Annual Report of a Foreign Private Issuer — Form 20-F
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 20-F Annual Report for Fiscal Year Ended December 31, HTML 3.02M
2005
2: EX-1.1 English Translation of the Articles of Association 16 35K
3: EX-4.3 Sale & Purchase Agreement 57 151K
4: EX-12.1 Section 302 Certification of Chief Executive 2± 10K
Officer
5: EX-12.2 Section 302 Certification of Chief Financial 2± 10K
Officer
6: EX-13.1 Section 906 Certification of CEO and CFO 1 7K
EXHIBIT 4.3*
Notarial Deed
Role of Deeds No. H 1323 /2005
Negotiated at Duesseldorf (Germany) this 17th day of May, 2005
Before me, the undersigned Notary
DR. ARMIN HAUSCHILD
duly admitted and sworn in with official residence at Duesseldorf,
appeared
1. Dr. Ingo Theusinger,
born on June 1, 1973,
business address Feldmuehleplatz 1, 40545 Duesseldorf,
identified by his identity card
not acting in his own name but as attorney-in-fact in the name and on
behalf of
- E.ON VITERRA-BETEILIGUNGSGESELLSCHAFT MBH
with registered offices in 40479 Duesseldorf, E.ON Platz 1,
which is registered in the commercial register (Handelsregister) of
the local court (Amtsgericht) of Duesseldorf under HRB 33224
2. Dr. Nina Boettger,
born on April 7, 1974
business address Feldmuehleplatz 1, 40545 Duesseldorf
personally known
not acting in her own name but as attorney-in-fact in the name and on
behalf of
- E.ON AG
with registered offices in 40479 Duesseldorf, E.ON Platz 1,
which is registered in the commercial register (Handelsregister) of
the local court (Amtsgericht) of Duesseldorf under HRB 22315
* CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT
-2-
3. Dr. Philipp Grzimek,
born on February 12, 1970,
business address Untermainanlage 1, 60329 Frankfurt am Main,
identified by his identity card
not acting in his own name but as attorney-in-fact in the name and on
behalf of
- ATRIUM EINHUNDERTERSTE V V GMBH
with registered offices in Duesseldorf,
c/o Lovells, Kennedydamm 17, 40212 Duesseldorf,
which is registered in the commercial register (Handelsregister) of
the local court (Amtsgericht) of Duesseldorf under HRB 50561
4. Dr. Philipp Grzimek,
aforementioned
not acting in his own name but as attorney-in-fact in the name and on
behalf of
- PRAETORIUM 40. V V GMBH
with registered offices in Koeln,
Domstr. 58, 50668 Koeln,
which is registered in the commercial register (Handelsregister) of
the local court (Amtsgericht) of Koeln under HRB 53872
The individuals present stated that they are in sufficient command of the
English language.
Thereupon, the individuals present declared :
SALE AND PURCHASE AGREEMENT
REGARDING THE SALE AND PURCHASE
OF ALL SHARES IN VITERRA AG
EXECUTION COPY 17 MAY 2005
page 2 of 55
SALE AND PURCHASE AGREEMENT
by and among
E.ON VITERRA-BETEILIGUNGSGESELLSCHAFT MBH
(hereinafter referred to as the "SELLER 1"),
E.ON AG
(hereinafter referred to as the "SELLER 2" or "E.ON"),
ATRIUM EINHUNDERTERSTE V V GMBH
(hereinafter referred to as the "PURCHASER 1")
and
PRAETORIUM 40. V V GMBH
(hereinafter referred to as the "PURCHASER 2"),
the Seller 1 and the Seller 2 hereinafter collectively referred to as the
"SELLERS" or each a "SELLER"; the Purchaser 1 and the Purchaser 2 hereinafter
collectively referred to as the "PURCHASERS" or each a "PURCHASER"; the Sellers
and the Purchasers hereinafter collectively referred to as the "PARTIES", and
each of them as a "PARTY".
page 3 of 55
TABLE OF CONTENTS
[Download Table]
PREAMBLE................................................................... 6
SECTION 1 CORPORATE OWNERSHIP/STRUCTURE OF THE ACQUISITION................ 6
SECTION 2 SALE AND PURCHASE OF THE SHARES; RIGHTS TO PROFITS.............. 8
SECTION 3 PURCHASE PRICE; TOTAL PURCHASE PRICE; CONDITIONS OF PAYMENT..... 9
SECTION 4* 11
SECTION 5 CLOSING; CLOSING CONDITIONS..................................... 13
SECTION 6 SELLERS' GUARANTEES............................................. 16
SECTION 7 REMEDIES FOR BREACH OF SELLERS' GUARANTEES...................... 26
SECTION 7A* 31
SECTION 8 TAXES........................................................... 33
SECTION 9 PURCHASERS' GUARANTEES.......................................... 40
SECTION 10 COVENANTS....................................................... 41
SECTION 11 SEPARATION OF VITERRA FROM E.ON................................. 46
SECTION 12 CONFIDENTIALITY/PRESS RELEASES.................................. 47
SECTION 13 ASSIGNMENT OF RIGHTS AND UNDERTAKINGS........................... 48
SECTION 14 PURCHASERS' FINANCING ASSURANCES................................ 49
SECTION 15 COSTS AND TAXES................................................. 49
SECTION 16 NOTICES......................................................... 50
SECTION 17 MISCELLANEOUS................................................... 52
* REDACTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
(PAGE INTENTIONALLY LEFT BLANK)
(PAGE INTENTIONALLY LEFT BLANK)
page 6 of 55
PREAMBLE
WHEREAS, the Seller 1 is a German limited liability company (Gesellschaft mit
beschraenkter Haftung, GmbH) duly organised under the laws of Germany;
WHEREAS, E.ON is a German stock corporation (Aktiengesellschaft) duly organised
under the laws of Germany;
WHEREAS, the Seller 1 is a wholly owned subsidiary of E.ON;
WHEREAS, the Sellers are the sole shareholders of Viterra AG (hereinafter
referred to as the "COMPANY" or "VITERRA");
WHEREAS, Viterra, including its Affiliates (Viterra and its Affiliates
hereinafter collectively referred to as the "VITERRA GROUP"), is a market leader
in the administration, buying, letting and selling of residential real estate
offering as of 31 December 2004 approximately 137,000 apartments for rent or
purchase and, in addition, operates as a developer of office buildings and
owner-occupied apartments (the entire business of the Viterra Group described in
this paragraph taken as a whole hereinafter referred to as the "BUSINESS");
WHEREAS, the Purchaser 1 is a German limited liability company (Gesellschaft mit
beschraenkter Haftung, GmbH) duly organised under the laws of Germany and the
Purchaser 2 is a German limited liability company (Gesellschaft mit
beschraenkter Haftung, GmbH) duly organised under the laws of Germany;
WHEREAS, the Sellers wish to sell the entire shares in Viterra to the
Purchasers, and the Purchasers wish to acquire such shares;
NOW, THEREFORE, the Parties hereto agree as follows:
SECTION 1
CORPORATE OWNERSHIP/STRUCTURE OF THE ACQUISITION
1.1 PARTICULARS OF THE COMPANY
Viterra AG (hereinafter referred to as the "COMPANY") is a German stock
corporation (Aktiengesellschaft) duly organised under the laws of Germany
with
page 7 of 55
registered offices at Essen and registered with the Commercial Register of
the local court (Amtsgericht) at Essen under HRB 13188.
1.2 SHARE CAPITAL OF THE COMPANY
The share capital (Grundkapital) of the Company amounts to EUR 182,000,000
(in words: one hundred eighty two million Euros) and is divided into
70,000,000 (in words: seventy million) non par value registered shares
(auf den Namen lautende Stueckaktien) with a partial value of the share
capital (anteiliger Betrag des Grundkapitals) of EUR 2.60 per share
(hereinafter referred to as the "SHARES"). 94.5 per cent of the Shares,
i.e. 66,150,000 (in words: sixty six million one hundred fifty thousand)
Shares, numbered with nos. 3,850,001 through 70,000,000, are registered in
the name of and held by the Seller 1 (hereinafter referred to as the
"MAJORITY SHARES") whereas 5.5 per cent of the Shares, i.e. 3,850,000 (in
words: three million eight hundred fifty thousand) Shares, numbered with
nos. 1 through 3,850,000 are registered in the name of and held by the
Seller 2 (hereinafter referred to as the "MINORITY SHARES"). The Sellers
are the sole shareholders of Viterra. The Majority Shares and the Minority
Shares are each certificated in a share certificate (hereinafter
collectively referred to as the "SHARE CERTIFICATES").
1.3 SUBSIDIARIES OF THE COMPANY; COMPANIES' SHARES
The Company holds shares or interests, directly or indirectly, only in the
wholly-owned or majority-owned subsidiaries listed in Annex 1.3
(hereinafter collectively referred to as the "SUBSIDIARIES", and each of
them as a "SUBSIDIARY"). Annex 1.3 includes the share capital of each
Subsidiary as well as the respective percentage of (direct or indirect)
ownership of the Company. The Company and its Subsidiaries are hereinafter
collectively referred to as the "COMPANIES". The shares and interests in
the Company and the shares and interests held, directly or indirectly, by
the Company in its Subsidiaries are hereinafter referred to as the
"COMPANIES' SHARES".
1.4 MINORITY PARTICIPATIONS
The Company holds, directly or indirectly, the minority participations in
the entities listed in Annex 1.4. Annex 1.4 includes the share capital of
each such entity as well as the respective percentage of (direct or
indirect) ownership of the Company. Such participations are hereinafter
collectively referred to as the "MINORITY PARTICIPATIONS", and each of them
as a "MINORITY PARTICIPATION". The respective entities in which the
Minority Participations exist are hereinafter collectively referred to as
the "MINORITY ENTITIES", and each of them as a "MINORITY ENTITY".
page 8 of 55
1.5 SIGNING DATE; EFFECTIVE DATE
For the purposes of this Agreement the "Signing Date" shall mean the date
on which this Agreement is signed (hereinafter referred to as the "SIGNING
DATE"), and the "Effective Date" shall mean 1 January 2005, 00:00 hours CET
(hereinafter referred to as the "EFFECTIVE DATE").
1.6 OTHER DEFINITIONS
Capitalised Terms used but not defined in the subsequent Sections shall
have the meaning attributed to them in Annex 0.
SECTION 2
SALE AND PURCHASE OF THE SHARES; RIGHTS TO PROFITS
2.1 SALE AND PURCHASE OF THE SHARES; RIGHTS TO PROFITS
The Seller 1 hereby sells to the Purchaser 1, and the Purchaser 1 hereby
purchases from the Seller 1, upon the terms and conditions of this
Agreement, the Majority Shares, with commercial effect (mit
wirtschaftlicher Wirkung) as of the Effective Date. The Seller 2 hereby
sells to the Purchaser 2, and the Purchaser 2 hereby purchases from the
Seller 2, upon the terms and conditions of this Agreement and subject to
(aufschiebend bedingt) the fulfilment of the Closing Conditions (as defined
in Section 5.2), the Minority Shares, with commercial effect (mit
wirtschaftlicher Wirkung) as of the Effective Date. The sale and purchase
of the Shares hereunder shall include any and all rights pertaining to the
Shares, including, without limitation, all undistributed profits, in
particular the rights to receive dividends and to participate in the
results of (i) the last quarter year of the calendar year 2004 which was a
short fiscal year (Rumpfgeschaeftsjahr) of the Company and (ii) the current
fiscal year of the Company.
2.2 SEPARATE TRANSFER DOCUMENTS
The Sellers and the Purchasers agree that the Shares sold and purchased
hereunder are not transferred by virtue of this Agreement but will be
transferred with effect "in rem" (mit dinglicher Wirkung) at the Closing by
means of separate transfer agreements substantially in the form as attached
hereto as Annex 2.2 and the indorsement and delivery of the Share
Certificates.
Page 9 of 55
SECTION 3
PURCHASE PRICE; TOTAL PURCHASE PRICE; CONDITIONS OF PAYMENT
3.1 PURCHASE PRICE, DUE DATE, TOTAL PURCHASE PRICE
The Purchase Price to be paid hereunder by the Purchasers for the Shares as
sold and purchased hereunder shall amount to
EUR 3,729,200,000.00
(in words: three billion seven hundred twenty nine million
two hundred thousand Euros)
(hereinafter referred to as the "PURCHASE PRICE"). The Purchase Price shall
become due and payable on the Closing Date (as defined in Section 5.1),
together with interest as set forth in Section 3.4.1 (the Purchase Price
together with interest hereinafter referred to as the "TOTAL PURCHASE
PRICE").
3.2 PAYMENT OF TOTAL PURCHASE PRICE
On the Closing Date, the Purchaser 1 shall pay 94.5 per cent of the
Purchase Price, i.e. an amount of EUR 3,524,094,000.00 (in words: three
billion five hundred twenty four million ninety four thousand Euros) plus
94.5 per cent of the interest accrued on the Purchase Price according to
Section 3.4.1 to the Seller 1 into the Seller 1's Account and the Purchaser
2 shall pay 5.5 per cent of the Purchase Price, i.e. an amount of EUR
205,106,000.00 (in words: two hundred five million one hundred six thousand
Euros) plus 5.5 per cent of the interest accrued on the Purchase Price
according to Section 3.4.1 to the Seller 2 into the Seller 2's Account (as
in each case defined in Sections 3.3.1 and 3.3.2 below), in each case by
way of wire transfer -- to be credited on the same day- free of any costs
and fees as set forth in Section 5.5 below.
3.3 SELLERS' ACCOUNTS; PURCHASERS' ACCOUNTS
3.3.1 All payments owed by the Purchasers to the Seller 1 under this Agreement
shall be paid by the Purchasers by irrevocable wire transfer to the bank
account of Seller 1 kept with Dresdner Bank Duesseldorf, sort code
(Bankleitzahl) 300 800 00, account number 0212439700, SWIFT DRESDEFF300
(hereinafter referred to as the "SELLER 1'S ACCOUNT") or any other account
to be nominated by the Seller 1 to the Purchasers 1 in writing at least
five Business Days prior to the Closing Date.
Page 10 of 55
3.3.2 All payments owed by the Purchasers to the Seller 2 under this Agreement
shall be paid by the Purchasers by irrevocable wire transfer to the bank
account of Seller 2 kept with Deutsche Bank Duesseldorf, sort code
(Bankleitzahl) 300 700 10, account number 394177000, SWIFT DEUTDEDD
(hereinafter referred to as the "SELLER 2'S ACCOUNT") or any other account
to be nominated by the Seller 2 to the Purchasers in writing at least five
Business Days prior to the Closing Date. Seller 1's Account and Seller 2's
Account are hereinafter collectively referred to as the "SELLERS'
ACCOUNTS".
3.3.3 All payments owed by the Sellers to the Purchaser 1 under this Agreement
shall be paid by the Sellers by irrevocable wire transfer to the Purchaser
1's bank account kept with Fortis Bank Koeln, sort code (Bankleitzahl) 370
106 00, account number 1163311192, SWIFT GEBA DE 33 (hereinafter referred
to as the "PURCHASER 1'S ACCOUNT") or any other account to be nominated by
the Purchaser 1 to the Sellers in writing at least five Business Days prior
to the Closing Date.
3.3.4 All payments owed by the Sellers to the Purchaser 2 under this Agreement
shall be paid by the Sellers by irrevocable wire transfer to the Purchaser
2's bank account kept with Fortis Bank Koeln, sort code (Bankleitzahl) 370
106 00, account number 1163051114, SWIFT GEBA DE 33 (hereinafter referred
to as the "PURCHASER 2'S ACCOUNT") or any other account to be nominated by
the Purchaser 2 to the Sellers in writing at least five Business Days prior
to the Closing Date. Purchaser 1's Account and Purchaser 2's Account are
hereinafter collectively referred to as the "PURCHASERS' ACCOUNTS".
3.4 INTEREST
3.4.1 The Purchase Price shall bear interest at the rate of 300 basis points
over the one month rate Euribor p.a. as of the next Business Day after the
Effective Date, i.e. at a rate of 5.125 per cent p.a., commencing as of the
Effective Date through and including the Closing Date. Interest shall be
calculated on the basis of actual days elapsed and a calendar year with 360
days.
3.4.2 If any Party is in default (Verzug) of payment with regard to the Total
Purchase Price, the Total Purchase Price shall bear interest at the rate of
700 basis points over the one month rate Euribor p.a. as of the next
Business Day after the first day of the default, commencing as of the first
day of the default through and including the last day of the time such
Party is in default.
Page 11 of 55
3.5 NO RIGHT TO SET-OFF
Any right of the Parties to set-off and/or to withhold any payments due
under this Agreement is hereby expressly waived and excluded except for
claims which are undisputed or res iudicatae.
SECTION 4*
* REDACTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
Page 12 of 55
* REDACTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
Page 13 of 55
SECTION 5
CLOSING; CLOSING CONDITIONS
5.1 CLOSING CONDITIONS; CLOSING DATE
The consummation of the transactions contemplated by this Agreement
(heretofore and hereinafter referred to as "CLOSING") shall take place at
the offices
page 14 of 55
of Freshfields Bruckhaus Deringer in 40545 Duesseldorf, Feldmuehleplatz 1
at 9:00 hours CET, seven Business Days after the date on which the last of
the Closing Conditions set forth in Section 5.2 has been fulfilled, or at
any other time or place which the Sellers and the Purchasers will mutually
agree upon (hereinafter referred to as the "CLOSING DATE").
5.2 CLOSING CONDITIONS
The obligations of the Sellers and the Purchasers to carry out the Closing
shall be subject to the satisfaction of the following conditions to Closing
(heretofore and hereinafter collectively referred to as the "CLOSING
CONDITIONS", each a "CLOSING CONDITION"):
5.2.1 The German Federal Cartel Office (Bundeskartellamt) ("FCO") shall have
cleared the proposed concentration. This condition shall be deemed
satisfied if
(1) the FCO has cleared the proposed concentration in accordance with
Section 40 para. 2 sentence 1 GWB; or
(2) the parties involved (Zusammenschlussbeteiligte) have received a
written notice from the FCO that the facts of the case do not allow a
prohibition of the proposed concentration under Section 36 GWB; or
(3) the FCO fails to notify the Parties in accordance with Section 40
para. 1 sentence 1 GWB within one (1) month after receipt of the pre-
merger notification that it has commenced a formal investigation of
the proposed concentration; or
(4) the FCO (i) fails to prohibit the proposed concentration in accordance
with Section 40 para. 2 sentence 1 GWB within four (4) months after
receipt of the pre-merger notification and (ii) fails to come to an
agreement with the parties involved (Zusammenschlussbeteiligte) on
the extension of such four-month waiting period in accordance with
Section 40 para. 2 sentence 3 no. 1 GWB; or
(5) the FCO fails to (i) prohibit the proposed concentration in accordance
with Section 40 para. 2 sentence 1 GWB within the agreed extension and
(ii) fails to come to an agreement with the parties involved
(Zusammenschlussbeteiligte) on a further extension of the
(extended) waiting period mentioned in (4) of this Section 5.2.1 in
accordance with Section 40 para. 2 sentence 3 no. 1 GWB.
Neither any of the Purchasers nor any of the Sellers shall grant its
consent and approval to any extension of the waiting periods without the
prior written consent of the respective other Parties involved.
page 15 of 55
5.2.2 The Polish Office for Protection of Competition and Consumers ("OPCP")
shall have cleared the proposed concentration. This condition shall be
deemed satisfied if
(1) the President of the OPCP has granted the consent for the proposed
concentration; or
(2) the period during which the President of the OPCP may raise an
objection has expired without any objection being made.
5.2.3 The supervisory board of E.ON has approved this Agreement and the
transactions contemplated herein; E.ON will submit the Agreement to its
supervisory board for a decision to be rendered within one month from the
Signing Date.
5.2.4 The MIRA Agreement has been signed substantially in the form as attached
hereto as Annex 5.2.4 and the closing conditions under the MIRA Agreement
have been fulfilled.
5.3 OBLIGATIONS WITH RESPECT TO THE CLOSING CONDITIONS
The Sellers and the Purchasers undertake to use their best efforts and to
cause the Closing Conditions to be satisfied as soon as possible. With
regard to the merger control clearance, the obligations of the Sellers and
the Purchasers are more specifically set out in Section 10.1 below. The
Sellers and the Purchasers shall inform each other in writing without undue
delay (unverzueglich) as soon as the Closing Conditions have been
satisfied.
5.4 CONSEQUENCES OF NON-SATISFACTION OF THE CLOSING CONDITIONS
If the Closing has not occurred, at the latest, on 30 September 2005, the
Sellers or the Purchasers may rescind this Agreement (Ruecktritt vom
Vertrag) by written notice to the other Parties. Any rescission under this
Section 5.4 shall be valid only if the recipient Party has received such
written notice of rescission prior to the date on which the last Closing
Condition has been satisfied or waived. If this Agreement is rescinded in
accordance with this Section, this Agreement shall cease to have force and
effect and shall not create any binding obligation between the Parties
except that Sections 12 (Confidentiality), 14 (Purchasers' Financing
Assurances), 15 (Costs and Taxes), 16 (Notices) and 17 (Miscellaneous)
shall remain in force and effect. If the Closing Condition set out in
Section 5.2.1 has not been satisfied, the Purchasers shall reimburse to the
Sellers all external costs and expenses up to an amount of EUR 15,000,000
(in words: fifteen million Euros) incurred in connection with the
preparation and execution of this Agreement. For the avoidance of doubt and
save for the terms and conditions explicitly mentioned in this Section 5.4,
the Parties confirm that the sale and purchase of the Minority Shares
pursuant to
page 16 of 55
Section 2.1 above is entered into only subject to (aufschiebend bedingt)
the fulfilment of the Closing Conditions.
5.5 ACTIONS ON THE CLOSING DATE
At the Closing, the Parties shall simultaneously execute and deliver the
following documents and take simultaneously (Zug um Zug) the following
actions:
5.5.1 The Sellers shall deliver to the Purchasers duly executed resignation
letters, effective at or prior to the Closing Date, of those members of the
Company's supervisory board who act as representatives of E.ON or any of
its Affiliates (other than the Companies) and who are listed in Annex 5.5.1
(hereinafter referred to as the "E.ON REPRESENTATIVES").
5.5.2 The Purchasers shall release E.ON from the E.ON Guarantees (as defined in
Section 11.1) or deliver to E.ON a bank guarantee as set forth in Section
11.1.
5.5.3 The Purchasers shall pay the Total Purchase Price in accordance with
Section 3.2
5.5.4 The Sellers shall transfer the Shares to the Purchasers as provided in
Section 2.2 above.
SECTION 6
SELLERS' GUARANTEES
6.1 FORM AND SCOPE OF SELLERS' GUARANTEES
The Sellers hereby guarantee to the Purchasers by way of an independent
promise of guarantee pursuant to Section 311 para. 1 of the German Civil
Code (selbstaendiges Garantieversprechen im Sinne des Paragraphen 311 Abs.
I BGB) within the scope and subject to the requirements and limitations
provided in Section 7 hereof, in particular in Section 7.4, or otherwise in
this Agreement that the statements set forth in Section 6.2 are complete
and correct as of the Signing Date and, unless explicitly provided
otherwise in this Section 6, on the Closing Date.
6.2 SELLERS' GUARANTEES
6.2.1 Corporate Issues and Authority of the Sellers
page 17 of 55
(1) The statements in Section 1 hereof regarding the Companies and the
Minority Entities are complete and correct. The Companies and the
Minority Entities have been duly established and are validly existing
under the laws of their respective jurisdictions. Annex 6.2.1 (1)
contains a complete and correct list of the articles of association
and of material shareholders' agreements (i) of such Subsidiaries
which are not, directly or indirectly, wholly-owned by the Company and
(ii) of the Minority Entities, with respect to shareholders'
agreements only to the extent that any of the Companies is a party
thereto.
(2) Except as disclosed in Annex 6.2.1 (2), the Companies' Shares and the
Minority Participations have been validly issued, are fully paid in,
either in cash or in kind, are non-assessable (unterliegen keiner
Nachschusspflicht), have not been repaid and are free from any
encumbrances or other rights of Third Parties, and there are no
pre-emptive rights, options, voting arrangements or other rights of
Third Parties to acquire any of the Companies' Shares or the Minority
Participations, in each case except under statutory law or under the
articles of association (or equivalent documents) listed in Annex
6.2.1 (1).
(3) Except as disclosed in Annex 6.2.1 (3), as of the Signing Date, no
bankruptcy, insolvency or judicial composition proceedings concerning
any of the Companies have been applied for. To the Sellers' Knowledge,
no circumstances exist which would require an application for any
bankruptcy, insolvency or judicial composition proceedings nor do any
circumstances exist according to any applicable bankruptcy or in-
solvency laws which would justify the avoidance of this Agreement.
(4) The Sellers are entitled to freely dispose of the Shares without such
a disposal infringing any rights of a Third Party.
(5) This Agreement constitutes a valid and binding obligation of the
Sellers, enforceable under German law against the Sellers in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganisation, moratorium, or
other similar laws relating to or affecting the rights of creditors
generally and except that the remedy of specific performance and
injunctive relief and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before which
any proceedings may be brought. The Sellers have the corporate
authority to execute this Agreement and to perform their respective
obligations under this Agreement.
page 18 of 55
(6) The execution and performance by the Sellers of this Agreement and the
consummation of the transactions contemplated herein do not (i)
violate the articles of association or by-laws of the Sellers or (ii)
violate any applicable law, regulation, judgment, injunction or order
binding on the Sellers, and (iii) there is no action, law suit,
investigation or proceeding pending against, or to the Seller's
Knowledge, threatened against, the Sellers before any court,
arbitration panel or governmental authority which in any manner
challenges or seeks to prevent, alter or delay the transaction
contemplated herein.
6.2.2 Consolidated Financial Statements; Financial Statements
The Sellers have delivered to the Purchasers the audited consolidated
financial statements of the Company as of 31 December 2004 (the
"CONSOLIDATED FINANCIAL STATEMENTS") as well as the audited financial
statements of (i) the Company as of 31 December 2004 and 30 September 2004
and (ii) the Subsidiaries listed in Annex 6.2.2 as of 31 December 2004 (the
"FINANCIAL STATEMENTS"). The Consolidated Financial Statements have been
prepared in accordance with U.S. GAAP and present fairly, in all material
respects, the assets and liabilities, financial condition and results of
operations of the Companies for the period referenced therein. The
Financial Statements have been prepared in accordance with generally
accepted German accounting principles and give a true and fair view, in
accordance with generally accepted German accounting principles (HGB and
German rules of orderly bookkeeping (Grundsaetze ordnungsmaessiger
Buchfuehrung)) of the assets and liabilities, financial condition and
results of operations (Vermoegens-, Finanz- und Ertragslage) of the Company
and the respective Subsidiary for the periods referenced therein, provided,
however, that for the determination whether the Financial Statements of the
Subsidiaries listed in Annex 6.2.2 comply with the true and fair view
principles, materiality thresholds shall be defined as for the Viterra
Group as a whole. For the avoidance of doubt, the Sellers do not assume any
guarantee for the Consolidated Financial Statements and the Financial
Statements with respect to the adequacy and correctness of
(1) the valuation of the Properties (as defined in Section 6.2.3 (1)
below), and
(2) any provisions for maintenance and repair with respect to the Proper-
ties.
6.2.3 Real Property
(1) Annex 6.2.3 (1) contains a complete and correct list as of 31 December
2004 of the real properties (Grundstuecke), condominium ownership
(Teil- und Wohnungseigentum) or hereditary building rights (Erbbau-
page 19 of 55
rechte), in case of real properties covered with buildings (bebaute
Grundstuecke) and hereditary building rights listed by so-called
economic units (Wirtschaftseinheiten), beneficially owned by the
Companies unless indicated otherwise in Annex 6.2.3 (1) (such real
property, condominium ownership and the hereditary building rights
hereinafter individually referred to as a "PROPERTY" and collectively
referred to as the "PROPERTIES"). For the purposes of this Section
6.2.3, "beneficial ownership" ("wirtschaftliches Eigentum") shall
mean that the Companies are the owners of the Properties according to
Sec. 39 para. 1 German Tax Code (Abgabenordnung 1977, AO) or the
beneficial owner of the Properties according to Sec. 39 para. 2 no. 1
AO.
(2) To the Sellers' Knowledge, Annex 6.2.3 (2) contains a complete and
correct list as of 31 December 2004 of the (i) monthly net rent
payable under the respective lease agreement for each rental unit of
the Properties (Nettokaltmiete) plus (ii) advance payments for
decorative repairs (Schoenheitsreparaturen) plus (iii) other premiums
less (iv) other discounts, in each case as calculated in the formate
and per the methodology as used by the Companies (hereinafter
collectively referred to as the "NET RENT PAYABLE"). The aggregate
monthly Net Rent Payable for all Properties as of 31 December 2004
amounts to EUR 38,330,495.18. For the avoidance of doubt, the Sellers
do not give a guarantee with respect to the existence of each rental
agreement or the rent for each individual Property.
(3) To the Sellers' Knowledge, except as disclosed in Annex 6.2.3 (3), on
the Properties there exist no harmful soil changes or residual
contamination pursuant to Section 2 para. 3 and 5 Federal Soil
Protection Act (Bundesbodenschutzgesetz).
(4) To the Sellers' Knowledge, only the Properties so specified in Annex
6.2.3 (4a) are financed or, to the extent the restrictions regarding
the letting, sale or other use have not yet expired, have been
financed with public funds (oeffentliche Mittel) according to Section
3 para. I or Section 6 para. II House Building Law (Wohnungsbaugesetz)
or with welfare subsidies granted by federal state or public
organisations (Wohnungsfuersorgemittel) (the "PUBLICLY SUBSIDISED
PROPERTIES") and except as stated in the respective orders
(Bewilligungsbescheide) and subsidised loan agreements
(Foerderdarlehen):
- no other material restrictions regarding the letting, sale or
other use of the Publicly Subsidised Properties exist, except as
disclosed in Annex 6.2.3 (4b);
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- all public subsidies have been applied for, obtained and used in
material compliance with all applicable laws, regulations and
other (also contractual) obligations;
- the present use of the Publicly Subsidised Properties is in
material compliance with the applicable orders for public grants
(Bewilligungsbescheide) and other (also contractual) obligations,
and the transaction contemplated in this Agreement will not
result in any termination or modification of any public subsidies
in particular any orders for public grants
(Bewilligungsbescheide) or subsidised loan agreements
(Foerderdarlehen) which termination or modification would have a
materially detrimental effect on the Properties.
(5) Except as disclosed in Annex 6.2.3 (5), to the Sellers' Knowledge,
Encumbrances in section III of the land registers (Grundbuecher) (or
applicable other registers) of the Properties are only securing
obligations of the Companies and are not securing any obligations of
the Sellers, their Affiliates (other than the Companies) and/or Third
Parties.
(6) E.ON has unconditionally waived all of its occupancy rights
(Belegungsrechte) relating to the Properties.
6.2.4 Other Assets
To the Sellers' Knowledge, the assets (other than the Properties) owned or
lawfully used by the Companies as of the Signing Date are sufficient to,
and in a reasonably usable condition (gebrauchsfaehiger Zustand) in order
to, continue the Business substantially in the same manner as conducted at
the Signing Date.
6.2.5 Intellectual Property Rights
(1) To the Sellers' Knowledge, Annex 6.2.5 (1) contains a complete and
correct list of all patents, trademarks and other registered
intellectual property rights owned by the Companies as of the Signing
Date (hereinafter referred to as the "INTELLECTUAL PROPERTY RIGHTS").
(2) To the Sellers' Knowledge, the Intellectual Property Rights are, as of
the Signing Date, not subject to any pending proceedings for
opposition, cancellation, revocation or rectification which may
negatively affect the operation of the Business nor are they being
materially infringed by Third Parties.
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6.2.6 Compliance with Laws and Permits
Except as disclosed in Annex 6.2.6, to the Sellers' Knowledge, as of the
Signing Date the Companies hold all material permits and licenses which are
required, if any, under applicable public laws (oeffentliches Recht) for
the operation of the Business as presently conducted. To the Sellers'
Knowledge, there are, as of the Signing Date, no implications or threats of
any revocation or restriction or subsequent orders (nachtraegliche
Anordnungen) relating to any such permits or licenses after the Effective
Date which would materially affect the Business. To the Sellers' Knowledge,
the Companies conduct their respective business in compliance with all
material provisions of such permits and licenses the non-compliance with
which would have a material adverse effect with respect to the Business.
6.2.7 Material Agreements
Annex 6.2.7 contains a complete and correct list of material agreements as
described below to which any of the Companies, as of the Signing Date, is a
party and of which the main obligations have not yet been completely
fulfilled (hereinafter referred to as the "MATERIAL AGREEMENTS"):
(1) agreements relating to the acquisition or sale of interests in other
companies or businesses providing, in each case, for a consideration
of EUR 10,000,000 or more;
(2) rental and lease agreements relating to real estate which,
individually, provide for annual payments of EUR 1,000,000 or more and
which cannot be terminated by the respective Companies on twelve
months or less notice without penalty;
(3) loan agreements, bonds, notes or any other instruments of debt
involving any Third Party outside the Companies and, individually, an
amount of EUR 10,000,000 or more;
(4) guarantees, indemnities and suretyships issued for any debt of any
Third Party other than the Companies for an amount of EUR 1,000,000 or
more;
(5) financial debt instruments or interest swap agreements containing
change of control provisions, which would allow the other party to
terminate or pursuant to which payments could become due in excess of
EUR 500,000, in each case as a result of the consummation of this
Agreement; and
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(6) any continuing obligations (Dauerschuldverhaeltnisse) other than
described in Sections 6.2.7 (1) through 6.2.7 (5) which cannot be
terminated with effect as of or prior to 31 December 2005 and which
provide for annual obligations of the Company or the Subsidiaries in
excess of EUR 1,000,000.
To the Sellers' Knowledge, each of the Material Agreements is, as of the
Signing Date, in full force and effect, and the Company or the respective
Subsidiary have received no notice of termination as of the Signing Date
and, to the Sellers' Knowledge, neither the Company nor any Subsidiary is
in any material breach of any of the Material Agreements.
6.2.8 Employees
(1) To the Sellers' Knowledge, Annex 6.2.8 (1) contains, as of the
Signing Date, a complete and correct list of (i) all collective
bargaining agreements and material agreements with unions, workers'
councils and similar organisations, (ii) all social compensation plans
executed during the two years prior to the Signing Date, (iii) all
pension or retirement schemes and (iv) all stock option and such
incentive plans relating to the completion of the transaction
contemplated under this Agreement, by which any of the Companies, as
of the Signing Date, are bound.
(2) Annex 6.2.8 (2) contains, as of the Signing Date, a complete and
correct list of all officers and employees of the Companies who are
entitled, as of the Signing Date, to receive in the calendar year 2005
a gross annual base salary (excluding fringe benefits, such as
incentives, stock options or appreciation rights, company car and
other benefits) in excess of EUR 250,000 (such officers and employees
collectively hereinafter referred to as the "KEY EMPLOYEES" and each
of them as a "KEY EMPLOYEE"). Except as set forth in Annex 6.2.8 (2),
as of the Signing Date, none of the Key Employees has given written
notice of termination of his or her employment.
6.2.9 Insurance
To the Sellers' Knowledge, the insurance policies listed in Annex 6.2.9,
representing in the view of the Companies all insurance policies material
for the Business, are as of the Signing Date valid and in full force. All
premiums due on the above policies have been duly paid up to the Signing
Date and, to the Sellers' Knowledge, (i) there are no circumstances due to
which any such policy might be voidable and (ii) there are no material
claims individually exceeding EUR 1,000,000 by any of the Companies pending
under any of such
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policies as to which coverage has been questioned, denied or disputed by
the insurer.
6.2.10 Litigation
None of the Companies is involved in any law suits, court actions or
similar proceedings before a court of justice, arbitration panel or an
administrative authority involving an amount in dispute (Streitwert) or
potential liabilities likely resulting therefrom exceeding EUR 250,000 in
each individual case on the Signing Date pending (rechtshaengig) or, to the
Sellers' Knowledge, threatened in writing to be filed against any of the
Companies, except those disclosed in Annex 6.2.10.
6.2.11 Ordinary Course of Business
Except as set forth in Annex 6.2.11a, from 1 January 2005 until the Signing
Date, the business operations of the Companies have been conducted in the
ordinary course of business and substantially in the same manner as before,
in all instances except as provided otherwise for the year 2005 in the
budget of the Viterra Group which is attached as Annex 6.2.11b (the "2005
BUDGET"), and, on a consolidated basis only, as Annex 6.2.11c (the "2005
CONSOLIDATED BUDGET"), and there has been no material adverse change with
respect to the Business taken as a whole. In particular, the Companies,
from 1 January 2005 until the Signing Date (unless indicated otherwise in
the following sub-paragraphs), have not:
(1) amended in any material respect the articles of association or
partnership agreements of any of the Companies;
(2) (i) from 1 October 2004 until the Signing Date declared or paid out
any dividend or made any other distribution (whether in cash or in
kind, but excluding the profit transfer from the Company to E.ON
pursuant to the profit and loss transfer agreement ending on 30
September 2004) to a person or an entity other than the Companies, or
(ii) otherwise made payments to the Sellers or their Affiliates (other
than the Companies) other than in fulfilment of existing arm's length
contracts;
(3) made any increase or reduction of the share capital of any of the
Companies or issued any share capital or similar interest to an entity
which is not part of the Companies;
(4) created any encumbrances on or disposed of any of the shares in any of
the Companies or granted any options, pre-emptive rights, rights of
first refusal or other rights to purchase any such shares to any Third
Party other than the Companies;
page 24 of 55
(5) effected any dissolution or liquidation of any of the Companies;
(6) effected any reduction of the existing insurance coverage;
(7) settled or agreed to settle any claim or litigation where the
settlement would result in a payment to or by a Company of EUR 250,000
or more;
(8) undertaken to make or made any capital expenditure exceeding an amount
of EUR 1,000,000 in the individual case except as set forth for the
year 2005 in the 2005 Budget, or undertaken to increase or increased
maintenance and modernisation materially over and above the annual
level provided in the 2005 Consolidated Budget (whereby any overrun of
the 2005 Consolidated Budget up to ten per cent shall be disregarded
for the purposes of this paragraph);
(9) or entered into any contract or commitment outside the ordinary course
of business;
(10) acquired or disposed of any fixed assets relating to their business
outside the ordinary course of business or not provided for the year
2005 in the 2005 Budget (whereby any overrun of the 2005 Consolidated
Budget up to ten per cent shall be disregarded for the purposes of
this paragraph) or other than at arm's length conditions;
(11) incurred, assumed or guaranteed any financial indebtedness vis-a-vis
Third Parties (other than the Companies) except as set forth for the
year 2005 in the 2005 Consolidated Budget (whereby any overrun of the
2005 Consolidated Budget up to ten per cent shall be disregarded for
the purposes of this paragraph);
(12) made any material amendment to any material loan agreement listed in
Annex 6.2.11 (12) with a bank or any material financing arrangement to
which the respective Company is a party;
(13) made any advance or extended any loan to any Third Party other than
the Companies outside the ordinary course of business;
(14) made any material change in the terms of employment (including
compensation) of or dismissed or gave notice of termination to any Key
Employees other than in the ordinary course of business;
(15) entered into any new (or increased the benefits under any existing)
employee benefit plans or arrangements;
(16) materially increased the number of employees employed;
page 25 of 55
(17) assumed any liability, or granted security for a liability, of the
Sellers or any of its Affiliates (other than the Companies); or
(18) made any material changes in any methods of accounting practice or
policy.
6.3 NO OTHER SELLERS' GUARANTEES
6.3.1 The Sellers do not give or assume any express or implied representations,
warranties or guarantees of any nature except for the guarantees
explicitly given by the Sellers under this Agreement.
6.3.2 Without limiting the generality of the foregoing, the Purchasers
acknowledge that the Sellers give no representation, warranty or guarantee
with respect to
(1) any projections, estimates or budgets delivered or made available to
the Purchasers of future revenues, future results of operations (or
any component thereof), future cash flows or future financial
condition (or any component thereof) or the future business operations
of the Companies or the Business;
(2) any other information or documents made available to the Purchasers or
their counsel, accountants or advisors with respect to the Companies
or the Business, including, without limitation, the Information
Memorandum, the Reports and the information provided during the
Management Presentation; or
(3) any Tax matter except as explicitly otherwise provided for in Section
8
6.4 SELLERS' KNOWLEDGE
In this Agreement, the term knowledge of the Sellers (heretofore and
hereinafter referred to as the "SELLERS' KNOWLEDGE") shall solely encompass
the actual knowledge as of the Signing Date of the individuals listed in
Annex 6.4 after having made, with the standard of care of a prudent
businessman (Section 347 HGB), due inquiries with the management board
members of Viterra, who have made, with the standard of care of a prudent
businessman (Section 347 HGB), due inquiries with the divisional directors
(Bereichsleiter) of the Company and the managing directors
(Geschaeftsfuehrer) of Viterra Development GmbH, Deutschbau
Wohnungsgesellschaft mbH and WohnBau Rhein-Main GmbH before, which includes
without limitation the following persons: Burkhard Niedermowwe, Mark Ennis,
Thomas Jacobs, Kurt Fassbender and Dr. Ralf Lehmann.
page 26 of 55
SECTION 7
REMEDIES FOR BREACH OF SELLERS' GUARANTEES
7.1 GENERAL/RECOVERABLE DAMAGES
7.1.1 In the event of any breach or non-fulfilment by the Sellers of any of the
guarantees pursuant to Section 6.2, the Sellers shall put the Purchasers
and/or the Company which has incurred the respective damage into the
position the Purchasers and/or the respective Company would have been in
had the guarantee not been breached (restitution in kind;
Naturalrestitution). If the Sellers are unable to achieve this position
within sixty days after having been notified by the Purchasers of such
breach or non-fulfilment, the Purchasers may claim for monetary damages
(Schadenersatz in Geld) from the Sellers provided, however, that such
damages shall only cover actual damages incurred by the Purchasers
(including reasonable costs and expenses such as reasonable attorney fees),
and shall in particular not cover internal administration or overhead costs
of the Purchasers and/or the respective Company, consequential damages
(Folgeschaeden), loss of profits (entgangener Gewinn), except where loss of
profits is the only form of damage, or any arguments that the Purchase
Price was calculated upon incorrect assumptions. The Purchasers are
excluded with any arguments that the Purchase Price was calculated taking
into account a certain earnings multiple ("Euro for Euro principle").
7.1.2 The Sellers shall not be liable for, and the Purchasers shall not be
entitled to claim for, any damages of the Purchasers under or in connection
with this Agreement if and to the extent that
(1) the specific matter to which the claim relates is provided for in the
Financial Statements for the fiscal period ending on 31 December 2004
or the Consolidated Financial Statements; or
(2) any damages of the Purchasers are recovered through claims against
Third Parties, including, but not limited to, through existing
insurance policies (whereby the compensation through insurance
policies shall be considered net of any increase in insurance premiums
caused by assertion of the insurance claim).
For the avoidance of doubt, this Section 7.1.2 does not apply to any claims
by the Purchasers according to Section 8.
7.1.3 In case of a liability of the Sellers to the Purchasers under this
Agreement, such liability is joint and several (Gesamtschuld). Any claim by
the Purchasers
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against the Sellers must be made against both Sellers. The Parties agree
that any rights and claims of the Purchaser 2 arising out of this Agreement
can only be exercised and ascertained by the Purchaser 1 acting in its own
name and as agent (Vertreter) in the name of the Purchaser 2. The Purchaser
1 must not exercise any rights or make any claims when acting as agent in
the name of the Purchaser 2 differently to when acting in its own name and
vice versa so that the Purchasers are forced to exercise their rights to
make claims in an identical manner. Any reference to a cap, threshold,
maximum or minimum amount or similar measure shall refer to this nominal
amount in total regardless of the number of shareholders and the amount of
their shareholding, and shall not be affected by the fact that the Majority
Shares and the Minority Shares are sold to different entities.
7.2 OVERALL SCOPE OF SELLERS' LIABILITY
7.2.1 To the extent any guarantee relating to one of the Companies which as of
the Closing is not (directly or indirectly) a wholly-owned subsidiary of
the Sellers is breached, the Sellers shall be liable to the Purchasers for
monetary damages pro rata to the Sellers' equity shareholding in such
member of the Companies.
7.2.2 The Sellers' aggregate liability for breach of any of the guarantees
pursuant to Sections 6.2, shall be limited to twenty per cent of the
Purchase Price (hereinafter referred to as the "SELLERS' LIABILITY CAP")
provided that any claims of the Purchasers for breach of any of the
guarantees pursuant to Sections 6.2.1 (solely with respect to the Shares)
and 6.2.11 (2) (solely with respect to payments to the Sellers or its
Affiliates (other than the Companies)), shall be limited to the Purchase
Price (hereinafter referred to as the "EXTENDED SELLERS' LIABILITY CAP").
For the avoidance of doubt, this Section 7.2.2 shall not apply to a breach
of the indemnities in Sections 7A and 8.
7.3 DE MINIMIS AMOUNT; THRESHOLD
The Purchasers shall only be entitled to any claims under Sections 6 and 7
to the extent each individual claim, including, for the avoidance of doubt,
a series of damages resulting from identical or similar causes
(Serienschaeden) exceeds an amount of EUR 1,000,000 (in words: one million
Euros) (hereinafter referred to as the "DE MINIMIS AMOUNT") and the
aggregate amount of all such individual claims exceeds EUR 25,000,000 (in
words: twenty five million Euros) (hereinafter referred to as the
"THRESHOLD"). In case the De Minimis Amount is exceeded, the Purchasers can
claim, subject to the Threshold, the full amount, and in case the Threshold
is exceeded, the Purchasers can claim the amount exceeding EUR 15,000,000
(in words: fifteen million Euros). The above De-Minimis Amount and
Threshold shall not apply, however, to any claims of the Purchasers for a
breach of any of the guarantees pursuant to Sec-
page 28 of 55
tions 6.2.1 (solely with respect to the Shares) and 6.2.11 (2), solely with
respect to payments to the Sellers or its Affiliates (other than the
Companies). For the avoidance of doubt, this Section 7.3 shall not apply to
a breach of the indemnities in Sections 7A and 8.
7.4 EXCLUSION OF CLAIMS DUE TO PURCHASERS' KNOWLEDGE
The Purchasers shall not be entitled to bring any claim under Sections
6.2.1 (except with respect to the title to Shares) through 6.2.11 and 7 if
the underlying facts or circumstances to which the claim relates were
known, or could have been known (negligent lack of knowledge; fahrlaessige
Unkenntnis), by the Purchasers, taking into account that the Purchasers,
prior to entering into this Agreement, (i) are familiar with the business
areas in which the Companies operate and (ii) have been given the
opportunity to a thorough review of the status of the Companies, the
Minority Entities and the Business from a commercial, technical, financial
and legal perspective and, inter alia, to a review of the documents
disclosed in the data room and identified in the data room index which is
attached hereto as Annex 7.4. including in particular, without limitation,
the Information Memorandum, the Investors' Data Base, the Management
Presentation and the Reports (all such documents hereinafter referred to as
the "DISCLOSED DOCUMENTS"). In this Agreement, the knowledge of the
Purchasers shall solely encompass the knowledge and negligent lack of
knowledge as of the Signing Date of one or more of the following persons:
Dagmar Valcarcel, Phillip W. Burns, Jon Draffan (each of Terrafirma),
Andreas Raffel (Rothschild), Wilhelm Mickerts (KPMG), Oliver Felsenstein
(Lovells), after having made, with the standard of care of a prudent
businessman (Section 347 HGB), due inquiries with each Purchaser's managing
directors, advisors and those of its employees who were engaged in carrying
out the due diligence examination undertaken with regard to entering into
this Agreement. Section 442 BGB and Section 377 HGB shall not apply.
7.5 NOTIFICATION OF SELLERS; PROCEDURE IN CASE OF THIRD PARTY CLAIMS
7.5.1 In the event of an actual or potential breach of guarantee pursuant to
Section 6 above, the Purchasers shall without undue delay from becoming
aware of the matter notify the Sellers of such alleged breach in writing,
describing the potential claim in reasonable detail and, to the extent
practical, state the estimated amount of such claim and give the Sellers
the opportunity to remedy the breach within the period of time indicated in
Section 7.1 above.
7.5.2 Furthermore, in the event that in connection with a breach of a guarantee
under Section 6 any claim or demand of a Third Party is asserted against
the Purchasers or any of the Companies or the Minority Entities (for the
purposes of this Section each a "RELEVANT COMPANY"), the Purchasers shall
(i) give notice
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to the Sellers without undue delay of such claim and (ii) make available to
the Sellers a copy of the Third Party claim or demand and of all
time-sensitive documents. Within fifteen Business Days following such
notice, the Sellers may elect at their own discretion to defend the
Purchasers or the Relevant Company against such claim. The Sellers shall
then have the right to defend the claim by all appropriate proceedings and
shall have the sole power to direct and control such defense. In
particular, without limitation, the Sellers may (i) participate in and
direct all negotiations and correspondence with the Third Party, (ii)
appoint and instruct counsel acting, if necessary, in the name of the
Purchasers or the Relevant Company, and (iii) require that the claim be
litigated or settled in accordance with the Sellers' instructions. The
Sellers shall conduct such proceedings in good faith with due regard to the
concerns of the Purchasers. The Sellers agree to use any information
regarding the Purchaser or the Relevant Company received by the Sellers in
connection with the respective Third Party claim and its defense
confidentially only for the purpose of evaluating and defending such claim.
7.5.3 In the event the Sellers do not, within fifteen Business Days after
receipt of the notice mentioned in Section 7.5.2, elect to defend the
Purchasers or the Relevant Company against such claim, the Purchasers shall
have the right to defend the claim by all appropriate proceedings and shall
have the sole power to direct and control such defense. In no event shall
the Purchasers or the Relevant Company be entitled to acknowledge or
settle a claim or permit any such acknowledgement or settlement without the
Sellers' prior written consent (which consent shall not unreasonably be
withheld) to the extent that such claims may result in a liability of the
Sellers under this Agreement. Regardless which Party controls the defense,
the Purchasers or the Relevant Company shall, subject to them being
reimbursed by the Sellers all reasonable external out-of-pocket costs and
expenses, fully cooperate with the Sellers in the defense of any Third
Party claim, provide the Sellers and their representatives (including, for
the avoidance of doubt, its advisors) access to all relevant business
records and documents and permit the Sellers and their representatives to
consult with the directors, employees and representatives of the Purchasers
or the Relevant Company. To the extent that the Sellers are in breach of a
guarantee provided for under Section 6 above, all costs and expenses
incurred by the Sellers in defending such claim shall be borne by the
Sellers. If it turns out that the Sellers were not in breach, any costs and
expenses reasonably incurred by the Sellers in connection with the defense
(including advisors' fees) shall be borne by the Purchasers or the Relevant
Company.
7.5.4 The failure of any of the Purchasers to fully comply with their
obligations under this Section 7.5 shall release the Sellers from their
respective obligations under Sections 6 and 7, unless and to the extent the
Sellers' ability to remedy a
page 30 of 55
breach of guarantee or to defend a Third Party claim has not been impaired
due to such failure.
7.6 MITIGATION
Section 254 BGB shall remain unaffected, i.e. the Purchasers are in
particular obliged to prevent the occurrence of any damages and to limit
the scope of any damages incurred.
7.7 LIMITATION PERIODS
All claims for any breach of guarantees of the Sellers pursuant to Sections
6.2.1 (4) through 6.2.11 above shall become time-barred (verjaehren) on 30
December 2006. All claims based on a breach of the guarantees given by the
Sellers under Sections 6.2.1 (1) through 6.2.1 (3) shall become time-barred
five years after the Closing Date. Claims with respect to Taxes (Section 8)
shall become time-barred in accordance with Section 8.9. Section 203 BGB
shall not apply.
7.8 EXCLUSION OF FURTHER REMEDIES; EFFECT OF PAYMENT
7.8.1 To the extent permitted by law, any further claims and remedies of the
Purchasers other than explicitly provided for under Sections 6, 7 and 8
hereof, irrespective of which nature, amount or legal basis, are hereby
expressly waived and excluded, in particular, without limitation, claims
under pre-contractual fault (Section 311 para. 2 and 3 BGB), breach of
contract (Pflichtverletzung aus dem Schuldverhaeltnis) and/or the right to
reduce the Purchase Price (Minderung) or to rescind this Agreement
(Ruecktritt), and any liability in tort (Deliktshaftung).
7.8.2 Further to the statements made in Section 6.1, the Sellers and the
Purchasers agree that the provisions contained in Sections 6 through 8 of
this Agreement are no quality guarantees concerning the object of the
purchase (Garantien fuer die Beschaffenheit der Sache) within the meaning
of Sections 443, 444 BGB. In the unlikely event that the provisions of
Sections 6 through 8 setting out the scope and limitations of the Sellers'
liability are, contrary to the intention and explicit understanding of the
Parties, regarded and construed as quality guarantees concerning the object
of the purchase, and the limitations of the Sellers' liability contained
herein are therefore found wholly or partially invalid, the Purchasers
hereby waive the right to assert claims going beyond the limits of
limitations provided for herein. The Sellers accept such waiver.
7.8.3 Payments of Sellers made according to this Section 7 or under the
indemnities contained in this Agreement shall constitute in the
relationship between the Sellers and the Purchasers a reduction of the
Purchase Price and, to the extent
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they are made directly to any of the Companies, in the relationship between
the Purchasers and the recipient a capital contribution (Einlage).
SECTION 7A*
* REDACTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
page 32 of 55
*REDACTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
page 33 of 55
SECTION 8
TAXES
8.1 DEFINITIONS
8.1.1 "TAX" means any federal, state or local tax, including corporate income
tax, solidarity surcharge, trade, value-added, real estate transfer tax,
salary withholding tax/wage tax or any other tax within the meaning of Sec.
3 AO or comparable laws of the Czech Republic or Poland, customs, dues or
public social security payments under German, Czech or Polish mandatory law
together with any interest, penalty or addition to tax and all charges
accessory to taxes and liability claims (Haftungsschulden) imposed by any
German, Czech or Polish governmental authority responsible for the
imposition of such Tax (hereinafter referred to as a "TAXING AUTHORITY").
8.1.2 For the purposes of this Section 8, the term "COMPANY" or "COMPANIES"
shall solely refer to the Company and its Subsidiaries in Germany, the
Czech Republic and Poland.
8.1.3 For the purposes of this Section 8, "AGREED TAX RATES" shall mean the Tax
rates and Tax laws applicable for the periods for which a Tax is claimed
or, if for future periods at such time amended Tax rates and amended Tax
laws for these future Tax periods have already been enacted, such amended
Tax rates and amended Tax laws.
page 34 of 55
8.2 GUARANTEES RELATED TO TAX
The Sellers guarantee to the Purchasers by way of an independent promise
of guarantee pursuant to Section 311 para. 1 BGB (selbstaendiges
Garantieversprechen im Sinne des Paragraphen 311 Abs. 1 BGB), within the
scope of and subject to the requirements and limitations contained in this
Section 8, that
8.2.1 the Companies have duly, completely, in all material respects correctly
and timely made, and will duly, completely, in all material respects
correctly and timely (taking into consideration extensions of time allowed
by the competent Taxing Authorities) make until the Closing Date, all Tax
filings due;
8.2.2 the Companies have paid, and will pay until the Closing Date, all Taxes
when due and payable;
8.2.3 the Companies have not paid to the Sellers (or their Affiliates other than
the Companies) any constructive dividends (verdeckte Gewinnausschuettungen)
(other than constructive dividends, if any, according to Section 8a German
Corporate Income Tax Act (Koerperschaftsteuergesetz, KStG)) after 31
December 2004 until the Closing Date;
8.2.4 the Companies for which a constructive dividend would lead to a taxation
according to Section 38 KStG have not paid any constructive dividends
(verdeckte Gewinnausschuettungen) (other than constructive dividends, if
any, according to Section 8a KStG) after 31 December 2004 until the Closing
Date; and
8.2.5 the Companies have kept all records which the Companies are required by
law to keep for Tax purposes including documents and records which need to
be kept for the documentation of the proper application of transfer prices
(Verrechnungspreisdokumentation).
Section 7.8.2 shall apply mutatis mutandis.
8.3 TAX INDEMNIFICATION
8.3.1 The Sellers agree to indemnify the Purchasers from and against all Taxes
due and payable by the Companies for Tax assessment periods (steuerliche
Veranlagungszeitraeume) or time periods ending on or before 31 December
2004, unless, and except to the extent, that such Tax liabilities
(1) are shown or provided for in the financial statements as of 31
December 2004 of any of the Companies (i) as Tax accruals
(Steuerrueckstellungen) or (ii) as part of the other accruals
(sonstige Rueckstellungen) for eventual Tax liabilities deducted from
the books and records of the Companies, if any; or
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(2) are subject of a valid and enforceable claim for repayment or
indemnification against a Third Party and the Purchasers or the
Companies have in good faith used their reasonable efforts to recover
such claim; or
(3) are the result of a reorganisation or other measures with retroactive
effect for Tax purposes prior to 1 January 2005 initiated by the
Purchasers; or
(4) can be offset against Tax loss carry backs or loss carry forwards that
are or were available (including as a result of subsequent Tax audits)
in the period to which such Taxes are allocable, whereby any use or
reduction caused directly or indirectly by the Purchasers of such Tax
loss carry back or loss carry forward shall be disregarded (it being
understood that Tax losses incurred by any of the Companies after 31
December 2004 and carried back into any period ending prior to the
Effective Date are not taken into account); or
(5) can be offset against future Tax reductions (Steuerminderungen) or
correspond to Tax refunds of any of the Companies arising after the
Effective Date out of the circumstance triggering the Tax
indemnification claim, e.g. resulting from the lengthening of
depreciation periods or higher depreciation allowances
(Phasenverschiebung) whereby the amount of such future Tax reductions
shall be calculated on the basis of the Agreed Tax Rates. The
calculation period for such future Tax profits shall be limited to ten
years after the Effective Date and the amount of such future Tax
profits shall be discounted to the date when the indemnification
payment by the Sellers is due pursuant to Section 8.3.2 at a rate of 6
per cent p.a., whereby the amount of the future Tax reductions so
arrived at shall be considered solely in accordance with the
provisions in Section 8.7.3 below; or
(6) correspond to Tax advantages of any of the Companies, any of the
Purchasers or any Affiliate of the Purchasers to the extent such Tax
advantages are not subject to a Tax refund in accordance with the
provisions set forth in Section 8.7.1.
8.3.2 Indemnification payments due by the Sellers under this Section 8 shall be
made within 20 Business Days following written notice by the Purchasers,
provided that the payment of such amounts to the Taxing Authority is due
and that the Sellers shall not be required to make any payment earlier than
two Business Days before such Taxes are due to the Taxing Authority. In
case of any Tax being contested in accordance with Section 8.6.2, payment
of such Tax to the Taxing Authority will be considered due no earlier than
on the date
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a final (bestandskraeftig) determination to such effect is made by either
the Taxing Authority or a court of proper jurisdiction, provided that the
Taxing Authority has granted suspension from paying the assessed Tax
(Aussetzung der Vollziehung) until such Tax becomes final and binding. If
this is not the case, the Sellers shall make a respective advance
indemnification payment to the Purchasers provided that the Purchasers
concurrently assign to the Sellers any potential Tax refund claim against
the Taxing Authority resulting from a successful Tax contest of the Tax
assessment underlying such indemnification payment. If the final amount to
be indemnified for Taxes and to be paid is lower than the advance
indemnification payment by the Sellers, then the difference shall be
reimbursed by the Purchasers to the Sellers, including all interest earned
thereon, if any, to the extent not received by the Sellers from the Taxing
Authority under the Tax refund claim.
8.4 TAX FILINGS AFTER THE CLOSING DATE
8.4.1 After the Closing Date, the Purchasers shall prepare and make, or cause
the Companies to prepare and make, all Tax filings required to be filed by
or on behalf of the Companies, in the case of any Tax filings for periods
ending on, prior to or including (einschliessen) 31 December 2004, subject
to the review and approval of the Sellers (which may not unreasonably be
withheld). Tax filings for periods including the period ending on 31
December 2004 shall be prepared on a basis consistent with those prepared
for prior Tax assessment periods. The Purchasers shall ensure that any Tax
filing to be reviewed and approved by the Sellers will be furnished to the
Sellers no later than 20 Business Days prior to the due date of such Tax
filing.
8.4.2 The Sellers undertake to reasonably cooperate with and assist the
Purchasers in preparing any Tax filings pursuant to Section 8.4.1 and, to
the extent that Tax filings cannot accurately be filed without the Sellers'
assistance, also for periods ending after the Effective Date.
8.5 TAX COVENANTS
The Purchasers covenant to the Sellers that except as legally required by
any Taxing Authority or otherwise compelled by mandatory law and after
having given the Sellers the opportunity to intervene, whereby the Sellers
have not objected within ten Business Days after having been notified by
the Purchasers, the Purchasers will not cause or permit the Companies
8.5.1 to make or change any Tax election, amend any Tax return or take any Tax
position on any Tax return; or
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8.5.2 to take any action, omit to take any action or enter into any transaction,
merger or restructuring with retroactive effect for Tax purposes prior to 1
January 2005;
in each case, if such action or change results in any increased Tax
liability (including a Tax indemnification liability) of the Sellers or
their Affiliates or reduction of any of their Tax assets.
8.6 INDEMNIFICATION PROCEDURES
8.6.1 Following the Closing Date, the Purchasers shall without undue delay (un-
verzueglich) notify the Sellers of any Tax audit or administrative or
judicial proceeding that is announced or commenced and that might
constitute a basis for indemnification by the Sellers pursuant to this
Section 8. Such notice shall be in writing and shall contain factual
information sufficiently describing the object of the Tax audit or the
asserted Tax liability of the Sellers in reasonable detail and shall
include copies of any notice or other document received from any Taxing
Authority in respect of any such Tax audit or asserted Tax liability. The
Purchasers shall further procure that the Companies allow the Sellers to
fully participate in such Tax audit. If the Sellers are not given notice
without undue delay as required before, then the Sellers shall not have any
obligation to indemnify the Purchasers or the Companies for any damages
arising out of such asserted Tax liability.
8.6.2 The Sellers may elect to direct on their own or through counsel of their
choice and at their expense, any audit, claim for refund and administrative
or judicial proceeding involving any asserted Tax liability with respect to
which indemnity may be sought under this Section 8 (any such audit, claim
for refund or proceeding relating to an asserted Tax liability is
hereinafter referred to as a "TAX CONTEST"). If the Sellers elect to direct
a Tax Contest, then the Sellers shall within twenty Business Days of
receipt of the Purchasers' written notice pursuant to Section 8.6.1 above,
notify the Purchasers of their intent to do so, and the Purchasers shall
cooperate and follow the Sellers' directions and cause the Companies or
their respective successors to cooperate and follow the Sellers'
directions, at the Sellers' expense and against reimbursement of the Pur-
chasers' and/or the Companies' reasonable external costs in each phase of
such Tax Contest. If the Sellers do not elect to direct such Tax Contest or
fail to notify the Purchasers of their election as herein provided, the
Purchasers or the relevant Company may pay, compromise or contest such
asserted Tax liability, provided that neither the Purchasers nor the
relevant Company may settle or compromise any asserted Tax liability
without the consent of the Sellers which shall not unreasonably be
withheld. In any event, the Sellers may participate, at their own expense,
in any Tax Contest. If the Sellers choose to direct the Tax Contest, the
Purchasers shall promptly authorise, and shall
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cause the Companies to authorise, (by power-of-attorney and such other
documentation as may be necessary and appropriate) the designated
representative of the Sellers to represent the Purchasers, the relevant
Company or their successors in the Tax Contest insofar as the Tax Contest
involves an asserted Tax liability for which the Sellers would be liable
under this Section 8.
8.6.3 The Purchasers acknowledge that the Sellers, in accordance with Section
8.6.2 above, shall have the right to direct, inter alia, the following Tax
Contests:
(i) Tax Contests relating to the corporation tax increase
(Koerperschaftsteuererhoehung) due to the excess profit transfers
(vororganschaftliche Mehrabfuehrungen) of the Company to E.ON, of Viterra
Wohnungsgesellschaft II GmbH to the Company and of Viterra
Wohnungsgesellschaft III GmbH to Viterra Wohnungsgesellschaft II GmbH in
the fiscal years ending on 30 September 2004, based on the argument that
the retroactive effect of Section 14 para. 3 of the German Corporate Income
Tax Act in its recent version (Koerperschaftsteuergesetz, neue Fassung;
KStG n.F.) is unconstitutional; and
(ii) Tax Contests relating to the disputed impact of excess profit
transfers (vororganschaftliche Mehrabfuehrungen) from the fiscal years
2001, 2002 and 2003 on the amount of corporation tax increase potential
(fortgeschriebenes EK 02) of the Companies mentioned in (i), above, due to
an alleged invalidity of section II of a certain letter of the Federal
Ministry of Finance (BMF-Schreiben) dated 22 December 2004 - IV B 7 - S
2770 - 9/04.
8.7 TAX REFUNDS
8.7.1 If any of the Companies will receive a Tax refund relating to any period
ending on or before 31 December 2004 (to the extent not reflected in the
Financial Statements), the amount of the Tax refund shall be paid by the
Purchasers to the Sellers. The Purchasers shall duly notify the Sellers of
any Tax refund relating to any period ending on or before 31 December
2004. The Tax refund shall be reduced by future Tax profits (steuerliche
Mehrgewinne) or Tax disadvantages related to the Tax refund and arising
after 31 December 2004, whereby future Tax profits and Tax disadvantages
shall be calculated on the basis of the Agreed Tax Rates. The calculation
period for such future Tax profits shall be limited to ten years after the
Effective Date and the amount of such future Tax profits or Tax
disadvantages shall be discounted to the date of payment of the Tax refund
by the Purchasers at a rate of 6 per cent p.a.
8.7.2 If, due to a fiscal unity (Organschaft) between (i) any of the Sellers and
the Company and (ii) the Company and German Subsidiaries, any of the
Sellers is allocated additional taxable income under Section 14 KStG and/or
Section 2 para. 2 of the German Trade Tax Act (Gewerbesteuergesetz, GewStG)
resulting from an increased taxable assessment basis (Bemessungsgrund-
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lage/Gewerbeertrag) of any of the Companies which leads to a decrease of
the taxable assessment basis of any of the Companies for Tax assessment
periods after 31 December 2004, the Purchasers shall repay to the Sellers
an amount equal to the Tax reduction resulting therefrom. The Tax reduction
amount shall be calculated on the basis of the Agreed Tax Rates. The
calculation period for such Tax reduction amount shall be limited to ten
years after the Effective Date and the amount of such Tax reduction amount
shall be discounted to the date of payment of the Tax reduction amount by
the Purchaser at a rate of 6 per cent p.a. With respect to the repayment,
Section 8.7.3 shall apply.
8.7.3 For Tax periods until and including 31 December 2010, the Tax reduction
amounts to be repaid by the Purchasers shall be payable immediately, at the
latest, however, ten Business Days after a corresponding notification of
the Sellers to the Purchasers, up to an aggregate amount of EUR 2,000,000
for all amounts payable under Section 8.7.2 with respect to the fiscal
unity (hereinafter referred to as the "REPAYMENT CAP") and up to an
aggregate amount of EUR 10,000,000 for all other amounts owed by the
Purchasers to the Sellers under this Section 8, including, without
limitation, any Tax reductions which can be offset in accordance with
Section 8.3.1 (5) above (hereinafter referred to as the "EXTENDED REPAYMENT
CAP").
For Tax periods after 31 December 2010, the Tax reduction amounts to be
repaid by the Purchaser shall finally be calculated on 31 December 2010 (or
on any other date the Sellers and the Purchasers will mutually agree on) on
the basis of the Agreed Tax Rate, with a calculation period of ten years
after the Effective Date and the Tax reduction amounts shall be discounted
at a rate of 6 per cent p.a. to 31 December 2010. Such amounts plus any
amounts relating to Tax periods until and including 31 December 2010 which
were not paid by the Purchasers solely because the Repayment Cap or the
Extended Repayment Cap were reached, shall be payable immediately, at the
latest, however, ten Business Days after a corresponding notification of
the Sellers to the Purchasers and are not subject to the Repayment Cap, the
Extended Repayment Cap or any other limitation.
8.7.4 If due to a fiscal unity (Organschaft) between (i) any of the Sellers and
the Company and (ii) the Company and German Subsidiaries, any of the
Sellers is allocated reduced taxable income under Section 14 KStG and/or
Section 2 para. 2 GewStG resulting from a reduced taxable assessment basis
(Bemessungsgrundlage/Gewerbeertrag) of any of the Companies which leads
to an increase of the taxable assessment basis of any of the Companies for
Tax assessment periods after 31 December 2004, the Sellers shall repay to
the Purchasers an amount equal to the Tax increase resulting therefrom.
With respect to the calculation of the Tax increase, Section 8.7.2 shall
apply mutatis mutandis. The amount payable by the Sellers shall be due for
payment immediately,
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at the latest, however, ten Business Days after a corresponding
notification of the Purchaser to the Sellers.
8.8 SCOPE OF SELLERS' LIABILITY IN NOT WHOLLY-OWNED COMPANIES
To the extent a claim of the Purchasers under this Section 8 refers to any
of the Companies in which the Sellers hold (directly or indirectly) as of
31 December 2004 less than 100 per cent, the Sellers shall nevertheless be
liable to the Purchasers for a damage, as if the Sellers' equity
shareholding in such Company amounted to 100 per cent.
8.9 LIMITATION
Claims of the Purchasers under this Section 8 shall be time-barred six
months after the assessment of the relevant Taxes has become final and
binding.
SECTION 9
PURCHASERS' GUARANTEES
9.1 GUARANTEES
The Purchaser 1 and the Purchaser 2 hereby individually, and each Purchaser
for itself only and not as joint and several debtors (Gesamtschuldner),
guarantee by way of an independent promise of guarantee pursuant to Section
311 para. 1 BGB (selbstaendiges Garantieversprechen im Sinne des
Paragraphen 311 Abs. 1 BGB):
9.1.1 The Purchaser 1 is duly incorporated and validly existing under the laws
of Germany and has all requisite corporate power and authority to own its
assets and to carry out its business. The Purchaser 2 is duly incorporated
and validly existing under the laws of Germany and has all requisite
corporate power and authority to own its assets and to carry out its
business.
9.1.2 The execution and performance by the Purchasers of this Agreement and the
consummation of the transactions contemplated hereby are within the
corporate powers of each Purchaser and have been duly authorised by all
necessary corporate action on part of the Purchasers.
9.1.3 The execution and performance by the Purchasers of this Agreement and the
consummation of the transactions contemplated herein do not (i) violate the
articles of association or by-laws of the Purchasers or (ii) violate any
applicable law, regulation, judgment, injunction or order binding on the
Purchasers, and (iii) there is no action, law suit, investigation or
proceeding pending against, or
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to the knowledge of the Purchasers threatened against, the Purchasers
before any court, arbitration panel or governmental authority which in any
manner challenges or seeks to prevent, alter or delay the transaction
contemplated herein.
9.1.4 Based on their due diligence, the Purchasers are not aware of any facts or
circumstances that could give rise to claims against the Sellers pursuant
to Sections 6 and 7 of this Agreement.
9.1.5 The bank guarantee and the commitment letters supported by term sheets
securing the payment of the Total Purchase Price by the Purchasers, all as
set forth in Section 14 of this Agreement, are in full force and effect.
9.2 INDEMNIFICATION
In the event that any of the Purchasers is in breach of any guarantee
pursuant to Section 9.1, the Purchasers shall indemnify and hold harmless
the Sellers from any damages incurred by the Sellers. In case of a
liability of the Purchasers to the Sellers under this Agreement, each
Purchaser is liable for its own obligations only and the Purchasers shall
not be treated as joint and several debtors (Gesamtschuldner). All claims
of the Sellers arising under this Section 9 shall be time-barred five years
after the Closing Date.
SECTION 10
COVENANTS
10.1 MERGER CONTROL PROCEEDINGS; OTHER REGULATORY REQUIREMENTS
10.1.1 The Purchasers shall ensure that any filings to be made with the
competent merger control authorities or other governmental authorities, to
the extent they have not already been made prior to the Signing Date, will
be made within five Business Days after the Signing Date, unless the
applicable laws and regulations require an earlier filing. Such filings
shall be made by the Purchasers on behalf of all Parties, provided,
however, that the contents of such filings relating to the Sellers or the
Companies shall require prior written approval of the Sellers, which shall
not unreasonably be withheld. The Sellers and the Purchasers shall closely
cooperate in the preparation of such filings. Each Party shall without
undue delay provide all other Parties with copies of any correspondence
with the merger control or other governmental authorities and with copies
of any written statement, order or decision of such authorities. All
Parties shall closely cooperate in any discussions and negotiations with
the competent authorities with the objective to obtain clearance for the
transaction
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contemplated by this Agreement in the shortest time period possible. The
Purchasers may waive (zuruecknehmen) filings with the competent authorities
or agree with such authorities on the extension of any examination period
only with the express prior written consent of the Sellers. If the
competent authorities are prepared to grant their approval only subject to
compliance with specific conditions or obligations to be imposed upon the
Purchasers, the Purchasers shall accept the imposition of such conditions
and obligations, unless the acceptance causes unreasonable commercial
hardship (wirtschaftliche Unzumutbarkeit) for the Purchasers.
10.1.2 If on the Closing Date any merger control approval or any other
governmental consent, approval or waiver required under applicable law in
any jurisdiction (other than in Germany) in order to effect the Closing has
not been obtained, the Sellers and the Purchasers shall consummate the
Closing, provided, however, that the Sellers and the Purchasers shall not
be under an obligation to, directly or indirectly, transfer or acquire
shares or interests in respect of which the consummation of the Closing
would violate any applicable law or decision. The Sellers and the
Purchasers shall in such case agree on all appropriate measures, including
"hold separate" arrangements, regarding the shares or interests affected,
in order that the relevant jurisdiction can be exempted from the
consummation of the transaction until the required consents and approvals
have been obtained.
10.2 PRE-CLOSING COVENANTS OF THE SELLERS
10.2.1 Between the Signing Date and the Closing Date, the Sellers shall procure,
to the extent permissible under applicable law, that the Companies shall
conduct their business operations in the ordinary course of business and
substantially in the same manner as before. Section 6.2.11 (1) through (18)
shall apply mutatis mutandis (provided that any measures set forth therein
may be taken with the express consent of the Purchasers, which shall be
resolved without undue delay and shall not unreasonably be withheld).
10.2.2 Between the Signing Date and the Closing Date, (i) the Sellers shall
provide to the Purchasers upon request any material information relating to
the Companies, (ii) the Sellers shall use their reasonable best efforts to
ensure that the Purchasers have access to the management of the Companies,
in both cases to the extent necessary for the Purchasers to effect a
seamless transition of the Business and as permitted under applicable
antitrust laws, and (iii) the Sellers shall apply reasonable efforts to
provide the Purchasers upon request reasonable access to all banks as
listed in Annex 6.2.11 (12) providing financing to any of the Companies in
order to achieve that the security granted to such banks in respect of such
financing will be released subject to the repayment of the balance of the
respective financing. Further, the Sellers shall reasonably
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cooperate with the Purchasers to prepare (at the costs of the Purchasers)
for a conversion of the Company into a limited liability company (GmbH)
becoming legally effective as fast as possible following Closing.
10.2.3 Without undue delay after the Signing Date, the Sellers shall notify the
former minority shareholders in Deutschbau-Holding GmbH which have sold
their respective shares in Deutschbau-Holding GmbH to the Company by
agreements dated 29 November 2004 of the intention of the Company to prepay
the outstanding purchase prices to each of the minority shareholders.
10.2.4 Without undue delay after the Signing Date, the Sellers shall, to the
extent possible, (i) provide the Purchasers access to the current minority
shareholders holding 0.685 per cent of the shares in Deutschbau-Holding
GmbH and (ii) reasonably assist the Purchasers in the acquisition of such
minority shares. For the avoidance of doubt, the Sellers shall not be
obliged to incur any costs in the context of such acquisition and shall not
be liable for the success of such acquisition.
10.3 ACCESS TO FINANCIAL INFORMATION
The Purchasers shall procure that after the Closing Date, the Sellers and
their respective representatives are given reasonable access to, and are
allowed to make copies of, (i) the annual books of accounts for the fiscal
year that ended on 31 December 2004 and (ii) the books of account for the
first and second quarters of the fiscal year 2005 as well as any other
financial information required to achieve the deconsolidation from the
Sellers' consolidated financial statements on the Closing Date or, if the
Closing does not occur on the last day of a month, on the end of the month
following the Closing Date, (iii) any information the Sellers require to
review the Tax filings as mentioned in Section 8.4 of this Agreement and/or
to conduct any Tax Contests as mentioned in Sections 8.6.2, 8.6.3 of this
Agreement, and (iv) any other financial or business information as may be
required by the Sellers to comply with information requests from
administrative authorities, public agencies (including but not limited to
the United States Securities and Exchange Commission) and stock exchanges
relating to periods ending on or prior to the Closing Date.
10.4 INSURANCE COVERAGE
The Sellers shall procure, to the extent permissible under applicable law,
that the Companies and the Business remain insured until the Closing Date
in substantially the same way as they are on the Signing Date and that all
premiums due for all applicable insurance policies are duly and timely
paid.
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10.5 EXONERATION (ENTLASTUNG) OF SUPERVISORY BOARD MEMBERS; CONTINUATION OF
SUPERVISORY BOARD
10.5.1 The Purchasers undertake to hold an extraordinary general shareholders'
meeting (ausserordentliche Hauptversammlung) within one month after the
Closing and vote for a shareholders' resolution granting exoneration
(Entlastung) to each of the E.ON Representatives for the time period from 1
January 2005 through the date their resignations become effective.
10.5.2 The Purchasers undertake to maintain the equal number of representatives
of shareholders and employees at the supervisory board (hereinafter
referred to as "EQUAL REPRESENTATION") for the remaining time of the
members' current term of service (i.e. until the annual general
shareholders' meeting (ordentliche Hauptversammlung) in 2009) (hereinafter
referred to as the "REMAINING TERM"), notwithstanding a status proceeding
in accordance with Sections 97 et seq. AktG or a transformation of the
Company into another legal form, namely a limited liability company (GmbH).
If the Act on 1/3 Co-Determination (Drittelbeteiligungsgesetz, DrittelbG)
applies to the supervisory board of the Company, the Purchasers
nevertheless shall during the Remaining Term procure Equal Representation
with a number of twelve members of the supervisory board, and a scope of
authority and responsibility of such supervisory board as if the
Co-Determination Act 1976 (Mitbestimmungsgesetz, Mit- bestG) were
applicable. More specifically, the Purchasers shall procure that, in
addition to the supervisory board members who are elected by the employees,
the shareholders of the Company elect such external representatives of the
employees as were elected by the employees as members of the Company's
supervisory board as are required to achieve Equal Representation,
provided, however, that the representatives of the shareholders shall have
the right to elect the chairman of the supervisory board and such chairman
shall have a casting vote. The Purchasers shall further procure that the
Company's articles of association, rules of procedure (Geschaeftsordnungen)
and other applicable documents are amended accordingly.
10.6 GROUP INTERNAL CREDITS
Following the Effective Date, the Sellers have not reversed, and following
the Signing Date, the Sellers will not reverse any group internal credits
(Gutschriften) accorded to any of the Companies prior to the Signing Date.
10.7 CONTINUATION OF VITERRA SELF COMMITMENT
The Purchasers acknowledge that Viterra is bound by a self commitment to
the socially acceptable structuring of privatisations ("Selbstverpflichtung
der Viterra AG zur sozialvertraeglichen Gestaltung von Wohnungsverkaeufen";
hereinafter referred to as the "VITERRA SELF COMMITMENT") which was signed
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by the Company in August 2004 and which is attached as Annex 10.7. The
Purchasers undertake to use their best efforts to procure, to the extent
permissible under applicable law, that the Company will comply with the
Viterra Self Commitment in accordance with the terms thereof.
10.8 COVENANT NOT TO COMPETE
10.8.1 For a period of three years after the Closing Date the Sellers shall not
(i) establish a business which competes with the residential part of the
Business as presently conducted by the Companies; or
(ii) acquire an interest of more than 20 per cent (equity or votes) in an
enterprise which competes with the residential part of the Business as
presently conducted by the Companies.
10.8.2 The acquisition (including by way of a merger) of
(i) a non-controlling financial interest in an entity engaged in a
business competing with the residential part of the Business as
presently conducted; or
(ii) a controlling interest in an entity or group if either the annual
sales in the competing business do not exceed 33 per cent of the
aggregate sales of such entity or group or the competing business is
sold within 18 months after the acquisition of the controlling
interest has been completed
shall be exempted from the covenant not to compete.
10.9 INDEMNIFICATION
To the extent that after the Effective Date a Third Party raises a claim
against any of the Sellers which is due to a legal relationship between
such Third Party and any of the Companies, the Purchasers shall hold
harmless and indemnify the Sellers from any such claim as well as any costs
and expenses incurred in connection therewith, unless the Sellers are
liable in accordance with this Agreement. The Parties agree by way of an
agreement for the benefit of Third Parties (Vertrag zugunsten Dritter) in
the sense of Section 328 BGB that Sentence 1 of this Section 10.9 shall
apply accordingly in the event that the Third Party raises a claim against
a company which is an Affiliate of the Sellers. Unless the Sellers are
liable in accordance with this Agreement, the Purchasers hereby agree to
hold harmless and indemnify the Sellers and their Affiliates from any and
all claims, liabilities, obligations, costs and expenses (including
reasonable attorneys' fees) relating to, or arising out of, the Shares
and/or the Business and/or the respective transfer thereof, including any
such
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claims, liabilities, costs and expenses claimed by the Companies. For the
avoidance of doubt, this Section shall not apply if and to the extent any
of the Sellers or their Affiliates are held liable for any breach of
contract conducted by any of them. As regards Third Party claims, Section
7.5 shall apply mutatis mutandis.
SECTION 11
SEPARATION OF VITERRA FROM E.ON
11.1 EXISTING E.ON GUARANTEES
E.ON has extended certain guarantees for obligations of certain of the
Companies which are listed in Annex 11.1 (hereinafter referred to as the
"E.ON GUARANTEES"). The Purchasers shall on the Closing Date either effect
E.ON to be fully released from the E.ON Guarantees or, to the extent and as
long as the E.ON Guarantees will have survived the Closing and will not
have been released, deliver to E.ON a legal independent guarantee not
requiring fault and to be honoured on first demand (selbstaendige
verschuldensunabhaengige Garantie auf erstes Anfordern), waiving any rights
as to set-off and withholding (Aufrechnung und Zurueckbehaltung), to
reimburse E.ON for any amount paid by E.ON under the E.ON Guarantees,
issued by a bank of international reputation. E.ON may make the first
demand as soon as it has made any payment under any of the E.ON Guarantees.
E.ON shall inform the Purchasers in due course before it pays any amounts
under any of the E.ON Guarantees.
11.2 PURCHASE FRAMEWORK AGREEMENTS
As of Closing, the Companies will no longer be eligible under the
conditions of certain purchase framework agreements currently in place for
the E.ON group, such as special conditions for IT hardware, standard
software, travel services, vehicles, telecommunications, etc.
11.3 SEPARATION OF IT
The Companies currently use licences for SAP and Oracle software acquired
under E.ON framework agreements. The use of the existing licences by the
Companies can be continued after the Closing. However, the Companies are
obliged to conclude individual service agreements with SAP and Oracle.
page 47 of 55
11.4 SALES AND MANAGEMENT CONTRACTS BETWEEN E.ON AND THE COMPANIES
The existing sales and management contracts between E.ON and certain of the
Companies which are listed in Annex 11.4 will be continued after the
Closing Date in accordance with their terms.
11.5 E.ON INVESTMENTPLAN; E.ON SHARE OPTIONS
The Companies will no longer participate in the incentive program E.ON
InvestmentPlan. The Companies will remain obliged under the current
tranches of the virtual E.ON share option program in accordance with its
terms at the Companies' own cost and under their own administration. The
numbers and the strike price of share options granted under the virtual
E.ON share option program are listed in Annex 11.5.
SECTION 12
CONFIDENTIALITY/PRESS RELEASES
12.1 CONFIDENTIALITY; PRESS RELEASES; PUBLIC DISCLOSURE
The Parties mutually undertake to keep the contents of this Agreement
secret and confidential vis-a-vis any Third Party except to the extent that
the relevant facts are publicly known or disclosure is required by law, or
unless disclosure is required to their respective professional advisers,
shareholders or, in case of the Purchasers, their financing banks (provided
that these advisers, shareholders and financing banks are subject to
confidentiality obligations comparable to those contained in the
confidentiality agreements signed by the Purchasers (or their Affiliates)
on 11 November and 3 December 2004). In such case, the Parties shall,
however, inform each other prior to such disclosure and shall limit any
disclosure to the minimum required by statute, the authorities or otherwise
permitted hereunder. No press releases or other public announcement
concerning the transactions contemplated by this Agreement shall be made by
either Party unless the form and text of such announcement shall first have
been approved by the other Parties except that - if the Party is required
by law or by applicable stock exchange regulations to make an announcement
- it may do so after first consulting with the other Parties. The Parties
have agreed on the wording of press releases announcing the signing of this
Agreement drafts of which are attached hereto as Annex 12.1 and they hereby
expressly approve the wording of such press releases.
page 48 of 55
12.2 PURCHASERS' CONFIDENTIALITY; RETURN OF DOCUMENTS
In the unlikely event that this Agreement is terminated without the Closing
having been consummated, the Purchasers undertake to keep confidential all
information received from the Sellers in connection with the transactions
contemplated by this Agreement and to return all documents and information
embodied otherwise which they received from the Sellers, together with any
copies thereof and to destroy all documents and information embodied
otherwise it produced based on information received from the Sellers,
unless such information is in the public domain without breach of a
confidentiality obligation towards the Sellers or unless the Purchasers are
obliged by law or by an enforceable order of any court or administrative or
governmental body to act otherwise. The Purchasers shall not be entitled to
any retention right with respect to such documents or information.
SECTION 13
ASSIGNMENT OF RIGHTS AND UNDERTAKINGS
13.1 Subject to Section 13.2 below, this Agreement and any rights and
obligations hereunder may not be assigned and transferred, in whole or in
part, without the prior written consent of the other Parties hereto.
However, the Purchasers shall be entitled to assign certain rights under
Sections 6 through 8 of this Agreement for purposes of security to the
bank(s) acting as financier(s) of the Purchasers' obligations under this
Agreement provided that (i) the right to collect any claims against the
Sellers (Einziehungsberechtigung) remains solely with the Purchasers, (ii)
the Purchasers inform the Sellers in writing before such assignment of
claims and (iii) the Sellers' rights to set-off and/or to withhold any
payments vis-a-vis the Purchasers and due under this Agreement shall in no
event be affected thereby; Section 406 BGB shall insofar not apply. For the
purpose of clarification, the Purchasers' obligations under this Agreement,
in particular the obligation to pay the Total Purchase Price in accordance
with Section 3 hereunder shall not be affected by such assignment.
13.2 If either of the Purchasers submits to the Sellers a written request to
consent to a pre-Closing transfer of the position of such Purchaser under
this Agreement to a Third Party in whole or in part (hereinafter referred
to as the "TRANSFER REQUEST"), the Sellers are under the obligation to
grant such consent in writing without undue delay if the Transfer Request
contains (i) reasonable evidence for the legal existence and not negative
commercial reputation of the Third Party as well as for the due
authorisation of the Third Party to enter into this Agreement, and (ii)
evidence that upon entry of the Third Party into this
page 49 of 55
Agreement (a) the financing assurances mentioned in Section 14 below will
support the obligations of the Third Party under this Agreement in the same
manner and to the same extent as they previously supported the obligations
of the transferring Purchaser and (b) no amendment to the merger filings
mentioned in Section 5.2 which might materially delay the merger clearance
process in Germany and/or Poland will have to be made; provided that, in
case of any transfer of the position of the Purchaser 1 under this
Agreement, the Purchaser 1 shall remain jointly and severally liable with
the respective assignee(s) or transferee(s) for any of its obligations
arising under or in connection with this Agreement.
SECTION 14
PURCHASERS' FINANCING ASSURANCES
The Purchasers have submitted to the Sellers on the Signing Date (i) a bank
guarantee, a standby letter of credit and a commitment letter supported by
a term sheet for the equity portion of the Total Purchase Price (in each
case with an availability period ending on or after 30 September 2005), and
(ii) a commitment letter supported by a term sheet from the providers of
debt financing for the remaining part of the Total Purchase Price, both
with an availability period ending on 30 September 2005 (copies of which
are attached hereto as Annex 14).
SECTION 15
COSTS AND TAXES
15.1 Taxes
All transfer taxes (including real estate transfer taxes, if any), stamp
duties, costs for the notarisation of this Agreement and any other charges
and costs which result from this Agreement and the Closing of the
transaction considered hereby shall be borne by the Purchasers, unless
provided otherwise in this Agreement. All charges, costs and fees which
result from the filings under the merger control laws and in compliance
with other regulatory requirements, including, but not limited to, the
charges, costs and fees of the competent merger control authorities, shall
be borne by the Purchasers.
page 50 of 55
15.2 COSTS
Each Party shall bear the costs and fees of its own advisors, unless
provided otherwise in this Agreement.
SECTION 16
NOTICES
16.1 FORM OF NOTICE
All declarations, notices or other communications hereunder (hereinafter
referred to as the "NOTICES") shall be done in writing in the English
language and delivered by hand or by courier or by facsimile to the person
at the addresses set forth below, or such other addresses as may be
designated by the respective Party to the other Parties in the same manner.
16.2 NOTICES TO SELLER 1
Any Notice to be given to the Seller 1 hereunder shall be addressed as
follows:
E.ON Viterra-Beteiligungsgesellschaft mbH
Attn.: Managing Director(s)
E.ON-Platz 1
D-40479 Duesseldorf
Fax: +49 211 4579 466;
with a copy to:
Freshfields Bruckhaus Deringer
Attn.: Dr. Axel Epe
Feldmuehleplatz 1
D-40545 Duesseldorf
Fax: +49 211 4979 103.
16.3 NOTICES TO SELLER 2
Any Notice to be given to the Seller 2 hereunder shall be addressed as
follows:
E.ON AG
Attn.: Legal Department
E.ON-Platz 1
D-40479 Duesseldorf
Fax: +49 211 4579 466;
page 51 of 55
with a copy to:
Freshfields Bruckhaus Deringer
Attn.: Dr. Axel Epe
Feldmuehleplatz 1
D-40545 Duesseldorf
Fax: +49 211 4979 103.
16.4 NOTICES TO PURCHASER 1
Any Notice to be given to the Purchaser 1 hereunder shall be addressed as
follows:
Atrium Einhunderterste V V GmbH
c/o Deutsche Annington Immobilien GmbH
Attn: Volker Riebel
Gladbecker Strasse 3
D-40472 Duesseldorf
Fax: +49 211 43717923;
with a copy to:
Terra Firma Capital Partners Limited
Attn.: General Counsel
2 More London Riverside
UK-London, SE1 2AP
Fax: +44 20 7015 9501;
and with a further copy to:
Lovells
Attn.: Oliver Felsenstein
Untermainanlage 1
D-60329 Frankfurt/Main
Fax: +49 69 96236 100.
16.5 NOTICES TO PURCHASER 2
Any Notice to be given to the Purchaser 2 hereunder shall be addressed as
follows:
Praetorium 40. V V GmbH
c/o Annington Homes Ltd.
Attn.: Barry Chambers
1, James Street
page 52 of 55
UK-London W1U 1DR
Fax: +44 20 7960 7548;
with a copy to:
Terra Firma Capital Partners Limited
Attn.: General Counsel
2 More London Riverside
UK-London, SE1 2AP
Fax: +44-207-0159501;
and with a further copy to:
Lovells
Attn.: Oliver Felsenstein
Untermainanlage 1
D-60329 Frankfurt/Main
Fax: +49 69 96236 100.
16.6 CHANGE OF ADDRESS
The Parties are to, without being legally obliged to, communicate any
change of their respective addresses set forth in Sections 16.2 through
16.5 as soon as possible in writing to the respective other Parties. Until
such communication, the address as hitherto shall be relevant.
16.7 COPIES TO ADVISORS
16.7.1 The receipt of copies of Notices by the Parties' advisors shall not
constitute or substitute the receipt of such Notices by the Parties
themselves.
16.7.2 Any Notice shall be deemed received by a Party regardless of whether any
copy of such Notice has been sent to or received by an advisor of such
Party or the acting notary, irrespective of whether the delivery of such
copy was mandated by this Agreement.
SECTION 17
MISCELLANEOUS
17.1 GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with, the
laws of Germany, excluding the German conflicts of laws rules and further
excluding
page 53 of 55
the United Nations Convention on Contracts for the International Sale of
Goods (CISG).
17.2 JURISDICTION
In the event of any dispute in context with or arising from this Agreement,
including its Annexes, exclusive jurisdiction shall be with the competent
courts in Duesseldorf.
17.3 BUSINESS DAY
Heretofore and hereinafter, "BUSINESS DAY" means a day (other than a
Saturday or Sunday) on which banks are open for business in Frankfurt am
Main.
17.4 AMENDMENTS, SUPPLEMENTATIONS
Any amendment or supplementation of this Agreement, including of this
provision, shall be valid only if made in writing, except where a stricter
form (e.g. notarisation) is required under applicable law. Section 15.1 and
15.2 shall apply mutatis mutandis.
17.5 LANGUAGE
17.5.1 This Agreement is written in the English language (except that Annexes
may be partly in German language). Terms to which a German translation has
been added shall be interpreted throughout this Agreement in the meaning
assigned to them by the German translation.
17.5.2 Any reference made in this Agreement to any types of companies or
participations, proceedings, authorities or other bodies, rights,
institutions, regulations or legal relationships (hereinafter collectively
referred to as the "LEGAL TERMS") under German law shall extend to any
corresponding or identical Legal Terms under foreign law to the extent that
relevant facts and circumstances must be assessed under such foreign law.
Where no corresponding or identical Legal Terms under foreign law exist,
such Legal Terms shall be introduced as - functionally - come closest to
the Legal Terms under German law.
17.6 HEADINGS
The headings and sub-headings of the sections contained herein are for
convenience and reference purposes only and shall not affect the meaning or
construction of any of the provisions hereof.
17.7 ANNEXES
The Annexes referred to in this notarial deed - except for Annex 0 and
Annex
page 54 of 55
5.2.4 - have been notarised in a notarial reference deed (No. H 1318/2005
dated 15, 16 and 17 May 2005 of the officiating Notary, the "REFERENCE
DEED"). The original of the Reference Deed was available during the
notarisation. All Annexes attached to the Reference Deed or hereto form an
integral part of this Agreement.
After having been advised by the officiating Notary of their respective
rights pursuant to Section 13a of the German Notarisation Act
(Beurkundungsgesetz), the individuals present stated that they have full
knowledge of the contents of the Reference Deed and that they waive their
right to have the Reference Deed read out aloud.
The individuals present declared that they ratify all declarations given
and accepted on behalf of the Parties represented by them in the Reference
Deed.
17.8 DEFINITIONS
In this Agreement defined terms shall have the meaning as so defined
throughout the entire Agreement. In the event any definition contained in
the main body of this Agreement conflicts with a definition set forth in
Annex 0 (Index of Definitions), the definition contained in the main body
shall prevail.
17.9 ENTIRE AGREEMENT
This Agreement constitutes the full understanding of the Parties and the
complete and exclusive statements of the terms and conditions of the
Parties' agreements relating to the subject matter hereof and supersedes
any and all prior agreements and understandings, whether written or oral,
that may exist between the Parties with respect to the subject matter of
this Agreement or parts thereof. Side agreements to this Agreement do not
exist.
17.10 SEVERABILITY
Should any provision of this Agreement be or become invalid, ineffective or
unenforceable as a whole or in part, the validity, effectiveness and
enforceability of the remaining provisions shall not be affected thereby.
Any such invalid, ineffective or unenforceable provision shall be deemed
replaced by such valid, effective and enforceable provision as comes
closest to the economic intent and the purpose of such invalid, ineffective
or unenforceable provision as regards subject-matter, amount, time, place
and extent. The aforesaid shall apply mutatis mutandis to any gap in this
Agreement.
17.11 NO BROKERAGE
The Sellers shall indemnify and hold the Purchasers and/or, at the
Purchasers' absolute discretion, any of the Companies, harmless against any
and all liabilities,
page 55 of 55
losses, expenses and third party claims incurred, suffered or sustained by
any of them resulting from any finder's fee arrangements entered into by
the Sellers or the Companies with respect to the preparation,
implementation or completion of any transaction contemplated by this
Agreement.
The above deed, its Annexes 0 and 5.2.4, were read to the individuals present,
approved by them and signed as follows:
/s/ Ingo Theusinger
------------------------------
/s/ Dr. Nina Boettger
------------------------------
/s/ Dr. Philipp Grzimek
------------------------------
/s/ Dr. Armin Hauschild, Notar
------------------------------
3 Subsequent Filings that Reference this Filing
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