereby agrees to procure that (i) IF Japan shall
sell and transfer the Japan Assets to Purchaser under an asset purchase
agreement to be executed on the Scheduled Closing Date substantially in
the form as attached hereto as Exhibit 2.4-2 (herein "JAPAN ASSET
PURCHASE AGREEMENT") and (ii) IF AP shall sell and transfer the Asia /
Pacific Assets to Purchaser under an asset purchase agreement to be
executed on the Scheduled Closing Date substantially in the form as
attached hereto as Exhibit 2.4-3 (herein "ASIA / PACIFIC ASSET PURCHASE
AGREEMENT", together with the US Asset Purchase Agreement and the Japan
Asset Purchase Agreement the "FOREIGN ASSET PURCHASE AGREEMENTS").
19
Purchaser hereby undertakes to accept the sale and transfer of the
Foreign Business from IF NA, IF Japan and IF AP on the Scheduled
Closing Date as provided for under the Foreign Asset Purchase
Agreements by executing the Foreign Asset Purchase Agreements in
accordance with the foregoing sentences.
2.5 Seller, upon the terms and conditions of this Agreement, hereby sells
with commercial effect (mit wirtschaftlicher Wirkung) as of the
Effective Date the Seller's Inventories to Purchaser and undertakes to
transfer on the Scheduled Closing Date to Purchaser the Seller's
Inventories with in rem effect (mit dinglicher Wirkung) as of the
Closing Date on the basis of an asset transfer agreement substantially
in the form as set forth in Exhibit 2.5 (herein "SELLER'S INVENTORIES
TRANSFER INSTRUMENT"). Purchaser hereby purchases from Seller the
Seller's Inventories and hereby undertakes on the Scheduled Closing
Date to accept the transfer thereof as provided for under the Seller's
Inventories Transfer Instrument by executing the Seller's Inventories
Transfer Instrument in accordance with the foregoing sentence.
2.6 If (i) any assets or liabilities exclusively pertaining to the Foreign
Business at the Closing Date are not specified in the Foreign Asset
Purchase Agreements and/or (ii) any assets pertaining to the Seller's
Inventories at the Closing Date are not specified in the Seller's
Inventories Transfer Instrument and in the case of both (i) and (ii)
such assets or liabilities are not specifically retained under the
terms of such Foreign Asset Purchase Agreement and/or Seller's
Inventories Transfer Document by Seller or an Affiliate of Seller
(collectively, the "PERTAINING ASSETS"), Seller hereby undertakes to
the extent permitted by law or applicable agreement or other
arrangement to sell and transfer the Pertaining Assets to Purchaser,
which will accept such sale and transfer, and Seller agrees to amend
the Foreign Asset Purchase Agreements and/or the Seller's Inventories
Transfer Instrument, as the case may be, to include the Pertaining
Assets in such agreement(s) as soon as Seller is notified by Purchaser
of the existence of such Pertaining Assets, so that the Pertaining
Assets shall be sold and transferred to Purchaser as if they had been
specified in the Foreign Asset Purchase Agreements and/or the Seller's
Inventories Transfer Instrument delivered at the Closing.
2.7 If (i) any assets forming part of the Foreign Business, (ii) any of
Seller's Inventories and/or (iii) any Pertaining Assets are in the
possession of third parties, Seller hereby to the extent permitted by
law or applicable agreement or other arrangement
20
assigns to Purchaser, with commercial effect (mit wirtschaftlicher
Wirkung) as of the Effective Date and with in rem effect (mit
dinglicher Wirkung) as of the Closing Date, all of Seller's claims for
return or surrogate claims against such third parties and shall deliver
to Purchaser any documents related to such claims.
2.8 To the extent that Seller has assigned to Purchaser any claims for the
return of (i) any assets forming part of the Foreign Business, (ii) any
of Seller's Inventories and/or (iii) any Pertaining Assets, Seller
shall, immediately after the Closing Date or, in the case of the
Pertaining Assets, immediately after obtaining knowledge of the
Pertaining Assets, notify the obligors of the assignment of such claims
in a form and to the extent deemed suitable after consultation with
Purchaser.
3. PURCHASE PRICE
3.1 The Purchase Price for (i) the Shares and (ii) the Assets (herein
collectively "PURCHASE OBJECT") to be paid by Purchaser shall be the
aggregate of:
3.1.1 a fixed number of 135 million Consideration Shares (herein the
"FIXED SHARES");
minus Consideration Shares equal in value to
3.1.2 the consolidated nominal amount of the following financial
debt obligations (Finanzverbindlichkeiten) of the Companies
and the Assets as determined on the basis of the respective
items as stated in the Effective Date Balance Sheet (as
defined in Section 5.1 below):
(i) long-term debt;
(ii) short-term debt (excluding Intercompany Financing
Arrangements); and
(iii) financial payables;
(herein collectively "FINANCIAL DEBT"), excluding, for the
avoidance of doubt, any unfunded pension liabilities;
21
plus Consideration Shares equal in value to
3.1.3 the consolidated nominal amount of the following cash items of
the Companies and the Assets as determined on the basis of the
respective items as stated in the Effective Date Balance
Sheet:
(i) cash and cash equivalents; and
(ii) financial receivables owed by Seller or any Seller's
Affiliate excluding the Deposits;
(herein collectively "CASH");
minus Consideration Shares equal in value to
3.1.4 if any, the amount by which the balance of the consolidated
amount of the following assets and liabilities of the
Companies and the Assets as listed in (i) - (ix) below (herein
"WORKING CAPITAL"), determined on the basis of the respective
items as stated in the Effective Date Balance Sheet, falls
short of EUR 23,000,000.00 (in words: EURO twenty three
million):
(i) inventories;
(ii) plus trade accounts receivable owed by third parties;
(iii) plus the trade accounts receivable owed by Seller,
any Seller's Affiliate or any non-consolidated
subsidiary of Seller;
(iv) plus other current assets;
(v) plus current deferred income tax assets;
(vi) less trade accounts payable;
(vii) less other current liabilities;
(viii) less accrued liabilities; and
22
(ix) less current deferred income tax liabilities;
plus Consideration Shares equal in value to
3.1.5 if any, the amount by which the Working Capital as per the
Effective Date Balance Sheet exceeds EUR 24,000,000.00 (in
words: Euro twenty four million);
minus Consideration Shares equal in value to
3.1.6 the amount of (i) the total shareholder's equity of IF AP and
(ii) the total shareholder's equity minus inventories of IF
Japan and (iii) the total shareholder's equity minus
inventories and minus property, plant and equipment of IF NA,
in each case, relating to the FO Business Unit and as
determined on the basis of the respective item as stated in
the Effective Date Balance Sheet and a statement as of the
Effective Date prepared on the same basis as Exhibit 3.1.6.
(herein "SUBSIDIARY EQUITY ADJUSTMENT");
plus or minus Consideration Shares equal in value to
3.1.7 an amount equivalent to the average daily earnings or loss
before interest and taxes (EBIT) of the FO Business Unit
during the last fiscal quarter preceding the Closing Date (as
determined on the basis of the quarterly profits and loss
statement prepared on the basis of the same principles as the
Effective Date Balance Sheet) multiplied by the number of days
between the Effective Date and the Closing Date, excluding,
for the avoidance of doubt the Effective Date and the Closing
Date, (herein "INTERIM LOSS/PROFIT")
(herein "PURCHASE PRICE").
3.2 On the Scheduled Closing Date (as defined in Section 6.1.3 below),
Purchaser shall deliver to Seller, in the manner described in Section
3.8 below, the Fixed Shares. The amount of the Financial Debt, Cash,
Working Capital, Subsidiary Equity Adjustment and the Interim
Loss/Profit shall be preliminarily determined based on a written
agreement between the Parties on the basis of an agreed upon estimate,
if
23
such agreement can be reached not later than five (5) business days
prior to the Scheduled Closing Date (herein "PRELIMINARY ADJUSTMENT"),
it being understood that the Parties shall as soon as practicable after
the Signing Date use reasonable efforts in order to reach a mutual
agreement on the Preliminary Adjustment. If such agreement is reached,
such number of Consideration Shares (herein the "ADJUSTMENT SHARES")
shall be added to or subtracted from the Fixed Shares to be delivered
by Purchaser to Seller on the Scheduled Closing Date as equals the
Preliminary Adjustment, converted from EUR to USD at the average
Exchange Rates during the five (5) Business Days ending on the Signing
Date (herein "CURRENCY CONVERSION RATE"), divided by the average
closing sale price of Purchaser Common Stock, as reported on the Nasdaq
National Market (herein "NNM"), for the five (5) trading days ending on
the Signing Date (herein "SHARE PRICE"). The number of the Adjustment
Shares shall be determined two (2) Business Days prior to the Scheduled
Closing Date. The Fixed Shares plus or minus the Adjustment Shares, if
any, are referred to herein as the "PRELIMINARY PURCHASE PRICE" or
"PRELIMINARY SHARE CONSIDERATION".
3.3 The Parties agree that the Preliminary Purchase Price shall be
allocated to the Purchase Object as set out in Exhibit 3.3.
3.4 If on the basis of the Effective Date Balance Sheet, the Purchase Price
is higher than the Preliminary Purchase Price, Purchaser shall pay to
Seller an amount equal to the amount by which the Purchase Price
exceeds the Preliminary Purchase Price. If on the basis of the
Effective Date Balance Sheet, the Preliminary Purchase Price is higher
than the Purchase Price, Seller shall pay to Purchaser an amount equal
to the amount by which the Preliminary Purchase Price exceeds the
Purchase Price. Any such amount to be paid either by Purchaser or by
Seller (herein "PURCHASE PRICE ADJUSTMENT") shall be paid as follows:
3.4.1 any Purchase Price Adjustment owed by Purchaser shall be paid
by Purchaser free of costs and charges five (5) banking days
(Bankarbeitstage) after the Effective Date Balance Sheet has
become final and binding upon the Parties in accordance with
Section 5 below (herein "ADJUSTMENT PAYMENT DATE"), at
Purchaser's option by either (i) wire transfer by Purchaser of
immediately available funds into Seller's Account (as defined
in Section 3.6), or (ii) the delivery by Purchaser to Seller
of such additional number of Consideration Shares determined
by dividing the amount of the Purchase Price
24
Adjustment, converted from EUR to USD at the Currency
Conversion Rate, by the Share Price;
3.4.2 any Purchase Price Adjustment owed by Seller shall be paid by
Seller free of costs and charges on the Adjustment Payment
Date, at Seller's option by either (i) wire transfer by Seller
of immediately available funds into Purchaser's Account (as
defined in Section 3.7 below), or (ii) the return by Seller to
Purchaser of such number of Consideration Shares determined by
dividing the amount of the Purchase Price Adjustment,
converted from EUR to USD at the Currency Conversion Rate, by
the Share Price; and
3.4.3 any Purchase Price Adjustment payable pursuant to this Section
3.4 shall be treated as an adjustment to the Purchase Price
for income tax purposes and Exhibit 3.3 shall be adjusted as
soon as reasonably practicable after the Adjustment Payment
Date in order to reflect the final allocation of the Purchase
Price after determination of the Purchase Price Adjustment.
3.5 Except as herein provided otherwise, each of the Parties shall pay
interest on any amounts becoming due and payable to the other Party
under this Agreement as from the respective due date for payment until,
but not including, the day of actual payment at the rate of 800 basis
points over the European inter bank offered rate for EURO deposits with
an interest period of one (1) month quoted on the Reuters Page EURIBOR
at 11.00 a.m. C.E.T. on the first banking day of the relevant month
(herein "EURIBOR"). For the avoidance of doubt interest payments under
this Section 3.5 shall have to be made in cash.
3.6 All cash payments owed by Purchaser to Seller under this Agreement
shall be paid by Purchaser by wire transfer to the bank account of
Seller kept with Commerzbank AG, Munchen, sort code (Bankleitzahl) 700
400 41, account number 15 30 87 200 (herein "SELLER'S ACCOUNT").
3.7 All cash payments owed by Seller to Purchaser under this Agreement
shall be paid by Seller by wire transfer to an account of Purchaser to
be identified by Purchaser to Seller on or prior to the Closing Date
(herein "PURCHASER'S ACCOUNT").
3.8 Delivery of any Consideration Shares by Purchaser to Seller shall be
made by the delivery by Purchaser to Seller of one or more certificates
representing the Consid-
25
eration Shares registered in the name of Seller, or its nominees,
together with all required stock transfer stamps affixed, if any.
Delivery of any Consideration Shares by Seller to Purchaser, shall be
made by the delivery by Seller to Purchaser of one or more certificates
representing the Consideration Shares duly endorsed in blank, or
accompanied by stock powers duly executed in blank, together with all
required stock transfer stamps affixed, if any.
3.9 Seller and Purchaser hereby enter into a Stockholder Agreement and a
Registration Rights Agreement attached as Exhibit 3.9-1 and 3.9-2,
respectively, relating to the transferability of the Consideration
Shares by Seller and related stockholder matters.
4. TERMINATION OF INTERCOMPANY FINANCING ARRANGEMENTS AND DEPOSITS
Seller shall procure that on or before the Closing Date the
Intercompany Financing Arrangements and the Deposits shall have been
terminated with no further liabilities arising under the respective
agreements for either Party and that there shall be no other
intercompany debt owed by any of the Companies to Seller or any
Seller's Affiliates as of the Closing Date.
C. EFFECTIVE DATE BALANCE SHEET, SIGNING DATE, EFFECTIVE DATE, CLOSING
DATE AND CLOSING
5. EFFECTIVE DATE BALANCE SHEET AND ADJUSTMENT STATEMENT
5.1 The Financial Debt, the Cash, the Working Capital and the Subsidiary
Equity Adjustment of the Companies and the Assets, each existing as of
the Effective Date, shall be determined on the basis of a consolidated
group balance sheet (Gruppenbilanz) of the Companies and the Assets
(herein "EFFECTIVE DATE BALANCE SHEET"). A statement listing the
individual Financial Debt, Cash and Working Capital items set forth in
Sections 3.1.2 through 3.1.5 above, and the additional adjustments
required under and determined in accordance with Sections 3.1.6 and
3.1.7 above, and containing the determination of the Purchase Price
Adjustment (herein "ADJUSTMENT STATEMENT"), shall be prepared by Seller
and Seller's Affiliates, as appropriate, with the cooperation of the
Wholly-Owned Companies. The Effective Date Balance
26
Sheet shall be reviewed in accordance with the standard "PS 900"
(pruferische Durchsicht gema(beta) PS 900) and the Adjustment Statement
shall be reviewed on the basis of agreed upon procedures, in each case,
by KPMG Deutsche Treuhandgesellschaft Aktiengesellschaft
Wirtschaftsprufungsgesellschaft (KPMG) (herein "SELLER'S AUDITOR" or
"KPMG"). The Effective Date Balance Sheet and the Adjustment Statement
shall each be prepared in accordance with accounting principles
generally accepted in the United States of America, as applicable on
the Effective Date (herein "US GAAP"), subject to utilizing and
continuing the same capitalization, election rights, valuation and
consolidation principles and the same interpretation of the so called
"Infineon Accounting Guidelines" and the so called "Infineon
Kontenrahmen" as applicable on the Effective Date (herein "INFINEON
ACCOUNTING PRINCIPLES") consistently applied and as used in preparation
of the Financial Statements (as defined in Section 7.1.14 below)
(herein "CONSISTENCY PRINCIPLE"), provided, however that certain
positions may - other than in the Financial Statements - no longer be
determined on the basis of the carve-out assumptions as described in
the footnotes to the Financial Statements. For the avoidance of doubt,
the Parties confirm that for the purposes of the interpretation of the
Infineon Accounting Principles referring to consolidated companies
(konsolidierte Unternehmen) the Effective Date Balance Sheet shall
assume that the Wholly-Owned Companies are part of the consolidated
Infineon group. Purchaser's Auditor (as defined in Section 5.2 below)
shall upon request receive from time to time as reasonably practicable
interim reports on the preparation of the Effective Date Balance Sheet
from Seller's Auditor and may participate upon request in the physical
inventory.
5.2 Seller and Purchaser shall procure that the management responsible for
the Business will effectively assist Seller's Auditor in the
certification and review of the Effective Date Balance Sheet and the
Adjustment Statement, in particular, by providing all information and
documentation that (i) is relevant for reviewing the Effective Date
Balance Sheet and the Adjustment Statement, and (ii) has been
reasonably requested by Seller. The Effective Date Balance Sheet and
the Adjustment Statement shall be delivered to Ernst & Young AG
Wirtschaftsprufungsgesellschaft (herein "PURCHASER'S AUDITOR"), subject
to execution by Purchaser and Purchaser's Auditor of a letter
substantially in the format attached hereto as Exhibit 5.2, no later
than sixty (60) days after the Effective Date. Purchaser's Auditor
shall receive all necessary assistance and shall be given access to the
management responsible for the Business, and to all relevant
documentation reasonably necessary for reviewing
27
the Effective Date Balance Sheet and the Adjustment Statement,
including the working papers of Seller's Auditor.
5.3 The calculation of the Financial Debt, the Cash, the Working Capital,
the Subsidiary Equity Adjustment and the Interim Loss/Profit shall be
based on the Effective Date Balance Sheet and the Adjustment Statement
to the extent that Purchaser does not within thirty (30) days after the
receipt of the Effective Date Balance Sheet and the Adjustment
Statement provide Seller with a written report asserting that the
Effective Date Balance Sheet and/or the Adjustment Statement received
from Seller do not meet the provisions of this Agreement by way of
stating specific objections to that effect and provided that in such
event a revised Effective Date Balance Sheet (herein "REVISED EFFECTIVE
DATE BALANCE SHEET") and/or a revised Adjustment Statement (herein
"REVISED ADJUSTMENT STATEMENT") shall be prepared by Purchaser's
Auditor and submitted to Seller within the same thirty (30) days'
period mentioned above which shall take into account the changes that
are necessary in Purchaser's Auditor's view. Seller's Auditor shall
receive all necessary assistance and shall be given access to the
management responsible for the Business and to all documentation
relevant for reviewing the Revised Effective Date Balance Sheet and the
Revised Adjustment Statement, including the working papers of
Purchaser's Auditor. If no written objections are raised by Seller
within thirty (30) days following the delivery of the Revised Effective
Date Balance Sheet and the Revised Adjustment Statement by Purchaser's
Auditor to Seller, then the Revised Effective Date Balance Sheet and
the Revised Adjustment Statement shall be final and binding on the
Parties.
5.4 If, after Seller having raised in time and due form its objections to
the Revised Effective Date Balance Sheet and/or the Revised Adjustment
Statement (herein "OBJECTIONS"), Seller and Purchaser cannot agree on
changes to the Revised Effective Date Balance Sheet or the Revised
Adjustment Statement within thirty (30) days following the receipt by
Purchaser of the Objections, each of Seller and Purchaser shall be
entitled to request the "Institut der Wirtschaftsprufer in Deutschland
e.V.", Dusseldorf, to appoint an auditor to act as an arbitrator
(Schiedsgutachter) (herein "NEUTRAL AUDITOR") to determine the correct
amount of the Financial Debt, the Cash, the Working Capital and the
Subsidiary Equity Adjustment as at the Effective Date, and the Interim
Loss/Profit if and to the extent such amounts are in dispute between
Seller and Purchaser. The Neutral Auditor shall decide only on the
specific items in dispute in accordance with the principles set out in
Section 5.1
28
above and shall render his decision within two (2) months after the
date of his appointment. The Neutral Auditor shall give Seller and
Purchaser adequate opportunity to present their views in writing and at
a hearing or hearings to be held in the presence of Seller and
Purchaser and their advisors. The final decision of the Neutral Auditor
must not fall beyond or outside the respective positions taken by the
Parties with respect to any item in dispute. The Neutral Auditor shall
provide the Parties with a written report setting forth the reasons for
his decision on each of the specific items in dispute between Seller
and Purchaser. The costs and expenses incurred by the Neutral Auditor
shall be borne by the Parties in relation to their respective losing or
winning in the final decision of the Neutral Auditor. The Effective
Date Balance Sheet and the Revised Adjustment Statement as determined
by the Neutral Auditor shall be final and binding on the Parties
subject to Section 319 German Civil Code.
6. SIGNING DATE, EFFECTIVE DATE, SCHEDULED CLOSING DATE, CLOSING DATE AND
CLOSING
6.1 Signing Date, Effective Date, Scheduled Closing Date and Closing Date
shall each have the following meaning in this Agreement:
6.1.1 "SIGNING DATE" (Unterzeichnungsstichtag) shall be the day on
which this Agreement has been duly executed before a notary
public;
6.1.2 "EFFECTIVE DATE" shall be the last day of the fiscal month of
Seller preceding the month in which the Closing occurred,
24:00 hrs.;
6.1.3 "SCHEDULED CLOSING DATE" shall be five (5) Business Days
(Werktage) after all of the Closing Conditions (as defined in
Section 6.2 below) have been fulfilled or waived or any other
day as agreed between the Parties; and
6.1.4 "CLOSING DATE" shall be the day on which all, and not only
some of the Closing Events (as defined in Section 6.7 below)
have taken place or have been duly waived pursuant to Section
6.8 below.
6.2 The obligations of the Parties to carry out the Closing (as defined in
Section 6.7 below) shall be subject to the satisfaction of each of the
following conditions:
29
6.2.1 The hold separate requirements under the applicable national
merger control rules of (i) with regard to the acquisition of
the Business by the Purchaser, the Czech Republic, Japan and
the United States of America and (ii) with regard to the
acquisition of the Consideration Shares by Seller, Germany and
the United States of America (herein collectively "ANTITRUST
CLEARANCES") shall have either expired or been terminated by a
clearance decision of the relevant competition authority;
6.2.2 The Consideration Shares shall have been authorized for
listing on the NNM, subject to official notice of issuance;
and
6.2.3 The Purchaser Stock Issuance (as defined in Section 14.6.1)
shall have been duly approved by the requisite vote of
Purchaser's stockholders, in accordance with all applicable
laws, the rules of the NNM, and Purchaser's Certificate of
Incorporation and By-Laws
(herein collectively "CLOSING CONDITIONS").
6.3 The obligation of Purchaser to carry out the Closing shall be subject
to the condition that, between the Signing Date and the Closing Date,
no change, condition, event or development shall have occurred that has
or could reasonably be expected to have a Material Adverse Effect on
the FO Business Unit, except where the existence or possibility of such
change, condition, event or development was expressly disclosed in this
Agreement or in an exhibit or schedule hereto. For purposes of this
Section 6.3, the term "MATERIAL ADVERSE EFFECT ON THE FO BUSINESS UNIT"
means any change, condition, event or effect (or any development that
has had or is reasonably likely to have any change or effect) that,
individually or in the aggregate with any such other change, condition,
event or effect is or would reasonably be expected to be materially
adverse to the business, condition (financial or otherwise), assets,
liabilities or results of operations of the FO Business Unit, taken as
a whole; provided, however, that none of the following shall be deemed
in themselves, either alone or in combination, to constitute, and none
of the following shall be taken into account in determining whether
there has been, a Material Adverse Effect on the FO Business Unit: (i)
any failure by the FO Business Unit to achieve projected revenue or
operating results, (ii) any adverse changes, events, developments or
effects arising from or relating to general business or economic
conditions
30
or the general conditions of the industry in which the FO Business Unit
participates which are not specific to the FO Business Unit, (iii) any
outbreak or escalation of hostilities involving the United States or
Germany or the occurrence of any act of terrorism (except acts directed
specifically at the FO Business Unit), (iv) any adverse change, result,
event, development or effect arising from or relating to any change in
US GAAP, or (v) any adverse changes, events, developments or effects
reasonably attributable to the execution or announcement of this
Agreement or (vi) any adverse changes, conditions, events or
development which have lead to, or would reasonably be expected to lead
to Losses which, in the aggregate, do not exceed EUR 25,000,000.00.
Notwithstanding the foregoing, Purchaser shall continue to be obliged
to carry out the Closing despite the occurrence of a Material Adverse
Effect on the FO Business if Seller agrees to (i) share any resulting
Losses of Purchaser in excess of EUR 25,000,000.00 and up to EUR
50,000,000.00 not covered under the Seller's guarantees on a 50:50
basis and (ii) to indemnify Purchaser for all resulting Losses
exceeding EUR 50,000,000.00.
6.4 The obligation of Seller to carry out the Closing shall be subject to
the condition that, between the Signing Date and the Closing Date, no
change, condition, event or development shall have occurred that has or
could reasonably be expected to have a Material Adverse Effect on
Purchaser, except where the existence or possibility of such change,
condition, event or development was expressly disclosed in this
Agreement, in an exhibit or schedule hereto or in the SEC Reports (as
defined in Section 8.1.5 (a) below). For purposes of this Section 6.4,
the term "MATERIAL ADVERSE EFFECT ON PURCHASER" means any change,
condition, event or effect (or any development that has had or is
reasonably likely to have any change or effect) that, individually or
in the aggregate with any such other change, condition, event or effect
is or would reasonably be expected to be, materially adverse to the
business, condition (financial or otherwise), assets, liabilities or
results of operations of Purchaser and its subsidiaries, taken as a
whole; provided, however, that none of the following shall be deemed in
themselves, either alone or in combination, to constitute, and none of
the following shall be taken into account in determining whether there
has been, a Material Adverse Effect on Purchaser: (i) any failure by
the Purchaser to achieve projected revenue or operating results, (ii)
any change in the market price or trading volume of the capital stock
of Purchaser after the date hereof, (iii) changes, events or
occurrences in the United States securities markets which are not
specific to Purchaser, (iv) any adverse changes, events, developments
or effects arising from or relating to general business or economic
conditions or the
31
general conditions of the industry in which Purchaser participates
which are not specific to Purchaser and its subsidiaries, (v) any
outbreak or escalation of hostilities involving the United States or
Germany or the occurrence of any act of terrorism (except acts directed
specifically at Purchaser or its subsidiaries), (vi) any adverse
change, result, event, development or effect arising from or relating
to any change in US GAAP, (vii) any adverse changes, conditions,
events, or developments reasonably attributable to the execution or
announcement of this Agreement, (viii) the effect on Purchaser of
out-of-pocket fees or expenses (including legal, accounting and
financial advisory fees and expenses) incurred by Purchaser in
connection with the transactions contemplated by this Agreement or (ix)
any adverse changes, conditions, events or developments which have lead
to, or would reasonably be expected to lead to, Losses which, in the
aggregate, do not exceed EUR 25,000,000.00. Notwithstanding the
foregoing, Seller shall continue to be obliged to carry out the Closing
despite the occurrence of a Material Adverse Effect on Purchaser if
Purchaser agrees to (i) share any resulting Losses of Seller in excess
of EUR 25,000,000.00 and up to EUR 50,000,000.00 not covered under the
Purchaser's guarantees on a 50:50 basis and (ii) to indemnify Seller
for all resulting Losses exceeding EUR 50,000,000.00.
6.5 The Parties undertake to use all reasonable endeavors and to render to
each other all reasonably necessary support and cooperation to ensure
that the Closing Conditions are fulfilled as soon as possible after the
Signing Date. In particular, though each Party remains responsible for
preparing and making its own required filings, Seller and Purchaser
shall cooperate with one another in preparing and making the filings
described in Section 6.2.1 above and in Section 14.6 below and in
furnishing all information required in connection therewith. The
Parties shall inform each other in writing without undue delay as soon
as any or all of the Closing Conditions have been fulfilled. Purchaser
shall undertake or cause to be undertaken all steps necessary to remove
any impediments, restrictions, or conditions that may affect the
Antitrust Clearances, including, but not limited to, Purchaser's
selling or divesting of tangible or intangible assets or business
operations as necessary to receive the approval or clearance of
competition or antitrust authorities in all jurisdictions referred to
in Section 6.2.1 above, or to remove any decision, order, decree,
complaint, injunction, or other impediment or restriction which impedes
or threatens to impede the Closing.
32
6.6 Either Seller or Purchaser may withdraw (zurucktreten) from this
Agreement by written notice to the other Party if not all of the
Closing Conditions have been fulfilled at the latest six (6) months
after the Signing Date unless the Party claiming such withdrawal is
responsible for (hat zu vertreten) the non-fulfillment of the Closing
Conditions. Such withdrawal (Rucktritt) is only valid if the other
Party (i.e. Seller or Purchaser) has received written notice of such
withdrawal (Rucktrittserklarung) prior to the date on which the Closing
Conditions have been fulfilled.
In the event of any change, condition, event or development which
either Party believes gives rise to a right on the part of such Party
to invoke the provisions of Sections 6.3 or 6.4, such party shall give
the other Party notice thereof as soon as practicable upon becoming
aware thereof. Thereafter, the Parties will consult in good faith for
the succeeding ten (10) days period to consider the basis upon which
the Parties may be willing to proceed with the transactions
contemplated in this Agreement. If the Parties are unable to reach such
an agreement within such ten (10) days period, either Party may, by
written notice to the other, withdraw (zurucktreten) from this
Agreement within five (5) Business Days after expiry of the
aforementioned ten (10) days period. In any event such notice of
withdrawal must be received by the other Party at the latest ten (10)
Business Days after all Closing Conditions according to Section 6.2
have been fulfilled or waived. If one Party alleges to have a right not
to close according to Sections 6.3 or 6.4, the other Party may withdraw
(zurucktreten) from this Agreement by written notice immediately after
receipt of a respective allegation.
In the event of a withdrawal, none of the Parties shall have any
obligation or incur any liability towards the other Parties provided,
however, that Sections 18, 19 and 20 of this Agreement shall survive
and remain in full force and effect, and the Parties herewith waive all
such claims they may have against each other in connection with such
withdrawal, except for any liability of any Party for damages for
willful breach of any covenant or other obligation under this
Agreement.
6.7 The closing (Vollzug) of the transactions contemplated hereunder
(herein "CLOSING") shall occur on the Scheduled Closing Date. If for
any reason the Closing does not occur on the Scheduled Closing Date,
the Closing shall occur as soon as possible thereafter. On the Closing
Date the following events (herein "CLOSING EVENTS") shall take place at
the offices of Freshfields Bruckhaus Deringer, Munich, Germany or at
such other place as agreed between the Parties:
33
6.7.1 delivery by Purchaser of the Preliminary Share Consideration
to Seller in accordance with Section 3.8;
6.7.2 delivery by Purchaser to Seller of (i) evidence satisfactory
to Seller that the Trutnov Letter of Comfort has been replaced
or (ii) a bank guarantee in the aggregate amount of the
Trutnov Letter of Comfort, in each case in accordance with the
terms set out in Section 14.1 below;
6.7.3 with respect to the Foreign Shares, execution of the Foreign
Share Transfer Instruments between IF BV on the one hand and
Purchaser on the other hand;
6.7.4 execution and simultaneous consummation of the Foreign Asset
Purchase Agreements between IF NA, IF Japan and IF AP,
respectively, on the one hand and Purchaser on the other hand;
6.7.5 execution and simultaneous consummation of the Seller's
Inventories Transfer Instrument by Seller and Purchaser; and
6.7.6 delivery of resignation letters of the individuals listed in
Exhibit 6.7.6 as board members of any of the Companies listed
in Exhibit 6.7.6.
6.8 The Closing Events listed in Sections 6.7.1 and 6.7.2 above can be
waived by Seller. The Closing Events listed in Sections 6.7.3 through
Sections 6.7.6 above can be waived by Purchaser. Section 6.6 paragraph
1 and 3 shall apply mutatis mutandis in the event that not all of the
Closing Events shall have been fulfilled thirty (30) days after the
Scheduled Closing Date.
D. GUARANTEES, REMEDIES, INDEMNITIES AND COVENANTS
7. SELLER'S GUARANTEES
7.1 Seller hereby guarantees subject to any limitations contained in this
Agreement, in particular, but not limited to, the remedies set out in
Section 9 below, the Time Limitations (as defined in Section 13.1
below), the exclusion of De Minimis Claims
34
(as defined in Section 13.3 below), the Deductible (as defined in
Section 13.3 below) and the Liability Cap (as defined in Section 13.4
below) by way of an independent guarantee pursuant to Section 311 (1)
German Civil Code (BGB) that the statements set forth hereinafter are
true and correct as at the Signing Date and the Closing Date, unless
expressly specified otherwise herein; provided, however, that the
statements which are subject to the Best Knowledge of Seller (as
defined in Section 7.3 below) shall only be true as at the Signing Date
(herein collectively "SELLER'S GUARANTEES"):
7.1.1 ENFORCEABILITY, NO CONFLICT. This Agreement has been duly
executed by Seller and constitutes the legal, valid, and
binding obligation of Seller. The Contribution Agreement,
Seller's Inventories Transfer Instruments, the Foreign Asset
Purchase Agreements and the Foreign Share Transfer Instruments
(herein collectively "ANCILLARY AGREEMENTS") have been or
shall have been as of the Closing Date duly executed by
Seller, IF FO GmbH, IF BV, IF AP, IF Japan and IF NA,
respectively (herein together "TRANSFERORS") and each
constitute legal, valid, and binding obligations of the
respective Transferor. Transferors have the right, power,
authority, and capacity to execute and deliver this Agreement
and the Ancillary Agreements and to perform their obligations
under this Agreement or the respective Ancillary Agreements,
as the case may be, which actions have been duly authorized
and approved by all necessary corporate action of Transferors.
Except for (i) the approvals required pursuant to Section 6.2
above, (ii) the approval of SIPA to the transfer of the
ParoLink Shares and (iii) any notices under bulk sale or
similar laws, Transferors are not required to give any notice
to any person or governmental or regulatory authority, or
obtain any consent, waiver, authorization or approval from any
such person or governmental or regulatory authorization in
connection with (i) the execution of this Agreement by Seller
and the performance by Seller of its respective obligations
hereunder and (ii) the execution of the Ancillary Agreements
by the Transferors concerned and the performance by the
respective Transferors of their respective obligations
thereunder. The execution and performance by Transferors of
this Agreement or of the Ancillary Agreements (i) does not
violate or conflict with any provision of the charter or other
organizational documents or by-laws of any of the Transferors,
as the case may be (or any resolution adopted by the
respective supervisory board or boards of directors of
35
any of the Transferors), and (ii) will not lead to liabilities
of the Wholly-Owned Companies for the repayment of government
incentives.
7.1.2 EXISTENCE AND CAPITALIZATION OF COMPANIES; OWNERSHIP OF
SHARES. Each of the Wholly-Owned Companies and, to the Best
Knowledge of Seller (as defined in Section 7.3 below),
ParoLink, is duly organized and validly existing under the
laws of its jurisdiction and has all requisite corporate power
and authority to conduct its respective business substantially
in the form as conducted on the Signing Date. The Wholly-Owned
Companies and, to the Best Knowledge of Seller, ParoLink, are
duly qualified to do business as a German, Czech or Chinese
(Taiwanese) corporation, respectively, except where the
failure to be so qualified is not reasonably expected to
result in a Material Adverse Effect (as defined in Section
7.1.9 below). The Shares and, to the Best Knowledge of Seller,
the shares held by IF FO GmbH in the IF FO GmbH Subsidiaries,
have been duly authorized and validly issued, and are fully
paid-up and have not been wholly or partially repaid to the
respective shareholders and are non-assessable (nicht
nachschusspflichtig), and free and clear of any third party
rights and owned directly or indirectly by Seller and have not
been pledged, assigned, charged or used as a security. Except
as disclosed in Exhibit 7.1.2, no outstanding options,
warrants, agreements, conversion rights, preemptive rights or
other similar rights exist, in each case for the benefit of
third parties, to subscribe for, purchase or otherwise acquire
any shares or equivalent equity interests in any of the
Companies.
7.1.3 BANKRUPTCY OR JUDICIAL COMPOSITION PROCEEDINGS. As of the
Closing Date, no bankruptcy or judicial composition
proceedings concerning Seller, any Wholly-Owned Company, or,
to the Best Knowledge of Seller, ParoLink have been applied
for and to the Best Knowledge of Seller no circumstances exist
which would require the application for any bankruptcy or
judicial composition proceedings under mandatory law and, to
the Best Knowledge of Seller, no circumstances exist pursuant
to any applicable bankruptcy laws which could justify the
voidance of this Agreement or any of the Ancillary Agreements.
7.1.4 ENTERPRISE AGREEMENTS. As of the Closing Date, none of the
Companies is a party to an enterprise agreement within the
meaning of Sections 291 and
36
292 German Stock Corporation Act (AktG) or comparable
agreements under other jurisdictions.
7.1.5 MATERIAL AGREEMENTS. To the Best Knowledge of Seller, the
Business is not a party to any agreements and commitments of
the type described in (i) to (viii) below, except for such
agreements and commitments (a) which are listed or disclosed
in Exhibit 7.1.5 (herein collectively "MATERIAL AGREEMENTS"),
or (b) which have been completely fulfilled before the
Effective Date (vollstandig erfullte Vertrage).
(i) Loan and credit agreements, or other agreements or
instruments creating indebtedness of the Business in
excess of EUR 500,000.00 or securing such indebtedness
such as pledges, guarantees, securities (Burgschaften)
or letters of comfort (Patronatserklarungen) extended
by the Business, to any third parties and that will
continue in effect or with respect to which the
Business will have any liabilities after the Closing
Date.
(ii) Patents, trademarks and know how license agreements
(excluding standard software license agreements) which
involve annual royalties in excess of EUR 250,000.00.
(iii) Agreements relating to the acquisition or disposition
(whether by stock or asset purchase, merger or
otherwise) of fixed assets, interests in companies or
businesses, partnerships or other business
organizations, which in each case involve payment
obligations in excess of EUR 500,000.00.
(iv) Lease, leasehold or hereditary building right
agreements relating to real properties involving
annual payments in excess of EUR 12,000.00.
(v) Agreements with suppliers and customers (relating to
the Business) which involve payment obligations of
more than EUR 500,000.00 p.a.
37
(vi) Any contract for any joint venture or any agreement
relating to holding, voting or transferring any
equity interests in any Company.
(vii) Agency and distribution agreements which involve
payment obligations of the Business of more than EUR
500,000.00 p.a.
(viii) Consultancy agreements other than with financial
advisors involving payment obligations of more than
EUR 100,000.00 p.a.
7.1.6 COMPLIANCE WITH MATERIAL AGREEMENTS. The Business is not in
material breach of any Material Agreements. None of the
Material Agreements has been materially modified or terminated
by any party, nor has any party given written notice about its
intention to terminate a Material Agreement, nor has the
validity or enforceability of any of the Material Agreements
been legally contested.
7.1.7 MATERIAL INTELLECTUAL PROPERTY RIGHTS. Under the Contribution
Agreement, Seller
(a) contributed to IF FO GmbH all existing or registered
patents (Patente), utility patents (Gebrauchsmuster),
design patents (Geschmacksmuster), trademarks/service
marks (Marken) and employees' inventions according to
the German Employees' Invention Act
(Arbeitnehmererfindungsgesetz) or respective foreign
regulations of employees' inventions ("IP RIGHTS")
previously owned by Seller and exclusively used by
the Business, as listed in Exhibit 7.1.7-1 (herein
collectively "IF FO GMBH EXCLUSIVE IP RIGHTS");
(b) granted an irrevocable, non-exclusive,
non-transferrable and timely and locally unrestricted
right of use to IF FO GmbH regarding certain IP
Rights, which are listed in Exhibit 7.1.7-2 and which
are used by the Business on a non-exclusive basis
(herein collectively "IF FO GMBH NON-EXCLUSIVE IP
RIGHTS");
(c) contributed to IF FO GmbH all secret know-how of
Seller, including all rights to inventions for which
applications under the German Employees' Invention
Act have not been made, as well as knowledge
38
not covered by intellectual property rights
protection laws ("KNOW-HOW") previously owned by
Seller and exclusively used for the manufacture of
products of the FO Business Unit by the Business, as
listed in Exhibit 7.1.7-3 (herein collectively "IF FO
GMBH EXCLUSIVE KNOW-HOW");
(d) granted an irrevocable, non-exclusive,
non-transferrable and timely and locally unrestricted
right of use to IF FO GmbH regarding certain other
Know-How, which is listed in Exhibit 7.1.7-4, for the
purpose of development, production and maintenance of
products within the scope of the Business, including
the right of IF FO GmbH to grant sub-licenses to
affiliated companies of IF FO GmbH within the meaning
of Sections 15 et.seq. German Stock Corporation Act
(herein collectively "OTHER KNOW-HOW");
(e) granted an exclusive, timely, locally and with regard
to content unrestricted right of use and exploitation
to IF FO GmbH of all software in object and source
code form, including related documentation, system
concepts, IC-specifications, software tools,
application support, function blocks and system
architectures, which is attributable to or created by
Seller or by third parties for Seller and exclusively
to be attributed to the Business, as listed in
Exhibit 7.1.7-5 (herein collectively "IF FO GMBH
EXCLUSIVE SOFTWARE AND MATERIAL");
(f) granted a non-exclusive, non-transferrable, timely,
locally and with regard to content unrestricted right
of use and exploitation to IF FO GmbH of all software
in object code form, including related documentation,
which was created by Seller, as listed in Exhibit
7.1.7-6 and which is used by the Business on a
non-exclusive basis (herein collectively "IF FO GMBH
NON-EXCLUSIVE SOFTWARE AND MATERIAL", and together
with the IF FO GmbH Exclusive IP Rights, the IF FO
GmbH Non-Exclusive IP Rights, the IF FO GmbH
Exclusive Know-How, the Other Know-How and the IF FO
GmbH Exclusive Software and Material" herein
collectively "Material INTELLECTUAL PROPERTY
RIGHTS").
39
The Material Intellectual Property Rights are, to the Best
Knowledge of Seller, in full force; they are - as far as
registration is possible - duly registered and all renewal
fees have been fully paid when due in as far as registration
is a prerequisite for protection.
The Material Intellectual Property Rights are free and clear
of any liens, encumbrances or other third party rights other
than non - exclusive licenses or rights of use. The Business
has not granted any exclusive licenses for the use of any of
the Material Intellectual Property Rights.
To the Best Knowledge of Seller, the Material Intellectual
Property Rights constitute all intellectual property rights
owned or controlled by Seller and the Business which are
required to operate the Business in the manner in which it is
being operated as of the Signing Date and will be operated
through the Closing Date. IF FO GmbH is the owner and holds
good title to the IF FO GmbH Exclusive IP Rights, the IF FO
GmbH Exclusive Know How and the IF FO GmbH Exclusive Software
and Material.
To the Best Knowledge of Seller and except as disclosed in
Exhibit 7.1.7-7, ParoLink has the right to use all material
intellectual property rights which are required to operate its
business in the manner in which it is being operated as of the
Signing Date and will be operated through the Closing Date.
7.1.8 PROCEEDINGS RELATING TO MATERIAL INTELLECTUAL PROPERTY RIGHTS.
Except as disclosed in Exhibit 7.1.8, (i) the Material
Intellectual Property Rights are not subject to any pending
or, to the Best Knowledge of Seller, threatened proceedings
for opposition or cancellation, revocation and/or invalidity
or any legal proceedings otherwise challenging the use of any
Material Intellectual Property Rights in the Business, (ii)
there are no contractual restrictions materially affecting the
use of the Material Intellectual Property Rights in the
Business, and (iii) to the Best Knowledge of Seller, none of
the Material Intellectual Property Rights infringes any third
party's rights if used in a manner consistent with past
practice prior to the Closing Date.
7.1.9 INSURANCE. Except as disclosed in Exhibit 7.1.9, Transferors
maintain in full force and effect policies of insurance for
their own benefit until the Closing
40
Date against property damage, liability (Haftpflicht),
including product liability, and other usually insured
business risks except for such insurance the lack of which
would not reasonably be expected to have a Material Adverse
Effect. For the purpose of this Section 7, "MATERIAL ADVERSE
EFFECT" means any change or effect that is materially adverse
to the financial condition, results of operations, business
operations or assets of the Business taken as a whole.
7.1.10 MATERIAL ASSETS. The Business holds good title to all material
fixed assets (Anlagevermogen) which are reflected as being
owned by them in the Wholly-Owned Companies' and the Foreign
Business' books and records (herein collectively "MATERIAL
ASSETS"). The Material Assets are not charged with any rights
of third parties except for (i) customary rights of retention
of title (handelsubliche Eigentumsvorbehalte), liens, pledges
or other security rights in favour of suppliers, mechanics,
workers, landlords, carriers and the like; (ii) security
rights granted to banks and other financial institutions in
respect of debt reflected in the Financial Statements or in
the Effective Date Balance Sheet; (iii) statutory security
rights in favour of tax authorities or other governmental
entities; and (iv) liens, mortgages or encumbrances
(Belastungen) or other third party rights other than rights
which would not reasonably be expected to have a Material
Adverse Effect. The Material Assets are in a reasonably
useable condition, except for regular needs for maintenance
and repair.
7.1.11 PERMITS. To the Best Knowledge of Seller, the Wholly-Owned
Companies, ParoLink and the Business are in possession of all
governmental approvals, licenses and permits required under
public law for the conduct of the Business, in particular in
the areas of emission laws, safety laws and construction laws,
as necessary to operate the Business as it is conducted as of
the Signing Date and which are material for the Business and
the business of ParoLink (herein collectively "PERMITS"). To
the Best Knowledge of Seller, (i) the Permits have not been
withdrawn or revoked and (ii) there is no pending threat that
the Permits will be withdrawn or revoked. To the Best
Knowledge of Seller, no circumstances exist which would
reasonably be expected to result in, as a consequence of the
implementation of this Agreement, (i) a withdrawal, revocation
or limitation of the Permits or (ii) the imposition of
material conditions to the Permits.
41
7.1.12 LITIGATION. There are (i) no court or administrative
proceedings, including arbitration proceedings or, to the Best
Knowledge of Seller, investigations by administrative
authorities pending or, to the Best Knowledge of Seller,
threatened involving the Business, either as plaintiff or
defendant having a litigation value (Streitwert) exceeding EUR
100,000.00 in the individual case or which in any manner seek
to prevent, materially enjoin, alter or delay the transactions
contemplated herein and (ii) no product liability claims
pending or, to the Best Knowledge of Seller, threatened
against the Business with a value in dispute exceeding EUR
500,000.00 in the individual case, in each case except as
disclosed in Exhibit 7.1.12.
7.1.13 EMPLOYMENT MATTERS.
(a) With respect to the contribution of a certain part of
the FO Business Unit to IF FO GmbH under the
Contribution Agreement (for the purposes of this
Section 7.1.13 the "IF FO TRANSFERRED BUSINESS"),
Seller guarantees as follows:
(i) As a result of the transfer of the IF FO
Transferred Business to IF FO GmbH, as of
the date the Contribution Agreement became
effective (for the purposes of this Section
7.1.13 "CONTRIBUTION EFFECTIVE DATE"), IF FO
GmbH has by operation of law (Section 613 a
BGB) entered into the employment
relationships with the employees of the IF
FO Transferred Business (for the purposes of
this Section 7.1.13 "IF FO-EMPLOYEES") as
employer and has assumed the rights and
obligations arising out of these employment
relationships with the IF FO-Employees.
(ii) Seller and IF FO GmbH have, in connection
with the contribution of the IF FO
Transferred Business to IF FO GmbH, complied
with all laws and regulations applicable to
the transfer of employees in connection with
the transfer of business operations within
the meaning of Section 613a BGB, including,
but not limited to:
42
- laws and regulations regarding the
consultation and information of the
works council or other employees'
representative bodies; and
- information provided to the IF
FO-Employees on the transfer of the
IF FO Transferred Business, the
transfer of their employment
relationships to IF FO GmbH pursuant
to Section 613a para. 5 BGB.
(iii) All IF FO-Employees transferred to IF FO
GmbH by operation of law (Section 613 a BGB)
and all employees transferred by contractual
agreement as of 1 April 2004 are listed in
Exhibit 7.1.13 (a) (iii)-1. Exhibit 7.1.13
(a) (iii)-2 lists such employees who have
objected to the transfer of the employment
relationships pursuant to Section 613 a BGB.
The number of employment relationships
transferred to IF FO GmbH on the
Contribution Effective Date does not exceed
the number of employees listed in Exhibit
7.1.13 (a) (iii)-1. If any employees other
than those listed in Exhibit 7.1.13 (a)
(iii)-1 claim that their employment
relationships were transferred to IF FO GmbH
on the basis of Section 613a BGB, Seller
shall be liable for any and all liabilities
for claims raised against IF FO GmbH by
those employees of Seller who are not listed
in Exhibit 7.1.13 (a) (iii)-1 but are
transferred from Seller to IF FO GmbH on the
basis of Section 613a BGB, including, but
not limited to, employment, remuneration,
pension or other rights related to labour
law or social securities, severance payments
and costs of judicial proceedings, including
court and reasonable attorney's fees,
provided and to the extent Purchaser
undertakes best efforts to terminate
employment with such employees as soon and
as cost efficient as possible.
(b) In addition, Seller guarantees as follows:
(i) All fixed term employment contracts of
employees of the Wholly-Owned Companies
terminate on the expiry date without notice
of termination being necessary.
43
(ii) The Wholly-Owned Companies employ no persons
who are employees for purposes of social
security contributions and/or fiscal
legislation for whom all applicable wage tax
or social security contributions have not
been paid. The Wholly-Owned Companies have
paid in full, when due, all social security
contributions, including the amounts due to
the competent social security for
occupational accidents.
(iii) Exhibit 7.1.13 (b) (iii) contains a complete
list as of the Signing Date of all employees
of the Wholly-Owned Companies (including
members of management) who have been
promised a bonus payment or an incentive
payment in connection with the transactions
contemplated by this Agreement ("KEY
EMPLOYEES"). Subject to the terms and
conditions of the respective agreements,
such bonus or incentive payments are to be
paid by Seller. As of the date hereof,
except as disclosed in Exhibit 7.1.13 (b)
(iii), none of the Key Employees has given
written notice of termination of his or her
employment.
(iv) There are no pending or threatened legal
proceedings (gerichtliche Verfahren) with
employees of the Wholly-Owned Companies,
with the exception of the legal proceedings
listed in Exhibit 7.1.13 (b) (iv).
(v) Except as disclosed in Exhibit 7.1.13 (b)
(v), there are no pending, and during the
three (3) years prior to the date of this
Agreement there have been no legal
proceedings with any works council or trade
union nor has there been any labour strike
or work stoppage (excluding warning strikes
(Warnstreiks)) against or involving the
Wholly-Owned Companies.
(vi) There are no post contractual
non-competition agreements or agreements
stating obligations in connection with the
termination or cancellation of employment
relationships with any Key Employees.
44
(vii) The Wholly-Owned Companies have conducted
and currently conduct their businesses in
accordance with all statutory provisions,
regulations and rules imposed by
authorities, works agreements, collective
bargaining agreements and other general
working conditions, including those relating
to employment and employment practices,
employment conditions, holidays, wages,
working hours, non-discrimination and
health.
(viii) Exhibit 7.1.13 (b) (viii) sets forth a
correct and complete list of each bonus
program and/or medical, life, accident or
disability insurance program sponsored,
maintained or contributed to or required to
be contributed by the Wholly-Owned
Companies, for the benefit of any employee
or former employee of the Wholly-Owned
Companies (herein collectively the "PLANS"),
except for such Plans (i) which have been
established in connection with shop
agreements, social plans or collective
bargaining agreements or (ii) the terms of
which are specified by statutory law. Except
as set forth in Exhibit 7.1.13 (b) (viii),
the Wholly-Owned Companies have no
commitment to create any additional Plan or
materially increase the benefits provided
under any existing Plan. To the Best
Knowledge of Seller, each Plan has been
created, operated and administered in
accordance with its terms and in compliance
with applicable laws.
(ix) Neither the execution and delivery of this
Agreement by Seller nor the performance by
the Wholly-Owned Companies and Seller of
this Agreement or the consummation of the
transactions contemplated herein will (a)
entitle any current or former director,
officer or employee of the Wholly-Owned
Companies to severance pay, unemployment
compensation or any other payment from the
Wholly-Owned Companies, or (b) accelerate
the time of payment or vesting, or increase
the amount of compensation due to any such
director, officer or employee, or (c)
entitle any current or former director,
officer or employee of the Wholly-Owned
Companies to terminate his or her employment
with the Wholly-Owned Companies.
45
(x) Exhibit 7.1.13 (b) (x) includes to the Best
Knowledge of Seller a list of all shop
agreements (Betriebsvereinbarungen),
including equalisation of interests
(Interessenausgleiche) and social plans
(Sozialplane), and all collective bargaining
agreements (Tarifvertrage) applicable to the
Wholly-Owned Companies, including
industry-based collective bargaining
agreements (Verbandstarifvertrage) and
company-based collective bargaining
agreements (Firmentarifvertrage). There are
no outstanding liabilities resulting from
social plans adopted in connection with the
restructuring in 2003 for the Berlin site of
IF FO GmbH.
(xi) With the exception of the pension and early
retirement commitments listed in Exhibit
7.1.13 (b) (xi) ("PENSION COMMITMENTS"),
there are no pension commitments to the
employees of the Wholly-Owned Companies,
whether on the basis of individual or
collective promises, or on the basis of an
employment agreement, shop agreement,
collective bargaining agreement, operational
custom (Betriebliche Ubung) or other legal
relationships.
7.1.14 FINANCIAL STATEMENTS. Seller has furnished to Purchaser a copy
of the certified (bescheinigte) accounts (Abschlusse) of the
Companies and Assets as of 29 January 2004 certified
(bescheinigt) by KPMG together with the related statements of
operations, business equity and cash flow
(Kapitalflu(beta)rechnung) for the period ending on 30
September 2003 and the explanations (Erlauterungen) thereto
(herein "FINANCIAL STATEMENTS"). The Financial Statements
present fairly in all material respects the financial position
of the Companies and Assets as a whole and have been prepared
in accordance with US GAAP and the Infineon Accounting
Principles applied on a consistent basis throughout the
periods covered thereby. Except as and to the extent taken
into account in the Effective Date Balance Sheet or in the
Financial Statements, Seller has no liability or obligation of
any nature (whether accrued, absolute, contingent or
otherwise) which would prevent or materially delay Seller from
performing its obligations under this Agreement.
46
7.1.15 FINDERS' FEES. Seller does not have any obligation or
liability to pay any fees or commissions to any broker, finder
or agent with respect to the transaction contemplated
hereunder for which Purchaser could become wholly or partly
liable.
7.1.16 ABSENCE OF CERTAIN CHANGES OR EVENTS. To the Best Knowledge of
Seller, since 29 January 2004, except as expressly
contemplated by this Agreement:
(i) Seller, the Wholly-Owned Companies and ParoLink have
conducted the Business and the business of ParoLink
only in the ordinary course of business and in a
manner consistent with past practice to preserve each
of its relationships with customers, suppliers,
employees, creditors, and business partners;
(ii) no extraordinary business has been conducted and no
liabilities or debts outside the normal course of the
Business and of the business of ParoLink have been
entered into, except where failure to do so would not
lead to a Material Adverse Effect;
(iii) the Material Assets have been maintained and
supplemented in the ordinary course of business and
in a manner consistent with past practice, and none
of the Material Assets have been disposed of outside
the ordinary course of business;
(iv) there has been no material damage to any of the
facilities of the Wholly-Owned Companies or ParoLink,
whether or not covered by insurance; and
(v) there has been no increase in compensation payable or
to become payable to any of the officers or employees
of the Business in any bonus payment or arrangement
with any such person, or any material change in
personnel policies or benefits except as in the
ordinary course of business and retention bonuses in
connection with the transaction contemplated by this
Agreement, which are payable by Seller.
7.1.17 TAX FILINGS. All declarations and advance returns (Erklarungen
und Voranmeldungen) concerning taxes (including, but not
limited to, any fed-
47
eral, state or local tax, including income, withholding,
value-added, sales, property or transfer tax, salary
withholding tax/wage tax, customs, tax assessment notes for
tax liability claims (steuerliche Haftungsbescheide) as well
as interest and incidental tax claims (Zinsen und steuerliche
Nebenleistungen)) (herein "TAXES"), charges, contributions and
all other levies, tolls and social security contributions,
including interest thereon, incidental tax claims and
liability claims related to the Business have been issued when
due or within explicitly or implicitly granted extension
periods completely and truly by the Transferors, and, to the
extent applicable, the Wholly-Owned Companies, and, but
restricted to the Best Knowledge of Seller, by ParoLink.
7.1.18 SUBSIDIES. To the Best Knowledge of Seller, the Wholly-Owned
Companies are not obligated to pay back any investment
subsidies or grants, other subsidies, tax advantages and
similar benefits based on public law related to the Business,
and Seller is not aware of any such claims that are to be paid
on or after the Closing Date.
7.1.19 STATEMENTS ABOUT STATUS. The statements contained in Sections
1.1 through 1.7 are true and accurate.
7.1.20 PRODUCT DEFECTS. No products of the Business containing
defects leading to epidemic failure have been shipped prior to
the Closing Date that have resulted or will result in a
product recall by customers of the Business and in Losses of
the Business in excess of EUR 500,000.00.
7.2 All Exhibits referred to in Section 7.1 are collectively referred to as
the "DISCLOSURE SCHEDULES". For the avoidance of doubt, any fact or
item referenced in or disclosed in a specific Disclosure Schedule,
shall be deemed to be disclosed also with respect to any other Seller's
Guarantee whether or not a cross-reference appears, if the relevance of
such disclosed fact or item under any other Disclosure Schedule is
reasonably apparent. Seller does not give or assume any guarantees
other than those set forth in Section 7.1 above and none of the
Seller's Guarantees shall be construed as a guarantee or representation
with respect to the quality of the Purchase Object within the meaning
of Sections 276 (1), 443 German Civil Code (Garantie fur die
Beschaffenheit der Sache).
48
7.3 For the purpose of this Agreement, "BEST KNOWLEDGE OF SELLER" shall
mean the actual knowledge (positive Kenntnis) of Peter Gruber, Thomas
Seifert, Arno Patzold and/or Rudolf v. Moreau, after due inquiry of the
following persons having operational responsibility for the Business:
Erwin Wolf, head of worldwide operations; Barbara Fischer, head of
business administration; Ayad Abul-Ella, director of the Module
segment; Ambros Wascher, general manager of the Trutnov site; and
Christian Winkelmeyr, director of the POF segment.
8. PURCHASER'S GUARANTEES
8.1 Purchaser hereby guarantees subject to any limitations contained in
this Agreement, in particular, but not limited to, the remedies set out
in Section 9 below, the Time Limitations (as defined in Section 13.1
below), the exclusion of De Minimis Claims (as defined in Section 13.3
below), the Deductible (as defined in Section 13.3 below) and the
Liability Cap (as defined in Section 13.4 below) - as applicable to
claims against Purchaser on the basis of Sections 9.8 and 13.8 - by way
of an independent guarantee pursuant to Section 311 (1) German Civil
Code (BGB) that the statements set forth hereinafter are true and
correct as of the Signing Date and the Closing Date, unless expressly
specified otherwise herein; provided, however, that the statements
which are subject to the Best Knowledge of Purchaser (as defined in
Section 8.3 below) shall only be guaranteed as at the Signing Date
(herein collectively "PURCHASER'S GUARANTEES"):
8.1.1 ENFORCEABILITY, NO CONFLICT. Purchaser is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware. This Agreement has been duly
executed by Purchaser and constitutes the legal, valid and
binding obligation of Purchaser. Purchaser has the right,
power, authority, and capacity to execute and deliver this
Agreement and the Ancillary Agreements to which it is a party
and to perform its obligations under this Agreement or the
respective Ancillary Agreements, which actions have been duly
authorized and approved by all necessary corporate action of
Purchaser and no other proceedings on the part of Purchaser or
its Board of Directors are necessary to approve or recommend
for approval or to consummate the transactions contemplated by
this Agreement or any Ancillary Agreement (other than the
approval of the issuance of the Consideration Shares by the
affirmative vote of the holders of a majority of Purchaser's
outstanding Purchaser Common Stock present at a meeting of
49
stockholders and entitled to vote). Except for the Antitrust
Clearances, the filing of a proxy statement and related proxy
materials with the U.S. Securities and Exchange Commission
(herein the "SEC") in accordance with the Securities Exchange
Act of 1934, as amended (herein the "EXCHANGE ACT"), to
solicit the approval by Purchaser's stockholders to issue the
Consideration Shares, Purchaser is not required to give any
notice to any person or obtain any consent or governmental
authorization in connection with the execution of this
Agreement or the Ancillary Agreements by Purchaser. The
execution and performance of this Agreement or of the
Ancillary Agreements does not violate or conflict with any
provision of the certificate of incorporation or by-laws of
Purchaser or any Affiliate of Purchaser, as the case may be
(or any resolution adopted by Purchaser's Board of Directors).
8.1.2 FINDERS' FEES. Purchaser does not have any obligation or
liability to pay any fees or commissions to any broker, finder
or agent with respect to the transaction contemplated
hereunder for which Seller could become wholly or partly
liable.
8.1.3 CAPITALIZATION. The authorized capital stock of Purchaser
consists of 500,000,000 shares of common stock, par value
$0.001 per share (herein "PURCHASER COMMON STOCK") and
5,000,000 shares of preferred stock, par value $0.001 per
share, 500,000 of which are designated Series RP Preferred
Stock (herein "PURCHASER PREFERRED STOCK" and, together with
Purchaser Common Stock, the "PURCHASER SHARES"). The shares of
Series RP Preferred Stock are issuable upon the exercise of
rights attached to shares of Purchaser Common Stock (herein
"RIGHTS") pursuant to the Rights Agreement dated as of
September 25, 2002 between Purchaser and American Stock
Transfer & Trust Company (herein "RIGHTS AGREEMENT"). As of 1
March 2004: (i) 222,000,774 shares of Purchaser Common Stock
were issued and outstanding, all of which were validly issued,
fully paid and nonassessable; (ii) no shares of Purchaser
Preferred Stock were issued and outstanding; (iii) no
Purchaser Shares were held in treasury; (iv) 52,492,072 shares
of Purchaser Common Stock were reserved for future issuance
pursuant to Purchaser's stock option and employee stock
purchase plans; (v) an aggregate of 58,647,020 shares of
Purchaser Common Stock were reserved for future issuance upon
the conversion of Purchaser's 5-1/4% convertible subordinated
notes due 2008 and Purchaser's 2-1/2% convertible subordi-
50
nated notes due 2010; and (vi) 937,185 shares of Purchaser
Common Stock were reserved for future issuance upon the
exercise of outstanding warrants at a weighted average price
of USD 1.57 per share of Purchaser Common Stock. Except as
disclosed in the SEC Reports, Purchaser is not party to any
agreement relating to restrictions on the transferability of
any Purchaser Shares. Except as set forth in this Section
8.1.3 or in this Agreement, or as disclosed in the SEC
Reports, there are (i) no options, warrants or other rights,
agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of Purchaser
and that Purchaser or any of its subsidiaries is a party or
bound or obligating Purchaser to issue or sell any Purchaser
Shares or capital stock of, or other equity interests in,
Purchaser and (ii) no outstanding contractual obligations of
Purchaser or any Affiliate of the Purchaser to repurchase,
redeem or otherwise acquire any Purchaser Shares. Except as
set forth in this Section 8.1.3 or as disclosed in the SEC
Reports, to the Best Knowledge of Purchaser, there are no
voting trusts, proxies or other agreements or understandings
with respect to the registration or voting of any equity
security of any class of Purchaser or with respect to the
registration or voting of any interest of any equity security
of any class of any of Purchaser's subsidiaries. The Purchaser
Stock Issuance is not subject to any pre-emptive rights,
rights of first refusal, anti-dilution rights or similar
rights created by statute, the Certificate of Incorporation or
By-laws of Purchaser or by any agreement to which Purchaser is
a party or by which Purchaser is bound. Under the Rights
Agreement, until the Distribution Date (as defined in the
Rights Agreement), (i) the Rights will be evidenced by the
certificates for Purchaser Common Stock registered in the
names of the holders thereof and not by separate certificates
and (ii) the surrender for transfer of any certificate for
Purchaser Common Stock shall also constitute the surrender for
transfer of the Right associated with the Purchaser Common
Stock represented thereby.
8.1.4 THE CONSIDERATION SHARES. The Consideration Shares to be
issued pursuant to Section 3.2 of this Agreement will be duly
authorized, validly issued, fully paid and non-assessable and
will not be subject to preemptive rights created by statute,
Purchaser's organizational documents or any agreement to which
Purchaser is a party or by which it is bound.
51
8.1.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Purchaser has filed all forms, reports and documents
required to be filed by it with the SEC since 1 May
2001, and has heretofore delivered or made available
to Seller, in the form filed with the SEC, forms,
reports and other documents filed by the Purchaser
with the SEC since 1 May 2001, other than
registration statements on Form S-8 (herein
collectively, the "SEC REPORTS"). The SEC Reports (i)
were prepared in accordance with either the
requirements of the Securities Act of 1933, as
amended (herein the "SECURITIES ACT"), or the
Exchange Act, as the case may be, and the rules and
regulations promulgated thereunder, and (ii) did not,
at the time they were filed, or, if amended, as of
the date of such amendment, contain any untrue
statement of a material fact or omit to state a
material fact required to be stated therein or
necessary in order to make the statements made
therein, in the light of the circumstances under
which they were made, not misleading. No subsidiary
of the Purchaser is required to file any form, report
or other document with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) included
or incorporated by reference in the SEC Reports was
prepared in accordance with US GAAP applied on a
consistent basis throughout the periods indicated
(except as may be indicated in the notes thereto) and
each fairly presents, in all material respects, the
consolidated financial position, results of
operations and cash flows of Purchaser and its
consolidated subsidiaries as at the respective dates
thereof and for the respective periods indicated
therein except as otherwise noted therein (subject,
in the case of unaudited statements, to normal and
recurring year-end adjustments which would not result
in a Purchaser Material Adverse Effect). For the
purpose of this Agreement, "PURCHASER MATERIAL
ADVERSE EFFECT" means any change or effect that is
materially adverse to the financial condition,
results of operation, business operations or assets
of the Purchaser and its subsidiaries taken as a
whole.
(c) Except as and to the extent disclosed in the SEC
Reports or set forth on the consolidated balance
sheet of Purchaser and its consolidated
52
subsidiaries as at 31 January 2004, including the
notes thereto, neither Purchaser nor any such
subsidiary has any liability or obligation of any
nature (whether accrued, absolute, contingent or
otherwise) which would prevent or materially delay
Purchaser from performing its obligations under this
Agreement.
8.1.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. To the Best Knowledge of
Purchaser, since 31 January 2004, except as expressly
contemplated by this Agreement, or specifically disclosed in
the SEC Reports filed prior to the date of this Agreement, (i)
Purchaser and its subsidiaries have conducted their businesses
only in the ordinary course and in a manner consistent with
past practice, (ii) Purchaser has not issued, sold, pledged,
disposed of, granted, encumbered or authorised the issuance,
sale, pledge, disposition, grant or encumbrance of any
Purchaser Shares or its capital stock, or any options,
warrants, convertible securities or other rights of any kind
to acquire any Purchaser Shares or any such capital stock or
any ownership interest of Purchaser other than the grant of
options and issuance of Purchaser Shares pursuant to existing
stock option plans and employee stock purchase plans of
Purchaser, and (iii) there has been no dividend or other
distribution with respect to Purchaser's capital stock or any
change in the rights or any reclassification, combination,
split, subdivision, redemption, or other purchase or other
acquisition by Purchaser of any of Purchaser's capital stock.
8.1.7 VOTE REQUIRED. The only vote of the holders of any class or
series of capital stock of the Purchaser necessary to approve
the issuance of the Consideration Shares pursuant to this
Agreement or any other transaction contemplated by this
Agreement or the Ancillary Agreements is the affirmative vote
of the holders of a majority of the shares of Purchaser Common
Stock present in person or represented by proxy at a meeting
of stockholders and entitled to vote.
8.1.8 FORM S-3 ELIGIBILITY. Purchaser is eligible to register the
Consideration Shares for resale by Seller using Form S-3
promulgated under the Securities Act.
53
8.1.9 LISTING AND MAINTENANCE REQUIREMENTS. Since January 1, 2003,
Purchaser has been in compliance with all listing and
maintenance requirements for the NNM.
8.1.10 STATE TAKEOVER STATUTES. The Board of Directors of Purchaser
has approved all transactions contemplated by this Agreement
and the Ancillary Agreements pursuant to Section 203 of the
Delaware General Corporation Law, and otherwise has taken the
necessary actions to make inapplicable any other applicable
anti-takeover statute or similar statute or regulation to the
transactions contemplated by this Agreement and the Ancillary
Agreements, including the acquisition of the Consideration
Shares by Seller.
8.1.11 SHAREHOLDER RIGHTS PLAN. The Board of Directors of Purchaser
has adopted resolutions to provide that (i) no "Distribution
Date" shall have occurred or will occur as a result of the
approval, execution or delivery of this Agreement, the
Ancillary Agreements or the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements,
(ii) Seller has not become and will not be an "Acquiring
Person" solely as a result of entering into, performing the
terms of or consummating the transactions contemplated by this
Agreement or the Ancillary Agreements and (iii) the Rights
Agreement will otherwise be inapplicable to Seller while this
Agreement is in effect, but only to the extent that Seller or
any of its Affiliates becomes a "Beneficial Owner" of shares
of Purchaser's securities pursuant to this Agreement, the
Ancillary Agreements or the consummation of the transactions
contemplated thereby. Capitalized terms in quotations in this
Section 8.1.11 shall have the meanings ascribed to such terms
in the Rights Agreement.
8.1.12 FAIRNESS OPINION. The Board of Directors of Purchaser has
received an opinion from Deutsche Bank AG, dated as of the
date of this Agreement, to the effect that, as of such date,
issuance of the Consideration Shares in the Purchaser Stock
Issuance is fair, from a financial point of view, to
Purchaser, a signed copy of which opinion will be delivered to
Seller solely for informational purposes as promptly as
practicable after receipt thereof by Purchaser. Such opinion
has not been withdrawn or modified.
54
8.1.13 BOARD APPROVAL. The Board of Directors of Purchaser (i) has
determined that the Purchase Price for the Purchase Object in
the form of the Purchaser Stock Issuance is fair to Purchaser
and its stockholders, (ii) has approved this Agreement, the
Ancillary Agreements and the transactions contemplated hereby
and thereby, and (iii) has approved and determined to
recommend that the stockholders of Purchaser vote to approve
the Purchaser Stock Issuance (herein the "BOARD
RECOMMENDATION").
8.1.14 BANKRUPTCY OR JUDICIAL COMPOSITION PROCEEDINGS. As of the
Closing Date, no bankruptcy or judicial composition
proceedings concerning Purchaser or any subsidiary of
Purchaser have been applied for and, to the Best Knowledge of
Purchaser, no circumstances exist which would require the
application for any bankruptcy or judicial composition
proceedings under mandatory law and, to the Best Knowledge of
Purchaser, no circumstances exist pursuant to any applicable
bankruptcy laws which could justify the voidance of this
Agreement or any of the Ancillary Agreements.
8.1.15 ENTERPRISE AGREEMENTS. As of the Closing Date, neither
Purchaser nor any of Purchaser's subsidiaries are a party to
an enterprise agreement within the meaning of Sections 291 and
292 German Stock Corporation Act (AktG) or comparable
agreements under other jurisdictions.
8.1.16 PURCHASER MATERIAL AGREEMENTS. To the Best Knowledge of
Purchaser, neither Purchaser nor any of Purchaser's
subsidiaries are a party to any agreement or commitment of the
type described in (i) to (viii) below, except for such
agreements and commitments (a) which are listed or disclosed
in Exhibit 8.1.16 or disclosed (i.e. mentioned, but not
necessarily disclosed in full) in the SEC Reports (herein
collectively "PURCHASER MATERIAL AGREEMENTS") or (b) which
have been completely fulfilled before the Effective Date
(vollstandig erfullte Vertrage).
(i) Loan and credit agreements, or other agreements or
instruments creating indebtedness of the Purchaser or
any Purchaser's Affiliate in excess of USD
1,000,000.00 or securing such indebtedness such as
pledges, guarantees, securities (Burgschaften) or
letters of comfort (Patronatserklarungen) extended by
the Purchaser or any subsidiary of Purchaser, to any
third parties and that will continue in effect or
55
with respect to which the Purchaser or such
subsidiary will have any liabilities after the
Closing Date;
(ii) Patent, trademark and know how license agreements
(excluding standard software license agreements)
which involve annual royalties in excess of USD
2,000,000.00;
(iii) Agreements relating to the acquisition or disposition
(whether by stock or asset purchase, merger or
otherwise) of fixed assets, interests in companies or
businesses, partnerships or other business
organizations which in each case involve payment
obligations in excess of USD 25,000,000.00;
(iv) Agreements with suppliers and customers (relating to
Purchaser's business) which involve payment
obligations of more than USD 1,000,000.00 p.a.;
(v) Any contracts for any joint venture or any agreement
relating to holding, voting or transferring any
equity interests in Purchaser or any of Purchaser's
subsidiaries;
(vi) Agency and distribution agreements which involve
payment obligations of Purchaser of more than USD
1,000,000.00 p.a.;
(vii) Consultancy agreements other than with financial
advisors involving payment obligations of more than
USD 500,000.00 p.a.
8.1.17 COMPLIANCE WITH PURCHASER MATERIAL AGREEMENTS. Purchaser and
its subsidiaries are not in material breach of any Purchaser
Material Agreements. None of the Purchaser Material Agreements
has been materially modified or terminated by any party, nor
has any party given written notice about its intention to
terminate a Purchaser Material Agreement, nor has the validity
or enforceability of any of the Purchaser Material Agreements
been legally contested.
8.1.18 PURCHASER INTELLECTUAL PROPERTY RIGHTS. None of the
intellectual property rights that are material to the conduct
of Purchaser's business as currently
56
conducted (herein collectively "PURCHASER MATERIAL
INTELLECTUAL PROPERTY RIGHTS") are subject to any pending or,
to the Best Knowledge of Purchaser, threatened proceedings for
opposition or cancellation, revocation and/or invalidity or
any legal proceedings otherwise challenging the use of any
Purchaser Material Property Rights in Purchaser's business.
There are no contractual restrictions materially affecting
Purchaser's and its subsidiaries' use of the Purchaser
Material Intellectual Property Rights in Purchaser's business.
To the Best Knowledge of Purchaser, none of the Purchaser
Material Intellectual Property Rights infringe any third
party's rights if used in a manner consistent with past
practice prior to the Closing Date. To the Best Knowledge of
Purchaser and except as disclosed in the SEC Reports, the
Purchaser Material Intellectual Property Rights constitute all
intellectual property rights required to operate the business
of Purchaser in the manner in which it is being operated as of
the Signing Date and will be operated through the Closing
Date.
8.1.19 INSURANCE. Purchaser and its subsidiaries maintain in full
force and effect policies of insurance for their own benefit
against property damage, liability (Haftpflicht), including
product liability, and other usually insured business risks
except for such insurance the lack of which would not
reasonably be expected to have a Purchaser Material Adverse
Effect.
8.1.20 PURCHASER MATERIAL ASSETS. Purchaser and its subsidiaries hold
good title to all material fixed assets (Anlagevermogen) which
are reflected as being owned by them in Purchaser's and its
subsidiaries books and records (herein collectively "PURCHASER
MATERIAL ASSETS"). To the Best Knowledge of Purchaser, The
Purchaser Material Assets are not charged with any rights of
third parties except for (i) customary rights of retention of
title (handelsubliche Eigentumsvorbehalte), liens, pledges or
other security rights in favour of suppliers, mechanics,
workers, landlords, carriers and the like; (ii) security
rights granted to banks and other financial institutions in
respect of debt reflected in the financial statements of
Purchaser or Purchaser's Affiliates; (iii) statutory security
rights in favour of tax authorities or other governmental
entities; and (iv) liens, mortgages or encumbrances
(Belastungen) or other third party rights other than rights
which would not reasonably be expected to have a Purchaser
Material Adverse Effect. The Purchaser Material Assets are in
a reasonably useable condition, except for regular needs
57
for maintenance and repair, in order to continue the
Purchaser's business substantially in the same fashion and
manner as conducted as at the Signing Date.
8.1.21 PURCHASER PERMITS. To the Best Knowledge of Purchaser,
Purchaser and its subsidiaries are in possession of all
governmental approvals, licenses and permits required under
public law for the conduct of the business of Purchaser, in
particular in the areas of emission laws, safety laws and
construction laws, as necessary to operate the business as it
is conducted as of the Signing Date and which are material for
the business of Purchaser (herein collectively "PURCHASER
PERMITS"). To the Best Knowledge of Purchaser, (i) the
Purchaser Permits have not been withdrawn or revoked and (ii)
there is no pending threat that the Purchaser Permits will be
withdrawn or revoked. To the Best Knowledge of Purchaser, no
circumstances exist which would reasonably be expected to
result in, as a consequence of the implementation of this
Agreement, (i) a withdrawal, revocation or limitation of the
Purchaser Permits or (ii) the imposition of material
conditions to the Purchaser Permits.
8.1.22 LITIGATION. There are (i) no court or administrative
proceedings, including arbitration proceedings or, to the Best
Knowledge of Purchaser, investigations by administrative
authorities pending or, to the Best Knowledge of Purchaser,
threatened involving the business of Purchaser or its
Affiliates either as plaintiff or defendant having a
litigation value (Streitwert) exceeding USD 250,000.00 in the
individual case or which in any manner seek to prevent,
materially enjoin, alter or delay the transactions
contemplated herein and (ii) no product liability claims
pending or, to the Best Knowledge of Purchaser, threatened
against the business of Purchaser or its Affiliates with a
value in dispute exceeding USD 1,000,000.00 in the individual
case, in each case except as disclosed in the SEC Reports.
8.1.23 EMPLOYMENT MATTERS. Purchaser and its subsidiaries have
conducted their businesses in accordance with all laws
relating to employment and employment practices, terms and
conditions of employment, wages and hours and
nondiscrimination in employment, except where such failure
would not have a Purchaser Material Adverse Effect. With
respect to any employee benefit plan (as defined in the United
States Employee Retirement Income
58
Security Act of 1974, as amended (ERISA)) or any bonus, stock
option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance or other similar employee
benefit plan, written or otherwise, for the benefit of, or
relating to, any current or former United States employee of
Purchaser or any of its subsidiaries, individually and in the
aggregate, there are no funded benefit obligations for which
contributions have not properly been made or properly accrued
and there are no unfunded benefit obligations which have not
been accounted for by reserves, or otherwise properly
footnoted in accordance with US GAAP on the financial
statements of Purchaser, that could reasonably be expected to
have a Purchaser Material Adverse Effect. With respect to any
bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance or other
similar employee benefit plan, written or otherwise, for the
benefit of, or relating to, any current or former employee of
Purchaser or any of its subsidiaries outside the United
States, each such plan has been established, maintained and
administered in compliance with its terms and conditions and
with the requirements prescribed by any and all statutory and
regulatory laws that are applicable to such plan and no such
plan has unfunded liabilities that will not be offset by
insurance or fully accrued or that could reasonably be
expected to have a Purchaser Material Adverse Effect.
8.1.24 ENVIRONMENTAL MATTERS. To the Best Knowledge of Purchaser,
there are no existing environmental conditions (within the
meaning of Section 10.2.2 to be applied mutatis mutandis)
which could reasonably be expected to result in an
environmental liability of Purchaser or its Affiliates (in the
meaning of Section 10.2.1 to be applied mutatis mutandis)
which could reasonably be expected to have a Purchaser
Material Adverse Effect.
8.1.25 TAXES AND SOCIAL SECURITY. Purchaser and its subsidiaries have
timely paid and discharged all taxes and social security
contributions when due and timely and accurately filed all tax
returns, and all other returns, reports and notifications
required to be filed in accordance with applicable tax or
social security laws and regulations. To the extent taxes or
social security contributions were not due at the end of any
fiscal year of Purchaser, sufficient reserves (Ruckstellungen)
have been made in the balance sheets in the respective annual
accounts. Other than in the course of an ordinary tax audit,
no proceeding has been initiated or indicated to be initiated
by any tax or other
59
authority against Purchaser or its Affiliates in connection
with their obligation to pay taxes or social security
contributions.
8.1.26 PRODUCT DEFECTS. No products of the business of Purchaser
containing defects leading to epidemic failure have been
shipped prior to the Closing Date that have resulted or will
result in a product recall by customers of the business of
Purchaser and in Losses of Purchaser's business in excess of
USD 1,000,000.00.
8.2 All Exhibits referred to in this Section 8 are collectively referred to
as the "PURCHASER DISCLOSURE SCHEDULES". For the avoidance of doubt,
any fact or item referenced in or disclosed in a specific Purchaser
Disclosure Schedule or in an SEC Report, shall be deemed to be
disclosed also with respect to any other Purchaser Guarantee whether or
not a cross-reference appears, if the relevance of such disclosed fact
or item under any other Purchaser Disclosure Schedule is reasonably
apparent. Purchaser does not give or assume any guarantees other than
those set forth in this Section 8 and none of the Purchaser's
Guarantees shall be construed as a guarantee or representation with
respect to the quality of the Consideration Shares within the meaning
of Sections 276 (1), 443 German Civil Code (Garantie fur die
Beschaffenheit der Sache).
8.3 For the purpose of this Agreement, "BEST KNOWLEDGE OF PURCHASER" shall
mean the actual knowledge (positive Kenntnis) of any of the executive
officers of Purchaser serving as of the Signing Date as disclosed in
the SEC Reports.
9. REMEDIES
9.1 In the event of any breach or non-fulfilment by Seller of any of
Seller's Guarantees or Seller's covenants contained in this Agreement,
Seller shall be liable for putting Purchaser, or, at the election of
Purchaser, the respective Company into the same position that it would
have been in if the Seller's Guarantees or Seller's covenants contained
in this Agreement had been correct or had not been breached
(Naturalrestitution), or, at the election of Seller, to pay damages for
non-performance (kleiner Schadenersatz). For purposes of determining
the liability of Seller under this Agreement, only the actual losses
incurred by the respective Company or Purchaser shall be taken into
account, excluding any consequential damages (Folgeschaden), potential
or actual reduction (Minderung) in value of the Companies,
60
lost profits (entgangener Gewinn), and any internal costs and expenses
incurred by the Companies or Purchaser (herein "LOSSES"). If and to the
extent indemnification for any Loss is paid to any of the Companies,
such payments shall be constructed and deemed as contributions
(Einlagen) made by Purchaser into the respective Company and shall be
treated as a reduction of the Purchase Price as between the Parties. If
and to the extent a breach of a Seller's Guarantee results in Losses to
a Company in which Seller, prior to the Closing Date, holds less than
100% of the total equity, the amount of Losses to be paid by Seller
hereunder shall be the total amount of Losses incurred by the
respective Company times Seller's direct or indirect shareholding
percentage unless either Purchaser or any Wholly-Owned Company is
directly liable for a greater percentage of such Losses incurred by the
respective Company in which case Seller shall be liable for the entire
Losses.
9.2 In the event of any breach or non-fulfilment by Seller of any of
Seller's Guarantees or covenants contained in this Agreement (herein
"PURCHASER CLAIM"), Purchaser will give Seller written notice of such
breach or non-fulfilment containing a detailed description of the
alleged event giving rise to a Purchaser Claim, with such notice
stating the nature thereof and the amount involved, to the extent that
such amount has been determined at the time when such notice is given,
(herein "CLAIM NOTICE"). Any Claim Notice must be made within one month
after the (alleged) event giving rise to a liability has arisen. Any
failure to make a Claim Notice prior to the expiration of such deadline
leads to an exclusion of the Seller's liability for the respective
event, unless the Purchaser making the Claim Notice can prove that it
has not been aware of such event, without such unawareness being due to
negligence. Without prejudice to the validity of the Purchaser Claim or
alleged claim in question, Purchaser shall allow, and shall cause the
Companies to allow, Seller and its accountants and its professional
advisors to investigate the matter or circumstance alleged to give rise
to such Purchaser Claim, and whether and to what extent any amount is
payable in respect of such Purchaser Claim and, for such purpose,
Purchaser shall give and shall cause the Companies to give, subject to
their being paid their reasonable out-of-pocket costs and expenses,
such information and assistance, including access to Purchaser's and
the Companies' premises and personnel and including the right to
examine and copy or photograph any assets, accounts, documents and
records, as Seller or its accountants or professional advisors may
reasonably request. The preceding sentence shall, for the avoidance of
doubt, also apply in case any arbitration or court proceedings are
pending between the Parties.
61
9.3 Seller shall not be liable for, and Purchaser shall not be entitled to
bring any Purchaser Claim or any other claim under or in connection
with this Agreement if and to the extent that:
9.3.1 the matter to which the Purchaser Claim relates has been taken
into account in the Financial Statements by way of a provision
(Ruckstellung), or depreciation (Abschreibung), or exceptional
depreciation (au(beta)erplanma(beta)ige Abschreibung), or
depreciation to reflect lower market values (Abschreibung auf
den niedrigeren beizulegenden Wert) or liability
(Verbindlichkeit);
9.3.2 the matter to which the Purchaser Claim relates (i) has been
taken into account in the Effective Date Balance Sheet by way
of a provision (Ruckstellung) or depreciation (Abschreibung)
or (ii) has led to a reduction of the Purchase Price;
9.3.3 the amount of the Purchaser Claim is or could have been
recovered from a third party or under an insurance policy in
force on the Effective Date;
9.3.4 the payment or settlement of any item giving rise to a
Purchaser Claim results in a tax benefit to the Business or
Purchaser;
9.3.5 the Purchaser Claim results from a failure of Purchaser or the
Business to mitigate damages pursuant to Section 254 of the
German Civil Code;
9.3.6 the matter to which the Purchaser Claim relates was explicitly
disclosed to Purchaser during its review of the FO Business
Unit under commercial, technical, organizational, financial,
environmental and legal aspects; without limiting the
generality of the foregoing, Purchaser shall be deemed to have
knowledge of all matters explicitly disclosed to it in (i) the
Information Memorandum relating to the FO Business Unit
prepared by Citigroup, dated January 2004, (ii) the written
answers to information requests of Purchaser, (iii) the
contents of the written management presentation on 18 February
2004, and (iv) two identical copies of the contents of the
documents disclosed in the general and protected data rooms
for the FO Business Unit which will be set aside and preserved
for purposes of providing evidence for a period of three (3)
years after the Closing Date at the offices of the Parties
external counsel;
62
9.3.7 the Purchaser Claim results from or is increased by the
passing of, or any change in, after the Effective Date, any
law, statute, ordinance, rule, regulation, common law rule or
administrative practice of any government, governmental
department, agency or regulatory body including (without
prejudice to the generality of the foregoing) any increase in
the rates of Taxes or any imposition of Taxes or any
withdrawal or relief from Taxes not actually (or
prospectively) in effect at the Effective Date;
9.3.8 the procedures set forth in Section 9.5 were not observed by
Purchaser or the Business unless Seller was not prejudiced by
the non-compliance with such procedures;
9.3.9 the matter to which the Purchaser Claim relates gives rise to
a claim for indemnification under Section 10 or 11.
9.4 Seller shall not be liable for any Purchaser Claim if and to the extent
either Purchaser or the Business have caused (verursacht oder
mitverursacht) such Purchaser Claim after the Effective Date. When
calculating the amount of the liability of Seller under this Agreement
all advantages in connection with the relevant matter shall be taken
into account (Vorteilsausgleich) and Seller shall not be liable under
this Agreement in any respect of any Purchaser Claim for any Losses
suffered by Purchaser or the Business to the extent of any
corresponding savings by or net benefit to the Purchaser or the
Business arising therefrom.
9.5 If (i) an order of any governmental authority is issued or threatened
to be issued against Purchaser or the Business or (ii) the Business or
Purchaser are sued or threatened to be sued by a third party, including
without limitation any government agencies, or (iii) if the Business or
Purchaser are subjected to any audit or examination by any tax
authority which may give rise to a Purchaser Claim (herein "THIRD PARTY
CLAIM"), Purchaser shall give Seller prompt notice of such Third Party
Claim. Purchaser shall ensure that Seller shall be provided with all
materials, information and assistance relevant in relation to the Third
Party Claim, be given reasonable opportunity to comment or discuss with
Purchaser any measures which Seller proposes to take or to omit in
connection with a Third Party Claim, and in particular Seller shall be
given an opportunity to comment on, participate in, and review any
reports and all relevant tax and social security audits or other
measures
63
and receive without undue delay copies of all relevant orders
(Bescheide) of any authority. No admission of liability shall be made
by or on behalf of the Purchaser or the Business and the Third Party
Claim shall not be compromised, disposed of or settled without the
prior written consent of the Seller. Further, Seller shall be entitled
at its own discretion to take such action (or cause the Purchaser or
the Business to take such action) as they shall deem necessary to
avoid, dispute, deny, defend, resist, appeal, compromise or contest
such Third Party Claim (including making counter claims or other claims
against third parties) in the name of and on behalf of the Purchaser or
the Business concerned and the Purchaser will give and cause the
Business to give to Seller or it's professional advisors, subject to
them being paid all reasonable out-of-pocket costs and expenses, all
such information and assistance, as described above, including access
to premises and personnel and including the right to examine and copy
or photograph any assets, accounts, documents and records for the
purpose of avoiding, disputing, denying, defending, resisting,
appealing, compromising or contesting any such claim or liability as
Seller or its professional advisors may reasonably request. Seller
agrees to use all such information confidentially only for such
purpose. To the extent that Seller is in breach of a Seller's Guarantee
or covenant, all costs and expenses reasonably incurred by Seller in
defending such Third Party Claim shall be borne by Seller; if it turns
out that Seller was not in breach, any costs and expenses reasonably
incurred by them in connection with the defense shall be borne by
Purchaser.
9.6 Sections 9.1 through 9.5 shall apply mutatis mutandis to the remedies,
if any, of Purchaser under the Ancillary Agreements.
9.7 Seller may settle any Purchaser's Claim (at Seller's option) by either
(i) wire transfer by Seller of immediately available funds into
Purchaser's Account or, if Purchaser has elected payment to a Company,
into the account of the respective Company as notified by Purchaser to
Seller or (ii) the return by Seller to Purchaser of such number of
Consideration Shares determined by dividing the amount of the
respective Purchaser's Claim by the Share Price.
9.8 In the event of any breach or non-fulfilment by Purchaser of
Purchaser's Guarantees under Sections 8.1.5 or 8.1.14 through 8.1.25
Purchaser shall pay damages for non-performance (kleiner Schadenersatz)
to Seller in the amount of the respective Losses of Purchaser
multiplied by the percentage of the shareholding of Seller in Purchaser
acquired on the Closing Date. The respective payment shall be treated
as
64
an increase of the Purchase Price as between the Parties. Other than
that, Sections 9.1 through 9.5 and 9.7 shall apply mutatis mutandis to
any breach or non-fulfilment of (i) any Purchaser's Guarantee or (ii)
any Purchaser's covenants under this Agreement.
10. ENVIRONMENTAL INDEMNITY
10.1 Seller shall, subject to the Time Limitation under Section 13.1.2
below, Seller's Liability Cap (as defined in Section 13.4 below), the
exclusion of De Minimis Claims (as defined in Section 13.3 below) but
not subject to the Deductible (as defined in Section 13.3 below),
indemnify and hold harmless Purchaser or, at the election of Purchaser,
the respective Company, from and against all Environmental Liabilities
(as defined in Section 10.2.1 below) resulting from
(i) a final (bestandskraftig) and/or enforceable (vollziehbar)
order, decree or demand issued by any governmental authority
(Behorde) or any obligation caused by an agreement concluded
prior to the Closing Date, in each case imposing clean-up,
segregation or protective containment measures, or
(ii) an immediate danger to the well-being or health (unmittelbare
Gefahr fur Leib oder Leben) or an immediate and significant
danger to the environment (unmittelbare erhebliche Gefahr fur
die Umwelt), or
(iii) a final and/or enforceable court judgment rendered in
connection with a private party claim.
The penultimate sentence of Section 9.1 shall apply mutatis mutandis.
10.2 Environmental Liabilities, Existing Environmental Condition,
Environmental Laws, Hazardous Materials, Environmental Matters shall
each have the following meaning:
10.2.1 "ENVIRONMENTAL LIABILITIES" means all Losses reasonably
incurred by any of the Wholly-Owned Companies in connection
with
(i) the investigation (Ma(beta)nahmen der
Gefahrerkundung, Untersuchungsma(beta)nahmen) in
connection with or in anticipation of a re-
65
mediation of an Existing Environmental Condition (as
defined in Section 10.2.2 below);
(ii) a clean up (Sanierung) within the meaning of Section
2 (7) Federal Soil Protection Act
(Bundesbodenschutzgesetz) or any other applicable
Environmental Laws (as defined in Section 10.2.3
below) relating in each case to an Existing
Environmental Condition;
(iii) securing measures (Sicherungsma(beta)nahmen), or
protective containment measures (Schutz- und
Beschrankungsma(beta)nahmen) pursuant to Section 4
(3) Federal Soil Protection Act or applicable
Environmental Laws relating in each case to an
Existing Environmental Condition;
(iv) measures to eliminate, reduce or otherwise remedy an
immediate danger to well-being or health
(Ma(beta)nahmen zur Abwehr von unmittelbaren Gefahren
fur Leib oder Leben) or an immediate and significant
danger to the environment (unmittelbare erhebliche
Gefahr fur die Umwelt) resulting from an Existing
Environmental Condition;
(v) any claims by private parties, internal compensation
payments under police law (Polizei- und
Ordnungsrecht), in particular pursuant to Section 24
(2) Federal Soil Protection Act or, outside the
Federal Republic of Germany, any equivalent claims,
omission claims (Unterlassungsanspruche) for personal
injury, property damage, or otherwise in connection
with a private party claim within the meaning of
Section 10.1 Subsection (iii) above, in each case
relating to an Existing Environmental Condition.
10.2.2 "EXISTING ENVIRONMENTAL CONDITION" means (i) the pollution or
contamination of the soil (schadliche Bodenveranderungen)
within the meaning of Section 2 (3) of the Federal Soil
Protection Act (Bundesbodenschutzgesetz) (or, outside the
Federal Republic of Germany, any comparable Environmental
Laws) of the real estate currently owned or leased by any of
the Wholly-Owned Companies (herein "REAL ESTATE") or (ii)
historical pollution (Altlast) as defined in Section 2 (5) of
the Federal Soil Protection Act (or, outside the Federal
Republic of Germany, any comparable Environmental
66
Laws) on the Real Estate or (iii) the presence of Hazardous
Materials (as defined in Section 10.2.4 below) in the
groundwater beneath the Real Estate or (iv) the disposal of
any Hazardous Materials used, generated or stored by the
Wholly-Owned Companies at any offsite location, provided,
however, in each of the cases (i) to (iv) such Existing
Environmental Condition existed at, or prior to, the Closing
Date.
10.2.3 "ENVIRONMENTAL LAWS" means all applicable laws, and, to the
extent they are legally binding, ordinances, regulations
relating directly to Environmental Matters (as defined in
Section 10.2.5 below) and being applicable as at the Closing
Date in the respective jurisdiction in which the respective
Wholly-Owned Company operates.
10.2.4 "HAZARDOUS MATERIALS" means any pollutants, contaminants or
toxic substances that are defined as such in the Environmental
Laws.
10.2.5 "ENVIRONMENTAL MATTERS" means any matter relating to pollution
or contamination of the soil, ground water or surface water.
10.3 Any Environmental Liability for which Purchaser may claim
indemnification pursuant to this Section 10 shall be prorated between
Purchaser and Seller as follows:
YEAR AFTER CLOSING DATE PURCHASER SELLER
- ----------------------- --------- ------
year 1 20 % 80 %
year 2 30 % 70 %
year 3 50 % 50 %
year 4 70 % 30 %
Further years 100 % 0 %
The relevant time for determining the foregoing prorated liability of
each Party shall be the time when the Environmental Liability is first
asserted by Purchaser and notified to Seller provided, however, that
the Losses in relation to the Environmental Liability must actually be
incurred by Purchaser within the subsequent twelve (12) months after
the notification of Seller of the respective Environmental Liability.
To the extent such Losses are not incurred within the said
twelve-months period, the year in which the Losses in relation to the
Environmental Liability have
67
actually been incurred by Purchaser shall be decisive for the foregoing
sharing obligation of the Parties.
10.4 Seller's obligation to indemnify and hold harmless Purchaser shall be
excluded if and to the extent the respective Environmental Liability
10.4.1 is compensated for or made good by any third party to
Purchaser, in particular, but without limitation, by insurance
companies under applicable insurance policies or from a third
party, it being understood that the Purchaser shall use all
reasonable efforts to make recovery from any third party or
under an insurance policy with respect to any matter to which
an Environmental Liability relates;
10.4.2 is incurred as result of investigations, preparatory or
explanatory measures or notifications after the Closing Date
which the Wholly-Owned Companies were not obliged to carry out
under applicable laws, ordinances, regulations under the
respective jurisdiction which (i) relate directly to
Environmental Matters and (ii) are applicable at the time when
the respective investigation or measure or notification was
carried out;
10.4.3 is incurred as a consequence after the Closing Date of (i)
negligent omissions to take actions required to be taken by
the Wholly-Owned Companies, under the applicable laws,
ordinances, regulations under the respective jurisdiction
relating directly to Environmental Matters and being
applicable at the time when the respective Environmental
Liability was incurred, or (ii) activities outside of the
ordinary course of business of the Wholly-Owned Companies (as
conducted as of the Closing Date) after the Closing Date, or
(iii) expansion activities or construction activities carried
out by or on behalf of the Wholly-Owned Companies, or (iv) any
material change of use of the Real Estate, or (v) any
negligent act or omission of an employee or other
representative of, or service provider to, the Wholly-Owned
Companies after the Closing Date;
10.4.4 results from any failure to take state-of-the-art measures to
minimize risks (dem jeweiligen Stand der Technik entsprechende
Ma(beta)nahmen der Gefahrenabwehr) or to apply
state-of-the-art environmental and safety standards (dem
jeweiligen Stand der Technik entsprechende Umwelt- und
Si-
68
cherheitsstandards) which, in each case, should reasonably
have been taken by a prudent businessman after the Closing
Date;
10.4.5 results from the coming into force of, or the change in, any
Environmental Laws after the Closing Date;
10.4.6 results from non-compliance with the procedures set forth in
Section 10.5 and Section 10.6, unless Seller was not
prejudiced by the non-compliance with such procedures;
10.4.7 results from a failure of Purchaser or the Company to mitigate
damages pursuant to Section 254 of the German Civil Code.
10.5 If Purchaser becomes aware of any circumstances which could reasonably
be expected to give rise to an Environmental Liability of Seller under
Section 10.1 above, then Purchaser shall inform Seller in writing
thereof without undue delay and any investigation and/or clean-up
measures shall be conducted solely in consultation with Seller. Seller
shall be given access to the Real Estate and the books and records of
Purchaser (or its successor, as the case may be) to the extent that
such access is reasonably necessary to assess any Environmental
Liability being incurred. Purchaser shall ensure that for as long as
Seller may be held liable under Section 10.1, copies of all documents
relating to the Real Estate which, as of the Effective Date are in the
possession of the Wholly-Owned Companies will be kept available for
inspection by Seller at the premises of the Wholly-Owned Companies upon
Seller's reasonable request.
10.6 Purchaser shall ensure that Seller is given all opportunities to defend
or avoid at their sole expense any claims which might give rise to any
Environmental Liabilities. In particular, Seller shall be given an
opportunity to comment on, participate in and review any reports on
relevant investigations, reports, correspondence, orders or other
measures which may with reasonable likelihood give rise to an
Environmental Liability and Purchaser shall ensure that Seller receives
without undue delay copies of all such documents. Purchaser shall
ensure that, upon the request of Seller, objections are filed and legal
proceedings instituted and conducted against any orders and judgments
in accordance with Seller's direction and at Seller's expense, as
described in more detail in Section 9.5 above.
69
10.7 Section 9.7 shall apply mutatis mutandis.
11. TAX INDEMNITY
11.1 Seller shall, subject to the Time Limitation under Section 13.1.1 below
and Seller's Liability Cap, but not subject to the exclusion of De
Minimis Claims and the Deductible, indemnify and hold harmless
Purchaser against any non-appealable liability for the payment of Taxes
and relating to the Business for accounting periods ending before the
Effective Date and the current accounting period until the Effective
Date if and to the extent that no reserves or liabilities
(Ruckstellungen oder Verbindlichkeiten) have been made in the Effective
Date Balance Sheet or the Financial Statement. The penultimate and
final sentences of Section 9.1 shall apply mutatis mutandis (provided
that it is understood between the Parties that the indemnification
under this Section 11 is not limited to Losses).
11.2 In relation to tax releases, tax benefits and changes in accounting
practices the following shall apply:
11.2.1 If the Business is entitled to or could receive any benefits
by refund, set-off or reduction of Taxes as the result of an
adjustment or payment giving rise to a claim for
indemnification of Taxes, then the corresponding benefit shall
reduce the claim for indemnification of any such Tax in the
amount of its net present value discounted at a rate of
EURIBOR plus 225 basis points on the basis of a combined tax
rate applicable in the respective jurisdiction as at the date
when the respective benefit is calculated. This shall in
particular but without limitation apply to any Tax benefits
after the Effective Date resulting from the lengthening of any
amortization or depreciation periods, higher depreciation
allowances or higher carry forwards of losses or deductions.
11.2.2 Seller shall not be responsible for any Tax liabilities
attributable to periods ending on or before the Effective Date
and the current accounting period until the Effective Date
resulting from any change in the accounting and taxation
principles or practices of the Business (including methods of
submitting taxation returns) introduced after the Effective
Date, except if required under mandatory law, mandatory
regulations or decisions by the ultimate courts of the
respective jurisdiction.
70
11.2.3 Seller shall not be responsible for any tax liabilities
attributable to periods ending on or before the Effective Date
and the current accounting period until the Effective Date and
triggered by actions, declarations or any other means effected
by Purchaser or the Companies after the Effective Date except
if required under mandatory law, mandatory regulations or
decisions by the ultimate courts of the respective
jurisdiction.
11.2.4 Seller shall not be responsible for any Tax liabilities, if
and to the extent the amount of the Taxes is recovered from a
third party or Purchaser has not undertaken reasonable efforts
to achieve recovery from a third party.
11.2.5 Seller shall not be responsible for any Tax liability, if and
to the extent such Tax liability has lead to a reduction of
the Purchase Price under Section 3.
11.3 Any additional profit and loss allocations resulting from any tax audit
relating to taxable periods ending on or before the Effective Date
shall not increase or reduce the Purchase Price and shall not entitle
the Seller to any additional profit distribution nor the Purchaser or
Seller to any Purchase Price Adjustment.
11.4 Purchaser shall inform Seller without undue delay of and keep Seller
fully informed regarding the commencement of any audit or other
proceeding which may give rise to a claim under Section 11.1 above.
Sections 9.2 (provided that it is understood by the Parties that the
one month notice period pursuant to Section 9.2 shall commence at the
day of the announcement of the tax audit) and 9.5 (with the exception
of the second clause of the last sentence) shall apply mutatis
mutandis.
11.5 Seller shall be entitled to any refunds of Taxes relating to the
Business received by Purchaser or any of the Wholly-Owned Companies or
any of Purchaser's Affiliates attributable to any accounting period
ending on or before the Effective Date and the current accounting
period until the Effective Date to the extent it has not increased the
Purchase Price in accordance with Section 3, such refunds of Taxes
becoming due and payable ten (10) business days (Werktage) after
receipt of the final non-appealable assessment concerning the
respective tax refund (by means of refund or set-off). Such refunds
shall be treated as an increase of the Purchase Price as between the
Parties. This Section shall not apply if (i) refunds result from any
change in the accounting and taxation principles or practices of the
Business (including methods of submitting taxation returns) introduced
after the Effective Date, except
71
if required under mandatory law or (ii) refunds are triggered by
actions, declarations or any other means effected after the Effective
Date.
11.6 In relation to the preparation of tax returns relating to Taxes (herein
"TAX RETURNS") the following shall apply:
11.6.1 Seller shall prepare (or cause the Wholly-Owned Companies or
Seller's Affiliate to prepare) at its cost all Tax Returns
which (i) are due to be filed by Seller or by the Wholly-Owned
Companies or Seller's Affiliate on or before the Closing Date,
or (ii) are filed on a consolidated, combined or unitary basis
and which include the Wholly-Owned Companies for accounting
periods ending on or before the Closing Date. Purchaser is
obliged to (or cause the Wholly-Owned Companies to) submit
such Tax Returns.
Purchaser shall file (or cause the Companies to file) all Tax
Returns other than those referred to in the preceding
sentence.
11.6.2 Seller shall have the right to review and comment on any Tax
Return to be filed by Purchaser a Wholly-Owned Company or
Purchaser's Affiliate relating to an accounting period
beginning before the Effective Date and Purchaser shall
provide copies of such Tax Return to Seller no later than
thirty (30) days prior to the relevant due date of such Tax
Return.
11.7 The Parties agree to fully cooperate with each other in connection with
any matter relating to Taxes including the preparation of any Tax
Return, conduct of any audit, investigation or contest each at its own
cost. Such cooperation shall include, without limitation, providing or
making available all relevant books, records and documentation and the
assistance of officers and employees. The Purchaser agrees to retain
all books, records and documentation relating to the Business that may
be relevant in connection with any audit or investigation for which the
Seller may be responsible hereunder until the expiration of any
applicable statute of limitation. Further, the Purchaser shall cause
its Affiliates and the Companies to furnish to Seller all such
information as may be necessary or helpful for Seller to prepare any
Tax Return to be filed after the Closing Date, consistent with prior
practice of the Seller.
11.8 Section 9.7 shall apply mutatis mutandis.
72
12. SELLER'S COVENANTS
12.1 For the period between the Signing Date and the Closing Date, (a)
Seller shall use commercially reasonable efforts that the Wholly-Owned
Companies and - with respect to the Foreign Business - IF NA, IF Japan
and IF AP shall, where applicable, and (b) Seller shall itself (i)
preserve relationships with customers, vendors and others with whom
they deal, (ii) preserve the assets of the Business in good working
condition, reasonable wear and tear excepted, (iii) keep the necessary
insurance for the Business in place, and (iv) maintain accounting
procedures consistent with past practice, and (v) operate the Business
in the ordinary course of business and consistent with past practices.
12.2 For the period between the Signing Date and the Closing Date, Seller
shall not, and shall ensure that the Wholly-Owned Companies and
Seller's Affiliates shall not, with respect to the Business without
consultation with Purchaser, except in the ordinary course of business
and consistent with past practice, (i) permit any of its material
assets to be subjected to any mortgage, pledge, lien, security,
encumbrance or charge of any kind, except for those arising by
operation of law, (ii) make any material capital expenditure (i.e.
exceeding an amount of EUR 500,000.00 (in words: Euro five hundred
thousand)) or enter into any material contract or material commitment
with onerous terms which are not consistent with past practices, (iii)
grant any increase in wages, salaries, bonus or other remuneration of
any employee, (iv) cancel or waive any claims or rights of substantial
value, (v) enter into any agreement relating to the acquisition or
disposition of any material assets, interest in companies or
businesses, except for sales of products in the ordinary course of
business, (vi) enter into any agreements with customers or suppliers
which involve payment obligations of more than EUR 500,000.00 p.a., or
(vii) undertake an obligation, whether or not in writing, to do any of
the foregoing. For the avoidance of doubt, nothing in this Section 12.2
shall prevent Seller and / or IF FO GmbH from concluding employment
agreements between IF FO GmbH and the employees listed in Exhibit
7.1.13 (a) (iii)-2.
12.3 After the Closing, Seller shall permit Purchaser at its own cost to
have reasonable access to such of Seller's books, records and files
that are not transferred together with the FO Business Unit but are
relevant for the Business, if (i) such access is reasonably necessary
for use in financial reporting, tax return preparation, or tax
compliance matters and (ii) Seller has no legitimate interest not to
disclose such
73
books, records and files. Seller shall reasonably assist Purchaser,
upon Purchaser's reasonable request and against reimbursement of any
cost incurred thereby, if Purchaser reasonably needs any information
not transferred together with FO Business Unit for use in financial
reporting, tax return, preparation or tax compliance matters. Without
limiting the generality of the foregoing, Seller will provide or make
available to Purchaser all financial and accounting records not
included in the FO Business Unit that shall reasonably be requested by
Purchaser if such records are reasonably necessary for the purpose of
preparing financial statements of the Business for any period, or as of
any date, prior to the Effective Date, to the extent such financial
statements are required by US GAAP or by the applicable rules and
regulations of the SEC.
12.4 As soon as practicable after the Signing Date, Purchaser will notify
Seller in writing of any financial statements of the Business for any
period, or as of any date, prior to the Effective Date, that are
required by the applicable rules and regulations of the SEC to be
included in the Proxy Statement or a report on Form 8-K to be filed by
Purchaser in connection with the transactions contemplated by this
Agreement (the "BUSINESS FINANCIAL STATEMENTS"). Immediately after
receipt of such notice Seller will prepare or cause to be prepared and
use its reasonable efforts to cause to be audited and certified by
Seller's Auditor the Business Financial Statements.
12.5 Seller will, if requested by Purchaser, in good faith agree to amend
this Agreement for the purpose of adjusting the structure of the
transactions contemplated in this Agreement in order to optimise the
tax effects for Purchaser, provided, however, that Seller shall not be
required to amend this Agreement in a manner that Seller determines, in
its sole discretion, will have any adverse effect on Seller and its
Affiliates.
12.6 Seller shall procure that on or before the Closing Date, the
Contribution Agreement shall be amended as follows:
12.6.1 The license-back pursuant to Section 3.11 of the Contribution
Agreement shall not apply (i) to IF FO GmbH Exclusive Know-How
and IF FO GmbH Exclusive Software and Material and (ii) to IF
FO GmbH Exclusive IP Rights for use in connection with
Restricted Activities.
74
12.6.2 IF FO GmbH shall be entitled to sublicense the licenses
granted to the IF FO GmbH Non-Exclusive IP Rights and the
Other Know-How (i) to Purchaser and any Purchaser's
Affiliates, provided that the sublicense shall cease to exist
when the sub-licensee ceases to be an Affiliate of IF FO GmbH,
and (ii) to contract-manufacturers for the purposes of
"have-made"-manufacture for the Purchaser or IF FO GmbH.
12.7 Seller shall inform Purchaser if, prior to the Closing Date, Seller
becomes aware of the fact that any statement contained in the Seller's
Guarantees which is subject to Best Knowledge of Seller is no longer
true.
13. EXPIRATION / LIMITATION OF SELLER'S CLAIMS
13.1 All claims of Purchaser arising under this Agreement shall be
time-barred on 31 December 2005. Exempted herefrom are:
13.1.1 all claims of Purchaser arising under Section 11 (Tax
Indemnity) which shall be time barred for each Tax six (6)
months after the date of the final, non-appealable assessment
concerning the respective Tax;
13.1.2 all claims of Purchaser arising under Section 10
(Environmental Indemnity) which shall be time barred on the
fourth (4th) anniversary of the Closing Date;
13.1.3 all claims of Purchaser in respect of liabilities for defects
of title arising from a breach in respect of Section 7.1.2
which shall be time barred on the tenth (10th) anniversary of
the Closing Date;
13.1.4 all claims of Purchaser arising as a result of wilful or
intentional breaches of Seller's obligations under this
Agreement which shall be time barred in accordance with the
statutory rules in Sections 195, 199 German Civil Code;
(herein collectively "TIME LIMITATIONS").
13.2 The expiry period for any claims of Purchaser under this Agreement
shall be tolled (gehemmt) pursuant to Section 209 German Civil Code by
any timely notification
75
of Seller pursuant to Section 9.2, Section 10.5 or Section 11.4 (in
connection with Section 9.2) above, as the case may be, provided that
Purchaser commences judicial proceedings within three (3) months after
the expiry of the relevant Time Limitations. Section 203 German Civil
Code shall not apply, unless the Parties agree in writing that the
expiry period shall be tolled on the basis of pending settlement
negotiations. This Section 13.2 shall apply mutatis mutandis to all
claims of Seller arising under Sections 8 and 9.7.
13.3 Except as explicitly provided otherwise in this Agreement or the
Ancillary Agreements, no liability shall attach to Seller or any
Transferor under this Agreement or any of the Ancillary Agreements
where the individual claim is less than EUR 500,000.00 (in words:
Euro five hundred thousand) (herein "DE MINIMIS CLAIMS") and until
the aggregate amount of claims (excluding the De Minimis Claims), is
more than EUR 5,000,000.00 (in words: Euro five million)
(Freibetrag) (herein "DEDUCTIBLE"). If the aggregate liability of
Seller and the Transferors under this Agreement (including, for the
avoidance of doubt, any liability of Seller or any Transferor under
the Ancillary Agreements) is greater than EUR 5,000,000.00 (in
words: Euro five million) the liability of Seller and the
Transferors shall be the excess above EUR 5,000,000.00 (in words:
EURO five million) subject to the other provisions of this Section
13.
13.4 The aggregate liability of Seller and the Transferors under this
Agreement (including, for the avoidance of doubt, any liability of
Seller or any Transferor under the Ancillary Agreements), shall not
exceed twenty percent (20 %) of the Purchase Price (herein "SELLER'S
LIABILITY CAP").
13.5 The limitation of liabilities under Section 13.3 and Section 13.4 shall
not apply if the respective Purchaser Claim is based on intentional
behaviour of Seller.
13.6 The Parties are in agreement that the remedies that Purchaser, or any
of the Companies, may have against Seller or any Transferor for breach
of obligations set forth in this Agreement or any of the Ancillary
Agreements are solely governed by this Agreement, and the remedies
provided for by this Agreement shall be the exclusive remedies
available to Purchaser or the Business. Apart from the rights of
Purchaser under Section 6.6, Section 6.8, Section 9, Section 10,
Section 11 and Section 13 above (i) any right of Purchaser to withdraw
(zurucktreten) from this Agreement or to require the winding up of the
transaction contemplated hereunder (e.g. by way of
76
gro(beta)er Schadenersatz or Schadenersatz statt der Leistung), (ii)
any claims for breach of pre-contractual obligations (culpa in
contrahendo, including, but not limited to, claims arising under
Sections 280 I, 241 (2), 311 (2) (3) German Civil Code) or ancillary
obligations (positive Forderungsverletzung, including, but not limited
to, claims arising under Sections 280, 241 II, 282 German Civil Code),
(iii) frustration of contract pursuant to Section 313 German Civil Code
(Storung der Geschaftsgrundlage), (iv) all remedies of Purchaser for
defects of the Purchase Object under Sections 437 through 441 German
Civil Code and (v) any and all other statutory rights and remedies, if
any, are hereby expressly excluded and waived (verzichtet) by
Purchaser, except claims for willful deceit (arglistige Tauschung) and
other intentional breaches of contract (vorsatzliche
Vertragsverletzungen). All rights of Seller pursuant to sections 377
HGB and 442 BGB, except for the purposes of Section 9.3.5 above, are
excluded.
The Parties are in agreement that Seller's Guarantees are only designed
for the specific remedies of Purchaser set forth in Section 9 above and
the restrictions contained in this Section 13 and that Seller's
Guarantees shall not serve to provide Purchaser with any other claims
than those set forth in this Agreement. The Parties are further in
agreement that Section 444 German Civil Code shall not apply to any of
the provisions on liability in this Agreement because Seller has only
given independent guarantees, but no representations with respect to
the quality of the Purchase Object (Garantie fur die Beschaffenheit der
Sache) within the meaning of Section 444 German Civil Code.
13.7 This Section 13 shall also apply to any claims of Purchaser or IF FO
GmbH, if any, under the Ancillary Agreements. Purchaser shall see to it
that IF FO GmbH shall comply at all times following the Closing Date
with the terms of this Section 13 in connection with any claims arising
under the Ancillary Agreements.
13.8 With respect to claims of Seller arising under Sections 8, 9.7 or 14,
this Section 13 shall apply mutatis mutandis.
14. PURCHASER'S COVENANTS
14.1 With effect as of the Closing Date, Purchaser (i) hereby assumes the
Trutnov Letter of Comfort and (ii) shall indemnify and hold harmless
Seller and its Affiliates from all obligations and liabilities arising
out of or in connection with the Trutnov Letter
77
of Comfort. Purchaser shall further, prior to or on the Scheduled
Closing Date, either
(i) replace the Trutnov Letter of Comfort (provided that Seller
shall notify Purchaser thereof at least ten (10) business days
(Werktage) before the Closing Date), so that Seller is fully
released from such Trutnov Letter of Comfort as of the Closing
Date; or
(ii) provide, on or prior to the Scheduled Closing Date, an
unconditional bank guarantee (issued by a bank with an AA
rating) payable upon first demand, for the Trutnov Letter of
Comfort in an aggregate amount of CZK 34,000,000.00 as
notified to Purchaser by Seller at least ten (10) business
days (Werktage) before the Scheduled Closing Date.
14.2 Purchaser undertakes and covenants to procure insurance coverage for
the Business effective from the Closing Date, the lack of which would
not reasonably be expected to have a Material Adverse Effect.
14.3 Purchaser undertakes that with respect to the subsidies by the German
ministry of Education and Research (Bundesministerium fur Bildung und
Forschung) (herein "BMBF") including the project "Schlusselkomponenten
fur 40 Gbit/s-Transceiver mit innovativen Realisierungskonzepten"
(herein "SUBSIDY") it will procure that IF FO GmbH shall comply with
all obligations under the Subsidy, if any, and that IF FO GmbH shall,
if applicable, support Seller to comply with all obligations of Seller
under the Subsidy.
14.4 Purchaser undertakes and covenants to procure that as soon as
practicable after the Closing Date, but in no event later than 6 (six)
months after the Closing Date (i) IF Trutnov and IF FO GmbH shall
remove or cause to be removed from assets and properties of the
Business (other than inventory run-off in the ordinary course of
business up to 12 (twelve) months after the Closing Date), names, marks
and identifications heretofore used by Seller or its Affiliates and all
variations and derivates thereof and logos relating thereto to the
extent they include the word "Infineon" or any derivation thereof or
combination therewith and (ii) IF Trutnov and IF FO GmbH do no longer
produce any marketing materials using the name "Infineon" or any
derivation thereof or combination therewith and (iii) all Companies and
the Foreign Business cease using the name "Infineon" in any way in
their business ac-
78
tivities and (iv) the Companies and the Foreign Business have cancelled
the right of any third party to use the name "Infineon" or any
derivation thereof or combination therewith and such cancellation has
become legally effective. Seller and IF BV shall pass shareholders'
resolutions shortly before the Scheduled Closing Date changing the
corporate name of IF Trutnov and IF FO GmbH in a way that it no longer
contains the word "Infineon" to a corporate name identified to Seller
by Purchaser five (5) days before the Scheduled Closing Date, provided,
that the filings of the change of the corporate name as prepared by
Seller and IF BV shall be withheld until Closing has occurred. Should
Purchaser not timely identify to Seller a new corporate name for IF
Trutnov and IF FO GmbH in accordance with the preceding sentence,
Seller shall be free to change the corporate names in its discretion.
14.5 For the accounting period 2002/2003 (tax assessment period 2003) Seller
shall prepare at its own cost and Purchaser shall file all tax returns
of IF FO GmbH (or cause IF FO GmbH to file) in accordance with Section
1.5 of the Contribution Agreement. Accordingly, IF FO GmbH shall report
the contributed assets and liabilities ("Teilbetrieb") at fair market
value ("Teilwert") in its tax balance sheet ("Steuerbilanz") pursuant
to Section 20 (2) Sentence 1 of the Reorganisation Tax Act (UmwStG) and
apply for a retroactive carve out of the "Teilbetrieb" according to
Section 20 (7, 8) UmwStG in its tax assessment for 2003.
14.6 Proxy Statement
14.6.1 As promptly as practicable after the execution of this Agreement,
Purchaser shall prepare and file with the SEC a proxy statement
(herein, together with any amendments thereof or supplements thereto,
the "PROXY STATEMENT") relating to the meeting of Purchaser's
stockholders (herein "PURCHASER STOCKHOLDERS' MEETING") to be held to
consider approval of the issuance of the Consideration Shares in
accordance with this Agreement (herein the "PURCHASER STOCK ISSUANCE").
Purchaser shall use all reasonable efforts to cause the Proxy Statement
to be cleared by the SEC as promptly as practicable after such filing,
and Purchaser shall use all best efforts to cause the Proxy Statement
to be mailed to Purchaser's stockholders as promptly as practicable
after the Proxy Statement is cleared by the SEC. Seller shall furnish
all information concerning Seller that Purchaser may reasonably request
in connection with such actions and the preparation of the Proxy
Statement, including, without limitation, the Business Financial
Statements to be prepared pursuant to Section 12.4 above.
79
14.6.2 The Proxy Statement shall include the recommendation of the Board of
Directors of Purchaser to the stockholders of Purchaser in favour of
approval of the Purchaser Stock Issuance; provided, however, that the
Board of Directors of Purchaser may, at any time prior to the Purchaser
Stockholders' Meeting, withdraw, modify or change any such
recommendation to the extent that the Board of Directors of Purchaser
determines in good faith after consultation with independent legal
counsel that the failure to so withdraw, modify or change its
recommendation would cause the Board of Directors of the Purchaser to
breach its fiduciary duties to Purchaser's stockholders under
applicable law; provided further that notwithstanding anything to the
contrary contained in this Agreement, such a withdrawal, modification
or change in such recommendation shall not relieve Purchaser in any way
whatsoever of its obligations under Section 14.6.1 of this Agreement.
14.6.3 Purchaser will advise Seller of any request by the SEC for amendment of
the Proxy Statement or comments thereon and responses thereto or
requests by the SEC for additional information and will consult with
Seller with respect to any amendment or supplement to the Proxy
Statement.
14.6.4 The information supplied by Seller for inclusion in the Proxy Statement
shall not, at (i) the time the Proxy Statement is cleared by the SEC,
(ii) the time the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to the stockholders of Purchaser,
and (iii) the time of the Purchaser Stockholders' Meeting, contain any
untrue statement of a material fact or fail to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. If, at any time prior to the Purchaser
Stockholders' Meeting, any event or circumstance relating to Seller, or
its officers or directors, should be discovered by Seller which should
be set forth in an amendment or a supplement to the Proxy Statement,
Seller shall promptly inform the Purchaser.
14.6.5 The information supplied by Purchaser for inclusion in the Proxy
Statement shall not, at (i) the time the Proxy Statement is cleared by
the SEC, (ii) the time the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to the stockholders of Purchaser,
and (iii) the time of the Purchaser Stockholders' Meeting, contain any
untrue statement of a material fact or fail to state any material fact
required to be stated therein or necessary in order to make the
statements
80
therein, in light of the circumstances under which they were made, not
misleading. If, at any time prior to the Purchaser Stockholders'
Meeting, any event or circumstance relating to Purchaser, or its
officers or directors, should be discovered by Purchaser which should
be set forth in an amendment or a supplement to the Proxy Statement,
Purchaser shall promptly inform Seller, and shall promptly arrange for
all necessary actions to be taken to amend or supplement the Proxy
Statement, and if required, distribute such amendment or supplement to
the Purchaser's stockholders as soon as practicable. All documents that
Purchaser is responsible for filing with the SEC in connection with the
transactions contemplated by this Agreement will comply as to form and
substance in all material respects with the applicable requirements of
the Exchange Act.
14.7 Purchaser Stockholders' Meeting
14.7.1 Purchaser shall call and hold the Purchaser Stockholders' Meeting as
promptly as practicable for the purpose of voting upon the approval of
the Purchaser Stock Issuance, and Purchaser shall use its best efforts
to hold the Purchaser Stockholders' Meeting as soon as practicable
after the Proxy Statement is cleared by the SEC.
14.7.2 Purchaser shall use its reasonable efforts to solicit from its
stockholders proxies in favour of the Purchaser Stock Issuance, and
shall take all other action necessary or advisable to secure the vote
or consent of its stockholders required by the Delaware General
Corporation Law to obtain such approvals. Without limiting the
generality of the foregoing, Purchaser agrees that it shall continue to
be obligated to call and hold a meeting pursuant to the first sentence
of this section even if withdrawal or modification in any adverse
manner of its approval or recommendation of the Purchaser Stock
Issuance or other transactions contemplated by this Agreement is
permitted under Section 14.6.2.
14.7.3 Jerry S. Rawls, Purchaser's President and Chief Executive Officer, and
Frank Levinson, Chairman of Purchaser's Board of Directors, have each
executed the respective Voting Agreements attached as Exhibit 14.7.3
hereto, pursuant to which they have agreed to vote shares of Purchaser
Common Stock beneficially owned by them in favour of approval of the
Purchaser Stock Issuance.
14.8 Section 12.7 shall apply mutatis mutandis.
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15. OTHER INDEMNITIES
15.1 If Seller or any of its Affiliates are held liable for any liability
arising in connection with the conduct of the Business or the Companies
or the Assets by a third party, including but not limited to any
liability in connection with any Environmental Matter, then Purchaser
shall indemnify and hold harmless Seller in respect of the relevant
liability, unless Purchaser has the right to claim indemnification from
Seller in respect of the relevant liability under the terms of this
Agreement. Purchaser shall in particular indemnify and hold harmless
Seller and its Affiliates and their respective officers, directors,
employees and agents against any and all liability, loss, damage or
injury, together with all reasonable out-of-pocket costs and expenses
relating thereto, including reasonable legal fees, expenses and
disbursements, arising out of, connected with, or resulting from any
such third party claim. Section 9.5 shall apply mutatis mutandis.
15.2 The following indemnifications shall not be subject to the Liability
Cap, the exclusion of De Minimis Claims or the Deductible, in each case
as provided for in Section 13, and payments on such indemnities shall
be made in cash.
15.2.1 INDEMNIFICATION CLAIMS
(a) Seller shall indemnify and hold harmless Purchaser
and any of the Wholly-Owned Companies against all
Losses for which any of the Wholly-Owned Companies
are held liable (i) on the basis of the patent
infringement lawsuit or (ii) in connection with the
IP claim, in each case as described in Exhibit
15.2.1. The foregoing indemnification shall be
limited to Losses incurred by any of the Wholly-Owned
Companies with respect to the operation of the
Business up and until the Closing Date.
(b) Purchaser shall indemnify and hold harmless Seller
and Seller's Affiliates against all Losses for which
Seller or any of Seller's Affiliates are held liable
on the basis of the patent infringement lawsuit
described in Exhibit 15.2.1. The foregoing
indemnification shall be limited to Losses incurred
by Seller or any of Seller's Affiliates with
82
respect to the operation of the Business by Purchaser
after the Closing Date.
15.2.2 If the draft settlement agreement attached hereto as Exhibit
15.2.2 (herein "DRAFT SETTLEMENT") shall not have been
concluded prior to the Closing Date, Seller shall indemnify
Purchaser against any and all claims identified in the Draft
Settlement, provided that Purchaser shall procure that IF FO
GmbH shall pay to Seller any amounts recovered from any third
party in relation to such claim, although neither Purchaser
nor IF FO GmbH shall be under any obligation to seek any such
recovery.
15.2.3 Purchaser agrees to indemnify Seller and Seller's Affiliates
from any liability arising on or after the Closing Date with
respect to (i) the employees of the FO Business Unit in
connection with the transactions contemplated in this
Agreement, including, but not limited to, liabilities arising
out of termination by Seller or any Seller's Affiliate of any
employees of (a) the Wholly-Owned Companies or (b) the Foreign
Business as listed in Exhibit 15.2.3 not offered continued
employment by Purchaser or (ii) the separation of the
operations of the FO Business Unit from the operation of
Seller (Auflosung des Gemeinschaftsbetriebs) or (iii) any
restructuring of the Wholly-Owned Companies and/or the Foreign
Businesses undertaken by Purchaser after the Closing Date in
particular, but not limited to, a close down of the Longmont
site.
15.3 Section 15.1 shall apply mutatis mutandis to any indemnification of
Seller and Seller's Affiliates by Purchaser.
E. MISCELLANEOUS
16. NON-COMPETE UNDERTAKING
16.1 Seller agrees to not directly or indirectly, manufacture, develop or
sell any fiber optical products similar to or derivative of the
products being sold or under development by the FO Business Unit as of
the Closing Date (herein "RESTRICTED ACTIVITIES"), for three (3) years
from the Closing Date.
83
16.2 Nothing in Section 16.1 shall prevent Seller during the three (3) year
period specified in Section 16.1 above from
- holding, directly and indirectly, ownership of an equity
interest not greater than 20 % in an entity engaged in the
Restricted Activities; and
- from acquiring, directly or indirectly, shares in, or the
assets or undertaking of, any entity which carries on
Restricted Activities, provided (i) that such Restricted
Activities do not constitute the principal activities of the
entity or business acquired (the Restricted Activities shall
constitute the principal activities of an entity or business
acquired if during the four (4) consecutive calendar quarters
prior to the acquisition of the entity or business such
activities contributed more than 50 % of the total sales of
the entity or business acquired) (herein "COMPETING
BUSINESS"), and (ii) that the Seller shall cease to carry on,
or to have such Competing Business cease carrying on, the
Restricted Activities within one (1) year from completion of
the relevant acquisition, unless (a) the Competing Business or
interest therein was acquired by Seller as part of a larger
acquisition and the value properly attributable to the
Restricted Activities did not at the date of acquisition
amount to more than 20 % of the value of such larger
acquisition taken as a whole; or (b) the revenues of the
Competing Business during four (4) consecutive calendar
quarters prior to the acquisition were less than 50 % of the
revenues of Purchaser in the corresponding period.
16.3 For a period of one (1) year from the Closing Date, Seller agrees that
it will not directly or indirectly solicit, influence, entice or
encourage any person who at such time is, or who at any time in the
six-months period prior to such time has been, an employee of, or
consultant to, Purchaser or any of its subsidiaries to (i) cease or
curtail his or her relationship therewith or (ii) to accept employment
with the Seller; provided, however, that nothing contained herein shall
prevent Seller from hiring or employing any person who responds to an
advertisement in a newspaper or other media of general circulation. In
the case of the Key Employees who have been promised retention
payments, as listed in Exhibit 7.1.13(b)(iii), the covenants in the
preceding sentence shall apply for a period of two (2) years from the
Closing Date.
16.4 For a period of one (1) year from the Closing Date, Purchaser agrees
that it will not directly or indirectly solicit, influence, entice or
encourage any person who at such
84
time is, or who at any time in the six-months period prior to such time
had been, an employee of, or consultant to, Seller or any of its
subsidiaries (other than employees of the FO Business) to (i) cease or
curtail his or her relationship therewith or (ii) to accept employment
with the Seller; provided, however, that nothing contained herein shall
prevent Seller from hiring or employing any person who responds to an
advertisement in a newspaper or other media of general circulation.
17. AGREEMENTS BETWEEN SELLER AND IF FO GMBH
17.1 Seller and IF FO GmbH have concluded the following transition
agreements (herein "TRANSITION AGREEMENTS"):
No. Agreement
- --- ----------
1. Corporate Service Agreement between IF FO GmbH and Seller
2. Marketing Service Agreement between IF FO GmbH and Infineon Technologies Hong Kong Ltd.
3. Marketing Service Agreement between IF FO GmbH and Infineon Technologies Japan KK
4. Development Agreement between IF FO GmbH and IF NA
5. Marketing Service Agreement between IF FO GmbH and IF NA
6. IT Service Agreement between IF FO GmbH and Seller
7. Distribution Agreement between IF FO GmbH and Seller
8. Chip Supply Agreement between IF FO GmbH and Seller
9. POF Product Supply Agreement between IF FO GmbH and Seller
10. AIT Development Agreement between IF FO GmbH and Seller
11. IC Development Agreement between IF FO GmbH and Seller
12. Perlach Rental Agreement between IF FO GmbH and Seller
13. Regensburg Rental Agreement between IF FO GmbH and Seller
14. Corporate Research (CPR) Development Agreement between IF FO GmbH and Seller
17.2 As to the continuation of the Transition Agreements after the Closing
Date, Purchaser and Seller agree as follows:
85
17.2.1 IF FO GmbH and Seller or the respective Seller's Affiliate
will terminate contracts nos. 1-5 as listed under Section 17.1
above on the Closing Date. At the option of Purchaser, upon
notice to Seller at least one month prior to the Closing Date,
IF FO GmbH and Seller shall enter into the Post Closing
Service Agreement substantially in the form attached hereto as
Exhibit 17.2.1.
17.2.2 It is anticipated that contract no. 6 (IT Service Agreement)
as listed under Section 17.1 above shall also terminate as of
the Closing Date. The Parties will negotiate in good faith
regarding a new IT Service Agreement to take effect on the
Closing Date. If no such agreement is reached, Purchaser shall
have the option, upon notice to Seller at least one month
prior to the Closing Date, to extend contract no. 6 for a
maximum period of six (6) months beyond the Closing Date. In
this case IF FO GmbH shall have the right to terminate the
contract at the end of any calendar month upon one (1) month
prior notice, and the total consideration payable to Seller
under contract no. 6 for the period after the Closing Date
shall be EUR 400,000.00 per month.
17.2.3 It is anticipated that contract no. 7 (Distribution Agreement)
as listed under Section 17.1 above shall terminate as of the
Closing Date. At the option of Purchaser upon notice to Seller
at least one month prior to the Closing Date, contract no. 7
shall be extended with respect to its provisions regarding
"demand fulfillment services" (logistics) for a maximum of six
(6) months beyond the Closing Date. In this case IF FO GmbH
shall have the right to terminate this contract at the end of
any calendar month upon one (1) month prior notice.
17.2.4 Contract no. 8 (Chip Supply Agreement) as listed under Section
17.1 above shall remain in effect, provided that the Parties
will enter into an amendment which shall provide that the
yield risk shall be borne by Seller up to achievement of the
M9 milestone, as defined in Seller's development process, and
by IF FO GmbH for time periods thereafter and that the price
for products supplied under contract no. 8 (with the exception
of chips used in POF products, for which Section 17.2.5 (b)
shall apply) shall be the price agreed by the parties in
Exhibit 1A to contract no. 8 plus the following mark-ups:
86
(i) from 1 October 2004 to 30 September 2005 : 10 %;
(ii) from 1 October 2005 to 30 September 2006 : 20 %;
(iii) from 1 October 2006 to 30 September 2007 : 30 %;
(iv) from 1 October 2007 onwards : 40 %.
17.2.5 Contract no. 9 (POF Product Supply Agreement) as listed under
Section 17.1 above shall be re-negotiated between IF FO GmbH
and Seller in good faith along the following principles:
(a) The yield risk shall be borne by Seller up to
achievement of the M9 milestone as defined in
Seller's development process and by IF FO GmbH for
time periods thereafter.
(b) Products shall be invoiced based on Seller's
manufacturing cost plus 5.75% of such costs
(excluding the cost of chips purchased from third
parties and the cost of cavity as interface (CAI)
components). In the event that Seller achieves any
cost savings, such savings shall be shared in
accordance with a formula to be agreed upon in good
faith after Signing of this Agreement.
(c) In the event that IF FO GmbH cannot adhere to the
volumes forecasted, Seller and IF FO GmbH shall
work-out in good faith a mechanism on how to reduce
the manufacturing cost.
(d) In the event that IF FO GmbH shall cancel any
purchase order to Seller, it shall reimburse Seller
for the costs incurred.
(e) The other provisions of contract no. 9 shall remain
substantially unchanged.
17.2.6 Contract no. 10 (AIT Development Agreement) as listed under
Section 17.1 above shall remain in effect after the Closing
Date, provided, however, that the license back granted to
Seller under development results conceived un-
87
der this agreement shall not apply for use in connection with
Restricted Activities.
17.2.7 Contracts no. 11 - 13 as listed under Section 17.1 above shall
remain in effect after the Closing Date, provided that, in
case of contract no. 12 (Perlach Rental Agreement) the Parties
will confer in good faith and make appropriate adjustments, if
any, to the rental provisions to properly reflect the space
actually occupied as of the Closing Date.
17.2.8 Contract no. 14 (Corporate Research Development Agreement) as
listed under Section 17.1 above shall be renegotiated in good
faith if BMBF grants approval to the transfer of the Subsidy
to IF FO GmbH.
18. RESTRICTION OF ANNOUNCEMENT / COOPERATION / CONFIDENTIALITY
18.1 Each of the Parties undertakes that prior to the Closing Date it will
not make an announcement in connection with this Agreement unless
required by applicable mandatory law or share exchange regulations or
unless the other Party hereto has given its consent to such
announcement, including the form of such announcement, which consents
may not be unreasonably withheld and may be subject to conditions. If
and to the extent any announcement or disclosure of information
regarding the subject matter of this Agreement is to be made under
applicable mandatory laws, in particular any applicable share exchange
rules, the Party being concerned shall not disclose any such
information without prior consultation with the other Parties. The
Parties agree that on the Signing Date the Parties will publish a joint
press release substantially in the form as attached hereto as Exhibit
18.1, Seller may publish an "ad hoc"-publication according to Section
15 of the German Securities Exchange Act (Wertpapierhandelsgesetz -
WpHG) and Purchaser may publish a report on form 8-K with the SEC which
will incorporate the English language version of Exhibit 18.1.
18.2 Upon and after the Closing Date, Seller and Purchaser shall each use
their best efforts to execute and deliver or procure to be done,
executed and delivered all such further acts, deeds, documents,
instruments of conveyance, assignment and transfer that may be
reasonably necessary to implement the terms of this Agreement.
88
18.3 The Parties understand and agree that all Proprietary Information (as
defined in Section 18.5 below) shall be treated as confidential. The
receiving Party shall use the same degree of care as it uses with
regard to its own Proprietary Information to prevent disclosure, use or
publication of the disclosing Party's Proprietary Information.
Proprietary Information of the originating Party shall be held
confidential by the receiving Party above unless it is, has been or
shall be:
18.3.1 obtained legally and freely from a third party without
restriction;
18.3.2 independently developed by the receiving Party at a prior time
or in a separate and distinct manner without benefit of any of
the Proprietary Information of the disclosing Party, and
documented to be as such;
18.3.3 made available by the disclosing Party for general release
independent of the receiving Party;
18.3.4 within the public domain or later becomes part of the public
domain as a result of acts by someone other than the receiving
Party and through no fault or wrongful act of the receiving
Party.
18.4 A receiving Party may disclose Proprietary Information of a disclosing
Party to directors, officers, employees and advisors of the receiving
Party or its Affiliates who have undertaken in writing to keep
Proprietary Information disclosed hereunder confidential or are subject
to professional confidentiality obligations. Any disclosure hereof
required by legal process pursuant to this Section shall only be made
after providing the disclosing Party with notice thereof in order to
permit the disclosing Party to seek an appropriate protective order or
exemption. Violation by a Party, its directors, officers, employees or
its advisors of the foregoing provisions shall entitle the disclosing
Party, at its option, to obtain injunctive relief without a showing of
irreparable harm or injury. The provisions of this Section will be
effective for a period of two (2) years after the Closing Date.
18.5 "PROPRIETARY INFORMATION" shall mean the information created,
transferred, recorded or employed as part of, or otherwise resulting
from the activities undertaken pursuant to this Agreement or the
Disclosure Schedules and Exhibits hereto which constitutes the
confidential, proprietary or trade secret information of the disclosing
89
Party as well as the terms and conditions of this Agreement. Such
information may be of, but not limited to, a business, organizational,
technical, financial, marketing, operational, regulatory or sales
nature and shall include, without limitation, any and all source codes
and information relating to services, methods of operation, price
lists, customer lists, technology, designs, specifications or other
proprietary information of the business or affairs of a Party or its
Affiliates. Proprietary Information may either be in a written or an
oral form.
19. NOTICES
All notices and other communications hereunder shall be made in writing and
shall be delivered or sent by registered mail or courier to the addresses below
or to such other addresses which may be specified by any Party to the other
Party in the future in writing:
If to Seller:
Infineon Technologies AG
Legal Department
Postfach 80 09 49
81609 Munchen
Germany
Telefax: +49 89 234 24 108
with a copy to:
Freshfields Bruckhaus Deringer
Dr. Ferdinand Fromholzer
Prannerstra(beta)e 10
80333 Munchen
Germany
Telefax: +49 89 20 70 21 00
If to Purchaser:
Finisar Corporation
1308 Moffett Park Drive
Sunnyvale, CA 94089
90
U.S.A.
Attention: Chief Executive Officer
Telefax: +1 (408) 543-1000
with a copy to:
Gray Cary Ware & Freidenrich LLP
2000 University Avenue
East Palo Alto, CA 94303-2248
U.S.A.
Attention: Dennis C. Sullivan, Esq.
Telefax: +1 (650) 833-2001
and
Taylor Wessing
Konigsallee 92a
40212 Dusseldorf
Germany
Attention: Dr. Peter Hellich
Telefax: +49 (0) 211 8387-100
20. MISCELLANEOUS
20.1 All expenses, costs, fees and charges in connection with the
transactions contemplated under this Agreement, including without
limitation, fees for legal and financial advisory services, shall be
borne by the Party commissioning the respective costs, fees and
charges. All notarial fees incurred with the notarization of this
Agreement as well as all official fees charged by the cartel
authorities in connection with the merger clearances required under
this Agreement shall be borne by Purchaser. Purchaser shall be
responsible for the payment of any sales, transfer or stamp taxes, or
other similar charges, payable by reason of the transactions
contemplated by this Agreement.
20.2 Effective upon the Closing, Purchaser hereby irrevocably and
unconditionally waives any and all claims against Seller and its
Affiliates for the alleged infringe-
91
ment by Seller and/or its Affiliates of Purchaser's patents by the FO
Business Unit prior to the Closing Date.
20.3 All Exhibits and Disclosure Schedules to this Agreement constitute an
integral part of this Agreement and are incorporated herein by
reference.
20.4 This Agreement and the Ancillary Agreements and the Exhibits and
Disclosure Schedules to this Agreement above comprise the entire
agreement between the Parties concerning the subject matter hereof and
supersede and replace all oral and written declarations of intention
made by the Parties in connection with the contractual negotiations.
Changes or amendments to this Agreement (including this Section 20.3)
must be made in writing by the Parties or in any other legally required
form, if so required.
20.5 No Party shall be entitled to assign any rights or claims under this
Agreement or any of the Ancillary Agreements without the written
consent of the other Parties.
20.6 Interest payable under any provision of this Agreement or any of the
Ancillary Agreements shall be calculated on the basis of actual days
elapsed divided by 360.
20.7 Business days (Werktage) (including, for the avoidance of doubt,
Saturdays) and banking days (Bankarbeitstage) shall be those prevailing
in Frankfurt am Main and the City of New York.
20.8 Neither this Agreement nor any of the Ancillary Agreements shall grant
any rights to, or is intended to operate for, the benefit of third
parties unless otherwise explicitly provided for herein.
20.9 In this Agreement the headings are inserted for convenience only and
shall not affect the interpretation of this Agreement; where a German
term has been inserted in quotation marks and/or italics it alone (and
not the English term to which it relates) shall be authoritative for
the purpose of the interpretation of the relevant English term in this
Agreement.
20.10 No Party, except as provided otherwise herein or in the respective
Ancillary Agreement, shall be entitled (i) to set-off (aufrechnen) any
rights and claims it may have against any rights or claims any other
Party may have under this Agreement or
92
under any of the Ancillary Agreements or (ii) to refuse to perform any
obligation it may have under this Agreement or under any of the
Ancillary Agreements on the grounds that it has a right of retention
(Zuruckbehaltungsrecht) unless the rights or claims of the relevant
Party claiming a right of set-off (Aufrechnung) or retention
(Zuruckbehaltung) have been acknowledged (anerkannt) in writing by the
relevant other Party or have been confirmed by final decision of a
competent court (Gericht) or arbitration court (Schiedsgericht).
20.11 Any currency conversions shall be determined using (i) the European
Central Bank fixing rates for the respective date which are published
both by electronic market information providers (e.g. Reuters page
ECB37) and on the ECB's website www.ecb.int shortly after 2.15 p.m. CET
or, (ii) in the event such rates are not available on such date,
Reuters world spot rates (mid rate on page FX=) taken as close as
possible to 2.15 p.m. CET shall be used ((i) or (ii), as the case may
be, herein "EXCHANGE RATES").
20.12 This Agreement shall be governed by, and be construed in accordance
with, the laws of the Federal Republic of Germany, without regard to
principles of conflicts of laws and without regard to the UN Convention
on the Sale of Goods. All disputes arising in connection with this
Agreement or its validity shall be finally settled by three arbitrators
in accordance with the Arbitration Rules of the German Institution of
Arbitration e.V. (DIS) without recourse to the ordinary courts of law.
The venue of the arbitration shall be Munich. The language of the
arbitral proceedings shall be English.
20.13 Purchaser shall maintain at all times a duly appointed agent in
Germany, which may be changed upon ten (10) days prior written notice
to Seller, for the service of any process or summons in connection with
any issue, litigation, action or proceeding brought in any such court
or arbitral tribunal in connection with this Agreement. Any such
process or summons may also be served on Purchaser by mailing a copy of
such process or summons to such agent at its address set forth below,
and in the manner provided in Section 19 above. Purchaser herewith
appoints Dr. Peter Hellich, Taylor Wessing, Konigsallee 92a, 40212
Dusseldorf, Germany, Telefax: +49-(0)211 83 87-100 as such agent.
Purchaser hereby irrevocably consents to the exclusive personal
jurisdiction and venue of any court or arbitral tribunal of competent
jurisdiction in Germany in any action, claim or proceeding arising out
of or in connection with this Agreement and agrees not to commence or
prosecute any ac-
93
tion, claim or proceeding or to enforce an arbitration decision in any
other court. Purchaser hereby expressly and irrevocably waives and
agrees not to assert the defense of lack of personal jurisdiction,
forum non conveniens or any similar defense with respect to the
maintenance of any such action or proceeding in Germany.
20.14 In the event that any terms or provisions of the Ancillary Agreements
conflict with the terms or provisions of this Agreement, the terms and
provisions of this Agreement shall prevail, unless specifically
provided for otherwise in the Ancillary Agreements.
20.15 In the event that one or more provisions of this Agreement shall, or
shall be deemed to, be invalid or unenforceable, the validity and
enforceability of the other provisions of this Agreement shall not be
effected thereby. In such case, the Parties hereto agree to recognize
and give effect to such valid and enforceable provision or provisions
which correspond as closely as possible with the commercial intent of
the Parties. The same shall apply in the event that the Agreement
contains any gaps (Vertragslucken).
This protocol has been read to the parties appearing in presence of the
Substitute of the Notary approved by them and thereafter signed by them and the
Substitute of the Notary personally as follows:
/s/ Rudolf v. Moreau
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/s/ Dr. Peter Hellich
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Lentfer, Notarvertr. (22:02)