An extensive list of definitions is included in Article 1 of the master contract. This definition list prior to the purchase and sale agreement is not necessary under German law and therefore constitutes an exception in German contracts for the purchase and sale of companies. If the defined terms and expressions are legal terms and expressions, these are governed by German law and consequently a designation of the respective norm is sufficient in the contract under German law.

Definitions are nonetheless helpful as far as specifications of the actual substance of the contract are concerned. If an agreement is involved which refers to a large number of facts and laws, it is recommended that these should be defined by the parties from the very beginning. On the one hand, this helps to avoid disputes during the implementation stage of the contract and, on the other, the risk is excluded that rulings are included in the contract which are contrary to the precept of definitiveness required under German law.

The definition list in the master contract includes a "bulk sale" which is customary in Anglo-American law. A bulk sale is excluded under German law. "Bulk sale" constitutes the purchase of a totality of assets which are not defined in detail. This is contrary to the definitiveness principle firmly entrenched in German law.

The definition list in the master contract also refers to "closing". Attention is once again draw to the fact the institution of "closing" in the American sense does not exist in German law. The abstraction principle anchored in German law calls for a separation in a contractual and a real act which is normally carried out simultaneously or shortly afterwards.

In the present master contract, there are also definitions of undertakings, terminologies, rulings and laws which are specifically US ("ERISA", "Exon-Florio-Act", "HSR Act" and "PBGC". These terms and expressions would naturally be inapplicable in an asset purchase agreement under German law.

When reference is made to "GAAP" in the master contract ("Generally Accepted Accounting Principles"), this must read as "GOB" in the German contract (Grunds=E4tze Ordnungsgem=E4=DFige Bilanzierung").

For further information please contact Dr Erich Michel, Wessing Berenberg-Gossler Zimmermann Lange, Freiherr-Vom-Stein-Strasse 24-26, Frankfurt am Maim 60323, Frankfurt, Germany- Tel: +496 997 1300, Fax: +496 997 130100.

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