EXHIBIT 2.7
AMENDED AND RESTATED MASTER
SALE AND PURCHASE AGREEMENT
regarding the
sale and purchase of the
INFINEON FIBER OPTICS BUSINESS
OCTOBER 11, 2004
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TABLE OF CONTENTS
A. STATUS......................................................................................... 11
1. CURRENT STATUS........................................................................ 11
B. SALE, PURCHASE AND ASSIGNMENT, PURCHASE PRICE.................................................. 14
2. SALE, PURCHASE AND ASSIGNMENT OF THE SHARES AND THE ASSETS............................ 14
3. PURCHASE PRICE........................................................................ 16
4. TERMINATION OF INTERCOMPANY FINANCING ARRANGEMENTS AND DEPOSITS....................... 21
C. EFFECTIVE DATE BALANCE SHEET, SIGNING DATE, PRELIMINARY CLOSING DATE, CLOSING DATE
AND CLOSING.................................................................................... 21
5. EFFECTIVE DATE BALANCE SHEET AND ADJUSTMENT STATEMENT................................. 21
6. SIGNING DATE, EFFECTIVE DATE, PRELIMINARY CLOSING DATE, CLOSING DATE,
CLOSING, WITHDRAWAL AND TERMINATION FEE............................................... 24
D. GUARANTEES, REMEDIES, INDEMNITIES AND COVENANTS................................................ 29
7. SELLER'S GUARANTEES................................................................... 29
8. PURCHASER'S GUARANTEES................................................................ 43
9. REMEDIES.............................................................................. 54
10. ENVIRONMENTAL INDEMNITY............................................................... 58
11. TAX INDEMNITY......................................................................... 62
12. SELLER'S COVENANTS.................................................................... 65
13. EXPIRATION / LIMITATION OF SELLER'S CLAIMS............................................ 67
14. PURCHASER'S COVENANTS................................................................. 70
15. OTHER INDEMNITIES..................................................................... 75
E. MISCELLANEOUS.................................................................................. 76
16. NON-COMPETE UNDERTAKING............................................................... 76
17. RESTRUCTURING AND SEVERANCE MATTERS................................................... 77
18. AGREEMENTS BETWEEN SELLER AND IF FO GMBH.............................................. 79
19. RESTRICTION OF ANNOUNCEMENT / COOPERATION / CONFIDENTIALITY........................... 82
20. NOTICES............................................................................... 84
21. MISCELLANEOUS......................................................................... 85
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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 (E)
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
Best Knowledge of Purchaser Section D, 8.3
Best Knowledge of Seller Section D, 7.3
BMBF Section D, 14.3
BMBF Projects Section D, 14.3
Board Recommendation Section D, 8.1.13
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
De Minimis Claims Section D, 13.3
Deposits Section A, 1.6
Disclosure Schedules Section D, 7.2
4
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
Finished Projects Section D, 14.3
Fixed Shares Section B, 3.1.1
FO Business Unit Recitals (A)
Force Reduction Plan Section E, 17.2
Foreign Asset Purchase Agreements Section B, 2.4
Foreign Business Section A, 1.5
Foreign Share Transfer Instruments Section B, 2.2
40 Gbit Project Section D, 14.3
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
IF NA Section A, 1.5
IF Trutnov Section A, 1.4.1
IF FO Loan Section A, 1.6
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Infineon Accounting Principles Section C, 5.1
Intercompany Financing Arrangements Section A, 1.6
Interim Loss Section B, 3.1.7
Interim Profit Section B, 3.1.8
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)
NegIT Project Section D, 14.3
Neutral Auditor Section C, 5.4
NNM Section B, 3.2
Objections Section C, 5.4
OpTun Section A, 1.3
Original Agreement Recitals (D)
Other Know-How Section D, 7.1.7 (d)
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 Closing Date Section B, 6.1.3
Preliminary Purchase Price Section B, 3.2
Preliminary Share Consideration Section B, 3.2
Proprietary Information Section E, 18.5
Proxy Statement Section D, 14.6.1
Purchase Object Section B, 3.1
Purchase Price Section B, 3.1
6
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
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
Restructuring Plan Section E, 17.1
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
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
Seller's Liability Cap Section D, 13.4
Severance Costs Section E, 17.3.1
Signing Date Section C, 6.1.1
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Seller's Inventories Section A, 1.5
Severance Costs Section E, 17.1
Subsidies Section D, 12.8
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
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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
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
*Amendment to Stockholder Agreement Exhibit 3.9-3
Release and Hold Harmless Letter Exhibit 5.2
*Individuals resigning as board members Exhibit 6.8.6
Options, warrants, conversion rights, pre-emptive rights or similar Exhibit 7.1.2
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
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 Exhibit 7.1.13 (b) (iv)
Companies
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)
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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
*Indemnified Claim Exhibit 15.2.3
*Force Reduction Plan Exhibit 17.2
Post Closing Service Agreement Exhibit 17.2.1
*US Employees Exhibit 17.3.5
*Severance Costs Exhibit 17.3.6
*Chip Supply Agreement Pricing Terms Exhibit 18.2.4
*POF Supply Agreement Payment Terms Exhibit 18.2.5
*Press Release Exhibit 19.1
- ----------------------
* Designates Exhibits to this Agreement. All other Exhibits are Exhibits to
the Original Agreement.
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AMENDED AND RESTATED 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.
(C) WHEREAS, Purchaser wishes to purchase and acquire the FO Business Unit
from Seller.
(D) WHEREAS, in consideration of the foregoing, the parties have previously
entered into a Master Sale and Purchase Agreement with the notarial deed
No. 84/2004 of the notary public Johann Peter Sieveking with official seat
in Berlin dated as of April 29, 2004 (herein "ORIGINAL AGREEMENT"),
including its exhibits, which were separately notarized in, and attached
to the Original Agreement with, the notarial reference deed No. 83/2004 of
the same notary and same date.
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(E) WHEREAS, the Parties now desire to amend certain of the terms and
conditions of the Original Agreement, to restate the terms and conditions
of the Original Agreement, as so amended, in this amended and restated
master sale and purchase agreement (herein "AGREEMENT"), to terminate the
Original Agreement as of the date of this Agreement and to include certain
of the exhibits to the Original Agreement also as exhibits to this
Agreement by explicitly referring to each of these certain exhibits as an
exhibit to the Original Agreement (as identified by its respective
number), for which purpose the notarial reference deed No. 83/2004 of the
notary public Johann Peter Sieveking shall become an integral part of this
Agreement.
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 to the Original Agreement.
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.
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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 to the Original Agreement (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 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").
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 to the Original Agreement. (Such inventories, as adjusted for
additions and subtractions in the ordinary course of business 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").
13
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").
1.7 Seller has issued a letter of comfort dated 1 April 2000 to Bayerische
Hypotheken- und 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 and IF Trutnov;
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 Trutnov 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;
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.
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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 6.8.1 through 6.8.6 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 (i) sells
with commercial effect (mit wirtschaftlicher Wirkung) as of the Effective
Date the Trutnov Shares to Purchaser and (ii) undertakes to procure that
IF BV shall on the Closing Date (as defined in Section 6.1.4 below) 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 to the Original Agreement (herein "CZECH SHARE
TRANSFER INSTRUMENT").
Purchaser hereby undertakes to purchase from Seller the Trutnov Shares and
to accept on the Closing Date the assignment thereof and such other
provisions as provided for under the Czech Share Transfer Instrument by
executing the Czech Share Transfer Instrument 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 Closing Date
substantially in the form as attached as Exhibit 2.4-1 to the Original
Agreement (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
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Closing Date substantially in the form as attached as Exhibit 2.4-2 to the
Original Agreement (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 Closing Date substantially
in the form as attached as Exhibit 2.4-3 to the Original Agreement (herein
"ASIA / PACIFIC ASSET PURCHASE AGREEMENT", together with the US Asset
Purchase Agreement and the Japan Asset Purchase Agreement the "FOREIGN
ASSET PURCHASE AGREEMENTS").
Purchaser hereby undertakes to accept the sale and transfer of the Foreign
Business from IF NA, IF Japan and IF AP on the 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
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
to the Original Agreement (herein "SELLER'S INVENTORIES TRANSFER
INSTRUMENT"). Purchaser hereby purchases from Seller the Seller's
Inventories and hereby undertakes on the 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.
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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 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 (i) cash in the amount of EUR 100,074.00 in consideration for the
German Shares, (ii) cash in the amount of EUR 100,074.00 in
consideration for the Trutnov Shares and (iii) a fixed number of
109,850,000 Consideration Shares in consideration for the Assets
(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;
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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 22,000,000.00 (in
words: EURO twenty-two 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
(ix) less current deferred income tax liabilities;
plus Consideration Shares equal in value to
18
3.1.5 if any, the amount by which the Working Capital as per the Effective
Date Balance Sheet exceeds EUR 23,000,000.00 (in words: Euro
twenty-three 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 to the Original Agreement. (herein "SUBSIDIARY EQUITY
ADJUSTMENT");
plus Consideration Shares equal in value to
3.1.7 an amount equivalent to the average daily 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 but ignoring any
gains or losses of a non-recurring nature) multiplied by the number
of days between the Preliminary Closing Date (as defined in Section
6.1.3 below) and the Effective Date, excluding, for the avoidance of
doubt the Preliminary Closing Date and the Effective Date, (herein
"INTERIM LOSS")
minus Consideration Shares equal in value to
3.1.8 an amount equivalent to the average daily earnings 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 but ignoring
any gains or losses of a non-recurring nature) multiplied by the
number of days between the Preliminary Closing Date and the
Effective Date, excluding, for the avoidance of doubt the
Preliminary Closing Date and the Effective Date, (herein "INTERIM
PROFIT")
(herein "PURCHASE PRICE").
19
3.2 On the Closing Date (as defined in Section 6.1.2 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 or Interim Profit shall
be preliminarily determined based on a written agreement between the
Parties on the basis of an agreed upon estimate, if such agreement can be
reached not later than five (5) business days prior to the 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
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
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 to this Agreement.
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
20
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;
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 by 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 Consideration 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,
21
or accompanied by stock powers duly executed in blank, together with all
required stock transfer stamps affixed, if any.
3.9 The Parties acknowledge that Seller and Purchaser have entered into a
Stockholder Agreement and a Registration Rights Agreement attached as
Exhibits 3.9-1 and 3.9-2, respectively, to the Original Agreement, and an
Amendment to the Stockholder Agreement attached as Exhibit 3.9-3 to this
Agreement, 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, PRELIMINARY CLOSING 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, 3.1.7 and 3.1.8 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 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
22
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 as Exhibit 5.2 to the Original
Agreement, 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 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
23
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 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.
24
6. SIGNING DATE, EFFECTIVE DATE, PRELIMINARY CLOSING DATE, CLOSING DATE,
CLOSING, WITHDRAWAL AND TERMINATION FEE
6.1 Signing Date, Effective Date, Preliminary 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 Closing Date, 24:00 hrs., or such
other date as the Parties shall agree upon in writing;
6.1.3 "PRELIMINARY CLOSING DATE" shall be the Business Day (Werktage)
following the day on which 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 last day of the fiscal month of Seller
in which the Preliminary Closing Date occurs, or such other date as
the Parties shall agree upon in writing, provided that by or on such
date all, and not only some of the Closing Events (as defined in
Section 6.8 below) have taken place or have been duly waived
pursuant to Section 6.9 below.
6.2 The obligations of the Parties to carry out the Closing (as defined in
Section 6.8 below) shall be subject to the satisfaction of each of the
following conditions:
6.2.1 The hold separate requirements under the applicable national merger
control rules of (i) the Czech Republic and the United States of
America, with regard to the acquisition of the Business by
Purchaser, and (ii) Germany and the United States of America, with
regard to the acquisition of the Consideration Shares by Seller
(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
25
(herein collectively "CLOSING CONDITIONS").
6.3 The obligation of Purchaser to carry out the Closing shall be subject to
the condition that, between the date of the Original Agreement 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 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 date of the Original Agreement and the Closing
Date, no change, condition, event or development shall have occurred that
has or could reasonably be
26
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 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 date of
the Original Agreement. In particular,
27
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.
6.6 Seller or Purchaser may withdraw (zurucktreten) from this Agreement by
written notice to the other Party under the following circumstances:
6.6.1 The parties may withdraw from this Agreement upon the mutual written
consent of Purchaser and Seller.
6.6.2 Either Seller or Purchaser may withdraw from this Agreement if all
of the Closing Conditions have not been satisfied on or before 31
March 2005 unless (i) the Party claiming such withdrawal is
responsible for (hat zu vertreten) the non-fulfillment of the
Closing Conditions due to such Party's failure to fulfill any
obligation under this Agreement, or (ii) the delay is the result of
pending review of the Proxy Statement by the SEC. Any such
withdrawal (Rucktritt) shall only be valid if the other Party has
received written notice of such withdrawal (Rucktrittserklarung)
prior to the date on which the Closing Conditions have been
fulfilled.
6.6.3 Either Seller or Purchaser may withdraw from this Agreement upon
written notice to the other Party if, at the Purchaser Stockholders'
Meeting (including any adjournment or postponement thereof), the
requisite vote of Purchaser's stockholders in favor of approval of
the Purchaser Stock Issuance shall not have been obtained.
6.6.4 Seller may withdraw from this Agreement upon written notice to
Purchaser if the Board of Directors of Purchaser shall have
withdrawn its recommendation of the Purchaser Stock Issuance, or
modified such recommendation in a manner substantially adverse to
Seller.
28
6.6.5 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) day 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) day period,
either Party may, by written notice to the other, withdraw from this
Agreement within five (5) Business Days after expiry of the
aforementioned ten (10) day 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 from this Agreement by written notice immediately after
receipt of such allegation.
6.7 In the event of a withdrawal pursuant to Section 6.6, neither of the
Parties shall have any obligation or incur any liability towards the other
Party, and the Parties herewith waive all such claims they may have
against each other or their respective officers, directors, agents or
Affiliates in connection with such withdrawal; provided, however that:
6.7.1 such waiver shall not affect the liability of any Party for damages
for willful breach of any covenant or other obligation under this
Agreement;
6.7.2 the provisions of Sections 19, 20 and 21 of this Agreement shall
survive and remain in full force and effect;
6.7.3 in the event of a withdrawal by Seller pursuant to Section 6.6.4,
Purchaser shall pay to Seller a termination fee of $5,000,000 in
cash, within ten (10) Business Days after such withdrawal; and
6.7.4 in the event of a withdrawal by either Seller or Purchaser pursuant
to Section 6.6.3, in a circumstance where Seller is not entitled to
withdraw pursuant to Section 6.6.4, Purchaser shall reimburse Seller
for all of Seller's reasonable attorneys fees and other
out-of-pocket expenses incurred in connection with the negotiation
and execution of this Agreement.
6.8 The closing (Vollzug) of the transactions contemplated hereunder (herein
"CLOSING") shall occur on the Closing Date. On the Closing Date the
following events (herein
29
"CLOSING EVENTS") shall take place at the offices of Freshfields Bruckhaus
Deringer, Munich, Germany or at such other place as agreed between the
Parties:
6.8.1 delivery by Purchaser of the Preliminary Share Consideration to
Seller in accordance with Section 3.8;
6.8.2 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;
6.8.3 with respect to the Trutnov Shares, execution of the Czech Share
Transfer Instrument between IF BV on the one hand and Purchaser on
the other hand;
6.8.4 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;
6.8.5 execution and simultaneous consummation of the Seller's Inventories
Transfer Instrument by Seller and Purchaser; and
6.8.6 delivery of resignation letters of the individuals listed in
Exhibit 6.7.6 to the Original Agreement as board members of any of
the Companies listed in Exhibit 6.7.6.
6.9 The Closing Events listed in Sections 6.8.1 and 6.8.2 above can be waived
by Seller. The Closing Events listed in Sections 6.8.3 through Sections
6.8.6 above can be waived by Purchaser. Sections 6.6.2 and 6.7 (with the
exception of Sections 6.7.3 and 6.7.4) shall apply mutatis mutandis in the
event that not all of the Closing Events shall have been fulfilled thirty
(30) days after the 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 (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
30
guarantee pursuant to Section 311 (1) German Civil Code (BGB) that the
statements set forth hereinafter are true and correct as of the date of
the Original Agreement 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 of the date of the Original Agreement (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
Czech Share Transfer Instrument (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 and (ii) 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 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 is duly organized and validly
existing
31
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 date of the Original
Agreement. The Wholly-Owned Companies are duly qualified to do
business as a German or Czech 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 to the Original
Agreement, 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 or any Wholly-Owned Company 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 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 to
the Original Agreement (herein collectively "MATERIAL AGREEMENTS"),
or (b) which have been completely fulfilled before the Effective
Date (vollstandig erfullte Vertrage).
32
(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.
(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.
33
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 to the Original
Agreement (herein collectively "IF FO GMBH EXCLUSIVE IP
RIGHTS");
(b) granted an irrevocable, non-exclusive, non-transferable
(other than to Purchaser and any affiliate of Purchaser, now
existing or hereafter acquired, which is controlled by
Purchaser) 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 to the Original Agreement 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 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 to the Original Agreement (herein
collectively "IF FO GMBH EXCLUSIVE KNOW-HOW");
(d) granted an irrevocable, non-exclusive, non-transferable
(other than to Purchaser and any affiliate of Purchaser, now
existing or hereafter acquired, which is controlled by
Purchaser) 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 to the Original Agreement, 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.
34
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 to the Original Agreement (herein
collectively "IF FO GMBH EXCLUSIVE SOFTWARE AND MATERIAL");
(f) granted a non-exclusive, non-transferable, 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 .1.7-6 to the Original
Agreement 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").
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 was being operated as of the
date of the Original Agreement and will
35
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.
7.1.8 PROCEEDINGS RELATING TO MATERIAL INTELLECTUAL PROPERTY RIGHTS.
Except as disclosed in Exhibit 7.1.8 to the Original Agreement, (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 to the Original
Agreement, Transferors maintain in full force and effect policies
of insurance for their own benefit until the Closing 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.
36
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 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 was being conducted as of the date of the
Original Agreement and which are material for the Business (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.
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 to the Original Agreement.
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
37
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:
- 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
to the Original Agreement. Exhibit 7.1.13 (a) (iii)-2
to the Original Agreement 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
38
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.
(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) to the Original Agreement
contains a complete list as of the date of the
Original Agreement 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 of
the Original Agreement, 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)
to the Original Agreement.
(v) Except as disclosed in Exhibit 7.1.13 (b) (v) to the
Original Agreement, there are no pending, and during
the three (3)
39
years prior to the date of the Original 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.
(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) to the Original Agreement
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
40
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.
(x) Exhibit 7.1.13 (b) (x) to the Original Agreement
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) to the Original Agreement ("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
41
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.
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 and the Wholly-Owned Companies have conducted the
Business 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 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, 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
42
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 federal, 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.
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
43
the meaning of Sections 276 (1), 443 German Civil Code (Garantie fur die
Beschaffenheit der Sache).
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 date of the Original
Agreement 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 of the date of the Original Agreement (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
44
present at a meeting of 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 subordinated notes due 2010; and
45
(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.
8.1.5 SEC Filings; Financial Statements.
46
(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 subsidiaries as at 31 January 2004, including
the notes thereto, neither Purchaser nor any such subsidiary
has any liability or
47
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.
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
48
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 9 October 2004, 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.
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").
49
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
(vii) below, except for such agreements and commitments (a) which
are listed or disclosed in Exhibit 8.1.16 to the Original Agreement
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 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
50
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 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
51
in the manner in which it is being operated as of the date of the
Original Agreement 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 for
maintenance and repair, in order to continue the Purchaser's
business substantially in the same fashion and manner as conducted
as of the date of the Original Agreement.
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 was being conducted as of the date of
the Original Agreement 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
52
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 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
53
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
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).
54
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 date of the Original Agreement 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, 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
55
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.
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;
56
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;
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
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"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 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.
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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 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 remediation of an Existing Environmental
Condition (as defined in Section 10.2.2 below);
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(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 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
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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 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
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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 Sicherheitsstandards) 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.
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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.
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).
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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.
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.
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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 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
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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.
12. SELLER'S COVENANTS
12.1 For the period between the date of the Original Agreement 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, except
for deviations from such practices as are reasonable in view of changes in
the FO Business Unit contemplated by the Restructuring Plan described in
Section 17 below, or as otherwise agreed to by Purchaser.
12.2 For the period between the date of the Original Agreement 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
66
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 to the Original Agreement.
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 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 date of the Original Agreement, 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.
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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.
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;
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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 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
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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 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.
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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 of Comfort. Purchaser shall
further, prior to or on the Closing Date,
(i) either 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 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 9,000,000.00 as notified to Purchaser
by Seller at least ten (10) business days (Werktage) before the
Closing Date; and
(iii) provide an unconditional bank guarantee, payable upon first demand,
valid until 30 April 2005, in the amount of EUR 400,000 in favor of
ABZ Arbeits- und Bildungzentrum GmbH, Berlin to secure the payment
of salaries and severance payments owed to former employees of IF FO
GmbH pursuant to obligations existing on the date of this Agreement.
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 Seller and IF FO GmbH have received certain subsidies from the German
Ministry of Education and Research (Bundesministerium fur Bildung und
Forschung) (herein "BMBF") with respect to the following projects (herein
"BMBF PROJECTS").
- The project entitled "Schlusselkomponenten fur 40 Gbit/s-Transceiver
mit innovativen Realisierungskonzepten" (herein "40 GBIT PROJECT");
- The project entitled "New Generation Interconnection Technology"
(herein "NEGIT PROJECT") and
- The projects entitled "Nanostruktur Materialien", "Komlaser" and
"Parop 10" (herein "FINISHED PROJECTS").
With respect to the BMBF Projects, Purchaser undertakes that:
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14.3.1 Purchaser will cause IF FO GmbH to comply with and perform the
obligations of Seller and/or IF FO GmbH under the exploitation
plans (Verwertungsplane) relating to efforts to identify commercial
markets for products or technology developed pursuant to the
Finished Projects in accordance with the conditions under which the
subsidies were granted (Zuwendungsbescheid) and the NKBF 98, to the
extent such obligations arise after the Closing;
14.3.2 Purchaser will cause IF FO GmbH to comply with and perform the
obligations of Seller and/or IF FO GmbH relating to the NegIT
Project in accordance with the conditions under which the subsidies
were granted (Zuwendungsbescheid) and the NKBF 98, to the extent
such obligations arise after the Closing;
14.3.3 Purchaser will cause IF FO GmbH to provide to Seller, on a
subcontractor basis, services related to the development of an
optical chip pursuant to the 40 Gbit Project. Such services shall
be performed at the Munich, Germany facility pursuant to the terms
of a subcontract to be agreed upon by the Parties. Purchasers shall
also cause IF FO GmbH to comply with and perform the obligations of
Seller and/or IF FO GmbH under the exploitation plan
(Verwertungsplan) relating to efforts to identify commercial
markets for products or technology developed pursuant to the 40
Gbit Project, to the extent such obligations arise after the
Closing and shall indemnify Seller for any reimbursements of
subsidies to BMBF caused by the failure of IF FO GmbH to comply
with the exploitation plan (Verwertungsplan).
14.3.4 Except as specifically provided in this Section 14.3, Seller will
comply with and perform all obligations of Seller and/or IF FO GmbH
relating to the Finished Projects and the 40 Gbit Project, whether
arising before or after the Closing.
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
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"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 activities 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 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 within (2) Business Days after the Preliminary 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 Purchaser has prepared and filed 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.
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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.
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 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 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
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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 the Board of Directors of
Purchaser shall have withdrawn or modified in any adverse manner
its approval or recommendation of the Purchaser Stock Issuance or
other transactions contemplated by this Agreement, as permitted
under Section 14.6.2; provided, however, that Purchaser shall not
be so obligated if Seller elects to withdraw from this Agreement
pursuant to Section 6.6.4 and Purchaser shall have paid to Seller
the termination fee specified in Section 6.7.3.
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 to the Original Agreement, 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 to the
Original Agreement. 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 to the
Original Agreement. The foregoing indemnification shall be
limited to Losses incurred by Seller or any of Seller's
Affiliates with respect to the operation of the Business by
Purchaser after the Closing Date.
15.2.2 If the draft settlement agreement attached as Exhibit 15.2.2 to the
Original Agreement (herein "DRAFT SETTLEMENT") shall not have been
concluded
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prior to the Closing Date, Seller shall indemnify Purchaser and any
of the Wholly-Owned Companies 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 Seller shall indemnify IF FO GmbH against any and all claims
related to alleged product defects as described in Exhibit 15.2.3
to this Agreement, provided that Purchaser shall procure that IF FO
GmbH shall pay to Seller any amounts recovered from any third party
in relation to any such claim. Purchaser shall cause IF FO GmbH to
use commercially reasonable efforts in the recovery of damages from
third parties in relation to any such claim.
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.
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
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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,
except as contemplated by Section 17 below or as otherwise agreed to by
Purchaser, without the prior consent of Purchaser, 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 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) to the Original
Agreement, 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 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 Purchaser; provided, however, that nothing
contained herein shall prevent Purchaser from hiring or employing any
person who responds to an advertisement in a newspaper or other media of
general circulation.
17. RESTRUCTURING AND SEVERANCE MATTERS
17.1 Seller agrees to use its reasonable efforts to assist Purchaser in
planning for and implementing, in an efficient and cost-effective manner,
Purchaser's plan for restructuring the FO Business Unit (herein
"RESTRUCTURING PLAN"). Purchaser shall keep Seller informed of the
development and refinement of the Restructuring Plan. The Parties shall
meet regularly to discuss the planning and implementation of the
Restructuring Plan.
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17.2 As part of the Restructuring Plan, Purchaser intends to reduce the
workforce of the FO Business Unit. Purchaser's preliminary list of
employees to be terminated at the various facilities of the FO Business
Unit is attached hereto as Exhibit 17.2 (herein "FORCE REDUCTION PLAN").
Purchaser will advise Seller of any changes in the Force Reduction Plan.
Changes that increase the number of employees to be terminated or which
could reasonably be expected to increase the costs of the reduction in
workforce shall be subject to the approval of Seller.
17.3 With respect to the severance of employees of the FO Business Unit
pursuant to the Restructuring Plan, the Parties agree as follows:
17.3.1 The Parties shall cooperate to minimize Severance Costs. For
purposes of this Agreement, "SEVERANCE COSTS" shall mean (i) all
severance payments made pursuant to severance plans, social plans
or individually negotiated termination agreements entered into with
employees of the FO Business Unit terminated pursuant to the
Restructuring Plan, (ii) all wages and salaries payable to such
employees, and all social security contributions payable by the
employer with respect to such employees, from the end of the
statutory or contractual notice periods applicable to each
individual employee or such other notice periods as may be agreed
upon between Seller and Purchaser (which may be different for
different categories of employees) through the termination of the
employee's employment, (iii) all fees and expenses of third party
consultants whose appointment has been approved by both Parties,
court costs and the costs of any reconciliation committees dealing
with the reconciliation of interests and/or social plans, and (iv)
relocation or other payments described in Section 17.3.2.
"SEVERANCE COSTS" shall not include attorneys fees of the Parties
or their Affiliates or charges for the time of any employee of
either Party or its Affiliates engaged in such activities.
17.3.2 In order to assist in the mitigation of Severance Costs, Seller
shall use reasonable efforts to identify opportunities to find
suitable employment for employees of the FO Business Unit that are
to be terminated pursuant to the Force Reduction Plan with other
business units of Seller or its Affiliates, and the Parties shall
cooperate to facilitate the transfer of such employees. Any
relocation payments or other payments to such employees to induce
them to agree to such transfer shall be subject to approval of both
Parties.
17.3.3 The Parties shall jointly participate in the negotiation of
severance plans, social plans and termination agreements to be
entered into with employees
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of IF FO GmbH located in Berlin, Germany and employees of IF
Trutnov located in Trutnov, Czech Republic to be terminated
pursuant to the Force Reduction Plan. Such negotiations shall be
conducted under the direction of such person or persons as the
Parties shall agree. All severance plans, social plans and
individually negotiated termination agreements entered into with
such employees shall be subject to the approval of both Parties.
17.3.4 The Parties shall jointly participate in the negotiation of
severance plans, social plans and termination agreements to be
entered into with employees of IF FO GmbH located in Munich,
Germany to be terminated pursuant to the Force Reduction Plan.
17.3.5 Purchaser shall make offers of employment to the employees of IF NA
located in Longmont, Colorado, U.S.A. and San Jose, California,
U.S.A. identified on Exhibit 17.3.5 to this Agreement.
17.3.6 The Parties shall bear the Severance Costs in the manner specified
in Exhibit 17.3.6 to this Agreement.
17.4 Seller shall bear all costs related to the restoration or refurbishment of
the Munich, Germany facility occupied by IF FO GmbH pursuant to the
Perlach Rental Agreement described in Section 18.1, including all costs
related to the removal and/or disposal of any reactors located at such
facility.
17.5 Except as specifically provided in this Section 17, Purchaser and its
Affiliates shall bear all costs associated with the implementation of the
Restructuring Plan, and Seller shall have no obligation to reimburse
Purchaser or any of its Affiliates for any costs incurred in the
restructuring of the FO Business Unit.
17.6 The Parties shall negotiate in good faith such additional agreements as
shall be necessary or appropriate to implement the general provisions of
this Section 17.
18. AGREEMENTS BETWEEN SELLER AND IF FO GMBH
18.1 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.
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No. Agreement
- --- ---------
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
18.2 As to the continuation of the Transition Agreements after the Closing
Date, Purchaser and Seller agree as follows:
18.2.1 IF FO GmbH and Seller or the respective Seller's Affiliate will
terminate contracts nos. 1-5 as listed under Section 18.1 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 as Exhibit 17.2.1 to the Original Agreement;
provided, however, that such form of agreement shall be revised to
include provisions under which Seller shall continue to provide
human resources and failure analysis services to IF FO GmbH,
substantially in the manner currently being provided, during the
term specified therein.
18.2.2 Contract no. 6 (IT Service Agreement) shall terminate as of the
Closing Date. The Parties agree that they will use reasonable
efforts to enter into a new Post Closing IT Support Agreement
within one month following the Signing Date. It is expected that
the scope of IT services to be provided by Seller following the
Closing will be reduced from those currently being provided.
Services to be provided under the Post Closing IT Support Agreement
are expected to include support for all existing business
applications that are required by Purchaser following the Closing
and all infrastructure which directly supports such applications
and access thereto.
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Such services are not expected to include support for desktop and
networking infrastructure. The total consideration payable under
the Post Closing IT Support Agreement shall be negotiated in good
faith and is expected to be between EUR 200,000 and EUR 300,000 per
month, depending on the scope of services the Parties agree shall
be provided.
18.2.3 It is anticipated that contract no. 7 (Distribution Agreement) as
listed under Section 18.1 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.
18.2.4 Contract no. 8 (Chip Supply Agreement) as listed under Section 18.1
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 IF FO GmbH up to achievement of the M9 milestone, as
defined in Seller's development process, and by Seller 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 18.2.5 (b) shall apply) shall be as set forth on
Exhibit 18.2.4 to this Agreement, or as the Parties shall otherwise
agree.
18.2.5 Contract no. 9 (POF Product Supply Agreement) as listed under
Section 18.1 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 IF FO GmbH up to achievement
of the M9 milestone as defined in Seller's development process
and by Seller 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.
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(c) Payment terms for products shipped during the first
twenty-four (24) months following the Closing shall be as set
forth on Exhibit 18.2.5 to this Agreement.
(d) 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.
(e) In the event that IF FO GmbH shall cancel any purchase order
to Seller, it shall reimburse Seller for the costs incurred.
(f) The other provisions of contract no. 9 shall remain
substantially unchanged.
18.2.6 Contract no. 10 (AIT Development Agreement) as listed under Section
18.1 above shall remain in effect after the Closing Date, provided,
however, that the license back granted to Seller under development
results conceived under this agreement shall not apply for use in
connection with Restricted Activities.
18.2.7 Contracts no. 11 - 13 as listed under Section 18.1 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.
18.2.8 Contract no. 14 (Corporate Research Development Agreement) as
listed under Section 18.1 above shall terminate as of the Closing
Date. Seller and IF FO GmbH shall enter into appropriate agreements
relating to the research and development activities described in
Section 14.3, which shall be subject to the reasonable approval of
Purchaser.
19. RESTRICTION OF ANNOUNCEMENT / COOPERATION / CONFIDENTIALITY
19.1 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
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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 as Exhibit 19.1 to this Agreement, 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 19.1.
19.2 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.
19.3 The Parties understand and agree that all Proprietary Information (as
defined in Section 19.5 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:
19.3.1 obtained legally and freely from a third party without restriction;
19.3.2 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;
19.3.3 made available by the disclosing Party for general release
independent of the receiving Party;
19.3.4 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.
19.4 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
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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.
19.5 "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 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.
20. 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
85
Germany
Telefax: +49 89 20 70 21 00
If to Purchaser:
Finisar Corporation
1308 Moffett Park Drive
Sunnyvale, CA 94089
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
21. MISCELLANEOUS
21.1 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
86
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.
21.2 Effective upon the Closing, Purchaser hereby irrevocably and
unconditionally waives any and all claims against Seller and its
Affiliates for the alleged infringement by Seller and/or its Affiliates of
Purchaser's patents by the FO Business Unit prior to the Closing Date.
21.3 All Exhibits and Disclosure Schedules to this Agreement constitute an
integral part of this Agreement and are incorporated herein by reference.
21.4 This Agreement and the Ancillary Agreements, the Exhibits and Disclosure
Schedules to this Agreement above (including the Exhibits to the Original
Agreement referred to herein) 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, including the Original
Agreement. Changes or amendments to this Agreement (including this Section
21.4) must be made in writing by the Parties or in any other legally
required form, if so required.
21.5 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.
21.6 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.
21.7 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.
21.8 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.
21.9 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.
21.10 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
87
have against any rights or claims any other Party may have under this
Agreement or 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).
21.11 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").
21.12 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.
21.13 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 action, 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
88
jurisdiction, forum non conveniens or any similar defense with respect to
the maintenance of any such action or proceeding in Germany.
21.14 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.
21.15 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).
/s/ Rudolf v. Moreau
Attorney-In-Fact, for Infineon Technologies AG
/s/ Dr. Peter Hellich
Attorney-In-Fact, for Finisar Corporation