OSRAM LICHT AG Convenience translation from German
ADDENDUM TO THE CONTRACT REPORT
Addendum to the joint report
of the Managing Board of
OSRAM Licht AG, Munich,
and
the Management of
ams Offer GmbH, Ismaning,
pursuant to
section 293a of the German Stock Corporation Act (Aktiengesetz - AktG)
on the Domination and Profit and Loss Transfer Agreement
between
OSRAM Licht AG and ams Offer GmbH
of 22 September 2020
in relation to
an amendment agreement
to this Domination and Profit and Loss Transfer Agreement
of 2 November 2020
Convenience translation from German
i
Convenience translation from German
LIST OF ANNEXES
Annex 1
Amendment Agreement of 2 November 2020 regarding the Domination and Profit and Loss Transfer Agreement of 22 September 2020 between OSRAM Licht AG and ams Offer GmbH and amendment to the comfort letter of ams AG, Premstätten (Austria), dated 2 November 2020 (including a consolidated version of the Domination and Profit and Loss Transfer Agreement together with the consolidated comfort letter of ams AG, Premstätten (Austria))
Annex 2:Update statement of 2 November 2020 regarding the Expert Opinion by PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, Friedrich-Ebert-Anlage35-37, 60327 Frankfurt am Main, Germany, of 21 September 2020 on the determination of the business value of OSRAM Licht AG as at the valuation date of 3 November 2020
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Convenience translation from German
The Managing Board of OSRAM Licht AG (OSRAM) and the Management of ams Offer GmbH (ams Offer), a wholly-owned subsidiary of ams AG, which has its business address at Tobelbader Straße 30, 8141 Premstätten, Austria (ams), have jointly prepared the following Addendum to the joint report of 22 September 2020 prepared pursuant to section 293 AktG (the Contract Report) on the Domination and Profit and Loss Transfer Agreement of 22 September 2020 (the Agreement) between ams Offer as the controlling company and OSRAM as the controlled company. The valuation-related statements in the Contract Report, which is here explicitly referenced, shall remain in place insofar as they are not amended hereinafter.
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Introduction
On 22 September 2020, ams Offer and OSRAM concluded a Domination and Profit and Loss Transfer Agreement. Through the Agreement, OSRAM places the man- agement of its company under the control of ams Offer and undertakes to transfer all of its profits to ams Offer. ams Offer undertakes to assume any OSRAM annual net loss and to pay appropriate recurring compensation (Ausgleich) or appropriate compensation (Abfindung) to outside OSRAM Shareholders. On 22 September 2020, ams submitted a letter of comfort to OSRAM with regard to performance of the duties of ams Offer under and in conjunction with the Agreement.
The shareholders of OSRAM (the OSRAM Shareholders) are expected to approve the Agreement at an Extraordinary General Meeting on 3 November 2020 which was convened on 24 September 2020 by way of an announcement in the Bundesan- zeiger (Federal Gazette) and on OSRAM's website at www.osram- group.de/hauptversammlung. The approval resolution by the ams Offer shareholders is to be passed on 2 November 2020.
To this end, the Managing Board of OSRAM and the Management of ams Offer prepared the Contract Report in accordance with section 293a AktG. The Contract Report also contains as an Annex the expert opinion by PricewaterhouseCoop- ers GmbH Wirtschaftsprüfungsgesellschaft, Friedrich-Ebert-Anlage35-37, 60327 Frankfurt am Main, Germany (hereinafter the Valuation Expert or PwC), dated 21 September 2020 (hereinafter the Expert Opinion), particularly in relation to calcu- lating the business value of OSRAM. Pursuant to section 293e AktG, the company appointed as the joint Contract Auditor, Ebner Stolz GmbH & Co KG, Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft, Kronenstraße 30, 70174 Stuttgart (the Contract Auditor or Ebner Stolz) prepared its report on the contractual audit (the Audit Report) on 23 September 2020 in which it confirmed that the determination in the Agreement of the recurring compensation payment and the compensation was appropriate.
The Agreement, the Contract Report and the Audit Report were made accessible, together with additional requisite documentation, via the Company's website at www.osram-group.de/hauptversammlung from the date that the OSRAM Extraordi- nary General Meeting was convened on 24 September 2020.
The valuation date for determining the appropriateness of the cash compensation of EUR 44.65 offered to the OSRAM Shareholders under Clause 5.1 of the Agreement (the Compensation) and the recurring compensation payment offered under Clause
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Convenience translation from German
4 of the Agreement (the Recurring Compensation Payment) is the date of the Extraordinary General Meeting of OSRAM on 3 November 2020. Therefore, ams Offer and OSRAM have been closely following the progress of the value of OSRAM since the publication of the Agreement, the Contract Report and the Audit Report.
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Change to the risk-free rate
Subsequent to the formation of the Agreement and the OSRAM Extraordinary Gen- eral Meeting being convened, the risk-free rate underlying OSRAM's business val- uation changed from 0.0% to -0.1%.
Taking into account the new risk-free rate of -0.1% and the resulting change to
OSRAM's business value as at the relevant valuation date, i.e. the date of the Ex- traordinary General Meeting on 3 November 2020, this results in nominal cash Com- pensation pursuant to section 305 AktG of EUR 45.54 per share and a nominal net Recurring Compensation Payment for the purposes of section 304(1) sentence 1 and section 304(2) sentence 1 AktG of EUR 2.23 per OSRAM Share.
There have been no changes to the planned earning expectations for OSRAM for the detailed planning years 2020 to 2025. The remaining valuation parameters have also not changed. - Amendment Agreement to the Agreement
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Amendment to the Compensation
Solely based on the situation described in B and on the change in the risk-free rate following the formation of the Agreement, OSRAM and ams Offer have agreed within the framework of an amendment agreement to the Agreement (the Amend- ment Agreement) that the Compensation offered to the OSRAM Shareholders pur- suant to Clause 5.1 of the Agreement of EUR 44.65 shall be increased by EUR 0.89. In accordance with section 305(1) AktG, ams Offer is now offering cash compensa- tion in the amount of EUR 45.54 per OSRAM Share to the outside OSRAM Share- holders who would like to divest their shareholding in the Company due to the con- clusion of the Agreement. The Amendment Agreement, including a consolidated version of the Agreement, is attached to this Addendum to the Contract Report as Annex 1.
The annual Recurring Compensation Payment, just like the other provisions of the Agreement, and in particular the additional provisions on Compensation in Clause 5 of the Agreement, shall remain unchanged.
The Amendment Agreement, which is the subject matter of the present Addendum to the Contract Report, was formed on 2 November 2020. Before signing the Amendment Agreement, on 2 November 2020 the OSRAM Supervisory Board re- solved to make a recommendation to the OSRAM Shareholders that they give their approval to the Agreement being amended by the Amendment Agreement.
The amount and appropriateness of the Compensation are explained and substanti- ated in more detail in D.
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Convenience translation from German
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Amendment to the Letter of Comfort
Clause 7 of the Agreement contains a reference that ams, without joining the Agree- ment as a party, provided a letter of comfort to OSRAM by separate declaration. This letter of comfort dated 22 September 2020 (Letter of Comfort) is attached to the Contract Report together with the Agreement as an Annex.
Due to the amendment to the Compensation set out in C.I, ams issued an amendment to the Letter of Comfort.
According to the Letter of Comfort, ams undertakes without limitation and irrevo- cably, including in relation to the Compensation under Clause 5.1 of the Agreement increased by virtue of the Agreement, to ensure that ams Offer will be financially equipped in a way that ams Offer is at all times able to completely fulfil all its obli- gations arising from or in connection with the Agreement when they become due.
A consolidated version of the Agreement, including the amendment under the Amendment Agreement, accompanied by a consolidated version of the Letter of Comfort, which includes the amendment of 2 November 2020, has been attached as an Annex to the Amendment Agreement.
- Amount of Compensation pursuant to section 305 AktG
Section 305(1) AktG provides that a domination and profit and loss transfer agree- ment must provide for the obligation of the controlling company to purchase the shares of outside shareholders upon their request in exchange for the payment of an appropriate compensation specified in the agreement. Section 305(3) sen- tence 2 AktG provides that the appropriate compensation must take into account the situation of the company at the time its general meeting resolves on the agreement. This applies accordingly to the recurring compensation payment within the meaning of section 304 AktG. The relevant valuation date is the date of the planned general meeting of OSRAM which is to resolve on the Agreement, that is 3 November 2020.
The Managing Board of OSRAM and the Management of ams Offer appointed PwC as Valuation Expert to prepare an Expert Opinion on the business value of OSRAM as at the date of the planned general meeting, 3 November 2020, and on the amount of the appropriate recurring compensation payment within the meaning of sec- tion 304 AktG and of the appropriate compensation within the meaning of sec- tion 305 AktG. The Valuation Expert carried out the work necessary for the Expert Opinion between May 2020 and September 2020 and presented its Expert Opinion on calculating the business value of OSRAM as at the valuation date on 3 November 2020. In its capacity as a neutral expert for the purposes of IDW S 1, PwC concluded in the Expert Opinion that the objectified business value of OSRAM within the meaning of IDW S 1 as of the valuation date relevant to the Compensation of 3 No- vember 2020 is approx. EUR 4,205 million. This corresponds to a value of EUR 44.65 for each outstanding OSRAM Share based upon a total of 94,183,686 Out- standing OSRAM Shares. For details, please refer to the remarks in Section E of the Contract Report.
In view of the situation set out in Section C of this Addendum to the Contract Report, PwC made an update to the business value that OSRAM was determined to have on
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Convenience translation from German
the valuation date and illustrated same in an update statement of 2 November 2020 regarding the Expert Opinion of 21 September 2020 (the Update Statement). According to the Update Statement, taking account of the risk-free rate of -0.1% before personal income taxes and taking account of the fact that no adjustment of the planned earning expectations for the detailed planning years 2020 to 2025 has been carried out since the Expert Opinion was signed, OSRAM's business value as at the valuation date of 3 November 2020 amounts to EUR 4,290 million. This results in an OSRAM Share value of EUR 45.54 and hence an appropriate Compensation amount of EUR 45.54 per OSRAM Share.
This produces a nominal value of EUR 2.23 per OSRAM Share for the net amount of recurring compensation for the purposes of section 304(1) sentence 1 and section 304(2) sentence 1 AktG and a nominal value of EUR 2.56 per OSRAM Share for the gross amount of recurring compensation - determined based on the rulings of the German Federal Court of Justice (BGH). ams Offer and OSRAM have agreed not to adjust the level of the annual Recurring Compensation Payment.
The full Update Statement is attached to this Addendum to the Contract Report as Annex 2and thus forms an integral part of this Addendum to the Contract Report.
Following their own reviews, the Managing Board of OSRAM and the Management of ams Offer have adopted as their own the full content of PwC's statements in the aforementioned Update Statement on OSRAM's business value, on the appropriate Recurring Compensation Payment and on the appropriate Compensation and include such statements as part of this Addendum to the Contract Report. In their own as- sessments, the Managing Board of OSRAM and the Management of ams Offer consider as appropriate an amount of EUR 45.54 per OSRAM Share for the Compensation within the meaning of section 305 AktG and - unchanged - a gross amount of EUR 2.57 (EUR 2.24 net) per OSRAM Share for the Recurring Compensation Payment within the meaning of section 304 AktG.
The Update Statement, as well as this Addendum to the Contract Report, will be available, together with the other documents required under section 293f(1) AktG, via OSRAM's website at https://www.osram-group.de/hauptversammlung from 2 November 2020. Upon request, copies of these documents will be available to each shareholder without undue delay and free of charge. With regard to the details of inspecting and requesting copies of this and other documents, reference is made to the notice of the Extraordinary General Meeting, as published in the Bundesanzeiger (Federal Gazette) and on the internet at https://www.osram-group.de/hauptversa- mmlung on 24 September 2020.
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Contract audit
In its capacity as the court-appointed Contract Auditor, Ebner Stolz audited the Agreement and, in particular, the appropriateness of the Compensation and the an- nual Recurring Compensation Payment and prepared a separate Audit Report thereon pursuant to section 293e AktG, which, together with the documents referred to in section 293f(1) AktG, has been available on OSRAM's website at https://www.osram-group.de/hauptversammlung since the Extraordinary General Meeting was convened on 24 September 2020.
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Convenience translation from German
In view of the situation set out in Section C, Ebner Stolz will submit an interim statement updating the Audit Report (the Interim Statement). Ebner Stolz has already stated in an email to the OSRAM Managing Board that the Interim Statement to be issued on 2 November 2020 will confirm that the change in the amount of Compensation under the Amendment Agreement is appropriate.
The Interim Statement will also be available at https://www.osram- group.de/hauptversammlung. Upon request, a copy of this document will be provided to each OSRAM Shareholder without undue delay and free of charge. With regard to the details of inspecting and requesting copies of this and other documents, reference is made to the notice of the Extraordinary General Meeting, as published in the Bundesanzeiger (Federal Gazette) and on the internet at https://www.osram- group.de/hauptversammlung on 24 September 2020.
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OSRAM Licht AG
The Managing Board
Munich, 2 November 2020
Dr Olaf Berlien
Chairman of the Managing Board
Convenience translation from German
Kathrin Dahnke
Member of the Managing Board
Dr Stefan Kampmann
Member of the Managing Board
Convenience translation from German
ams Offer GmbH
The Management
Munich, 2 November 2020
Name:Name:
Convenience translation from German | |
Annex 1 | Amendment Agreement of 2 November 2020 regarding the Domi- |
nation and Profit and Loss Transfer Agreement of 22 September | |
2020 between OSRAM Licht AG and ams Offer GmbH and | |
amendment to the comfort letter of ams AG, Premstätten (Aus- | |
tria), dated 2 November 2020 (including a consolidated version of | |
the Domination and Profit and Loss Transfer Agreement together | |
with the consolidated comfort letter of ams AG, Premstätten (Aus- | |
tria)) |
Convenience translation of the German original
Amendment Agreement
to the
Domination and Profit and Loss Transfer Agreement
between
OSRAM Licht AG,
Marcel-Breuer-Str. 6, 80807 München,
registered in the commercial register (Handelsregister) at the Local Court
(Amtsgericht) Munich (HRB 199675)
("OSRAM")
and
ams Offer GmbH,
Marcel-Breuer-Str. 6, 80807 München,
registered in the commercial register (Handelsregister) at the Local Court
(Amtsgericht) Munich (HRB 252979)
("ams Offer")
Preamble
- OSRAM and ams Offer entered into a domination and profit and loss transfer agreement on 22 September 2020. On 2 November 2020 the shareholders' meeting of ams Offer and on 3 November 2020 the general meeting of OSRAM shall decide on the approval of the dom- ination and profit and loss transfer agreement.
- Following the entering into the domination and profit transfer agreement dated 22 Septem- ber 2020, the base interest rate on which the company valuation of OSRAM was based changed from 0.0% to -0.1%. Under consideration of the changed base interest rate of - 0.1% and the resulting change in the enterprise value of OSRAM, the value per OSRAM share for the cash compensation is now EUR 45.54 instead of EUR 44.65 and the value per OSRAM share for the annual cash compensation shall be EUR 2.23 net and EUR 2.56 gross instead of EUR 2.24 net and EUR 2.57 gross.
- Against this background, and solely due to the change in the base interest rate after the entering into the domination and profit and loss transfer agreement dated 22 September 2020, the cash compensation offered to the shareholders of OSRAM pursuant to Section 5.1 of the domination and profit and loss transfer agreement dated 22 September 2020 shall be increased by EUR 0.89 from EUR 44.65 to EUR 45.54 per OSRAM share. The annual cash compensation, as well as the remainder of the domination and profit and loss transfer agreement dated 22 September 2020, shall remain unchanged.
This said, OSRAM and ams Offer agree what follows:
1 Amendment of Clause 5.1 of the domination and profit and loss transfer agree- ment dated 22 September 2020
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In Clause 5.1 of the domination and profit and loss transfer agreement dated 22 Septem- ber 2020, the value "EUR 44.65" shall be replaced by the value "EUR 45.54". The amended Clause 5.1 of the domination and profit and loss transfer agreement dated 22 September
2020 then reads as follows:
"ams Offer undertakes upon demand of each outside shareholder of OSRAM to purchase such shareholder's OSRAM Shares in exchange for a cash compensation ("Compensation") (Abfindung) in the amount of EUR 45,54 for each OSRAM Share." - The remaining provisions of the domination and profit and loss transfer agreement dated 22 September 2020 shall remain unaffected.
2 Comfort Letter
On 2 November 2020 ams AG with registered office in Premstaetten, Austria, ("ams AG") has issued a supplement to the comfort letter dated 22 September 2020, in which ams AG undertakes without limitation and irrevocably, that the comfort letter shall also apply with regard to the domination and profit and loss transfer agreement dated 22 September 2020 as amended by this Amendment Agreement.
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Consolidated Versions
A consolidated version of the domination and profit and loss transfer agreement dated 22 September 2020 including the amendment pursuant to Clause 1.1 of this Amendment Agreement together with a consolidated version of the comfort letter dated 22 Septem- ber 2020 including the supplement dated 2 November 2020 described in Clause 2 is at- tached to this Amendment Agreement as an Annex. - Miscellaneous
- For the effectiveness of this Amendment Agreement, the provisions under Clause 6 of the consolidated domination and profit and loss transfer agreement dated 22 September 2020 attached hereto as an Annex shall apply accordingly.
- To the extent a provision of this Amendment Agreement is or becomes invalid or impractica- ble in full or in part, or if this Amendment Agreement does not contain a necessary provision, the validity of the remaining provisions of this Amendment Agreement shall not be affected. In place of the invalid or impracticable provision, or in order to remedy an omission in this Amendment Agreement, an appropriate provision shall apply which corresponds as far as legally permissible to what the parties of this Amendment Agreement intended or would have intended in accordance with the intent and purpose of this Amendment Agreement if they had been aware of the provision.
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________________, ___________________
(place, date)
OSRAM Licht AG
Dr Olaf Berlien | Kathrin Dahnke |
Chairman of the management board, CEO | Member of the management board, CFO |
________________, ___________________
(place, date)
ams Offer GmbH
Name:Name:
Convenience translation of the German original
Consolidated version of the Domination and Profit and
Loss Transfer Agreement including the amendments of the
Amendment Agreement dated 2 November 2020
between
OSRAM Licht AG,
Marcel-Breuer-Str. 6, 80807 Munich,
registered in the commercial register (Handelsregister) at the Local Court
(Amtsgericht) Munich (HRB 199675)
("OSRAM")
and
ams Offer GmbH,
Marcel-Breuer-Str. 6, 80807 Munich,
registered in the commercial register (Handelsregister) at the Local Court
(Amtsgericht) Munich (HRB 252979)
("ams Offer")
1 Management Control
- OSRAM submits the management control (Leitung) of its company to ams Offer. ams Offer is accordingly entitled to issue instructions (Weisungen) to the management board of OSRAM with regard to the management control of the company.
- The management board of OSRAM is required to comply with the instructions of ams Offer. ams Offer is not entitled to issue the instruction to the management board of OSRAM to amend, maintain or terminate this Agreement.
- Any instructions require text form (Textform) or, if the instructions are issued orally, they shall be confirmed in text form without undue delay.
2 Transfer of Profit
- OSRAM undertakes to transfer its entire annual profit (Gewinnabführung) to ams Offer. Sub- ject to establishing or dissolving reserves in accordance with Clause 2.2 of this Agreement below, the maximum amount permissible under section 301 German Stock Corporations Act (Aktiengesetz - "AktG"), as amended from time to time, shall be transferred.
- OSRAM may, with the written consent of ams Offer, allocate parts of its annual profit to other profit reserves if and to the extent permissible under commercial law and as economically justified by reasonable commercial judgement. Upon the written request of ams Offer, OSRAM shall dissolve other profit reserves established during the course of this Agreement and use the proceeds to compensate for any annual loss or transfer the proceeds as profit. Other reserves or profits carried forward from the period prior to the effectiveness of this Agreement may neither be transferred as profit nor be used to compensate for any annual loss.
- The obligation to transfer the annual profit applies for the first time to the entire fiscal year of OSRAM in which this Agreement becomes effective according to Clause 6.2 of this Agree- ment. The obligation according to sentence 1 becomes due upon the end of the fiscal year of OSRAM and shall bear interest from this point on at an interest rate of 5% p.a.
3 Assumption of Losses
- ams Offer is obliged towards OSRAM to assume any losses (Verlustübernahme) according to the provisions of section 302 AktG in its entirety as amended from time to time.
- The obligation to assume any losses applies for the first time to the entire fiscal year of OSRAM in which this Agreement becomes effective according to Clause 6.2 of this Agree- ment. Clause 2.3 sentence 2 applies accordingly to the obligation to assume any losses.
4 Recurring Compensation Payment
- ams Offer undertakes to pay to the outside shareholders of OSRAM a recurring annual cash compensation ("Recurring Compensation Payment") (Ausgleichszahlung) from and in- cluding the fiscal year of OSRAM in relation to which the claim of ams Offer for the transfer of the annual profit under Clause 2 takes effect, and for the further duration of this Agree- ment.
- The Recurring Compensation Payment amounts for each full fiscal year of OSRAM for each no-par value registered ordinary voting shares (Aktien ohne Nennbetrag) in OSRAM,
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representing a mathematical portion of EUR 1.00 in the share capital (each "OSRAM Share" and all "OSRAM Shares") to a gross sum (Bruttobetrag) of EUR 2.57 minus the amount of any corporate income tax and the solidarity surcharge in accordance with the respective tax rate applicable for these taxes for the relevant fiscal year, whereby this deduction is to be calculated only on the basis of the pro rata gross sum of EUR 2.08 per OSRAM Share resulting from profits which are subject to German corporate income tax. Based on the situation at the time of conclusion of this Agreement, the pro rata gross sum of EUR 2.08 for each OSRAM share, which relates to profits made by OSRAM being subject to the German corporate income tax, is subject to a deduction of 15% corporate income tax plus 5.5% solidarity surcharge, that is EUR 0.33. Together with the remaining pro rata gross sum of EUR 0.49 for each OSRAM Share, relating to profits not being subject to the German corporate income tax, the Recurring Compensation Payment amounts to EUR 2.24 for each OSRAM Share for each full fiscal year, based on the situation at the time of conclusion of this Agreement. For the avoidance of doubt, it is agreed that any withholding tax (such as capital gains tax plus solidarity surcharge thereon) shall be withheld from the Recurring Compensation Payment to the extent required by statutory law. The Recurring Compensation Payment is due on the first banking day following the ordinary general shareholders' meeting of OSRAM for any respective preceding fiscal year but in any event within eight months following expiration of the relevant fiscal year.
- The Recurring Compensation Payment is granted for the first time for the full fiscal year of OSRAM for which the claim of ams Offer to transfer of profit under Clause 2 becomes effec- tive. If this Agreement ends during a fiscal year of OSRAM or if OSRAM establishes an abbreviated fiscal year (Rumpfgeschäftsjahr) while the obligation according to Clause 2 is existing, the Recurring Compensation Payment is reduced pro rata temporis.
- If the share capital of OSRAM is increased from the reserves in exchange for the issuance of new shares, the Recurring Compensation Payment for each OSRAM Share is reduced to such an extent that the total amount of the Recurring Compensation Payment remains un- changed. If the share capital of OSRAM is increased by cash contributions and/or contribu- tions in kind, the rights under this Clause 4 also apply for the shares subscribed to by outside shareholders in such capital increase. The beginning of each entitlement of the new shares pursuant to this Clause 4 corresponds to the dividend entitlement set by OSRAM when is- suing the new shares.
- If an appraisal proceeding (Spruchverfahren) according to the German Act on Appraisal Pro- ceedings (Spruchverfahrensgesetz) is initiated and the court adjudicates a legally binding higher Recurring Compensation Payment, the outside shareholders, even if they have al- ready been compensated according to Clause 5, are entitled to demand a corresponding additional payment to the Recurring Compensation Payment. Likewise all other outside shareholders will be treated in the same way if ams Offer undertakes to pay a higher Recur- ring Compensation Payment to an outside shareholder of OSRAM in a court settlement (gerichtlicher Vergleich) for the purpose of avoiding or settling judicial appraisal proceedings (Spruchverfahren).
5 Compensation
5.1 ams Offer undertakes upon demand of each outside shareholder of OSRAM to purchase such shareholder's OSRAM Shares in exchange for a cash compensation ("Compensa- tion") (Abfindung) in the amount of EUR 45,54 for each OSRAM Share.
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- The obligation of ams Offer to purchase OSRAM Shares is for a limited period of time. The time limitation period ends two months after the date on which the registration of this Agree- ment in the commercial register at the registered seat of OSRAM has been announced pur- suant to section 10 of the German Commercial Code (Handelsgesetzbuch - HGB). An ex- tension of the time limitation period pursuant to section 305 para. 4 sentence 3 AktG as a result of a motion for determining the Recurring Compensation Payment or Compensation by the court determined according to section 2 of the German Act on Appraisal Proceedings remains unaffected. In this case, the time limitation period ends two months after the date on which the decision on the last motion ruled on has been announced in the Federal Ga- zette (Bundesanzeiger).
- If the share capital of OSRAM is increased using corporate funds in exchange for the issu- ance of new shares prior to the expiration of the time limitation period set forth in Clause 5.2, the Compensation for each share is reduced to such an extent that the total amount of the Compensation remains unchanged. If the share capital of OSRAM is increased prior to the expiration of the time limitation period set forth in Clause 5.2 by means of cash contributions and/or contributions in kind, the rights under this Clause 5 also apply for the shares sub- scribed to by the outside shareholders in such capital increase.
- The transfer of the OSRAM Shares for Compensation is free of costs for the outside share- holders of OSRAM.
- If an appraisal proceeding (Spruchverfahren) pursuant to the German Act on Appraisal Pro- ceedings is initiated and the court adjudicates a legally binding higher compensation, the outside shareholders, even if they have already been compensated, are entitled to demand a corresponding additional payment to the Compensation. Likewise all other outside share- holders will be treated in the same way if ams Offer undertakes in a court settlement (gericht- licher Vergleich) to pay a higher compensation to an outside shareholder of OSRAM for the purpose of avoiding or settling judicial appraisal proceedings (Spruchverfahren).
6 Effectiveness and Term of this Agreement
- This Agreement requires for its effectiveness each the consent of the general shareholders' meeting of OSRAM as well as the consent of the shareholders' meeting of ams Offer.
- This Agreement becomes effective upon registration of its existence in the commercial reg- ister at the registered seat of OSRAM, however, at the earliest, upon the beginning of the financial year of OSRAM beginning on 1 October 2020.
- This Agreement is concluded for an indefinite period of time. It can be terminated in writing with a notice period of six month to the end of the fiscal year of OSRAM. This Agreement can be terminated for the first time as of the end of the fiscal year that ends at least five years (Zeitjahre) (60 months) after the beginning of the fiscal year of OSRAM, in which this Agreement has become effective according to Clause 6.2 of this Agreement.
- Each party can terminate this Agreement for good cause (wichtiger Grund) without compli- ance with any notice period. Good cause exists in particular if good cause for purposes of German tax law for the termination of this Agreement exists including those pursuant to R 14.5 (6) Corporation Tax Guidelines (Körperschaftsteuer-Richtlinien- KStR) (or a corre- sponding successor provision).
- Any notice of termination must be in writing.
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Comfort Letter
ams AG with seat in Premstätten, Austria, ("ams AG") holds 100% of the shares in ams Offer and in this capacity as direct shareholder, has without joining the Agreement as a party pro- vided the comfort letter attached for information purposes to this Agreement as an Annex. In this comfort letter ams AG undertakes without limitation and irrevocably to ensure, that ams Offer will be financially equipped in a way that ams Offer is at all times able to fulfil all its obligations arising from or in connection with this Agreement completely when they be- come due. This applies in particular to the obligation to compensate losses pursuant to sec- tion 302 AktG. ams AG undertakes towards the outside shareholders of OSRAM irrevocably and in principle without limitation that ams Offer fulfils all its obligations towards them arising from or in connection with this Agreement completely when they become due, in particular with respect to the Recurring Compensation Payment and the Compensation. To that extent the outside shareholders of OSRAM have an own claim according to section 328 para. 1 German Civil Code (Bürgerliches Gesetzbuch - BGB) directed at payment to ams Offer. This claim and the corresponding liability of ams AG towards the outside shareholders however only apply if ams Offer does not fulfil its obligations towards the outside shareholders of OSRAM arising from or in connection with this Agreement completely when they become due and ams AG does not comply with its obligation to equip ams Offer. - Miscellaneous
To the extent a provision of this Agreement is or becomes invalid or impracticable in full or in part, or if this Agreement does not contain a necessary provision, the validity of the re- maining provisions of this Agreement shall not be affected. In place of the invalid or imprac- ticable provision, or in order to remedy an omission in this Agreement, an appropriate provi- sion shall apply which corresponds as far as legally permissible to what the parties of this Agreement intended or would have intended in accordance with the intent and purpose of this Agreement if they had been aware of the provision.
OSRAM Licht AG | ams Offer GmbH |
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- Non-binding convenience translation of the German original - | ams AG | T +43 3136 500-0 |
Tobelbader Strasse 30 | sensors@ams.com | |
8141 Premstaetten | www.ams.com | |
Austria |
OSRAM Licht AG
Marcel-Breuer-Str. 6
80807 Munich
Germany
Premstaetten, 2 November 2020
Consolidated Comfort Letter (Patronatserklärung) including the amendments of the Supplement to the Comfort Letter (Patronatserklärung) dated 2 November 2020
ams Offer GmbH, Marcel-Breuer-Str. 6, 80807 Munich, Germany, registered in the commercial register (Handelsregister) at the Local Court (Amtsgericht) Munich under company number HRB 252979 ("ams Offer"), entered into a domination and profit and loss transfer agreement (Be- herrschungs- und Gewinnabführungsvertrag) with OSRAM Licht AG, Marcel-Breuer-Str. 6, 80807 Munich, Germany, registered in the commercial register at the Local Court Munich under company number HRB 199675 ("OSRAM"), with OSRAM as the controlled and profit transferring company and intends to amend this domination and profit and loss transfer agreement (Beherrschungs- und Gewinnabführungsvertrag) together with OSRAM due to the reduction of the base interest rate used for the determination of the cash compensation and annual cash compensation to the extent that the cash compensation in clause 5.1 of the Agreement will be increased by EUR 0.89 from EUR
44.65 to EUR 45.54 per OSRAM share (the so amended domination and profit and loss transfer agreement (Beherrschungs- und Gewinnabführungsvertrag) "Agreement"). ams AG, a stock corpo- ration incorporated and operating under the laws of Austria, with registered office in Premstätten ("ams AG"), directly holds 100% of the shares in ams Offer. ams AG hereby makes the following declarations without joining the Agreement as a party:
- ams AG undertakes without limitation and irrevocably to ensure, that ams Offer will be finan- cially equipped in such a way that ams Offer is at all times able to fulfil all its liabilities arising from or in connection with the Agreement completely when they become due. This applies in particular to the obligation to compensate losses pursuant to section 302 German Stock Corporations Act (Aktiengesetz - AktG).
- ams AG undertakes without limitation and irrevocably vis-à-vis the outside shareholders of OSRAM that ams Offer fulfils all its obligations towards them arising from or in connection with the Agreement completely when they become due, in particular with respect to the re- curring compensation payment (Ausgleichszahlung) and the cash compensation (Ab- findung). To that extent the outside shareholders of OSRAM have an own claim according to section 328 para. 1 German Civil Code (Bürgerliches Gesetzbuch - BGB) directed at pay- ment to ams Offer. ams AG's liability pursuant to the two preceding sentences does, how- ever, only apply if ams Offer does not fulfil its obligations towards the outside shareholders of OSRAM arising from or in connection with the Agreement completely when they become
1
- due and ams AG does not comply with its obligation to equip ams Offer pursuant to Section 1 of this Comfort Letter.
- This Comfort Letter is subject to the law of the Federal Republic of Germany. Exclusive place of jurisdiction for all disputes arising between the parties from or in connection with this Comfort Letter is Munich, Germany, to the extent permitted by law.
ams AG
2
Convenience translation from German
Annex 2:Update Statement of 2 November 2020 regarding the Expert Opin-
ionbyPricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, Friedrich-Ebert-Anlage35-37, 60327 Frankfurt am Main, Germany, of 21 September 2020 on the determination of the business value of OSRAM Licht AG as at the valuation date of 3 November 2020
PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft Bernhard-Wicki-Straße 8, 80636 Munich
OSRAM Licht AG
Marcel-Breuer-Straße 6
80807 Munich
ams Offer GmbH Marcel-Breuer-Straße 6 80807 Munich
PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft
Bernhard-Wicki-Straße 8 80636 Munich
www.pwc.de
phone: +49 89 5790-6415 eckhard.spaeth@pwc.com
2 November 2020
Convenience Translation - Update statement in context to the conclusion of a Domination and Profit and Loss Transfer Agreement pursuant to § 291(1) German Stock Corporation Act between ams Offer GmbH, Ismaning, and OSRAM Licht AG, Munich, as at 3 November 2020 as well as the related valuation
Dear Sir or Madam,
On September 21, 2020, we provided you with our Expert Opinion regarding the business value of OSRAM Licht AG, Munich ("OSRAM Licht AG", together with its subsidiaries also referred to as "OSRAM Group") and on the determination of the appropriate cash compensation in accordance with § 305 AktG as well as the appropriate recurring compensation payment in accordance with § 304 AktG on the valuation date November 3, 2020, the day of the Shareholder Meeting for the conclusion of a Domination and Profit and Loss Transfer Agreement pursuant to § 291(1) AktG between ams Offer GmbH, Ismaning and OSRAM Licht AG.
We hereby inform you that the relevant interest rates observable on the capital markets have changed in the period between the completion of the valuation of OSRAM Licht AG and the valuation date November 3, 2020. In accordance with this development, the risk-free rate (before personal income taxes) applicable for the derivation of the equity value of OSRAM Licht AG as at November 3, 2020, is -0.1% instead of 0.0%.
In our expert opinion as of September 21, 2020, we derived the equity value, the appropriate recurring compensation payment in accordance with § 304 AktG and the appropriate cash compensation in accordance with § 305 AktG based on a reduced risk-free rate within a sensitivity analysis. For reasons of simplification we assumed that all other planning and valuation parameters remain unchanged until the valuation date except for the risk-free rate.
...
Vorsitzender des Aufsichtsrats: WP StB Dr. Norbert Vogelpoth
Geschäftsführer: WP StB Dr. Ulrich Störk, WP StB Dr. Peter Bartels, Dr. Joachim Englert, WP StB Petra Justenhoven, WP Clemens Koch, StB Marius Möller, WP StB Uwe Rittmann, StB RA Klaus Schmidt, StB CPA Mark Smith
Sitz der Gesellschaft: Frankfurt am Main, Amtsgericht Frankfurt am Main HRB 107858
PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft ist Mitglied von PricewaterhouseCoopers International, einer Company limited by guarantee registriert in England und Wales
Page 2 / 6
In our expert opinion dated September 21, 2020, we outlined that based on these assumptions and considering a reduced risk-free rate (before personal income taxes) of -0.1% as at the valuation date, the equity value of OSRAM Licht AG results in EUR 45.54 per share (see paragraph 408 of the expert opinion). Accordingly, the calculated cash compensation per share in accordance with § 305 AktG would be EUR 45.54 and the calculated recurring compensation payment per share in accordance with § 304.1, sentence 1 AktG and § 304.2, sentence 1 AktG would be EUR 2.23 (see paragraph 421 of the expert opinion).
As of October 29, 2020, the management board of OSRAM Licht AG confirmed that considering the ongoing business operations of OSRAM Licht AG following the signing of the expert opinion on September 21, 2020, no adjustments of the originally planned operating profits for the detailed planning years 2020 to 2025 are required.
Based on this confirmation, we updated the determination of the equity value of OSRAM Licht AG as at the valuation date, November 3, 2020. Based on a risk-free rate of -0.1% (before personal income taxes) and considering that the originally planned operating profits for the detailed planning years 2020 to 2025 do not require an adjustment, the updated equity value of OSRAM Licht AG as at the valuation date November 3, 2020, amounts to EUR 4,290 million (cf. the supplementing documentation provided in the appendices regarding the determination of the equity value). As a result, the value per share amounts to EUR 45.54. The calculated net recurring compensation payment (corresponding to the recurring compensation payment before personal income taxes) in accordance with § 304.1, sentence 1 AktG, § 304.2, sentence 1 AktG amounts to EUR 2.23 per share while the gross recurring compensation payment per share - in accordance with the case law of the BGH - is EUR 2.56 per share.
Munich, 2 November 2020
Kind regards,
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
...
Page 3 / 6
Appendices
1. Net distributions after personal income taxes
As the ongoing business operations of OSRAM Licht AG following the signing of the expert opinion on September 21, 2020, do not require an adjustment of the originally planned operating profits for the detailed planning years 2020 to 2025, we based our updated determination of the equity value of OSRAM Licht AG as at the valuation date November 3, 2020, on the business plan as outlined in our expert opinion. We derived the projected net distributions to the shareholders based on these EBITs considering the financial result, the income taxes of the company, noncontrolling interests as well as income taxes of the shareholders. The updated projected net distributions to the shareholders were derived as follows:
OSRAM Licht AG
Net payout to be discounted
2020 | 2021 | 2022 | 2023 | 2024 | 2025 | from 2026 | ||
in EUR million | Plan | Plan | Plan | Plan | Plan | Plan | TV | |
EBITDA | 144 | 266 | 525 | 701 | 809 | 959 | 946 | |
Depreciation and amortization | (397) | (331) | (315) | (310) | (305) | (312) | (329) | |
EBIT | (253) | (65) | 210 | 392 | 504 | 647 | 616 | |
Financial result | (18) | (30) | (21) | (17) | (13) | (9) | (8) | |
EBT | (271) | (95) | 189 | 375 | 491 | 637 | 609 | |
Corporate tax | (32) | (76) | (37) | (63) | (112) | (162) | (166) | |
Earnings after Corporate Tax (before minority interest) | (303) | (171) | 152 | 312 | 379 | 475 | 443 | |
Minority interest | 61 | 44 | - | - | - | - | - | |
Earnings after Corporate Tax (after minority interest) | (242) | (127) | 152 | 312 | 379 | 475 | 443 | |
Cashflow relevant adjustments | - | - | - | - | - | - | (4) | |
Distributable result | (242) | (127) | 152 | 312 | 379 | 475 | 438 | |
Retained earnings | 242 | 127 | (91) | (187) | (227) | (285) | (219) | |
Dividends | - | - | 61 | 125 | 152 | 190 | 219 | |
Personal income taxes | - | - | (16) | (33) | (40) | (50) | (58) | |
Dividends after personal income taxes | - | - | 45 | 92 | 112 | 140 | 161 | |
Fictitious attribution from retained earnings | - | - | - | - | - | - | 219 | |
Personal income tax on fictitious attribution | - | - | - | - | - | - | (29) | |
Net payout to be discounted | - | - | 45 | 92 | 112 | 140 | 352 |
Source: business plan of OSRAM Licht AG; PwC analysis.
...
Page 4 / 6
2. Derivation of the discount rate
We also adjusted the annual discount rates based on the reduced risk-free rate. The updated discount rates that are the basis for the valuation are summarised in the following table:
OSRAM Licht AG
Cost of Equity
2020 | 2021 | 2022 | 2023 | 2024 | 2025 | from 2026 | |
Plan | Plan | Plan | Plan | Plan | Plan | Terminal value | |
Risk-free rate | -0.10% | -0.10%-0.10%-0.10%-0.10% | -0.10% | -0.10% | |||
MRP (after personal income tax) | 5.75% | 5.75% | 5.75% | 5.75% | 5.75% | 5.75% | 5.75% |
Beta (unlevered) | 1.25 | 1.25 | 1.25 | 1.25 | 1.25 | 1.25 | 1.25 |
Leverage ratio | 26% | 22% | 20% | 15% | 12% | 7% | 2% |
Beta (levered) | 1.51 | 1.44 | 1.44 | 1.40 | 1.36 | 1.32 | 1.26 |
Cost of equity (after personal income tax) | 8.60% | 8.17% | 8.17% | 7.93% | 7.74% | 7.48% | 7.16% |
Terminal growth rate (terminal value) | -0.87% | ||||||
Cost of equity (after personal income tax | |||||||
and terminal growth rate) | 8.60% | 8.17% | 8.17% | 7.93% | 7.74% | 7.48% | 6.29% |
Source: PwC analysis.
3. Value of operating assets
Based on the aforementioned net distributions to shareholders to be discounted, the value contribution from profit retention and the period-specific discount rates the updated value of the operating assets of OSRAM Licht AG as at November 3, 2020, was derived as follows:
OSRAM Licht AG
Determination of capitalised earnings value
2020 | 2021 | 2022 | 2023 | 2024 | 2025 | from 2026 | |
in EUR million | Plan | Plan | Plan | Plan | Plan | Plan Terminal value | |
Net payout to be discounted | - | - | 45 | 92 | 112 | 140 | 352 |
Cost of capital | 8.60% | 8.17% | 8.17% | 7.93% | 7.74% | 7.48% | 6.29% |
Period | 1.00 | 2.00 | 3.00 | 4.00 | 5.00 | 6.00 | |
Discount factor | 0.92 | 0.85 | 0.79 | 0.73 | 0.68 | 0.63 | 10.01 |
Present value | - | - | 35 | 67 | 76 | 88 | 3,520 |
Capitalised earnings at 30 September 2019 | 3,786 | ||||||
Compounding factor | 1.09 | ||||||
Capitalised earnings at 30 September 2020 | 4,111 | ||||||
Compounding factor | 1.01 | ||||||
Capitalised earnings value at 3 November 2020 | 4,142 |
Source: PwC analysis.
...
Page 5 / 6
4. Equity value and value per share
Considering the updated value of the operating assets (capitalised earnings value) as well as the value of the non-operating assets, the updated equity value of OSRAM Licht AG as at November 3, 2020 is as follows:
OSRAM Licht AG
Equity Value as of 3 November 2020 in EUR million
Capitalised earnings value as of 3 November 2020 | 4,142 |
Non-operating assets | 147 |
Equity value as of 3 November 2020 | 4,290 |
Source: PwC analysis.
As at the valuation date November 3, 2020, the updated equity value of OSRAM Licht AG amounts to EUR 4,290 million. Considering the number of outstanding shares of 94,183,686 of OSRAM Licht AG the value per share amounts to EUR 45.54.
5. Appropriate recurring compensation payment
The updated determination of the recurring compensation payment is shown in the following overview:
Recurring compensation (before corporate tax and solidarity surcharge)
Burdened with | Not burdened with | ||
corporate tax and | corporate tax and | ||
solidarity surcharge | solidarity surcharge | Total | |
Business value at 30 September 2020 in EUR million | 3,328 | 931 | 4,258 |
Number of shares | 94,183,686 | 94,183,686 | 94,183,686 |
Business value per share in EUR | 35.33 | 9.88 | 45.21 |
Yearly recurring compensation per share in EUR (after personal | |||
income tax, corporate tax and solidarity surcharge), annuity 3.617% | 1.28 | 0.36 | 1.64 |
Plus personal income tax 26.375% | 0.46 | 0.13 | 0.59 |
Yearly net recurring compensation per share in EUR (after personal | |||
income tax, corporate tax and solidarity surcharge) | 1.74 | 0.49 | 2.23 |
plus corporation tax and solidarity surcharge 15.825% | 0.33 | - | 0.33 |
Yearly gross recurring compensation per share in EUR (after | |||
personal income tax, corporate tax and solidarity surcharge) | 2.07 | 0.49 | 2.56 |
Source: PwC analysis.
...
Page 6 / 6
The calculated recurring compensation payment according to § 304 AktG equals EUR 2.56 per share (pro rata gross profit per share) less corporate income tax including solidarity surcharge to be paid by OSRAM Licht AG. The applicable corporate income tax rate including solidarity surcharge at the time of the conclusion of the contract is 15.825 %; resulting in a corporate income tax deduction of EUR 0.33 per share. Assuming the corporate income tax rate remains unchanged at 15.0 % and the solidarity surcharge at 5.5 %, the calculated recurring compensation payment is EUR 2.23 per share (net recurring compensation payment per share).
[Translator's notes are in square brackets]
General Engagement Terms
for
Wirtschaftsprüfer and Wirtschaftsprüfungsgesellschaften
[German Public Auditors and Public Audit Firms]
as of January 1, 2017
All rights reserved. This form may not be reprinted, either in whole or in part, or copied in any manner, without the express written consent of the publisher. © IDW Verlag GmbH · Tersteegenstraße 14 · 40474 Düsseldorf 50262 . PN 55502/0/0
- Scope of application
- These engagement terms apply to contracts between German Public Auditors (Wirtschaftsprüfer) or German Public Audit Firms (Wirtschaftsprüfungsgesellschaften) - hereinafter collectively referred to as "German Public Auditors" - and their engaging parties for assurance services, tax advisory services, advice on business matters and other engagements except as otherwise agreed in writing or prescribed by a mandatory rule.
- Third parties may derive claims from contracts between German Public Auditors and engaging parties only when this is expressly agreed or results from mandatory rules prescribed by law. In relation to such claims, these engagement terms also apply to these third parties.
- Scope and execution of the engagement
- Object of the engagement is the agreed service - not a particular economic result. The engagement will be performed in accordance with the German Principles of Proper Professional Conduct (Grundsätze ord- nungsmäßiger Berufsausübung). The German Public Auditor does not assume any management functions in connection with his services. The German Public Auditor is not responsible for the use or implementation of the results of his services. The German Public Auditor is entitled to make use of competent persons to conduct the engagement.
- Except for assurance engagements (betriebswirtschaftliche Prüfungen), the consideration of foreign law requires an express written agreement.
- If circumstances or the legal situation change subsequent to the release of the final professional statement, the German Public Auditor is not obli- gated to refer the engaging party to changes or any consequences result- ing therefrom.
- The obligations of the engaging party to cooperate
- The engaging party shall ensure that all documents and further infor- mation necessary for the performance of the engagement are provided to the German Public Auditor on a timely basis, and that he is informed of all events and circumstances that may be of significance to the performance of the engagement. This also applies to those documents and further information, events and circumstances that first become known during the German Public Auditor's work. The engaging party will also designate suitable persons to provide information.
- Upon the request of the German Public Auditor, the engaging party shall confirm the completeness of the documents and further information provided as well as the explanations and statements, in a written statement drafted by the German Public Auditor.
- Ensuring independence
- The engaging party shall refrain from anything that endangers the independence of the German Public Auditor's staff. This applies throughout the term of the engagement, and in particular to offers of employment or to assume an executive or non-executive role, and to offers to accept en- gagements on their own behalf.
- Were the performance of the engagement to impair the independence of the German Public Auditor, of related firms, firms within his network, or such firms associated with him, to which the independence requirements apply in the same way as to the German Public Auditor in other engage- ment relationships, the German Public Auditor is entitled to terminate the engagement for good cause.
- Reporting and oral information
To the extent that the German Public Auditor is required to present results in writing as part of the work in executing the engagement, only that written work is authoritative. Drafts are non-binding. Except as otherwise agreed, oral statements and explanations by the German Public Auditor are binding only when they are confirmed in writing. Statements and information of the German Public Auditor outside of the engagement are always non-binding.
6. Distribution of a German Public Auditor's professional statement
- The distribution to a third party of professional statements of the Ger- man Public Auditor (results of work or extracts of the results of work wheth- er in draft or in a final version) or information about the German Public Auditor acting for the engaging party requires the German Public Auditor's written consent, unless the engaging party is obligated to distribute or inform due to law or a regulatory requirement.
- The use by the engaging party for promotional purposes of the German Public Auditor's professional statements and of information about the German Public Auditor acting for the engaging party is prohibited.
7. Deficiency rectification
- In case there are any deficiencies, the engaging party is entitled to specific subsequent performance by the German Public Auditor. The engaging party may reduce the fees or cancel the contract for failure of such subsequent performance, for subsequent non-performance or unjusti- fied refusal to perform subsequently, or for unconscionability or impossibil- ity of subsequent performance. If the engagement was not commissioned by a consumer, the engaging party may only cancel the contract due to a deficiency if the service rendered is not relevant to him due to failure of subsequent performance, to subsequent non-performance, to unconscion- ability or impossibility of subsequent performance. No. 9 applies to the extent that further claims for damages exist.
- The engaging party must assert a claim for the rectification of deficien- cies in writing (Textform) [Translators Note: The German term "Textform" means in written form, but without requiring a signature] without delay. Claims pursuant to paragraph 1 not arising from an intentional act expire after one year subsequent to the commencement of the time limit under the statute of limitations.
- Apparent deficiencies, such as clerical errors, arithmetical errors and deficiencies associated with technicalities contained in a German Public Auditor's professional statement (long-form reports, expert opinions etc.) may be corrected - also versus third parties - by the German Public Auditor at any time. Misstatements which may call into question the results contained in a German Public Auditor's professional statement entitle the German Public Auditor to withdraw such statement - also versus third parties. In such cases the German Public Auditor should first hear the engaging party, if practicable.
8. Confidentiality towards third parties, and data protection
- Pursuant to the law (§ [Article] 323 Abs 1 [paragraph 1] HGB [German Commercial Code: Handelsgesetzbuch], § 43 WPO [German Law regulat- ing the Profession of Wirtschaftsprüfer: Wirtschaftsprüferordnung], § 203 StGB [German Criminal Code: Strafgesetzbuch]) the German Public Auditor is obligated to maintain confidentiality regarding facts and circum- stances confided to him or of which he becomes aware in the course of his professional work, unless the engaging party releases him from this confi- dentiality obligation.
- When processing personal data, the German Public Auditor will observe national and European legal provisions on data protection.
9. Liability
- For legally required services by German Public Auditors, in particular audits, the respective legal limitations of liability, in particular the limitation of liability pursuant to § 323 Abs. 2 HGB, apply.
- Insofar neither a statutory limitation of liability is applicable, nor an individual contractual limitation of liability exists, the liability of the German Public Auditor for claims for damages of any other kind, except for dam- ages resulting from injury to life, body or health as well as for damages that constitute a duty of replacement by a producer pursuant to § 1 ProdHaftG [German Product Liability Act: Produkthaftungsgesetz], for an individual case of damages caused by negligence is limited to € 4 million pursuant to
- 54 a Abs. 1 Nr. 2 WPO.
- The German Public Auditor is entitled to invoke demurs and defenses based on the contractual relationship with the engaging party also towards third parties.
PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft inkl. Tochtergesellschaften | 4319723
- When multiple claimants assert a claim for damages arising from an existing contractual relationship with the German Public Auditor due to the German Public Auditor's negligent breach of duty, the maximum amount stipulated in paragraph 2 applies to the respective claims of all claimants collectively.
- An individual case of damages within the meaning of paragraph 2 also exists in relation to a uniform damage arising from a number of breaches of duty. The individual case of damages encompasses all consequences from a breach of duty regardless of whether the damages occurred in one year or in a number of successive years. In this case, multiple acts or omissions based on the same source of error or on a source of error of an equivalent nature are deemed to be a single breach of duty if the matters in question are legally or economically connected to one another. In this event the claim against the German Public Auditor is limited to € 5 million. The limitation to the fivefold of the minimum amount insured does not apply to compulsory audits required by law.
-
A claim for damages expires if a suit is not filed within six months subsequent to the written refusal of acceptance of the indemnity and the engaging party has been informed of this consequence. This does not apply to claims for damages resulting from scienter, a culpable injury to life, body or health as well as for damages that constitute a liability for replace- ment by a producer pursuant to § 1 ProdHaftG. The right to invoke a plea of the statute of limitations remains unaffected.
10. Supplementary provisions for audit engagements
- If the engaging party subsequently amends the financial statements or management report audited by a German Public Auditor and accompanied by an auditor's report, he may no longer use this auditor's report.
If the German Public Auditor has not issued an auditor's report, a reference to the audit conducted by the German Public Auditor in the management report or any other public reference is permitted only with the German Public Auditor's written consent and with a wording authorized by him.
- lf the German Public Auditor revokes the auditor's report, it may no longer be used. lf the engaging party has already made use of the auditor's report, then upon the request of the German Public Auditor he must give notification of the revocation.
- The engaging party has a right to five official copies of the report. Additional official copies will be charged separately.
11. Supplementary provisions for assistance in tax matters
- When advising on an individual tax issue as well as when providing ongoing tax advice, the German Public Auditor is entitled to use as a correct and complete basis the facts provided by the engaging party - especially numerical disclosures; this also applies to bookkeeping en- gagements. Nevertheless, he is obligated to indicate to the engaging party any errors he has identified.
- The tax advisory engagement does not encompass procedures required to observe deadlines, unless the German Public Auditor has explicitly accepted a corresponding engagement. In this case the engaging party must provide the German Public Auditor with all documents required to observe deadlines - in particular tax assessments - on such a timely basis that the German Public Auditor has an appropriate lead time.
- Except as agreed otherwise in writing, ongoing tax advice encompasses the following work during the contract period:
- preparation of annual tax returns for income tax, corporate tax and business tax, as well as wealth tax returns, namely on the basis of the annual financial statements, and on other schedules and evidence documents required for the taxation, to be provided by the engaging party
-
examination of tax assessments in relation to the taxes referred to in
(a) - negotiations with tax authorities in connection with the returns and assessments mentioned in (a) and (b)
- support in tax audits and evaluation of the results of tax audits with respect to the taxes referred to in (a)
- participation in petition or protest and appeal procedures with respect to the taxes mentioned in (a).
In the aforementioned tasks the German Public Auditor takes into account material published legal decisions and administrative interpretations.
- If the German Public auditor receives a fixed fee for ongoing tax advice, the work mentioned under paragraph 3 (d) and (e) is to be remunerated separately, except as agreed otherwise in writing.
- Insofar the German Public Auditor is also a German Tax Advisor and the German Tax Advice Remuneration Regulation (Steuerberatungsvergü- tungsverordnung) is to be applied to calculate the remuneration, a greater or lesser remuneration than the legal default remuneration can be agreed in writing (Textform).
- Work relating to special individual issues for income tax, corporate tax, business tax, valuation assessments for property units, wealth tax, as well as all issues in relation to sales tax, payroll tax, other taxes and dues requires a separate engagement. This also applies to:
- work on non-recurring tax matters, e.g. in the field of estate tax, capital transactions tax, and real estate sales tax;
- support and representation in proceedings before tax and administra- tive courts and in criminal tax matters;
- advisory work and work related to expert opinions in connection with changes in legal form and other re-organizations, capital increases and reductions, insolvency related business reorganizations, admis- sion and retirement of owners, sale of a business, liquidations and the like, and
- support in complying with disclosure and documentation obligations.
-
To the extent that the preparation of the annual sales tax return is undertaken as additional work, this includes neither the review of any special accounting prerequisites nor the issue as to whether all potential sales tax allowances have been identified. No guarantee is given for the complete compilation of documents to claim the input tax credit.
12. Electronic communication
Communication between the German Public Auditor and the engaging party may be via e-mail. In the event that the engaging party does not wish to communicate via e-mail or sets special security requirements, such as the encryption of e-mails, the engaging party will inform the German Public Auditor in writing (Textform) accordingly.
13. Remuneration
- In addition to his claims for fees, the German Public Auditor is entitled to claim reimbursement of his expenses; sales tax will be billed additionally. He may claim appropriate advances on remuneration and reimbursement of expenses and may make the delivery of his services dependent upon the complete satisfaction of his claims. Multiple engaging parties are jointly and severally liable.
-
If the engaging party is not a consumer, then a set-off against the German Public Auditor's claims for remuneration and reimbursement of expenses is admissible only for undisputed claims or claims determined to be legally binding.
14. Dispute Settlement
The German Public Auditor is not prepared to participate in dispute settlement procedures before a consumer arbitration board (Verbraucherschlich- tungsstelle) within the meaning of § 2 of the German Act on Consumer Dispute Settlements (Verbraucherstreitbeilegungsgesetz).
15. Applicable law
The contract, the performance of the services and all claims resulting therefrom are exclusively governed by German law.
PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft inkl. Tochtergesellschaften | 4319723
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OSRAM Licht AG published this content on 02 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 November 2020 18:54:03 UTC
