Joint Venture Agreement

Exhibit 10.4


Joint Venture Agreement


between


Siemens Aktiengesellschaft


and


Breed Technologies, Inc.


concerning


the establishment and operation of the joint venture company


BST Restraint Systems International GmbH & Co. KG


TABLE OF CONTENTS Preamble 1. Definitions


I. ESTABLISHMENT OF THE COMPANY 2. The COMPANY 3. Contributions 4. CHANGE OF CONTROL 5. Disposal of CAPITAL INTERESTS


II. ORGANIZATION OF THE COMPANY 6. Bodies of the COMPANY 7. PARTNERSHIP MEETING 8. PARTNERS= BOARD 9. MANAGEMENT 10. Staff, Non-Solicitation of Employees 11. Organizational Structure


III. OPERATION OF THE COMPANY 12. Initial Business Plan, Budget 13. Profit and Loss, Financing, Corporate Opportunities 14. Books and Records, FISCAL YEAR, Financial Statements 15. Guidelines for the Operation of the COMPANY 16. Contracts


IV. TERM OF AGREEMENT, DISSOLUTION 17. Term of Agreement 18. Dissolution


V. OTHER PROVISIONS 19. Premerger Control 20. Applicable Law 21. DISPUTE Settlement 22. Confidentiality 23. Miscellaneous 24. Notices


This Agreement is made between


(1) Siemens Aktiengesellschaft, a corporation organized and existing under the laws of Germany and having its registered seats at Nonnendammallee 101, D-13599 Berlin and at Wittelsbacher Platz 2, D-80333 Munich, Germany, hereinafter referred to as "SIEMENS"


(2) Breed Technologies, Inc. a corporation organized and existing under the laws of Delaware, USA and having its registered seat and head office at 5300 Old Tampa Highway, Lakeland, Florida 33807-3050, USA hereinafter referred to as "BREED"


Preamble


Passive Restraint Systems for cars are presently regarded to be stand-alone components and subsystems such as seatbelt, steering wheel, airbag sensors, ECU's etc. and they are mainly developed as applications for specific cars. The airbag successfully achieved high penetration rates (>50% worldwide, >75% in Europe) and now there are many airbags in the field. It is recognized, that the airbag saved many people from death or serious injury in accidents. In certain, but rare occasions, it caused damages to passengers unintentionally.


While all safety components need to be further developed and improved technically, it is imperative to begin incorporating the components into integrated, smart systems that detect, monitor and control all related functions and actions. The critical objectives in offering maximum benefit to the occupants are adaptive reactions and to avoid malfunctions and misuse of the system.


The most likely customer and legislative requirements for adaptive future protection systems shall be to improve e.g. passenger size sensing, passenger position sensing, adaptive air bag inflation adaptive seat belt pre-tensioning. To facilitate development of advanced systems which incorporate the appropriate technologies a joint venture between the PARTIES shall be formed to utilize the respective capabilities of each company, to meet the evolving technical market demands and to increase passenger safety as fast as possible.


Through the joint venture it is ensured that all components of a motor vehicle occupant safety restraint system are indentified, designed and manufactured in accordance with the automotive safety standards with the objective to increase the overall quality level of all subcomponents.


This AGREEMENT is being entered into under the following circumstances:


WHEREAS SIEMENS, through its Automotive Systems Group, and its affiliated companies, are involved in the development, manufacturing and sale of mainly electronic components for motor vehicle occupant safety restraint systems;


WHEREAS, BREED and its affiliated companies are involved in the development, manufacturing and sale of mainly mechanical components for motor vehicle occupant safety restraint systems;


WHEREAS, SIEMENS and BREED are determined to cooperate on a worldwide basis with respect to the worldwide research, development, engineering and marketing of motor vehicle occupant safety restraint systems as defined herein; WHEREAS, SIEMENS and BREED are determined to appoint the joint venture as their reseller in order to market and sell components of motor vehicle occupant safety restraint systems;


WHEREAS, the PARTIES, have concluded a Non Binding Memorandum of Understanding on July, 27 1997 and a Memorandum of Understanding on October, 14 1997;


WHEREAS the PARTIES have decided to carry out such a cooperation through a joint venture company to be incorporated and organized under German law; and


WHEREAS the PARTIES desire to set forth herein their rights, duties and responsibilities with respect to the joint venture company;


NOW, THEREFORE, in consideration of these premises and of the mutual promises, obligations and agreements contained herein, the PARTIES hereto, intending to be legally bound, subject to any necessary governmental or corporate approvals, do hereby agree as follows:


1. Definitions


Wherever the following terms are used in this AGREEMENT in capital letters in the singular or plural form, or in any of its ANNEXES, they shall be understood as defined below.


"ACCOUNTING FIRM" means: the international independent certified accounting firm KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprhfungsgesellschaft, located in Frankfurt/ Main, Germany, if the PARTIES fail to agree on KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprhfungsgesellschaft in special cases the accounting firm shall be appointed by the president of the Chamber of Commerce of Munich, Germany;


"AUDITOR" means: the auditor of the COMPANY and of the VERWALTUNGS-GMBH designated by unanimous vote of the PARTNERSHIP MEETING according to SECTION 7.2 (F) and unanimous resolution of the SHAREHOLDERS'= MEETING;


"AFFILIATE" means: related companies within the meaning of Secs. 15 et seq. of the German Stock Corporation Act ("Aktiengesetz"), in which either of the PARTIES has more than 50 % of all voting rights, directly or indirectly owned;


"AGREEMENT" means: this Agreement and its ANNEXES;


"ANNEX" means: an annex to this AGREEMENT;


"ARTICLES OF LIMITED PARTNERSHIP" means: the articles of organization of the COMPANY as a limited partnership;


BREED-FAMILY means: Allen K. Breed and Johnnie Cordell Breed including their heirs and legal sucessors;


"CAPITAL INTEREST" means: the capital interest in the COMPANY and/or the VERWALTUNGS-GMBH as the case may be;


"CEO" means: Chief Executive Officer ("Vorsitzender der Gesch@ftsfhhrung") of the COMPANY;


"CFO" means: Chief Financial Officer ("Kaufm@nnischer Gesch@ftsfhhrer") of the COMPANY;


2


"CHANGE OF CONTROL" means: (A) for SIEMENS that any person or entity other than SIEMENS or its AFFILIATES acquires directly or indirectly fifty percent (50%) or more of shareholders' voting rights in the SIEMENS Automotive Systems Group; (B) (i) for BREED that (i) any person or entity other than the BREED-FAMILIY acquires beneficial ownership (as defined in Rule 13d-3 under the US Security Exchange Act of 1934) of fifty percent (50%) or more of the outstanding common stock of BREED; or (ii) any company which is a competitor of SIEMENS in the automotive field or a competitor of the COMPANY or its SUBSIDIARIES either: (a) becomes the largest single shareholder in BREED; or (b) makes a tender offer resulting in the ownership of fifty percent (50 %) or more of the shares of outstanding common stock of BREED


"CLOSING" means: the consummation of all transactions which have to occur under this AGREEMENT after the EFFECTIVE DATE including all governmental authorizations and approvals of any nature necessary for the effectiveness of this transactions;


"CLOSING DATE" means: the earliest date on which the CLOSING will occur, provided that such date may not be later than June, 6.1998 unless otherwise agreed by the PARTIES;


"COMPANY" means: the joint-venture company under the laws of Germany in the legal form of a limited partnership ("Kommanditgesellschaft") with the VERWALTUNGS-GMBH as general partner and with SIEMENS and BREED or an AFFILIATE of SIEMENS or an AFFILIATE of BREED each as limited partners ("GmbH & Co. KG"), to be established in accordance with this AGREEMENT;


"COMPONENTS"A means: components of SRS-SYSTEMS as listed in ANNEX 1;


"CONTRIBUTION AGREEMENT" means: the contribution agreement regarding the contribution of shares in PARS to be contributed by SIEMENS or an AFFILIATE of SIEMENS to the COMPANY and the contribution agreement regarding the contribution of interests in the US-PARTNERSHIP to be contributed by BREED or an AFFILIATE of BREED to the COMPANY and to the VERWALTUNGS-GMBH;


"DEADLOCK"" means: a situation of impasse where a decision which is required for the continuing operations of the COMPANY as a going-business concern cannot be taken because of a failure to agree upon a common course of action among the MANAGEMENT, the PARTNERS' BOARD, the PARTNERSHIP MEETING or the SHAREHOLDERS MEETING or the PARTIES;


"DISPUTE" means: any claims, differences or disputes, arising out of or in connection with this AGREEMENT, including any question regarding its existence, validity, termination or its performance, or in connection with arrangements regarding the perfor mance of this AGREEMENT;


"EFFECTIVE DATE" means: the date on which this AGREEMENT becomes effective according to SECTION 19. hereof;


"FISCAL YEAR" means: the fiscal year of the COMPANY and of the VERWALTUNGS-GMBH, as provided for in this AGREEMENT.


"MANAGEMENT" means: the management of the VERWALTUNGS-GMBH and/or the COMPANY as the case may be, consisting of a CEO and a CFO, as provided for in this AGREEMENT;


"OFFER" means: the offer to be made under the procedure described in the case of disposal of CAPITAL INTEREST as per SECTION 5 hereof;


"OFFEREE" means: the offeree in the procedure described in the case of disposal of CAPITAL INTEREST as per SECTION 5 hereof;


"OFFEROR" means: the offeror under the procedure described in the case of disposal of CAPITAL INTEREST as per SECTION 5 hereof;


"PARS" means: PARS Passive Rhckhaltesysteme GmbH, a limited liability corporation organized and existing under the laws of Germany and having its registered seats at Carl-Zeiss-Strasse 9, D-63755 Alzenau, Germany, of which the shares are to be contributed to the COMPANY by SIEMENS or an AFFILIATE of SIEMENS according to this AGREEMENT;


"PARTNER" means: a limited partner ("Kommanditist") in the COMPANY, i.e. SIEMENS or BREED or an AFFILIATE of SIEMENS or BREED, as the case may be;


"PARTNERSHIP MEETING" means: the partnership meeting for the COMPANY as provided for in this AGREEMENT;


"PARTY" means: SIEMENS or BREED;


"PARTNERS' BOARD" means: the partners' board for the COMPANY as provided for in this AGREEMENT;


"SECTION" means: a section of this AGREEMENT;


"SHAREHOLDERS' MEETING" means: the shareholders' meeting for the VERWALTUNGS-GMBH as provided for in this AGREEMENT;


"SIGNATURE A means: the date on which the AGREEMENT is signed by both PARTIES;


"SRS-BACKGROUND-TECHNOLOGY" means: the technology with respect to SRS-SYSTEMS and COMPONENTS available on the CLOSING DATE, whether in written or oral form and whether under statutory protection such as patent applications, patents, utility models, or not, at SIEMENS in its Automotive Systems Group subdivision safety and chassis systems location Regensburg, Germany and available at BREED, and which technology o is needed by the COMPANY and its SUBSIDIARIES for the development, integration and application of SRS-SYSTEMS, and o either PARTY is legally entitled to license to the other PARTY and/or the COMPANY and its


SUBSIDIARIES;


"SRS-FOREGROUND-TECHNOLOGY" means: the technology with respect to SRS-SYSTEMS and COMPONENTS available after the CLOSING DATE, whether in written or oral form and whether under statutory protection such as patent applications, patents, utility models, or not,


o at SIEMENS in its Automotive Systems Group subdivision sayety and chaissis systems location Regensburg, Germany and at BREED, and which technology is needed by the COMPANY and its SUBSIDIARIES for the development, integration and application of SRS-SYSTEMS, or
o at the COMPANY and/or at its SUBSIDIARIES


and which technology either PARTY or the COMPANY or its SUBSIDIARIES, respectively, is legally entitled to license as laid down in this AGREEMENT.


"SRS-SYSTEM" means: a motor vehicle occupant safety restraint system as described in ANNEX 1.


"STATUTES" means: the articles of organization of the VERWALTUNGS-GMBH as provided for in this AGREEMENT;


"SUBSECTION" means: a subsection of this AGREEMENT;


"SUBSIDIARY A means: any legal entity, in which the COMPANY or the VERWALTUNGS-GMBH, as the case may be, has more than 50 % of all voting rights, directly or indirectly owned, such as but not limited to the US-PARTNERSHIP and the PARS;


"US-PARTNERSHIP" means: the legal entity in the form of a limited partnership organized and existing under the laws of the State of Delaware, USA, which is to be founded by BREED and an AFFILIATE of BREED and of which the interests are to be contributed to the COMPANY and the VERWALTUNGS-GMBH by BREED and an AFFILIATE of BREED under this AGREEMENT;


"VERWALTUNGS-GMBH" means: a legal entity in the form of a limited liability company (GmbH) under the laws of Germany which assumes personal liability and the management of the COMPANY as general partner, to be established in accordance with this AGREEMENT;


I. ESTABLISHMENT OF THE COMPANY


2. The COMPANY


2.1 The PARTIES or AFFILIATES designated by the respective PARTY shall establish the COMPANY with ARTICLES OF LIMITED PARTNERSHIP set forth in ANNEX 2.1 A and the VERWALTUNGS-GMBH with STATUTES set forth in ANNEX 2.1 B. The COMPANY shall be established for an indefinite period of time subject to the right of either PARTY to terminate this Agreement as per SECTION 17 hereof.


2.2 The name of the COMPANY shall be: "BST Restraint Systems International GmbH & Co. KG" The name of the VERWALTUNGS-GMBH shall be: "BST Restraint Systems Verwaltungs-GmbH" On its corporate stationary the COMPANY may add to its name the words: "A joint venture of Siemens and Breed"


2.3 The COMPANY and the VERWALTUNGS-GMBH shall have their registered seats and administrative head offices at Alzenau, Germany.


2.4 The scope of the COMPANY shall be: the worldwide research, development, engineering, assembly, marketing and sale of SRS-SYSTEMS, and the purchase, marketing and sale of COMPONENTS, and the holding of participations in companies which are engaged in businesses as described in SUBSECTION 2.4.1 and 2.4.2 hereof.


2.5 It is understood, that the COMPANY and the SUBSIDIARIES shall exercise the worldwide research, development and engineering of SRS-SYSTEMS on a contractual basis. The COMPANY may perform by itself or through its SUBSIDIARIES on a worldwide basis all activities related to this scope, including but not limited to the representation, administration or acquisition of other enterprises of the same or a similar nature and participation in such enterprises. Furthermore, the COMPANY may establish branches and/or SUBSIDIARIES worldwide. The scope of the COMPANY may be extended by unanimous resolution of the PARTNERSHIP MEETING.


2.6 It is understood, that any SUBSIDIARY established by the COMPANY or the VERWALTUNGS-GMBH shall be found in the most beneficial way in respect of taxation and liability. All shares of SUBSIDIARIES in the form of a corporation with its registered seat outside Germany shall be solely owned by the VERWALTUNGS-GMBH or any other legal entity agreed upon by the PARTIES.


2.7 The COMPANY shall have a registered liability capital ("Haftkapital") to be registered in the companies' register ("Handelsregister") in an aggregate amount of DM 10.000.000 (Deutsche Mark ten million) divided into one (1) CAPITAL INTEREST of DM 5.020.000 (Deutsche Mark five million twenty thousand) held by SIEMENS or an AFFILIATE designated by SIEMENS and into one (1) CAPITAL INTEREST of DM 4.980.000 (Deutsche Mark four million ninety eight thousand) held by BREED or an AFFILIATE designated by BREED.


2.8 The scope of the VERWALTUNGS-GMBH as general partner ("Komplement@r") in the COMPANY shall be the assumption of the personal liability for and the management of the COMPANY. The VERWALTUNGS- GMBH will not hold any interest in the COMPANY'S capital. Its aggregate share capital shall be DM 50,000 (Deutsche Mark fifty thousand) divided into one (1) CAPITAL INTEREST of DM 25.100 (Deutsche Mark twenty five thousand one hundred) held by SIEMENS, or an AFFILIATE designated by SIEMENS, and one (1) CAPITAL INTEREST of, DM 24.900 (Deutsche Mark twenty four thousand nine hundred) held by BREED, or an AFFILIATE designated by BREED.


2.9 As of the CLOSING DATE, the CAPITAL INTERESTS in the COMPANY and the CAPITAL INTERESTS in the VERWALTUNGS-GMBH shall be fully paid in as provided for in SECTION 3 hereof and the ratio of shareholding of SIEMENS, or an AFFILIATE designated by SIEMENS, shall be 50,2 % and the ratio of shareholding of BREED or an AFFILIATE designated by BREED, shall be 49,8 % in the COMPANY and the VERWALTUNGS- GMBH, as provided for in SECTION 2.7 and 2.8 hereof.


2.10 The CAPITAL INTERESTS in the COMPANY and the CAPITAL INTERESTS in the VERWALTUNGS-GMBH may only be transferred together and to the same extent. Therefore, to the extent that in this AGREEMENT or the ARTICLES OF LIMITED PARTNERSHIP any provisions have been agreed for a voluntary or involuntary transfer of CAPITAL INTERESTS in the COMPANY, such provisions, in particular SECTION 5., shall apply


mutatis mutandis to a transfer of CAPITAL INTERESTS in the VERWALTUNGS-GMBH subject to the hereof condition that any such transfer shall occur simultaneously. The same shall apply to any other disposal or encumbrance of the CAPITAL INTERESTS.


3. Contributions


3.1 Immediately after the EFFECTIVE DATE, SIEMENS, or an AFFILIATE designated by SIEMENS, and BREED, or an AFFILIATE designated by BREED, shall jointly form the VERWALTUNGS-GMBH and shall make their contributions to the aggregate share capital in cash in order to receive in return their respective CAPITAL INTERESTS, as provided for in SUBSECTION 2.8 hereof.


3.2. After the incorporation of the VERWALTUNGS-GMBH, the VERWALTUNGS-GMBH as general partner ("Komplementar"), SIEMENS, or an AFFILIATE designated by SIEMENS, and BREED, or an AFFILIATE designated by BREED, as limited partners ("Kommanditisten") shall jointly form the COMPANY and SIEMENS, or an AFFILIATE designated by SIEMENS, as well as BREED, or an AFFILIATE designated by BREED, shall make their contributions to the aggregate share capital of the COMPANY in kind as provided for in SUBSECTION 3.2.1, 3.2.2 and 3.2.3 hereof in order to receive in return their respective CAPITAL INTERESTS as provided for in SUBSECTION 2.7 hereof:


3.2.1 SIEMENS, or an AFFILIATE designated by SIEMENS, shall according to SECTION 3.2 contribute all of the shares of PARS to the COMPANY with economic effect as of the EFFECTIVE DATE.The value of the shares of PARS is DM 9.318.000,-- (Deutsche Mark nine million threehundred eighteen thousand) as of September 30, 1997.


3.2.2 Prior to the EFFECTIVE DATE BREED, and an AFFILIATE designated by BREED, shall form the US- PARTNERSHIP as a limited partnership and transfer the tangible assets with respect to development, research and testing of SRS-SYSTEMS as described in ANNEX 3.2.2 into the US-PARTNERSHIP. Any licenses or transfer of SRS- BACKGROUND-TECHNOLOGY shall be solely provided according to SECTION 15. BREED shall be the limited partner in the US-PARTNERSHIP with capital interests of 99% and the AFFILIATE designated by BREED shall be the general partner in the US-PARTNERSHIP with capital interest of 1 %. BREED shall according to SECTION 3.2 contribute all its interests as a limited partner of the US-PARTNERSHIP to the COMPANY and the AFFILIATE designated by BREED shall according to SECTION 3.2 transfer all its interests as a general partner of the US- PARTNERSHIP to the VERWALTUNGS-GMBH with economic effect as of the EFFECTIVE DATE.The value of the assets to be transfered by BREED, and an AFFILIATE designated by BREED, into the US-PARTNERSHIP and accordingly the value of the interests of the US-PARTNERSHIP are DM 9.318.000,-- (Deutsche Mark Mark nine million threehundred eighteen thousand) as of the EFFECTIVE DATE.


3.2.3 The shares of PARS and interests in the US-PARTNERSHIP contributed by the respective PARTNER shall be entered in the registered liability contribution of the contributing PARTNER in the COMPANY up to an amount of DM 5.020.000 (Deutsche Mark five million twenty thousand) for SIEMENS or an AFFILIATE designated by SIEMENS and up to an amount of DM 4.980.00 (Deutsche Mark four million ninety eight thousand) for BREED or an AFFILIATE designated by BREED. The exceeding amount of DM 8.636.000 (Deutsche Mark eight million sixhundred thirty-six thousand) shall be entered in the joint capital reserve of the COMPANY.


3.2.4 The shares in PARS shall be contributed by SIEMENS or an AFFILIATE designated by SIEMENS, to the COMPANY under the condition that any and all risks resulting from product liability or liability for infringement of proprietary rights or any other liabilities for any products produced or developed or services rendered before the CLOSING DATE shall remain with SIEMENS who shall hold the COMPANY harmless from any and all claims of third parties resulting therefrom. The interests in the US-PARTNERSHIP shall be contributed by BREED and an AFFILIATE designated by BREED, to the COMPANY and the VERWALTUNGS-GMBH under the condition that any and all risks


resulting from product liability or liability for infringement of proprietary rights or any other liabilities for any products produced or developed or services rendered before the CLOSING DATE shall remain with BREED and the AFFILIATE designated by BREED who shall hold the COMPANY and the VERWALTUNGS-GMBH harmless from any and all claims of third parties resulting therefrom.


3.2.5 The CONTRIBUTION AGREEMENTS shall each contain adequate representations and warranties substantially in the form as stated in ANNEX 3.2.5.


3.3 With the exception of costs and expenses for counsel and auditors to be borne solely by each PARTY, SIEMENS and BREED shall jointly bear all costs and expenses related to the formation of the VERWALTUNGS-GMBH and the COMPANY unless the ARTICLES OF LIMITED PARTNERSHIP or the STATUTES stipulate that the costs and expenses, such as for the notarized application to and the registration in the companies' register ("Handelsregister") as well as the publication costs, shall be borne directly by the VERWALTUNGS-GMBH or the COMPANY. SIEMENS shall solely bear all cost and expenses ,including any and all duties and taxes, related to the contribution of the shares in PARS to the COMPANY as per SUBSECTIONS 3.2.1. and BREED shall solely bear all cost and expenses, including any and all duties and taxes, related to the contribution of the interests in the US-PARTNERSHIP to the COMPANY and the VERWALTUNGS-GMBH as per SUBSECTION 3.2.2. BREED shall solely bear all costs and expenses, including any and all duties and taxes, related to the formation of the US-PARTNERSHIP and the transfer of the assets thereto as per SUBSECTION 3.2.2.


3.4 Third parties shall only be permitted to join the VERWALTUNGS-GMBH and the COMPANY if all PARTIES approve.


3.5 After the implementation of the contribution according to SUBSECTION 3.2.1 and 3.2.2 the corporate names of the SUBSIDIARIES shall be changed as far as legally possible


3.5.1 PARS in "BST Restraint Systems-GmbH


3.5.2 US-PARTNERSHIP in BST Restraint Systems-LP Any other SUBSIDIARY of the COMPANY or the VERWALTUNGS-GMBH shall be named with a similar name as far as legally possible.


4. CHANGE OF CONTROL


4.1 If, after the incorporation of the COMPANY and/or the VERWALTUNGS- GMBH, a CHANGE OF CONTROL occurs in respect of a PARTY, this PARTY shall notify this to the other PARTY without undue delay and shall sell all or part of its CAPITAL INTERESTS in the COMPANY and the VERWALTUNGS-GMBH to the other PARTY if and to the extent so requested by the other PARTY. Such a request shall be made in writing not later than three (3) months after the notification. The price for the CAPITAL INTERESTS shall be agreed upon by the PARTIES and, failing such agreement, shall be determined by an ACCOUNTING FIRM jointly appointed by the PARTIES. The opinion of the ACCOUNTING FIRM as to the price of the CAPITAL INTERESTS shall be based on a generally accepted valuation method being in common use at the time of appointment of the ACCOUNTING FIRM and shall result in a reasonable, arm's-length price on the basis of a willing buyer and a willing seller of the relevant CAPITAL INTERESTS. The cost of the opinion of the ACCOUNTING FIRM shall be paid by the selling PARTY.


4.2 Insofar as the conditions as set out in sentence 1 of SUBSECTION 4.1 already exist and have been disclosed in writing at the time of SIGNATURE, this shall not be deemed to be CHANGE OF CONTROL within the meaning of this provision.


4.3 An AFFILIATE of a PARTY shall be deemed not to be a third party within the meaning of this provision, but only as long as it remains an AFFILIATE.


5. Disposal of CAPITAL INTERESTS


5.1 For a time period of six (6) years commencing at the CLOSING DATE, the transfer of any CAPITAL INTERESTS by a PARTY to a third party or any other disposal or encumbrance thereof shall not be permitted and after such six (6) years time period shall require the prior written consent of the other PARTY, such consent to be given if and when the following conditions are fulfilled:


(A) If a PARTY (the "OFFEROR") wishes to transfer its CAPITAL INTERESTS in the COMPANY, it shall first offer such CAPITAL INTERESTS in writing (the "OFFER") to the other PARTY (the "OFFEREE").


(B) If within one (1) months from receipt of the OFFER the OFFEREE indicates in writing that he is not interested in purchasing the CAPITAL INTERESTS or does not reply to the OFFER, the OFFEROR shall have the right to offer its CAPITAL INTERESTS to a third party of whose identity the OFFEROR has immediately informed the OFFEREE. In such a case, the OFFEREE may withhold its approval only for cause which must relate to the potential third party purchaser. Such cause shall be deemed to be constituted without limitation if su ...