Exhibit 10.1

 

 

 

 

PURCHASE AGREEMENT

 

BY AND BETWEEN

 

CASINOS AUSTRIA AKTIENGESELLSCHAFT

 

AND

 

CAI CASINOINVEST MIDDLE EAST GMBH

 

ON THE ONE HAND

 

AND

 

SHUFFLE MASTER MANAGEMENT-SERVICE GMBH

 

AND

 

SHUFFLE MASTER GMBH

 

ON THE OTHER HAND

 

 

DATED AS OF May 13, 2004

 

 

 

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INDEX OF EXHIBITS

 

I.

 

Agreements to be signed or handed over at Closing

 

 

 

 

 

Exhibit A

 

Patents Transfer Agreement

 

Exhibit B

 

Application to Commercial Register

 

 

 

 

 

II.

 

 

 

Other Exhibits

 

 

 

 

 

 

 

Exhibit I

 

Closing Financial Statements

 

Exhibit II

 

Latest Financial Statements

 

 

INDEX OF SCHEDULES

 

Schedule 6.3

 

Capitalization

 

Schedule 6.5

 

Subsidiaries; Investments

 

Schedule 6.6

 

Absence of Conflicts

 

Schedule 6.8

 

Absence of Undisclosed Liabilities

 

Schedule 6.9

 

Absence of Certain Developments

 

Schedule 6.10(b)

 

Title to Properties, Sufficiency of Assets (Real Property; Leases)

 

Schedule 6.10(c)

 

Title to Properties, Sufficiency of Assets (Personal Property)

 

Schedule 6.11

 

Accounts Receivable

 

Schedule 6.12

 

Taxes

 

Schedule 6.13

 

Contracts and Commitments

 

Schedule  6.14(a)

 

Material Proprietary Rights

 

Schedule 6.14(b)

 

Material Licensed Proprietary Rights

 

Schedule 6.14(c)

 

Material Limitations regarding Proprietary Rights

 

Schedule 6.18

 

Litigation, Proceedings

 

Schedule 6.20

 

Governmental Licenses and Permits

 

Schedule 6.21

 

Employees

 

Schedule 6.22

 

Employee Benefit Plans

 

Schedule 6.23

 

Environmental, Health and Safety Matters

 

Schedule 6.24

 

Insurance

 

Schedule 6.25

 

Officers and Directors; Bank Accounts

 

Schedule 6.26

 

Affiliate Transactions

 

Schedule 6.28

 

Powers of Attorney; Guarantees

 

Schedule 6.29

 

Product Warranties

 

Schedule 7.6

 

Sellers’ Assets

 

Schedule 10.11

 

Settlement of Mutual Claims

 

 

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PURCHASE AGREEMENT

 

THIS PURCHASE AGREEMENT (this “Agreement”) is made as of May 13, 2004, by and
between Casinos Austria Aktiengesellschaft, a stock corporation organized, duly
established and validly existing under the laws of Austria, with the corporate
seat in Vienna and business address at Dr. Karl Lueger Ring 14, A-1010 Vienna,
Austria, registered with the Commercial Register under FN99639d (“CASAG”), and
CAI Casinoinvest Middle East GmbH, a limited liability company organized, duly
established and validly existing under the laws of Austria with corporate seat
in Vienna and business address at Dr. Karl Lueger Ring 14, A-1010 Vienna,
Austria, registered with the Commercial Register under FN196567w (“CAI”) on the
one hand and Shuffle Master Management-Service GmbH, a limited liability company
organized, duly established and validly existing under the laws of Austria with
corporate seat in Vienna and business address at Dr. Karl Lueger Ring 14, A-1010
Vienna, Austria, registered with the Commercial Register under FN247570z
(“SHFMMS”) and Shuffle Master GmbH, a limited liability company organized, duly
established and validly existing under the laws of Austria with corporate seat
in Vienna and business address at Dr. Karl Lueger Ring 14, A-1010 Vienna,
Austria, registered with the Commercial Register under FN247566v (“SHFM”) on the
other hand. (CASAG and CAI are collectively referred to herein as the “Sellers”
and individually as “Seller”. SHFMMS and SHFM are collectively referred to
herein as the “Buyers” and individually as “Buyer”).  The Sellers and the Buyers
are collectively referred to herein as the “Parties” and individually as a
“Party.”

 

CASAG is the only limited partner (“Kommanditist”) and holds the limited
partnership interest (“Kommanditanteil”) of one million Euros (€1,000,000) (the
“Limited KG Share”) representing the entire share capital
(“Gesellschaftskapital”) in CARD Casinos Austria Research & Development GmbH &
Co KG, a limited partnership duly established and validly existing under the
laws of Austria with corporate seat in Vienna and business address at Dr. Karl
Lueger Ring 14 A-1015 Vienna, Austria, registered with the Commercial Register
under FN 247789x (the “Company”; for purposes of definition, and unless
expressly stated otherwise herein, the term “Company” also includes its
predecessor CARD, as defined below).  CAI is the only general partner
(“Komplementär”) of the Company and holds the general partnership interest
(“Komplementäranteil”) (the “Unlimited KG Share”) The Company has been
established by way of a transformation (“errichtende Umwandlung”) of CARD
Casinos Austria Research & Development GmbH, a limited liability company
organized, duly established and validly existing under the laws of Austria with
corporate seat in Vienna and business address at Dr. Karl Lueger Ring 14 A-1015
Vienna, Austria, registered with the Commercial Register under FN 75379b
(“CARD”).

 

SHFMMS desires to acquire from CASAG, and CASAG desires to sell to SHFMMS, the
Limited KG Share. SHFM desires to acquire from CAI, and CAI desires to sell to
SHFM, the Unlimited KG Share.  (The Limited KG Share and the Unlimited KG Share
are collectively referred to hereinafter as the “Shares”).  In consideration for
the Shares, Buyers shall pay the Sellers cash as well as common stock of Buyers’
indirect parent Shuffle Master, Inc., a

 

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Minnesota corporation, with its corporate business address at 1106 Palms Airport
Drive, Las Vegas, Nevada 89119, USA (“SMI”).

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Parties agree as follows:

 

ARTICLE I

DEFINITIONS

 

1.1 Definitions  For purposes of this Agreement, the following terms shall have
the meanings set forth below:

 

“Affiliate” of any particular Person means any other Person controlling,
controlled by or under common control with such particular Person, where
“control” means the possession, directly or indirectly, of the power to direct
the management and policies of a Person whether through the ownership of voting
securities or otherwise.  In the case of the Buyers, Affiliates, inter alia,
include SMI. Any Subsidiary shall also be deemed an Affiliate.

 

 “Austrian GAAP” means Austrian generally accepted accounting principles in
accordance with Austrian law, in particular Section 189 et sequ of the Austrian
Commercial Code (Handelsgesetzbuch).

 

“Closing Financial Statements” means the  unaudited balance sheet of the
Company, as of 30 April 2004 and the related statements of income and notes, if
any, (“Anhang”) thereto, for the four months then ended, that have been prepared
in accordance with Austrian GAAP. The Closing Financial Statements also mean the
unaudited report for CARD Casinos Austria Research and Development Limited
(“CARD NZ”), the Company’s New Zealand Affiliate, for the month of April 2004.
The Closing Financial Statements are attached to this Agreement as Exhibit I.

 

“Commercial Register” means the commercial register (“Firmenbuch”) of the
Commercial Court Vienna (“Handelsgericht Wien”).

 

“Company” means collectively (i) CARD Casinos Austria Research & Development
GmbH & Co KG and (ii) its predecessor, CARD, unless expressly stated otherwise.

 

“Contract” means any contract, license, sublicense, franchise, mortgage,
hypothecation, purchase order, indenture, loan agreement, lease, sublease,
agreement, contractual obligation, instrument or other arrangement or any
commitment to enter into any of the foregoing (in each case in writing, unless
explicitly stated otherwise) to which the Company or any of its Subsidiaries are
a party or by which any of their assets are bound.

 

 “Environmental, Health, and Safety Requirements” means, with respect to Austria
and any other relevant jurisdictions, all federal, state, local, and foreign
statutes,

 

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regulations, ordinances, and other provisions having the force or effect of law,
all judicial and administrative orders and determinations, (and all common law
in the United Kingdom) concerning public health and safety, worker health and
safety, and pollution or protection of the environment, including, without
limitation, all those relating to the presence, use, production, generation,
handling, transportation, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, release, threatened release, control, or cleanup
of any hazardous materials, substances, or wastes, chemical substances or
mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum
products or byproducts, asbestos, polychlorinated biphenyls, noise, or
radiation, each as amended and as now or hereafter in effect.  In the case of
Austria, Environmental, Health and Safety Requirements shall include the
following statutes and all rules, regulations and interpretations thereunder:
Trade Code (“Gewerbeordnung”), Water Protection Act (“Wasserrechtsgesetz”), Law
on the Control of Waste (“Abfallwirtschaftsgesetz”), provincial laws on the
protection of nature (“Naturschutzgesetze”), the Act on the Clean-Up of
Contaminated Sites (“Altlastensanierungsgesetz”), as well as any and all
administrative ordinances (“Verordnungen”) issued thereunder.

 

“Indebtedness” means (i) any indebtedness for borrowed money or issued in
substitution for or exchange of indebtedness for borrowed money, (ii) any
indebtedness evidenced by any note, bond, debenture or other debt security,
(iii) any indebtedness for the deferred purchase price of property or services
with respect to which a Person is liable, as obligor or otherwise, (iv) any
commitment by which a Person assures a creditor against Loss (including, without
limitation, contingent reimbursement Liabilities with respect to letters of
credit), (v) any indebtedness guaranteed in any manner by a Person (including,
without limitation, guarantees in the form of an agreement to repurchase or
reimburse), (vi) any Liabilities under capitalized leases with respect to which
a Person is liable, contingently or otherwise, as obligor, guarantor or
otherwise, or with respect to which Liabilities a Person assures a creditor
against Loss, (vii) any indebtedness secured by a Lien on a Person’s assets
(including, without limitation, any mortgage), (viii) any amounts owed to any
Person under any  consulting arrangements; (ix) any Intercompany Liabilities;
and (x) any prorated amounts due any of the Company’s employees prior to May 1,
2004, 09:00 a.m. Vienna time.

 

“Intercompany Liabilities” means any amounts, if any owed by the Company or any
of its Subsidiaries to the Sellers or to any Subsidiary of the Sellers.

 

“International Trade Laws and Regulations” means, with respect to Austria and
any other relevant jurisdictions, all federal, state, local and foreign
statutes, executive order, decrees, proclamations, regulations, rules,
directives, ordinances and similar provisions having the force or effect of law
and all judicial and administrative orders , rulings, determinations and common
law concerning the importation of merchandise, the export or reexport of
products, services and technology.

 

“Knowledge” as used in the phrases “to the Knowledge of the Sellers” “to the
Sellers’ Knowledge” or phrases of similar import shall mean and be deemed to
exist, for all purposes under this Agreement and under Austrian law and under
the laws of any jurisdiction in the world, if, on or prior to Closing (i) any
TWO of the managing directors of CASAG or ONE of the managing directors of CASAG
AND Mr. Josef Leutgeb had actual knowledge, or (ii) both the following TWO
managing directors of CARD (i.e. jointly): Mr. Ernst Blaha (“Blaha”) PLUS

 

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Mr. Ewald Kirschenmann, (“Kirschenmann”) had actual knowledge, or (iii) if
either Blaha OR Kirschenmann had actual knowledge, PLUS the existence of a
written document (including but not limited to electronic versions thereof)
which existed in electronic or hardcopy form prior to Closing and which
evidences that one of these two managing directors had such actual knowledge
prior to Closing.  Knowledge as used in the phrases “to the Knowledge of the
Buyers,” “to the Buyers’ Knowledge” or phrases of similar import shall mean and
be deemed to exist for all purposes under this Agreement and under Austrian law
and under the laws of any jurisdiction in the world, if, on or prior to Closing,
(i) any two of the following four persons had actual knowledge: Paul Meyer,
Jerry Smith, Jerry Koslow, or Dana Kelley; or (ii) the documents, information
and materials that are disclosed on the Schedules hereto. Any information
contained in the Schedules and Exhibits attached hereto (for the avoidance of
doubt, this also includes the documents mentioned in any of the Schedules which
documents are contained in the disclosure bundle which was initialed by the
Parties at Closing) are disclosed and shall be deemed Knowledge of Buyers.

 

“Latest Financial Statements” means the unaudited, balance sheet plus profit and
loss statement and notes, of the Company as of December 31, 2003 and the related
statements of income and any notes thereto for the year ended which have been
prepared according to Austrian GAAP. The Latest Financial Statements also
include the Annual Report for CARD NZ for the year ended December 31, 2003. The
Latest Financial Statements are attached as Exhibit II.

 

“Letter of Intent” means that certain letter of intent, dated February 20, 2004,
by and among CARD, CASAG and SMI including the amendment thereof, dated February
23, 2004.

 

“Liability” means any liability, debt, obligation, deficiency, Tax, penalty,
fine, claim, cause of action or other loss, cost or expense of any kind or
nature whatsoever, including without limitation, any Intercompany Liabilities,
which, under Austrian GAAP, should have been disclosed on the Company’s Closing
Financial Statements.

 

“Liens” means any ownership rights of third parties, mortgage, hypothecation
(“Hypothek”), pledge (“Pfandrecht”), assignment of rights
(“Sicherungsabtretung”), assignment of ownership (“Sicherungsübereignung”), and
any security interest, encumbrance, right of first refusal, adverse claim, Tax,
lien or charge or restriction of any kind or right of others of any nature
(including, without limitation, any conditional sale or other title retention
agreement or lease in the nature thereof) or any agreement to file any of the
foregoing.

 

“Material” means any matter that, in the aggregate with all other related
matters, has resulted in or might result in costs, expenses, damages, payments
or other Liabilities of, to or involving, or claims by or against the Company
involving €50.000 or more or in a decrease in the earnings, cash flow, net worth
or value of the Company involving €50,000 or more.

 

“MATERIAL ADVERSE EFFECT” MEANS AN EVENT, TRANSACTION, CONDITION OR CHANGE WHICH
HAS A MATERIAL ADVERSE EFFECT ON THE BUSINESS OF THE COMPANY IN THE AMOUNT OF
€50.000 OR MORE (A “MATERIAL ADVERSE EFFECT”).

 

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“Ordinary Course of Business” means in the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency) or usual in the trade.

 

“Person” means a physical or legal person (“juristische Person”) or a person
legally treated as such (e.g., partnership, association).

 

“Proprietary Rights” means all of the following: (i) patents, patent
applications (including continuations, continuations-in-part and divisionals),
inventions (whether or not reduced to practice); (ii) utility models
(“Gebrauchsmuster”), utility models applications (including continuations,
continuations-in-part and divisionals); (iii) registered trademarks, service
marks, industrial designs, trade dress, trade names, corporate names, logos and
slogans (and all translations, derivations and combinations of each of the
foregoing) and Internet domain names (together with all good-will associated
with all foregoing); (iv) copyrights and copyrightable works; (v) registrations
and applications for any of the foregoing; (vi) trade secrets and confidential
information (including, without limitations, ideas, inventions (whether or not
reduced to practice), formulae, compositions, know-how, manufacturing and
production processes and techniques, research and development information,
drawings, designs, plans, proposals, technical data, financial, business and
marketing plans, costumer supplier lists and related information); (vii)
computer software and software systems (including, without limitation, source
code, executable code, data, databases and documentation).

 

 “SMI” means Shuffle Master, Inc., a Minnesota corporation located at 1106 Palms
Airport Drive, Las Vegas, Nevada 89119, USA.

 

“Subsidiary” means, with respect to any Person, any corporation, partnership,
limited liability company, association or other business entity of which (i) if
a corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or (ii) if a partnership, limited
liability company, association or other business entity, a majority of the
partnership or other similar ownership interest thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more Subsidiaries of
that Person or a combination thereof.  For purposes hereof, a Person or Persons
shall be deemed to have a majority ownership interest in a partnership, limited
liability company, association or other business entity if such Person or
Persons shall be allocated a majority of partnership, limited liability company,
association or other business entity gains or losses or shall be or control the
managing director or general partner of such partnership, limited liability
company, association or other business entity.

 

“Tax” or “Taxes” means, with respect to Austria and other relevant jurisdiction,
any federal, state, provincial, local tax and any income, gross receipts,
capital gains, franchise, alternative or add-on minimum, estimated, sales, use,
goods and services, transfer, registration, value added, excise, natural
resources, severance, stamp, occupation, premium, environmental, customs,
duties, personal property, capital stock, social security, unemployment,
employment, disability, payroll, license, employee tax, social security
contributions or other withholding, contributions, Austrian real estate transfer
tax (“Grunderwerbsteuer”), capital duty

 

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(“Gesellschaftsteuer”), stamp duty (“Gebühren”) or other tax, of any kind
whatsoever, including any fines, interest, penalties or additions to tax.

 

“Tax Returns” means returns, declarations, reports, claims for refund,
information returns or other documents filed or required to be filed in
connection with the determination, assessment or collection of Taxes of the
Company and its Subsidiaries.

 

“Transaction Documents” means this Agreement, the Lease Agreements and the
Patent Transfer Agreement.

 

“US GAAP” means United States generally accepted accounting principles as in
effect from time to time.

 

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ARTICLE II

PURCHASE AND SALE OF SHARES

 

2.1 Purchase of Shares, of rights to the name CARD and certain Company
Proprietary Rights  2.1.1 On and subject to the terms and conditions set forth
in this Agreement, including without limitation the representations and
warranties contained in Article VI, Article VII and Article VIII, simultaneously
and with economic effect as of May 1, 2004, 9:00 a.m. Vienna time (a) SHFM
herewith purchases, acquires and accepts the transfer of the Unlimited KG Share
from CAI, and CAI herewith sells, assigns and transfers to SHFM, all of the
right, title and interest in the Unlimited KG Share, including all rights
pertaining thereto, free and clear of any Liens or other rights of third
parties; and (b) SHFMMS herewith purchases, acquires and accepts the transfer of
the Limited KG Share from CASAG, and CASAG sells, assigns and transfers to SFMMS
all of the right, title and interest in the Limited KG Share, including all
rights pertaining thereto, including without limitation the balance standing to
the credit of the capital account (“Kapitalkonto”) as of May 1, 2004, 9:00 a.m.
Vienna time as well as any rights CASAG may have in relation to the name CARD
and any Company Proprietary Rights owned or controlled by CASAG, all free and
clear of any Liens or other rights of third parties; and (c) in consideration of
the sale of the Shares as set forth herein the Buyers shall deliver to the
Sellers the consideration specified in Section 2.3 (the “Limited KG Payment”)
and Section 2.4 (the “Unlimited KG Payment”) (collectively, the “Purchase
Price”).

 

2.1.2      CASAG HEREWITH ALSO GRANTS ITS WRITTEN CONSENT TO THE SALE AND
TRANSFER OF THE UNLIMITED KG SHARE, AS CONTEMPLATED HEREIN, UNDER ARTICLE VII(1)
OF THE ARTICLES OF INCORPORATION (“KG-VERTRAG”) OF THE COMPANY .

 

2.1.3      TITLE TO THE SHARES SHALL TRANSFER FROM THE RESPECTIVE SELLER TO THE
RESPECTIVE BUYER AS SPECIFIED HEREIN AGAINST (I) RECEIPT BY THE SELLERS OF THE
FULL AND UNREDUCED AMOUNTS OF THE LIMITED KG PAYMENT AND THE UNLIMITED KG
PAYMENT, AS DEFINED ABOVE AND AS SET FORTH IN SECTIONS 2.3 AND 2.4, AND (II)
REGISTRATION OF THE BUYERS AS HOLDERS OF THE SHARES IN THE COMMERCIAL REGISTER,
WHICHEVER IS LATER.

 

2.2 Closing Transactions.

 

(A)  CLOSING.  THE CLOSING OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
(THE “CLOSING”) TAKES PLACE BOTH AT THE OFFICES OF DEUTSCHE BANK, 280 PARK AVE,
NEW YORK, USA, AND AT THE OFFICES OF FIEBINGER, POLAK, LEON & PARTNERS, AM
GETREIDEMARKT 1, A-1060 VIENNA, AUSTRIA, COMMENCING AT 08:00 A.M., VIENNA TIME
ON MAY 13, 2004 AND CONTINUING IN NEW YORK CITY AT 9:00 A.M., NEW YORK TIME. THE
DATE AND TIME OF THE CLOSING ARE HEREIN REFERRED TO AS THE “CLOSING DATE.”

 

(B)  CLOSING TRANSACTIONS.  THE PARTIES SHALL CONSUMMATE THE FOLLOWING “CLOSING
TRANSACTIONS” ON THE CLOSING DATE IN THE FOLLOWING CHRONOLOGICAL ORDER:

 

(I)            SIGNING OF THIS AGREEMENT (IN VIENNA).

 

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(II)           SIGNING OF AN APPLICATION AND FILING WITH THE COMMERCIAL
REGISTER, THE APPLICATION SUBSTANTIALLY IN THE FORM OF EXHIBIT B (BOTH IN
VIENNA).

 

(III)          PAYMENT AND RECEIPT OF THE FULL AND UNREDUCED AMOUNTS OF (X) THE
LIMITED KG PAYMENT AS SET FORTH IN SECTION 2.3 WHICH SHALL CONSIST OF THE CASH
PAYMENT, AND THE SHARES PAYMENT, AND (Y) THE UNLIMITED KG PAYMENT AS SET FORTH
IN SECTION 2.4.

 

THE LIMITED KG PAYMENT, IS SET FORTH IN SECTION 2.3 AND SHALL BE DELIVERED BY
SHFMMS TO CASAG AS FOLLOWS:

 

(A) SHFMMS SHALL DELIVER THE CASH PAYMENT BY INTRA-BANK FUNDS TRANSFER OF
IMMEDIATELY AVAILABLE FUNDS FROM AN AUSTRIAN BANK ACCOUNT OF SHFMMS WITH ERSTE
BANK DER OESTERREICHISCHEN SPARKASSEN AG, VIENNA, TO AN ACCOUNT DESIGNATED BY
CASAG WITH ERSTE BANK DER OESTERREICHISCHEN SPARKASSEN AG, VIENNA ; AND

 

(B) SHFMMS SHALL CAUSE THE DELIVERY, IN NEW YORK OF THE SHARES PAYMENT BY
DELIVERY OF A STOCK CERTIFICATE REGISTERED IN THE NAME OF CASAG.

 

THE UNLIMITED KG PAYMENT IS SET FORTH IN SECTION 2.4 AND SHALL BE DELIVERED BY
SHFM BY INTRA-BANK FUNDS TRANSFER OF IMMEDIATELY AVAILABLE FUNDS TO AN ACCOUNT
OR ACCOUNTS DESIGNATED BY CAI;

 

(IV)          THE LEASE AGREEMENTS AND THE PATENT TRANSFER AGREEMENT, SHALL BE
SIGNED BY ALL RESPECTIVE PARTIES TO SUCH AGREEMENTS.

 

(V)           THE SELLERS SHALL DELIVER TO THE BUYERS EVIDENCE THAT MR. ERNST
BLAHA HAS RESIGNED AS MANAGING DIRECTOR OF CAI AND OF CAST CASINOS AUSTRIA
SICHERHEITSTECHNOLOGIE GMBH, VIENNA, AUSTRIA, AND AS HOLDER OF A SPECIAL POWER
OF ATTORNEY (“PROKURIST”) OF CASAG, EFFECTIVE ON OR BEFORE THE CLOSING DATE.

 

(VI)          REGISTRATION OF THE BUYERS AS SHAREHOLDERS OF THE COMPANY IN THE
COMMERCIAL REGISTER.

 

ALL CLOSING TRANSACTIONS DESCRIBED HEREIN ARE PART OF THE CLOSING OF THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND SHALL BE DEEMED
SIMULTANEOUSLY OCCURRED.

 

2.3 THE LIMITED KG PAYMENT.

 

THE LIMITED KG PAYMENT SHALL EQUAL FORTY ONE MILLION SEVEN HUNDRED FORTY-FOUR
THOUSAND EUROS (€41,744,000).  THE LIMITED KG PAYMENT SHALL CONSIST OF THE CASH
PAYMENT AND THE SHARES PAYMENT AND SHALL BE PAID FREE OF ANY BANK CHARGES,
TRANSFER FEES, SIMILAR TRANSFER TAXES AND FREE OF ANY OTHER WITHHOLDINGS, COSTS
OR REDUCTIONS OF ANY KIND. FOR THE AVOIDANCE OF DOUBT IT IS EXPLICITLY AGREED
THAT THE SELLERS WILL BE RESPONSIBLE FOR THEIR OWN INCOME TAXES, BUT UNDER NO
CIRCUMSTANCES WILL THE BUYERS BE ENTITLED TO MAKE ANY DEDUCTIONS OR WITHHOLDINGS
FOR SELLERS’ INCOME TAXES.

 

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(A)  THE CASH PAYMENT SHALL BE TWENTY FIVE MILLION NINE HUNDRED THIRTY ONE
THOUSAND EUROS (€25,931,000) THE CASH PAYMENT SHALL BE PAYABLE BY INTRA-BANK
TRANSFER AT CLOSING.

 

(B)  THE SHARES PAYMENT IS 767,076 (SEVEN HUNDRED SIXTY SEVEN THOUSAND AND
SEVENTY SIX) SHARES OF SMI COMMON  STOCK (HEREINAFTER REFERRED TO AS THE “SMI
STOCK” OR “SMI SHARES”) (WHICH WAS DETERMINED BASED ON THE FOLLOWING AGREED
FORMULA: THE NUMBER OF SHARES OF SMI STOCK OBTAINED WHEN FIFTEEN MILLION EIGHT
HUNDRED THIRTEEN THOUSAND EUROS (EUR 15,813,000), TRANSLATED INTO AN EQUIVALENT
AMOUNT OF U.S. DOLLARS BASED ON THE CONVERSION RATE OF 1 EURO EQUALS $1.2289, IS
DIVIDED BY THE AVERAGE PRICE, WHERE THE “AVERAGE PRICE” EQUALS THE SUM OF (I)
50% OF THE AVERAGE CLOSING PRICE OF SMI’S STOCK DURING THE TEN (10) TRADING DAYS
PRIOR TO THE THIRD BUSINESS DAY PRIOR TO THE CLOSING DATE; AND (II) 50% OF THE
AVERAGE CLOSING PRICE OF SMI’S STOCK DURING THE TEN TRADING DAYS PRIOR TO SMI’S
ISSUANCE OF ITS PRESS RELEASE ANNOUNCING THE SIGNING OF THE LETTER OF INTENT;
PROVIDED, HOWEVER, THAT IN NO EVENT SHALL THE AVERAGE PRICE EXCEED TWENTY-FIVE
DOLLARS AND THIRTY TREE CENTS ($25.3333) PER SHARE FOR PURPOSES OF DETERMINING
THE NUMBER OF SHARES OF COMMON STOCK OF SMI. THE PARTIES ACKNOWLEDGE THAT THE
SHARES PAYMENT AND THE “AVERAGE PRICE” HAVE BEEN ADJUSTED FOR THE 3 FOR 2 STOCK
SPLIT OF SMI’S COMMON STOCK WHICH OCCURRED ON APRIL 16, 2004.)

 

2.4  The Unlimited KG Payment

 

The Unlimited KG Payment shall equal four thousand Euros (EUR 4,000). The
Unlimited KG Payment shall be payable by funds transfer at Closing.

 

2.5          LATE PAYMENT

 

In the event of late payment of the Limited KG Payment or the Unlimited KG
Payment, or any parts thereof by more than two business days from Closing,
without prejudice to any other remedies which Sellers may have under applicable
law, Sellers shall be entitled to default interest at a rate of 6 months’
EURIBOR plus 2% (two per cent) per year for any unpaid amount of Purchase Price
starting as from the day after the Closing until full payment.

 

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ARTICLE III

DELETED

 

 

ARTICLE IV

PRE-CLOSING COVENANTS AND AGREEMENTS

 

Each of the Parties (as applicable) agrees as follows that, except as otherwise
expressly noted, with respect to the period between December 31, 2003 and the
Closing:

 

4.1 General  Since February 20, 2004, the Buyers and the Sellers agree that they
shall not have taken (and Sellers agree that the Company has not taken) any
action which would require disclosure under Articles VI, VII and VIII below, or
which would violate any of their respective representations and warranties
contained therein.

 

4.2 Allocation of Profits  On a contractual basis, the Buyers and the Sellers
agree that all rights and obligations and the economic risk connected with the
Shares shall pass from Sellers to Buyers on   May 1st, 2004, 9:00 a.m. Vienna
time.  SHFMMS shall, however, be entitled to receive any profits or dividends
attributable to the share in CARD or the Limited KG Share, which are
attributable to or which have been resolved to be distributed or withdrawn after
December 31, 2003, 12:00 p.m.

 

The legal title in the Shares shall pass, subject to (i) registration of the
Buyers in the Commercial Register and (ii) receipt by the Sellers of the payment
of the Limited KG Payment and the Unlimited KG Payment, from the Sellers to the
Buyers on the Closing Date. Therefore, the Buyers shall only become shareholders
of the Company when the registration of the Buyers in the Commercial Register
shall have been effected and the Limited KG Payment and the Unlimited KG Payment
shall have been received by the Sellers.

 

The Sellers shall not be entitled nor obligated to participate in any business
of the Company which is pending at December 31, 2003, 12:00 p.m. Vienna time
(“schwebende Geschäfte”).

 

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ARTICLE V

TRANSFER OF RESTRICTED SECURITIES

 

5.1 General Provisions  Subject to Section 5.2, the SMI Stock issued under this
Agreement may not be offered for sale, sold, reoffered, resold, transferred,
assigned, pledged or otherwise disposed of, except (A) pursuant to (i) an
effective registration statement under the U.S. Securities Act of 1933, as
amended (including the rules and regulations promulgated thereunder, the
“Securities Act”), (ii) an offshore transaction complying with Regulation S
under the Securities Act (or any similar rule or rules then in force) if such
regulation is available and if the prospective acquiror thereof makes available
to CASAG in advance of such transfer information demonstrating compliance with
Regulation S or (iii) Rule 144 or Rule 144A under the Securities Act (or any
similar rule or rules then in force) if such rule is available and, as
applicable, if the prospective acquiror thereof makes available to CASAG in
advance of such transfer information demonstrating compliance with Rule 144 or
Rule 144A, respectively, and (B) in accordance with all applicable securities
laws of the states of the United States and other jurisdictions.

 

5.2 Holding Period  Notwithstanding Section 5.1, and notwithstanding any
registration of the SMI Stock, CASAG agrees that it will not offer for sale,
sell, transfer, assign, pledge or otherwise dispose of more than 50% of the SMI
Stock prior to November 13, 2004; and the remaining 50% of the SMI Stock prior
to May 13, 2005.  Thereafter, CASAG may offer, sell, pledge, transfer or
otherwise dispose of the common stock of SMI Stock; provided that any such offer
for sale, sale, transfer, assignment, pledge or disposition will be subject to
and must be made in compliance with the Securities Act (including without
limitation, if applicable, Rule 144, Rule 144A and Regulation S) and any other
applicable securities laws of the states of the United States and other
jurisdictions of which such compliance shall be CASAG’s sole responsibility and
shall be at CASAG’s sole expense.

 

5.3 Right of First Refusal.

 

(A) PROVIDED THAT THE REGISTRATION AGREEMENT REGARDING THE SMI STOCK SHALL HAVE
BECOME EFFECTIVE BY NOVEMBER 30, 2004, CASAG SHALL NOT SELL, TRANSFER, ASSIGN,
PLEDGE OR OTHERWISE DISPOSE OF (WHETHER WITH OR WITHOUT CONSIDERATION) (WITH THE
EXCEPTION OF TRANSFERS BETWEEN CASAG AND ITS AFFILIATES, PROVIDED THAT THE
TRANSFEREE AGREES, ALSO VIS-À-VIS SMI, TO BE BOUND BY THIS RIGHT OF FIRST
REFUSAL, I.E. CONTRACT FOR THE BENEFIT OF SMI; “ECHTER VERTRAG ZUGUNSTEN
DRITTER”) BY WAY OF A PRIVATE PLACEMENT OR OFFSHORE TRANSACTION OR  A SALE
EXECUTED THROUGH NASDAQ NMS) ANY INTEREST IN ANY SMI STOCK (A “TRANSFER”)
WITHOUT FIRST DELIVERING TO SMI WRITTEN NOTICE (THE “SALE NOTICE”).  THE SALE
NOTICE SHALL DISCLOSE IN REASONABLE DETAIL THE NUMBER OF SHARES TO BE
TRANSFERRED, THE IDENTITY OF THE PURCHASER (UNLESS FOR SALES THROUGH NASDAQ NMS
OR ANOTHER STOCK EXCHANGE), THE PRICE OR PRICE FORMULA (INCLUDING ALL RELEVANT
CRITERIA FOR CALCULATING THE PRICE) AND ANY OTHER TERMS AND CONDITIONS OF THE
PROPOSED TRANSFER. ANY SUCH PROPOSED TRANSFER SHALL BE BONA FIDE AND TO A BONA
FIDE PURCHASER. THE SALE NOTICE SHALL CONSTITUTE A BINDING OFFER TO SELL ALL,
BUT NOT LESS THAN ALL, OF THE SUBJECT SHARES TO SMI ON THE SAME TERMS AND
CONDITIONS SPECIFIED IN THE SALE NOTICE. UNLESS CASAG SHALL HAVE RECEIVED (I)
SMI’S

 

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Election Notice (i.e., the written acceptance of CASAG’s offer) within five New
York business days after the Sale Notice was delivered to SMI, (or two New York
business days after the Sales Notice, if for a sale through NASDAQ, as the case
may be) and (ii) the full and unreduced purchase price for the SMI stock
specified in the Sale Notice from SMI within five New York business days, CASAG
shall be free to sell the SMI stock specified in the Sale Notice.

 

(B) SMI MAY ELECT TO PURCHASE ALL (BUT NOT LESS THAN ALL) OF THE SHARES OF SMI
STOCK TO BE TRANSFERRED PURSUANT TO THE SALE NOTICE AND AT THE EXACT CONDITIONS
DESCRIBED IN THE SALE NOTICE BY DELIVERING A WRITTEN NOTICE OF SUCH ELECTION
(THE “ELECTION NOTICE”) TO SMI WITHIN FIVE (OR TWO, IF FOR A SALE THROUGH
NASDAQ) NEW YORK BUSINESS DAYS AFTER THE SALE NOTICE HAS BEEN DELIVERED TO SMI,
PROVIDED THAT THE ELECTION NOTICE SHALL BE VALID AND EFFECTIVE ONLY IF IT
CONTAINS AN EXPRESS, UNCONDITIONAL AND IRREVOCABLE UNDERTAKING OF SMI TO PAY THE
FULL AND UNREDUCED PURCHASE PRICE STATED IN THE SALE NOTICE, FREE OF ANY
WITHHOLDINGS, SET-OFFS OR REDUCTIONS, WITHIN FIVE NEW YORK BUSINESS DAYS FROM
DELIVERY OF THE ELECTION NOTICE TO CASAG. WITHIN FIVE NEW YORK BUSINESS DAYS
AFTER RECEIPT OF THE ELECTION NOTICE, SMI SHALL PAY THE FULL AND UNREDUCED
PURCHASE PRICE STATED IN THE SALE NOTICE, FREE OF ANY WITHHOLDINGS, SET-OFFS OR
REDUCTIONS, CONCURRENTLY WITH AND AGAINST DELIVERY OF THE SHARE CERTIFICATES OF
THE SMI STOCK SPECIFIED IN THE SALE NOTICE.

 

(C) IF WITHIN SUCH FIVE (OR TWO, IF FOR A SALE THROUGH NASDAQ) NEW YORK BUSINESS
DAYS, SMI DOES NOT ELECT TO PURCHASE ALL OF THE SHARES OF SMI STOCK SPECIFIED IN
THE SALE NOTICE, OR FAILS TO PAY THE FULL AND UNREDUCED PURCHASE PRICE FOR SUCH
SHARES, TO BE CALCULATED AS DEFINED IN THE SALE NOTICE, TO CASAG, CASAG MAY
TRANSFER THE SHARES OF SMI STOCK, SUBJECT TO THE PROVISIONS OF SECTION 5.2
HEREOF (E.G., THE REMAINING HOLDING PERIOD, IF ANY, NEEDS TO BE OBSERVED)
WITHOUT ANY RESTRICTIONS AND FOR ANY CONSIDERATION DETERMINED BY CASAG WHENEVER
CASAG SO DESIRES.  IF SMI HAS ELECTED TO PURCHASE SHARES OF SMI STOCK SPECIFIED
IN THE SALE NOTICE, THE SALE OF SUCH SHARES, AGAINST FULL AND UNREDUCED PAYMENT
OF THE RESPECTIVE PURCHASE PRICE, SHALL BE CONSUMMATED AS SOON AS PRACTICAL
AFTER THE DELIVERY OF THE ELECTION NOTICE TO CASAG, BUT IN ANY EVENT WITHIN FIVE
NEW YORK BUSINESS DAYS AFTER SMI DELIVERS TO CASAG THE ELECTION NOTICE.

 

IF SMI SHALL HAVE DELIVERED AN ELECTION NOTICE, BUT SHALL SUBSEQUENTLY FAIL TO
PAY THE FULL AND UNREDUCED PURCHASE PRICE FOR THE SMI STOCK IN TIME, CASAG SHALL
ALTERNATIVELY BE ENTITLED, AT ITS DISCRETION, TO DEMAND PAYMENT OF THE
APPLICABLE PURCHASE PRICE UNDER THE ELECTION NOTICE AGAINST TRANSFER OF THE SMI
STOCK; IN SUCH CASE, SMI SHALL BE OBLIGED TO PAY TO CASAG THE APPLICABLE
PURCHASE PRICE UNDER THE ELECTION NOTICE PLUS DEFAULT INTEREST AT A RATE OF
6-MONTHS EURIBOR PLUS TWO PER CENT PER YEAR. IF SMI SHOULD FAIL TO PAY THE FULL
AND UNREDUCED PURCHASE PRICE FOR THE SMI STOCK PLUS DEFAULT INTEREST, CASAG,
NOTWITHSTANDING ANY OTHER RIGHT OR REMEDY AVAILABLE UNDER APPLICABLE LAW AND
THIS AGREEMENT, SHALL ALSO BE ENTITLED TO RESCIND THE SALE TO SMI BY GIVING AT
LEAST FIVE NEW YORK BUSINESS DAYS’ PRIOR WRITTEN NOTICE; AND IN THE EVENT OF
SUCH RESCISSION, SMI SHALL HOLD CASAG HARMLESS FOR ANY LOSS WHICH CASAG MAY
INCUR DUE TO SMI’S FAILURE TO PAY THE PURCHASE PRICE FOR THE SMI SHARES.

 

(D) ALL RIGHTS UNDER THIS SECTION 5.3 SHALL BE FOR THE EXCLUSIVE BENEFIT OF SMI
AS A THIRD PARTY BENEFICIARY (“ECHTER VERTRAG ZUGUNSTEN DRITTER”), AND,
THEREFORE ONLY SMI, BUT NOT THE BUYERS NOR ANY THIRD PARTIES SHALL HAVE ANY
RIGHTS UNDER THIS SECTION 5.3.

 

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5.4 Restrictive Legends  Unless the stock of SMI is registered prior to the
execution of this Agreement, each certificate or instrument representing the
common stock shall be imprinted with a legend in substantially the following
form:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  THE SECURITIES
MAY NOT BE SOLD OR OFFERED FOR SALE, TRANSFERRED, ASSIGNED, PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT, OR IN COMPLIANCE WITH REGULATION S, RULE
144A OR RULE 144 UNDER THE SECURITIES ACT OR PURSUANT TO ANOTHER EXEMPTION FROM
REGISTRATION AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.  THE SECURITIES ARE SUBJECT
TO A HOLDING PERIOD AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED,
ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF FOR A PERIOD OF ONE YEAR FROM MAY 13,
2004, PURSUANT TO A PURCHASE AGREEMENT.”

 

5.5          Legend Removal  When the common stock becomes eligible for sale
(including, without limitation, pursuant to Rule 144 under the Securities Act),
SMI shall, upon the request of the holder of such common stock, remove the
legend set forth in Section 5.4 from the certificates or instruments
representing such common stock.

 

5.6          CASAG’s Put Option of SMI Stock

 

At any time prior to the effective date of the registration of the SMI Stock
(i.e. Sellers are free to sell the SMI Stock, but for the right of first refusal
and the agreed holding period), CASAG shall have the right to request SHFMMS to
cause SMI or to directly request SMI to buy back all, but not less than all, of
the SMI Stock based on a share price of USD 25.3333 (twenty five dollars and
thirty three point thirty three cents) per share, for a total price of EUR
15,813,000 (fifteen million eight hundred thousand and thirteen thousand Euros)
(i.e. based on a fixed and agreed exchanged rate of 1 Euro equals USD 1.2289).
After the registration of the SMI Stock, CASAG’S rights and SHFMMS’s obligations
under this Clause 5.6 shall fully terminate.

 

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ARTICLE VI

REPRESENTATIONS AND WARRANTIES
WITH RESPECT TO THE COMPANY AND ITS SUBSIDIARIES

 

With respect to the Company and its Subsidiaries, each Seller hereby jointly and
severally represents and warrants to the Buyers that:

 

6.1 Organization and Corporate Power  The Company is a limited partnership
(“Kommanditgesellschaft”) being duly organized and validly existing and in good
standing under the laws of Austria and is qualified to do business in  and holds
all necessary material licenses in those jurisdictions where the Company
conducts its business. The Company has full corporate power and authority and
all material public licenses, public permits and public authorizations necessary
to own and operate its properties, to carry on its business as now conducted. 
All of the Company’s and its Subsidiaries’ organizational documents reflect all
amendments made thereto at any time prior to the date of this Agreement and are
correct and complete.  Neither the Company nor any Subsidiary of the Company is
in default under or in violation of any provision of their respective
organizational documents.

 

6.2 Authorization of Transactions  The Company has full corporate power and
authority to consummate the transactions contemplated by the Transaction
Documents.  The shareholders (“Gesellschafter”) of the Company have duly
approved all Transaction Documents to which the Company is a party and have duly
authorized the execution and delivery of all Transaction Documents to which it
is a party and the consummation of the transactions contemplated hereby and
thereby.  No other corporate proceedings are necessary to approve and authorize
the execution and delivery of this Agreement or the other Transaction Documents
and the consummation of the transactions contemplated hereby and thereby.  Upon
execution by the Sellers, this Agreement and each of the other Transaction
Documents shall have been duly executed and delivered by the respective Seller
and shall constitute valid and binding obligations upon the Sellers, enforceable
in accordance with their terms and applicable law.

 

6.3 Capitalization  The authorized, issued and outstanding share capital, and
ownership thereof, of the Company, as well as the ownership of the Shares are as
set forth on Schedule 6.3 respectively.  The Shares are validly existing and
nonassessable, are not subject to, nor issued in violation of, any preemptive
rights or rights of first refusal, and are owned of record and beneficially by
Sellers free and clear of all options, warrants, rights, Contracts, calls, puts,
rights to subscribe, conversion rights and other Liens.  There are no
outstanding or authorized options, warrants, rights, Contracts, calls, puts,
rights to subscribe, conversion rights or other agreements or commitments to
providing for the issuance, disposition or acquisition of any interest in the
Company.  There exists no obligation to contribute further funds, with the
exception of the statutory obligations of an unlimited partner in a limited
partnership to be personally liable, without any limits of liability.  There are
no outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to the Company (other than this Agreement).  There are no voting
trusts, proxies or any other agreements or understandings with respect to the
Shares (other than this Agreement).  The Company is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any interest in the Company.  The Company has not violated any applicable
federal, provincial or state securities

 

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laws of Austria or any other jurisdiction in connection with the offer, sale or
issuance of any shares, including the offer and sale of the Shares.  Since
registration of the Company as a limited partnership in the Commercial Register,
the shareholders have not made any withdrawal (“Entnahme”) from the accounts
(“Kapitalkonten”) or other accounts (“Verrechnungskonten”, “Privatkonten”). . 
For clarification purposes, it is explicitly stated and agreed that the Company
has paid, prior to Closing, the Intercompany Liabilities.

 

6.4 Transformation of CARD  The Limited KG Share has been fully contributed by
the Seller in the course of the transformation (“errichtende Umwandlung”) of
CARD into the Company as a limited partnership. In the course of the
transformation of CARD into the Company as a limited partnership, , the whole
business, all contracts and all rights and entitlements of CARD have been
lawfully and fully transferred to the Company, and thereby, to the Knowledge of
the Sellers, no contracts have been or will be terminated.

 

It is explicitly agreed that the Sellers shall not be responsible for any
negative consequences, costs, expenses, Losses or Taxes which may have occurred
or will occur due to such transformation which may or may not qualify as a
non-recognition transaction for Austrian tax purposes. In the course of the
transformation of CARD into the Company as a limited partnership all form and
other requirements of applicable law have been complied with in all material
respects. In particular the shares in the Subsidiaries, all Company Proprietary
Rights, and all Licenses have been validly and duly transferred from CARD to the
Company in such transformation by universal succession.

 

With the exception of the registration of the transformation in the Commercial
Register, which was effected by the Sellers and the Company, it will be the
Buyers’ obligation to make all applications, notifications and filings and to
obtain all consents in this respect which might be necessary due to applicable
law, such that all assets including all rights, Proprietary Rights, privileges
and Licenses shall lawfully and fully, without restrictions or Liens, be vested
in the Company. The Sellers make no respective representations and warranties
and assume no respective liability with respect to such Buyers’ obligations and
the results thereof as mentioned in this paragraph.

 

6.5 Subsidiaries; Investments  Schedule 6.5 sets forth a complete and accurate
list of all of the direct or indirect Subsidiaries of the Companies and the
jurisdiction of organization of each such Subsidiary.  Each such Subsidiary is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization and is qualified to do business in its respective
jurisdiction of incorporation, except where the failure to so qualify has not
had or would not reasonably be expected to have a Material Adverse Effect.  All
jurisdictions in which each Subsidiary is registered or holds trade or other
licenses are set forth on Schedule 6.5.  All of the outstanding shares of
capital stock of each such Subsidiary are validly issued, fully paid and
nonassessable, and all such shares are owned by the Company as set forth on
Schedule 6.5, free and clear of any Lien and not subject to any option or right
to purchase any such shares.  Except as set forth on Schedule 6.5, none of the
Company or its Subsidiaries own or hold any stock, units or any other security
or interest in any other Person or any rights to acquire any such stock, units
or other security or interest, and none of the Company or its Subsidiaries has
ever owned any further Subsidiary.

 

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6.6 Absence of Conflicts  Except as set forth on Schedule 6.6 ,  the execution,
delivery and performance of this Agreement and the other Transaction Documents
and the consummation of the transactions contemplated hereby and thereby by each
of the Company and/or Sellers do not and shall not (a) conflict with or result
in any breach of any of the Material terms, conditions or provisions of, (b)
constitute a Material default under, (c) result in a Material violation of, (d)
give any third party the right to modify, terminate or accelerate any Material
obligation under, (e) result in the creation of any Lien upon the Shares or the
assets of the Company and its Subsidiaries, or (f) limited to aspects of
corporate existence and organization, require any authorization, consent,
approval, exemption or other action by or notice or declaration to, or filing
with, any court or administrative or other governmental body or agency, under
the organizational documents of the Company or any Subsidiary or any Contract to
which the Company or any Subsidiary are bound or affected, or any law, statute,
rule or regulation to which the Company or any Subsidiary are subject or any
judgment, order or decree to which the Company or any Subsidiary are subject.

 

6.7 Financial Statements  The Sellers have furnished Buyers with copies of (i)
the “Closing Financial Statements” and (ii) the “Latest Financial Statements”.
Each of the foregoing financial statements (including in all cases the notes
thereto, if any) (the “Financial Statements”) (i) have been prepared to be
accurate and complete in all Material respects; (ii) have been prepared to be
consistent with the Company’s books and records (which, in turn, are accurate
and complete in all Material respects); (iii) have been prepared to present
fairly in all Material respects the Company’s financial condition and results of
operations as of the times and for the periods referred to therein; and (iv)
have been prepared in accordance with Austrian GAAP consistently applied (The
Latest Financial Statements were also prepared in accordance with US GAAP for
purposes of information only.  Nothing contained herein or therein shall be
construed as a warranty of any of the foregoing under US GAAP).

 

6.8 Absence of Undisclosed Liabilities  All Liabilities of the Company, to the
extent that such Liabilities must be reflected on the Closing Financial
Statements under Austrian law and Austrian GAAP, are reflected on the Closing
Financial Statements and the Company has no additional Material current
Liabilities other than the current Liabilities which have arisen after the date
of the Closing Financial Statements in the Ordinary Course of Business or
otherwise in accordance with the terms and conditions of this Agreement (none of
which is a Material liability for breach of contract, breach of warranty, tort
or infringement or a claim or lawsuit or an environmental liability)and the
Company has those additional Liabilities disclosed on Schedule  6.8; provided,
however, that no liabilities or Indebtedness of the Company at the Closing Date
shall include any Intercompany Liabilities or any amounts or obligations owed or
due Clarence Rudd. Notwithstanding the foregoing, Buyers shall be solely
responsible for the payment of any Distributor Termination Fees (irrespective of
whether or not such fees become due and owing as a result of termination
decisions made by Buyers). . The Company’s reserves for severance payments
(“Abfertigung”) were calculated and funded in accordance with Austrian laws; any
additional warranty or liability of the Sellers with respect to such severance
payments is excluded.

 

6.9 Absence of Certain Developments  Except as set forth on Schedule 6.9 and
except as expressly contemplated by this Agreement, since December 31, 2003,
neither the Company nor any of their Subsidiaries, other than in the Ordinary
Course of Business:

 

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(A) SUFFERED A MATERIAL ADVERSE EFFECT OR SUFFERED ANY THEFT, DAMAGE,
DESTRUCTION OR CASUALTY LOSS IN EXCESS OF €25,000, TO ITS ASSETS, WITH THE
EXCLUSION OF DAMAGES  COVERED BY INSURANCE, OR SUFFERED ANY SUBSTANTIAL
DESTRUCTION OF THE COMPANY’S BOOKS AND RECORDS;

 

(B) REDEEMED OR REPURCHASED, DIRECTLY OR INDIRECTLY, ANY INTEREST IN THE COMPANY
OR DECLARED, SET ASIDE, PAID OR RESOLVED TO PAY ANY WITHDRAWAL (“ENTNAHME”) OR
ANY DIVIDEND WITH RESPECT TO THE COMPANY, OR ANY DISTRIBUTIONS OR MADE ANY OTHER
DIVIDENDS (WHETHER IN CASH OR IN KIND) WITH RESPECT TO ANY SHARES OF CAPITAL
STOCK OR OTHER EQUITY SECURITY OF THE COMPANY, NO MATTER FOR WHICH PERIOD AND
FOR THE AVOIDANCE OF DOUBT ALSO COVERING THE PERIOD PRIOR TO THE TRANSFORMATION
OF CARD INTO A LIMITED PARTNERSHIP; FOR THE AVOIDANCE OF DOUBT, ANY OF THESE
ACTS SHALL UNDER NO CIRCUMSTANCES BE CONSIDERED TO BE IN THE ORDINARY COURSE OF
BUSINESS;

 

(C) ISSUED, SOLD OR TRANSFERRED ANY NOTES, BONDS OR OTHER DEBT SECURITIES, ANY
EQUITY SECURITIES, ANY SECURITIES CONVERTIBLE, EXCHANGEABLE OR EXERCISABLE INTO
ANY INTEREST IN THE COMPANY OR OTHER EQUITY SECURITIES, OR WARRANTS, OPTIONS OR
OTHER RIGHTS TO ACQUIRE ANY INTEREST IN THE COMPANY;

 

(D) BORROWED ANY AMOUNT OR INCURRED OR BECOME SUBJECT TO ANY INDEBTEDNESS OR
OTHER LIABILITIES, EXCEPT CURRENT LIABILITIES INCURRED IN THE ORDINARY COURSE OF
BUSINESS;

 

(E) DISCHARGED OR SATISFIED ANY LIEN OR PAID ANY LIABILITY (OTHER THAN CURRENT
LIABILITIES PAID IN THE ORDINARY COURSE OF BUSINESS OR OTHER THAN INTERCOMPANY
LIABILITIES) OR PREPAID ANY AMOUNT OF INDEBTEDNESS;

 

(F) SUBJECTED ANY PORTION OF THEIR PROPERTIES OR ASSETS TO ANY LIEN;

 

(G) SOLD, LEASED, LICENSED, ASSIGNED OR TRANSFERRED (INCLUDING, WITHOUT
LIMITATION, TRANSFERS TO SELLERS OR ANY INSIDER) A PORTION OF ITS TANGIBLE
(CORPOREAL) OR INTANGIBLE (INCORPOREAL) ASSETS (INCLUDING, WITHOUT LIMITATION,
ANY COMPANY PROPRIETARY RIGHTS), EXCEPT FOR SALES OF INVENTORY (OR REPLACEMENT
OF FIXED ASSETS WITH A VALUE OF LESS THAN EUR 10,000) IN THE ORDINARY COURSE OF
BUSINESS, OR CANCELED WITHOUT FAIR CONSIDERATION ANY DEBTS OR CLAIMS (OF MORE
THAN EUR 10,000) OWING TO OR HELD BY THEM, OR DISCLOSED ANY CONFIDENTIAL
INFORMATION (OTHER THAN PURSUANT TO AGREEMENTS REQUIRING THE PARTY TO WHOM THE
DISCLOSURE IS MADE TO MAINTAIN THE CONFIDENTIALITY OF AND PRESERVING ALL RIGHTS
OF THE COMPANY AND ITS SUBSIDIARIES IN SUCH CONFIDENTIAL INFORMATION);

 

(H) SUFFERED ANY MATERIAL EXTRAORDINARY LOSSES OR WAIVED ANY RIGHTS OF MATERIAL
VALUE, UNLESS IN THE ORDINARY COURSE OF BUSINESS;

 

(I) ENTERED INTO, AMENDED IN A MATERIAL RESPECT, OR TERMINATED ANY MATERIAL
CONTRACT OR TAKEN ANY OTHER MATERIAL ACTION OR ENTERED INTO ANY OTHER MATERIAL
TRANSACTION OTHER THAN IN THE ORDINARY COURSE OF BUSINESS;

 

(J) ENTERED INTO ANY OTHER MATERIAL TRANSACTION OR MATERIALLY CHANGED ANY
BUSINESS PRACTICE;

 

(K) MADE OR GRANTED OR PROMISED ANY BONUS OR ANY WAGE, SALARY OR COMPENSATION
INCREASE (OTHER THAN THE REQUIRED INCREASES (NONE OF WHICH ARE MATERIAL) UNDER
THE COLLECTIVE

 

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bargaining agreement for white collar trade employees) in excess of EUR 5.000
per year to any director, officer, employee or sales representative, group of
employees or consultant or made or granted or promised any increase in any
employee benefit plan or arrangement, or amended or terminated any existing
employee benefit plan or arrangement or adopted any new employee benefit plan or
arrangement;

 

(L) MADE ANY OTHER CHANGE IN EMPLOYMENT TERMS FOR ANY OF THEIR DIRECTORS,
OFFICERS, AND EMPLOYEES OUTSIDE THE ORDINARY COURSE OF BUSINESS OR ENTERED INTO
ANY TRANSACTION WITH ANY INSIDER, OR EXCEPT AS SPECIFICALLY CONTEMPLATED BY THIS
AGREEMENT, ENTERED INTO ANY CONTRACT, AGREEMENT OR TRANSACTION, OTHER THAN IN
THE ORDINARY COURSE OF BUSINESS AND AT ARM’S LENGTH, WITH PERSONS WHO ARE
AFFILIATES OR INSIDERS;

 

(M) INCURRED INTERCOMPANY LIABILITIES OR CONDUCTED ITS CASH MANAGEMENT CUSTOMS
AND PRACTICES OTHER THAN IN THE ORDINARY COURSE OF BUSINESS (INCLUDING, WITHOUT
LIMITATION, WITH RESPECT TO MAINTENANCE OF WORKING CAPITAL BALANCES, COLLECTION
OF ACCOUNTS RECEIVABLE AND PAYMENT OF ACCOUNTS PAYABLE); ALL INTERCOMPANY
LIABILITIES WERE CLEARED AS PER APRIL 30, 2004 AND NO MATERIAL INTERCOMPANY
LIABILITIES WERE INCURRED SINCE THEN;

 

(N) MADE ANY MATERIAL CAPITAL EXPENDITURE;

 

(O) MADE ANY LOANS OR ADVANCES TO, OR GUARANTEES FOR THE BENEFIT OF, ANY PERSONS
(OTHER THAN (A) GUARANTEES TO CUSTOMERS IN THE ORDINARY COURSE OF BUSINESS AND
CONSISTENT WITH THE POLICIES AND PRACTICES DISCLOSED TO BUYERS OR SMI AND (B) A
LOAN OF EUR 3.000 GRANTED TO ONE EMPLOYEE OF THE COMPANY);

 

(P) MADE ANY CHARITABLE CONTRIBUTIONS, PLEDGES, OR PAID ANY ASSOCIATION FEES OR
DUES IN EXCESS OF EUR 25,000;

 

(Q) CHANGED OR AUTHORIZED ANY CHANGE IN ITS ORGANIZATIONAL DOCUMENTS OTHER THAN
CARD’S TRANSFORMATION INTO A LIMITED PARTNERSHIP AS PER DECEMBER 31, 2003;

 

(R) MATERIALLY DELAYED OR POSTPONED THE REPAIR AND MAINTENANCE OF ITS PROPERTIES
OR THE PAYMENT OF ACCOUNTS PAYABLE, ACCRUED LIABILITIES AND OTHER LIABILITIES;

 

(S) INSTITUTED ANY COURT PROCEEDING OR SETTLED ANY CLAIM PENDING IN COURT OR
LAWSUIT INVOLVING EQUITABLE OR INJUNCTIVE RELIEF OR INVOLVING MORE THAN EUR
10,000 IN THE AGGREGATE;

 

(T) GRANTED ANY PERFORMANCE GUARANTEES TO THEIR CUSTOMERS OTHER THAN IN THE
ORDINARY COURSE OF BUSINESS AND CONSISTENT WITH THE POLICIES AND PRACTICES
WITHIN THE KNOWLEDGE OF BUYERS OR SMI;

 

(U) ACQUIRED ANY OTHER BUSINESS OR ENTITY (OR ANY SIGNIFICANT PORTION OR
DIVISION THEREOF), WHETHER BY MERGER, CONSOLIDATION OR REORGANIZATION OR BY THE
PURCHASE OF ITS ASSETS OR STOCK OR ACQUIRED ANY OTHER MATERIAL ASSETS, WITH THE
EXCEPTION OF THE TRANSFORMATION OF CARD INTO A LIMITED PARTNERSHIP;

 

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(V) ENGAGED IN ANY TRANSACTION WITH SELLERS OR ITS AFFILIATES OTHER THAN ON
ARM’S-LENGTH TERMS;

 

(W) LOST, HAD SUSPENDED, CONDITIONED OR REVOKED ANY LICENSE; OR

 

(X) COMMITTED OR AGREED TO ANY OF THE FOREGOING.

 

6.10 Title to Properties; Sufficiency of Assets

 

(a) Neither the Company nor any of its Subsidiaries owns any real property.

 

(B) THE REAL PROPERTY LEASES AND SUBLEASES DESCRIBED ON SCHEDULE 6.10(B) ARE
VALID, BINDING, ENFORCEABLE AND IN FULL FORCE AND EFFECT AND HAVE NOT BEEN
MODIFIED (EXCEPT WITHIN THE KNOWLEDGE OF BUYERS), AND THE COMPANY OR A
SUBSIDIARY HOLDS VALID AND EXISTING RIGHTS AND INTERESTS AS LESSEE UNDER SUCH
LEASES OR SUBLEASES FOR THE TERM SET FORTH ON SCHEDULE 6.10(B).  THE LEASES AND
SUBLEASES DESCRIBED ON SCHEDULE 6.10(B) (THE “LEASED PROPERTIES”) CONSTITUTE ALL
OF THE LEASES AND SUBLEASES UNDER WHICH THE COMPANY OR ANY SUBSIDIARY HOLD
RIGHTS AND INTERESTS AS LESSEE IN REAL PROPERTY.  THE SELLERS HAVE DELIVERED TO
BUYERS AND BUYERS HAVE KNOWLEDGE OF COMPLETE AND ACCURATE COPIES OF EACH OF THE
LEASES OR SUBLEASES DESCRIBED ON SCHEDULE 6.10(B).  THE LEASED PROPERTIES
CONSTITUTE ALL OF THE REAL PROPERTY USED OR OCCUPIED BY THE COMPANY AND ITS
SUBSIDIARIES.  WITH RESPECT TO EACH LEASE AND SUBLEASE LISTED ON
SCHEDULE 6.10(B):

 

(I) THE LEASE OR SUBLEASE SHALL CONTINUE TO BE LEGAL, VALID, BINDING,
ENFORCEABLE AND IN FULL FORCE AND EFFECT ON IDENTICAL TERMS FOLLOWING THE
CLOSING (WITH THE EXCEPTION OF LANDLORDS’ POTENTIAL RIGHTS TO INCREASE THE RENT
FOLLOWING A CHANGE OF OWNERSHIP, AS PROVIDED IN § 12A OF THE AUSTRIAN RENTAL ACT
OR SIMILAR PROVISIONS OF LAWS OTHER THAN AUSTRIAN LAWS);

 

(II) NEITHER THE COMPANY (NOR ANY OF ITS SUBSIDIARIES) NOR ANY OTHER PARTY TO
THE LEASE OR SUBLEASE IS IN MATERIAL BREACH OR MATERIAL DEFAULT, AND NO EVENT
HAS OCCURRED WHICH, WITH NOTICE OR LAPSE OF TIME, WOULD CONSTITUTE SUCH A
MATERIAL BREACH OR DEFAULT OR PERMIT TERMINATION, MODIFICATION OR ACCELERATION
UNDER THE LEASE OR SUBLEASE;

 

(III) NO PARTY TO THE LEASE OR SUBLEASE HAS REPUDIATED ANY PROVISION THEREOF AND
THERE ARE NO DISPUTES, MATERIAL ORAL AGREEMENTS OR FORBEARANCE PROGRAMS IN
EFFECT AS TO THE LEASE OR SUBLEASE;

 

(IV) NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES HAS ASSIGNED, TRANSFERRED,
CONVEYED, MORTGAGED, HYPOTHECATED, DEEDED IN TRUST OR ENCUMBERED ANY OF ITS
RIGHTS AND INTERESTS IN THE LEASES OR SUBLEASES;

 

(V) SUCH LEASES OR SUBLEASES DO NOT PROHIBIT THE TRANSACTIONS CONTEMPLATED
HEREUNDER AND UNDER THE OTHER TRANSACTION DOCUMENTS.

 

(C) EXCEPT AS SET FORTH ON SCHEDULE 6.10(C), THE COMPANY AND ITS SUBSIDIARIES
OWN GOOD AND MARKETABLE TITLE TO, OR A VALID LEASEHOLD INTEREST IN, FREE AND
CLEAR OF ALL LIENS, ALL OF THE PERSONAL PROPERTY AND ASSETS WHICH ARE SHOWN ON
THE LATEST FINANCIAL STATEMENTS OR ACQUIRED THEREAFTER BY THEM.

 

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(D) THE PERSONAL PROPERTIES, VEHICLES AND OTHER TANGIBLE (CORPOREAL) ASSETS OF
THE COMPANY OWNED BY THE COMPANY ARE OPERATED IN CONFORMITY WITH ALL MATERIAL
APPLICABLE LAWS AND REGULATIONS,  ARE IN THE CONDITION AND REPAIR WHICH IS IN
LINE WITH THE VALUE ATTRIBUTED TO THESE ASSETS IN THE LATEST FINANCIAL
STATEMENTS, REASONABLE WEAR AND TEAR EXCEPTED.  THE COMPANY OR A SUBSIDIARY OWN
OR LEASE UNDER VALID LEASES ALL MATERIAL BUILDINGS, MACHINERY, EQUIPMENT AND
OTHER MATERIAL TANGIBLE ASSETS NECESSARY FOR THE CONDUCT OF THEIR BUSINESS.

 

(E) THE ASSETS AND PROPERTIES (WHETHER REAL (IMMOVEABLE) OR PERSONAL (MOVEABLE),
TANGIBLE (CORPOREAL) OR INTANGIBLE (INCORPOREAL)), INCLUDING BUT NOT LIMITED TO,
PROPRIETARY RIGHTS OWNED OR LEASED BY THE COMPANY OR A SUBSIDIARY CONSTITUTE ALL
OF THE ASSETS AND PROPERTIES USED FOR THE UNIMPAIRED OPERATION OF THE BUSINESS
PRESENTLY CONDUCTED BY THE COMPANY.

 

6.11        Accounts Receivable  Except as set forth on Schedule 6.11, all of
the notes and accounts receivable of the Company and its Subsidiaries reflected
on the Closing Financial Statements are good, valid and fully collectible
receivables (subject to no counterclaims or offset) and shall be collected (net
of the allowance for doubtful accounts recorded on the applicable Closing
Financial Statements) within 2004 at the aggregate amount recorded therefore on
the Latest Financial Statements.  There are no individual accounts receivable
which are over EUR 10,000 and 60 days past due, except as set forth on
Schedule 6.11.  As of the Closing Date, no Person shall have any Lien on such
receivables or any part thereof, and no agreement for deduction, free goods,
discount or other deferred price or quantity adjustment shall have been made
with respect to any such receivables. However, there are commissions and
compensations payable to the inventors, as disclosed on Schedule 6.21 and
Schedule 6.14(c).

 

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6.12        Taxes  (i) all Tax Returns which are required to be filed with
respect to the Company and its Subsidiaries have been timely filed or shall be
timely filed on or before the Closing Date, and all such Tax Returns are true,
complete and accurate, and complete and correct copies of all such returns and
other documents filed in respect of the three fiscal years of the Company and
its Subsidiaries ending prior to the date hereof have been provided to Buyers;
as for the Corporate Tax Returns required to be filed by the Company and its
Subsidiaries under the applicable law for fiscal year 2003 (and for the New
Zealand Subsidiary, for the FY ending March 31, 2004), the Sellers undertake to
and Buyers agree that the Sellers will prepare and file the Tax Returns of the
Company by June 30, 2004 at the latest and the Tax Returns of the Subsidiaries
no later than September 30, 2004, if such filing deadline, as regards the
Subsidiaries, is feasible under applicable law but no later than the earliest
point of time when such Tax Returns can be filed under applicable law.

 

(ii) all Taxes due and payable or required to be collected or remitted by or on
behalf of the Company and its Subsidiaries on or before the Closing Date,
whether or not shown on a Tax Return, have been paid, collected or remitted or
shall be paid, collected or remitted by the Company and its Subsidiaries or
Sellers on or before the Closing Date in an amount pursuant to and in line with
Austrian tax law or – as the case may be – foreign tax law - and all Taxes
incurred prior to the Closing Date, but not due and payable prior to or on the
Closing Date have been determined pursuant to and in line with Austrian tax law
or – as the case may be – foreign tax law and accrued but not yet due are shown
on the Closing Financial Statements  and no Taxes are delinquent;

 

(iii) with respect to any periods for which Tax Returns have not yet been
required to be filed or for which Taxes have been incurred but are not yet due
and payable, the Company and its Subsidiaries have incurred Liabilities for
Taxes only in the Ordinary Course of Business and in a manner consistent with
prior periods; it being understood that such Liabilities for Taxes incurred in
prior years were incurred based upon an accurate, diligent and lawful
application of the applicable tax law and recognition and determination of the
relevant tax base on which such taxes were levied, provided that any tax
consequence out of or in connection with the transformation of CARD into a
limited partnership shall be for the account of the Buyers;

 

(iv) with respect to any period before the Closing Date including but not
limited to periods for which Tax Returns have or have not yet been required to
be filed or for which Taxes have been due and payable or have been incurred but
are not yet due and payable including but not limited to the period January 1,
2004 through the Closing Date the Company and its Subsidiaries (i) have
accurately and diligently recorded all of their business transactions in their
books thereby duly considering Austrian GAAP and – as the case may be – foreign
GAAP and (ii) have fully complied with Austrian tax law and - as the case may be
- foreign tax law and (iii) have paid or accrued for any Austrian or foreign tax
for which the Company and its Subsidiaries can be held liable pursuant to
Austrian and – as the case may be — foreign tax law;

 

(v) no deficiency for any amount of Tax has been asserted or assessed by a
taxing authority against the Company and its Subsidiaries and the Company and
its Subsidiaries do not reasonably expect that any such assertion or assessment
of Tax liability will be made,

 

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(vi) Austrian corporate income tax assessments have been issued to the Company
covering all past periods up to and including the fiscal year ended December 31,
2002,

 

(vii) the Company and its Subsidiaries have withheld from each amount paid or
credited to any Person the amount of Taxes required to be withheld therefrom and
has remitted such Taxes to the proper Tax or other governmental authorities
within the time required under applicable law,

 

(viii) there is no investigation, action, suit, proceeding or audit or any
notice of inquiry of any of the foregoing pending against or with respect to the
Company and its Subsidiaries regarding Taxes and, to the Knowledge of Sellers,
no investigation, action, suit, proceeding or audit has been threatened against
or with respect to the Company and its Subsidiaries regarding Taxes,

 

(ix) the Company and its Subsidiaries have not consented to extend or otherwise
waive the time in which any Tax may be assessed or collected by any taxing
authority,

 

(x) the Company and its Subsidiaries have not been a member of an affiliated
group for tax purposes,

 

(xi) no pending claim has been made by a taxing authority in a jurisdiction
where the Company and its Subsidiaries do not file Tax Returns that the Company
and its Subsidiaries is or may be subject to Taxes assessed by such
jurisdiction,

 

(xii), deleted

 

(xiii) the Company and its Subsidiaries have withheld and paid all Taxes
required to have been withheld and paid before Closing, in connection with
amounts paid or owing to any employee, independent contractor, creditor,
shareholder or other third party,

 

(xiv) deleted

 

(xv) the Company and its Subsidiaries have not made any agreement with any
taxing authority adversely affecting the treatment of Taxes of the Company and
its Subsidiaries,

 

(xvi) the Company and its Subsidiaries will not be required (A) as a result of a
change made by the Company or its Subsidiaries prior to the Closing in method of
accounting for a taxable period ending on or prior to the Closing Date, to
include any adjustment in taxable income for any taxable period (or any portion
thereof) or (B) as a result of a tax ruling or similar agreement reached prior
to Closing with a competent tax office of the Company or its Subsidiaries to
include any item of income in, or exclude any item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing Date
and

 

(xvii) for  the period prior to Closing the Company and its Subsidiaries have
collected from each receipt from any of the past and present customers (or other
persons paying amounts to the Company and its Subsidiaries) the amount of all
Taxes (including VAT) required to be collected and have remitted such Taxes when
due, in the form required under the appropriate legislation or made adequate
provision for the payment of such amount to the proper receiving

 

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authorities; the Company and its Subsidiaries have accurately calculated any
deducted input VAT and fulfilled all legal prerequisites to claim such input
VAT.

 

(xviii) Schedule 6.12  contains a list of states, provinces, territories and
jurisdictions (whether foreign or domestic) in which the Company and its
Subsidiaries have been  required to file Tax Returns prior to Closing.  The
Company and its Subsidiaries have not at any time benefited from a forgiveness
of debt or entered into any transaction or arrangement (including conversion of
debt into shares of  their share capital) which could have resulted in penalties
under Austrian tax law (or comparable provisions under any applicable provincial
statute).

 

(xix) The Company and its Subsidiaries have not acquired property from or
rendered services to, or disposed of property or provided services to a Person
with whom they do not deal at arm’s length for an amount that is other than the
fair market value of such property or services, or has been deemed to have done
so for purposes of all applicable tax laws.  There are no contingent Liabilities
or any grounds that could prompt an assessment or reassessment of Taxes,
including, but without limitation, aggressive treatment of income, expenses,
deductions, credits or other amounts in the filing of Tax Returns.

 

(xx) Taxes incurred by SHFMMS and/or SHFM as partners of the Company for periods
(or portions thereof) starting as from the date of Closing due to the fact that
the Company, prior to Closing, has been found to have violated applicable
Austrian or applicable foreign tax law with respect to any tax wise relevant
business transaction effected in a period (or portions thereof) prior to Closing
shall be borne by Sellers.

 

(xxi) In the case of any Taxes that are imposed on a periodic basis and are
payable for a taxable period that includes (but does not end on) the Closing
Date, the portion of such Tax which relates to the portion of such taxable
period ending on the Closing Date shall (x) in the case of any Taxes other than
Taxes based upon or related to income or receipts (the latter including but not
limited to Corporate Income Tax (“Körperschaftsteuer”), VAT (“Umsatzsteuer”),
Insurance Tax (“Versicherungsteuer”), Fire Brigade Tax (“Feuerschutzsteuer”),
Energy Tax (“Energieabgaben”), Wage Tax (“Lohnsteuer”), Social Insurance
(“Sozialversicherungsabgaben”), Contribution to the Family Burden Equalization
Fund (“Dienstgeberbeitrag zum Familienlastenausgleich”) and Surcharge thereon
(“DZ”) Municipal Wage Tax (“Kommunalsteuer”)), be deemed to be the amount of
such Tax for the entire taxable period multiplied by a fraction the numerator of
which is the number of days in the taxable period ending on the Closing Date and
the denominator of which is the number of days in the entire taxable period, and
(y) in the case of any Tax based upon or related to income or receipts be deemed
equal to the amount which would be payable if the relevant taxable period ended
on the Closing Date.

 

Nothwithstanding anything to the contrary contained herein, it is expressly
agreed by Buyers and Sellers that:

 

(A) NEITHER PARTY NOR ANY OF THEIR AFFILIATES HAS, AT CLOSING, ANY KNOWLEDGE OF
ANY BREACH OR UNTRUTH OF ANY REPRESENTATION OR WARRANTY OR ANY OBLIGATION
CONTAINED IN SECTION 6.12, AND

 

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(B) NO BREACH OR UNTRUTH OF ANY REPRESENTATION OR WARRANTY OR ANY OBLIGATION
CONTAINED IN SECTION 6.12 IS DISCLOSED OR CONTAINED ON ANY SCHEDULE, EXHIBIT OR
DISCLOSURE BUNDLE OR ON ANY DOCUMENT, INFORMATION OR MATERIAL THAT IS DISCLOSED
ON OR IN THE SCHEDULES.

 

6.13        Contracts and Commitments

 

(a)           Except as specifically contemplated by this Agreement and except
as set forth on Schedule 6.13, to the Knowledge of Sellers, neither the Company
nor any Subsidiary is a party to or bound by any written:

 

(I)            COLLECTIVE BARGAINING AGREEMENT, WORKS COUNCIL AGREEMENT OR
CONTRACT WITH ANY LABOR UNION OR ANY BONUS, COMMISSIONS, PENSION, PROFIT
SHARING, RETIREMENT OR ANY OTHER FORM OF DEFERRED COMPENSATION PLAN OR ANY STOCK
PURCHASE, STOCK OPTION, HOSPITALIZATION INSURANCE OR SIMILAR PLAN OR PRACTICE,
WHETHER FORMAL OR INFORMAL;

 

(II)           CONTRACT FOR THE EMPLOYMENT OF ANY OFFICER, INDIVIDUAL EMPLOYEE
OR OTHER PERSON ON A FULL-TIME OR CONSULTING BASIS OR ANY NOTICE, SEVERANCE OR
CHANGE-OF-CONTROL AGREEMENTS;

 

(III)          CONTRACT OR INDENTURE RELATING TO THE BORROWING OF MONEY OR TO
MORTGAGING, PLEDGING OR OTHERWISE PLACING A LIEN ON ANY OF THEIR ASSETS;

 

(IV)          CONTRACTS WITH RESPECT TO THE LENDING OR INVESTING OF FUNDS;

 

(V)           CONTRACTS (IN PARTICULAR LICENSING RIGHTS) RELATING TO THE COMPANY
PROPRIETARY RIGHTS BY THE COMPANY OR ANY SUBSIDIARY TO ANY PERSON OR BY ANY
PERSON TO THE COMPANIES OR ANY SUBSIDIARY, OR CONTRACTS AFFECTING THE COMPANY’S
OR ANY SUBSIDIARY’S ABILITY TO USE OR DISCLOSE ANY PROPRIETARY RIGHTS;

 

(VI)          GUARANTY, SURETY OR LETTER OF COMFORT WITH REGARD TO ANY
OBLIGATION, OTHER THAN ENDORSEMENTS MADE FOR COLLECTION;

 

(VII)         CONTRACT UNDER WHICH ANY OF THE COMPANY OR ITS SUBSIDIARIES IS
LESSEE OF, OR HOLDS OR OPERATES, ANY PERSONAL PROPERTY OWNED BY ANY OTHER PARTY
CALLING FOR PAYMENTS IN EXCESS OF EUR 50,000 ANNUALLY OR UNDER WHICH IT IS
LESSOR OF OR PERMITS ANY THIRD PARTY TO HOLD OR OPERATE ANY PROPERTY, REAL OR
PERSONAL, OWNED OR CONTROLLED BY IT;

 

(VIII)        CONTRACT OR GROUP OF RELATED CONTRACTS WITH THE SAME PARTY FOR THE
PURCHASE OR SALE OF SUPPLIES, PRODUCTS OR OTHER PERSONAL PROPERTY OR FOR THE
FURNISHING OR RECEIPT OF SERVICES WHICH EITHER CALLS FOR PERFORMANCE OVER A
PERIOD OF MORE THAN ONE YEAR (EXCEPT IF SUCH CONTRACTS DO NOT INVOLVE A SUM IN
EXCESS OF EUR 50,000 ANNUALLY) OR INVOLVES A SUM IN EXCESS OF EUR 50,000;

 

(IX)           CONTRACT OR GROUP OF RELATED CONTRACTS WITH THE SAME PARTY
CONTINUING OVER A PERIOD OF MORE THAN SIX MONTHS FROM THE DATE OR DATES THEREOF,
NOT TERMINABLE BY THE COMPANY OR ITS SUBSIDIARIES, AS THE CASE MAY BE, ON 90
DAYS OR LESS NOTICE WITHOUT PENALTIES OR INVOLVING MORE THAN EUR 50,000;

 

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(X)            CONTRACT RELATING TO THE DISTRIBUTION, MARKETING OR SALES OF ITS
PRODUCTS (ON A REGULAR BASIS, SUCH AS AGENCY CONTRACTS);

 

(XI)           CONTRACTS PURSUANT TO WHICH THE COMPANY OR ITS SUBSIDIARIES
SUBCONTRACT WORK TO THIRD PARTIES, INVOLVING MORE THAN EUR 50,000;

 

(XII)          FORMAL POWER OF ATTORNEY;

 

(XIII)         WARRANTY CONTRACT WITH RESPECT TO THEIR SERVICES RENDERED OR
THEIR PRODUCTS SOLD, LEASED OR LICENSED WHICH CONTAINS TERMS AND CONDITIONS THAT
DIFFER IN ANY MATERIAL RESPECT FROM THE STANDARD WARRANTY TERMS AND CONDITIONS
OF THE COMPANY AND ITS SUBSIDIARIES;

 

(XIV)        CONTRACT RELATING TO THE ACQUISITION OR SALE OF ITS BUSINESS (OR
ANY MATERIAL PORTION THEREOF); OR

 

(B) EXCEPT AS DISCLOSED ON SCHEDULE 6.13, TO THE KNOWLEDGE OF SELLERS (I) NO
CONTRACT REQUIRED TO BE DISCLOSED ON SCHEDULE 6.13 HAS BEEN BREACHED IN A
MATERIAL RESPECT OR CANCELED BY THE OTHER PARTY, AND SELLERS HAVE NO KNOWLEDGE
OF ANY ANTICIPATED BREACH BY ANY OTHER PARTY TO ANY CONTRACT SET FORTH ON
SCHEDULE 6.13, (II) SINCE DECEMBER 31, 2003, NO MATERIAL CUSTOMER OR SUPPLIER
HAS INDICATED IN WRITING TO THE SELLERS THAT IT SHALL STOP OR MATERIALLY
DECREASE THE RATE OF BUSINESS DONE WITH THE COMPANY OR A SUBSIDIARY OR THAT IT
DESIRES TO RENEGOTIATE ITS CONTRACT WITH THE COMPANY OR ITS SUBSIDIARIES IN A
MATERIAL ASPECT AND WITH MATERIALLY DETRIMENTAL CONSEQUENCES FOR THE COMPANY,
(III) THE COMPANY AND ITS SUBSIDIARIES HAVE PERFORMED ALL THE MATERIAL
OBLIGATIONS REQUIRED TO BE PERFORMED BY IT IN CONNECTION WITH THE MATERIAL
CONTRACTS REQUIRED TO BE DISCLOSED ON SCHEDULE 6.13 AND ARE NOT IN MATERIAL
DEFAULT UNDER OR IN MATERIAL BREACH OF ANY MATERIAL CONTRACT REQUIRED TO BE
DISCLOSED ON THE SCHEDULE 6.13, AND NO EVENT HAS OCCURRED WHICH WITH THE PASSAGE
OF TIME OR THE GIVING OF NOTICE OR BOTH WOULD RESULT IN A DEFAULT OR BREACH
THEREUNDER, (IV)  DELETED (VI) EACH MATERIAL CONTRACT IS LEGAL, VALID, BINDING,
ENFORCEABLE AND IN FULL FORCE AND EFFECT, WITH THE EXCEPTION OF ANY TERMS AND
CLAUSES WHICH MAY NOT BE VALID OR ENFORCEABLE UNDER APPLICABLE LAWS, AND WILL
CONTINUE AS SUCH FOLLOWING THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
HEREBY, (VII)  DELETED (VIII)  NEITHER THE COMPANY NOR ANY SUBSIDIARY ARE A
PARTY TO ANY CONTRACT REQUIRING IT TO PURCHASE GOODS OR SERVICES OR LEASE
PROPERTY ABOVE OR BELOW, AS THE CASE MAY BE, PREVAILING MARKET RATES AND PRICES
OR TO SELL GOODS OR SERVICES BELOW PREVAILING MARKET RATES OR BELOW THE COST OF
SUCH GOODS OF SERVICES TO THE COMPANY OR SUCH SUBSIDIARIES, AND (IX) WITH REGARD
TO ANY COMMERCIAL AGENCY AGREEMENT AND DISTRIBUTION AGREEMENT OF THE COMPANY AND
ITS SUBSIDIARIES STATUTORY ENTITLEMENT FOR A COMPENSATION FEE
(“AUSGLEICHSANSPRUCH”) OR SIMILAR ENTITLEMENT EXIST IN CASE OF TERMINATION OF
SUCH AGREEMENT, AND IT IS EXPLICITLY AGREED THAT THESE WILL BE FOR THE ACCOUNT
OF THE BUYERS.

 

(C) SCHEDULE 6.13 LISTS THE TEN LARGEST CUSTOMERS OF THE COMPANY DURING THE
12-MONTH PERIOD ENDED DECEMBER 31, 2003.

 

(D) THE SELLERS HAVE PROVIDED BUYERS WITH A TRUE AND CORRECT COPY OF ALL WRITTEN
MATERIAL CONTRACTS WHICH ARE REQUIRED TO BE DISCLOSED ON SCHEDULE 6.13, IN EACH
CASE TOGETHER

 

27

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with all Material amendments, waivers or other changes thereto (all of which are
disclosed on Schedule 6.13).

 

(e) To the Knowledge of the Sellers, no Material Contract contains a change of
control provision, the implementation of which would have a Material Adverse
Effect unless disclosed in Schedules to this Agreement.

 

6.14 PROPRIETARY RIGHTS

 

(a)           To the Knowledge of the Sellers, Schedule 6.14(a) sets forth a
complete and correct list of all of the following that are owned by the Company
or any Subsidiary: (i) Material patents and utility models and pending patent
and utility model applications; (ii) Material registered trademarks and Material
registered service marks, corporate names and Internet domain names. Sellers
have delivered to Buyers correct and complete lists of all such Material
Proprietary Rights, as listed on Schedule 6.14(a).

 

(b)         To the Knowledge of Sellers (i) the Company or its Subsidiaries own
and possess all right, title and interest in and to any of the Proprietary
Rights set forth on Schedule 6.14(a), and (ii) the Company or its Subsidiaries
have valid and enforceable licenses to use the Proprietary Rights listed on
Schedule 6.14(b), pursuant to a written license agreement (for the time, terms
and scope described in the respective license agreements) as disclosed in
Schedule 6.14(b).

 

The Material Proprietary Rights listed on Schedule 6.14(a) and 6.14(b) are
herein referred to as the “Company Proprietary Rights”.

 

(c)          To the Knowledge of Sellers, except as set forth on Schedule
6.14(c),

 

a.               other than the proceedings between SMI and its Affiliates on
the one hand and CASAG and its Affiliates on the other hand no action, suit,
proceeding, injunction, judgment, hearing or investigation is pending, and
Sellers have no Knowledge of any filed claims, that challenge the legality or
validity of the Company Proprietary Rights, and which, if successfully pursued
against the Company, would affect the validity and enforceability of the
Company’s Proprietary Rights.;

b.              there are no claims by third Persons that the Company’s or its
Subsidiaries’ products or Company Proprietary Rights, as they are developed or
manufactured as of the Closing, infringe or violate any patent, intellectual
property or other Proprietary Right of any such third Person.

c.               other than the  claims of Blaha and Krenn, no present or former
employee of the Company or the Sellers has made or is making any claim of
ownership, in any Company Proprietary Right.

 

No other representation or warranty is given, and all liability regarding the
validity and enforceability of the Company Proprietary Rights is excluded.

 

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6.15 SUPPLEMENTAL INTELLECTUAL PROPERTY ISSUES.

 

 

DIGITAL, TECHNO-CONSULT AND LUMITECH.  NEITHER DIGITAL-ELEKTRONIK GESELLSCHAFT
MIT BESCHRÄNKTER HAFTUNG, GARTENAU-ST LEONHARD, AUSTRIA , TECHNO-CONSULT NOR
LUMITECH HOLDING GMBH, JENNERSDORF, NOR ANY OF THEIR EMPLOYEES, HAVE EVER
ASSERTED OR CLAIMED AND ARE NOT NOW ASSERTING OR CLAIMING ANY OWNERSHIP OR OTHER
INTEREST IN ANY OF THE COMPANY PROPRIETARY RIGHTS TO THE PRODUCTS.

 

6.16        DELETED

 

6.17 Inventory  The inventory of the Company and its Subsidiaries consists of
raw materials and supplies, manufactured and purchased parts, goods in process,
and finished goods, all of which is merchantable and fit for the purpose for
which it was procured or manufactured, and none of which is slow-moving,
obsolete, damaged, or defective, subject only to the reserve for inventory
writedown set forth on the face of the Latest Financial Statements (or in any
notes thereto) as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Company and its
Subsidiaries.

 

6.18 Litigation; Proceedings  To the Knowledge of Sellers, except as set forth
on Schedule 6.18 , there are no actions, suits, proceedings (including but not
limited to administrative proceedings), orders, judgments, decrees or
investigations pending or, to the Sellers’ Knowledge, threatened against or
affecting the Company or any Subsidiary, at law or in equity, or before or by
any Austrian or other federal, provincial, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
and to the Knowledge of Sellers and the Company and any Subsidiary there is no
basis known for any of the foregoing.    Neither the Company nor any Subsidiary
are subject to any outstanding order, judgment or decree issued by any court or
quasi-judicial or administrative agency of any federal, provincial, state, local
or foreign jurisdiction or any arbitrator.

 

6.19 Brokerage (Companies)  There are no claims for brokerage commissions,
finders’ fees or similar compensation in connection with the transactions
contemplated by this Agreement payable by or on behalf of the Company and its
Subsidiaries.

 

6.20 Governmental Licenses and Permits  Schedule 6.20 contains to the Knowledge
of Sellers a complete listing and summary description of all Material permits,
licenses, certificates, approvals, certificates of authorization, registrations
and other authorizations of Austrian and other federal, provincial, state and
local governments, administrations or departments or other similar rights,
including, without limitation, any of the foregoing issued by any gaming entity,
commission, agency or authority, or any authority that regulates the foregoing,
and whether related to CARD or a Subsidiary or any product of CARD or a
Subsidiary (collectively, the “Licenses”) owned or possessed by CARD or a
Subsidiary or used by CARD or a Subsidiary in the conduct of their business. 
Except as indicated on Schedule  6.20 the Company, before the transformation, or
a Subsidiary owned or possessed all right, title and interest in and to all
Licenses which were necessary to conduct their business as presently conducted 
and it shall be the Buyers’ obligation to  maintain all such Licenses and to
have them transferred to CARD

 

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(after the transformation and after the change of Company’s shareholders).  CARD
and its Subsidiaries were in compliance with the terms and conditions of such
Licenses.  Until the transformation, no loss or expiration of any License was
pending , to Sellers’ and the Company’s Knowledge, or threatened or reasonably
foreseeable (excluding, however, as a result of the transformation and of the
transactions contemplated hereby although, after such transformation, the
Company has not received any notice and has no Knowledge that any License is or
has been suspended), other than expiration in accordance with the terms thereof,
which terms may or may not expire as a result of the consummation of the
transactions contemplated hereby (which shall be the risk of the Buyers). 
Neither the Company nor any Subsidiary has ever had a License conditioned,
suspended or revoked.

 

6.21 Employees  Except as set forth on Schedule  6.21, to the Knowledge of
Sellers and the Company, no executive, key employee, or group of employees has
any plans to terminate employment with the Company or any of its Subsidiaries as
a cause of the transactions contemplated hereby. Neither the Company nor any of
its Subsidiaries is a party to or bound by any collective bargaining agreement
(“Kollektivvertrag” - except re the Company for the collective bargaining
agreement for the white collar trade employees – “Kollektivvertrag der
Handelsangestellten”) or any works council agreement (“Betriebsvereinbarung”),
nor has any of them experienced any strikes, grievances, claims of unfair labor
practices, or other collective bargaining disputes. In the business of the
Company no labor practice (“betriebliche Übung”) exist which have a Material
adverse effect on the business of the Company. Neither the Company nor any of
its Subsidiaries has committed any unfair labor practice.  The Company does not
have a works council (“Betriebsrat”). The works council of CASAG is not
competent to represent any of the employees of the Company and has never acted
on behalf of the Company’s employees. The Company and its Subsidiaries have
complied in all material respects with all applicable laws relating to the
employment of personnel and labor, including provisions thereof relating to
wages, hours, vacation, overtime, notice, pay in lieu of notice, termination and
severance pay obligations, human rights, occupational health and safety, equal
opportunity and the payment of social security and other Taxes.  Schedule 6.21
sets forth the names, present annual or, as the case may be, hourly rate of
compensation (including base salary, bonuses and commissions) and all other
Material employment arrangements like any royalty arrangements, fringe benefits,
the date of the start of employment and any other (potential) entitlements of
the employee like severance payment entitlements (“Abfertigung”), if any, of all
persons employed by the Company and its Subsidiaries (including independent
contractors) and their job descriptions. Except as set forth on Schedule 6.21,
any employees who have been previously employed by CASAG but who provided
services to the Company (i) are not entitled to any severance payment, (ii) any
pension entitlements accrued until Closing have been fully settled and have been
paid in by CASAG into the pension fund of ÖPAG Pensionskassen AG, Vienna and
(iii) therefore no claims of employees arising out of or in connection with
pension entitlements accrued until Closing exist. For all other employees only
severance payments as set out in Schedule 6.21 exist and the aggregate maximum
exposure of the Company to accrued pension entitlements as of the Closing Date
amounts to EUR 10,000. The Company and its Subsidiaries are not, and, to the
Knowledge of Sellers and the Company, none of the employees of the Company or
its Subsidiaries are, subject to any noncompete, nondisclosure, confidentiality,
employment, consulting or similar Contract , in each case relating to, affecting
or in conflict with the present or proposed business activities of the Company
and its Subsidiaries (other than such Contracts with and in favor of the
Company).  Except as set forth on Schedule 6.21,

 

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the Company and its Subsidiaries are not party to any employment agreement and
there is no agreement for the employment of any other person. Any employment of
persons set forth on Schedule 6.21 who have been previously employed by CASAG
but who provided services to the Company does not trigger a transfer of
employment relationships of employees of CASAG who are not listed on Schedule
6.21.  Except as set forth on Schedule 6.21 to the Knowledge of Seller, the
Company and its Subsidiaries are not subject to any claim for wrongful
dismissal, constructive dismissal or any other claim or complaint, actual or
threatened, or any litigation, actual or threatened, relating to employment,
discrimination or termination of employment of any employee or former employee
of the Company or a Subsidiary.

 

6.22 Employee Benefit Plans   (a) Except as provided by compulsory law or as set
forth on Schedule  6.22 (which also contains a list of all entitled employees
setting out their respective individual pension entitlements and payments to be
made by the Company and its Subsidiaries) the Company and its Subsidiaries
neither maintain nor ever have maintained, contribute to nor have ever
contributed to, have nor ever have had any obligation to contribute to, nor have
nor ever have had any liability or potential liability with respect to any (i)
funded or unfunded, registered or unregistered, pension, retirement,
superannuation or other employee pension benefit plans or retirement income
arrangements (whether or not terminated) (“Employee Pension Plans”);
(ii) ongoing or terminated funded or unfunded hospitalization, medical, dental,
vision care, health, life, disability, accident or other employee welfare
benefit plans (“Employee Welfare Plans”); or (iii) plan, policy, program or
arrangement (whether individual or collective, whether or not terminated) which
provides deferred compensation benefits, stock purchase, stock option, bonus
benefits or compensation, incentive benefits or compensation, severance or
salary continuation benefits or compensation, “change of control” benefits or
compensation or any program, plan, policy or arrangement which provides any
vacation, tuition reimbursement, car allowance, service awards or other fringe
benefits (“Other Plans”).  The Company and its Subsidiaries do not participate
in or contribute to and has never participated in or contributed to any
multiemployer plan (“Multiemployer Plan”), nor do the Company and its
Subsidiaries have any other liability, including, without limitation, any
potential withdrawal liability, with respect to any Multiemployer Plan, and the
Company and its Subsidiaries have not incurred any current or potential
withdrawal liability as a result of a complete or partial withdrawal (or
potential partial withdrawal) from any Multiemployer Plan.  Except as set forth
on Schedule 6.22, the Company and its Subsidiaries do not maintain or have any
obligation to contribute to (or any other liability with respect to) any funded
or unfunded Employee Welfare Plan, Multiemployer Plan or Other Plan which
provides post-retirement benefits to current or former employees, current or
former independent contractors, current or future retirees, their spouses,
dependents or beneficiaries.  (Any Employee Pension Plan, any Employee Welfare
Plan, any Other Plan and any Multiemployer Plan shall be referred to herein
collectively as the “Plans”).

 

(B) ALL PLANS (AND RELATED TRUSTS AND INSURANCE CONTRACTS) COMPLY IN FORM AND IN
OPERATION IN ALL MATERIAL RESPECTS WITH THE REQUIREMENTS OF APPLICABLE LAW.  ALL
REQUIRED REPORTS AND DESCRIPTIONS WITH RESPECT TO THE PLANS FOR WHICH THE
COMPANIES ARE RESPONSIBLE HAVE BEEN PROPERLY AND TIMELY FILED WITH THE
APPROPRIATE GOVERNMENT AGENCY, IF ANY, AND DISTRIBUTED TO PARTICIPANTS AS
REQUIRED.

 

(C) THE COMPANY AND ITS SUBSIDIARIES HAVE NOT INCURRED ANY LIABILITY TO ANY
GOVERNMENTAL AGENCY, ANY MULTIEMPLOYER PLAN OR ANY OTHER PERSON WITH RESPECT TO
ANY PLAN CURRENTLY OR PREVIOUSLY MAINTAINED BY THE COMPANY AND ITS SUBSIDIARIES
THAT HAS NOT BEEN SATISFIED IN FULL, AND

 

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no condition exists that presents a risk to the Company or any Subsidiary of
incurring such a liability.

 

(D) WITH RESPECT TO EACH PLAN, ALL CONTRIBUTIONS WHICH ARE REQUIRED TO BE PAID
BY THE COMPANY AND ITS SUBSIDIARIES UNDER THE TERMS OF THE APPLICABLE PLAN OR
BYLAWS HAVE BEEN MADE (INCLUDING ALL EMPLOYER CONTRIBUTIONS AND EMPLOYEE SALARY
REDUCTION CONTRIBUTIONS), ALL CONTRIBUTIONS FOR PRIOR PLAN YEARS WHICH ARE NOT
YET DUE AND WITH RESPECT TO THE CURRENT PLAN YEAR FOR THE PERIOD ENDING ON THE
CLOSING DATE HAVE BEEN MADE OR ACCRUED IN ACCORDANCE WITH AUSTRIAN GAAP AND
APPEAR ON THE CLOSING STATEMENT.  THE SELLERS DO NOT HAVE ANY LIABILITY (OTHER
THAN LIABILITIES ACCRUING AFTER THE CLOSING DATE) WITH RESPECT TO ANY OF THE
PLANS.

 

(E)           WITH RESPECT TO EACH OF THE PLANS LISTED ON SCHEDULE  6.22,
SELLERS HAVE FURNISHED TO BUYERS TRUE AND COMPLETE COPIES OF THE RESPECTIVE (I)
PLAN DOCUMENTS, SUMMARY PLAN DESCRIPTIONS AND SUMMARIES OF MATERIAL
MODIFICATIONS AND OTHER MATERIAL EMPLOYEE COMMUNICATIONS, (II) ALL RELATED TRUST
AGREEMENTS, INSURANCE CONTRACTS OR OTHER FUNDING AGREEMENTS WHICH IMPLEMENT SUCH
PLANS AND (III) ALL CONTRACTS RELATING TO EACH SUCH PLAN, INCLUDING, WITHOUT
LIMITATION, SERVICE PROVIDER AGREEMENTS, INSURANCE CONTRACTS, INVESTMENT
MANAGEMENT AGREEMENTS AND RECORD KEEPING AGREEMENTS.

 

6.23 Environmental, Health, and Safety Matters  (a) The Company, each of its
Subsidiaries, and their respective predecessors and Affiliates have complied and
are in compliance with all Material Environmental, Health, and Safety
Requirements.

 

 (B) WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE COMPANY, EACH OF ITS
SUBSIDIARIES, AND THEIR RESPECTIVE AFFILIATES HAVE OBTAINED AND COMPLIED WITH,
AND ARE IN COMPLIANCE WITH, ALL MATERIAL OBLIGATIONS UNDER PERMITS, LICENSES AND
OTHER AUTHORIZATIONS THAT ARE REQUIRED PURSUANT TO ENVIRONMENTAL, HEALTH, AND
SAFETY REQUIREMENTS FOR THE OCCUPATION OF THEIR FACILITIES AND THE OPERATION OF
THEIR BUSINESS; A LIST OF ALL SUCH PERMITS, LICENSES AND OTHER AUTHORIZATIONS IS
SET FORTH ON SCHEDULE 6.23.

 

 (C) NEITHER THE COMPANY, NOR ANY OF ITS SUBSIDIARIES, NOR THEIR RESPECTIVE
PREDECESSORS OR AFFILIATES HAS RECEIVED ANY WRITTEN OR ORAL NOTICE, REPORT OR
OTHER INFORMATION REGARDING ANY ACTUAL OR ALLEGED VIOLATION OF ENVIRONMENTAL,
HEALTH, AND SAFETY REQUIREMENTS, OR ANY LIABILITIES OR POTENTIAL LIABILITIES,
INCLUDING ANY INVESTIGATORY, REMEDIAL OR CORRECTIVE OBLIGATIONS, RELATING TO ANY
OF THEM OR THEIR FACILITIES ARISING UNDER ENVIRONMENTAL, HEALTH, AND SAFETY
REQUIREMENTS.

 

 (D) NONE OF THE FOLLOWING EXISTS AT ANY PROPERTY OR FACILITY OWNED OR OPERATED
BY THE COMPANY OR ITS SUBSIDIARIES: (1) UNDERGROUND STORAGE TANKS, (2)
ASBESTOS-CONTAINING MATERIAL IN ANY FORM OR CONDITION, (3) MATERIALS OR
EQUIPMENT CONTAINING POLYCHLORINATED BIPHENYLS, OR (4) LANDFILLS, SURFACE
IMPOUNDMENTS, OR DISPOSAL AREAS.

 

 (E) NEITHER THE COMPANY, NOR ANY OF ITS SUBSIDIARIES, NOR THEIR RESPECTIVE
PREDECESSORS OR AFFILIATES HAVE TREATED, STORED, DISPOSED OF, ARRANGED FOR OR
PERMITTED THE DISPOSAL OF, TRANSPORTED, HANDLED, OR RELEASED ANY SUBSTANCE,
INCLUDING WITHOUT LIMITATION ANY HAZARDOUS SUBSTANCE, OR OWNED OR OPERATED ANY
PROPERTY OR FACILITY (AND NO SUCH PROPERTY OR FACILITY IS CONTAMINATED BY ANY
SUCH SUBSTANCE) IN A MANNER THAT HAS GIVEN OR WOULD GIVE RISE TO LIABILITIES,

 

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including any Liability for response costs, corrective action costs, personal
injury, property damage, natural resources damages or attorney fees, pursuant to
the applicable Environmental, Health, and Safety Requirements.

 

(F)            TO THE SELLERS’ KNOWLEDGE, NEITHER THIS AGREEMENT NOR THE
CONSUMMATION OF THE TRANSACTION THAT IS THE SUBJECT OF THIS AGREEMENT WILL
RESULT IN ANY OBLIGATIONS FOR SITE INVESTIGATION OR CLEANUP, OR NOTIFICATION TO
OR CONSENT OF GOVERNMENT AGENCIES OR THIRD PARTIES, PURSUANT TO ANY OF THE
SO-CALLED “TRANSACTION-TRIGGERED” OR “RESPONSIBLE PROPERTY TRANSFER”
ENVIRONMENTAL, HEALTH, AND SAFETY REQUIREMENTS.

 

(G)           NEITHER THE COMPANY, NOR ANY OF ITS SUBSIDIARIES, NOR ANY OF THEIR
RESPECTIVE PREDECESSORS OR AFFILIATES HAVE, EITHER EXPRESSLY OR BY OPERATION OF
LAW, ASSUMED OR UNDERTAKEN ANY LIABILITY, INCLUDING WITHOUT LIMITATION ANY
OBLIGATION FOR CORRECTIVE OR REMEDIAL ACTION, OF ANY OTHER PERSON RELATING TO
ENVIRONMENTAL, HEALTH, AND SAFETY REQUIREMENTS, AND NEITHER THE SELLER NOR THE
COMPANY HAVE RECEIVED AN UNFULFILLED ASSESSMENT OF CORRECTION (“BEHÖRDLICHE
AUFLAGE”) BY ANY PUBLIC AUTHORITY.

 

(H)           TO THE KNOWLEDGE OF SELLERS, NO FACTS, EVENTS OR CONDITIONS
RELATING TO THE PAST OR PRESENT FACILITIES, PROPERTIES OR OPERATIONS OF THE
COMPANY, ITS SUBSIDIARIES, OR ANY OF THEIR RESPECTIVE PREDECESSORS OR AFFILIATES
WILL PREVENT, HINDER OR LIMIT CONTINUED COMPLIANCE WITH ENVIRONMENTAL, HEALTH,
AND SAFETY REQUIREMENTS, GIVE RISE TO ANY INVESTIGATORY, REMEDIAL OR CORRECTIVE
OBLIGATIONS PURSUANT TO ENVIRONMENTAL, HEALTH, AND SAFETY REQUIREMENTS, OR GIVE
RISE TO ANY OTHER LIABILITIES PURSUANT TO ENVIRONMENTAL, HEALTH, AND SAFETY
REQUIREMENTS, INCLUDING WITHOUT LIMITATION ANY RELATING TO ONSITE OR OFFSITE
RELEASES OR THREATENED RELEASES OF HAZARDOUS MATERIALS, SUBSTANCES OR WASTES,
PERSONAL INJURY, PROPERTY DAMAGE OR NATURAL RESOURCES DAMAGE.

 

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6.24 Insurance  Schedule  6.24 lists and briefly describes each insurance policy
maintained by or on behalf of the Company or its Subsidiaries with respect to
their properties, assets and business, together with a claims history for the
past five years.  It is expressly agreed that Buyers, within 30 days of the
Closing,  will be exclusively responsible for securing appropriate insurance
coverage after the Closing Date and the Sellers shall have no respective duties
or liabilities.

 

6.25 Officers and Directors; Bank Accounts  Schedule  6.25 lists all officers
and directors of the Company and its Subsidiaries, and all bank accounts,
(designating each authorized signatory with respect thereto) and there are no
safety deposit boxes and no lock boxes, for the Company and its Subsidiaries.

 

6.26 Affiliate Transactions  Except as disclosed on Schedule  6.26 no officer,
director, employee, shareholder, or Affiliate of the Company or any individual
related by marriage or adoption to any such individual or any entity in which
any such Person owns any beneficial interest (collectively, the “Insiders”), is
a party to any Contract or transaction with the Company and its Subsidiaries or
which is pertaining to the business of the Company and its Subsidiaries or has
any interest in any property, real or personal or mixed, tangible or intangible,
used in or pertaining to the business of the Company and its Subsidiaries. 
Schedule  6.26 hereto describes all intercompany or affiliated services provided
to or on behalf of the Company or its Subsidiaries by Sellers or any of their
Affiliates and to or on behalf of Sellers and such Affiliates by the Company or
its Subsidiaries and all intercompany transactions or Contracts among the
Company or its Subsidiaries and Sellers or their Affiliates (including, in each
case, the costs charged to the Company or its Subsidiaries) and all intercompany
transactions or Contracts among the Company and any Subsidiary. Unless disclosed
to the Buyers or SMI, all such intercompany transactions shall comply with arm’s
length principles and except as disclosed on Schedule  6.26 or as reflected in
the Closing Financial Statements, no claims of Sellers and any of their
Affiliates exist against the Company and its Subsidiaries.

 

6.27 Compliance with Laws  To the Sellers’ Knowledge, the Company, its
Subsidiaries and their respective officers and directors, when acting on behalf
of the Company or its Subsidiaries have complied with all Material applicable
laws, regulations and ordinances of Austrian or other federal, provincial, state
and local governments and all agencies thereof which are applicable to the
business, business practices (including, but not limited to, their marketing,
sales and distribution of their products and services) or any owned or leased
properties of the Company or any Subsidiary or to which the Company or any
Subsidiary may be subject, and no claims have been filed against the Company or
any Subsidiary alleging a violation of any such laws or regulations, and the
Company and its Subsidiaries have not received notice of any such violations.

 

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6.28 Powers of Attorney; Guarantees  Except as set forth on Schedule 6.28 ,
there are no outstanding formal powers of attorney executed on behalf of the
Company or any Subsidiary.  Neither the Company nor any Subsidiary are a
guarantor or otherwise liable for any indebtedness of any other person, firm or
corporation other than endorsements for collection in the Ordinary Course of
Business.

 

6.29 Product Warranties  To the Knowledge of Sellers, the Company and its
Subsidiaries have not made any warranties with respect to the products or
services manufactured, rendered and/or sold by them which contain terms and
conditions that differ in any Material respect from those warranties usual in
the trade or expressly made in the respective contracts or in the literature
accompanying such products;  copies of sample documents, which the Company
prefers to use but which are not always accepted by customers, are attached
hereto as Schedule 6.29.

 

6.30 Product Liability  To the Knowledge of Sellers, neither the Company nor any
of its Subsidiaries have any Liability (and there is no basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against any of them giving rise to any Liability) arising out
of any injury to individuals or property as a result of the ownership,
possession, or use of any product manufactured, sold, leased, or delivered by
the Company or any of its Subsidiaries, which would exceed the aggregate of the
respective reserves being accrued for such purposes in the Company’s accounts
and the insurance coverage which was in place until the Closing Date, if any.

 

6.31 International Trade Laws and Regulations  To the Knowledge of Sellers:

 

(A) THE COMPANY, ITS SUBSIDIARIES HAVE COMPLIED AND ARE IN COMPLIANCE WITH ALL
INTERNATIONAL TRADE LAWS AND REGULATIONS APPLICABLE TO THE COMPANY AND ITS
SUBSIDIARIES IN CONNECTION WITH THE CONDUCT OF THE COMPANY’S AND ITS
SUBSIDIARIES’ BUSINESS .

 

(B) NEITHER THE COMPANY NOR THE SUBSIDIARIES ARE OR HAVE BEEN THE SUBJECT OF ANY
CIVIL OR CRIMINAL INVESTIGATION, LITIGATION, AUDIT, PENALTY, PROCEEDING OR
ASSESSMENT, LIQUIDATED DAMAGES PROCEEDING OR CLAIM, FORFEITURE OR FORFEITURE
ACTION, CLAIM FOR ADDITIONAL CUSTOMS DUTIES OR FEES, DENIAL ORDERS, SUSPENSION
OF EXPORT PRIVILEGES, GOVERNMENTAL SANCTIONS, OR ANY OTHER ACTION, PROCEEDING OR
CLAIM, IN EACH OF THE ABOVE CASES, BY ANY AUSTRIAN OR OTHER FEDERAL, STATE OR
LOCAL GOVERNMENTAL AGENCY INVOLVING OR OTHERWISE RELATING TO ANY ALLEGED OR
ACTUAL VIOLATION OF INTERNATIONAL TRADE LAWS AND REGULATIONS OR RELATING TO ANY
ALLEGED OR ACTUAL UNDERPAYMENT OF CUSTOMS DUTIES, FEES, TAXES OR OTHER AMOUNTS
OWED PURSUANT TO ANY INTERNATIONAL TRADE LAWS AND REGULATIONS, IN EACH CASE IN
CONNECTION WITH THE CONDUCT OF THE COMPANY’S AND ITS SUBSIDIARIES’  BUSINESS,
AND, TO THE KNOWLEDGE OF SELLERS AND THE COMPANY, THERE IS NO BASIS FOR ANY OF
THE FOREGOING.

 

(C) NEITHER THE COMPANY NOR ITS SUBSIDIARIES HAVE KNOWINGLY MADE OR PROVIDED ANY
MATERIAL FALSE STATEMENT OR MATERIAL OMISSION TO ANY AGENCY OF ANY FEDERAL,
STATE OR LOCAL GOVERNMENT, PURCHASER OF PRODUCTS OR SERVICES, OR FOREIGN
GOVERNMENT OR FOREIGN AGENCY, IN CONNECTION WITH THE IMPORTATION OF MERCHANDISE
(INCLUDING THE VALUATION OR CLASSIFICATION OF IMPORTED MERCHANDISE, THE DUTY
TREATMENT OF IMPORTED MERCHANDISE, THE ELIGIBILITY OF IMPORTED

 

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merchandise for favorable duty rates or other special treatment,
country-of-origin marking, or other statements or certificates concerning
origin, quota or visa rights) or other approvals required by a foreign
government or agency or any other requirement relating to any International
Trade Laws and Regulations in connection with the conduct of the Company’s and
its Subsidiaries’ business.

 

(D) NEITHER THE COMPANY NOR THE SUBSIDIARIES HAVE MADE ANY PAYMENT, OFFER, GIFT,
PROMISE TO GIVE, OR AUTHORIZED OR OTHERWISE PARTICIPATED IN, ASSISTED OR
FACILITATED ANY PAYMENT OR GIFT THAT IS PROHIBITED BY THE UNITED STATES FOREIGN
CORRUPT PRACTICES ACT OR ANY SIMILAR AUSTRIAN OR EUROPEAN UNION LAW.

 

(E) NEITHER THE COMPANY NOR ITS SUBSIDIARIES HAVE ENGAGED IN OR OTHERWISE
PARTICIPATED IN, ASSISTED OR FACILITATED ANY TRANSACTION THAT IS PROHIBITED BY
ANY APPLICABLE EMBARGO OR RELATED TRADE RESTRICTION IMPOSED BY THE UNITED STATES
OFFICE OF FOREIGN ASSETS CONTROL OR ANY OTHER AGENCY OF THE UNITED STATES
GOVERNMENT OR ANY AGENCY OF THE AUSTRIAN GOVERNMENT WITH SIMILAR AUTHORITY OR
THE EUROPEAN UNION.

 

6.32 No Acceleration of Rights or Benefits  Neither the Companies nor any
Subsidiary have made, nor is any such entity obligated to make, any payment to
any Person in connection with the transactions contemplated by the Transaction
Documents.  No rights or benefits of any Person have been (or will be)
accelerated or increased as a result of the consummation of the transactions
contemplated by the Transaction Documents.

 

6.33 Disclosure  Neither this Agreement, the other Transaction Documents nor any
of the Schedules, attachments or Exhibits hereto, contain any untrue statement
of a material fact or omit a material fact necessary to make each statement
contained herein or therein, not misleading, which has a Material Adverse Effect
on the Company.  In the course of the due diligence process, Sellers have
provided to the Buyers’ and SMI’s representatives all information relating to
the Company and its Subsidiaries requested by them that would be Material to a
purchaser of the Shares.  All such information is, to the Knowledge of Sellers
in all material respects, true and correct and not misleading and no Material
facts have been omitted therefrom that would make such information misleading. 
There is no fact which has not been disclosed to Buyers or SMI of which Sellers
have Knowledge which has a Material Adverse Effect.

 

6.34 Closing Date  All of the representations and warranties of Sellers
contained in this Article VI and elsewhere in this Agreement and all information
delivered in any Schedule, attachment or Exhibit hereto or in any writing
delivered by the Company are true and correct in all material respects on the
date of this Agreement which is also the Closing Date, unless explicitly
otherwise stated herein or  in the Schedules or Annexes hereto.

 

ARTICLE VII

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO SELLERS

 

Each Seller jointly and severally represents and warrants to Buyers that:

 

7.1 Authorization of Transactions  Sellers have full power, authority and legal
capacity to enter into this Agreement and the other Transaction Documents to
which Sellers are a

 

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party and to perform their obligations hereunder and thereunder. .  The
execution, delivery and performance of this Agreement and the other Transaction
Documents to which Sellers are a party have been duly and validly authorized by
all requisite corporate action on the part of Sellers and no other corporate
proceedings on their part are necessary to authorize the execution, delivery or
performance of this Agreement.  This Agreement constitutes, and each of the
other Transaction Documents to which Sellers are a party shall when executed
constitute, a valid and binding obligation of Sellers, enforceable in accordance
with their terms.

 

7.2 Absence of Conflicts  Neither the execution and delivery of this Agreement
and the other Transaction Documents to which Sellers are a party, nor the
consummation of the transactions contemplated hereby and thereby, nor the
payment of any portion of the Purchase Price shall, with respect to the Sellers,
(a) conflict with, result in a breach of any of the provisions of, (b)
constitute a default under, (c) result in the violation of, (d) give any third
party the right to terminate or to accelerate any obligation under, (e) result
in the creation of any Lien upon the Shares owned by Sellers, or (f) require any
authorization, consent, approval, execution or other action by or notice to any
court or other governmental or regulatory body, the provisions of any License,
indenture, mortgage, lease, loan agreement or other agreement or instrument to
which Sellers are bound or affected, or any statute, regulation, rule, judgment,
order, decree or other restriction of any government, governmental agency or
court to which Sellers are subject.  No notice to, filing with or authorization,
consent or approval of any government, regulatory or governmental agency by
Sellers is necessary for the consummation of the transactions contemplated by
this Agreement and the other Transaction Documents to which Sellers are a party.

 

7.3 Governmental Authorities and Consents  Sellers are not required to submit
any notice, report or other filing with any governmental authority in connection
with the execution or delivery by them of this Agreement and the other
Transaction Documents to which they are a party or the consummation of the
transactions contemplated hereby or thereby.

 

7.4 Brokerage (Seller)  There are no claims for brokerage commissions, finders’
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of
Sellers.

 

7.5 Shares  Sellers hold of record and owns legally and beneficially the Shares,
and at the Closing, Sellers transfer to Buyers good and marketable title to the
Shares, in each case free and clear of any Liens, restrictions on transfer,
options, warrants, rights, calls, commitments, proxies or other contract
rights.  Sellers are not a party to any option, warrant, right, Contract, call,
put or other agreement or commitment providing for the disposition or
acquisition of any interest in the Company (other than this Agreement).  Sellers
are not a party to any voting trust, proxy or other agreement or understanding
with respect to the voting of the Shares (other than this Agreement).

 

7.6 Seller Assets  At Closing, Sellers do not or will not own or lease or
possess any right, title or interest in any Material assets or properties
(whether real (immoveable) or personal (moveable), tangible (corporeal) or
intangible (incorporeal)), including but not limited to, Proprietary Rights,
that are used in either the operation of the Company’s and its Subsidiaries’
business as presently conducted, or with respect to Company’s products in

 

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development or in existence. Except as set forth on Schedule 7.6, Sellers do not
provide the Company or a Subsidiary of the Company any services, employees or
independent contractors.

 

7.7 Litigation  There are no actions, suits, proceedings or orders pending or,
to Sellers’ knowledge, threatened against or affecting Sellers at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which would adversely affect Sellers’ performance under this Agreement
and the other Transaction Documents to which Sellers are a party or the
consummation of the transactions contemplated hereby or thereby.

 

7.8 Company Transactions  Sellers are not a party to or bound by any agreement
with respect to a Company Transaction other than this Agreement, and Sellers
have terminated all discussions with third parties (other than Buyer) regarding
Company Transactions, if any.

 

7.9 Closing Date  All of the Sellers’ representations and warranties contained
in this Article VII and elsewhere in this Agreement and all information
delivered in any Schedule, attachment or Exhibit hereto or in any writing
delivered by Sellers are true and correct in all Material respects on the date
of this Agreement which is also the Closing Date.

 

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7.10        Adherence to Securities Laws  At all times, Sellers and its
Affiliates will adhere to all United States securities laws respecting the
common stock (and any transfers thereof) of SMI transferred under this
Agreement.

 

7.11        Accredited Investor  CASAG is an “accredited investor,” as defined
in Regulation D, promulgated under the Securities Act.

 

 

ARTICLE VIII

REPRESENTATIONS AND WARRANTIES OF BUYERS

 

Each of the Buyers hereby jointly and severally represents and warrants to
Sellers that:

 

8.1 Organization and Corporate Power  Each of the Buyers is a limited liability
company, duly organized, validly existing and in good standing under the laws of
Austria, with full corporate power and authority to enter into this Agreement
and the other Transaction Documents to which Buyers are a party and perform its
obligations hereunder and thereunder.

 

8.2 Authorization of Transaction  The execution, delivery and performance of
this Agreement and the other Transaction Documents to which Buyers are a party
have been duly and validly authorized by all requisite corporate action on the
part of Buyers and no other corporate proceedings on its part are necessary to
authorize the execution, delivery or performance of this Agreement.  This
Agreement constitutes, and each of the other Transaction Documents to which
Buyers are a party shall when executed constitute, valid and binding obligations
of Buyers, enforceable in accordance with their terms.

 

8.3 No Violation  Buyers are not subject to or obligated under their certificate
of incorporation, their by-laws, any applicable law, or rule or regulation of
any governmental authority, or any agreement or instrument, or any license,
franchise or permit, or subject to any order, writ, injunction or decree, which
would be breached or violated by its execution, delivery or performance of this
Agreement and the other Transaction Documents to which they are a party.

 

8.4 Governmental Authorities and Consents  Except for any applicable gaming
regulatory authorities, Buyers are not required to submit any notice, report or
other filing with any governmental authority in connection with the execution or
delivery by it of this Agreement and the other Transaction Documents to which
they are a party or the consummation of the transactions contemplated hereby or
thereby.  .

 

8.5 Litigation  There are no actions, suits, proceedings or orders pending or,
to Buyers’ knowledge, threatened against or affecting Buyers at law or in
equity, or before or by

 

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any federal, provincial, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, which
would adversely affect Buyers’ performance under this Agreement and the other
Transaction Documents to which Buyers are a party or the consummation of the
transactions contemplated hereby or thereby.

 

8.6 SEC Documents and Other Reports   SMI has timely filed with the Securities
and Exchange Commission all documents required to be filed by it since January
1, 2001 under the Securities Act or the Securities Exchange Act of 1934, as
amended (the “Exchange Act”, and together with the Securities Act, the “SMI SEC
Documents”).  As of their respective filing dates, the SMI SEC Documents
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, each as in effect on the date so filed,
and at the time filed with the SEC none of the SMI SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.  To the Knowledge
of Buyers, the financial statements of SMI included in the SMI SEC Documents
complied as of their respective dates in all material respects with the then
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, were prepared in accordance with US GAAP (except
in the case of the unaudited statements, as permitted by Form 10-Q under the
Exchange Act) applied on a consistent basis during the periods involved (except
as may be indicated therein or in the notes thereto) and fairly present in all
material respects the consolidated financial position of SMI and its
consolidated Subsidiaries as at the dates thereof and the consolidated results
of their operations and their consolidated cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein).  Sellers
acknowledge that they are voluntarily accepting the SMI Stock as part of the
Purchase Price and without any reliance on any representations (whether by
Buyers or any Affiliate of the Buyers, none of which has been made), about SMI
or the value of the SMI Stock ,as may be contained in this Section 8.6 . The
foregoing sentence shall not reduce or eliminate any indemnification obligations
which may be applicable with respect to any other Section in this Article VIII.

 

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8.7 SMI Stock  All of the SMI Stock is duly authorized and validly issued;
provided that the Sellers have complied with the Sellers’ representations in
Section 7.10 and 7.11, is transferred pursuant to a valid exemption from
registration under the Securities Act, and is fully paid and non-assessable and
free of preemptive or other similar  rights. There was no additional stock split
or similar measure taken by SMI regarding the SMI shares, following the 3 for 2
stock split of SMI’s common stock which occurred on April 16, 2004. For the
avoidance of doubt, notwithstanding the warranties given under this Article 8,
no further warranties or representations are made regarding SMI, SMI’s business,
or the SMI Stock.

 

8.8 Brokerage (Buyer)  There are no claims for brokerage commissions, finders’
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of
Buyers.

 

8.9 Taxes

 

It is hereby agreed that any Taxes incurred by CASAG and/or CAI as partners of
the Company for periods (or portions thereof) prior to Closing due to the fact
that the Company after Closing is found to have violated applicable Austrian tax
law with respect to any tax wise relevant business transaction effected in a
period (or portions thereof) after Closing shall be borne by Buyers.

 

8.10 Closing Date  All of the representations and warranties of Buyers contained
in this Article VIII and elsewhere in this Agreement and all information
delivered in any Schedule, attachment or Exhibit hereto or in any writing
delivered by Buyers are true and correct in all material respects on the date of
this Agreement which is also the Closing Date.

 

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ARTICLE IX

GENERAL PROVISION REGARDING CLAIMS UNDER THIS AGREEMENT

 

9.1 Survival

 

(A) SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.  ALL
REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS SET FORTH IN THIS
AGREEMENT, THE TRANSACTION DOCUMENTS OR IN ANY WRITING OR CERTIFICATE DELIVERED
IN CONNECTION WITH THIS AGREEMENT SHALL SURVIVE THE CLOSING DATE.

 

NOTWITHSTANDING THE FOREGOING, BUYERS SHALL NOT BE ENTITLED TO RECOVER FOR ANY
LOSS AND SELLERS SHALL NOT BE ENTITLED TO RECOVER FOR ANY LOSS UNLESS WRITTEN
NOTICE OF A CLAIM THEREOF IS DELIVERED TO THE OTHER PARTY PRIOR TO THE
APPLICABLE LIMITATION DATE, AND, IN ADDITION, A REQUEST FOR ARBITRATION IS FILED
WITH THE ICC AND DELIVERED TO THE OTHER PARTY WITHIN SIX MONTHS FROM THE
APPLICABLE LIMITATION DATE.

 

FOR PURPOSES OF THIS AGREEMENT, THE TERM “APPLICABLE LIMITATION DATE” SHALL MEAN
DECEMBER 31, 2005; UNLESS EXPLICITLY AGREED OTHERWISE HEREINAFTER:

 

(I)            WITH RESPECT TO ANY LOSS ARISING FROM A BREACH OF THE
REPRESENTATIONS AND WARRANTIES OF THE SELLERS SET FORTH IN SECTION 7.6 (SELLER
ASSETS), THE APPLICABLE LIMITATION DATE SHALL MEAN JUNE 30, 2006;

 

(II)           WITH RESPECT TO ANY LOSS ARISING FROM A BREACH OF THE
REPRESENTATIONS AND WARRANTIES OF THE BUYERS SET FORTH IN SECTION 8.7 (SMI
STOCK), THE APPLICABLE LIMITATION DATE SHALL MEAN THE SOONER OF MAY 12, 2009 OR
SIX MONTHS AFTER THE SELLERS SHALL HAVE SOLD ALL THE SMI STOCK;

 

(III)          WITH RESPECT TO ANY LOSS ARISING FROM A BREACH OF THE
REPRESENTATIONS AND WARRANTIES OF THE SELLERS SET FORTH IN SECTION 6.12 (TAXES),
THE APPLICABLE LIMITATION DATE SHALL BE SIX MONTHS AFTER THE FINAL TAX
ASSESSMENT (WHICH IS NOT AND CANNOT BE SUBJECT TO ANY REVIEW OR AMENDMENT OR
REASSESSMENT WHATSOEVER, AND WHERE THERE CAN NOT BE ANY NEW OR ADDITIONAL
ASSESSMENT) REGARDING THE COMPANY AND ITS RESPECTIVE SUBSIDIARY BY THE RELEVANT
TAX AUTHORITY IN THE RESPECTIVE JURISDICTION WITH RESPECT TO THE EVENT WHICH
GAVE RISE TO SUCH LOSS IS ISSUED,

 

(IV)          WITH RESPECT TO ANY LOSS ARISING FROM A BREACH OF THE
REPRESENTATIONS AND WARRANTIES OF THE SELLERS SET FORTH IN SECTION 6.1
(ORGANIZATION AND CORPORATE POWER), SECTION 6.2 (AUTHORIZATION OF TRANSACTIONS)
SECTION 6.4 (TRANSFORMATION OF CARD),  SECTION 7.1 (AUTHORIZATION OF
TRANSACTION), OR SECTION 7.2 (ABSENCE OF CONFLICTS) THERE SHALL BE NO APPLICABLE
LIMITATION DATE; AND

 

(V)           WITH RESPECT TO ANY LOSS ARISING FROM  A BREACH OF THE
REPRESENTATIONS AND WARRANTIES OF BUYERS SET FORTH IN SECTION 8.1(ORGANIZATION
AND CORPORATE POWER) OR SECTION 8.2 (AUTHORIZATION OF TRANSACTION) THERE SHALL
BE NO APPLICABLE LIMITATION DATE.

 

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(B) SPECIAL RULE FOR FRAUD.  NOTWITHSTANDING ANYTHING IN THIS SECTION 9.1 TO THE
CONTRARY, AND SUBJECT TO SECTION 9.3 BELOW, IN THE EVENT OF ANY BREACH OF A
REPRESENTATION OR WARRANTY BY A PARTY THAT CONSTITUTES ACTUAL FRAUD (“LIST” IN
THE SENSE OF SECTION 870 OF THE AUSTRIAN CIVIL CODE), SUCH REPRESENTATION OR
WARRANTY SHALL SURVIVE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED IN THIS
AGREEMENT AND CONTINUE IN FULL FORCE AND EFFECT WITHOUT ANY TIME LIMITATION.

 

9.2 CLAIMS.

 

9.2.1        BUYERS’ CLAIMS.  SUBJECT TO THE PROVISIONS OF ARTICLE IX, THE
SELLERS SHALL JOINTLY AND SEVERALLY INDEMNIFY THE BUYERS, SMI (WHICH SHALL BE
ENTITLED TO DEMAND PAYMENT OF CLAIMS ON BEHALF OF THE BUYERS) AND PERMITTED (SEE
CLAUSE 11.3) ASSIGNS (COLLECTIVELY, THE “BUYERS PARTIES”) AND HOLD EACH OF THEM
HARMLESS FROM AND AGAINST AND PAY ON BEHALF OF OR REIMBURSE SUCH BUYERS IN
RESPECT OF ANY LOSS, LIABILITY, COST, DAMAGE, DEFICIENCY, TAX, PENALTY, FINE OR
EXPENSE, WHETHER OR NOT ARISING OUT OF THIRD PARTY CLAIMS (INCLUDING, WITHOUT
LIMITATION, REASONABLE INTEREST, AND, WITH RESPECT TO THIRD PERSON CLAIMS,
ATTORNEYS FEES, AS PROVIDED IN SECTION 9.4.3), (COLLECTIVELY, “LOSSES” AND
INDIVIDUALLY, A “LOSS”) WHICH ANY SUCH BUYERS PARTY SUFFERS FROM:

 

(I)            THE BREACH OF ANY REPRESENTATION OR WARRANTY MADE BY THE SELLERS
CONTAINED IN SECTIONS VI AND VII OF THIS AGREEMENT OR ANY EXHIBIT OR SCHEDULE
HERETO OR THERETO; OR

 

(II)           THE BREACH OF ANY COVENANT OR AGREEMENT MADE BY THE SELLERS
CONTAINED IN THIS AGREEMENT OR ANY EXHIBIT OR SCHEDULE HERETO OR THERETO;

 

UNLESS, IN EACH CASE,

 

(A) BUYERS OR SMI HAD KNOWLEDGE OF SUCH BREACH OF REPRESENTATION OR WARRANTY AT
OR PRIOR TO THE CLOSING, AND

 

(B) ONLY IF AND UNLESS STATED OTHERWISE HEREIN TO THE EXTENT THAT NO SUFFICIENT
RESERVES OR PROVISIONS FOR SUCH PURPOSES WERE INCLUDED IN THE CLOSING FINANCIAL
STATEMENTS.

 

9.2.2 SELLERS’ CLAIMS.

 

SUBJECT TO THE PROVISIONS OF ARTICLE IX, THE BUYERS SHALL JOINTLY AND SEVERALLY
INDEMNIFY THE SELLERS AND PERMITTED (SEE CLAUSE 11.3) ASSIGNS (COLLECTIVELY, THE
“SELLERS PARTIES”) AND HOLD EACH OF THEM HARMLESS FROM AND AGAINST AND PAY ON
BEHALF OF OR REIMBURSE SUCH SELLERS IN RESPECT OF ANY LOSS WHICH ANY SUCH
SELLERS PARTY SUFFERS FROM:

 

(I)            THE BREACH OF ANY REPRESENTATION OR WARRANTY MADE BY THE BUYERS
CONTAINED IN SECTIONS VIII OF THIS AGREEMENT OR ANY EXHIBIT OR SCHEDULE HERETO
OR THERETO; OR

 

(I)           THE BREACH OF ANY COVENANT OR AGREEMENT MADE BY THE BUYERS
CONTAINED IN THIS AGREEMENT OR ANY EXHIBIT OR SCHEDULE HERETO OR THERETO;

 

UNLESS, IN EACH CASE, SELLERS HAD KNOWLEDGE OF SUCH BREACH OF REPRESENTATION OR
WARRANTY AT OR PRIOR TO THE CLOSING.

 

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9.3 LIMITATIONS ON CLAIMS.  THE CLAIMS PROVIDED FOR IN SECTIONS 9.1 AND 9.2
ABOVE ARE SUBJECT TO THE FOLLOWING LIMITATIONS:

 

9.3.1 NO PARTY WILL BE LIABLE HEREUNDER WITH RESPECT TO CLAIMS REFERRED TO IN
SECTION 9.2 ABOVE UNLESS THE OTHER PARTY GIVES PRIOR WRITTEN NOTICE OF A CLAIM
OR A POTENTIAL CLAIM PRIOR TO THE APPLICABLE LIMITATION DATE, SO AS TO ALLOW THE
OTHER PARTY TO MINIMIZE THE LOSS.

 

NOTWITHSTANDING ANY IMPLICATION TO THE CONTRARY CONTAINED IN THIS AGREEMENT, SO
LONG AS A PARTY (X) SO DELIVERS WRITTEN NOTICE OF A CLAIM AND (Y) FILES AN
ARBITRAL ACTION WITH THE ICC WITH SIX MONTHS FROM THE APPLICABLE LIMITATION DATE
AND (Z) SERVES THE REQUEST FOR ARBITRATION ON THE OTHER PARTIES WITHIN SIX
MONTHS FROM THE APPLICABLE LIMITATION DATE, THE OTHER PARTY SHALL BE REQUIRED TO
COMPENSATE AS PROVIDED IN AND WITHIN THE LIMITATIONS OF ARTICLE IX HEREOF, FOR
ALL LOSSES AND WITHIN THE LIMITATIONS SO CLAIMED BY THE PARTY REQUESTING THE
INDEMNIFICATION.

 

9.3.2 THE SELLERS SHALL NOT BE LIABLE FOR ANY CLAIM ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, FOR ANY LOSS
ARISING UNDER CLAUSE 9.2.1 ABOVE, UNLESS, EXCEPT OTHERWISE PROVIDED BELOW, THE
AMOUNT OF THE LOSS EXCEEDS EUR 50,000 (FIFTY THOUSAND EUROS) INDIVIDUALLY (THE
“DE MINIMIS”) OR EUR 250,000 (TWO HUNDRED AND FIFTY THOUSAND EUROS) IN THE
AGGREGATE (THE “BASKET”), IN WHICH CASE THE SELLERS SHALL BE LIABLE FOR ALL SUCH
LOSSES (PROVIDED THAT THE AMOUNT OF THESE EXCEED EUR 50,000) THE TOTAL OF WHICH
EXCEED THE BASKET; FURTHER PROVIDED THAT ONCE THE BASKET IS ACHIEVED FROM ALL
LOSSES (EXCEPT DE MINIMIS LOSSES), THERE SHALL NO LONGER BE ANY DE MINIMIS OR
BASKET;

 

THE BASKET LIMITATION AND THE DE MINIMIS LIMITATION SHALL NOT APPLY WITH RESPECT
TO ANY LOSS ARISING FROM A BREACH OF THE REPRESENTATIONS AND WARRANTIES OF THE
SELLERS SET FORTH IN SECTION 6.1 (ORGANIZATION), SECTION6.2 (AUTHORIZATION OF
TRANSACTIONS), SECTION 6.3 (CAPITALIZATION), SECTION 6.4 (TRANSFORMATION OF
CARD), SECTION 6.12 (TAXES) AND SECTIONS 7.1 THROUGH 7.3 AND SECTION 7.6.

 

THE DE MINIMIS AMOUNTS AND THE BASKET AMOUNTS FOR EACH OF SECTION 6.7 (FINANCIAL
STATEMENTS) AND SECTION 6.8 (UNDISCLOSED LIABILITIES) SHALL BE EUR 10,000 AND
EUR 100,000, RESPECTIVELY.

 

9.3.3 THE BUYERS SHALL NOT BE LIABLE FOR ANY CLAIM ARISING OUT OF OR IN
CONNECTION WITH THE TRANSACTION DOCUMENTS, INCLUDING, WITHOUT LIMITATION, FOR
ANY LOSS ARISING UNDER CLAUSE 9.2.2 ABOVE, UNLESS THE AMOUNT OF SUCH LOSSES
EXCEEDS EUR 50,000 INDIVIDUALLY (THE “DE MINIMIS”) OR EUR 250,000 IN THE
AGGREGATE (THE “BASKET”), IN WHICH CASE THE BUYERS SHALL BE LIABLE FOR ALL SUCH
LOSSES (PROVIDED THAT THE AMOUNT OF THESE EXCEED EUR 50,000) THE TOTAL OF WHICH
EXCEED THE BASKET; FURTHER PROVIDED THAT ONCE THE BASKET IS ACHIEVED FROM ALL
LOSSES (EXCEPT DE MINIMIS LOSSES), THERE SHALL NO LONGER BE ANY DE MINIMIS OR
BASKET;

 

THE BASKET LIMITATION AND THE DE MINIMIS LIMITATION SHALL NOT APPLY WITH RESPECT
TO ANY LOSS ARISING FROM OR RELATED TO A BREACH OF THE REPRESENTATIONS AND
WARRANTIES OF THE BUYERS SET FORTH IN SECTION 8.2 (AUTHORIZATION OF TRANSACTION)
OR SECTION 8.7 (SMI SHARES);

 

9.3.4 THE AGGREGATE LIABILITY OF EACH OF THE RESPECTIVE SELLERS FOR ALL SUCH
LOSSES AND FOR ANY AND ALL CLAIMS OUT OF OR IN CONNECTION WITH THIS AGREEMENT
SHALL NOT EXCEED 50% (FIFTY PER CENT) OF THE LIMITED KG PAYMENT (CASH AND STOCK)
IN CASE OF CASAG AND OF THE UNLIMITED KG PAYMENT

 

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in case of CAI, which, in each case, was  actually received by the respective
Seller; however, there shall be no limit on the aggregate liability for a breach
of Sellers’ representation under Section 6.1 (Organization), Section 6.2
(Authorization of Transactions), Section 6.3 (Capitalization), Section 6.4
(Transformation of CARD), Section 6.12 (Taxes) and Sections 7.1 through 7.3 and
Section 7.6.

 

AS A SUB-THRESHOLD WITHIN SUCH 50% THRESHOLD, IN NO EVENT SHALL THE AGGREGATE
LIABILITY OF CASAG FOR ALL LOSSES ARISING OUT OF OR IN CONNECTION WITH
PROPRIETARY RIGHTS, INCLUDING, WITHOUT LIMITATION, UNDER SECTIONS 6.14 AND 6.15
HEREOF, EXCEED EUR 4,000.000 (FOUR MILLION EUROS).

 

9.3.5 THE BUYERS’ AGGREGATE LIABILITY FOR ALL SUCH LOSSES AND FOR ANY AND ALL
CLAIMS OUT OF OR IN CONNECTION WITH THIS AGREEMENT, OTHER THAN THE PURCHASE
PRICE, SHALL NOT EXCEED EUR 4,000.000 (FOUR MILLION EUROS); HOWEVER, THERE SHALL
BE NO LIMIT FOR THE AGGREGATE LIABILITY OF BUYERS FOR A BREACH OF BUYERS’
REPRESENTATIONS UNDER SECTION 8.2 (AUTHORIZATION OF TRANSACTION), AND THERE
SHALL BE A LIMIT FOR THE AGGREGATE LIABILITY OF BUYERS IN THE AMOUNT OF EUR
15,813,000 (FIFTEEN MILLION EIGHT HUNDRED THIRTEEN THOUSAND EUROS) FOR A BREACH
OF BUYERS REPRESENTATIONS UNDER SECTION 8.7 (SMI SHARES).

 

9.4 Procedure.

 

9.4.1 No Party shall raise a claim under this Agreement, unless such party (the
“Compensated Party”) shall have promptly (no later than 10 business days) given
written notice to the other Party(ies) (the “Compensating Party”) after
receiving written notice of any action, lawsuit, proceeding, investigation or
other claim against it (if by a third person) or discovering the potential
liability, obligation or facts giving rise to such potential claim for
compensation, describing, if and as known, the claim, the amount thereof (if
known and quantifiable) and the basis thereof; failure to so notify the
Compensating Party within six weeks after the Compensated Party has obtained
knowledge of the relevant circumstances shall relieve the Compensating Party of
its Liabilities hereunder, to the extent that the Compensating Party is actually
prejudiced.

 

9.4.2  Sellers shall, at their own expense, assume the defense of any such suit,
action or proceeding, provided that (i) the Sellers’ counsel is reasonably
acceptable to the Buyers, (ii) the Sellers shall thereafter consult with the
Buyers upon the Buyers’ reasonable request for such consultation from time to
time, and Buyers shall be entitled to participate at their own expense with
respect to such suit, action or proceeding and (iii) the Sellers shall not,
without the Buyers’ consent, agree to any settlement (provided that no Party
shall be obligated to accept a settlement that contains an admission of fraud)
provided that if Sellers would be prepared to accept a settlement and to pay out
of the settlement for periods prior to Closing and Buyers refuse their consent
to the settlement, Sellers shall, provided they first pay to Buyers the proposed
settlement amount, be free of their respective payment obligation under the
respective representation and warranty, and Buyers shall solely be responsible
for the continuation and handling (including without limitation the ultimate
payment of any such claim). If the ultimate resolution by the Buyers of said
claim results in the Buyers paying less than the settlement amount previously
paid by Sellers to Buyers, Buyers shall promptly refund the excess amount to
Sellers, but only after deduction of 100% of any unreimbursed attorneys fees,
expert fees and court fees.

 

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PARTICIPATION OF THE COMPENSATING PARTY IN THE DEFENSE OF ANY CLAIM SHALL NOT BE
DEEMED AN ACKNOWLEDGEMENT OF ANY OBLIGATION TO INDEMNIFY THE COMPENSATED PARTY,
AND SHALL NOT CONSTITUTE A WAIVER OF ANY DEFENSES WHICH THE COMPENSATING PARTY
MAY HAVE AGAINST ANY CLAIM FOR INDEMNIFICATION RAISED BY THE COMPENSATED PARTY.

 

9.4.3 Except as otherwise provided herein, 30% of all reasonable attorneys fees,
expert fees and court costs of such defense against such claims shall be
reimbursed by CASAG and 70% shall be borne by the Company or Buyers, as the case
may be; provided, however, that with respect to the representations and
warranties of the Sellers contained in Sections 6.2, 6.12, and 7.2 the
Indemnifying Party (i.e., the Sellers) shall pay and be responsible for 100% of
the attorneys fees, expert fees and court cost).

 

9.4.4 IN PROCEEDINGS BETWEEN THE SELLERS AND THE BUYERS OR SMI, THE ARBITRAL
TRIBUNAL SHALL DECIDE OF THE ALLOCATION OF THE COSTS AND FEES AMONG THE PARTIES
TO THE DISPUTE.

 

9.5 OFFSET.

 

NOTWITHSTANDING ANY OTHER PROVISION CONTAINED IN THIS AGREEMENT, ANY LOSS WHICH
ANY OF THE PARTIES SUFFERS, SUSTAINS OR BECOMES SUBJECT TO AND WITH RESPECT TO
WHICH SUCH PARTY IS ENTITLED TO INDEMNIFICATION FROM THE RESPECTIVE OTHER PARTY
PURSUANT TO THIS ARTICLE IX MAY, AT THE OPTION OF SUCH PARTY, BE SATISFIED (TO
THE EXTENT OF SUCH OFFSET) BY SETTING OFF ALL OR ANY PORTION OF SUCH LOSSES
AGAINST ANY AMOUNTS WHICH SUCH PARTY OWES TO THE RESPECTIVE OTHER PARTY.

 

9.6 PAYMENT OF CLAIMS BY SELLERS.

 

SELLERS SHALL BE ENTITLED TO FULFILL ANY OBLIGATION UNDER THIS AGREEMENT TO ANY
OF THE BUYERS OR SMI BY DELIVERING TO SMI SUCH NUMBER OF SHARES OF SMI COMMON
STOCK VALUED AT THE AVERAGE CLOSING PRICE OF SMI’S COMMON STOCK DURING THE 10
(TEN) TRADING DAYS PRIOR TO THE THIRD NEW YORK BUSINESS DAY PRIOR TO THE DUE
DATE OF SUCH PAYMENT (THE “COMPENSATION PRICE”).  THE CONVERSION RATE FOR ANY
EURO OBLIGATION THEREUNDER SHALL BE 1 EURO EQUALS $1.2289. THUS, FOR EXAMPLE, IF
AN OBLIGATION OF 100 EUROS SHALL BE PAID, THE SELLERS MAY DELIVER SMI STOCK,
BASED ON THE COMPENSATION PRICE, WITH A VALUE OF $122.89.

 

THE PARTIES AGREE THAT THEY WILL TAKE ALL NECESSARY AND APPROPRIATE ACTIONS IN
ORDER TO AVOID AN UNLAWFUL REPAYMENT OF EQUITY AND HOLDING OF PARENT SHARES.

 

9.7           NO RESCISSION RIGHTS OR SIMILAR RIGHTS

 

9.7.1        THE BUYERS AND THE SELLERS SHALL NOT BE ENTITLED TO CHALLENGE,
RESCIND OR TERMINATE THIS AGREEMENT, IN WHOLE OR IN PART, IN PARTICULAR BASED ON
ANY WARRANTY CLAIMS AND NO PARTY SHALL BE ENTITLED TO CHALLENGE, RESCIND OR
TERMINATE THIS AGREEMENT BASED ON ERROR, OR FOR ANY SIMILAR REASON.

 

9.7.2        NO WARRANTIES ARE GIVEN OTHER THAN THOSE CONTAINED IN ARTICLES VI,
VII AND VIII, AND THESE SHALL NOT CONSTITUTE GUARANTIES (I.E., NO “ECHTE ODER
UNECHTE” “GARANTIEN”). NONE OF THE REPRESENTATIONS AND WARRANTIES GIVEN BY THE
SELLERS UNDER THIS AGREEMENT CONSTITUTE AND THE SELLERS DO NOT MAKE ANY
REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO THE INHERENT VALUE OF THE
COMPANY OR THE PRESENT OR FUTURE PERFORMANCE FOR THE COMPANY OR ITS AFFILIATES.
NONE OF THE

 

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representations and warranties given by the Buyers under this Agreement
constitute and neither Buyers nor its Affiliates make any representation,
express or implied, with respect to the inherent value of the Buyers or SMI or
the present or future performance of the Buyers or SMI.

 

9.7.3        THE REMEDIES AGREED IN SECTION 9.2 SHALL BE THE SOLE AND EXCLUSIVE
REMEDIES FOR A PARTY FOR OR IN CONNECTION WITH ANY OF THE MATTERS DESCRIBED IN
AND BREACHES OF ANY OF THE REPRESENTATIONS AND WARRANTIES MADE IN ARTICLES VI,
VII AND VIII. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, UNDER NO
CIRCUMSTANCES SHALL ANY OF THE PARTIES BE ENTITLED TO LOSS OF EARNINGS OR
PROFITS, DIMINUTION IN VALUE, INDIRECT OR CONSEQUENTIAL LOSSES, DAMAGES AND
COSTS, OR PUNITIVE DAMAGES.

 

9.7.4        Deleted .

 

9.7.5        SECTION 924 OF THE AUSTRIAN GENERAL CIVIL CODE SHALL NOT APPLY.

 

9.7.6        DISCLOSURES MADE AGAINST ONE REPRESENTATION AND WARRANTY IN THIS
AGREEMENT IN ANY OF THE SCHEDULES OR EXHIBITS HERETO OR THERETO SHALL BE DEEMED
MADE AGAINST ALL AND ANY REPRESENTATIONS AND WARRANTIES HEREIN.

 

9.7.7        FACTS WHICH CONSTITUTE VIOLATIONS OF MORE THAN ONE REPRESENTATION
OR WARRANTY GIVEN BY SELLERS OR BUYERS SHALL NOT RESULT IN A DOUBLE COUNTING OF
WARRANTY CLAIMS. TO THE EXTENT A VIOLATION OF REPRESENTATIONS AND WARRANTIES HAS
TAX IMPLICATIONS, THE DE MINIMIS AND BASKET FOR TAX REPRESENTATIONS AND
WARRANTIES (I.E., ZERO AND ZERO) SHALL ALWAYS APPLY. IN ALL OTHER SITUATIONS
WHERE MORE THAN ONE REPRESENTATION AND WARRANTY IS VIOLATED BY THE SAME SET OF
FACTS, THE DE MINIMIS AND THE BASKET FOR SUCH REPRESENTATION SHALL APPLY, WHICH
IS THE “LEX SPECIALIS” (I.E., THE MORE SPECIFIC RULE).

 

ARTICLE X
ADDITIONAL AGREEMENTS

 

10.1 General  In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other party reasonably may
request, all at the sole, actual cost and out of pocket expense of the
requesting Party (unless the requesting Party is entitled to indemnification
therefor under Article IX).  The Sellers acknowledge and agree that from and
after the Closing, the Company will be entitled to possession of all documents,
books, records (including Tax records), agreements, and financial data of any
sort relating to the Company and its Subsidiaries.

 

10.2 Litigation Support  In the event and for so long as any Party actively is
contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Company or any of its Subsidiaries, each of the other Parties will
cooperate with it and its counsel in the contest or defense, make available
their personnel, and provide such testimony and access to their books and
records as shall be necessary in connection with the contest or defense,

 

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all at the sole cost and expense of the contesting or defending Party (unless
the contesting or defending Party is entitled to indemnification therefore under
Article IX.

 

10.3 TAX MATTERS.

 

10.3.1 TRANSFER TAXES.  ALL TRANSFER, DOCUMENTARY, SALES, USE, STAMP,
REGISTRATION AND OTHER SUCH TAXES AND FEES (INCLUDING ANY PENALTIES AND INTEREST
THEREON) INCURRED IN CONNECTION WITH THIS AGREEMENT (FOR THE AVOIDANCE OF DOUBT,
WITH THE EXCLUSION OF SELLERS’ INCOME TAXES, IF ANY) SHALL BE PAID BY BUYERS
WHEN DUE, AND BUYERS SHALL, AT THEIR OWN EXPENSE, FILE ALL NECESSARY TAX RETURNS
AND OTHER DOCUMENTATION WITH RESPECT TO ALL SUCH TRANSFER, DOCUMENTARY, SALES,
USE, STAMP, REGISTRATION AND OTHER TAXES AND FEES, AND IF REQUIRED BY APPLICABLE
LAW, SELLERS SHALL, AND SHALL CAUSE ITS AFFILIATES TO, JOIN IN THE EXECUTION OF
ANY SUCH TAX RETURNS AND OTHER DOCUMENTATION.

 

10.3.2 COOPERATION ON TAX MATTERS.  BUYERS AND SELLERS SHALL COOPERATE FULLY AND
SELLERS (FOR PERIODS PRIOR TO CLOSING) AND BUYERS (FOR PERIODS AFTER THE
CLOSING) SHALL CAUSE THE COMPANY AND ITS SUBSIDIARIES AS AND TO THE EXTENT
REASONABLY REQUESTED BY ANY OTHER PARTY, IN CONNECTION WITH THE PREPARATION AND
FILING OF TAX RETURNS AND THE TAXWISE HANDLING OF TAX ISSUES RELATING TO PERIODS
PRIOR TO CLOSING BUT AFFECTING PERIODS THEREAFTER OF THE COMPANY AND ITS
SUBSIDIARIES AND ANY AUDIT, LITIGATION OR OTHER PROCEEDING WITH RESPECT TO TAXES
OF THE COMPANY AND ITS SUBSIDIARIES.  SUCH COOPERATION SHALL INCLUDE THE
RETENTION AND (UPON ANY SUCH PARTY’S REQUEST) THE PROVISION OF RECORDS AND
INFORMATION WHICH ARE REASONABLY RELEVANT TO ANY SUCH AUDIT, LITIGATION OR OTHER
PROCEEDING AND MAKING EMPLOYEES AVAILABLE ON A MUTUALLY CONVENIENT BASIS TO
PROVIDE ADDITIONAL INFORMATION AND EXPLANATION OF ANY MATERIAL PROVIDED
HEREUNDER.  THE SELLERS SHALL AGREE:

 

(I) TO RETAIN ALL OF SELLER’S BOOKS AND RECORDS WITH RESPECT TO TAX MATTERS AND
PERTINENT TO THE COMPANY RELATING TO ANY TAXABLE PERIOD BEGINNING BEFORE THE
CLOSING DATE UNTIL THE EXPIRATION OF THE PERIOD DURING WHICH THE RELEVANT TAX
AUTHORITY MAY ASSESS OR REASSESS ELEMENTS RELATING TO THE RESPECTIVE TAXABLE
PERIODS, AND TO ABIDE BY ALL RECORD RETENTION AGREEMENTS ENTERED INTO WITH ANY
TAXING AUTHORITY;

 

(ii) to specifically assist and support Buyers as reasonably requested to
fulfill Company’s obligation to prepare the Company’s Tax Return 2004 as
required pursuant to sec 188 Federal Fiscal Code (Bundesabgabenordnung); this
includes but is not limited to assistance and support to:

 

(a) accurately determine each of Seller’s and Buyer’s tax relevant profit share
in the Company for Company’s Fiscal Year 2004 which profit shares shall be
calculated based upon a tax relevant Closing Financial Statements and Closing
Profit and Loss Account considering the Closing Date and

(b) to determine Seller’s tax relevant taxable capital gain achieved through the
sale of KG Shares at closing; and

(c) to specifically assist and support Buyers as reasonably requested to
determine Buyers’ tax wise cost of acquisition of each of the Company’s assets
and liabilities acquired through the consummation of this Agreement, such
assistance and support including but not limited to the provision of such
information and data that allows the Buyer to exactly determine the assets and
liabilities acquired at closing so that Buyer can

 

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accurately capitalize for tax purposes all of these assets and liabilities on a
per item basis at closing.

 

10.3.3      TAX AUDITS.

 

AT SELLERS’ OPTION AND OWN EXPENSE SELLERS ARE PERMITTED TO ASSUME THE CONDUCT
OF ANY TAX AUDIT RELATING TO THE COMPANY AND/OR ITS SUBSIDIARIES INSOFAR SUCH
TAX AUDITS COVER THE PERIODS ENDING ON OR PRIOR TO DECEMBER 31, 2003 (OR IN CASE
OF THE NEW ZEALAND SUBSIDIARY PERIODS ENDING ON OR PRIOR TO MARCH 31, 2004). IF
SELLERS ASSUME THE CONDUCT OF ANY TAX AUDIT AS MENTIONED IN THE PRESECING
SENTENCE, SELLERS SHALL HAVE THE RIGHT TO EMPLOY COUNSEL SEPARATE FROM COUNSEL
EMPLOYED BY THE BUYERS IN ANY SUCH TAX AUDIT PROVIDED THAT (I) THE SELLERS’
COUNSEL IS REASONABLY ACCEPTABLE TO THE BUYERS, (II) THE SELLERS SHALL
THEREAFTER CONSULT WITH THE BUYERS UPON THE BUYERS’ REASONABLE REQUEST FOR SUCH
CONSULTATION FROM TIME TO TIME WITH RESPECT TO SUCH TAX AUDIT AND (III) THE
SELLERS SHALL NOT, WITHOUT THE BUYERS’ CONSENT, AGREE TO ANY SETTLEMENT WITH
RESPECT TO ANY TAX.

 

IN CASE THE SELLERS ASSUME THE CONDUCT OF ANY TAX AUDIT BUYERS SHALL BE ENTITLED
AT THEIR OWN EXPENSE TO PARTICIPATE IN ANY SUCH TAX AUDIT, INCLUDING BUT NOT
LIMITED TO PARTICIPATION IN ANY MEETING WITH THE TAX AUDITORS, UP FRONT
COORDINATION REGARDING ANY CORRESPONDENCE WITH THE TAX AUDITORS AND, AS
REASONABLY REQUESTED BY BUYERS, PARTICIPATION IN ANY PREPARATORY MEETING BY THE
SELLERS TO DEVELOP AN APPROPRIATE TAX AUDIT STRATEGY. FOR THE PURPOSE OF THE
AFORESAID BUYERS SHALL BE ENTITLED TO EMPLOY COUNSEL, SEPARATE FROM THE COUNSEL
EMPLOYED BY THE SELLERS.

 

10. 3.4 TAX CONTROVERSIES.  BUYERS SHALL GIVE PROMPT NOTICE TO THE SELLERS OF
THE ASSERTION OF ANY CLAIM, OR THE COMMENCEMENT OF ANY SUIT, ACTION OR
PROCEEDING WITH RESPECT TO ANY TAX LIABILITY OF THE COMPANY FOR WHICH SELLERS
ARE RESPONSIBLE UNDER SECTION 6.12 (BY APPLICATION OF SECTION IX AND SHALL GIVE
THE SELLERS SUCH INFORMATION WITH RESPECT THERETO AS THE SELLERS MAY REASONABLY
REQUEST.

 

AT SELLERS’ OPTION AND AT THEIR OWN EXPENSE SELLERS SHALL BE PERMITTED TO ASSUME
THE DEFENSE OF ANY SUCH SUIT, ACTION OR PROCEEDING, PROVIDED THAT (I) THE
SELLERS’ COUNSEL IS REASONABLY ACCEPTABLE TO THE BUYERS, (II) THE SELLERS SHALL
THEREAFTER CONSULT WITH THE BUYERS UPON THE BUYERS’ REASONABLE REQUEST FOR SUCH
CONSULTATION FROM TIME TO TIME WITH RESPECT TO SUCH SUIT, ACTION OR PROCEEDING
AND (III) BUYERS SHALL ALWAYS HAVE THE RIGHT TO PARTICIPATE IN THE DEFENSE, AND
(IV) THE SELLERS SHALL NOT, WITHOUT THE BUYERS’ CONSENT, AGREE TO ANY SETTLEMENT
WITH RESPECT TO ANY TAX.

 

IF SELLERS’ CONDUCT THE DEFENSE AND PROPOSE A SETTLEMENT WHICH IS ACCEPTABLE BY
THE COMPETENT TAX OFFICE IN CHARGE OF THE PROCEEDING AND THE BUYERS FAIL TO
CONSENT TO SUCH PROPOSED SETTLEMENT (BUT PROVIDED THAT NO PARTY SHALL BE
OBLIGATED TO ACCEPT A SETTLEMENT THAT CONTAINS AN ADMISSION OF FRAUD), THE
BUYERS’ CLAIMS FOR INDEMNIFICATION AGAINST THE SELLERS SHALL BE LIMITED TO THE
CLAIMS WHICH THE BUYERS WOULD HAVE HAD, HAD THE SETTLEMENT BEEN ACCEPTED BY THE
BUYERS, PROVIDED THAT SELLERS FIRST PAY THE BUYER THE PROPOSED SETTLEMENT
AMOUNT.

 

IN THE EVENT THAT THE SELLERS DO NOT ASSUME THE DEFENSE OR, AFTER HAVING ASSUMED
THE DEFENSE, FAIL TO TIMELY UNDERTAKE THE DEFENSE OF ANY TAX CLAIM UNDER SECTION
6.12, THEN BUYERS SHALL HAVE THE RIGHT TO DEFEND AND SETTLE ANY SUCH TAX CLAIM
IN THEIR SOLE AND REASONABLE DISCRETION AND SELLERS

 

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shall be solely liable for any Tax assessed or settlement including without
limitation reasonable attorneys fees, expert fees and court costs pursuant to
Sellers indemnification obligation under section 9.2.1.

 

10.4        Press Releases and Announcements  At and prior to the Closing Date,
no press releases related to this Agreement and the transactions contemplated
herein, or other announcements to the employees, customers or suppliers of the
Company  shall be issued without the mutual approval of all Parties, except for
any public disclosure which is required of a Party by law or regulation.  During
the first sixteen days after the Closing Date, no press releases related to this
Agreement and the transactions contemplated herein, or other announcements to
the employees, customers or suppliers of the Company, shall be issued without
Buyers’ prior written consent.

 

10.5        Further Transfers  Each Party shall do such additional acts, and
shall execute and deliver such further documents and instruments of conveyance
and transfer and take such additional action as the respective other Party may
reasonably request to effect, consummate, confirm or evidence the transfer to
the Buyers of the Shares and the payment to the Sellers of the Purchase Price
and any other transactions contemplated or intended hereby.

 

10.6 Deleted

 

10.7 Expenses.  Except as otherwise provided herein, the Sellers and the Buyers
shall pay all of their own fees, costs and expenses (including, without
limitation, fees, costs and expenses of legal counsel, investment bankers,
accountants, brokers or other representatives and consultants and appraisal
fees, costs and expenses) incurred in connection with the negotiation of the
Letter of Intent, this Agreement, the other Transaction Documents, the
performance of their obligations hereunder and thereunder, and the consummation
of the transactions contemplated hereby and thereby; it being understood that
the Company shall pay the fees, costs and expenses of the Company (including
without limitation its legal and accounting fees, costs and expenses up to an
amount of EUR 25,000 (twenty five thousand Euros) as well as any Taxes) and that
the Company shall not pay any of Sellers’ fees, costs and expenses (including,
without limitation, Sellers’ legal and accounting fees, costs and expenses)
arising in connection with the transactions contemplated hereby if the
transactions are consummated.

 

10.8 Confidentiality.

 

10.8.1      CONFIDENTIAL INFORMATION.  EACH PARTY SHALL TREAT AND HOLD AS
CONFIDENTIAL ANY INFORMATION CONCERNING THE BUSINESS AND AFFAIRS OF THE OTHER
PARTY AND ITS SUBSIDIARIES THAT IS NOT ALREADY GENERALLY AVAILABLE TO THE PUBLIC
(THE “CONFIDENTIAL INFORMATION”), REFRAIN FROM USING ANY OF THE CONFIDENTIAL
INFORMATION EXCEPT IN CONNECTION WITH THIS AGREEMENT.  IN THE EVENT THAT ANY
PARTY OR ANY AFFILIATE OF ANY PARTY IS REQUESTED OR REQUIRED (BY ORAL QUESTION
OR REQUEST FOR INFORMATION OR DOCUMENTS IN ANY LEGAL PROCEEDING, INTERROGATORY,
SUBPOENA, CIVIL INVESTIGATIVE DEMAND, OR SIMILAR PROCESS) TO DISCLOSE ANY
CONFIDENTIAL INFORMATION, SUCH NOTIFYING PARTY SHALL NOTIFY THE RESPECTIVE OTHER
PARTY PROMPTLY OF THE REQUEST OR REQUIREMENT SO THAT THE OTHER PARTY MAY SEEK AN
APPROPRIATE PROTECTIVE ORDER OR WAIVE COMPLIANCE WITH THE PROVISIONS OF THIS
SECTION

 

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If, in the absence of a protective order or the receipt of a waiver hereunder,
the notifying Party is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for contempt, the
notifying Party may disclose the Confidential Information to the respective
court, authority, tribunal, etc; provided that such disclosing party shall use
its best efforts to obtain, at the request of the respective other Party, an
order or other assurance that confidential treatment shall be accorded to such
portion of the Confidential Information required to be disclosed as the other
Party shall designate. Notwithstanding the foregoing, any Party shall be
entitled to disclose and confidential information, as required by applicable
law, regulation or regulatory entity.

 

10.8.2      NON-DISCLOSURE.  THE PARTIES SHALL KEEP CONFIDENTIAL THE SUBJECT
MATTER DESCRIBED HEREIN AND THE FACT THAT NEGOTIATIONS WERE TAKING PLACE UNTIL
THE CONTENT AND TIMING OF A PUBLIC ANNOUNCEMENT ARE MUTUALLY AGREED OR UNTIL THE
CLOSING, WHICHEVER IS EARLIER, AND, IN SUCH CASE ONLY PURSUANT TO SECTION 10.8.2
EXCEPT IF OTHERWISE REQUIRED BY APPLICABLE LAW, STATUTE, REGULATION OF
REGULATORY ENTITY.

 

10.9 Protection of Business  The Sellers shall not in any manner take any action
which is designed or intended to have the effect of discouraging customers,
suppliers, vendors, service providers, employees, lessors, licensors and other
business relations from maintaining the same business relationships with the
Company  after the date of this Agreement and after the Closing Date, provided
that nothing contained herein shall be construed to restrain any of the Sellers
in any way in the operation of its core business areas, including in particular
the operation of casinos. This obligation shall terminate on March 31, 2009.

 

10.10 Covenant Not to Compete  For a period of five years from and after the
Closing Date, neither Sellers nor its  subsidiaries will engage directly or
indirectly in any area of the world in the business that the Buyers, the
Companies or any of their Subsidiaries conduct as of the Closing Date, limited,
however, to the design, manufacture, sale or leasing of automatic card shuffling
machines or roulette chip sorting machines; provided, however, that no owner of
less than 5% of the outstanding stock of any publicly-traded corporation shall
be deemed to engage solely by reason thereof in any of its businesses, provided
further that Sellers shall in no way be prevented from purchasing or leasing
from any third person any product similar to those of the Company, for use in
casinos co-owned or co-operated by Sellers.  If the final judgment of a court of
competent jurisdiction declares that any term or provision of this Section 10.10
is invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.

 

If, for any reason, Sellers breach the 5 years non-compete period, or if such
period is shortened by any court or administrative ruling, then Sellers agree to
return and refund to SMI or the Company (as the case may be) any refunds or
rebates which any Seller or its Affiliates received as a result of any supply
arrangement between Buyers and/or its Affiliates and Sellers and/or its
Affiliates (i.e. any refunds or rebates).

 

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10.11 Settlement of Mutual Claims

 

Any and all pending and non-pending claims, court cases and arbitral
proceedings, between SMI and/or any of SMI’s Affiliates on the one hand and
CASAG and/or any of CASAG’s Affiliates and/or the Company or its Subsidiaries on
the other hand, including, in particular, those proceedings listed on Schedule
10.11 (the “Proceedings”), are herewith settled by mutual agreement and no
Party, as well as any Party’s and its Affiliates and assigns, shall have any
further claims against the respective other party to any of these Proceedings, 
irrespective of whether or not such rights or claims were subject to or alleged
in the Proceedings.

 

The Parties as well as SMI and its Affiliates and assigns shall promptly take
any necessary steps to have all pending actions, petitions, complaints,
challenges to patents, etc. withdrawn, to have all Proceedings formally closed
and to have all court orders, judgments, injunctions, etc. vacated and to have
all security bonds or similar deposits repaid to such party to the Proceedings
who deposited them. Each party to the Proceedings shall bear its own costs,
attorneys fees and other expenses incurred in the past or future, including any
costs, attorneys fees or other expenses, if any, which shall become payable in
the process of closing the Proceedings. Any expert fees shall be paid by the
party to the Proceedings who requested the appointment of such expert. To the
extent that rulings, decrees, awards, etc. have been issued on or before the
Closing or shall be issued after the Closing (including, in particular, rulings
ordering one party to the Proceedings to pay any amount to another party, or to
refrain from or carry out any acts), the Parties will take all required steps to
have such decrees vacated; if this should not be possible, the party to the
Proceedings who is entitled under such decrees shall not make use of them (in
particular, by demanding enforcement or other compliance with such decrees).

 

10.12 Corporate Names

 

In addition to the transfer of any and all rights in the expression “CARD”, if
any, the Sellers expressly consent that the Company and its Subsidiaries are
entitled to bear the term “CARD” as part of their respective corporate names,
for an unlimited term (“Zustimmung zur Firmenfortführung”). The Buyers covenant
and agree that they will take all necessary corporate actions and will make all
necessary filings, and will cause the Company to do the same, to effect that the
combination of the words “Casinos Austria”, “Austrian Casinos” (or any
confusingly similar expressions or translations or any other names, marks, logos
et cetera, used by any of the Sellers or their Affiliates, whether registered or
not) (hereinafter the “Protected Names”) will be removed from all corporate
names of the Company and its Subsidiaries, at the latest three months after the
Closing.

 

Furthermore, the Buyers undertake and agree that as (a) from the Closing, they
will cause the Company to discontinue the usage of and will refrain from using
the Protected Names in any context and for any purposes whatsoever, and (b) that
the Buyers and their Affiliates, including in particular, SMI and its
Affiliates, will at all times (before or after the Closing) refrain from using
any of the Protected Names for any purpose whatsoever, and (c) that any forms,
advertising materials, price lists, or other documents, objects or items of the
Company

 

52

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or its Subsidiaries on which the Protected Names appear, shall be destroyed
within fifteen business days after the Closing and (d) that the Company, the
Subsidiaries nor  SMI or any Affiliates of SMI will take any step or omission
which would create the impression to any third party that the Company or the
Subsidiaries or SMI or any of SMI’ Affiliates is associated with any of the
Sellers or, in particular, that any of the Sellers is liable for any obligations
of any of these companies.

 

10.13      Compliance  Each Party acknowledges that each Party:  (a) operates
under privileged licenses in a highly regulated industry; and (b) maintains a
compliance program to (i) protect and preserve its name, reputation, integrity,
and good will through a thorough review and determination of its integrity and
fitness, both initially and thereafter, of any person or company that performs
work for either Party or with which those companies are otherwise associated,
and (ii) to monitor compliance with the requirements established by gaming
regulatory authorities or authorities that regulate the gaming industry in
various jurisdictions around the world.  Each Party shall cooperate with the
other Party and its compliance committee as reasonably requested and provide the
relevant committee with such information as it may reasonably request on
appropriate notice.

 

ARTICLE XI

 

MISCELLANEOUS

 

11.1 Amendment and Waiver  This Agreement may be amended and any provision of
this Agreement may be waived, provided that any such amendment or waiver shall
be binding upon a Party only if such amendment or waiver is set forth in a
writing executed by the Buyers and the Sellers.  No course of dealing between or
among any persons having any interest in this Agreement shall be deemed
effective to modify, amend or discharge any part of this Agreement or any rights
or Liabilities of any Party under or by reason of this Agreement.

 

11.2 Notices  All notices, demands and other communications given or delivered
under this Agreement shall be in writing and shall be deemed to have been given
when personally delivered, or delivered by express courier service or telecopied
(with confirmation of receipt and hard copy by courier to follow). Notices,
demands and communications to the Sellers shall be sent to the address or
telecopy number of the Sellers at the address or telecopy number indicated
below, unless another address or telecopy for the Sellers is specified in
writing and shall be deemed received by both Sellers if received by CASAG, and
notices, demands and communications to the Company and the Buyers shall, unless
another address is specified in writing, be sent to the address or telecopy
number indicated below, and shall be deemed received by both Buyers and the
Company if received by SMI:

 

Notices to the Sellers:

 

 

 

 

 

Casinos Austria Aktiengesellschaft

 

 

Dr. Karl Lueger Ring 14

 

 

1015 Vienna, Austria

 

 

Attention:

Managing Board (“Vorstand”)

 

 

Telecopy:

+43-1-53440 515

 

53

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CAI Casinoinvest Middle East GmbH

 

 

Dr. Karl Lueger Ring 14

 

 

1015 Vienna, Austria

 

 

Attention:

Managing Directors (“Geschäftsführung”)

 

 

Telecopy:

+43-1-53440 515

 

with copies to:

 

 

 

 

 

 

 

 

 

Fiebinger, Polak, Leon & Partner

 

 

 

 

Am Getreidemarkt 1

 

 

 

 

1060 Vienna, Austria

 

 

 

 

 

 

 

 

 

Attention:

Peter M. Polak

 

 

 

 

Telecopy:

+43-1-582 582

 

 

 

 

 

 

 

Notices to the Buyers:

 

 

 

 

 

 

 

 

 

Shuffle Master Management–Service GmbH

 

 

 

 

1106 Palms Airport Drive

 

 

 

 

Las Vegas, Nevada 89119

 

 

 

 

Attention:  Jerome R. Smith, General Counsel

 

 

 

 

Telecopy:

+001-702-270-5161

 

 

 

 

 

 

 

 

 

Shuffle Master GmbH

 

 

 

 

1106 Palms Airport Drive

 

 

 

 

Las Vegas, Nevada 89119

 

 

 

 

Attention:  Jerome R. Smith, General Counsel

 

 

 

 

Telecopy:

+001-702-270-5161

 

 

 

 

 

 

 

with copies to:

 

 

 

 

 

 

 

Shuffle Master, Inc.

 

 

 

 

1106 Palms Airport Drive

 

 

 

 

Las Vegas, Nevada 89119

 

 

 

 

Attention:  Jerome R. Smith, Senior Vice President and General Counsel

 

 

Telecopy:

+001-702-270-5161

 

Kirkland & Ellis LLP

 

 

200 East Randolph Drive

 

 

 

 

Chicago, IL 60601

 

 

 

 

Attention:  Keith S. Crow, P.C.

 

 

 

 

Telecopy:  (312) 861-2200

 

 

 

11.3 Binding Agreement; Assignment  This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns.  No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the Buyers and the Sellers, which approval shall be at the sole and free
discretion of the Party asked for such approval; provided, however, that the
Sellers shall be obligated to agree to the assignment by Buyers of all or part
of their rights, interests and obligations hereunder to one of their Affiliates
(the “Designated Affiliate”) if and

 

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provided that prior to such assignment (i) both the Buyers and the Designated
Affiliate confirm to and agree with the Sellers in writing that each of the
Buyers and the Designated Affiliate shall be jointly and severally liable to
each of the Sellers for all and any obligations out of or in connection with any
of the Transaction Documents; and (ii) the Designated Affiliate has
counter-signed this Agreement, in particular, the arbitration clause (see
Section 11.12 hereof) and (iii) so that any arbitral award thereunder, if any,
will be enforceable against the Designated Affiliate and its assets.

 

11.4 Severability  Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Agreement.  Any arbitrator or
court shall be authorized by the Parties to reform and “blue pencil” this
Agreement in the least way necessary in order to make it enforceable and
consistent, to the maximum extent possible, with the original intent of the
Parties.

 

11.5 No Partnership, Joint Venture or Fiduciary Relationship  This Agreement
does not create and shall not be deemed to create any partnership, joint
venture, fiduciary relationship, or trust relationship, of any kind, express or
implied by or between the Buyers (including the Buyers’s parent, SMI), on the
one hand, and the Sellers, on the other hand.  The only legal relationship
between the Buyers (including the Buyers’s parent, SMI), on the one hand, and
the Sellers, on the other hand, shall be contractual, consistent with and
pursuant to this Agreement.  The Parties expressly waive any presumptions to the
contrary which might exist or be implied.

 

11.6 Construction  The language used in this Agreement shall be deemed to be the
language jointly chosen by the Parties to express their mutual intent, and no
rule of strict construction shall be applied against any person. The inclusion
or deletion of various provisions in prior drafts of this Agreement shall not be
admissions, express or implied, by or against any Party and shall not be
indicative of any intent of any Party. All Schedules and Exhibits hereto and all
documents attached to the Schedules and Exhibits hereto shall be deemed read,
understood and acknowledged by each of the Parties and Knowledge of the Buyers,
even if they are not written in English.

 

11.7 Captions  The captions used in this Agreement are for convenience of
reference only and do not constitute a part of this Agreement and shall not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement shall be enforced and construed
as if no caption had been used in this Agreement.

 

11.8 Entire Agreement  The Schedules identified in this Agreement are
incorporated herein by reference.  This Agreement and the documents referred to
herein contain the entire agreement between the Parties and supersede any prior
understandings, agreements, draft

 

55

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versions of this Agreement,  or representations by or between the Parties,
written or oral, which may have related to the subject matter hereof in any way,
including, without limitation, the Letter of Intent.

 

11.9 Counterparts  This Agreement may be executed in four counterparts, one for
each Party.

 

11.10 Governing Law  All questions concerning the construction, validity and
interpretation of this Agreement shall be governed by and construed in
accordance with the laws of Austria applicable therein, without giving effect to
any choice of law or conflict of law provision (whether of Austria or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than Austria.  The application of the United Nations Convention on
Contracts for the International Sale of Goods is specifically excluded by the
Parties.

 

11.11 Parties in Interest  Nothing in this Agreement, express or implied, is
intended to confer on any person other than the Parties and their respective
successors and assigns any rights or remedies under or by virtue of this
Agreement.

 

11.12 Arbitration (a)  All disputes, controversies, or claims arising under or
relating to this Agreement, however with the exclusion of the Transaction
Documents (other than this Agreement), or any breach or threatened breach of
this Agreement or violation, termination or nullity of this Agreement
(“Arbitrable Dispute”), shall be finally settled under the Rules of Arbitration
of the International Chamber of Commerce by three arbitrators appointed in
accordance with the said Rules.

 

 (B) AS MORE THAN TWO PERSONS ARE PARTY TO THIS AGREEMENT, IT IS EXPRESSLY
STIPULATED THAT MORE THAN ONE CLAIMANT AND/OR MORE THAN ONE DEFENDANT ARE
PERMITTED. FOR THE PURPOSE OF THE NOMINATION OF ARBITRATORS, THERE IS DEEMED TO
BE ONLY ONE CLAIMANT PARTY AND ONE DEFENDANT PARTY, REGARDLESS OF WHETHER
MULTIPLE PARTIES APPEAR.

 

(C) ALL SUCH ARBITRATION PROCEEDINGS SHALL TAKE PLACE IN LONDON, UNITED
KINGDOM.  THE LANGUAGE OF THE ARBITRATION SHALL BE THE ENGLISH LANGUAGE.

 

11.13 Deleted

 

 

11.14 Deleted

 

11.15 Currency To the extent that an amount in any currency is required from
time to time to be converted into another currency pursuant to this Agreement or
any other Transaction Document and except as otherwise expressly set forth
herein, such conversion shall be made using the Euro foreign exchange reference
rates as published by the European Central Bank (these reference rates are based
on the regular daily concertation procedure between central banks within and
outside the European System of Central Banks, which normally takes place at 2.15
p.m. ECB time (CET). The reference exchange rates are published by ECB both by

 

56

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electronic market information providers and on the ECB’s website shortly after
the concertation procedure has been completed). For those currencies for which
the European Central Bank does not or ceases to publish any such reference
rates, such conversion shall be made by using the Currency exchange rates
published by the Financial Times, London, on its web-site (presently:
www.marketprices.ft.com/markets/currencies/ab ) for each currency, on the end of
the London business day preceding the date of such calculation (unless otherwise
stated herein).

 

11.16 Governing Language.  English shall be the governing language of this
Agreement.

 

IN WITNESS WHEREOF, the Parties have executed this Purchase Agreement as of the
date first written above.

 

 

CASINOS AUSTRIA AKTIENGESELLSCHAFT
(“CASAG”)

 

 

 

  /s/

 

 

 By:

Peter Pollak

 

 

 Its:

Im Vollmachtsnamen

 

 

 

 

 

 

CAI CASINOINVEST MIDDLE EAST GMBH
(“CAI”)

 

 

 

  /s/

 

 

 By:

Peter Pollak

 

 

 Its:

Im Vollmachtsnamen

 

 

 

 

 

 

SHUFFLE MASTER MANAGEMENT-SERVICE
GMBH
(“SHFMMS”)

 

 

 

  /s/

 

 

 By:

Rene Schneider

 

 

 Its:

Im Vollmachtsnamen

 

 

 

 

 

 

SHUFFLE MASTER GMBH
(“SHFM”)

 

 

 

  /s/

 

 

 By:

Rene Schneider

 

 

 Its:

Im Vollmachtsnamen

 

 

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