Document:

exv10w6

Exhibit 10.6

 Amendment and Restatement Version

19 December 2008

 

AMENDMENT AND RESTATEMENT AGREEEMENT
IN RESPECT 

OF AN INVESTMENT AND SHAREHOLDERS AGREEMENT

REGARDING

INVESTMENTS IN ELSTER GROUP S.À R.L (FORMERLY GOLD 

SILVER S.À R.L) DATED 8
SEPTEMBER 2005 AS AMENDED 

AND RESTATED FROM
TIME TO TIME

 

 

Amendment and Restatement Version

19 December 2008

	 	 	 	 	 

	1. DEFINITIONS
	 	 	2	 
	2. AMENDMENTS TO THE SHAREHOLDERS AGREEMENT
	 	 	2	 
	3. RATIFICATION OF THE SHAREHOLDERS AGREEMENT
	 	 	2	 
	4. GOVERNING LAW AND JURISDICTION
	 	 	2	 

 

AMENDMENT AND RESTATEMENT AGREEEMENT IN RESPECT OF AN INVESTMENT AND SHAREHOLDERS AGREEMENT
REGARDING INVESTMENTS IN ELSTER GROUP S.À R.L (FORMERLY GOLD SILVER S.À R.L) DATED 8 SEPTEMBER 2005
AS AMENDED AND RESTATED FROM TIME TO TIME

This Amendment and Restatement Agreement in respect of an Investment and Shareholders Agreement
regarding investments in Elster Group S.à r.l. (formerly Gold Silver S.à.r.l.) dated 8 September
2005 as amended as amended and restated from time to time is made on 19 December 2008

BETWEEN:

	1.	 	Elster Holdings S.A., a société anonyme (a public limited liability company) incorporated
under the laws of the Grand Duchy of Luxembourg, having its registered office 20, Avenue
Monterey, L-2163 Luxembourg, registered under B 108466 with the Luxembourg register of
commerce and companies, and duly represented for the purposes of this Agreement by Emanuela
Brero (“Elster Holdings”);
	 
	2.	 	Nachtwache Reserve GmbH, with its seat in Wiesbaden, registered in the commercial register of
the local court of Wiesbaden under HRB 21891, and duly represented for the purposes of this
Agreement by Marc Strobel (“Reserve GmbH”);
	 
	3.	 	Rembrandt Nachtwache Verwaltungs GmbH, with its seat in Wiesbaden, registered in the
commercial register of the local court of Wiesbaden under HRB 21938, and duly represented for
the purposes of this Agreement by Marc Strobel (“GP GmbH”);
	 
	4.	 	Nachtwache Management Vermögensverwaltungs GmbH & Co. KG (to be renamed Nachtwache Metering
Management Vermögensverwaltungs GmbH & Co. KG), with its seat in Wiesbaden, registered in the
commercial register of the local court of Wiesbaden under HRA 8299, and duly represented for
the purposes of this Agreement by its general partner Rembrandt Nachtwache Verwaltungs GmbH in
turn duly represented by Marc Strobel (“Management KG”); and
	 
	5.	 	Elster Group S.à r.l. (formerly Gold Silver S.à r.l. and Nightwatch Investments S.à r.l.), a
société à responsabilité limitée (a private limited liability company) incorporated under the
laws of the Grand Duchy of Luxembourg, having its registered office at 26 — 28, Rue Edward
Steichen, L-2540 Luxemburg (formerly 2-4, Rue Beck, L-1222 Luxembourg), registered under B
103553 with the Luxembourg register of commerce and companies, and duly represented for the
purposes of this Agreement by Emanuela Brero (“Elster Group”)

(Elster Holdings, Reserve GmbH, GP GmbH, Management KG and

Elster Group, together the “Parties”).

- 1 - 

 

WHEREAS

	(A)	 	This Agreement is supplemental to the Investment and Shareholders’ Agreement
regarding Investments in Gold Silver S.à.r.l. originally dated 8 September 2005 as amended and
restated prior to, and as in force at, the date hereof (the “Shareholders Agreement”) between
Elster Holdings S.A., Nachtwache Reserve GmbH, Rembrandt Nachtwache Verwaltungs GmbH,
Nachtwache Metering Management Vermögensverwaltungs GmbH & Co. KG and Elster Group S.à r.l.;
	 
	(B)	 	The parties wish to amend and restate the Shareholders Agreement on the terms and
subject to the conditions set out in this Amendment and Restatement Agreement.

NOW IT IS AGREED AS FOLLOWS:

	1.	 	DEFINITIONS
	 
	 	 	Unless otherwise defined herein, words and expressions defined in Shareholders Agreement
shall have the same meanings in this Amendment and Restatement Agreement.
	 
	2.	 	AMENDMENTS TO THE SHAREHOLDERS’ AGREEMENT
	 
	 	 	With effect from 19 December 2008 (00:00), the Shareholders Agreement shall be amended and
restated as set out in Appendix 1 (Amended and Restated Shareholders and Investment
Agreement regarding Investments in Elster Group S.à r.l.) and all references in the
Shareholders Agreement to “this Agreement” shall include this Amendment and Restatement
Agreement.
	 
	3.	 	RATIFICATION OF THE SHAREHOLDERS’ AGREEMENT
	 
	 	 	The Shareholders Agreement as amended and restated by this Amendment and Restatement
Agreement is ratified and confirmed.
	 
	4.	 	GOVERNING LAW AND JURISDICTION
	 
	4.1	 	This Agreement shall be governed by and construed in accordance with the laws of the
Grand Duchy of Luxembourg.
	 
	4.2	 	The Courts of Luxembourg shall have exclusive jurisdiction to hear and decide any
suit, action or proceedings, and to settle any disputes which may arise in connection with
this Agreement (respectively “Proceedings” and “Disputes”) and, for these purposes, the
Parties irrevocably submit to the jurisdiction of the Courts of Luxembourg.
	 
	4.3	 	The Parties irrevocably waive any objection which they might at any time have to

- 2 - 

 

	 	 	the Courts of Luxembourg being nominated as the forum to hear and decide any Proceedings and
to settle any Disputes and agree not to claim that the Courts of Luxembourg are not a
convenient or appropriate forum.

* * *

IN WITNESS WHEREOF this Agreement has been executed by the Parties on 19 December 2008

	 	 	 	 	 	 	 

	Signed by

	 	 	)	 	 	Emanuela Brero
	a duly authorised

	 	 	)	 	 	 
	representative of

	 	 	)	 	 	 
	Elster Holdings S.A.

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	/s/ Emanuela Brero
 
	 	Signature
	 
	 	 	 	 	 	 
	Signed by

	 	 	)	 	 	Marc Strobel
	a duly authorised

	 	 	)	 	 	 
	representative of

	 	 	)	 	 	 
	Nachtwache Reserve GmbH

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	/s/ Marc Strobel
 
	 	Signature
	 
	 	 	 	 	 	 
	Signed by

	 	 	)	 	 	Marc Strobel
	a duly authorised

	 	 	)	 	 	 
	representative of

	 	 	)	 	 	 
	Rembrandt Nachtwache

	 	 	)	 	 	 
	Verwaltungs GmbH

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	/s/ Marc Strobel
 
	 	Signature
	 
	 	 	 	 	 	 
	Signed by

	 	 	)	 	 	Marc Strobel
	a duly authorised

	 	 	)	 	 	 
	representative of

	 	 	)	 	 	 
	Rembrandt Nachtwache

	 	 	)	 	 	 
	Management

	 	 	)	 	 	 
	Vermögensverwaltungs

	 	 	)	 	 	 
	GmbH & Co. KG

	 	 	)	 	 	 
	duly represented by its

	 	 	)	 	 	 
	general partner)

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	/s/ Marc Strobel
 
	 	Signature
	 
	 	 	 	 	 	 

- 3 - 

 

	 	 	 	 	 	 	 

	Signed by

	 	 	)	 	 	Emanuela Brero
	a duly authorised

	 	 	)	 	 	 
	representative of

	 	 	)	 	 	 
	Elster Group S.à r.l

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	/s/ Emanuela Brero
 
	 	Signature

- 4 - 

 

APPENDIX 1

AMENDED AND RESTATED INVESTMENT AND SHAREHOLDERS

AGREEMENT REGARDING INVESTMENTS IN ELSTER GROUP S.À R.L.

- 5 - 

 

			
	 	 	 
	 
	 	Amended and Restated Execution Version
	 
	 	19 December 2008

 

INVESTMENT AND SHAREHOLDERS AGREEMENT

REGARDING

INVESTMENTS IN ELSTER GROUP S.À R.L.

(FORMERLY GOLD SILVER S.À R.L.)

 

As amended and restated with effect from 19 December 2008

 

 

			
	 	 	 
	 
	 	Amended and Restated Execution Version
	 
	 	19 December 2008

	 	 	 	 	 

	1. DEFINITIONS
	 	 	4	 
	2. COMPLETION, FUNDING
	 	 	13	 
	3. COMPLETION ETC.
	 	 	14	 
	4. POST CLOSING RESTRUCTURING AND OTHER MEASURES
	 	 	15	 
	5. INVESTING MANAGERS
	 	 	16	 
	6. SHAREHOLDERS MEETING
	 	 	17	 
	7. BOARD OF MANAGERS ETC
	 	 	18	 
	8. AUDIT COMMITTEE AND COMPENSATION COMMITTEE
	 	 	22	 
	9. ERISA RIGHTS
	 	 	25	 
	10. FINANCIAL AND OTHER INFORMATION; ACCOUNTING
	 	 	26	 
	11. TRANSFERS OF SHARES ETC., NEW ISSUES
	 	 	27	 
	12. ELSTER HOLDINGS PERMITTED TRANSFERS
	 	 	30	 
	13. PURCHASE OFFER AND BRING ALONG
	 	 	31	 
	14. LEAVER PROVISIONS
	 	 	31	 
	15. COMPENSATION
	 	 	33	 
	16. CALL OPTIONS FOR RESERVE GMBH
	 	 	35	 
	17. EXIT; LIQUIDATION EVENT
	 	 	37	 
	18. EXPENSES
	 	 	40	 
	19. PRESS ANNOUNCEMENTS AND CONFIDENTIALITY
	 	 	41	 
	20. NOTICES
	 	 	41	 
	21. MISCELLANEOUS PROVISIONS
	 	 	43	 
	22. GOVERNING LAW AND JURISDICTION
	 	 	45	 

 

 

LIST OF ANNEXES AND SCHEDULES

	 	 	 
	Annex/Schedule	 	Contents
	Annex A

	 	Form of Articles of Association of Elster Group
	 
	 	 
	Annex B1

	 	Form of PECs A
	 
	 	 
	Annex B2

	 	Form PECs B
	 
	 	 
	Annex C

	 	Structure Chart
	 
	 	 
	Annex D

	 	Form of Deed of Adherence
	 
	 	 
	Annex E

	 	Form of Voting Undertaking
	 
	 	 
	Annex F

	 	Form of Deed of Acknowledgement and Undertaking
	 
	 	 
	Annex H

	 	Initial Managers
	 
	 	 
	Schedule 2.1.1

	 	Investments in Elster Group
	 
	 	 
	Schedule 2.1.3

	 	Investments by Elster Group
	 
	 	 
	Schedule 2.2A

	 	Elster Group and Management KG Capitalisation Post-Closing
	 
	 	 
	Schedule 2.2B

	 	Elster Group and Management KG Capitalisation Post-MEP
Implementation
	 
	 	 
	Schedule 4.3

	 	PECs Restructuring
	 
	 	 
	Schedule 7.7

	 	Matters requiring consent
	 
	 	 
	Schedule 10

	 	Financial and Other Information; Accounting

- 1 -

 

INVESTMENT AND SHAREHOLDERS AGREEMENT

BETWEEN:

	1.	 	Elster Holdings S.A., a société anonyme (a public limited liability company) (formerly
“Nightwatch Holdings S.A.”) incorporated under the laws of the Grand Duchy of Luxembourg,
having its registered office at 2-4 Rue Beck, L-1222 Luxembourg, registered under B 108466
with the Luxembourg register of commerce and companies (“Elster Holdings”);
	 
	2.	 	Nachtwache Reserve GmbH, with its seat in Wiesbaden, registered in the commercial register of
the local court of Wiesbaden under HRB 21891 (“Reserve GmbH”);
	 
	3.	 	Rembrandt Nachtwache Verwaltungs GmbH, with its seat in Wiesbaden, registered in the
commercial register of the local court of Wiesbaden under HRB 21938 (“GP GmbH”);
	 
	4.	 	Nachtwache Metering Management Vermögensverwaltungs GmbH & Co. KG, with its seat in
Wiesbaden, registered in the commercial register of the local court of Wiesbaden HRA 8299 and
duly represented for the purposes of this Agreement by its general partner Rembrandt
Nachtwache Verwaltungs GmbH (“Management KG”); and
	 
	5.	 	Elster Group S.à r.l. (formerly “Gold Silver S.à r.l.” and “Nightwatch Investments S.à.r.l),
a société à responsabilité limitée (a private limited liability company) incorporated under
the laws of the Grand Duchy of Luxembourg, having its registered office at 2-4, Rue Beck,
L-1222 Luxembourg, registered under B 103553 with the Luxembourg register of commerce and
companies (“Elster Group”)

(Elster Holdings, Reserve GmbH, GP GmbH, Management KG and 

Elster Group, together the “Parties”).

- 2 -

 

WHEREAS

	(A)	 	The entire share capital of Elster Holdings is currently owned by or on behalf of the
CVC Funds and, pursuant to the investment and shareholders agreement regarding investments in
Elster Holdings entered in to on 8 September 2005 (the “Elster Holdings Investment
Agreement”), will in future be held by or on behalf of those CVC Funds on the terms of that
Agreement;
	 
	(B)	 	Elster Holdings and Management KG own the entire issued share capital of Elster
Group;
	 
	(C)	 	Management KG has a limited partnership capital of EUR 132,075 (in words: Euros one
hundred thirty two thousand and seventy five). Reserve GmbH has subscribed for and funded
limited partnership interests in the nominal amount of EUR 132,075 (in words: Euros one
hundred thirty two thousand and seventy five), with a total liability contribution of
EUR 9,800 in Management KG. Two Limited Partnership Interests with a nominal value of EUR 100
each are held for the time being by Marc Strobel and Gregor Hilverkus respectively as managing
limited partners of Management KG. GP GmbH is the general partner of Management KG;
	 
	(D)	 	Currently, Management KG holds a total of 5,283 Elster Group Shares with a total
nominal value of EUR 132,075. Management KG has subscribed to 5,067,925 PECs B with the total
nominal value of EUR 5,067,925.
	 
	(E)	 	Elster Holdings and its subsidiaries including the Parties have been incorporated and
structured solely for the purpose of the transactions contemplated in this Agreement;
	 
	(F)	 	Nachtwache Acquisition GmbH has entered into and implemented the Purchase Agreement
(as defined below) for the acquisition of 100% of the share capital of Ruhrgas Industries
GmbH (“RI GmbH”) with E.ON Ruhrgas AG (the “Seller”);
	 
	(G)	 	It is intended that certain members of the management of the Acquired Group be given
the opportunity to acquire an equity interest in Elster Group through investing as limited
partners in Management KG after Completion (as defined below);
	 
	(H)	 	It is furthermore intended that certain members of the management of Nachtwache
Furnaces GmbH and its subsidiaries be given the opportunity to acquire an equity interest in
Nachtwache Furnaces GmbH of up to 8 percent through investing as limited partners in a
separate limited partnership under German law, Nachtwache Ipsen Management GmbH & Co. KG as
shown in Annex C.
	 
	(I)	 	The Parties wish to set out in this Agreement the terms on which they will hold their
direct and indirect investments in Elster Group and Elster Group wishes to

- 3 -

 

	 	 	express its agreement to the contents hereof and its acceptance of the rights and
obligations hereunder, which it agrees are for its benefit.

NOW IT IS AGREED AS FOLLOWS:

	1.	 	DEFINITIONS
	 
	1.1	 	Certain terms are defined elsewhere in this Agreement. They will have those meanings
throughout this Agreement, unless the context requires otherwise.
	 
	1.2	 	Otherwise, in this Agreement the following words and expressions shall have the
following meanings:

	 	 	 

	1915 Law

	 	means the law dated 10 August 1915 on
commercial companies as amended from time to
time.
	 
	 	 
	Acquired Group

	 	means Elster Holdings, Elster Group and each of
their subsidiaries from time to time;
	 
	 	 
	Acquirer

	 	has the meaning given to it in Clause 13.2;
	 
	 	 
	Add-on Investment

	 	has the meaning given to it in Clause 11.6;
	 
	 	 
	Affiliate or Affiliated

	 	when used (i) with reference to a specified
person (excluding, however, any individual),
shall mean any person that directly or
indirectly through one or more intermediaries
owns or controls, is owned or controlled by or
is under common control or ownership with the
specified person. For such purposes, the term
“control” (including the terms “controlling”,
“controlled by” and “under common control
with”) shall mean the possession, direct or
indirect, of the power to direct or cause the
direction of the management and policies of a
person, whether through the ownership of a
majority of voting securities, by contract or
otherwise; and in addition when used (ii) with
reference to the CVC Funds shall mean where
such CVC Fund(s) is a body corporate, any
Affiliated Party within the meaning of (i) or
controlled by or under common control with
another nominee, trustee, general partner,
custodian, adviser or manager of such CVC
Fund(s);

- 4 -

 

	 	 	 

	Agreed Form

	 	means, in relation to any document, such
document in the form agreed between the Parties
as being final, initialled upon the signature
of this Agreement by or on behalf of the
Parties for the purposes of identification
only, subject to such amendments as may be
agreed from time to time in writing between the
Parties;
	 
	 	 
	Agreement

	 	means this investment and shareholders’
agreement including all Annexes and Schedules
to it;
	 
	 	 
	Articles of Association

	 	means the articles of association of Elster
Group in the form set out in Annex A and, once
adopted, those articles of association as
amended from time to time;
	 
	 	 
	Audit Committee

	 	has the meaning given to it in Clause 8.1;
	 
	 	 
	Bad Leaver

	 	has the meaning given to it in Clause 14.1.3;
	 
	 	 
	Bad Leaver Call Option

	 	has the meaning given to it in Clause 14.2;
	 
	 	 
	Balancing Options

	 	has the meaning given to it in Clause 17.10;
	 
	 	 
	Board Members

	 	has the meaning given to it in Clause 7.1;
	 
	 	 
	Board of Managers

	 	means the board of managers of Elster Group
from time to time;
	 
	 	 
	Business Day

	 	means any day that is not a Saturday, Sunday or
an official (federal) public holiday in
Luxembourg, Germany or the United Kingdom and
on which banks in Luxembourg, Germany and the
United Kingdom are open for the transaction of
commercial business;
	 
	 	 
	CEO

	 	has the meaning given to it in Clause 5.2;
	 
	 	 
	CFO

	 	has the meaning given to it in Clause 7.6;
	 
	 	 
	Chairman

	 	has the meaning given to it in Clause 7.6;
	 
	 	 
	Co-Investment Committee

	 	means the advisory board (Beirat) of Reserve
GmbH;

- 5 -

 

	 	 	 

	Co-Investment Scheme

	 	has the meaning given to it in Clause 12.1.2;
	 
	 	 
	Company

	 	means Elster Group S.à r.l.;
	 
	 	 
	Compensation Committee

	 	has the meaning given to it in Clause 8.2;
	 
	 	 
	Completion

	 	means the fulfilment of each of the obligations
set out in Clause 3;
	 
	 	 
	Completion Date

	 	means 9 September 2005 or such other date as
may be the date set by Elster Holdings for the
Completion as described in Clause 3;
	 
	 	 
	Cost of Investment

	 	has the meaning given to it in Clause 14.1.5;
	 
	 	 
	CPECs

	 	means the convertible preferred equity
certificates, to be issued by Elster Holdings
as registered form securities on the basis of
the terms and conditions for convertible
preferred equity certificates;
	 
	 	 
	CVC Funds

	 	means CVC European Equity Partners IV A LP
(Cayman), CVC European Equity Partners IV B LP
(Cayman), CVC European Equity Partners IV C LP
(Cayman), CVC European Equity Partners IV D LP
(Cayman) and CVC European Equity Partners IV E
LP (Cayman);
	 
	 	 
	Deed of Acknowledgement
and Undertaking

	 	means a Deed of Acknowledgement and Undertaking
substantially in the form set out in Annex F;
	 
	 	 
	Deed of Adherence

	 	means a document completed in a form
substantially similar to the one set out in
Annex D under which a permitted transferee or
assignee of one of the Parties or a subscriber
for shares, PECs or other instruments or
securities issued by Elster Group or other
third party agrees to be bound to the terms of
this Agreement as if it had originally been a
signatory;
	 
	 	 
	Default Call Option

	 	has the meaning given to it in Clause 16.1;
	 
	 	 
	Early Period

	 	has the meaning given to it in Clause 15.1(a);
	 
	 	 
	Elster Group

	 	has the meaning given to it in the introduction
to this Agreement;

- 6 -

 

	 	 	 

	Elster Group Shareholder

	 	means a holder of Elster Group Shares from time
to time;
	 
	 	 
	Elster Group Shares

	 	means the shares in the capital of Elster Group
as issued from time to time;
	 
	 	 
	Elster Holdings

	 	has the meaning given to it in the introduction
to this Agreement;
	 
	 	 
	Elster Holdings
Investment Agreement

	 	has the meaning given to it in Recital (A);
	 
	 	 
	Elster Holdings PECs

	 	means the preferred equity certificates to be
issued by Elster Holdings in substantially the
same form as the PECs;
	 
	 	 
	Elster Holdings Shares

	 	means the ordinary shares in the capital of
Elster Holdings as issued from time to time;
	 
	 	 
	Encumbrance

	 	means any mortgage, charge, claim, pledge,
lien, restriction, assignment, hypothecation,
security interest, title retention, or any
other agreement or arrangement the effect of
which is the creation of security, or any other
interest, equity or other right of any person,
or any agreement or arrangement to create any
of the same, and “Unencumbered” and “Encumber”
shall be construed accordingly;
	 
	 	 
	ERISA Board Member

	 	has the meaning given to it in Clause 7.3;
	 
	 	 
	ERISA Fund

	 	means CVC European Equity Partners IV A LP
(Cayman);
	 
	 	 
	Executive Committee

	 	has the meaning given to it in Clause 7.1;
	 
	 	 
	Existing Shareholder

	 	has the meaning given to it in Clause 11.5;
	 
	 	 
	Exit

	 	means a Sale or a Listing;
	 
	 	 
	Facilities Agreements

	 	means the Senior Facilities Agreement and the
Mezzanine Facility Agreement;
	 
	 	 
	Good Leaver

	 	has the meaning given to it in Clause 14.1.4;
	 
	 	 
	Good Leaver Call Option

	 	has the meaning given to it in Clause 14.3;

- 7 -

 

	 	 	 

	GP GmbH

	 	has the meaning given to it in the introduction
of this Agreement;
	 
	 	 
	Group

	 	means Elster Group and its subsidiaries;
	 
	 	 
	Initial Managers

	 	means those Managers listed in Annex H;
	 
	 	 
	Institutional Investors

	 	means the CVC Funds and any other investor from
time to time in Elster Holdings;
	 
	 	 
	Institutional Strip

	 	means the Elster Holdings Shares, the PECs, the
CPECs and any other instruments or securities
to be issued by Elster Holdings to the
Institutional Investors;
	 
	 	 
	Intercreditor Deed

	 	means the deed dated 11 July 2005 (as amended
and/or restated on 11 July 2005, 17 August 2005
and as further amended and/or restated from
time to time) and made among, inter alios,
Nachtwache Acquisition GmbH as bidco, the
companies named therein as original obligors,
CIBC World Markets plc as mezzanine agent and
documentation agent, Deutsche Bank AG London as
senior agent and security agent, the financial
and other institutions named therein as
original senior lenders, original tranche D
lenders and original mezzanine lenders and
certain other parties named therein;
	 
	 	 
	Investing Managers

	 	means those persons identified as Investing
Managers by the Co-Investment Committee who
invest in Management KG;
	 
	 	 
	Investment Ratio

	 	has the meaning given to it in Clause 11.6;
	 
	 	 
	Investment Vehicle

	 	means any corporate body, partnership, trust,
association, insurance company or other person
through or by which a Manager’s limited
partnership interest or other interest in
Management KG is held or managed on his behalf;
	 
	 	 
	Investors

	 	means those entities listed in the tables in
Schedule 2.1.1;
	 
	 	 
	Leaver

	 	has the meaning given to it in Clause 14.1.1;

- 8 -

 

	 	 	 

	Limited Partner

	 	means any limited partner (Kommanditist) of
Managing KG from time to time
	 
	 	 
	Listing

	 	means the making of an application for
admission to listing on any internationally
recognised securities market of the shares (or
the equivalent securities following a
reconstruction or amalgamation) of any of
Elster Holdings or Elster Group (or its legal
successor as the case may be) or a newly-formed
company of which Elster Holdings or Elster
Group or its legal successor are subsidiaries
or which is wholly-owned by Elster Group;
	 
	 	 
	Listing Price

	 	has the meaning given to it in Clause 17.10;
	 
	 	 
	Look-through PECs

	 	has the meaning given to it in Clause 15.1;
	 
	 	 
	Management KG

	 	has the meaning given to it in the introduction
to this Agreement;
	 
	 	 
	Management Strip Ratio

	 	has the meaning given to it in Clause 6.1;
	 
	 	 
	Manager’s Equity Stake

	 	has the meaning given to it in Clause 14.2;
	 
	 	 
	Market Value

	 	has the meaning given to it in Clause 15.1(b);
	 
	 	 
	Mezzanine Facility
Agreement

	 	means the mezzanine facility agreement dated 12
June 2005 (as amended and restated on 11 July
2005 and 17 August 2005 and as further amended
and/or restated from time to time) and made
among, inter alios, Nachtwache Acquisition
GmbH as bidco, a borrower and a guarantor, the
companies named therein as guarantors, CIBC
World Markets plc, Deutsche Bank AG London and
Morgan Stanley Bank International Limited as
mandated lead arrangers, CIBC World Markets plc
as facility and documentation agent, Deutsche
Bank AG London as security agent and the
financial and other institutions named therein
as lenders;
	 
	 	 
	Option Completion Date

	 	has the meaning given to it in Clause 15.3;
	 
	Parties

	 	has the meaning given to it in the introduction
to this Agreement and Party means any one of
them including any other person, who becomes

- 9 -

 

	 	 	 

	 

	 	a Shareholder and who agrees to be bound by the
provisions of the Agreement by executing a Deed
of Adherence;
	 
	 	 
	PEC Equity Contribution

	 	has the meaning given to it in Clause 17.4.2;
	 
	 	 
	PEC Restructuring

	 	means the restructuring referred to in Clause
4.3;
	 
	 	 
	PECs

	 	means the PECs A and the PECs B;
	 
	 	 
	PECs A

	 	means the preferred equity certificates to be
issued by Elster Group as registered form of
securities on the basis of the terms and
conditions for preferred equity certificates
substantially similar to those set out in Annex
B1 as amended from time to time;
	 
	 	 
	PECs B

	 	means the preferred equity certificates to be
issued by Elster Group as registered form of
securities on the basis of the terms and
conditions for preferred equity certificates
substantially similar to those set out in Annex
B2 as amended from time to time;
	 
	 	 
	Pre-Listing Equity
Conversion

	 	has the meaning given to it in Clause 17.10;
	 
	 	 
	Purchase Agreement

	 	means the agreement for the acquisition of one
hundred percent (100%) of the issued share
capital of RI GmbH dated 15 June 2005 (Roll of
Deeds H 1637/2005 of the Notary Dr. Armin
Hauschild) amongst the Seller and Nachtwache
Acquisition GmbH and any ancillary documents
executed or to be executed pursuant to it;
	 
	 	 
	Reserve GmbH

	 	has the meaning given to it in the introduction
to this Agreement;
	 
	 	 
	RI GmbH

	 	has the meaning given to it in Recital (F);
	 
	 	 
	RI Shares

	 	means the entire issued share capital of RI
GmbH being acquired pursuant to the Purchase
Agreement;

- 10 -

 

	 	 	 

	Sale

	 	means a sale of more than fifty percent (50%)
of the Elster Group Shares (including a pro
rata portion of the claims under the PECs) or
of the business of the Acquired Group in one
transaction or a series of related
transactions;
	 
	 	 
	Seller

	 	has the meaning given to it in Recital (F);
	 
	 	 
	Selling Investors

	 	has the meaning given to it in Clause 13.1;
	 
	 	 
	Senior Facilities
Agreement

	 	means the senior facilities agreement dated 12
June 2005 (as amended and/or restated on 11
July 2005 and 17 August 2005 and as further
amended and/or restated from time to time) and
made among, inter alios, Nachtwache Acquisition
GmbH as bidco, borrower and guarantor, the
companies named therein as borrowers and
guarantors, CIBC World Markets plc, Deutsche
Bank AG London and Morgan Stanley Bank
International Limited as mandated lead
arrangers, Deutsche Bank AG London as facility
agent and as security agent, CIBC World Markets
plc as documentation agent and the financial
and other institutions named therein as
lenders;
	 
	 	 
	Share Surplus A

	 	has the meaning given to it in Clause 6.2.6;
	 
	 	 
	Shareholders

	 	means the shareholders of Elster Group S.à r.l.;
	 
	 	 
	Transfer Price

	 	has the meaning given to it in Clause 15.1;
	 
	 	 
	Trigger Call Option

	 	has the meaning given to it in Clause 14.4;
	 
	 	 
	Trigger Date

	 	has the meaning given to it in Clause 14.1.2;
	 
	 	 
	VCOC

	 	has the meaning given to it in Clause 9.3; and
	 
	 	 
	Voting Undertaking

	 	means the undertaking to be given by each
Investor, subject to English law, in respect of
exercising voting rights to implement and
comply with this Agreement, in the form set out
in Annex E.

	1.3	 	In this Agreement:

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	 	1.3.1	 	a reference to a company or other legal entity shall be construed so as to
include any legal entity or entities into which such company may be merged by means of
a statutory merger or into which it may be split up or demerged, by means of a
statutory split-up or demerger;
	 
	 	1.3.2	 	a reference to a “person” includes a reference to an individual, body
corporate, and any other legal entity and includes such person’s legal representatives,
successors and permitted assigns;
	 
	 	1.3.3	 	the term “subsidiary” of a person shall mean a legal entity which that
company is able to direct or control, immediately or through one or more subsidiaries
through:

	 	(a)	 	the exercise of more than half of the votes at a general meeting of
shareholders;
	 
	 	(b)	 	the appointment of more than half of the members of the management
board (or local law equivalent); or
	 
	 	(c)	 	the appointment of more than half of the members of the supervisory
board, if any,

	 	 	 	and the term “parent” of a company means a legal entity of which that company is a
subsidiary within that meaning;
	 
	 	1.3.4	 	reference to the singular includes a reference to the plural and vice versa;
	 
	 	1.3.5	 	reference to the masculine includes a reference to the feminine and neuter
and vice versa;
	 
	 	1.3.6	 	a reference to using best endeavours includes exercising all relevant voting
rights and other legal powers of control;
	 
	 	1.3.7	 	a reference to “includes” or “including” or any equivalent expression means
“including but without limiting the generality of the aforegoing” and general words
introduced by the word “other” (or any similar term) shall not be given a restrictive
meaning by reason of the fact that they are preceded by words indicating a particular
class of facts, matters or things.

	1.4	 	References to this Agreement include the Recitals, Schedules and Annexes, which form
part of this Agreement. A reference to a Recital, Schedule, Annex or Clause means a recital,
schedule, annex or clause to or of this Agreement.

	1.5	 	When this Agreement refers to decisions or resolutions requiring a certain proportion
or percentage of the votes at a shareholders general meeting, that requirement shall be
satisfied only if the number of votes exercised in favour of the decision or resolution is at
least equal to the relevant proportion or percentage of the

- 12 -

 

	 	 	total number of votes that could be exercised at that general meeting, as the case may be,
if all Shareholders entitled to be present or represented there were present or represented.
	 
	1.6	 	The Parties agree as between themselves that if there is a conflict between any
provision of this Agreement and any provision of the Articles of Association, they shall
observe the provisions of this Agreement with the intent that its commercial effect be
achieved to the effect that:

	 	1.6.1	 	if the Articles of Association prescribe the observance of requirements that
are less stringent than the corresponding requirements set out in this Agreement, the
Parties shall also observe the latter requirements; and
	 
	 	1.6.2	 	if the Articles of Association prescribe the observance of requirements that
are more stringent than the corresponding requirements set out in this Agreement, upon
the requirements of this Agreement having been satisfied the Parties shall without
discretion co-operate in ensuring that the requirements of the Articles of Association
are also satisfied without delay.

	2.	 	COMPLETION, FUNDING
	 
	2.1	 	On the Completion Date

	 	2.1.1	 	Elster Holdings and Management KG subscribed in cash for Elster Group Shares
(including premium) in each case as set out against their name in Schedule
2.1.1 and paid the relevant amounts which are set out against their name in the
columns titled “Elster Group Subscribed Shares”;
	 
	 	2.1.2	 	Elster Holdings and Management KG subscribed in cash for PECs in each case as
set out in Schedule 2.1.1 and paid the relevant amounts which are set out
against their names in the columns titled “PECs A at Completion” and “PECs B at
Completion”;
	 
	 	2.1.3	 	Elster Group contributed to the capital reserves of Nachtwache Acquisition
GmbH an amount as set out in Schedule 2.1.3 and paid the amount set out against
its name in the column “Nachtwache Acquisition GmbH Contribution”;
	 
	 	2.1.4	 	Elster Group entered into the intercompany loan agreement with Elster
Holdings GmbH as set out in Schedule 2.1.3 and paid the amount as set out
against its name in the column titled “ Nachtwache Acquisition GmbH Loan”;

	 	 	and the relevant Parties accepted the making of this contribution and passed all resolutions
and make all declarations to do so.

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	2.2	 	After the steps set out in this Clause 2 and registration of the relevant capital
increases, the capitalisation of Elster Group and Management KG is as set out in Schedule
2.2A. The capitalisation of Management KG, i.e. after the reduction of the liable capital
to EUR 10,000 etc. will be as set out in Schedule 2.2B.

	2.3	 	Elster Holdings, Elster Group, Reserve GmbH, GP GmbH, Management KG and their
subsidiaries at the date hereof have been incorporated and structured at the request of the
Parties and only to facilitate the transactions contemplated in this Agreement and the Parties
acknowledge that they shall not have any claims against the incorporators or current
shareholders of such entities in connection therewith, except in the event of gross negligence
or wilful misconduct.

	2.4	 	The Parties and the Investing Managers agree to subordinate their investments to the
banks and other third parties on such terms and to such extent as may be required under the
terms of the Facilities Agreements and will enter into such inter-creditor, subordination or
other agreements as may be required in connection therewith.

	3.	 	COMPLETION ETC.

	3.1	 	Completion took place on the date notified by Elster Holdings as the Completion Date
at the offices of Clifford Chance in Frankfurt, Germany and Luxembourg, Luxembourg, where the
following took place (or, to the extent that any of the documents referred to below were
executed before Completion, shall be deemed to have taken place at Completion) in the
following order:

	 	3.1.1	 	Management KG delivered a duly executed Voting Undertaking;
	 
	 	3.1.2	 	the increase of the share capital of Elster Group: Elster Holdings and
Management KG subscribed for new shares in Elster Group in each case for cash
(including premium) and paid the relevant amounts in each case as set out against their
names in Schedule 2.1.1 in the columns titled “Subscribed Elster Group Shares”;
	 
	 	3.1.3	 	the execution by Reserve GmbH and GP GmbH of the documents required to
implement the matters set out in Clauses 2.1 and 2.2 to the extent they are a party
thereto and the provision to Management KG and Elster Group as the case may be of the
relevant funds;
	 
	 	3.1.4	 	Elster Group signed the terms and conditions for the issue of the PECs, and
Elster Holdings and Management KG as applicable executed such documents in such
customary form as may be approved by Elster Group to subscribe for the PECs A and PECs
B as applicable and paid the relevant amount set out against their names in
Schedule 2.1.1 in the column titled “PECs A” and “PECs B” in each case in cash
and Elster Group shall issue the Elster Group PECs to them respectively;

- 14 -

 

	 	3.1.5	 	the shareholders of Elster Group passed a written shareholders resolution,
effective as of the Completion Date, to

	 	(a)	 	approve the issue of Elster Group Shares and PECs to the relevant
Investors;
	 
	 	(b)	 	approve all actions and the execution of all documents and agreements
to be effected by Elster Group to fully effect the transactions contemplated
in this Agreement;
	 
	 	(c)	 	adopt the Articles of Association, and

	 	 	 	shall passed or procured the passing of any other resolution of Elster Group
necessary or appropriate to give effect to the transactions contemplated in this
Agreement.
	 
	 	3.1.6	 	the Parties shall do all such further acts and execute all such further
documents as shall in the reasonable opinion of Elster Holdings be necessary or
appropriate to fully effect the transactions contemplated in this Agreement to take
place at the Completion Date.

	 	 	All actions and transactions listed in this Clause 3.1 shall be regarded as a single
transaction and subject to the fulfilment of all other actions and transactions referred to
in this Clause 4.1. The anticipated structure upon completion of these actions is set out in
Annex C.
	 
	3.2	 	The Parties undertook to timely provide any powers of attorney necessary or required
for their representation before the notary in charge of recording the resolution to increase
the share capital of Elster Group and for any other steps hereunder.
	 
	3.3	 	The Elster Group Shares subscribed and issued pursuant to Clause 2 shall carry a
right to profits from the commencement of the current financial year of Elster Group.
	 
	4.	 	POST CLOSING RESTRUCTURING AND OTHER MEASURES
	 
	4.1	 	The Parties agree that without undue delay after the Completion Date the steps
indicated in the Ernst & Young structure memorandum dated 7 September 2005 may be taken.
	 
	4.2	 	The Parties also agree to take or permit all such restructuring measures within the
Acquired Group (other than Elster Holdings and Elster Group) after Completion as the Board of
Managers may resolve.
	 
	4.3	 	The Parties agree that the PEC Restructuring as summarised in Schedule 4.3
(the “PEC Restructuring”) shall be implemented, in particular that the matters identified at
steps 1.1, 1.2 and 1.3 in Schedule 4.3 be implemented prior to 31 December 2008,

- 15 -

 

	 	 	and that the Board of Managers be authorised to implement the matters
identified at step 1.4 at such times as it may resolve are appropriate.
	 
	4.4	 	The Parties undertake to take, make and accept all such actions and declarations and
to execute all such documents as may be reasonably necessary or appropriate to implement any
measure referred to under this Clause 4.
	 
	5.	 	INVESTING MANAGERS
	 
	5.1	 	The Co-Investment Committee may in its discretion from time to time suggest that one
or more persons be invited to invest indirectly in Elster Group Shares and PECs and such other
instruments or securities as are issued by Elster Group and held by Management KG through
Management KG as “Investing Managers” under the terms of this Agreement, provided that the
(indirect) holding of Elster Group Shares and PECs offered to an Investing Manager shall be in
the same ratios to each other as those held by Reserve GmbH (the “Management Strip Ratio”) and
otherwise on such terms as the Co-Investment Committee may suggest.
	 
	5.2	 	If the Co-Investment Committee so advises after consultation with the Chief Executive
Offer of the Group from time to time (the “CEO”) (or if none is appointed the CFO), an
Investing Manager shall be offered the option to acquire from Reserve GmbH at a price
determined by the Co-Investment Committee a limited partnership interest in Management KG of
such nominal value that it represents the economic interest in Elster Group Shares and PECs
(in the Management Strip Ratio) that the Co-Investment Committee resolved that such Investing
Manager should be offered provided that, unless the Chairman agrees otherwise, the price at
which any such interest shall be offered should not be less than its Market Value.
	 
	5.3	 	Any transfer pursuant to Clause 6.2 shall be conditional upon:

	 	5.3.1	 	compliance by the Investing Manager with Clauses 2.4, 11.1, 11.2 and 11.3;
	 
	 	5.3.2	 	receipt by Reserve GmbH of the price determined pursuant to Clause 5.2 or as
otherwise agreed by the Co-Investment Committee;
	 
	 	5.3.3	 	execution by the Investing Manager of an undertaking to be bound by the terms
of the partnership agreement of Management KG as in force in form and substance
satisfactory to the Co-Investment Committee; and
	 
	 	5.3.4	 	such other conditions as may be required by law or as are determined by the
Co-Investment Committee (including amendments to this Agreement).

	5.4	 	The Parties undertake to take, make and accept all such actions and declarations

- 16 -

 

	 	 	and to execute all such documents as may be necessary or appropriate to implement any
measure referred to under this Clause 5.
	 
	6.	 	SHAREHOLDERS MEETING
	 
	6.1	 	Unless explicitly otherwise provided for in Clause 6.2 or 6.3 or required by
mandatory law, all resolutions of the shareholders general meeting of Elster Group require a
simple majority of the votes capable of being cast. The Parties agree to use their voting
rights in a manner consistent with the commitments undertaken by each of them in this
Agreement and, in particular, to vote in favour of:

	 	6.1.1	 	the approval of any third party as a new shareholder of Elster Group, if such
third party becomes a transferee provided that the provisions set forth in Clauses 11
to 17 inclusive have been duly observed whereby the Parties to this Agreement
acknowledge that pursuant to the 1915 Law a majority vote of 75% of the share capital
of Elster Group is required to approve the transfer of any shares in a Sàrl to a
non-existing shareholder, and they waive, as far as legally permissible, such
requirement;
	 
	 	6.1.2	 	if required, the appointment as member of the Board of Managers of persons
duly nominated under Clause 7 below; and
	 
	 	6.1.3	 	if required, the removal of a member of the Board of Managers if such removal
has been requested by the Elster Group Shareholder who initially nominated such member.

	6.2	 	Without prejudice to the provisions set forth in the 1915 Law, resolutions of the
shareholders general meeting of Elster Group in respect of the following matters require a
ninety five percent (95%) majority of the votes attaching to all shares then issued and
existing, provided that in the case of Clause 6.2.6 in addition to a ninety five percent (95%)
majority the approval (vote in favour) of Management KG shall be required:

	 	6.2.1	 	to the extent legally permissible the legal merger or demerger of Elster
Group into one or more entities, except in connection with an Exit or if the position
of Management KG is not materially disadvantaged by such merger or demerger;
	 
	 	6.2.2	 	the liquidation of Elster Group, except in connection with an Exit or a
restructuring under which Management KG receives shares and other investments in a
successor entity such that its position is not materially disadvantaged by such
liquidation;
	 
	 	6.2.3	 	payment of dividends, unless all holders of a class of shares are treated
pari passu;
	 
	 	6.2.4	 	exclusion of pre-emption rights on issue of new shares for cash;

- 17 -

 

	 	6.2.5	 	any issue of shares to an Affiliate of the CVC Funds for non-cash
consideration, unless the Board of Managers has obtained a fairness opinion as required
by Clause 11.6;
	 
	 	6.2.6	 	the conversion of the Class A Share(s) and/or Share Surplus A (each as
defined in the Articles of Association) or any other share or premium created as part
of the PEC Restructuring into new Elster Group Shares or other equity instrument(s) and
the issue of such shares or instrument(s) to Elster Holdings or one of its Affiliates;
	 
	 	6.2.7	 	changes to the Articles of Association regarding transfer
provisions/tag-along rights; and
	 
	 	6.2.8	 	any amendment or the deletion of the provision of the Articles of Association
requiring these qualified majorities.

	6.3	 	Without prejudice to the provisions set forth in the 1915 Law, resolutions of the
shareholders general meeting of Elster Group in respect of the following matters require a
seventy five percent (75%) majority of the votes attaching to all shares then issued and
existing:

	 	6.3.1	 	the approval of any third party as a new shareholder of Elster Group, if such
third party becomes a transferee, provided that the provisions set forth in Clauses 11
to 17 inclusive have been duly observed.

	6.4	 	To the extent any losses are generated by the mismatch between interest income
generated by the loans to be granted by Elster Group to any subsidiaries and interest charge
generated by the PECs and other instruments or securities issued by Elster Group to Elster
Holdings and any other Elster Group Shareholders, and any shareholders general meeting is
convened or an equivalent resolution is required to resolve upon the continuation of Elster
Group, the Elster Group Shareholders agree to use their voting rights in favour of the
continuation of Elster Group and not to vote for Elster Group’s dissolution.
	 
	7.	 	BOARD OF MANAGERS ETC

	7.1	 	Elster Group shall be managed by a Board of Managers (“Board of Managers”) which
shall consist of up to ten board members (“Board Members”), of which up to seven shall be
non-executive Board Members and up to three shall be executive Board Members. The general
meeting of the Elster Group Shareholders can resolve upon an increase or decrease of the
number of Board Members and the allocation of executive and non-executive Board Members. The
Board Members (and the Chairman) shall be elected by simple majority of a general meeting of
the Elster Group Shareholders. The management of day-to-day operations of Elster Group
including the provision of services by the Company to its subsidiaries shall be delegated (to
the extent permissible by law and subject always to

- 18 -

 

	 	 	Clause 7.7) to a committee consisting of the executive Board Members (the “Executive
Committee”).
	 
	7.2	 	The Investing Managers, to the extent they are or become Board Members, undertake,
and the Elster Group Shareholders shall use all their rights as shareholders and otherwise to
procure, that the Board Members and the Executive Committee manage the business of Elster
Group in accordance with the law, this Agreement, the applicable articles of association and
the resolutions or the advice (if any) passed or given by the Co-Investment Committee, the
Audit Committee, the Compensation Committee or the general meeting of the Elster Group
Shareholders.

	7.3	 	For as long as it or its Permitted Transferees collectively is shareholder of the
Company, Erisa Fund is entitled from time to time to propose for appointment at least four
candidates for Managers out of which the general meeting of Elster Group shall appoint up to
two non-executive Board Members (the “ERISA Board Member”).

	7.4	 	CVC Funds (other than the Erisa Fund) are entitled from time to time to nominate for
appointment at least four candidates for non-executive Board Members, out of which the general
meeting of Elster Group Shareholders shall appoint the remaining non-executive Board Members
(but no more than four in total).

	7.5	 	CVC Funds (other than the Erisa Fund) are entitled from time to time to nominate for
appointment at least four candidates for executive Board Member, out of which the
general meeting of Elster Group Shareholders shall appoint at least one executive Board
Member.

	7.6	 	The following Board Members shall be non-executive Board Members:

	 	•	 	Steven Koltes
	 
	 	•	 	Hugh Briggs
	 
	 	•	 	Emanuela Brero
	 
	 	•	 	Stef Oostvogels
	 
	 	•	 	Marc Strobel
	 
	 	•	 	Gregor Hilverkus.

	 	 	The following Board Members shall be executive Board Members including the first
chairman:

	 	•	 	Howard Dyer (Executive Chairman) (“Chairman”)
	 
	 	•	 	Christoph Schmidt-Wolf (Chief Financial Officer, “CFO”).

- 19 -

 

	7.7	 	Those matters set out in Schedule 7.7 shall not be carried out by the
Executive Committee, the Company or any other member of the Acquired Group without both the
prior approval of the Board of Managers by way of a resolution passed with simple majority of
the Board in accordance with this Clause 7 of this Agreement and the approval of the majority
of the non-executive Board Members. The Parties and the Board Members shall each use their
respective rights and powers as a director, shareholder or otherwise to procure so far as he,
she or it is able to do so that no such act is carried out unless such approval has been given
and that appropriate restrictions are imposed on the management of the subsidiaries of Elster
Group, whether by rules of procedure or otherwise.

	7.8	 	Any Board Member can be removed “ad nutum” and without cause by a resolution of the
general meeting of the Elster Group Shareholders taken with a fifty percent (50%) plus one
vote majority. Notwithstanding the aforegoing sentence (i) the right of a Party or Parties to
propose a candidate for appointment to the Board of Managers includes the right to propose the
dismissal or suspension of the Board Member appointed in accordance with Clause 7.3 after the
nomination by that Party or Parties, and (ii) the provisions of Clause 7.3 shall apply mutatis
mutandis to the replacement of a Board Member.

	7.9	 	With respect to the appointments in Clause 7.6, the Elster Group Shareholders
undertake, if a shareholders resolution is required, to vote in favour of the appointment of
the person(s) duly nominated or entitled to be appointed. The Elster Group Shareholders shall
vote in favour of the dismissal or suspension of a member of the Board of Managers in
accordance with Clause 7.6 above if and when such dismissal or suspension is requested by the
person pursuant to whose nomination such member was appointed.

	7.10	 	Each Party acknowledges that with effect from and as a term of his appointment each
Board Member appointed under Clause 7.3 above shall have the benefit of and be entitled to
rely on the indemnity contained in article 16.2 of the Articles of Association.

	7.11	 	Meetings of the Board of Managers shall be held at the offices of Elster Group
unless the members unanimously decide to hold the meeting at some other place in Luxembourg or
abroad. All meetings shall be held in English unless the members resolve otherwise. The
Chairman or any other member authorised by either of these shall convene and chair the
meetings. Meetings of the Board of Managers shall be held as often as the business of Elster
Group so requires, but at least quarterly per calendar year. Every Board Member can demand
that a meeting be called. The meetings of the Board of Managers shall be called in writing or
by e-mail, the place, date, time and preliminary agenda being indicated with at least seven
(7) days’ notice unless (i) all the Members waive to these formalities, or (ii) unless in case
of urgency duly justified in the resolutions taken by the Board of

- 20 -

 

	 	 	Managers in which case the notice can be reduced to one (1) day. The notice period shall
begin to run on the day following the day on which the invitation is mailed or, if the
invitation is transmitted by e-mail, on the day of transmission. The day of the meeting
shall not count as part of the notice period.
	 
	7.12	 	Absent Board Members may be represented by other members. Experts and other persons
can be invited by the Chairman, or any Board Member authorized by the Chairman, to participate
in the meeting. Minutes are to be kept of each meeting of the Board of Managers, setting out
the place and the date of the meeting, the participants, the items of the agenda and the
essential content of the resolutions of the Board of Managers. The minutes shall be signed by
the Chairman or any other member to whom the Chairman delegates this task. A copy of the
minutes shall be sent to every Board Member.

	7.13	 	Resolutions of the Board Meetings shall in principle be adopted in meetings.
However, to the extent permitted by law, resolutions of the Board Meetings may be adopted
outside meetings in writing, by facsimile, by e-mail or in telephone or video conferences
without complying with any provisions set forth herein with regard to the convocation of such
meetings.
	 
	 	 	In particular, one or more Board Members may participate in a meeting by means of a
conference call or by any similar means of communication initiated from Luxembourg enabling
thus several persons participating therein to simultaneously communicate with each other.

	7.14	 	A written decision, signed by all the Board Members, is proper and valid as though
it had been adopted at a meeting of the Board of Managers, which was duly convened and held.
Such a decision can be documented in a single document or in several separate documents having
the same content signed by all the Board Members.

	7.15	 	A meeting of the Board of Managers may adopt resolutions only if at least the
majority of the members of the Board of Managers are present or represented. If a meeting is
not quorate, a new meeting of the Board of Managers with the same agenda is to be called
observing the same convocation period and notification as set out in this Clause 7. In such
new meeting a quorum shall be deemed constituted as long as two Board Members of whom at least
50% must be non-executive Board Members are present or represented, provided, however, that
the Board Members were notified of such fact in the invitation.

	7.16	 	Resolutions of the Board of Managers shall be adopted pursuant to a simple majority
vote of its members present or represented at such meeting. In case of a tie, the Chairman
shall have a casting vote.

	7.17	 	The Parties shall each use their respective rights and powers as a Manager,
shareholder or otherwise to procure so far as it is able to do so that representatives of

- 21 -

 

	 	 	Elster Holdings and the lenders under the Mezzanine Facility Agreement (to the extent
required thereunder) shall be entitled to attend and speak as an observer (but not vote) at
meetings of the Board of Managers or equivalent body of any member of the Acquired Group
(other than Elster Holdings), save only where prohibited by mandatory law.
	 
	7.18	 	The non-executive Board Members are entitled to an annual fee of € 20,000 each, plus
value added tax, if applicable, unless they waive their right to receive such fee. The
executive Board Members (with whom a service agreement shall be entered into by the Company)
and any non-executive Board Member who conducts the business of a Board Member on more than
one day in any week then he shall be entitled to receive such reasonable additional
remuneration as may be agreed from time to time by the Board of Managers. If such members of
the Board of Managers are employees or consultants of the CVC Funds or their Affiliates, such
fees shall be payable directly to such CVC entity as specified in writing to the Chairman. In
addition, the members of the Board of Managers shall be reimbursed for their reasonable
expenses resulting from their duties as members of the Board of Managers.

	7.19	 	With regard to matters set out Schedule 7.7, the Company shall be bound by the
signatures of three Board Members. With regard to all other matters, the Company shall be
bound by the signature of any two Board Members.

	7.20	 	Any two Manager may sub-delegate their powers for specific tasks to one or more ad
hoc agents.

	7.21	 	The Executive Committee shall have the power to determine its own procedures, but if
it and to the extent it does not, the provisions of Clauses 7.11 — 7.20 shall apply to
meetings and resolutions of the Executive Committee mutatis mutandis.

	8.	 	AUDIT COMMITTEE AND COMPENSATION COMMITTEE
	 
	8.1	 	Immediately following Completion, the Shareholders procured the constitution of a
committee (the “Audit Committee”) consisting of two to three members and the non-executive
Board of Managers shall elect members of the Audit Committee from their number.

	 	8.1.1	 	The following Board Members are the initial members of the Audit Committee:

	 	•	 	Marc Strobel
	 
	 	•	 	Gregor Hilverkus.

	 	8.1.2	 	The Audit Committee shall be responsible for (a) the approval of a change of
auditors for the Acquired Group (so far as not approved under Clause 7.7 and Schedule
7.7) and (b) the review and internal approval of

- 22 -

 

	 	 	 	the form and substance of the consolidated accounts of the Acquired Group if
requested by the Audit Committee; no such matter shall be implemented by the
Executive Committee, the Board of Managers, Elster Group or any other member of the
Acquired Group without receiving the prior written advice of the Audit Committee
which advice may only be given on the basis of a duly passed resolution of the
committee. The Parties shall each use their respective rights and powers as a
shareholder or otherwise to procure so far as he, she or it is able to do so that
no such act is carried out unless such advice has been given and that equivalent
restrictions are imposed on the management of the subsidiaries of Elster Group,
whether by rules of procedure or otherwise. The advice of the Audit Committee shall
not be binding on the Executive Committee or the Board of Managers. However, for
each decision where the Executive Committee or the Board of Managers resolves not
to follow the advice of the Audit Committee, it shall convene an extraordinary
meeting of the Elster Group Shareholders for the purpose of the approval of such
decision. The notice convening such meeting will include the reasons for the
decision proposed by the Executive Committee or the Board of Managers. The
resolution of the extraordinary meeting of the Elster Group Shareholders on the
matter referred to it requires a simple majority of the votes cast. The Executive
Committee and the Board of Managers shall be obliged to accept and implement such
resolution.
	 
	 	8.1.3	 	The Audit Committee shall have the right to meet with and review the working
papers of the auditors of Elster Group and any member of the Acquired Group without the
Managers or any other member of management being present and shall be entitled to
appoint independent accountants or advisers for these purposes at Elster Group’s or the
relevant entity’s expense.
	 
	 	8.1.4	 	The Audit Committee shall have the power to determine its own procedures, but
if it and to the extent it does not, the provisions of Clauses 7.13- 7.19 shall apply
to meetings and resolutions of the Audit Committee mutatis mutandis.
	 
	 	8.1.5	 	The members of the Audit Committee are entitled to an additional annual fee
of € 5,000 each plus value added tax, if applicable. If a member is an employee or
consultant of the CVC Funds or their Affiliates, such fees shall be payable directly to
CVC Capital Partners (Deutschland) GmbH. In addition, the members of the Audit
Committee shall be reimbursed for their reasonable expenses resulting from their duties
as members of the Audit Committee. Each Party acknowledges that with effect from and as
a term of his appointment each member appointed under Clause 9.1 shall have the benefit
of and be entitled to rely on the indemnity contained in

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	 	 	 	Article 16.2 of the Articles of Association.
	 
	 	8.1.6	 	None of the Audit Committee or any of its members, shall be liable for advice
given to the Executive Committee or the Board of Managers, which shall each be solely
responsible for its decisions and their implementation.

	8.2	 	Immediately following Completion, the Shareholders procured the constitution of a
committee (the “Compensation Committee”) consisting of two to three members and the
non-executive Board of Managers shall elect members of the Compensation Committee from their
number.

	 	8.2.1	 	The following Board Members are the initial members of the Compensation
Committee:

	 	•	 	Marc Strobel
	 
	 	•	 	Gregor Hilverkus.

	 	8.2.2	 	The Compensation Committee shall be responsible for (a) general policies for
remuneration and benefits for directors, officers and employees of the Acquired Group,
(b) the introduction, amendment or termination of any pension or benefit schemes (to
the extent not contained in an annual budget approved in accordance with Clause 7.7 and
Schedule 7.7), (c) the appointment or removal of any director (or similar officer) and
any change to, termination or entering into employment or service agreement with
managing directors (executive Board Members, Chairman, Geschäftsführer, Vorstände oder
andere Organe) or administrateur délégués, as the case may be, of Elster Holdings or
any subsidiary in each case providing for an annual remuneration (including target
bonus) exceeding an amount of EUR 350,000 and (d) determination of an annual bonus
structure concerning agreement with managing directors (executive Board Members,
Chairman, Geschäftsführer, Vorstände oder andere Organe) or administrateur délégués, as
the case may be, of Elster Holdings or any subsidiary, such managing director’s service
agreements with the respective company in each case providing for an annual
remuneration exceeding an amount of EUR 350,000 (including target bonus), and any
similar employee benefit or incentive scheme relating to the foregoing entities; no
such matters shall be implemented by the Executive Committee, the Board of Managers,
Elster Group or any other member of the Acquired Group without receiving the prior
written advice of the Compensation Committee which advice may only be given on the
basis of a duly passed resolution of the committee. The Parties shall each use their
respective rights and powers as a shareholder or otherwise to procure so far as he, she
or it is able to do so that no such act is carried out

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	 	 	 	unless such advice has been given and that equivalent restrictions are imposed on
the management of the subsidiaries of Elster Group, whether by rules of procedure
or otherwise. The advice of the Compensation Committee shall not be binding on the
Executive Committee or the Board of Managers. However, for each decision where the
Executive Committee or the Board of Managers resolves not to follow the advice of
the Compensation Committee, it shall convene an extraordinary meeting of the Elster
Group Shareholders for the purpose of the approval of such decision. The notice
convening such meeting will include the reasons for the decision proposed by the
Executive Committee or the Board of Managers. The resolution of the extraordinary
meeting of the Elster Group Shareholders on the matter referred to it re-quires a
simple majority of the votes cast. The Executive Committee and the Board of
Managers shall be obliged to accept and implement such resolution. A Board Member
shall not be entitled to attend at or vote on any meeting or resolution to the
extent it relates to or affects him personally.
	 
	 	8.2.3	 	The Compensation Committee shall have the power to determine its own
procedures, but if it and to the extent it does not, the provisions of Clauses 7.13 -
7.19 shall apply to meetings and resolutions of the Compensation Committee mutatis
mutandis.
	 
	 	8.2.4	 	The members of the Compensation Committee are entitled to an additional
annual fee of € 5,000 each plus value added tax, if applicable. If a member is an
employee or consultant of the CVC Funds or their Affiliates, such fees shall be payable
directly to CVC Capital Partners (Deutschland) GmbH. In addition, the members of the
Compensation Committee shall be reimbursed for their reasonable expenses resulting from
their duties as members of the Compensation Committee. Each Party acknowledges that
with effect from and as a term of his appointment each member appointed under Clause
8.2 shall have the benefit of and be entitled to rely on the indemnity contained in
Article 16.2 of the Articles of Association.
	 
	 	8.2.5	 	None of the Compensation Committee or any of its members, shall be liable for
advice given to the Executive Committee or the Board of Managers, which shall each be
solely responsible for its decisions and their implementation.

	9.	 	ERISA RIGHTS

	 	 	Elster Holdings, Management KG and Elster Group agree and undertake for the benefit of the
ERISA Fund as follows:

	9.1	 	For as long as ERISA Fund or its nominee is directly or indirectly a shareholder

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	 	 	of Elster Holdings or Elster Group, ERISA Fund will be granted certain management rights in
Elster Group and its subsidiaries in a manner and to the extent permitting ERISA Fund to
substantially influence or participate in the management of Elster Group and its
subsidiaries. Accordingly, it is agreed for the benefit of ERISA Fund that ERISA Fund or its
nominee may from time to time and at any time by notice in writing propose up to four
persons for election as Board Members and the Elster Group Shareholders undertake to vote
and take such other action as may be necessary to ensure that at least two of such persons
shall hold office as Board Members (the “ERISA Board Members”).
	 
	9.2	 	The ERISA Fund shall have the right to meet with such management and personnel of
Elster Group and its subsidiaries as the ERISA Fund may reasonably designate, upon reasonable
notice to Elster Group and its subsidiaries, for the purpose of consulting with and advising
and influencing the management of Elster Group and its subsidiaries, obtaining information
regarding the business operations, properties and financial and other conditions and prospects
of Elster Group and its subsidiaries or expressing the views of the ERISA Fund on such
matters. The foregoing shall include the right to submit business proposals or suggestions to
the management of Elster Group and its subsidiaries from time to time with the requirement
that one or more members of the management of Elster Group and its subsidiaries discuss such
proposals or suggestions with ERISA Fund within a reasonable period after such submission and
the right to call a meeting with the management of Elster Group and its subsidiaries in order
to discuss such proposals or suggestions.

	9.3	 	If ERISA Fund notifies Elster Holdings or Elster Group in writing that the provisions
of Clauses 9.1 and 9.2 require any amendment to preserve the qualification of ERISA Fund as a
“venture capital operating company” (“VCOC”) for the purposes of ERISA, or otherwise to ensure
that the assets of the ERISA Fund are not considered “plan assets” for the purposes of ERISA,
Elster Holdings, Management KG and Elster Group will consent to the proposed amendments,
provided that the amendments do not result in a material adverse effect on the operations,
business or the prospects of Elster Group and its subsidiaries or, in the opinion of the CVC
Funds, to the current or future value of Elster Group or any class of shares in Elster Group.

	9.4	 	Where reference is made to Elster Group in this Clause 9, the provisions are to apply
mutatis mutandis to the subsidiaries of Elster Group.

	10.	 	FINANCIAL AND OTHER INFORMATION; ACCOUNTING

	10.1	 	The Parties agree that certain financial and other information (at least the
information set out in Schedule 10) shall be provided on a regular basis to the ERISA
Board Members and Elster Holdings.

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	10.2	 	The Parties acknowledge that, subject to all mandatory applicable law, a person
(including a CVC Fund or an ERISA Board Member) who receives information pursuant to this
Clause 10 may (if he is a an ERISA Board Member) disclose it to the entity nominating him and
to that entity’s Affiliates and in the case of CVC Funds disclose it to their Affiliates
(including for these purposes any adviser to, trustee or manager of, or investor or
prospective investor in the CVC Funds, but excluding any investee company of the CVC Funds,
any investee company of an investor or of a prospective investor in the CVC Funds that is not
a subsidiary of Elster Holdings), in each case so long as the discloser makes reasonable
efforts to make the recipients aware of the confidential nature of such information. Any Party
may elect, temporarily or definitively by notifying the Chairman in writing, not to receive
all or any part of the information listed in Schedule 10.
	 
	10.3	 	Notwithstanding anything to the contrary:

	 	10.3.1	 	the Elster Group Shareholders shall use their reasonable efforts to prevent
a shareholder, by reason of its purchase and holding of interests in Elster Holdings or
Elster Group, from being engaged, or deemed engaged, in a trade or business in any
jurisdiction or from otherwise being subject to taxation on a net income basis in a
foreign jurisdiction;
	 
	 	10.3.2	 	Elster Group will seek to minimize the imposition of withholding taxes by
governmental authorities (in particular in countries other than the United States) on
payments due to Elster Group in respect of its investments or activities in such
countries; and
	 
	 	10.3.3	 	Elster Group shall use reasonable efforts to assist a Elster Group
Shareholder to obtain any available tax refunds, exemptions from withholding, material
benefits of any applicable tax treaties or similar relief with respect to any taxes
imposed as a result of Elster Group’s activities or investments.

	11.	 	TRANSFERS OF SHARES ETC., NEW ISSUES
	 
	11.1	 	No shares in Elster Group shall be issued and no Elster Group Shares, PECs or other
instruments or securities issued by Elster Group shall be transferred to a person who is not
already a party to this Agreement unless that person has already executed a Deed of
Acknowledgement and Undertaking and submitted to the Co-Investment Committee satisfactory in
form and substance to the Co-Investment Committee. No partnership interest in Management KG
shall be issued or transferred to a person who is not already a party to this Agreement unless
that party (and any Investment Vehicle) has already executed a Deed of Acknowledgement and
Undertaking. Subject to the foregoing, upon the execution by a subscriber for or a transferee
of shares, PECs or partnership interests in Management KG or other relevant of the appropriate
Deed of Adherence and Deed of Acknowledgement

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	 	 	and Undertaking the provisions of this Agreement shall apply to the subscriber or
transferee as if it were a Party to this Agreement.

	11.2	 	Except pursuant to a restructuring measure under Clause 4, or unless the
Co-Investment Committee explicitly agrees otherwise, no Elster Group Shares shall be
transferred unless the transferee at the same time acquires a proportional amount of PECs and
other instruments and securities issued by Elster Group in each case.
	 
	11.3	 	The Elster Group Shareholders acknowledge and agree those Investing Managers who are
invited to invest in accordance with this Agreement and are designated by the Co-Investment
Committee as senior managers (“Investing Managers”) may hold their interests in Management KG
through Investment Vehicles, provided that the relevant Manager and Investment Vehicle execute
a Deed of Acknowledgement and Undertaking substantially in the form attached in Annex
F, and that the holding of such interests through such Investment Vehicles is approved by
the Co-Investment Committee.
	 
	11.4	 	The Elster Group Shareholders are only permitted to transfer, assign, encumber or
create any interest in or right or claim to, their Elster Group Shares, PECs or other
instruments or securities issued by Elster Group (or to enter into any agreement or
undertaking to do so) if in compliance with Clauses 11.1, 11.2 and 11.3 above and only:

	 	11.4.1	 	pursuant to a restructuring measure under Clause 4.3; or
	 
	 	11.4.2	 	as permitted under Clause 12; or
	 
	 	11.4.3	 	when required, or in acceptance of an offer made by an Acquirer, under
Clause 13; or
	 
	 	11.4.4	 	upon an Exit under Clause 17; or
	 
	 	11.4.5	 	with the prior written consent of the Co-Investment Committee,

	 	 	provided that no transfer, assignment, encumbrance or creation of any interest in or right
or claim to, or to the benefit of, a competitor of the Acquired Group shall be permitted
without the prior written consent of the Co-Investment Committee.

	11.5	 	Other than in connection with the implementation of the PEC Restructuring referred
to in Clause 4.3 (including the conversion referred to in Clause 6.2.6) or in the event of
Clause 11.6 below, the Shareholders agree that upon an increase of the issued share capital
of, or other issue of securities by Elster Group, each person who then holds shares in that
company (“Existing Shareholder”) shall have the right to subscribe on the same terms for that
proportion of new shares or securities which is, subject to any rounding corrections required
to comply, for example, requirements as to the nominal value of shares or other securities
equal to the proportion 

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	 	 	of the nominal value of Elster Group Shares held by the Existing Shareholder in Elster
Group to the nominal value of all Elster Group Shares then in issue. Such right shall,
except in case of urgency as resolved by the Board of Managers, be exercisable for a period
of 30 days following the resolution to increase the capital or issues new shares or
securities. Elster Holdings or any of its Affiliates which is then an Existing Shareholder
may nominate any one or more of its Affiliates to subscribe for all or any of those new
shares or securities in Elster Group for which Elster Holdings is entitled to subscribe
pursuant to the foregoing sentence. If new shares or securities are issued with a premium or
in connection with other related obligations (including the obligation to provide additional
debt funding) the same terms and conditions relating to the subscription of the new shares
or securities shall apply to all Existing Shareholders including, for the avoidance of
doubt, Clauses 11.1, 11.2 and 11.3 of this Agreement.

	11.6	 	Unless required by the financing banks, an increase of the issued share capital of
Elster Group for cash pursuant to Clauses 11.5 shall only occur if the new shares of Elster
Group are issued together with securities and related debt instruments in Elster Group,
including but not limited to PECs, at the ratio of Shares (at a nominal value of EUR 25 per
share) to PECs, the PEC Equity Contributions or shares or securities deriving from them as the
case may be (at a nominal value of EUR 1 per PEC or the relevant nominal value of the PEC
Equity Contributions or such other shares or securities of an equivalent economic value) held
by Elster Holdings upon Completion of the Steps 1.1, 1.2 and 1.3 of the PEC Restructuring as
set out in Schedule 4.3B (the “Investment Ratio”) or a lower ratio. For the purpose of
this Clause 11.6 lower ratio shall mean that the funds subscribed are allocated to fewer
Shares but more PECs than would be the case under the Investment Ratio.
	 
	11.7	 	In the event of a decision by the Board of Managers to invest in assets or shares of
another company pursuant to which all or some of the consideration is proposed to be settled
by means of shares or other securities and related debt instruments in Elster Group (the
“Add-on Investment”), the Board of Managers may instruct the Existing Shareholders to waive
their subscription rights under Clause 12.5 and the Articles of Association and to admit the
relevant new shareholder(s) nominated by the Board of Managers as subscriber(s) for such
number of new shares or securities on such terms as the Board of Managers may in its
reasonable discretion determine, provided that if the new shareholder under this Clause 11.6
is an Affiliate of the CVC Funds, the Board of Managers must obtain a fairness opinion from a
reputable independent investment bank or corporate finance adviser (in each case jointly
chosen by the executive members (to include for these purposes, for the avoidance of doubt,
the CEO and the CFO from time to time notwithstanding their membership of the Board of
Managers) and the non-executive members of the Board of Managers) as to the valuation of the
shares or assets to be acquired by Elster Group and the shares and debt instruments proposed
to be issued by Elster Group, such opinion to be addressed to Elster Holdings, Management KG
and Elster Group and

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	 	 	provided further that it is the Parties’ intention that any Add-On Investments should, if
reasonably practicable, be financed by third party debt rather than equity issues.

	11.8	 	If an issue or transfer of Elster Group Shares, PECs, CPECs, interests in Management
KG or other instruments or securities is permitted or agreed pursuant to the terms of this
Agreement, the Parties and the Managers undertake to pass all resolutions and make and take
all declarations and actions as may be reasonably necessary or appropriate in the discretion
of the Board of Managers to effect the same in compliance with the Articles of Association,
the partnership agreement of Management KG and the terms and conditions of the securities or
instruments in question.
	 
	11.9	 	Elster Holdings, GP GmbH, Reserve GmbH and the Managers shall ensure that the
partnership agreement of Management KG implements the provisions of this Agreement, including
Clauses 11-17, and to the extent it does not shall as between themselves act and be treated as
if it did.
	 
	12.	 	ELSTER HOLDINGS PERMITTED TRANSFERS
	 
	12.1	 	Subject to the obligation for any transferee to become a party to this Agreement as
provided for in Clause 11.1 above, for the duration of this Agreement, Elster Holdings shall
have the right to transfer Elster Group Shares and PECs and any other securities or
instruments issued to it in connection with its investment at its sole discretion to:

	 	12.1.1	 	Affiliates (including on a distribution in kind or specie, to the underlying
investors in such Affiliates), or to another institutional investor which is advised or
managed by the adviser or manager of such CVC Funds in each such case without any
restrictions, provided that for the purposes of this Clause 12, the term Affiliates
shall not include any portfolio companies directly or indirectly controlled by the CVC
Funds or other funds advised or managed by the adviser to or manager of the CVC Funds;
	 
	 	12.1.2	 	with respect to a co-investment or similar scheme (“Co-Investment Scheme”)
to any person which holds or is to hold assets for a Co-Investment Scheme or to the
officers, employees and partners entitled to such assets under the Co-Investment
Scheme.

	12.2	 	Upon any such transfer, Elster Holdings shall be released from the liabilities and
obligations assumed by the transferee.
	 
	12.3	 	The Parties undertake to pass any resolutions necessary or appropriate in the
discretion of the Board of Managers in order to (pre-)approve any such transfer (including the
granting of powers of attorney for any future shareholders meetings) in order to effect the
same in compliance with the Articles of Association, the

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	 	 	Management KG partnership agreement and the terms and conditions of the PECs, CPECs or other
securities or instruments in question.

	13.	 	PURCHASE OFFER AND BRING ALONG
	 
	13.1	 	If Elster Group Shareholders holding more than fifty percent (50%) of the Elster
Group Shares then in issue (the “Selling Investors”) wish to sell all their Elster Group
Shares, PECs and any other securities or instruments then in issue and find a bona fide arm’s
length purchaser which is not an Affiliate of any such shareholders and agree terms for the
sale to such purchaser of all the Elster Group Shares or wish to tender their Elster Group
Shares in a Listing and the Board of Managers so resolves, then, on receipt of written
notification of such fact, all the other holders of Elster Group Shares (the “Non-Selling
Investors”) shall be bound and undertake to accept any offer from such a purchaser or to
tender such Elster Group Shares, PECs, securities and instruments in such Listing on the same
terms as agreed and at the same time as the Selling Investors sell or tender their shares. The
Non-Selling Investors shall be entitled to make an offer to sell to such a purchaser or to
tender such Elster Group Shares, PECs, securities and instruments in such Listing on the terms
substantially equivalent to those agreed and at the same time as the Selling Investors sell or
tender their shares unless reasonably requested by the lead underwriter(s) in such Listing in
accordance with market practice at that time. The Parties hereto agree to waive all rights of
pre-emption, rights of veto and analogous rights under the Articles of Association, this
Agreement or otherwise for these purposes.
	 
	13.2	 	Except in case of an equity syndication by the CVC Funds resulting in the
syndicatee(s) holding no more than fifty percent of the Elster Holdings Shares then in issue,
no sale of Elster Holdings Shares or Elster Group Shares, PECs, CPECs and any other securities
or instruments then in issue, shall be made to any person (the “Acquirer”) unless the Acquirer
shall have made an offer pro-rata to their respective shareholding to all holders of Elster
Group Shares, PECs and other securities or instruments issued by Elster Group at a price equal
or substantially equivalent to the price at which such transfer is to be made.
	 
	13.3	 	The Parties acknowledge that the Elster Holdings Investment Agreement contains a
provision giving Management KG equivalent rights and obligations in the case of the sale of
over fifty percent (50%) of the Elster Holdings Shares, which shall constitute a contract for
the benefit of Management KG as a third party.
	 
	14.	 	LEAVER PROVISIONS
	 
	14.1	 	For the purposes of this Agreement:

	 	14.1.1	 	a Manager, who resigns, is dismissed or otherwise ceases to be an employee
of the Group is a “Leaver”;

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	 	14.1.2	 	the date on which a Manager gives notice or is given notice of such
termination or is put on garden leave (Freistellung) is the “Trigger Date”
	 
	 	14.1.3	 	a “Bad Leaver” is a Manager leaving who (i) resigns for any reason except
for good cause for which the Elster Group is responsible or (ii) breaches any
non-competition / confidentiality agreement, breach of the transfer restrictions under
Clause 11, breach of his transfer obligations under Clauses 13 and 14, breach of his
cooperation obligations under Clauses 15 and 16 or breach of confidentiality
obligations under Clause 19.2 (unless, but then only to the extent, the Manager is
obliged and/or entitled to disclose such information to third parties under his service
agreement), or the equivalent provisions to any of the foregoing in the partnership
agreement of Management KG (iii) is dismissed / removed from office for good cause for
which he is responsible other than permanent disability (e.g. gross breach of duty,
incapability) or (iv) if the Manager’s service contract in force at any time expires
and the Manager does not accept the offer of a new service contract on at least the
same financial terms and otherwise on substantially the same terms as the expired
service contract;
	 
	 	14.1.4	 	a Leaver who is not a Bad Leaver is a “Good Leaver”. Notwithstanding any
other provision, a leaver is not a Bad Leaver if (i) the Co-Investment Committee
resolves that such leaver shall be a Good Leaver, (ii) he ceases to be employed as a
result of his death, (iii) becomes permanently disabled for health reasons, or (iv) he
retires at the age of 67 or other applicable statutory retirement age; and
	 
	 	14.1.5	 	the amount invested by a Manager in the Partnership being the price paid by
such Manager to Reserve GmbH for the acquisition of his Manager’s Equity Stake, plus in
either case any amounts subsequently invested (which shall include any Subscription
Payment) is his “Cost of Investment”.

	14.2	 	If a Manager is a Bad Leaver, Reserve GmbH shall be entitled to acquire his entire
limited partnership interest in Management KG (comprising the liability amount (Hafteinlage)
and the limited partnership interest and all rights to capital or other accounts) (“Manager’s
Equity Stake”) on the terms of this Clause 14 and each Manager and Investment Vehicle by
signing a Deed of Acknowledgement and Undertaking grants Reserve GmbH the right to so acquire
the entire Manager’s Equity Stake in such circumstances (“Bad Leaver Call Option”).
	 
	14.3	 	If a Manager is a Good Leaver, Reserve GmbH shall be entitled to acquire the
Manager’s entire Manager’s Equity Stake on the terms of this Clause 14 and each Manager and
Investment Vehicle by signing a Deed of Acknowledgement and Undertaking grants Reserve GmbH
the right to so acquire his entire Manager’s

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	 	 	Equity Stake in such circumstances (“Good Leaver Call Option”). The Good Leaver Call Option
or the Bad Leaver Call Option, as the case may be, may only be exercised within a period of
six months after the Trigger Date.

	14.4	 	On the Trigger Date, the offeror’s voting rights in respect of his Manager’s Equity
Stake (including the rights in respect of the interests the Partnership holds on behalf of the
Manager in Elster) are suspended, and the offeror shall no longer be entitled to exercise
them. At any time after the Trigger Date in respect of either a Bad Leaver Call Option or in
respect of a Good Leaver Call Option (the “Triggered Call Option”), Reserve GmbH may resolve
that (i) that Reserve GmbH shall acquire the Manager’s Equity Stake itself or (ii) that
Reserve GmbH shall require the Leaver to transfer the Manager’s Equity Stake to a person
nominated by Reserve GmbH.
	 
	14.5	 	Upon receipt of a notice from Reserve GmbH informing the relevant offeror of the
exercise of the Triggered Call Option, the offeror shall, without undue delay execute all such
documents and take all actions as may reasonably be required to effect and to evidence the
transfer of the Manager’s Equity Stake free of any encumbrance in accordance with this § 14.5
and in particular to record the transfer of the Manager’s Equity Stake to Reserve GmbH. The
transfer of the Manager’s Equity Stake shall take effect vis-à-vis third parties only at the
time Reserve GmbH (or its designee in accordance with § 14.4), is registered in the commercial
register as the transferee of the Manager’s Equity Stake.
	 
	15.	 	COMPENSATION
	 
	15.1	 	In consideration of the transfer of the Manager’s Equity Stake by an offeror,
Reserve GmbH shall pay to the offeror an amount to be determined as follows (the “Transfer
Price”):

	 	(a)	 	in the case of a Good Leaver Call Option being exercised within 2
(two) years after the the date of the Good Leaver’s first investment (“Early
Period”), the value for the Manager’s Equity Stake attributable to the Good
Leaver shall be the Cost of Investment plus accrued interest of 3% per annum
up to the date of termination; or
	 
	 	(b)	 	in the case of a Good Leaver Call Option being exercised after
expiration of the Early Period, the value for the Manager’s Equity Stake shall
be the Market Value (as defined below) of the Manager’s Equity Stake (as
defined below), but in any event shall not be less than the multiple of 7
(seven) times EBITA of the Elster Group for the last completed financial year
less the amount as at the date of the end of the last completed financial year
of the net financial debt (incl. pension provisions or underfunding) and the
PEC Equity Contributions or shares or securities deriving from it (including
accrued

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	 	 	 	interest or cumulative dividend entitlements or equivalent where relevant) of
Elster on a consolidated basis (the “Base Value”). “Market Value” shall be
established by applying the methodology used from time to time by the
advisers/managers of the CVC Funds in their regular reporting package to the
investors in the CVC Funds, and shall in any particular case be that pro rata
share represented by the Shares attributable to the Manager’s Equity Stake
(as a percentage) of the value shown for 100% of the ordinary share capital
of Elster Group in the most recent report delivered to such investors on
behalf of the CVC Funds. The Co-Investment-Committee shall notify the Market
Value or the Base Value, as applicable, to the relevant Manager in writing,

plus in either case the nominal amount of the PECs attributable to the offeror (to
be computed as the total number of PECs owned by the Management KG times the
Proportional Interest of the respective Limited Partner – the “Look-through PECs”)
plus the amount paid for Additional PECs (if any) plus accrued but unpaid interest
on such PECs and Additional PECs up to the Trigger Date;

	15.2	 	in the case of a Bad Leaver Call Option being exercised,

	 	(a)	 	the value for the Manager’s Equity Stake attributable to the Bad
Leaver shall be the lower of the Market Value or the Cost of Investment plus
accrued interest of 3% per annum up to the date of termination and
	 
	 	(b)	 	the lower of the nominal amount of the Look-through PECs attributable
to the offeror and the Additional PECs (if any) plus accrued but unpaid
interest on such PECs and Additional PECs up to the Trigger Date and the
market value of the Look-through PECs and the Additional PECs (if any). In
this case the Co-Investment Committee will notify the market value of
Look-through PECs and Additional PECs (based on the report referred to in
Clause 15.1(b)) lower than the nominal amount of the Look-through PECs and
Additional PECs (if any).

	15.3	 	The day on which the transfer of the Manager’s Equity Stake upon the exercise of one
of the options provided for in the Management KG’s partnership agreement herein is registered
in the commercial register (the “Option Completion Date”).
	 
	15.4	 	In the case of a Good Leaver Option being exercised, the Transfer Price shall,
subject to Reserve GmbH being able to fund such payment, be paid 30 Business days after the
Option Completion Date. In this case, interest shall accrue on the Transfer Price from the
Option Completion Date to the date of payment on unpaid

-34-

 

	 	 	amounts at a rate of 3% p.a. and shall be payable at the same time the Transfer Price
becomes due. If payment is not made when due, interest shall accrue from the date on which
payment is due to the date payment is made in full at a rate equal to the Luxembourg
statutory rate plus five percent (5%).

	15.5	 	In the case of a Bad Leaver, the Transfer Price shall, subject as aforesaid,
be payable at Exit. In this case, interest shall accrue on the Transfer Price from the
Option Completion Date to the date of payment on unpaid amounts at a rate of 3% p.a. and shall
be payable at the same time the Transfer Price becomes due. If payment is not made when due,
interest shall accrue from the date payment is due to the date payment is made in full at a
rate equal to the Luxembourg statutory rate plus five percent (5%).
	 
	15.6	 	If any Transfer Price calculated under this Clause 15 is held to be invalid or
unenforceable at law, the lowest legally valid and enforceable price shall apply instead.
	 
	15.7	 	If within six months of the Trigger Date in respect of a particular Good Leaver (a
“Participating Good Leaver”) an Exit occurs, then the provisions of this Clause 15.7 shall
apply:

	 	15.7.1	 	for the purposes of this Clause 15.7 an Exit shall be treated as having
occurred if either (a) a Listing takes place and the relevant shares are admitted to
trading on the relevant exchange; in this case the Exit shall be deemed to occur on the
first day such shares are traded; or (b) a binding, definitive contract for a Sale is
signed and closing of that contract (and payment thereunder) occurs within 6 (six)
months of it being signed; in this case the Exit shall be deemed to occur on the day
the contract is signed;
	 
	 	15.7.2	 	if an Exit occurs and Reserve GmbH has exercised its Good Leaver Call Option
in respect of a Participating Good Leaver, then the Participating Good Leaver shall be
entitled to receive an amount equal to the excess (if any) of (a) the amount receivable
in respect of such Management Equity Stake had he continued to hold it up to, and then
disposed of it in, the Exit over (b) the amount payable in respect of his Management
Equity Stake under Clauses 14 and 15 (the “Top-Up”); and
	 
	 	15.7.3	 	an amount equal to the Top-Up shall be paid by Reserve GmbH to the
Participating Good Leaver at the same time as proceeds are payable to other
Shareholders.

	16.	 	CALL OPTIONS FOR RESERVE GMBH
	 
	16.1	 	Subject to Clause 11.3, Reserve GmbH shall be entitled to acquire or nominate an
acquirer for a Manager’s entire Manager’s Equity Stake on the terms of this

-35-

 

	 	 	Clause 16 and each Manager and Investment Vehicle by signing a Deed of Acknowledgement and
Undertaking grants Reserve GmbH the right to so acquire all the entire Manager’s Equity
Stake in the following circumstances (“Default Call Options”):

	 	16.1.1	 	insolvency, composition, bankruptcy (including any statutory procedures
requiring him to give a declaration as to his assets) or similar proceedings in any
jurisdiction are initiated against a Manager;
	 
	 	16.1.2	 	insolvency, composition, bankruptcy (including any statutory procedures
requiring the making of a declaration as to his assets) or similar proceedings in any
jurisdiction are initiated (or declined for lack of assets) against any Investment
Vehicle (unless the same is terminated or released within 4 weeks of its creation) or
any resolution is passed or order or declaration made for the winding up, liquidation
or cessation of any Investment Vehicle;
	 
	 	16.1.3	 	the creation of any pledge, lien or encumbrance over or any enforcement or
equivalent proceedings being initiated against a Manager’s Equity Stake or any
Investment Vehicle (unless the same is terminated or released within 4 weeks of its
creation);
	 
	 	16.1.4	 	the Manager ceasing to control and to be economic owner of at least 75% of
any Investment Vehicle or to be the beneficiary under the scheme under which the
Investment Vehicle holds or manages the Manager’s Equity Stake;
	 
	 	16.1.5	 	on a Manager’s divorce (except where proof is provided to the satisfaction
of the Co-Investment Committee that the divorce does not impact the control, economic
ownership and transferability of the Manager’s Equity Stake whereby it is acknowledged
that this is the case if the German matrimonial law on community of surplus
(Zugewinngemeinschaft) or separation of property (Gütertrennung) or equivalent
provisions in other jurisdictions apply); and
	 
	 	16.1.6	 	material breach or entry into agreements or arrangements which (if
implemented) could reasonably be expected to lead to a material breach of the transfer
restrictions under Clause 11, breach of his transfer obligations under Clauses 13 and
14, breach of his cooperation obligations under Clause 15 and this Clause 16 or breach
of confidentiality obligations under Clause 19.2 (unless, but then only to the extent,
the Manager is obliged and/or entitled to disclose such information to third parties
under his service agreement), or the equivalent provisions to any of the foregoing in
the partnership agreement of Management KG or a non-compete agreement (unless such
breach is cured within 4 weeks of its creation).

-36-

 

	16.2	 	The price payable under the Default Call Option shall be the Cost of Investment plus
accrued interest of 3% per annum up to the date of the trigger event plus interest accrued on
the PECs B up to the date of the Trigger Event (the “Call Price”) unless the circumstances
triggering the Default Call Option also trigger a Bad Leaver Call Option, in which case the
Call Price shall be the lower of the Market Value or the Cost of Investment plus accrued
interest of 3% per annum. Interest shall accrue on the Call Price from the date of the Trigger
Event at a rate of 3% p.a. until the date of payment.
	 
	16.3	 	Clauses 14.3 and 15.4 shall apply mutatis mutandis to this Clause 16.
	 
	17.	 	EXIT; LIQUIDATION EVENT
	 
	17.1	 	It is the intention of the Institutional Investors and the Managers to achieve an
optimised Exit at a time selected by the CVC Funds and that the Exit should entitle Management
KG to realise its investment in Elster Group at the same time as the Institutional
Shareholders achieve an Exit from Elster Holdings. To this end, Elster Holdings shall, so far
as legally permissible and, subject to compliance with confidentiality restrictions, keep the
other Elster Group Shareholders and the Investing Managers reasonably informed of any
reasonably advanced discussion relating to an Exit. Each of the other Parties shall take such
action and give such co-operation and assistance as Elster Holdings may reasonably request in
this context, which (in the case of the Investing Managers) shall include, without limitation,
facilitating the changes of legal form and other steps comprised in the PEC Restructuring, the
preparation of an information memorandum or prospectus and the giving of presentations to
potential purchasers, investors, underwriters, financiers and their respective advisers, with
a view to facilitating such Exit.
	 
	17.2	 	The Elster Group Shareholders agree that in the event of an Exit:

	 	17.2.1	 	Each of them shall give usual warranties as to title to their Shares, PECs
or other securities or instruments being sold by them as the case may be, subject to
such negotiated limitations and caps and disclosure principles as may be agreed at the
time;
	 
	 	17.2.2	 	the shareholders of Elster Group (other than Elster Holdings) shall only
give further warranties and indemnities to the extent they are negotiated by them in
accordance with market-practice at the time of the Exit and subject as aforesaid;
	 
	 	17.2.3	 	Management KG and the Investing Managers will agree such restrictions on the
transfer of their interests in Management KG, their Elster Group Shares and other
securities or instruments being sold by them or by any other person which is subject to
a Listing for such reasonable period after the Listing as may be negotiated by the CVC
Funds with the lead underwriter(s) in accordance with market practice at the time. It
is the joint understanding

-37-

 

	 	 	 	of the Parties hereof, that the lock-up periods for Management KG and
the Investing Managers shall not be longer than the lock-up periods to which the
other shareholders will be subjected, unless and to the extent that longer lock-up
periods for Management KG and the Investing Managers are reasonably requested by
the lead underwriter(s) for such Listing subject to market practice at the time of
the Listing; and

	 	17.2.4	 	on a Sale, Management KG (or the Managers themselves) will consider a
request by the proposed purchaser to reinvest a portion of the (net) proceeds they
would receive from the Sale at its (or their) sole discretion.

	17.3	 	For the avoidance of doubt and subject to any restrictions agreed in connection with
a re-investment (Clause 17.2.4), after the expiry of any lock-up periods entered into under or
in connection with Clause 17.2.3, Management KG and the Investing Managers are free to dispose
over their Shares or the respective Managers’ Equity Stake.
	 
	17.4	 	In the event of any liquidation or winding up of Elster Group, the Parties hereby
agree that to the extent legally permissible, it is intended that the proceeds of liquidation
be applied to instruments issued by Elster Group as follows:

	 	17.4.1	 	firstly, all debt instruments (other than PECs) shall be fully repaid in
that order and pari passu between the holders of a particular instrument, including in
each case all accrued but unpaid interest,
	 
	 	17.4.2	 	secondly, all outstanding PECs (including those held by Management KG after
the PEC Restructuring, but as between the PECs by reflecting any priority set out in
the terms thereof) and pari passu with such PECs all Elster Group Shares or other
securities and any share premium issued or created by contribution or payment to
capital reserves (“PEC Equity Contributions”) made by an Elster Group Shareholder in
connection with the PEC Restructuring shall be returned to that Elster Group
Shareholder (or its successor in title),
	 
	 	17.4.3	 	thirdly, any other securities issued and any share premium or payment to
capital reserves made by an Elster Group Shareholder in respect of an Elster Group
Share (other than any PEC Equity Contribution) shall be returned to that Elster Group
Shareholder (or its successor in title),
	 
	 	17.4.4	 	finally the remaining liquidation proceeds shall be distributed among the
Elster Group Shareholders holding Elster Group Shares pro rata to their holdings of
such Elster Group Shares (excluding, for the avoidance of doubt, any Elster Group Share
created in connection with the PEC Restructuring and repaid under Clause 17.4.2),

	 	 	provided that to the extent the proceeds do not suffice for all payments due under

-38-

 

	 	 	Clauses 17.4.1 or 17.4.3 they shall be paid to the relevant persons entitled thereto
pro rata to their entitlements under that Clause.
	 
	17.5	 	The preceding liquidation rights shall also apply mutatis mutandis to the extent
legally permissible in the event of a sale of all or substantially all of the assets of Elster
Group (or Elster Group and its subsidiaries taken as a whole), a merger, consolidation or
takeover of Elster Group, or a (partial) IPO of Elster Group or a vehicle created for those
purposes, provided that the Board of Managers may resolve to the extent permitted by law to
repay all or some of the PECs in priority to any other instrument and on such terms as they
may resolve, provided always that any repayment of the PECs shall be made to all holders of
PECs pari passu to their holdings.
	 
	17.6	 	In no event shall dividends be payable to Elster Group Shareholders without the
consent of the shareholders general meeting of Elster Group with a simple majority of the
votes capable of being cast.
	 
	17.7	 	For the avoidance of doubt, it is the Parties intention that, as far as reasonably
practicable at the time, proceeds received by Managers following an Exit (or partial Exit)
ought to be subject to capital gains treatment.
	 
	17.8	 	In case the Institutional Investors intend to trigger an Exit at the level of Elster
Holdings or on any other level than the level of Company, Elster Holdings shall be obliged to
ensure and procure that Management KG and the Investing Managers shall have the right to swap
their then shareholding in the Company for shares of Elster Holdings or that subsidiary of
Elster Holdings at which level the Exit is to occur, unless such swap materially disadvantages
the tax position of the Institutional Investors, in which case the Institutional Investors
shall use best endeavours to find an alternative structure taking due account of the interests
of all parties involved or otherwise to achieve an Exit for the Investing Managers in each
case on substantially the same terms and conditions as if the Exit took place at the level of
the Company in which case the provisions of this Agreement shall be construed and deemed to
apply to those other shares.
	 
	17.9	 	For the avoidance of doubt, Clause 13 shall apply mutatis mutandis in case of a
Listing.
	 
	17.10	 	The Parties acknowledge that the change of Elster Group into another legal form
and, if applicable, the subsequent conversion of all or any of the PEC Equity Contribution
will have to take place in advance of a Listing (a “Pre-Listing Equity Conversion”). The
Parties also acknowledge that any Pre-Listing Equity Conversion will take place based on an
estimated market value per share which may not be the actual price per share achieved in the
initial Listing (the “Listing Price”). Therefore, in order to put Elster Holdings and
Management KG in the economic position in which they would have been had the Pre-Listing
Equity

-39-

 

	 	 	Conversion been implemented on the basis of the Listing Price, Elster Holdings and
Management KG agree and undertake to sell and transfer Elster Group Shares (the “Balancing
Options”) as follows:

	 	17.10.1	 	if, during the Pre-Listing Equity Conversion, more new Elster Group Shares
are issued to Elster Holdings than would have been issued to it had the Pre-Listing
Equity Conversion been implemented on the basis of the Listing Price, Elster Holdings
shall transfer to Management KG for no consideration such number of new Elster Group
Shares as shall result in Management KG and Elster Holdings each owning as nearly as
possible such percentage of Elster Group Shares as they would have owned had the
Pre-Listing Equity Conversion been implemented on the basis of the Listing Price
(provided that fractional amounts of a share shall not be transferred); or
	 
	 	17.10.2	 	if, during the Pre-Listing Equity Conversion, fewer new Elster Group Shares
are issued to Elster Holdings than would have been issued to it had the Pre-Listing
Equity Conversion been implemented on the basis of the Listing Price, Management KG
shall transfer to Elster Holdings for no consideration such number of new Elster Group
Shares as shall result in Management KG and Elster Holdings each owning as nearly as
possible such percentage of Elster Group Shares as they would have owned had the
Pre-Listing Equity Conversion been implemented on the basis of the Listing Price
(provided that fractional amounts of a share shall not be transferred).

	 	 	The Parties undertake to take, make and accept all such actions and declarations and to
execute all such documents as may be reasonably necessary or appropriate to implement any
measure referred to under this Clause 17.10 as promptly as is practicable in the context of
the Listing.
	 
	17.11	 	The Parties undertake that if after implementation of the Pre-Listing Equity
Conversion the proposed Listing does not take place, then they shall make and accept all such
actions and declarations and execute all such documents as may be reasonably necessary or
appropriate to implement such measures as may be determined by the Board of Managers (acting
reasonably) in order to establish an appropriate capital structure for the Company in such
circumstances, to reflect the Elster Group Shareholders’ economic interests in the Company
prior to the Pre-Listing Equity Conversion.
	 
	18.	 	EXPENSES
	 
	18.1	 	Save as otherwise provided in this Agreement, the Shareholders shall procure that
the expenses incurred in connection with the preparation and implementation of this Agreement
and the transactions contemplated in it, including legal, consulting

-40-

 

	 	 	and auditing fees and expenses, including any notarial and court or other similar fees,
if any, including any value added tax payable thereon, will so far as legally permissible be
borne by Elster Group or its subsidiaries.

	18.2	 	The Parties agree and Elster Group confirms that the payment of the expenses, fees
and value added tax as set out in Clause 18.1 is in the best interests of Elster Group.
	 
	19.	 	PRESS ANNOUNCEMENTS AND CONFIDENTIALITY
	 
	19.1	 	None of the Parties shall make any press release or public announcement relating to
the existence of, or the transactions contemplated in, this Agreement, without the prior
written consent of Elster Holdings, unless there is a statutory obligation or an obligation
under applicable stock exchange regulations to make a press release or public announcement (in
which case the Party required to make the announcement shall use its reasonable endeavours to
inform the other Parties in advance of the proposed announcement and to take into account
their reasonable requests).
	 
	19.2	 	Each of the Parties undertakes towards each other that it will not, and will use its
best efforts to procure that each of its respective Affiliates will not, at any time disclose
or use for any purpose any information of a confidential nature concerning the CVC Funds,
Elster Holdings, Elster Group, the members of the Acquired Group or their business or affairs,
except:

	 	19.2.1	 	to the extent required by law or any competent authority (including any
relevant stock exchange), after consultation with Elster Holdings (to the extent
reasonably possible);
	 
	 	19.2.2	 	to the extent that such information is provided to professional advisors to
the Parties under appropriate terms of confidentiality; or
	 
	 	19.2.3	 	to the extent that such information is at the date of this Agreement, or
after the date of this Agreement becomes, public knowledge otherwise than through
improper disclosure by any person.

	19.3	 	The obligations under Clause 19.2 shall continue to apply for a period of five years
after a Party or an Investing Manager has ceased to be an Elster Holdings Shareholder.
	 
	19.4	 	Nothing in Clause 19.2 shall prevent compliance with any requirements regarding the
disclosure of information required under Clauses 9 or 10, the Facilities Agreements or the
Intercreditor Deed.
	 
	20.	 	NOTICES
	 
	20.1	 	All notices, requests, claims, demands and other communications under this Agreement
shall be delivered by hand to the Parties in person or sent to the addresses

-41-

 

set out below by registered letter, postage prepaid and return receipt requested or
by telefax as follows:

	 	20.1.1	 	if to any of the CVC Funds or to Reserve GmbH or GP GmbH:

	 	 	 

	to:

	 	CVC Capital Partners Limited
	 
	 	 
	Attn:

	 	Jeremy Conway
	Email:

	 	jconway@cvceurope.com
	Telefax:

	 	+44 207 420 4245
	Address:

	 	111 Strand
	 

	 	LondonWC2R 0AG
	 

	 	United Kingdom
	 
	 	 
	with a copy to:

	 	Clifford Chance
	Attn:

	 	Christopher Kellett (AZ: 50032150)
	Email:

	 	christopher.kellett@cliffordchance.com
	Telefax:

	 	+49 69 7199 4000
	Address:

	 	Mainzer Landstrasse 46
	 

	 	60325 Frankfurt
	 

	 	Germany
	 
	 	 

	 	20.1.2	 	if to Elster Holdings to:

	 	 	 

	Attn:

	 	Board of Directors
	Email:

	 	as notified
	Telefax:

	 	as notified
	Address:

	 	2-4, Rue Beck
	 

	 	L-1222 Luxembourg
	 
	 	 
	with a copy to:

	 	Clifford Chance
	Attn:

	 	Christopher Kellett (AZ: 50032150)
	Email:

	 	christopher.kellett@cliffordchance.com
	Telefax:

	 	+49 69 7199 4000
	Address:

	 	Mainzer Landstrasse 46
	 

	 	60325 Frankfurt
	 

	 	Germany

	 	20.1.3	 	if to Elster Group to:

	 	 	 

	Attn:

	 	Board of Managers
	Email:

	 	as notified
	Telefax:

	 	as notified

-42-

 

	 	 	 

	Address:

	 	2-4 Rue Beck
	 

	 	L-1222 Luxembourg
	 
	 	 
	with a copy to:

	 	Clifford Chance
	Attn:

	 	Christopher Kellett (AZ: 50032150)
	Email:

	 	christopher.kellett@cliffordchance.com
	Telefax:

	 	+49 69 7199 4000
	Address:

	 	Mainzer Landstrasse 46
	 

	 	60325 Frankfurt
	 

	 	Germany

	 	20.1.4	 	if to Management KG:

	 	 	 

	Attn:

	 	CEO/CFO of Elster Group
	Email:

	 	as notified
	Telefax:

	 	as notified
	Address:

	 	2-4, Rue Beck
	 

	 	L-1222 Luxembourg
	 
	 	 
	with a copy to:

	 	P+P Pöllath+Partner
	Attn:

	 	Dr. Benedikt Hohaus
	Email:

	 	benedikt.hohaus@pplaw.com
	Telefax:

	 	+49 89 24240-995
	Address:

	 	Fünf Höfe
	 

	 	Kardinal-Faulhaber-Straße 10
	 

	 	80333 München
	 

	 	Germany

	20.2	 	Any Party may change its address for the purpose of this Agreement by giving notice
of the change to the other Parties pursuant to the provisions of this Clause 20.
	 
	20.3	 	Any notice, demand or other communication sent by mail shall be deemed to have been
received by the Party to whom it was sent at the end of the day shown as the day of receipt on
the return receipt sent with the same. Any notice, demand or other communication sent by
telefax shall be deemed, in the absence of proof to the contrary, to have been received by the
Party to whom it was sent on the date of despatch, provided that the report generated by the
sender’s telefax machine shows that all pages of such notice, demand or other communication
were properly transmitted to the recipient’s telefax number.
	 
	21.	 	MISCELLANEOUS PROVISIONS

-43-

 

	21.1	 	This Agreement shall cease to have effect upon the Exit and shall, subject thereto,
cease to bind a Party if and when it ceases to be an Elster Group Shareholder, in both cases
subject to the other Parties’ accrued rights and obligations at such time and to provisions
which expressly continue to apply (in particular, Clause 19 (Press Announcements and
Confidentiality)), none of which shall be affected. Notwithstanding the aforegoing, the
Parties to this Agreement shall be obliged to handle the allocation of the proceeds resulting
from the Exit(s) in good faith and the liquidation of the Company and Management KG in good
faith in accordance with the terms of this Agreement as if it were (to the extent required
therefor) still in force.
	 
	21.2	 	The Parties shall at all times use (or refrain from using) their voting and other
rights in Elster Holdings and/or Elster Group and shall take all other lawful steps that are
within their power to procure that full effect is given to the terms of this Agreement.
	 
	21.3	 	This Agreement, including the provisions of this Clause 21.3, may only be amended or
varied by an instrument in writing or, to the extent required by law, in notarial form signed
by or and on behalf of all the Parties from time to time. Except as expressly provided herein,
any waiver by any party of any condition, or of the breach of any provision, term or covenant
contained in this Agreement, in any one or more instances, shall not be deemed to be nor
construed as a further or continuing waiver of any such condition, or of the breach of any
other provision, term or covenant of this Agreement.
	 
	21.4	 	If any Party is obliged to pay a certain sum of money to another Party pursuant to
the provisions of this Agreement and such sum is not paid on the due date of payment, interest
shall accrue and be payable from the due date of the payment to the date of payment in full at
a rate equal to the Luxembourg statutory rate plus five percent (5%).
	 
	21.5	 	If, at any time, any provision of this Agreement is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, neither the legality, validity
or enforceability of the remaining provisions thereof nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall in any way be
affected or impaired thereby. In such case, the parties shall use their best efforts to agree
upon a valid and enforceable provision which shall be a reasonable substitute for such invalid
or unenforceable provision in the light of the purpose of this Agreement and the purpose of
the provision held invalid or unenforceable and, upon so agreeing, shall incorporate such
substitute provision in this Agreement.
	 
	21.6	 	This Agreement shall inure to the benefit of, and be binding upon, the parties
hereto and, subject to the terms and conditions of this Agreement, the respective successors
and assigns of the parties. Except as expressly provided herein, no

-44-

 

	 	 	party shall transfer, assign or delegate any of the rights or obligations created under this
Agreement.

	21.7	 	This Agreement supersedes all prior negotiations, discussions, communications,
understandings and agreements between the parties relating to the subject matter of this
Agreement and all prior drafts of this Agreement. Nothing herein is intended to, nor shall it
be deemed to, constitute between the Parties a partnership, joint venture or other joint
undertaking. Except as provided herein, no Party hereto has, or shall be deemed to have any
right or authority to act on behalf of any other party hereto as its agent or otherwise and,
in particular, the liability of the Parties shall be several.
	 
	21.8	 	As at the date hereof, there are no agreements or arrangements of any Party with any
other Person with respect to Elster Holdings or Elster Group or an investment in either of
them on terms which are inconsistent with, or violate, the provisions of this Agreement.
	 
	22.	 	GOVERNING LAW AND JURISDICTION
	 
	22.1	 	This Agreement shall be governed by and construed in accordance with the laws of the
Grand Duchy of Luxembourg.
	 
	22.2	 	All disputes arising out of or in connection with this Agreement shall be decided by
an arbitration tribunal without recourse to the ordinary courts of law. The arbitration
tribunal shall have its seat in Frankfurt. The arbitration tribunal shall consist of three
arbitrators. The arbitration proceedings shall be conducted in the English language.

* * *

-45-exv10w7

Exhibit 10.7

 

PARTNERSHIP AGREEMENT

REGARDING

NACHTWACHE METERING MANAGEMENT

VERMöGENSVERWALTUNGS GMBH & CO KG

DATED 8 SEPTEMBER 2005 (AS LAST AMENDED BY

RESOLUTION BY WAY OF CIRCULAR PROCEDURE ON

22 NOVEMBER 2007)

 

CLIFFORD
CHANCE PARTNERSCHAFTSGESELLSCHAFT VON RECHTSANWÄLTEN, WIRTSCHAFTSPRÜFERN, STEUERBERATERN UND

SOLICITORS SITZ: FRANKFURT AM MAIN · AG FRANKFURT AM MAIN PR 1000

 

 

CONTENTS

	 	 	 	 	 
	Clause	 	Page
	§ 1 Name and Registered Office
	 	 	2	 
	 
	§ 2 Purpose of the Partnership
	 	 	2	 
	 
	§ 3 Partnership Capital/Partners
	 	 	3	 
	 
	§ 4 Partner’s Accounts
	 	 	4	 
	 
	§ 5 Admission of additional Partners, Transfer of Limited Partnership Interests
	 	 	5	 
	 
	§ 6 Management and Representation
	 	 	6	 
	 
	§ 7 Resolutions of the Partnership, Partners Meetings
	 	 	8	 
	 
	§ 8 Annual Financial Statement and Appropriation of Results
	 	 	11	 
	 
	§ 9 Partnership’s Ownership of Shares and PECS
	 	 	12	 
	 
	§ 10 Pre-emptive rights to new shares or other equity security interests in
Elster
	 	 	13	 
	 
	§ 11 Compulsory Transfer of Limited Partnership Interests
	 	 	15	 
	 
	§ 12 Compensation
	 	 	17	 
	 
	§ 13 Call Options for Reserve GmbH
	 	 	19	 
	 
	§ 14 Duration/Termination
	 	 	20	 
	 
	§ 15 Succession upon Death
	 	 	22	 
	 
	§ 16 Duty to Maintain Confidentiality
	 	 	22	 
	 
	§ 17 Power of Attorney for Dealings with the Commercial Registry
	 	 	22	 
	 
	§ 18 Fiscal Year/Publications
	 	 	22	 
	 
	§ 19 Partial Invalidity and Amendments to this Agreement
	 	 	22	 
	 
	§ 20 Arbitration, Jurisdiction
	 	 	23	 

- 1 -

 

PARTNERSHIP AGREEMENT

	§ 1 	 	 NAME AND REGISTERED OFFICE
	 
	1.1	 	The name of the partnership shall be
	 
	 	 	Nachtwache Metering Management Vermögensverwaltungs GmbH & Co. KG.
	 
	1.2	 	The partnership (“Partnership”) shall have its seat in Wiesbaden.
	 
	§ 2 	 	 PURPOSE OF THE PARTNERSHIP
	 
	2.1	 	The purpose of the Partnership shall be the acquisition, ownership and disposition of
common shares and other interests in Elster Group S.à r.l, a private limited liability company
incorporated under the laws of the Grand Duchy of Luxembourg, having its seat in Luxembourg
and its registered office at 2-4 Rue Beck, L-1222 Luxembourg, registered under B 103553 with
the Luxembourg Register of Commerce and Companies (“Elster”). The common shares in Elster
which the Partnership owns at any time, excluding the Additional Shares (if any) are hereunder
referred to as “Shares”. Currently, the Partnership holds a total of 5,283 Shares with a total
nominal value of EUR 132,075 in Elster. The preferred equities certificates issued by Elster
and subscribed to by the Partnership are hereinafter referred to as “PECs” (Shares and PECs
are hereinafter referred to as “Securities”). The Partnership has subscribed to 5,067,925 PECs
with the total nominal value of EUR 5,067,925.
	 
	2.2	 	The Partnership shall be entitled to engage in any activities that directly or
indirectly serve its purpose. The Partnership shall be entitled to dispose of any interest in
Elster only in accordance with the provisions of this Partnership Agreement.
	 
	2.3	 	The Partnership is not entitled to become commercially (gewerblich) active.
	 
	2.4	 	The Partnership serves as the vehicle for certain members of the management of Elster
and its subsidiaries from time to time (the “Group”) to participate in the growth and success
of the Group. The Managers of the Group are herein referred to as the “Group Managers”).

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	§ 3 	 	 PARTNERSHIP CAPITAL/PARTNERS
	 
	3.1	 	The Partnership capital (Festkapital) shall be equal at all times to the Securities
held by the Partnership (the “Fixed Capital”); i.e. the Fixed Capital shall be increased or
decreased in the event of an acquisition or disposal of Securities. Each Limited Partner is
participating in the Fixed Capital in an amount equal to the Securities the Partnership holds
in her/his regard in accordance with the terms and conditions of the Investment and
Shareholders’ Agreement regarding Investments in Elster Group S.à r.l dated 8 September 2005
(as amended from time to time, the “Investment Agreement”) (the “Manager’s Equity Stake”).
	 
	3.2	 	Each Limited Partner shall contribute an amount equal to his/her share in the Fixed
Capital pursuant to Clause 3.1.
	 
	3.3	 	The general partner (Komplementärin) of the Partnership shall be Rembrandt Nachtwache
Verwaltungs GmbH (“the General Partner”). The nominal capital of Rembrandt Nachtwache
Verwaltungs GmbH amounts to EUR 25,000. Rembrandt Nachtwache Verwaltungs GmbH is registered in
the commercial register of the local court of Wiesbaden under number HRB 21938. The General
Partner shall hold no interest in the Partnership’s assets and shall not be obliged or
entitled to make any partnership contribution.
	 
	3.4	 	Subject to the transfer of interests in the Partnership in accordance with § 5
hereof, the limited partners (Kommanditisten) (the “Limited Partners” or a “Limited Partner”)
of the Partnership are:

	 	– 	 	 Nachtwache Reserve GmbH, a company registered in the commercial register of the
local court of Wiesbaden under number HRB 21981, (“the Reserve GmbH”);
	 
	 	– 	 	 Marc Strobel;
	 
	 	– 	 	 Gregor Hilverkus.

	3.5	 	In addition to the liable capital contribution provided for in § 3.4, Reserve GmbH
granted a shareholder loan to the Partnership in the amount of EUR 5,000,000 on 8 September
2005 (the “Loan”) and contributed this loan to the reserves of the Partnership on the date
hereof. This additional contribution does not constitute liable capital and shall not be
recorded in the commercial register as such. The additional contribution will be credited to
the capital account III of Reserve GmbH.
	 
	3.6	 	The payment of the liable capital contributions and the additional contribution has
been made prior to the execution of this Partnership Agreement.
	 
	3.7	 	The Managing Limited Partners (as the term is in defined in § 6.1) shall maintain a
list of all Limited Partners setting forth their personal details (name, address, telephone
number, telefax

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	 	 	number and e-mail) and their respective
interests in the Partnership. Each Limited
Partner shall provide its personal details to
the Managing Limited Partners and shall update
the information as appropriate without undue
delay. Each Limited Partner shall be
individually responsible for any delays in
contacting such Limited Partner if such delay
occurs because the up to date personal details
are not notified to the Managing Limited
Partners in time.
	 
	§ 4 	 	 PARTNER’S ACCOUNTS
	 
	4.1	 	For each Limited Partner, the Partnership shall maintain a capital account I
(Kapitalkonto I), a capital account II (Kapitalkonto II), a capital account III (Kapitalkonto
III), a capital account IIIA (Kapitalkonto IIIA), collectively the “Capital Accounts”), a
current account (Verrechnungskonto), a reserve account (Rücklagenkonto) and a loss carryover
account (Verlustvortragskonto).
	 
	4.2	 	For each Limited Partner (other than Reserve GmbH) an amount of EUR 100.00 shall be
posted at all times to Capital Account I; for Reserve GmbH an amount equal to the result of
(i) EUR 10,000.00 minus (ii) the aggregate of the amounts posted to the Capital Accounts I for
the Limited Partners other than Reserve GmbH from time to time shall be posted to Capital
Account I.
	 
	4.3	 	For each Limited Partner the relevant portion (i) in case of Managers attributable to
his Manager’s Equity Stake or, (ii) in case of Reserve GmbH held by the Partnership but not
attributable to any Manager Equity Stake, of:

	 	4.3.1	 	the Shares shall be posted to Capital Account II;
	 
	 	4.3.2	 	the PECs shall be posted to Capital Account III;
	 
	 	4.3.3	 	yield accrued on the PECs shall be posted to Capital Account IIIA;

	4.4	 	For each Limited Partner the amount posted on Capital Account I shall be registered
with the commercial register as Liable Capital Contribution. The Liable Capital Contributions
have been paid in fully prior to the execution of this Partnership Agreement.
	 
	4.5	 	The Capital Accounts shall be maintained as fixed, non-interest-bearing accounts.
	 
	4.6	 	Withdrawal from the Capital Accounts shall be permissible only if expressly provided
for in this Partnership Agreement or upon dissolution of the Partnership.
	 
	4.7	 	Any profits eligible for withdrawal, any sums withdrawn, interest, partners’ loans
and other payments between each Limited Partner and the Partnership shall be booked to the
current account. The current accounts shall not bear interest, provided that any negative
balance in the current accounts shall bear interest at a rate of 6.8% per annum. For the
purpose of any dealings between the General Partner and the Limited Partners (the “Partners”)
inter se, such

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	 	 	interest shall be deemed to constitute proceeds of the Partnership. The Partners shall only
be entitled to withdraw any positive balance of their current accounts in accordance with
§8.8 hereof.
	 
	4.8	 	Unless otherwise provided herein, any profits which may not be withdrawn, and any
further contributions made by the Limited Partners in accordance with a resolution of the
Partnership, shall be credited to the reserve accounts. These accounts shall neither bear
interest, nor constitute liabilities of the Partnership but, in case of liquidation of the
Partnership, do form the basis of a claim for repayment.
	 
	4.9	 	The pro rata shares of the Limited Partners in any losses shall be booked to the loss
carryover accounts. The loss carryover accounts shall bear no interest. The loss carryover
accounts shall not constitute liabilities of the Limited Partners. However, in the event that
the Partnership is liquidated, the debit balances on these accounts shall be settled with
priority, albeit that this shall not give rise to any obligation of the Limited Partners to
make further capital contributions.
	 
	4.10	 	A current account shall be kept for the General Partner.
	 
	§ 5 	 	 ADMISSION OF ADDITIONAL PARTNERS, TRANSFER OF LIMITED PARTNERSHIP INTERESTS
	 
	5.1	 	The Partnership has been formed for certain Managers of the Group to serve as the
vehicle for the Managers to participate in the growth and success of the Acquired Group during
the period that such Manager is employed by the Group. Other than Reserve GmbH, each Limited
Partner of the Partnership is or will be either a Manager of the Group himself or a corporate
body, partnership, trust, association, insurance company or other person through or by which a
Manager’s limited partnership interest or other interest in Management KG is held or managed
on his behalf (such vehicle an “Investment Vehicle”) as approved by the Co-Investment
Committee of Elster (the “Co-Investment Committee”).
	 
	5.2	 	The Partners do not expect to admit additional Limited Partners to the Partnership
other than by way of a transfer of an existing limited partnership interest (or parts thereof)
to another Manager (or his Investment Vehicle) in accordance with this Partnership Agreement.
	 
	5.3	 	All rights of a Partner in the Partnership including without limitation each
Partners’ rights to the accounts set forth in § 4 as well as all rights (if any) in connection
with the subscription by the Partnership to Additional Shares or Additional PECs (each as
defined in § 10 and including, any rights under § 10.5), are hereinafter referred to as a
“Limited Partnership Interest”.
	 
	5.4	 	Subject to § 5.5, any transfer of a Limited Partnership Interest or parts thereof
shall require the prior written consent of the Co-Investment Committee. The Partners
acknowledge that

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	 	 	the Co-Investment Committee will not approve the transfer unless (i) the prospective new
Limited Partner is either a Manager or such Manager’s Investment Vehicle, (ii) the
prospective new Limited Partner has signed a Deed of Acknowledgement and Undertaking and
(iii) the prospective new Limited Partner has become a party to the Arbitration Agreement (as
defined in § 20.1). The documents referred to in this § 5.4 of this Partnership Agreement are
to be delivered substantially in the form attached hereto as Annex 5.4.
	 
	5.5	 	The Partners acknowledge that Reserve GmbH under § 11 and § 13 of this Partnership
Agreement has granted to and has received from each Limited Partner options to acquire its
Limited Partnership Interest and that Reserve GmbH under certain circumstances is required to
acquire the Limited Partner’s Limited Partnership Interest. The transfer of a Limited
Partnership Interest (or parts thereof) by any Limited Partner to Reserve GmbH in performance
of the obligations stipulated herein shall not require the consent of the Co-Investment
Committee.
	 
	5.6	 	Unless approved by the Co-Investment Committee, no Manager shall be entitled to
pledge or otherwise encumber his Limited Partnership Interest or his interest in the
Investment Vehicle or to grant any sub-participation therein, or to otherwise agree to any
legal arrangements making the exercise of his rights as a (direct or indirect) Limited Partner
subject to approval by a third party or to agree to do any of the foregoing. The foregoing
applies mutatis mutandis to the Investment Vehicle itself.
	 
	§ 6  	 	MANAGEMENT AND REPRESENTATION
	 
	6.1	 	Mr. Marc Strobel and Gregor Hilverkus were appointed as the initial managing Limited
Partner (geschäftsführender Kommanditist) (a “Managing Limited Partner”) Messrs. Howard Dyer
(Chairman) and Mr. Christoph Schmidt-Wolf (CFO) are hereby each appointed as further Managing
Limited Partners, their respective appointment becomes effective upon them acquiring their
respective Limited Partnership Interests and registration thereof in the commercial register.
Further Managing Limited Partners may be appointed and the appointment of Managing Limited
Partners may be rescinded by way of a resolution of the Partnership. The appointment as a
Managing Limited Partner shall become effective when accepted by the new appointee in writing
vis-à-vis the General Partner or a Managing Limited Partner (if any). The rescission of the
appointment shall become effective when notified in writing by the General Partner or a
Managing Limited Partner to the other Managing Limited Partner. The individuals at any time
appointed as Managing Limited Partners under or in accordance with this Partnership Agreement
are herein referred to as “Managing Limited Partner”.
	 
	6.2	 	Each Managing Limited Partner is entitled to resign at his discretion. The
resignation shall be in writing and shall become effective when received by one other Managing
Limited Partner

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	 	 	(if any) or the General Partner, provided that, if the resignation would otherwise result in
the Partnership not having an individual appointed as a Managing Limited Partner, the
resignation shall become effective only upon a new Managing Limited Partner, who is a natural
person, being properly appointed and such appointment being effective, to replace the
resigning Managing Limited Partner. If one of the Managing Limited Partners ceases to be a
partner, his appointment as Managing Limited Partner terminates automatically as of the time
the transfer of his Limited Partnership Interest becomes effective. The Partnership shall
have at any time at least two Managing Limited Partners. If the number of Managing Limited
Partners falls below two for any reason, the General Partner shall appoint one or two
Managing Limited Partner(s) (as necessary to re-establish two Managing Limited Partners).
Such appointments shall become effective if and when the new appointee(s) accepts the
appointment in writing vis-à-vis the General Partner or the other Managing Limited Partner
(if any).
	 
	6.3	 	The Managing Limited Partners shall manage the affairs of the Partnership in
accordance with this Partnership Agreement. The General Partner is excluded from managing the
Partnership’s affairs. The Managing Limited Partners shall manage the affairs of the
Partnership jointly at their discretion and in accordance with the law, this Partnership
Agreement and the Partnership’s contractual commitments (in particular including its
obligations under the Investment Agreement). Should only one Managing Limited Partner be
appointed, this Managing Limited Partner manages the Partnership’s affairs alone.
	 
	6.4	 	The General Partner shall be entitled to represent the Partnership vis-à-vis third
parties (Vertretungsbefugnis). Subject to § 9.2 hereof, prior to taking any action or making
any declarations it shall obtain (i) the instructions of the Managing Limited Partners, or
(ii) instructions from the Partners in form of a properly adopted partnership resolution. If
the General Partner disagrees with instructions of the Managing Limited Partners, before
complying with the relevant instructions, the General Partner is entitled to submit to the
Partners a written resolution in accordance with § 7.4 or to call a formal partners meeting in
accordance with § 7.5 to obtain confirmation of the relevant instructions. The General Partner
is bound by the instructions of the Managing Limited Partners as confirmed by a Partnership
resolution.
	 
	6.5	 	The Managing Limited Partners are authorised to represent the Partnership vis-à-vis
third parties (Handlungsvollmacht). If the Partnership has only one Managing Limited Partner,
the Managing Limited Partner is authorised to represent the Partnership alone. If more than
one Managing Limited Partner have been appointed, two Managing Limited Partners are authorised
to represent the Partnership jointly.
	 
	6.6	 	The Managing Limited Partners and the General Partner (including its managing
directors) are exempt from the restrictions of § 181 of the German Civil Code (BGB) as regards
any dealings with or involving the Partnership.

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	6.7	 	The General Partner shall be entitled to immediate reimbursement of any expenses
incurred by it for representing the Partnership. Moreover, irrespective of the annual result
of the Partnership, the General Partner shall be paid a sum equivalent to 5% p.a. of its
share capital as compensation for the liability assumed by it. The Managing Limited Partners
shall not be entitled to any compensation for the services to be rendered hereunder.
	 
	§ 7  	 	RESOLUTIONS OF THE PARTNERSHIP, PARTNERS MEETINGS
	 
	7.1	 	The Partners shall pass resolutions (Gesellschafterbeschlüsse) as provided for under
applicable law or this Partnership Agreement and in particular on the following issues:

	 	(a)	 	appointment and rescission of the appointment of the Managing Limited Partners;
	 
	 	(b)	 	if the production of audited accounts is required (by law or under this
Partnership Agreement), the appointment of a chartered accountant or firm of chartered
accountants as auditor;
	 
	 	(c)	 	adoption of the annual accounts (in audited form if so required);
	 
	 	(d)	 	appropriation of the annual result;
	 
	 	(e)	 	formal approval of the acts of the General Partner and the Managing Limited
Partners;
	 
	 	(f)	 	instructions to the General Partner in accordance with § 6.4;
	 
	 	(g)	 	dissolution of the Partnership; and
	 
	 	(h)	 	any other matters that are not part of the ordinary business operations or that
involve rights of the Partnership in dealings with its General Partner or any of the
Managing Limited Partners and/or the their respective managing directors.

	7.2	 	Unless a higher majority is imposed by mandatory law or this Partnership Agreement,
resolutions of the Partnership shall be adopted by a 75% majority of the votes entitled to be
cast on the resolution provided that the votes of Reserve GmbH shall not be counted towards
the 75% majority. Each EUR 10 of the amount recorded in the capital accounts I, II and III
shall entitle the respective Partner to one vote. Changes to this Partnership Agreement and
any resolution which would result in an appropriation of profits to Limited Partners other
than in accordance with their respective Proportional Interest in the Partnership shall
require the approvals of the General Partner and Reserve GmbH.
	 
	7.3	 	Partnership resolutions may be passed by way of a written procedure as set forth in §
7.4 or in a formal partners meeting as set forth in § 7.5

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	7.4	 	The Partners expect that most business will be conducted and most resolutions will be
adopted by written resolution. A resolution shall have been validly adopted by the Partnership
if

	 	(a)	 	a Managing Limited Partner issues a request for a written vote on a proposed
resolution,
	 
	 	(b)	 	such request is submitted to each Partner in writing (including transmission by
telefax or email),
	 
	 	(c)	 	the request sets forth the resolution proposed to be adopted and instructs each
Partner to vote on this resolution in writing, such vote to be received by one of the
Managing Limited Partners within a specified time (unless the Partners unanimously agree
otherwise in respect of a specific resolution, such time to be no shorter than ten
business days from the date on which the requests have been mailed or otherwise
transmitted to all Partners, provided that the Managing Limited Partners are entitled to
shorten this period to two business days in case of any urgency of the matter),
	 
	 	(d)	 	the request has actually been received by each Partner prior to the date by
which the Partner is required to vote on the resolution,
	 
	 	(e)	 	no Limited Partner opposed the adoption of the resolution by way of a written
resolution, and
	 
	 	(f)	 	of those Partners who responded to the request in time, the necessary majority
voted in favour of the proposed resolution.

	 	 	Each Managing Limited Partner, the General Partner, as well as Partners acting jointly and
representing more than 25% of the total available votes under § 7.2, shall be entitled to
propose a written resolution to be adopted in the process outlined in this § 7.4. The
proposal for a written resolution is to be submitted in writing to any of the Managing
Limited Partners. Such Managing Limited Partners shall inform the other Managing Limited
Partners (if any) of the request and shall without undue delay issue a request for a vote to
the Partners on such proposed written resolution in accordance with this provision. The
Managing Limited Partners shall inform the Partners of the outcome of any written procedure
conducted in accordance with this provision without undue delay and at the latest within two
weeks after the resolution has been adopted or rejected, as the case may be. Any Partner
challenging the validity of the written resolution may do so only within four weeks after
being informed of the outcome of a written approval process by initiating an arbitration
procedure in accordance with the Arbitration Agreement for the purpose of having the
resolution declared invalid. Any defects in respect of the written resolution which are not
properly challenged within this period are deemed cured.

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	7.5	 	Each Managing Limited Partner, the General Partner, as well as Partners acting
jointly and representing more than 25% of the total available votes under § 7.2, shall be
entitled to require the Managing Limited Partners to call a partners meeting
(Gesellschafterversammlung). Such request shall be in writing, setting forth the proposed
agenda of the partners meeting and shall be addressed to one of the Managing Limited Partners.
Such Managing Limited Partner shall inform the other Managing Limited Partners (if any) of the
request and shall without undue delay call a partners meeting. Partners meetings shall be held
at the Partnership’s registered office or any other place that is acceptable to all Partners.
A partners meeting shall be called in writing (including transmission via e-mail) and with a
notice period of ten business days (not counting the day the invitation to the meeting is
mailed or otherwise transmitted to all partners and the day of the meeting). The partners
meetings shall be chaired by the oldest Managing Limited Partner present. The chairperson
shall determine whether the necessary number of votes (§ 7.2) are represented at the meeting
to adopt Partnership resolutions and shall decide on the method by which votes are to be
taken, unless the partners meeting decides otherwise. At a partners meeting, each Partner
shall be entitled to be accompanied by any legal, financial or tax adviser who is subject to a
professional duty to maintain confidentiality. The chairperson shall inform all Partners of
the outcome of the partners meeting without undue delay and at the latest two weeks after the
meeting. Any Partner challenging the validity of a resolution adopted at the partners meeting
may do so only within four weeks after being informed thereof by initiating an arbitration
procedure in accordance with the Arbitration Agreement for the purpose of having the
resolution declared invalid. Any defects in respect of the partners meeting or the resolutions
adopted therein which are not properly challenged within this period are deemed cured.
	 
	7.6	 	Each fiscal year, no later than two months after the final preparation and, if
applicable, audit of the annual financial statements of the previous fiscal year either a
written procedure in accordance with § 7.1 shall be conducted or a partners meeting shall be
held. The resolutions to be adopted or the agenda for the partners meeting to be held shall in
all cases include the items referred to in § 7.1 b), c), d) and e) above.
	 
	7.7	 	Except as otherwise stipulated in this Partnership Agreement and to the extent that
this is permissible under applicable law, Limited Partners shall also be entitled to vote on
resolutions concerning the formal approval of their own acts, their release from any
liability, or any legal transaction or the institution or termination of legal proceedings by
which they are personally concerned or that involve a firm affiliated with them within the
meaning of § 17 of the Stock Corporation Act (AktG).

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	§ 8  	 	ANNUAL FINANCIAL STATEMENT AND APPROPRIATION OF RESULTS
	 
	8.1	 	The fiscal year of the Partnership shall be the calendar year. The period between the
date of formation of the Partnership to December 31, 2005 shall be an abbreviated fiscal year
(Rumpfgeschäftsjahr).
	 
	8.2	 	Annual statement of accounts shall be drawn up by the Managing Limited Partners
within the first three months after the end of the relevant fiscal year and in compliance with
the statutory balance-sheet format and valuation provisions, taking into due consideration the
provisions of tax law relating to the assessment of profits. If prescribed by law or required
under a resolution of the Partners, the annual statement of accounts shall be submitted to the
Partnership’s auditor for a formal audit.
	 
	8.3	 	The Managing Limited Partners shall submit the annual statement of accounts and the
auditor’s examination report (if any) to the Partners immediately after receipt of these
documents.
	 
	8.4	 	The Limited Partners shall participate in the Partnership’s profits and losses in
proportion to their interest in the Partnership. Such proportional interest is to be
determined on the basis of their respective balances in the capital accounts I, II and III
(expressed as a percentage the “Proportional Interest”). The Partners shall not be required to
make any additional capital contributions, even if the Partnership is liquidated. This shall
not affect the provisions of § 171 para. 1 German Commercial Code (the “HGB”).
	 
	8.5	 	Any annual surplus shall, unless otherwise provided for herein or unless otherwise
resolved by the Partners, be credited to each Partner’s current account. Any annual deficit
shall be covered by the liquidation of reserves (if any). If the reserves are not sufficient
to cover the entire annual deficit incurred, the balance of such deficit shall be booked to
the loss carryover accounts. Any future annual surplus shall then be used to balance the loss
carryover accounts.
	 
	8.6	 	The partners, other than the Managing Limited Partners, shall not participate in the
preparation of the accounts. The rights of the Limited Partners under § 166 para. 1 and 3 HGB
remain in effect. The Managing Limited Partners may require those Limited Partners who want to
exercise these rights, to jointly instruct one legal, financial or tax adviser who is subject
to a professional duty to maintain confidentiality. In this case, the Partnership shall comply
with its obligations under § 166 HGB vis-à-vis the adviser acting on behalf of the Limited
Partners.
	 
	8.7	 	The Partnership shall provide to each Partner such information and such documents as
the Partner may require to comply with its obligations to file proper tax returns and to
respond to enquiries of appropriate tax authorities.

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	8.8	 	Withdrawals of funds by the Partners from the Partnership shall only be permissible
up to the amount of any credit balance on their current accounts. Subject to the ability of
the Partnership to pay out the entire balance of all current accounts each Partner shall be
entitled to withdraw funds from its current account at any time. Such request shall be made in
writing addressed to one of the Managing Limited Partners. If the Partnership has insufficient
funds available to pay each Limited Partner’s current account balance, the Partnership shall
distribute to each Partner who so requires a pro-rated amount of the available funds
reflecting such Limited Partner’s Proportional Interest in the Partnership. The Managing
Limited Partners shall arrange for the transfer of funds withdrawn pursuant to Sentence 1 of
this Clause to a bank account of the withdrawing Partner without undue delay and at the
withdrawing Partner’s cost.
	 
	§ 9 	 	 PARTNERSHIP’S OWNERSHIP OF SHARES AND PECS
	 
	9.1	 	The Partners acknowledge that the Partnership is a party to the Investment Agreement
and that under the Investment Agreement, the Partnership, the Managers and their Investment
Vehicles will have the benefit of and will be subject to certain rights and obligations in
connection with a potential sale of all or some of the shares in Elster held by other
investors.
	 
	9.2	 	The Partnership shall, from time to time as necessary, adopt a Partnership resolution
on how to exercise its voting rights in respect of Elster. Reserve GmbH shall not be entitled
to vote on such resolution. To implement the foregoing, the Managing Limited Partners shall in
good time seek the instructions on any pending exercise of voting rights and provide the
Limited Partners with the available information necessary or useful to make an informed
decision on the exercise of their rights. Subject to any limitations agreed to in or in
connection with the Investment Agreement, the Partnership shall vote in accordance with such
resolution a number of Shares to be computed as follows: 100% minus the Proportional Interest
of Reserve GmbH in the Partnership; the difference to be multiplied by the total number of
Shares owned by the Partnership in Elster (not including any Additional Shares as the same are
defined in Sec. 10). In respect of the remainder of the shares it owns in Elster, it shall
vote a number of shares corresponding to Reserve GmbH’s proportional share in accordance with
the instructions of Reserve GmbH and the Additional Shares in accordance with the instructions
which the Partnership receives from the beneficial owner of these additional shares.
	 
	9.3	 	Subject to § 10, § 9.1 and § 9.2 apply correspondingly to any other equity security
interest which the Partnership may hold in Elster.

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	§ 10 	 	 PRE-EMPTIVE RIGHTS TO NEW SHARES OR OTHER EQUITY SECURITY INTERESTS IN ELSTER
	 
	10.1	 	Under circumstances set out in the Investment Agreement, and subject to the articles
of association of Elster, the Partnership will be entitled to exercise pre-emptive rights in
connection with an increase of the issued share capital by Elster (the “New Issue”). Upon
receipt of a proper notification of a New Issue, the Managing Limited Partners shall forthwith

	 	(a)	 	inform each Limited Partner of the proposed New Issue,
	 
	 	(b)	 	provide each Limited Partner with the offering memorandum or other information
received by the Partnership in connection with the proposed New Issue and in particular
inform the Limited Partners about the proposed subscription price for the shares to be
issued, and
	 
	 	(c)	 	inform the Limited Partners about the procedural steps such Limited Partner
will have to comply with if such Limited Partner wishes to indirectly participate in the
New Issue.

	10.2	 	Each Limited Partner shall be entitled to participate in the New Issue by indirectly
acquiring its proportional share of the New Issue. The maximum number of shares in respect to
which a Limited Partner may indirectly participate in the New Issue is hereinafter referred to
as “Entitlement”. Each Limited Partner’s Entitlement shall be computed as follows:

	 	(a)	 	total number of shares which the Partnership (as a whole) is entitled to
subscribe to in the New Issue
	 
	 	 	 	times
	 
	 	(b)	 	the Limited Partner’s Proportional Interest.

	10.3	 	In the event that one or more Limited Partners decide not to subscribe to their
Entitlement, they shall inform a Managing Limited Partner of this
decision (the number of shares in respect of which the subscription rights are not exercised is hereinafter referred
to as the “Available Entitlement”). Such Managing Limited Partner shall notify the remaining
Limited Partners thereof. Each of the Limited Partners who have exercised their Entitlement in
full shall be entitled to offer to subscribe to some or all of the Available Entitlement. The
total number of shares which such Limited Partners offered to subscribe to in addition to
their respective Entitlement is hereinafter referred to as the “Additional Entitlement
Subscription”. If the Additional Entitlement Subscription exceeds the Available Entitlement,
each Limited Partner intending to subscribe to any of the Additional Entitlement Subscription
(the “Offeror”) shall be entitled to subscribe proportionally to the Available Entitlement,
such proportion to be computed as follows: total of Available Entitlements divided by the

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	 	 	Additional Entitlement Subscription times the number of shares which the respective Offeror
offered to subscribe to in addition to his Entitlement. As an example, if 1000 Shares are not
subscribed to by certain Limited Partners but of the remaining four Limited Partners each
would like to take up 400 shares, the number of shares which each such Limited Partner shall
be entitled to equals 250 (1,000 divided by 1,600 multiplied by 400). The Managing Limited
Partner shall decide on the applicable method and time periods to be obeyed to exercise the
right to subscribe to some or all of the Available Entitlement. Such instructions may require
the Limited Partners to pay to the account of the Partnership the subscription price for all
of the shares in respect of which such Limited Partner offers to participate in the Available
Entitlement.
	 
	10.4	 	The number of shares in respect of which such partner actually exercises its
Entitlement plus the number of shares (if any) which a Limited Partner acquires under § 10.3
are hereinafter referred to as the “Additional Shares”.
	 
	10.5	 	The Partnership, as represented by the General Partner, shall use reasonable efforts
to comply with the instructions of a Limited Partner to subscribe to the Additional Shares if
such instructions are received in time to permit the Partnership to participate in the New
Issue and if such instructions are accompanied by payment to the Partnership of the amount due
to Elster for the subscription to the Additional Shares (the amount payable for the Additional
Shares “Subscription Payment”). If the subscription by the Partnership fails after receipt of
the Subscription Payment, the Partnership shall return the same to the relevant Limited
Partner.
	 
	10.6	 	If all of the Limited Partners exercise their Entitlement in full, the Subscription
Payments shall be credited to each Limited Partners’ capital account II and the Additional
Shares shall become Shares for purposes of this Agreement. Otherwise, the Partnership and the
respective Limited Partner may (either prior to or after the payment of the Subscription
Payment) agree to adjust such Limited Partner’s capital account I and/or capital account II to
properly reflect the increased investment by the respective Limited Partner in the Partnership
and such Limited Partner’s increased indirect interest in Elster. Such agreement shall not
become effective before being approved by a Partnership resolution. Upon such approval, the
Additional Shares shall become Shares for the purposes of this Partnership Agreement.
	 
	10.7	 	In the absence of an agreement as contemplated in § 10.6, the Partnership hereby
agrees to pay to the respective Limited Partner in consideration of the payment of the
Subscription Payment by such Limited Partner to the Partnership,

	 	(a)	 	an amount equal to the dividends or other payments made by Elster to the
Partnership on account of the Partnership’s ownership of the respective Additional
Shares, and
	 
	 	(b)	 	an amount equal to the proceeds from a sale of the respective Additional
Shares.

- 14 -

 

	10.8	 	Payments pursuant to § 10.5 shall become due ten business days after the Partnership
actually receives payment from Elster or the proceeds from a sale, as the case may be. Should
the Partnership dissolve prior to the agreed adjustment of the capital accounts of the
respective Limited Partner and before the sale of the Additional Shares, the Partnership shall
transfer the Additional Shares to the respective Limited Partner.
	 
	10.9	 	In respect of voting rights or other shareholder rights attaching to the Additional
Shares, § 9.2 applies correspondingly.
	 
	10.10	 	The provisions of this § 10 apply correspondingly to the issuance by Elster of
other equity securities in respect of which the Partnership is entitled to exercise its
pre-emptive rights.
	 
	10.11	 	Should Elster as a condition for the subscription to new shares (or other equity
interests) require the subscriber to also subscribe to a proportional number of debt
instruments, a Limited Partner may instruct the Partnership to exercise the subscription
rights only in a manner consistent with the requirements imposed by Elster. Any debt
instruments acquired on behalf of a Limited Partner are hereinafter referred to as “Additional
PECs”. This § 10 applies correspondingly to Additional PECs.
	 
	§ 11	 	 COMPULSORY TRANSFER OF LIMITED PARTNERSHIP INTERESTS
	 
	11.1	 	For the purposes of this Agreement:

	 	11.1.1	 	a Manager, who resigns, is dismissed or otherwise ceases to be an employee of
the Group is a “Leaver”;
	 
	 	11.1.2	 	the date on which a Manager gives notice or is given notice of such
termination or is put on garden leave (Freistellung) is the “Trigger Date”;
	 
	 	11.1.3	 	a “Bad Leaver” is a Manager leaving who (i) resigns for any reason except for
good cause for which the Elster Group is responsible or (ii) breaches any
non-competition / confidentiality agreement, breach of the transfer restrictions under
Clause 11 of the Investment Agreement, breach of his transfer obligations under Clauses
13 and 14 of the Investment Agreement, breach of his cooperation obligations under
Clauses 15 and 16 of the Investment Agreement or breach of confidentiality obligations
under Clause 19.2 (unless, but then only to the extent, the Manager is obliged and/or
entitled to disclose such information to third parties under his service agreement) of
the Investment Agreement, or the equivalent provisions to any of the foregoing in this
Partnership Agreement (iii) is dismissed / removed from office for good cause for which
he is responsible other than permanent disability (e.g. gross breach of duty,
incapability) or (iv) if the Manager’s service contract in force at any time expires and

 - 15 - 

 

	 	 	 	the Manager does not accept the offer of a new service contract on at least the same
financial terms and otherwise on substantially the same terms as the expired service
contract;
	 
	 	11.1.4	 	a Leaver who is not a Bad Leaver is a “Good Leaver”. Notwithstanding any
other provision, a leaver is not a Bad Leaver if (i) the Co-Investment Committee
resolves that such leaver shall be a Good Leaver, (ii) he ceases to be employed as a
result of his death, (iii) becomes permanently disabled for health reasons, or (iv) he
retires at the age of 67 or other applicable statutory retirement age; and
	 
	 	11.1.5	 	the amount invested by a Manager in the Partnership being the price paid by
such Manager to Reserve GmbH for the acquisition of his Limited Partnership Interest,
plus in either case any amounts subsequently invested (which shall include any
Subscription Payment) is his “Cost of Investment”.

	11.2	 	Each Limited Partner hereby, but subject to the condition precedent that the Limited
Partner (or in case of an Investment Vehicle holding the interest in the Partnership, the
relevant Manager (the “Relevant Manager”)) becomes a Bad Leaver, hereby irrevocably offers to
sell and transfer its Limited Partnership Interest to Reserve GmbH on the terms and conditions
provided for in § 12.2 hereof. The right to acquire the Limited Partnership Interest granted
to Reserve GmbH hereunder is herein referred to as a “Bad Leaver Call Option”.
	 
	11.3	 	Each Limited Partner hereby, but subject to the condition precedent that such
Limited Partner (or its Relevant Manager) becomes a Good Leaver, hereby irrevocably offers to
sell and transfer its Limited Partnership Interest to Reserve GmbH on the terms and conditions
provided for in § 12.1 hereof. The right to acquire the Limited Partnership Interest granted
to Reserve GmbH hereunder is herein referred to as a “Good Leaver Call Option”. The Good
Leaver Call Option or the Bad Leaver Call Option, as the case may be, may only be exercised
within a period of six months after the Trigger Date.
	 
	11.4	 	On the Trigger Date, the offeror’s voting rights in respect of his Limited
Partnership Interest (including the rights in respect of the interests the Partnership holds
on behalf of the Manager in Elster) are suspended, and the offeror shall no longer be entitled
to exercise them. At any time after the Trigger Date in respect of either a Bad Leaver Call
Option or in respect of a Good Leaver Call Option (the “Triggered Call Option”), Reserve GmbH
may resolve that (i) that Reserve GmbH shall acquire the Limited Partnership Interest itself
or (ii) that Reserve GmbH shall require the Leaver (or if applicable his Investment Vehicle)
to transfer the Limited Partnership Interest to a person nominated by Reserve GmbH.
	 
	11.5	 	Upon receipt of a notice from Reserve GmbH informing the relevant offeror of the
exercise of the Triggered Call Option, the offeror shall, without undue delay execute all such
documents and take all actions as may reasonably be required to effect and to evidence the

 - 16 - 

 

	 	 	transfer of the Limited Partnership Interest free of any encumbrance in accordance with this
§ 11.5 and in particular to record the transfer of the Limited Partnership Interest to
Reserve GmbH. The transfer of the Limited Partnership Interest shall take effect vis-à-vis
third parties only at the time Reserve GmbH (or its designee in accordance with § 11.4), is
registered in the commercial register as the transferee of the Limited Partnership Interest.
	 
	§ 12 	 	 COMPENSATION
	 
	12.1	 	In consideration of the transfer of the Limited Partnership Interest by an offeror,
Reserve GmbH shall pay to the offeror an amount to be determined as follows (the “Transfer
Price”):

	 	(a)	 	In the case of a Good Leaver Call Option being exercised within 2 (two)
years after the the date of the Good Leaver’s first investment (“Early Period”),
the value for the vested Limited Partnership Interest attributable to the Good
Leaver shall be the Cost of Investment plus accrued interest of 3% per annum up
to the date of termination; or
	 
	 	(b)	 	in the case of a Good Leaver Call Option being exercised after
expiration of the Early Period, the value for the Manager’s Equity Stake shall
be the Market Value (as defined below) of the Manager’s Equity Stake (as defined
below), but in any event shall not be less than the multiple of 7 (seven) times
EBITA of the Elster Group for the last completed financial year less the amount
as at the date of the end of the last completed financial year of the net
financial debt (incl. pension provisions or underfunding) and PECs A and B
(including accrued interest) of Elster on a consolidated basis (the “Base
Value”). “Market Value” shall be established by applying the methodology used
from time to time by the advisers/managers of the CVC Funds (as defined in the
Investment Agreement) in their regular reporting package to the investors in the
CVC Funds, and shall in any particular case be that pro rata share represented
by the Shares attributable to the Manager’s Equity Stake (as a percentage) of
the value shown for 100% of the ordinary share capital of Elster Group in the
most recent report delivered to such investors on behalf of the CVC Funds. The
Co-Investment-Committee shall notify the Market Value or the Base Value, as
applicable, to the relevant Manager in writing,
	 
	 	(c)	 	plus in either case the nominal amount of the PECs attributable to the
offeror (to be computed as the total number of PECs owned by the Partnership
times the Proportional Interest of the respective Limited Partner — the
“Look-through PECs”) plus the amount paid for Additional PECs (if any) plus
accrued but unpaid interest on such PECs and Additional PECs up to the Trigger
Date;

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	12.2	 	in the case of a Bad Leaver Call Option being exercised,

	 	(a)	 	the value for the Limited Partnership Interest attributable to the Bad
Leaver shall be the lower of the Market Value or the Cost of Investment plus
accrued interest of 3% per annum up to the date of termination and
	 
	 	(b)	 	the lower of the nominal amount of the Look-through PECs attributable
to the offeror and the Additional PECs (if any) plus accrued but unpaid interest
on such PECs and Additional PECs up to the Trigger Date and the market value of
the Look-through PECs and the Additional PECs (if any). In this case the
Co-Investment Committee will notify the market value of Look-through PECs and
Additional PECs (based on the report referred to in § 12.1(b)) lower than the
nominal amount of the Look-through PECs and Additional PECs (if any).

	12.3	 	The day on which the transfer of the Limited Partnership Interest upon the exercise
of one of the options provided for in this Partnership Agreement herein is registered in the
commercial register (the “Option Completion Date”).
	 
	12.4	 	In the case of a Good Leaver Option being exercised, the Transfer Price shall,
subject to Reserve GmbH being able to fund such payment, be paid 30 Business Days after the
Option Completion Date. In this case, interest shall accrue on the Transfer Price from the
Option Completion Date to the date of payment on unpaid amounts at a rate of 3% p.a. and shall
be payable at the same time the Transfer Price becomes due. If payment is not made when due,
interest shall accrue from the date on which payment is due to the date payment is made in
full at a rate equal to the Luxembourg statutory rate plus five percent (5%).
	 
	12.5	 	In the case of a Bad Leaver, the Transfer Price shall, subject as aforesaid,
be payable at Exit. In this case, interest shall accrue on the Transfer Price from the
Option Completion Date to the date of payment on unpaid amounts at a rate of 3% p.a. and shall
be payable at the same time the Transfer Price becomes due. If payment is not made when due,
interest shall accrue from the date payment is due to the date payment is made in full at a
rate equal to the Luxembourg statutory rate plus five percent (5%).
	 
	12.6	 	If any Transfer Price calculated under this § § 12 is held to be invalid or
unenforceable at law, the lowest legally valid and enforceable price shall apply instead.
	 
	12.7	 	If within six months of the Trigger Date in respect of a particular Good Leaver (a
“Participating Good Leaver”) an Exit occurs, then the provisions of this § 12.7 shall apply:

	 	12.7.1	 	for the purposes of this § 12.7 an Exit shall be treated as having occurred
if either (a) a Listing takes place and the relevant shares are admitted to trading on
the relevant exchange; in this case the Exit shall be deemed to occur on the first day
such shares are traded; or (b) a binding, definitive contract for a Sale is signed and
closing of that

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	 	 	 	contract (and payment thereunder) occurs within 6 (six) months of it being signed; in
this case the Exit shall be deemed to occur on the day the contract is signed;
	 
	 	12.7.2	 	if an Exit occurs and Reserve GmbH has exercised its Good Leaver Call Option
in respect of a Participating Good Leaver, then the Participating Good Leaver shall be
entitled to receive an amount equal to the excess (if any) of (a) the amount receivable
in respect of such Management Equity Stake had he continued to hold it up to, and then
disposed of it in, the Exit over (b) the amount payable in respect of his Management
Equity Stake under §§ § 11 and § 12 (the “Top-Up”); and
	 
	 	12.7.3	 	an amount equal to the Top-Up shall be paid by Reserve GmbH to the
Participating Good Leavers at the same time as proceeds are payable to other
Shareholders.

	§ 13 	 	CALL OPTIONS FOR RESERVE GMBH
	 
	13.1	 	Subject to the condition precedent in § 5.4, each Limited Partner hereby irrevocably
offers to Reserve GmbH to sell and transfer to Reserve GmbH its Limited Partnership Interest
at the conditions set forth in this § § 13. The right to acquire a Limited Partnership
Interest in accordance with this § § 13 is referred to as the “Default Call Options”.)
	 
	13.2	 	The Default Call Option may be exercised upon any of the following events occurring:

	 	13.2.1	 	insolvency, composition, bankruptcy (including any statutory procedures
requiring him to give a declaration as to his assets) or similar proceedings in any
jurisdiction are initiated against a Manager;
	 
	 	13.2.2	 	insolvency, composition, bankruptcy (including any statutory procedures
requiring the making of a declaration as to his assets) or similar proceedings in any
jurisdiction are initiated (or declined for lack of assets) against any Investment
Vehicle (unless the same is terminated or released within 4 weeks of its creation) or
any resolution is passed or order or declaration made for the winding up, liquidation or
cessation of any Investment Vehicle;
	 
	 	13.2.3	 	the creation of any pledge, lien or encumbrance over or any enforcement or
equivalent proceedings being initiated against a Limited Partnership Interest or any
Investment Vehicle (unless the same is terminated or released within 4 weeks of its
creation);
	 
	 	13.2.4	 	the Manager ceasing to control and to be economic owner of at least 75% of
any Investment Vehicle or to be the beneficiary under the scheme under which the
Investment Vehicle holds or manages the Limited Partnership Interest;

 - 19 - 

 

	 	13.2.5	 	on a Manager’s divorce (except where proof is provided to the satisfaction of
the Co-Investment Committee that the divorce does not impact the control, economic
ownership and transferability of the Limited Partnership Interest whereby it is
acknowledged that this is the case if the German matrimonial law on community of surplus
(Zugewinngemeinschaft) or separation of property (Gütertrennung) or equivalent
provisions in other jurisdictions apply); and
	 
	 	13.2.6	 	material breach or entry into agreements or arrangements which (if
implemented) could reasonably be expected to lead to a material breach of the transfer
restrictions under Clause 11 of the Investment Agreement, breach of his transfer
obligations under Clauses 13 and 14 of the Investment Agreement, breach of his
cooperation obligations under Clauses 15 and 16 of the Investment Agreement or breach of
confidentiality obligations under Clause 19.2 (unless, but then only to the extent, the
Manager is obliged and/or entitled to disclose such information to third parties under
his service agreement) of the Investment Agreement, or the equivalent provisions to any
of the foregoing in this Partnership Agreement.

	13.3	 	The value for the Limited Partnership Interest called under the Default Call Option
shall be the Cost of Investment plus accrued interest of 3% per annum up to the date of the
trigger event plus interest accrued on the PECs B up to the date of the trigger event (the
“Call Price”) unless the circumstances triggering the Default Call Option also trigger a Bad
Leaver Call Option, in which case the Call Price shall be the lower of the Market Value or the
Cost of Investment plus accrued interest of 3% per annum. Interest shall accrue on the Call
Price from the date of the Trigger Event at a rate of 3% p.a. until the date of payment.
	 
	13.4	 	§ 11.4 shall apply mutatis mutandis to the Default Call Options, provided that for
these purposes the “Trigger Date” shall be the date on which the event triggering the Default
Call Option under § 13.1 occurred.
	 
	13.5	 	Clauses 11.3 and 12.4 shall apply mutatis mutandis to this Clause § 13.
	 
	§ 14 	 	DURATION/TERMINATION
	 
	14.1	 	The Partnership is established for an indefinite period.
	 
	14.2	 	The Partnership shall dissolve 18 months after the Partnership ceased to own any
Shares unless (i) the Partners shall vote for the continuation of the Partnership with a 95%
majority of votes that may be cast, or (ii) the Partnership in the course of a restructuring
in preparation of an exit or in the course of a corporate reorganization for tax or other
reasons exchanges its Shares (directly or indirectly) into an equity interest of
another entity and such other entity continues to operate the same business as previously
conducted by Elster and its affiliates (a “Successor Entity”). In this case, each reference to
Elster in this Partnership Agreement shall be replaced by a reference to the Successor Entity

 - 20 - 

 

	14.3	 	Prior to the dissolution of the Partnership in accordance with § 16.2 and while the
Partnership holds any Shares, the Partnership can be dissolved only by a unanimous decision of
the partners. Such unanimous decision shall also be required to amend the forgoing sentence.
Should the Partnership cease to own Shares (in Elster or a Successor Entity), the partners may
resolve to dissolve the Partnership by resolution a vote of 75% of the votes entitled to be
cast provided that the votes of Reserve GmbH shall not be counted towards the 75% majority.
	 
	14.4	 	A partner may terminate the Partnership only for cause as defined in § 133 HGB. The
right to force a termination in accordance with § 133 HGB is excluded and replaced by a right
to terminate. Such right to terminate is to be exercised in writing and only after complying
with the requirements set forth in § 14.5.
	 
	14.5	 	Prior to being entitled to terminate the Partnership for cause, each Limited Partner
is required to offer to sell its Limited Partnership Interest to Reserve GmbH in writing and
at the terms and conditions provided for a sale and transfer of the Limited Partnership
Interest in case of the exercise of a Bad Leaver Option provided that the Transfer Price in
this case shall be 80% of the Transfer Price payable to a Bad Leaver, and provided further,
that in this case the “Trigger Date” shall be the date as of which such Limited Partner would,
but for this provision, be entitled to terminate the Partnership Agreement. Reserve GmbH shall
be entitled to accept this offer within a period of 3 weeks after the conditions of such sale
have been determined in accordance with § 12.1 (b). If Reserve GmbH accepts the offer, the
offering Limited Partner shall be required to transfer its Limited Partnership Interest to
Reserve GmbH at the applicable terms and conditions and the offering Limited Partner shall not
be entitled to terminate the Partnership.
	 
	14.6	 	Reserve GmbH and the General Partner shall not be required to offer their Limited
Partnership Interest before exercising a right to terminate the Partnership for cause. The
termination by Reserve GmbH or the General Partner shall become effective only if it has not
been rescinded within four weeks after Reserve GmbH or the General Partner, as the case may
be, exercised its termination right in writing.
	 
	14.7	 	Should the Partnership dissolve, the Partnership shall be liquidated. The Managing
Limited Partners shall be the liquidators.
	 
	14.8	 	In the event of any liquidation or winding up of the Partnership, any outstanding
costs or charges owed by the Partnership to General Partner GmbH and Reserve GmbH shall be
fully repaid before any payments are made in respect of Limited Partnership Interests to
Limited Partners in the Management Investor Company and, for the avoidance of doubt, any such
payments shall only be made net of any other liability of the Partnership. This preference
will also apply in any case where funds are received by the Partnership for return to its
Limited Partners.

 - 21 - 

 

	§ 15	 	 SUCCESSION UPON DEATH
	 
	15.1	 	Upon the death of a Partner, the Partnership shall be continued with the heirs,
legatees, or statutory heirs of such Partner, as the case may be, until Reserve GmbH acquires
the Limited Partnership Interest of the deceased by exercising one of its options provided for
in § 11.
	 
	§ 16	 	 DUTY TO MAINTAIN CONFIDENTIALITY
	 
	16.1	 	Each Partner shall maintain confidentiality towards third Parties with respect to
any confidential matters he/it gains knowledge of in his/its capacity as a Partner and/or in
connection with any work for the Partnership, including in particular information concerning
balance sheets or any deliberations or resolutions of the Partners. This duty to maintain
confidentiality shall continue to apply after a Partner’s withdrawal from the Partnership. It
shall not affect the right of the Partners to submit their balance sheets to banks.
Furthermore, each Partner shall be entitled to disclose such confidential matters to members
of the legal, tax or financial consultation professions subject to a professional duty to
maintain secrecy if and to the extent that the disclosure of such information is in the
legitimate interest of the Partner concerned. Other exceptions from the duty to maintain
confidentiality may be authorized by a Partnership resolution in the individual case.
	 
	§ 17	 	 POWER OF ATTORNEY FOR DEALINGS WITH THE COMMERCIAL REGISTRY
	 
	 	 	Each Limited Partner shall grant a notarially certified power of attorney to the General
Partner authorizing the latter to represent it towards the commercial registry with respect
to any matter concerning the Partnership.
	 
	§ 18	 	 FISCAL YEAR/PUBLICATIONS
	 
	18.1	 	The fiscal year shall be the calendar year. The first fiscal year shall be an
abbreviated fiscal year ending on December 31 of the year in which the Partnership is
established and takes up its business activities.
	 
	18.2	 	Notices of the Partnership shall be published in the Federal Gazette
(Bundesanzeiger).
	 
	§ 19	 	 PARTIAL INVALIDITY, INTERPRETATION AND AMENDMENTS TO THIS AGREEMENT
	 
	19.1	 	Should any provision of this Partnership Agreement, or any provision that may be
included in this Partnership Agreement in the future, or any part of any such provision, be or
become ineffective or impossible to implement, or should this Partnership Agreement prove to
have a contractual gap, this shall not adversely affect the validity off the other provisions
hereof. Any such provision that may prove to be ineffective or impossible to implement, or any

 - 22 - 

 

	 	 	contractual gap that may be contained herein, shall be replaced or filled by such reasonable
provision which is acceptable in legal terms and which comes as close as possible to what the
parties intended to agree on or, judging by the purpose and the essence of this Partnership
Agreement, would have agreed on had they considered the relevant issue.
	 
	19.2	 	If any provision hereof is ineffective or impossible to implement due to the
quantity or extent of any contractual performance, or the time within which such performance
is to be rendered (i.e. a deadline set in the form of a specific date or period of time), the
parties shall be deemed to have agreed on such quantity, extent or time that is acceptable in
legal terms and that comes as close as possible to the original provision.
	 
	19.3	 	All arrangements concerning the contractual relationship between the Partners or
between the Partners and the Partnership shall only be binding if made in writing, unless they
are agreed on in the form of a Partnership resolution, or unless the law requires that they be
recorded by a notary. This shall also apply to any waiver of this requirement of written form.
	 
	19.4	 	This Agreement contains all agreements reached between the parties as of the date
hereof. There are no side agreements as of the date hereof.
	 
	19.5	 	Terms defined in the Investment Agreement and not otherwise defined in this
Partnership Agreement shall bear the same meaning in this Partnership Agreement.
	 
	19.6	 	Should there be any differences in the interpretation between this Partnership
Agreement and the Investment Agreement, then the Partnership Agreement shall be applied and
interpreted so as to conform with the Investment Agreement.
	 
	§ 20	 	 ARBITRATION, JURISDICTION
	 
	20.1	 	Any dispute arising out of or in connection with this Partnership Agreement
(including such on the validity of this clause), which cannot be settled amicably shall be
finally settled by arbitration in accordance with the separate arbitration agreement (the
“Arbitration Agreement”). The issue in dispute shall be finally settled according to the
Arbitration Rules of the German Institute for Arbitration (Deutsche Institution für
Schiedsgerichtsbarkeit e.V. — DIS) without recourse to the ordinary courts of law by an
arbitration tribunal which shall consist of three arbitrators and which shall have its seat in
Frankfurt/Main. Any arbitration shall be conducted in the English language.
	 
	20.2	 	The place of exclusive jurisdiction for all judicial acts relating to arbitration
proceedings in accordance with section 1062 para 1 no 1 to 4 Civil Procedure Code
(Zivilprozessordnung) as well as for all disputes between the parties that are not arbitrable
and for which there is no other exclusive place of jurisdiction is Frankfurt/Main.
	 
	20.3	 	This Agreement is governed by German law.

 - 23 - 

 

ANNEX 5.4

ARBITRATION AGREEMENT

 - 24 - 

 

This
ARBITRATION AGREEMENT is made on
[•] 2006

BETWEEN:

	(1)	 	Rembrandt Nachtwache Verwaltungs GmbH, registered in the commercial register of the local
court of Wiesbaden under HRB 21938 (the “General Partner”); and
	 
	(2)	 	Nachtwache Reserve GmbH, registered in the commercial register of the local court of
Wiesbaden under HRB 21891 (the “Reserve GmbH”); and
	 
	(3)	 	[•], resident at [•] (the “Limited Partner”)
	 
	(4)	 	and such other persons who from time to time may become partners in Nachtwache Metering
Management Vermögensverwaltungs GmbH & Co. KG, registered in the commercial register of the
local court of Wiesbaden under HRA 8922 (together, the “Parties”).

WHEREAS

	(A)	 	The Parties have entered into a partnership agreement dated 15 August 2005 (as amended
from time to time, the “Partnership Agreement”) regarding Nachtwache Metering Management
Vermögensverwaltungs GmbH & Co. KG with its registered office in Wiesbaden and registered in
the commercial register of the local court of Wiesbaden under HRA 8922.
	 
	(B)	 	Pursuant to Clause 20 of the Partnership Agreement any dispute under or in connection
with the Partnership Agreement which cannot be settled amicably shall be finally settled
according to the Arbitration Rules of the German Institute for Arbitration (Deutsche
Institution für Schiedsgerichtsbarkeit e.V. — DIS) without recourse to the ordinary courts of
law by an arbitration tribunal which shall consist of three arbitrators.

NOW IT IS AGREED AS FOLLOW

In accordance with the arbitration clause in the Partnership Agreement the Parties hereby enter
into the following arbitration agreement (the “Arbitration Agreement”):

	§1	 	 Competence of an arbitration tribunal
	 
	1.1	 	All disputes arising out of or in connection with the Partnership Agreement (including the
validity of the arbitration clause in Clause 20 of the Partnership Agreement and this
Arbitration Agreement) shall be decided by an arbitration tribunal without recourse to the
ordinary courts of law.

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	§2	 	 Arbitration proceedings
	 
	2.1	 	The arbitration tribunal shall have its seat in Frankfurt am Main.
	 
	2.2	 	The arbitration tribunal shall consist of three arbitrators.
	 
	2.3	 	The arbitration proceedings shall be conducted in the English language. Documents in the
German language need not be translated.
	 
	2.4	 	In addition to the above, the arbitration rules of the German Institute for Arbitration
(Deutsche Institution für Schiedsgerichtsbarkeit e.V.) shall apply.
	 
	2.5	 	Each party hereby authorize                     ,                     ,
                     (the “Notary”), to accept for each of them as attorney in fact
(authorized recipient) the declarations of the other parties regarding the entering into this
Arbitration Agreement. The Arbitration Agreement concluded by the Parties shall then be
deposited with the Notary and any party shall be entitled to receive a certified copy of it.
	 
	§3	 	 Miscellaneous
	 
	3.1	 	Any cancellation of or amendment to this Arbitration Agreement shall only be binding if in
writing. This also applies to a waiver of this requirement of written form. There are no side
agreements to this Arbitration Agreement.
	 
	3.2	 	Should any provision of this Arbitration Agreement, or any part of such provision, be or
become ineffective or impossible to implement, or should this Arbitration Agreement prove to
have a contractual gap, this shall not adversely affect the validity of the other provisions
hereof. Any such provision that may prove to be ineffective or impossible to implement, or any
contractual gap that may be contained herein, shall be replaced or filled by such reasonable
provision which is acceptable in legal terms and which comes as close as possible to what the
Parties intended to agree on or, judging by the purpose and essence of this Agreement, would
have agreed on had they considered the relevant issue.
	 
	3.4	 	This Arbitration Agreement is governed by German law. It shall remain in force in respect to
each of the persons who acceded to it even after such person ceases to be a partner of the
Partnership.
	 
	3.5	 	This Arbitration Agreement may be terminated only for important cause. The arbitration
tribunal shall be authorized to determine any dispute concerning an alleged termination of
this Arbitration Agreement.

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	 	 	[•],[•] 2006

	 	 	                                                            
	 
	 	 	[•] as managing director of Rembrandt Nachtwache Verwaltungs GmbH with the right
to represent alone an exempt from the restrictions on self dealing imposed by § 181 BGB
	 
	 	 	                                                            
	 
	 	 	[•] as managing director of Nachtwache Reserve GmbH with the right to represent
alone an exempt from the restrictions on self dealing imposed by § 181 BGB
	 
	 	 	                                                            
	 
	 	 	([•])

 - 27 - 

 

DEED OF ACKNOWLEDGMENT AND UNDERTAKING

 - 28 - 

 

DEED OF ACKNOWLEDGEMENT AND UNDERTAKING

This Deed
is signed this ___ day of [•] 2006 by [•] (the “Covenantor”)

WHEREAS:

	(A)	 	Nachtwache Acquisition GmbH and Nachtwache Furnaces GmbH have entered into a purchase
agreement for the acquisition of the furnaces and meterting business of E.ON Ruhrgas
Aktiengesellschaft by means of acquiring the shares and assets of various companies worldwide;
	 
	(B)	 	Nachtwache Acquisition GmbH and Nachtwache Furnaces GmbH are wholly-owned
subsidiaries of Elster Group S.à.r.l. (formerly Gold Silver S.à.r.l) (“Elster S.à r.l”).
	 
	(C)	 	The Covenantor is acquiring an indirect equity interest in Elster S.à r.l. through
investing as a limited partner in Nachtwache Management Vermögensverwaltungs GmbH & Co. KG
(“Management KG”). The Covenantor acknowledges and accepts that the investments in Elster
S.à.r.l and in Management KG are governed by the Investment and Shareholders Agreement
regarding Investments in Elster Group S.à.r.l. entered into on 8 September 2005 (as amended
from time to time, the “Agreement”) and that it is in his interests to agree to be bound to
the Agreement, insofar as its provisions are relevant to them.

NOW IT IS HEREBY AGREED AS FOLLOWS:

	1.	 	Terms defined in the Agreement and not otherwise defined in this Deed shall bear the
same meaning in this Deed.
	 
	2.	 	The Covenantor hereby agrees to be bound by the terms of the Agreement, a copy of
which it has received, and in particular to be bound by Clauses 11 to 17 and 19.2 of the
Agreement and any other Clause expressly or impliedly applicable to the Covenantor.
	 
	3.	 	This Deed is governed by and shall be construed in accordance with the laws of The
Grand Duchy of Luxembourg. Any dispute arising under or in connection with this Deed of
Adherence shall be settled by the competent court in Luxembourg, The Grand Duchy of
Luxembourg, subject to appeal in accordance with the applicable law.

IN WITNESS WHEREOF this Undertaking has been executed by the Covenantor on
                                                             2006.

 - 29 - 

 

Signed as a deed by            )

[•]                                                   )

	 	 	                                                            

in the presence of:                                  )

	 	 	 

	 

	 	Signature of witness
	 

	 	 
	 
	 	 
	 

	 	Name of witness
	 

	 	 
	 
	 	 
	 

	 	Address of witness
	 

	 	 
	 
	 

	 	 
	 
	 

	 	 

 - 30 -

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