Page

INDEX OF EXHIBITS

5

1.

DEFINITIONS

11

2.

CURRENT STATUS

17

2.1

THE COMPANY

17

2.2

THE GROUP ENTITIES

17

2.3

PROFIT AND LOSS TRANSFER AGREEMENT

17

3.

SALE AND TRANSFER OF THE SOLD SHARES; RIGHT TO PROFITS

17

3.1

SALE AND PURCHASE OF THE SOLD SHARES

17

3.2

TRANSFER OF THE SOLD SHARES

17

3.3

ECONOMIC EFFECT

17

3.4

CONSENTS

18

3.5

NEW SERVICE AGREEMENT WITH LOTHAR SCHWEMM

18

4.

PURCHASE PRICE FOR SOLD SHARES

18

4.1

PURCHASE PRICE FOR SOLD SHARES

18

4.2

NO PURCHASE PRICE ADJUSTMENTS

18

4.3

DISTRIBUTION

18

4.4

PLTA

19

4.5

VAT

20

5.

RULES FOR PAYMENT

20

5.1

MODES OF PAYMENT

20

5.2

ACCOUNTS

21

5.3

NO SET-OFF; NO RIGHT OF RETENTION

21

5.4

DEFAULT INTEREST; CALCULATION OF INTEREST

21

6.

CLOSING CONDITIONS

21

6.1

CLOSING CONDITIONS

21

6.2

FULFILLMENT OR LAPSE OF CLOSING CONDITIONS; WAIVER

22

6.3

RESPONSIBILITY FOR SATISFACTION OF CLOSING CONDITIONS RELATING TO CLEARANCES

22

6.4

COOPERATION WITH REGARD TO FINANCING COMMITMENT AND U.S. EMBARGO LAWS

23

6.5

OBLIGATIONS, CONDITIONS AND COMMITMENTS

23

6.6

CONSEQUENCES OF NON-SATISFACTION OF CLOSING CONDITIONS

24

7.

[INTENTIONALLY LEFT BLANK]

24

8.

CLOSING DATE; CLOSING; CLOSING ACTIONS

24

8.1

PLACE AND TIME OF CLOSING

24

8.2

CLOSING

25

8.3

CONSEQUENCES OF NON-SATISFACTION OF CLOSING ACTIONS

26

9.

SELLER’S REPRESENTATIONS AND WARRANTIES

27

9.1

GENERAL

27

9.2

STATUS OF THE SELLER

27

9.3

TITLE TO SOLD SHARE

28

9.4

STATUS OF THE GROUP ENTITIES

28

9.5

SUBSIDIARY INTERESTS

28

9.6

FINANCIAL STATEMENTS

28

9.7

FINANCIAL RECORDS

29

9.8

CONDUCT OF BUSINESS

29

9.9

GRANT AND STATE AID

29

9.10

REAL PROPERTY

29

9.11

MATERIAL AGREEMENTS

30

9.12

INTELLECTUAL PROPERTY RIGHTS

30

9.13

EMPLOYMENT MATTERS

31

9.14

DATA PROTECTION

31

9.15

ENVIRONMENTAL MATTERS

32

9.16

LEGAL PROCEEDINGS

32

9.17

ANTI-CORRUPTION

32

9.18

COMPLIANCE WITH LAWS

32

9.19

TAX

32

9.20

FINDER’S FEE AND MANAGEMENT INCENTIVES

33

9.21

INFORMATION DISCLOSED

33

9.22

NO OTHER REPRESENTATIONS OR WARRANTIES

33

10.

SELLER’S COVENANTS

33

10.1

CONDUCT OF BUSINESS PRIOR TO CLOSING

33

10.2

PURCHASER’S CONSENT

35

10.3

FUNDING OBLIGATIONS WITH REGARD TO THE SELLER

35

10.4

W&I INSURANCE PREMIUM

35

11.

RESTRUCTURING AND ABB SALE

35

12.

PURCHASER’S REMEDIES

36

12.1

BREACH; INDEMNIFICATION; LOSSES

36

12.2

CLAIM PROCEDURES

38

12.3

LIMITATIONS OF SELLER’S LIABILITY

39

12.4

REIMBURSEMENTS

40

12.5

NO ADDITIONAL RIGHTS OR REMEDIES

40

13.

TAXES

41

13.1

INDEMNIFICATION

41

13.2

TAX REFUNDS, EXCESS TAX BENEFITS, INDEMNIFICATION OF SELLER ETC.

42

13.3

COOPERATION ON TAX MATTERS

43

13.4

SOLE PROVISIONS FOR TAXES

44

14.

PURCHASER’S GUARANTEES

45

14.1

STATUS OF THE PURCHASER

45

14.2

NO KNOWLEDGE OF BREACH

45

14.3

CONTACTS WITH MANAGEMENT

46

14.4

ACQUISITION FOR THE PURCHASER’S OWN ACCOUNT

46

14.5

INFORMATION ON CLEARANCES

46

14.6

ACCESS TO INFORMATION

46

14.7

COOPERATION

46

14.8

BOARD MEMBERS

47

14.9

FURTHER INDEMNITIES

47

15.

SELLER’S REMEDIES

48

16.

MISCELLANEOUS

48

16.1

NOTICES

48

16.2

COSTS, TAXES AND EXPENSES

49

16.3

PUBLIC DISCLOSURE

49

16.4

ENTIRE AGREEMENT

49

16.5

AMENDMENTS, SUPPLEMENTS

49

16.6

ASSIGNMENTS

49

16.7

NO RIGHTS OF THIRD PARTIES

49

16.8

INTERPRETATION

49

16.9

GOVERNING LAW; JURISDICTION; AGENT FOR SERVICE OF PROCESS

50

16.10

SEVERABILITY

50

Exhibit 2.2

List of Subsidiaries

Exhibit 3.4

Shareholders’ Approval

Exhibit 4.3.1

Aggregated Reserves Amount

Exhibit 5.2.1

Seller’s Account

Exhibit 5.2.2

Purchaser’s Account

Exhibit 8.2.1(b)-1

Seller’s Board Members

Exhibit 8.2.1(b)-2

Shareholder’s Resolution re Removal of Seller’s Board Members

Exhibit 8.2.1(c)

Shareholder’s Resolutions re Discharge of Seller’s Board Members (included in Exhibit 8.2.1(b)-2)

Exhibit 8.2.1(i)

Shareholders’ Commitment

Exhibit 8.2.1(k)

Transfer of Ownership Confirmation

Exhibit 8.2.1(1)

Working Capital Facility

Exhibit 8.2.3

Form of Closing Confirmation

Exhibit 9.1.2

Seller’s Knowledge

Exhibit 9.1.3

W&I Insurance

Exhibit 9.4.2

No Insolvency

Exhibit 9.5.2

Subsidiary Interests

Exhibit 9.6-1

Financial Statements

Exhibit 9.6-2

Management Accounts

Exhibit 9.6-3

Deviations to IFRS

Exhibit 9.8

Conduct of Business

Exhibit 9.9

Grant and State Aid

Exhibit 9.10.2

Real Property

Exhibit 9.11.1

Material Agreements

Exhibit 9.12.2

Registered IP

Exhibit 9.12.3

Infringements of Third Party's IP

Exhibit 9.13.1

Key Employees

Exhibit 9.13.2

List of Employees

Exhibit 9.13.4

Works Councils

Exhibit 9.13.5

Employee Benefits

Exhibit 9.13.6

Pension Commitments

Exhibit 9.13.7

Labor Disputes or Proceedings

Exhibit 9.15

Environmental Matters

Exhibit 9.16

Legal Proceedings

Exhibit 9.18

Compliance

Exhibit 9.19

Tax

Exhibit 9.20

Finder's Fee & Management Incentives

Exhibit 10.1.1

Exceptional Actions during Interim Period

Exhibit 10.1.3

Non-Restricted Actions

Exhibit 10.1.4

Permitted Leakage

Exhibit 11.1.1(c)

Transferred or Terminated Employees

Exhibit 12.1.5(d)(iii)

Confirmation of Data Room provider

(1)

Riverside KM Beteiligung GmbH, a limited liability company (Gesellschaft mit beschränkter Haftung) organized under the laws of Germany, registered with the commercial register (Handelsregister) of the local court (Amtsgericht) of Hanover under registration number HRB 208686, and having its registered office in Wohlenbergstraβe 3, 30179 Hannover,

(2)

ZTI Merger Subsidiary III Inc., a corporation with limited liability, organized under the laws of Delaware, registered under registration number 3056631 and having its business address in 7195 Oakport Street, Oakland, California 94621 and its registered office in 15 East North St., City of Dover, County of Kent, Delaware, USA,

(A)

The Seller is the sole shareholder of Keymile GmbH, a limited liability company (Gesellschaft mit beschränkter Haftung) organized under the laws of Germany, registered with the commercial register (Handelsregister) of the local court (Amtsgericht) of Hanover under registration number HRB 208693 and having its registered office in Wohlenbergstraβe 3, 30179 Hannover, Germany (the “Company”).

(B)

The Company is the holding company of the Group Entities. The Group is a leading manufacturer of data transmission systems for telecommunication network operators and engaged in the business of broadband systems. The Group's business, taken as a whole, as presently conducted, disregarding the transactions contemplated by this Agreement (such transactions contemplated in this Agreement collectively the “Transaction”) or any intentions of the Purchaser, shall hereinafter be referred to as the “Business”.

(C)

The Seller wishes to sell to the Purchaser, and the Purchaser wishes to purchase from the Seller, all of the shares in the Company owned by the Seller.

(D)

The Purchaser, the Seller and DASAN Zhone Solutions, Inc. simultaneously enter into the guarantee which is included in Part B of this deed, governed by the laws of the State of New York, USA, duly executed on behalf of the Purchaser and the Purchaser's ultimate parent company DASAN Zhone Solutions Inc., a corporation with limited liability, organized under the laws of Delaware, registered under registration number 2742244 (the “NY Law Guarantee”), securing the Purchaser's obligations to pay the Purchase Price (for the avoidance of doubt, only after the Closing Conditions have either been duly fulfilled or duly waived pursuant to Section 6.2 (including the AWV Clearance)), and the Company's obligations under the Working Capital Facility.

(E)

The Parties confirm that they have freely discussed and negotiated all and any clauses of this Agreement.

1.

DEFINITIONS

(i)

in the case of any Tax based upon, or measured by, income, sales, transfers, gross receipts, wages, capital expenditures, expenses or any similar Tax base, the amount of Taxes to be allocated to the Pre-Effective Date Tax Period shall be equal to the amount that would be payable if the taxable period ended on the Tax Effective Date; and

(ii)

in the case of any other Tax the amount of Taxes to be allocated to the Pre­ Effective Date Tax Period shall be equal to the amount of Taxes for the entire taxable period multiplied by a fraction the numerator of which is the number of days of the portion of the taxable period ending on the Tax Effective Date and the denominator of which is the number of days of the entire taxable period.

2.

CURRENT STATUS

2.1

The Company

2.2

The Group Entities

2.3

Profit and Loss Transfer Agreement

3.

SALE AND TRANSFER OF THE SOLD SHARES; RIGHT TO PROFITS

3.1

Sale and Purchase of the Sold Shares

3.2

Transfer of the Sold Shares

3.3

Economic Effect

3.3.1

Principle. The Sold Shares are sold to the Purchaser with economic effect as of 01 October 2018, 00:00 a.m. (CET) (the “Effective Date”), with all rights and obligations pertaining thereto, including the right to receive all profits for the Company's current fiscal year for the period commencing on the Effective Date. As a matter of clarification, any profits of the current fiscal year for the period prior to the Effective Date shall belong to the Seller. In particular, the Seller shall be entitled, to the extent legally permissible, to distribute any and all existing profits or reserves of the Company to the Seller relating to the period prior to the Effective Date, in particular by way of release and distribution (Auflösung und Ausschüttung) and/or withdrawal (Entnahme) of profit reserves (Gewinnrücklagen) and/or free capital reserves (freie Kapitalrücklagen) in accordance with Section 4.3.

3.3.2

Delayed Closing. The Parties have agreed on the Effective Date in accordance with Section 3.3.1 above in the expectation that Closing will occur no later than by 15 December 2018. Should Closing occur thereafter due to the Purchaser failing to file within three (3) Business Days after the Signing Date the filings necessary to obtain the AWV Clearance pursuant to Section 6.3.1, the Sold Shares shall be sold to the Purchaser with economic effect as of the Closing Date and the provisions of this Agreement shall

be construed accordingly, in particular (i) any references to the Effective Date shall be replaced by references to the Closing Date, (ii) the Seller's Covenant (as defined below) relating to Leakage (as defined below) under Section 10.1.4 below shall not apply and deemed never given, and (iii) the Seller shall be entitled to make more than one pre-profit transfer (Vorabgewinnabführung) with the provisions of Sections 4.3.2 et seqq. applying mutatis mutandis to these additional pre-profit transfer(s) (Vorabgewinnabführung(en)).

3.4

Consents

3.5

New Service Agreement with Lothar Schwemm

4.

PURCHASE PRICE FOR SOLD SHARES

4.1

Purchase Price for Sold Shares

4.1.1

Purchase Price. The purchase price for the Sold Shares (the “Purchase Price”) amounts to the fixed amount of EUR 10,250,000.00 (in words: Euro ten million two hundred and fifty thousand).

4.1.2

Payment of the Purchase Price. The Purchase Price shall be paid by or on behalf of the Purchaser in cash at Closing (as defined below) into the Seller's Account in accordance with Sections 5 and 8.2.l(a).

4.2

No Purchase Price Adjustments

4.3

Distribution

4.3.1

Distribution. Until the Closing Date, the Seller is entitled to distribute any cash in the Company at the Effective Date (each a “Distribution” and collectively the “Distributions”) by way of (i) the payment by the Company to the Seller of the Profit Transfer Claim for the period ended 31 December 2017 (as mentioned in 4.4.2) (ii) the release and distribution (Aufösung und Ausschüttung) and/or withdrawal (Entnahme) of profit reserves (Gewinnrücklagen) in the meaning of Section 272 (3) HGB and/or free reserves freie Kapitalrücklagen) in the meaning of Section 272 (2) No. 4 HGB. Any such Distribution is to be made in cash to the Seller safe for an amount of EUR 4,000,000.00 (in words: Euro four million) (the “WCF Amount”), it being understood that such amount shall be the aggregate amount of cash in all Group Entities at the Effective Date, the Seller's claim for which shall be settled on the Closing Date by way of set-off (Aüfrechnung) against the Company's claim for payout of the Working Capital Facility (as defined below) in accordance with Section 8.2.l(n) below. If and to the extent the aggregate amount of the Distributions (including, for the avoidance of doubt, the WCF Amount and the payment of the Profit Transfer Claim Liability for December 2017 with an amount of EUR 3.324.446) does not exceed an amount of EUR 15,713,222.00 (including the Profit Transfer Claim December 2017 and free reserves in an amount of EUR 12.388.776) (the “Aggregate Reserves Amount”) as provided by the Company in Exhibit 4.3.1, such Distributions shall not be challenged and/or claimed back under any circumstances by the Purchaser or the Company (provided that the WCF Amount stays in the Group as per the above provisions in Section 4.3.1).

4.3.2

Pre-Profit Transfer. If and to the extent any cash in the Company at the Effective Date exceeds the Aggregate Reserves Amount, the Seller may effect a Distribution in addition by making a pre-profit transfer (Vorabgewinnabführung) (the “Pre-Profit Transfer”) in (partial) fulfillment of the expected Profit Transfer Claim (as defined below) on the basis of unaudited individual interim accounts of the Company as of 30 September 2018 to be prepared by the management of the Company in accordance with the principles set out in Section 4.4.4 below (the “Interim Accounts”). Subject to any limitations under Section 4.3.1 above, in particular the non-challenge obligation, Sections 4.4.4 through 4.4.10 shall

apply with regard to the Interim Accounts accordingly with the difference (i) that the Seller shall procure the set-up of the Interim Accounts and delivery to the Purchaser without undue delay, at the latest by the Closing Date, (ii) the Purchaser has the right to review and object, and (iii) the review period shall end by forty-five (45) calendar days from the Closing Date. For the avoidance of doubt, (i) any Pre-Profit Transfer may occur on the basis of the Interim Accounts as originally prepared by the management of the Company and (ii) any distribution in accordance with Section 4.3.1 may also be made after the Interim Accounts were prepared (but, for clarification, before Closing).

4.3.3

If and to the extent the amount of the Pre-Profit Transfer (the “Pre-Profit Transfer Amount”), if any, exceeds the amount of the Profit Transfer Claim that relates to the 2018 profits until the Effective Date (the “Pre ED Profit Transfer Claim Amount”) as finally determined in accordance with Section 4.4.4 below (together with the Post ED Profit Transfer Claim Amount the “Profit Transfer Claim Amount”), the Seller shall repay the excess amount, but in no event more than the Pre-Profit Transfer Amount, to the Company within fifteen (15) Business Days after final determination of the Profit Transfer Claim Amount. Subject to Section 4.3.4 below, if and to the extent the Pre-Profit Transfer Amount falls short of the Pre ED Profit Transfer Claim Amount, the Seller assigns (tritt ab) the exceeding portion of the Pre ED Profit Transfer Claim to the Purchaser, who accepts such assignment (Abtretung). The Pre ED Profit Transfer Claim Amount shall be set out in the Interim Accounts.

4.3.4

Post-Closing Payment. If and to the extent (i) the amount of any cash in the Company on the Effective Date exceeds the aggregate of the Aggregate Reserves Amount and the Pre­ Profit Transfer Amount and (ii) the Pre ED Profit Transfer Claim Amount exceeds the Pre-Profit Transfer Amount, then the Purchaser shall cause the Company to pay such further cash to the Seller within the time period in Section 4.4.2 (the “Post-Closing Payment”), but in no event more than until the sum of the Pre-Profit Transfer Amount and the amount of the Post-Closing Payment equals the Pre ED Profit Transfer Claim Amount. This shall also apply if the Pre-Profit Transfer Amount is zero.

4.3.5

Upstreaming of Cash. To allow that also cash available at the level of the Subsidiaries can be distributed to the Seller by Distributions, such cash may be upstreamed to the Company prior to the Effective Date to the extent legally permissible, including by (accelerated) payment of intercompany receivables of the Company against the relevant Subsidiary or upstream loans.

4.3.6

Permitted Leakage. For the avoidance of doubt, any Distribution or Payment may also occur after the Effective Date and shall be considered as Permitted Leakage (as defined below); in any case only if made in accordance with Sections 4.3.1 through 4.3.5.

4.4

PLTA

4.4.1

Termination of the PLTA. The Seller and the Purchaser acknowledge, agree and shall procure that the PLTA shall be terminated with effect as of Closing by extraordinary notice of termination for good cause based on the sale and transfer of the Sold Shares to the Purchaser.

4.4.2

Proper Consummation and Execution of PLTA until 31 December 2017. The Seller and the Purchaser acknowledge, agree and shall procure that for tax purposes the PLTA will be duly consummated and executed (durchgeführt) for the fiscal year ending on 31 December 2017, and that in particular (i) any amounts payable by the Seller in relation to its loss compensation obligation (the ,,Loss Compensation Claim”), and (ii) any amounts payable by the Company in relation to its profit transfer obligation
(the ,,Profit Transfer Claim”), are duly paid. If and to the extent any amounts that have been paid under the PLTA related to profits and losses (including interest) for the fiscal years ending on or before
31 December 2017 are increased or decreased (e.g. as a result of a tax audit), the Seller and the Purchaser shall, and shall procure that the Company will, duly consummate such increased or decreased payments between the Seller and the Company under the PLTA. Payments shall be compensated (i) by the Purchaser to the Seller in case of additional payments from the Seller to the Company and (ii) by the Seller to the Purchaser in case of additional payments from the Company to the Seller.

4.4.3

Proper Consummation and Execution of PLTA from 1 January 2018 until Closing. In order to determine Seller's Profit Transfer Claim or the Company's Loss Compensation Claim, if any, for the portion of the fiscal year ending with the termination of the PLTA, the Purchaser shall cause the Company to prepare as soon as reasonably practicable after the termination of the PLTA, at the latest within ninety (90) calendar days following the Closing Date, interim individual financial statements of the Company for the portion of the fiscal year ending with the termination of the PLTA (i.e. as of the Closing Date) (the ,,PLTA Financial Statements”). For the avoidance of doubt, the PLTA Financial Statements shall include an updated overview of the two pension actuarial report (relating to the Company and Keymile Networks GmbH) as referred to in Exhibit 9.13.6.

4.4.4

Preparation of PLTA Financial Statements. The PLTA Financial Statements shall be prepared in accordance with German GAAP and consistent with past practice. Any rights provided by applicable

German GAAP on whether to include and how to value items in the PLTA Financial Statements (Bilanzierungs- und Bewertungswahlrechte) shall be exercised on a basis consistent with past practice of the Company.

4.4.5

Review by Seller. The Purchaser shall procure that the Company submits the PLTA Financial Statements within the period set forth in Section 4.4.3 to the Seller for review and shall procure that the Group Entities make available to the Seller and its advisers all documents and other data reasonably required by them to review the PLTA Financial Statements, it being understood that the PLTA Financial Statements do not need to be audited.

4.4.6

Objections of the Seller. Any objections of the Seller against the PLTA Financial Statements must be stated within 60 Business Days of receipt of the PLTA Financial Statements and the documents and other data reasonably required pursuant to Section 4.4.3 by providing the Purchaser with (i) a written statement of objections, stating the grounds for the objections (the “Statement of Objections”); and (ii) a revised version of the PLTA Financial Statements (the ,,Revised PLTA Financial Statements”) taking such objections into account. If and to the extent that the Seller does not state its objections in accordance with the requirements of this Section 4.4.6, the PLTA Financial Statements shall be final and binding.

4.4.7

Disputes. In case of any duly submitted objections of the Seller to the PLTA Financial Statements, the Seller and the Purchaser shall attempt in good faith to resolve such objections. If the Parties cannot resolve such objections within thirty (30) Business Days of receipt by the Purchaser of the Seller's written statement of objections and the Revised PLTA Financial Statements, either Party may present the matter to a neutral auditor from an auditing firm of international standing to be jointly instructed by the Parties (the “Neutral Auditor”). If the Parties cannot agree on the Neutral Auditor within ten (10) Business Days of either Party's written request for such instruction, the Neutral Auditor shall at the request of either Party be appointed by the German Institute of Chartered Accountants (Institut der Wirtschaftsprüfer in Deutschland e. V.) after consideration of the proposals and comments by the Parties. The Parties shall jointly instruct the Neutral Auditor to decide the issues in dispute in accordance with the provisions of this Agreement, including in particular Exhibit 4.4.4. Unless jointly instructed otherwise by the Parties, the Neutral Auditor shall limit its decisions to the issues in dispute and its decisions shall fall in between the positions taken by the Seller and the Purchaser, it being understood that the Neutral Auditor shall be entitled to amend the undisputed parts of the PLTA Financial Statements in accordance with its decisions to the issues in dispute. To the extent necessary, the Neutral Auditor shall also be entitled to decide on the interpretation of this Agreement. The Neutral Auditor shall act as an expert (Schiedsgutachter) and not as an arbitrator.

4.4.8

Procedure. The Parties shall make available to the Neutral Auditor the PLTA Financial Statements, the Statement of Objections, the Revised PLTA Financial Statements and all other documents and other data reasonably required by the Neutral Auditor to make the required decisions and determination. The Neutral Auditor shall immediately submit copies of all documents and other data made available by a Party to the respective other Party. Before deciding on the issues put to it by the Parties, the Neutral Auditor shall grant the Parties the opportunity to present their respective positions, which shall include the opportunity of at least one oral hearing in the presence of both Parties and their professional advisers. The Parties shall instruct the Neutral Auditor to use its best efforts to deliver its written opinion with reasons for the decisions as soon as reasonably practical, but not later than within sixty (60) days of the issues in dispute having been referred to the Neutral Auditor. Except for manifest error or intentional fault, the Neutral Auditor's decisions and the PLTA Financial Statements as determined by the Neutral Auditor shall be final and binding upon the Parties. The Purchaser shall ensure that the PLTA Financial Statements are adopted by the Company as soon as reasonably practicable after the PLTA Financial Statements are final and binding upon the Parties.

4.4.9

Binding Effect of PLTA Financial Statements. If and to the extent any amounts that have been paid under the PLTA Financial Statements related to profits and losses (including interest) ending on the Closing Date are increased or decreased, Section 4.4.2 Sentence 2 shall apply mutatis mutandis.

4.4.10

Costs. The costs for the preparation of the PLTA Financial Statements shall be borne by the Company. The costs of the Neutral Auditor shall be borne by Seller and Purchaser pro-rata to the amounts by which the profits and losses as determined by the Parties in their respective (Revised) PLTA Financial Statements deviates from the profits and losses set out in the PLTA Financial Statements as determined by the Neutral Auditor.

4.5

VAT

5.

RULES FOR PAYMENT

5.1

Modes of Payment

5.2

Accounts

5.2.1

Seller’s Account. All payments owed by the Purchaser to the Seller under or in connection with this Agreement shall be paid in Euros to the bank account set forth in Exhibit 5.2.1 or any other bank account in the European Union notified by the Seller in writing at least five (5) Business Days prior to the due date of such payment (the “Seller's Account”). Any amounts payable by the Purchaser under or in connection with this Agreement are to be made free and clear of withholding taxes, if any. If and to the extent payments by the Purchaser are subject to withholding taxes, the respective amounts shall be grossed up for such withholding taxes.

5.2.2

Purchaser's Account. All payments owed by the Seller to the Purchaser under or in connection with this Agreement shall be paid in Euros to the bank account set forth in Exhibit 5.2.2 or any other bank account in the European Union notified by the Purchaser in writing at least five (5) Business Days prior to the due date of such payment (the “Purchaser's Account”).

5.3

No Set-Off; No Right of Retention.

5.4

Default Interest; Calculation of Interest

5.4.1

Default Interest. Any failure by a Party to fulfill its payment obligations when they fall due under this Agreement towards the respective other Party shall result in an immediate default (Verzug), without any reminder (Mahnung) being required. Without prejudice to any other contractual or statutory rights, in order to compensate the Party entitled to receive the payment for the damages incurred in case of default, the respective amount due for payment shall bear default interest (Verzugszins) from but excluding the respective due date until and including the date of actual receipt by the Party entitled to receive such payment in accordance with this Agreement at an interest rate of ten percent (10%) per annum (the “Default Interest”).

5.4.2

Interest Calculation. Interest for any amounts due under or in connection with this Agreement shall be calculated on the basis of actual days elapsed and a calendar year with 360 days.

6.

CLOSING CONDITIONS

6.1

Closing Conditions

6.1.1

AWV Clearance. The German Federal Ministry for Economic Affairs and Energy has issued a certificate of non-objection (Unbedenklichkeitsbescheinigung) pursuant to Sec. 58 of the German Foreign Trade Ordinance (Auβenwirtschaftsverordnung - AWV), or such certificate is deemed to have been issued in accordance with the provisions of AWV, or the German Federal Ministry for Economic Affairs and Energy decides not to order an investigation of the purchase under AWV, or the German Federal Ministry for Economic Affairs and Energy does not issue a prohibitive order or an order with requirements to safeguard the public order and safety of the Federal Republic of Germany.

6.1.2

No Material Adverse Effect. No Material Adverse Effect has occurred between Signing and the earlier of Closing or 15 December 2018.

6.1.3

Consent of ABB. The Seller has delivered, directly or indirectly, to the Purchaser a copy of ABB's written confirmation that it will not terminate the IP Back License and Usufruct Agreement between ABB and the Company in accordance with Section 3.15 of the ABB SPA in light of the Transaction (it being understood that (a) this Closing Condition is based on the information provided that the mission critical systems business unit of the Purchaser, DASAN Zhone Solutions Inc. and their respective Affiliates are projected to be no more than approximately EUR 4,000,000 of revenues globally for the full year 2018, and (b) such Closing Condition will fall away and be deemed to have never been agreed if such information was not accurate or not complete).

6.1.4

Pension Commitments. By no later than 15 November 2018 (thereby understood that Seller tries to deliver until 31 October, 2018), the Seller has delivered to the Purchaser an updated version of the two pension actuarial reports (relating to the Company and Keymile Networks GmbH) as referred to in Exhibit 9.13.6 updated as of the Effective Date and on the basis of US GAAP principles.

6.1.5

Cooperation regarding financing. The Seller or the Company, independently or jointly, have cooperated in good faith to any reasonable written request from the Purchaser and its advisors regarding a potential financing in connection with the Transaction within 48 hours after the receipt of such request (thereby understood that, depending on the request, a full answer might need more than forty-eight hours).

6.1.6

Cooperation regarding preparation of historical standalone financial statements. The Seller or the Company, independently or jointly, have cooperated in good faith to any reasonable written request from the Purchaser and its advisors regarding the preparation of (i) historical standalone financials for the Company (excluding the business as sold to ABB, excluding entities being liquidated or currently in liquidation) for the full fiscal reporting years 2016 and 2017, and for the 9 months period until 30 September 2018, and (ii) historical financial statements for the Company for the fiscal years 2016 and 2017 that are converted from IFRS basis financial reporting to U.S. GAAP basis financial reporting and other financial reporting obligations required by U.S. financial regulatory bodies, within 48 hours after the receipt of such request (thereby understood that, depending on the request, a full answer might need more than forty-eight hours).

6.1.7

Tax Audits. The currently ongoing tax audits of the Company for the fiscal years 2012 to 2015 (including) have been finalized by way of an issued and received tax audit report or related statement by the tax auditor that no tax audit report will be issued for reason that no changes to the audited tax returns will be made. If such tax audit has not been finalized as described before the Seller shall deliver a written statement, executed by the Seller and the Company, providing the Purchaser with the status of the audit.

6.1.8

Filing of tax returns. The corporate income tax, trade tax and VAT returns (Körper- schaftsteuer-, Gewerbesteuer- und Umsatzsteuererklärung) of the Company and Keymile Networks GmbH for the fiscal year 2017 have been filed with the competent Tax Au­ thority. For the avoidance of doubt, such returns shall include, but not be limited to, all such Taxes, whether direct and indirect, from any transaction in relation to the ABB SPA.

6.2

Fulfillment or Lapse of Closing Conditions; Waiver

6.2.1

Notification. The Parties shall keep each other informed of the status of satisfaction of the Closing Conditions and shall notify each other without undue delay (unverzüglich) in writing as soon as a Closing Condition has been satisfied or has permanently lapsed (endgültig ausgefallen).

6.2.2

Waiver of Closing Conditions. Any Closing Conditions may be waived, in full or in part, at any time (including, for the avoidance of doubt, following the definitive nonsatisfaction (Ausfall) of the respective Closing Condition(s)) by mutual written agreement of the Seller and the Purchaser in case of the Closing Conditions set out in Sections 6.1.1 and by written declaration of the Purchaser in case of the Closing Conditions set out in Sections 6.1.2 through 6.1.8. The effect of a waiver of a Closing Condition shall be limited to eliminating the need that the respective Closing Condition be satisfied and, unless otherwise agreed, shall not limit or prejudice any claims that a waiving Party may have with respect to any circumstances relating to such Closing Condition not having been satisfied.

6.2.3

Material Adverse Effect. In case a Material Adverse Effect occurs prior to Closing, the Seller shall inform the Purchaser in writing together with a reasonable detailed explanation (including documents evidencing such explanation). The Purchaser shall inform the Seller within seven (7) Business Days from the receipt of such notice whether it waives the closing condition in Section 6.1.2. In case the Purchaser is not willing to waive such right, either Party may terminate this Agreement (zurücktreten) by giving written notice thereof to the other Party. In case of such rescission, Section 6.6.2 (Consequences of Rescission) shall apply accordingly.

6.3

Responsibility for Satisfaction of Closing Conditions relating to Clearances

6.3.1

Filing Obligation. The Purchaser shall ensure that (i) any filings necessary to obtain the AWV Clearance and (ii) any other filings with, or notifications to, any Governmental Authority required in order to lawfully consummate the transactions contemplated hereunder (collectively the “Clearances”) are prepared and made within three (3) Business Days after the Signing Date.

6.3.2

Cooperation Rights. Any filings and submissions made by the Purchaser to obtain the Clearances (collectively the “Filings”) shall require the prior written consent of the Seller which shall not be withheld unreasonably. The Filings shall be made by the Purchaser also on behalf of the Seller (unless otherwise required by law, or otherwise requested by the Seller, or unless applicable law requires any filings to be made by the Seller himself), and the Purchaser may withdraw (zurücknehmen) any filings only with the Seller's prior written consent which shall not be withheld unreasonably.

6.3.3

Cooperation. Subject to appropriate measures being taken to safeguard (including from the Purchaser) the confidentiality of commercially sensitive information and business secrets (which may be provided on a counsel-to-counsel basis only), the Seller undertakes to cooperate with the Purchaser for purposes of the Filings by providing (to the extent available when applying reasonable efforts) the information concerning the Group Entities as may be reasonably requested by the competent Governmental Authorities.

6.3.4

Seller's Participation Rights. The Purchaser shall give the Seller reasonable advance notice of any notification, submission or other communication, including the Filings, which it proposes to make or submit to any Governmental Authority in connection with obtaining the Clearances and provide the Seller with copies of such draft notification, submission or correspondence and any supporting documentation or information reasonably requested by the Seller. The Purchaser undertakes to take any comments of the Seller in relation to any such notification, submission or communication into due consideration. The Purchaser further agrees to keep the Seller fully informed as to the progress of any notification, including the Filings, made in order to obtain the Clearances and to provide the Seller with (1) a copy of any respective written communication received from any Governmental Authority and (2) written summaries of any respective oral communication with any Governmental Authority.

6.4

Cooperation with regard to Financing Commitment and U.S. embargo laws

6.4.1

The Seller undertakes to cooperate and to procure that the Company cooperates with the Purchaser with regard to the financing commitment to be obtained by the Purchaser prior to Closing, including but not limited to the cooperation with regard to the preparation of any information and/or collateral to be provided to the financing bank in connection with the financing commitment.

6.4.2

The Seller shall and shall procure that the Company does cooperate regarding all reasonable requests for information by the Purchaser with regard to the financing commitment.

6.4.3

Through the Closing Date, the Seller and Purchaser shall work together in good faith, with the assistance of the Company to be arranged by the Seller, to assess any non­compliance of the Group Entities' business with U.S. embargo laws and regulations, to the extent applicable to non-U.S. subsidiaries of a U.S. parent and, as far as Iran is concerned, to bring the Group Entities' business into compliance with such laws and regulations prior to the Closing Date, as the Purchaser may reasonably request.

6.5

Obligations, Conditions and Commitments

6.5.1

Responsibility. In order to enable the Parties to consummate the transactions as contemplated under this Agreement in a timely manner, the Purchaser shall undertake and shall cause (steht dafür ein) its Affiliates to take any and all steps reasonable to obtain the Clearances at the earliest possible date and to avoid or eliminate each and every procedural impediment under any antitrust, competition or trade regulation law asserted by any Governmental Authority in writing. In particular, the Purchaser shall offer, and undertake that its Affiliates offer, upon request of the Seller, to the Governmental Authorities the acceptance of any obligations or conditions (Auflagen oder Bedingungen) imposed by any Governmental Authority, the compliance therewith and the making and satisfying of any commitments (Zusagen) as promptly as practicable, to the extent these are reasonable and do not materially adversely impact the Purchaser's business or the Group's Business as presently conducted, and the entrance into such other arrangements, as are reasonably necessary or desirable to avoid that the consummation of the transactions contemplated under this Agreement is materially delayed or prohibited.

6.5.2

No Interference. The Purchaser undertakes not to, and shall cause (dafür einstehen) its Affiliates not to, take any action, enter into any transaction, or any agreement to effect any transaction (including any merger or acquisition), that might (i) reasonably be expected to make it more difficult, or to increase the time required, to obtain any of the Clearances, or (ii) otherwise prevent, delay or interfere with the Closing.

6.5.3

Non-Satisfaction of Clearances. The Purchaser shall inform the Seller in writing without undue delay (unverzüglich) if it becomes reasonably likely that any of the Clearances will not be satisfied or will not be satisfied in a timely manner or that obligations or conditions (Auflagen oder Bedingungen) will or are likely to be imposed by a Governmental Authority. Subject to the limitations set forth in Section 6.5.1, if the Closing is prohibited by any Governmental Authority or obligations or conditions (Auflagen oder Bedingungen) are imposed by any Governmental Authority, upon request of the Seller, the Purchaser shall, at the Purchaser's cost and indemnifying the Seller against any costs and expenses incurred by the Seller in connection therewith, contest such decision (including by way of litigation) and use all other reasonable efforts to ensure that the Closing may be consummated as contemplated by this Agreement and as timely as reasonably practicable.

6.5.4

No Adjustment of the Purchase Price. For the avoidance of doubt, the Purchaser may not request any adjustment of the Purchase Price or any portion thereof or any other amendment to this Agreement as a result of (i) any action taken by the Purchaser pursuant to this Section 6.5 or (ii) any decision by a Governmental Authority prohibiting any transaction contemplated hereby in whole or in part.

6.6

Consequences of Non-Satisfaction of Closing Conditions

6.6.1

Termination Rights. In the event that the Closing Conditions are not all satisfied or waived in accordance with this Agreement by 31 December 2018 or any later date agreed in writing between the Parties (the “Longstop Date”),

(a)

the Seller may terminate this Agreement (zurüktreten) by giving written notice thereof to the Purchaser, unless the non-satisfaction of the relevant Closing Condition(s) was caused by a breach of the Seller's obligations provided for hereunder; and

(b)

the Purchaser may terminate this Agreement (zurücktreten) by giving written notice thereof to the Seller, unless the non-satisfaction of the relevant Closing Condition(s) was caused by a breach of the Purchaser's obligations provided for hereunder,

6.6.2

Consequences of Rescission. In the event of a rescission from this Agreement (Rücktritt) in accordance with, and except as otherwise provided in, this Section 6.6.2 the Parties shall have no claims and liability against each other except that

(a)

Section 16 of this Agreement shall survive and remain in full force and effect also after such termination (Rücktritt), and

(b)

the obligations and liabilities of the parties under the Confidentiality Agreement shall revive (wiederaufleben) and remain in full force and effect for a period of three (3) years after the date of such rescission (Rücktritt).

7.

[INTENTIONALLY LEFT BLANK]

8.

CLOSING DATE; CLOSING; CLOSING ACTIONS

8.1

Place and Time of Closing

8.2

Closing

8.2.1

Closing Actions. On the Targeted Closing Date, the Seller and the Purchaser (as the case may be) shall take, or cause to be taken, concurrently (Zug um Zug) the following actions (collectively the “Closing Actions” and each a “Closing Action” and the Closing Actions lit. (a) to lit. (j) below the “Closing Actions Part I”):

(a)

The Purchaser shall pay the Purchase Price to the Seller's Account in accordance with Section 5.

(b)

The Seller shall present to the Purchaser evidence of the removal, effective prior to or as of the Targeted Closing Date, of those members of the management, advisory board, or any other corporate body of the Group Entities as listed in Exhibit 8.2.l(b)­1 (the individuals listed on this Exhibit collectively the “Seller's Board Members”) through delivery to the Purchaser of one or several shareholder's resolutions (such shareholder's resolutions collectively the “Removal Resolutions”) substantially in the form set forth in Exhibit 8.2.l(b)-2 removing the Seller's Board Members.

(c)

The Seller shall deliver to the Purchaser shareholders' resolutions of the relevant Group Entities substantially in the form set forth in Exhibit 8.2.l(c) granting each of the Seller's Board Members discharge (Entlastung) for the time of their office (if and to the extent such discharge (Entlastung) has not been granted previously). For the avoidance of doubt, such shareholders' resolution granting discharge (Entlastung) may be included in the Removal Resolutions.

(d)

The Seller shall deliver to the Company an extraordinary notice of termination for good cause by which the PLTA shall be terminated with effect as of Closing.

(e)

The Seller and the Purchaser shall procure that the Company provides the Seller with its written confirmation of receipt and acknowledgement regarding the termination notice under Section 8.2.l(d) above.

(f)

The Seller and the Purchaser shall procure that (i) the Company duly executes the commercial register application regarding the termination of the PLTA and (ii) the relevant Group Entity duly executes the commercial register application regarding the resignation or removal of any Seller's Board Members as set out in Section 8.2.1(b), each to the extent and in the form required under applicable law.

(g)

The Purchaser shall deliver a copy of the W&I Insurance policy to the Seller.

(h)

The Seller shall deliver a copy of the Sell-Side W&I Insurance policy to the Purchaser.

(i)

The Seller shall deliver to the Purchaser undertakings of its shareholders safeguarding the Seller's undertakings under Section 10.3 below substantially in the form as attached hereto as Exhibit 8.2.1 (i).

(j)

Seller shall deliver reasonable evidence to the Purchaser showing that all shares in Keymile Russia LLC have been effectively transferred to a third party outside the Group.

(k)

The Seller and the Purchaser shall confirm in a written document, to be jointly executed (in duplicate) substantially in the form attached as Exhibit 8.2.l(k) (the “Transfer of Ownership Confirmation”), (a) that all Closing Conditions have been duly satisfied or waived, and (b) that all Closing Actions Part I have been duly taken, occurred or waived. The legal effect of the Transfer of Ownership Confirmation shall be to serve as prima facie evidence that the transfer of the Sold Shares pursuant to Section 3.2 has been perfected and the Seller is no longer shareholder of the Company prior to having entered into the Working Capital Facility.

(1)

The Seller shall offer in writing to the Company to enter into a facilities agreement regarding a working capital facility in the WCF Amount substantially in the form as attached hereto as Exhibit 8.2.1(1) (the “Working Capital Facility”).

(m)

The Seller and the Purchaser shall procure that the Company accepts the Working Capital Facility in writing.

(n)

The Seller shall satisfy the Company's payout claim under the Working Capital Facility through delivery of a written declaration of set-off (Aufrechnung) with its claim for a corresponding Distribution as provided for in Section 4.3.1.

8.2.2

Waiver of Closing Actions. All Closing Actions may be waived, in full or in part, at any time by mutual written agreement of the Seller and the Purchaser. The Seller shall be entitled to unilaterally waive, in full or in part, the Closing Action set forth in Section 8.2.l(a) and 8.2.l(g) at any time by giving written notice to the Purchaser to such effect. The Purchaser shall be entitled to unilaterally waive, in full or in part, the Closing Action set forth in Section 8.2.l(h) at any time by giving written notice to the Purchaser to such effect. The effect of such waiver shall be limited to eliminating the need that the respective Closing Action is taken on the Closing Date and, unless otherwise agreed, shall not limit or prejudice any claims that a waiving Party may have with respect to any circumstances relating to such Closing Action not being taken pursuant to this Agreement.

8.2.3

Closing Confirmation. On the Closing Date, after all Closing Actions have been taken or occurred or have been waived, the Seller and the Purchaser shall confirm in a written document, to be jointly executed (in duplicate) substantially in the form attached as Exhibit 8.2.3 (the “Closing Confirmation”), (a) that all Closing Conditions have been duly satisfied or waived, and (b) that all Closing Actions have been duly taken, occurred or waived. The legal effect of the Closing Confirmation shall be to serve as prima facie evidence that all Closing Actions and all Closing Conditions have been satisfied or waived, and a copy of the Closing Confirmation and the originals of the commercial register applications executed under Section 8.2.l(f) shall be provided to the acting notary public (the “Notary”). However, the execution of the Closing Confirmation shall not limit or prejudice any rights of the Parties arising under or in connection with this Agreement or under applicable law. The Seller and the Purchaser hereby instruct the Notary, after having been provided with a copy of the Closing Confirmation, to promptly submit a new shareholders’ list of the Company reflecting the transfer of the Sold Shares to the Purchaser to the commercial register of the Company. The Seller and the Purchaser further instruct the Notary, after having been provided with the commercial register applications as set forth in Section 8.2.l(f), to promptly file such applications with the competent commercial registers.

8.3

Consequences of Non-Satisfaction of Closing Actions

8.3.1

Termination Rights. In the event that the Closing Actions are not all satisfied or waived in accordance with this Agreement latest on the fifth (5^th) Business Day after the Targeted Closing Date,

(a)

the Seller may terminate this Agreement (zurücktreten) by giving written notice thereof to the Purchaser, unless the non-satisfaction of the relevant Closing Action(s) was caused by a breach of the Seller’s obligations provided for hereunder; and •

(b)

the Purchaser may terminate this Agreement (zurücktreten) by giving written notice thereof to the Seller, unless the non-satisfaction of the relevant Closing Actions(s) was caused by a breach of the Purchaser’s obligations provided for hereunder,

8.3.2

Consequences of Termination. In the event of a termination of this Agreement (Rücktritt) in accordance with, and except as otherwise provided in this Section 8.3, the Parties shall have no claims and liability against each other except that

(a)

Section 16 of this Agreement shall survive and remain in full force and effect also after such termination (Rücktritt); and

(b)

the obligations and liabilities of the parties under the Confidentiality Agreement shall revive (wiederaufleben) and remain in full force and effect for a period of three (3) years after the date of such rescission (Rücktritt).

9.

SELLER'S REPRESENTATIONS AND WARRANTIES

9.1

General

9.1.1

Form and Date. Subject to the limitations (in particular the W&I Liability Cap (as defined below)), qualifications and disclosures (including, without limitations, in the Due Diligence Material, this Agreement and its Exhibits) set forth in this Agreement, the Seller hereby represents to the Purchaser in the form of an independent promise of guarantee (selbständiges Garantieversprechen) within the meaning of Section 311 BGB that, except as disclosed or deemed disclosed in accordance with Section 12.1.5(d) below, the statements in Sections 9.2 through 9.21 (collectively the “Seller’s Representations” and each a “Seller’s Representation”) are true and correct as of the Signing Date, unless it is specifically provided that a Seller's Representation is made as of a different or additional date or dates, in which case such Seller's Representation shall be correct as of such different or additional date or dates. The scope and content of each Seller's Representation as well as the Seller's liability arising thereunder shall be exclusively defined by the provisions of this Agreement (including, without limitation, the limitations on the Purchaser’s rights and remedies set forth in Section 11.1.3), which shall be an integral part of the Seller's Representations. The Seller and the Purchaser agree and explicitly confirm that none of the Seller's Representations shall be construed as a Seller’s guarantee within the meaning of Sections 443 and 444 BGB (Garantie für die Beschaffenheit der Sache).

9.1.2

Seller's Knowledge. For purposes of and in connection with this Agreement, “Seller’s Knowledge” means the actual knowledge (positive Kenntnis) of Peter Schaberger, Bernd Starrock and Lothar Schwemm as at the Signing Date, including the deemed knowledge these persons should have after using reasonable efforts to make due inquiries, with the members of the management boards of the Group Entities and the functional heads of the various business units of the Group Entities as listed in Exhibit 9.1.2 in relation to the Seller’s Representations.

9.1.3

W&I Insurance. The Parties hereby agree that in case the Purchaser has not entered into a W&I insurance policy to provide W&I Insurance (as defined below) until or on the Closing Date generally covering the risks of a breach of Seller’s Representations under this Agreement, Seller's Representations shall be limited to these in Sections 9.2 through 9.5 and any other Seller's Representation shall be deemed never given and cannot give cause to any Seller’s liability hereunder. On the basis of the draft W&I insurance policy attached hereto as Exhibit 9.1.3 for evidentiary purposes it is likely that the final W&I insurance policy might have certain limitations. In the light of this, the Parties agree and acknowledge that carve-outs in relation to the Seller's Representations in the W&I Insurance policy shall not result in the Seller's Representations being limited to Sections 9.2 through 9.5 and any other Seller's Representation being deemed never given, but shall rather result in the Seller's Representations under this Agreement being limited to the scope of the Seller's Representations actually insured, whereas any other Seller's Representations or parts thereof not covered by the W&I Insurance policy (except for Seller's Representations set out under Sections 9.2 through 9.5) shall be deemed never been given and cannot give cause to any Seller’s liability hereunder. This shall also apply in case of any breach against
Section 14.1.6.

9.2

Status of the Seller

9.2.1

Corporate Status. As of the Signing Date and as of the Closing Date, the Seller is a limited liability company duly incorporated and validly existing under the laws of Germany.

9.2.2

Due Authorization. As of the Signing Date and as of the Closing Date the Seller has obtained all required corporate approvals for the execution of this Agreement and the consummation of the transactions contemplated hereunder.

9.2.3

No Insolvency. No insolvency proceedings (Insolvenzverfahren) are being applied for, are pending or have been rejected on account of lack of assets in relation to the Seller. The Seller is neither unable to pay its debts (zahlungsunfähig) nor over-indebted (überschuldet).

9.2.4

No Violation of Laws or Orders. Subject to the Clearances being obtained, (a) the Seller requires no approval or consent or waiver from any Governmental Authority to enter into this Agreement and to consummate the transactions contemplated hereunder, (b) the execution and consummation of this Agreement by the Seller and the performance of the transactions contemplated hereunder does not violate any judicial or governmental order (gerichtliche oder behördliche Verfügung) by which the Seller is bound, and (c) to the Seller’s Knowledge, there are no proceedings or investigations pending or threatened against the Seller which seek to prevent or materially delay the consummation of the transactions contemplated under this Agreement.

9.2.5

Binding Agreement. As of the Signing Date and as of the Closing Date subject to the Clearances being obtained, this Agreement and all other agreements executed or to be executed in connection therewith have been duly executed by or on behalf of the Seller and constitute binding obligations of the Seller, enforceable against the Seller in accordance with their respective terms and conditions.

9.3

Title to Sold Shares

9.3.1

Valid Issuance. As of the Signing Date and as of the Closing Date, (a) the Sold Shares are duly authorized, validly issued and the contributions thereon (Einlagen) are fully paid up and (b) there are no obligations to make further contributions (keine Nachschusspflichten) on the Sold Shares.

9.3.2

Ownership of Sold Shares; No Rights of Third Parties. As of the Signing Date and as of the Closing Date, (a) the Seller owns the Sold Shares, free and clear of any encumbrances (dingliche Belastungen) and pending assignments and (b) there are no preemptive rights, rights of first refusal, options or other rights of any third party to purchase or acquire the Sold Shares.

9.3.3

Entire Share Capital. As of the Signing Date and as of the Closing Date, (a) the Sold Shares represent all of the issued and outstanding shares in the Company and (b) there are no agreements or commitments, providing for the issuance of additional shares in the Company.

9.4

Status of the Group Entities

9.4.1

Corporate Status. As of the Signing Date and as of the Closing Date, the statements in Section 2.1 and Section 2.2 above are correct. As of the Signing Date and as of the Closing Date, each Group Entity is duly established and validly existing under the laws of its jurisdiction of incorporation or formation.

9.4.2

No Insolvency. Except as set forth in Exhibit 9.4.2, no insolvency proceedings (Insolvenzverfahren) are being applied for, are pending or have been rejected on account of lack of assets in relation to any Group Entity and none of the Group Entities is unable to pay its debts (zahlungsunfähig) or is over-indebted (überschuldet). No arrangement or compromise has been made by any Group Entity with its creditors. There are no circumstances which would justify the institution of insolvency proceedings or a proceeding with similar effect with regard to the Group Entities.

9.5

Subsidiary Interests

9.5.1

Valid Issuance. As of the Signing Date and as of the Closing Date, (a) the Subsidiary Interests are duly authorized, validly issued and the contributions thereon (Einlagen) are fully paid up and (b) there are no obligations to make further contributions (keine Nachschusspflichten) on the Subsidiary Interests.

9.5.2

Ownership of Subsidiary Interests, No Rights of Third Parties. As of the Signing Date and as of the Closing Date, the Subsidiary Interests (a) are owned as set forth in Exhibit 9.5.2, (b) are free and clear

of any encumbrances (dingliche Belastungen) and pending assignments and (c) there are no preemptive rights, rights of first refusal, options or other rights of any third party to purchase or acquire any of the Subsidiary Interests. No Group Entity is the legal or beneficial owner of, or has agreed to acquire, any shares, securities or other interests in any company (other than the Subsidiary Interest), is or has agreed to become a member of any partnership or other unincorporated association, joint venture or consortium (other than recognised trade associations), is a party to any profit-sharing arrangement (other than the PLTA), or is a party to or the subject of any shareholders' agreement.

9.5.3

Entire Share Capital. As of the Signing Date and as of the Closing Date, the Subsidiary Interests represent all of the issued and outstanding shares in the Subsidiaries and there are no agreements or commitments, providing for the issuance of additional shares or equity interests in the respective Subsidiary.

9.6

Financial Statements

9.7

Financial Records

9.8

Conduct of Business

9.8.1

no resolution of the shareholders of any Group Entity has been passed;

9.8.2

the Business has been carried on in the ordinary course of business without any material disruption or alternation in its nature, scope or manner, to maintain the same as a going concern;

9.8.3

no Group Entity has acquired or disposed of a business as a going concern, or agreed to do so;

9.8.4

no Group Entity has acquired or disposed of any fixed assets / assets with a value in excess of EUR 30,000, or agreed to do so;

9.8.5

no Group Entity has incurred any capital expenditure in the excess of EUR 30,000 or agreed to do so;

9.8.6

no Group Entity has changed its policies or procedures in relation to the collection of trade receivables or the payment of trade payables or agreed to do so;

9.8.7

no debts with a value in excess of EUR 15,000 owed to any Group Entity have been released, deferred, discounted, written off or have proved to any extent irrevocable; and

9.8.8

no Group Entity has assumed or incurred any liability, obligation or expense (whether actual or contingent) which is likely to exceed EUR 15,000 or agreed to do so, other than as a result of trading activities in the ordinary course of business;

9.8.9

no Group Entity has borrowed from a third party, raised any money or taken any financial facilities (including any kind of financing from other institutions or non-bank financing, factoring or private loans)

or agreed to do so nor has any Group Entity repaid any borrowing or indebtness before their stated maturity date or agreed to do so other than in the ordinary course of business; and

9.8.10

no litigation has been settled, commenced or threatened.

9.9

Grant and State Aid

9.10

Real Property

9.10.1

No Group Entity does own any real property.

9.10.2

Exhibit 9.10.2 lists completely and accurately all real property leased, occupied or used by a Group Entity. To the Seller's Knowledge, the underlying lease agreements are valid, in full force and effect and the rents and other monies due and payable under these leases have been paid in full and on time.

9.11

Material Agreements

9.11.1

To the Seller's Knowledge, except as concluded between any Group Entities and except as disclosed in the Due Diligence Material, Exhibit 9.11.1 contains a list of all agreements which have not yet been fully performed by both parties (nicht vollständig erfüllte Verträge) and which were expressly or implicitly concluded by a Group Entity, whether in writing, oral or in another form, and which fall within at least one of the following listed categories (hereinafter collectively referred to as the “Material Agreements” and individually as a “Material Agreement”), in each case containing correct information about the contracting parties and the subject matter thereof:

(a)

agreements regarding the acquisition, sale or encumbrance of real property or rights equivalent to real property;

(b)

agreements regarding the acquisition, sale or encumbrance of shares of or interests in other companies or partnerships;

(c)

agreements concerning the acquisition, sale or encumbrance of fixed assets which (either individually or collectively) have a value of at least EUR 50,000;

(d)

agreements to purchase, sell or use any enterprises, business operations, or parts thereof;

(e)

loan agreements, account agreements or other credit agreements, which the Group Entities have concluded either as lender or borrower (with the exception of any customary payment deferrals agreed to in the ordinary course of business), as well as factoring agreements, each with a value of at least EUR 50,000;

(f)

guarantees, payment guarantees (Bürgschaften), assumptions of debt, collateral promises (Schuldbeitritte), letters of comfort and similar legal instruments issued by any of the Group Entities;

(g)

collective bargaining agreements (including company-specific collective bargaining agreements) to which the Group Entities are subject (also by virtue of a decree of universal application (Allgemeinverbindlichkeitserklärung)), as well as shop agreements (Betriebsvereinbarungen) and implied contracts based on established plant practices (betriebliche Übungen);

(h)

agreements that were entered into or obligations that were incurred outside the ordinary course of business;

(i)

agreements between any of the Group Entities, on the one hand, and the Seller and/or Seller's Affiliates, on the other hand;

(j)

other agreements or commitments, (i) which impose annual payments in the individual case on

a Group Entity of at least EUR 50,000 per year, (ii) which may be terminated by the relevant Group Entity with at least 6 months prior notice, (iii) the breach or termination of which could have a Material Adverse Effect.

9.11.2

To the Seller's Knowledge, each Material Agreement is in full force and effect and binding on the parties to it.

9.11.3

To the Seller's Knowledge, no Group Entity is in breach of any Material Agreement, there are no circumstances which are likely to give rise to such a breach, no notice of termination or intention to terminate any Material Agreement has been received by any Group Entity and none is anticipated. To the Seller's Knowledge, there are no grounds for termination, rescission, avoidance, repudiation or a material change in the terms of any Material Agreement.

9.12

Intellectual Property Rights

9.12.1

Each Group Entity owns, or has licensed to it, all the Intellectual Property Rights that is necessary to carry on the Business in substantially the same manner as conducted on the Signing Date, and the lack of which would result in a Material Adverse Effect.

9.12.2

Exhibit 9.12.2 contains full and accurate details of all Intellectual Property rights which are registered, or the subject of an application to register it, in any jurisdiction in the name of any Group Entity (“Registered IP”).

9.12.3

Except as disclosed in Exhibit 9.12.3, the activities and operations of the Group Entities do not infringe any third party's Intellectual Property, and there are no existing, pending or, threatened claims against any Group entity in respect of any infringement of any third party's Intellectual Property directed to a governmental authority or court and no such claims have been made in the last twenty-four (24) months prior to the Signing Date.

9.12.4

All Intellectual Property Rights owned by and licensed to any Group Entity are valid, subsisting and enforceable, and nothing has been done or omitted to be done which is likely to affect adversely such validity, subsistence or enforceability.

9.12.5

All registration and renewal fees relating to the Registered IP have been fully paid when due.

9.13

Employment Matters

9.13.1

Exhibit 9.13.1 contains a complete and correct list as at the Signing Date of all employees and managing directors (Geschäftsführer) of the Group Entities with an annual target salary in excess of EUR 75,000 (the “Key Employees”) in the individual case (including all bonuses) and none of those Key Employees has given written notice of termination of his or her service or employment and, there is no indication that a Key Employee intends to terminate or otherwise end his or her engagement with the respective Group Entity.

9.13.2

Exhibit 9.13.2 contains an in all material respects complete and correct anonymized list as of the Signing Date of all employees of the Group Entities.

9.13.3

The Group Entities have duly and fully performed all payment and other obligations owed to their workers and employees when those obligations became due.

9.13.4

Except as listed in Exhibit 9.13.4, no Group Entity has a works council (Betriebsrat). There is also no indication that a works council will be established in any of those Group Entities where none exists.

9.13.5

Exhibit 9.13.5 contains for each Group Entity a complete and correct list of all agreements and other commitments, whether of an individual or collective nature and including commitments based on works custom (betriebliche Übung), regarding employee benefits such as anniversary, holiday or jubilee payments, bonus, profit participation or other variable remuneration elements (the “Employee Benefits”). Such list correctly states the legal basis for the Employee Benefits and the nature and dates of the respective commitments.

9.13.6

Exhibit 9.13.6 includes for each Group Entity a correct and complete list of all agreements and other commitments, whether of an individual or collective nature and including commitments based on works

custom (betriebliche Übung), regarding pensions under which such Group Entity has an obligation (betriebliche Altersversorgung; the agreements listed or to be listed in Exhibit 9.13.6 the “Pension Commitments”).

9.13.7

Except as disclosed in Exhibit 9.13.7 and in the Due Diligence Material, the Group Entities have in the last twenty-four (24) months prior to the Signing Date not experienced any formal disputes or proceedings with a Governmental Authority with regard to labor or work environment matters or any individual labor disputes or any strike, labor interruption or disturbance or other collective labor disputes of any nature.

9.14

Data Protection

9.14.1

Each Group Entity materially complies with all applicable and material laws, guidelines and industry standards relating to the processing of personal data and privacy (“Data Protection Laws”).

9.14.2

Each Group Entity has in place and operates adequate procedures to ensure continued compliance with Data Protection Laws.

9.14.3

No Group Entity has received in the last twenty-four (24) months before the Signing Date any notices or any communications from any person:

(a)

alleging non-compliance with any Data Protection Laws; or

(b)

complaining about its use of personal data;

9.15

Environmental Matters

9.15.1

each Group Entity has conducted its business in accordance with Environmental Laws;

9.15.2

in the last twenty-four (24) months, no Group Entity has received any enforcement, prohibition, improvement, remediation, compliance, restoration or stop notice or other notice of equivalent nature from any Governmental Authority relating to Environmental Laws;

9.15.3

no Group Entity is involved in any dispute, claim, legal action, proceeding, suit, litigation, prosecution, arbitration or any other form of alternative dispute resolution arising from or relating to Environmental Laws and none is pending or threatened. There are no circumstances likely to give rise to any such dispute;

9.15.4

there are no Hazardous Substances (including asbestos) present at, in, on or under the properties used by the Group Entities (including in any tanks, whether above or below ground). There has been no release, leakage, migration, spill, discharge or emission into the Environment of any Hazardous Substance other than in accordance with Environmental Laws.

9.16

Legal Proceedings

9.17

Anti-Corruption

9.18

Compliance with Laws

9.19

Tax

9.19.1

each Group Entity has as of the Signing Date:

(a)

submitted all relevant Tax returns to the relevant Tax Authorities in a timely manner (taking into account any applicable extension of any filing term);

(b)

punctually (taking into account any permitted extension) paid all Tax due to be paid;

(c)

punctually (taking into account any permitted extension) made all deductions and withholdings on account of Tax due to be made in respect of any payment made or benefit provided before the Signing Date; and

(d)

maintained and has in its possession or under its control all records and documentation that it is required to maintain for the purposes of any Tax and to calculate its obligations in respect of Tax.

9.19.2

no Group Entity is or has been subject to any investigation or other non-routine tax audit or visit (Durchsuchung im Sinne von § 399 Abs. 2 Satz 2 Abgabenordnung) by any Tax Authority and no Tax Authority has announced in writing that it intends to make such an investigation or other non-routine audit or visit.

9.19.3

none of the Group Entities are subject to any appeals proceeding relating to Taxes (Ein­ spruchsverfahren) or fiscal court proceedings (finanzgerichtliche Verfahren).

9.19.4

and except for the fiscal unity for corporate income and trade tax purposes established by way of the PLTA, no Group Entity forms a fiscal unity nor are any of them party to any tax allocation or sharing arrangement in respect of its profits, gains or losses of another company.

9.20

Finder’s Fee and Management Incentives

9.21

Information Disclosed

9.22

No Other Representations or Warranties

9.22.1

Due Diligence by Purchaser's Representatives. The Seller does not make any representations or warranties regarding the Sold Shares, the Group Entities and their business other than the Seller's Representations.

9.22.2

Non-Reliance on Provided Information. The Purchaser confirms and agrees that the Seller does not make any representations or warranties, and that the Purchaser has not relied on nor will it make any claim against the Seller or any of the Seller's Representatives, in respect of any budget, forecast, estimate or other projection of any nature (including projections of future revenues, future results of operations, future cash flows, future financial condition or future business operations (or any underlying components thereof).

7552690241300010.

SELLER'S COVENANTS

10.1

Conduct of Business prior to Closing

10.1.1

General. From the Signing Date until the Closing Date (the “Interim Period”), except for the actions set forth in Exhibit 10.1.1, the Seller shall procure that the Group Entities continue to carry on the Business in all material respects within the ordinary course consistent with past practice, except where failure to do so would not reasonably be expected to have a Material Adverse Effect. As a matter of clarification, the Seller shall in particular be entitled, to the extent legally permissible and subject to Section 4.3 above, to distribute any and all existing (undistributed) profits and other cash available at the Company to the Seller, including in particular by any and all actions under Section 4.4 above.

10.1.2

Debt free. The Seller shall procure that the Group Entities are transferred free of any financial debt (Verbindlichkeiten gegenüber Kreditinstituten) or any kind of financing (including any kind of financing from other institutions or non-bank financing, factoring or private loans) at Closing.

10.1.3

Restricted Actions. During the Interim Period, except for the actions set forth in Exhibit 10.1.3, the Seller shall procure that the Group Entities do not take any of the following actions without the Purchaser's prior written consent, which consent shall not be unreasonably withheld or delayed:

(a)

incur any liability (including any conditional, deferred or deferrable liabilities) which in the individual case exceeds the amount of EUR 25,000, with the exception of current liabilities arising from the purchase of goods and services in the ordinary course of business and in substantially the same business manner as before;

(b)

any waiver or settlement of liabilities with an aggregate amount of more than EUR 25,000;

(c)

incur any financial debt (Verbindlichkeiten gegenüber Kreditinstituten) or any kind of financing (including any kind of financing from other institutions or non-bank financing, factoring or private loans) without the prior written consent of the Purchaser (which consent in each case shall not be unreasonably withheld or delayed beyond two (2) Business Days after the Purchaser's receipt of the Company's request therefor);

(d)

shall make, with respect to any officer, managing director, board member, employee, advisor, sales representative or distributor, any changes regarding salaries or other (also performance-based) remuneration or other contractual terms or pay any bonuses or other extraordinary compensation or make any severance payments or otherwise commit (even conditionally) to make such payments or grant a loan to any such persons outside the ordinary course of business;

(e)

pledge, assign, create a security interest in, or otherwise encumber, any tangible or intangible assets (regardless of whether such assets can or cannot be recognized on the balance sheet), except in the ordinary course of business and in substantially the same business manner as before;

(f)

sell, lease, transfer, or purchase any tangible or intangible assets (regardless of whether such assets can or cannot be recognized on the balance sheet) for a value which in the individual case exceeds EUR 25,000, or undertake to do any of the foregoing, except for the sale or purchase of such assets in the ordinary course of business and in substantially the same business manner as before;

(g)

cancel, terminate or materially amend or modify any Material Agreement;

(h)

any merger, split-off or other company reorganization within the meaning of and pursuant to the German Reorganization Act (Umwandlungsgesetz) involving any Group Entity;

(i)

any dissolution or liquidation of any Group Entity;

(j)

any acquisition or disposal of shares or equity interests in any company or partnership for consideration in excess of EUR 25,000 (in words: Euro twenty-five thousand) in the individual case; for the avoidance of doubt, this does not apply for any measures as regards KEYMILE LLC (Russia);

(k)

any acquisition or disposal of real estate for consideration in excess of EUR 25,000 (in words: Euro twenty five thousand) in the individual case;

(l)

enter into any new employment or service contracts without the prior written consent of the Purchaser (which consent in each case shall not be unreasonably withheld or delayed beyond five (5) Business Days after the Purchaser's receipt of the Company's request therefor), provided that, when requesting such consent, the Company shall provide to the Purchaser all relevant information about the contract and the position; and

(m)

entering into any agreement to take any of the actions set forth under (a) through (1).

10.1.4

Leakage. During the Period between the Effective Date and the Closing Date, the Seller shall cause (steht dafür ein) that no Leakage, other than Permitted Leakage, occurs without the Purchaser's prior consent. For the purposes of this Agreement, “Leakage” means (a) any payment of dividends or conveyance of any monetary or other benefit by any Group Entity to any member of the Seller's Group; (b) any repurchase, redemption or other acquisition by any of the Group Entities of its shares or interests from any member of the Seller's Group; (c) any assumption or fulfillment by any Group Entity of liabilities of any member of the Seller's Group; or (d) any waiver by any of the Group Entities of a claim against any member of the Seller's Group. For purposes of this Agreement “Permitted Leakage” shall mean (a) any transactions contemplated by this Agreement including any distributions under Section 4.3; (b) any intragroup transactions between the Group Entities that were entered into in the ordinary course of business prior to the Effective Date in relation to which the relevant Group Entity has received arm’s length consideration or the relevant Group Entity has otherwise been adequately compensated or reimbursed as disclosed in Exhibit 10.1.4 and such other similar transactions entered into after the Signing Date subject to the written consent of the Purchaser (which consent in each case shall not be unreasonably withheld or delayed beyond two (2) Business Days after the Purchaser's receipt of the Company's request therefor); and (c) any internal administration or overhead costs of any of the Group Entities incurred in the ordinary course of business (but excluding any transaction costs of the Transaction) subject to the written consent of the Purchaser (which consent in each case shall not be unreasonably withheld or delayed beyond two (2) Business Days after the Purchaser's receipt of the Company's request therefor).

10.2

Purchaser's Consent

10.2.1

Consents. With respect to Section 10.1, the Purchaser hereby consents to (a) any of the measures or activities set forth in Exhibit 10.1.1 or reflected in any business plan and/or investment budget set forth in such Exhibit, (b) any actions, measures and transactions to be taken or performed pursuant to the provisions of this Agreement (including without limitation in preparation of the satisfaction of the Closing Conditions and the Closing Actions), and (c) any actions required to comply with applicable laws and orders of a competent Governmental Authority and in each case ((a) through (c)) any actions, measures and transactions required or expedient in connection therewith.

10.2.2

Request of Further Consent. Any requests by the Group Entities or the Seller for the Purchaser's consent should be addressed in writing to Michael Golomb with a copy to Alex Yastremski, or any other person explicitly defined by the Purchaser (including the contact details) (the “Contact Person”) by e-mail (preferred) or certified mail, followed by a phone call to ensure the actual receipt by the Contact Person of such consent request. In the event that the Contact Person does not oppose a request within three (3) Business Days after the receipt of the latter of the e-mail (preferred) or certified mail, the Purchaser shall be deemed to have consented to the respective action. For the avoidance of doubt, any deemed or other consent shall not oblige the Group Entity concerned to take the action or measure for which such consent was requested.

10.3

Funding Obligations with regard to the Seller

10.3.1

Until the finalization of a tax audit of the Company for the fiscal year 2017 by way of an issued and received tax audit report or a statement by the tax auditor that no changes to the audited tax returns will be made, the Seller undertakes to keep an amount of EUR 1,250,000.00 (in words: Euro one million two hundred and fifty thousand) at the level of the Seller (the “Liquidity Reserve”); provided, that (a) such amount can be reduced in case the underlying tax risk is reduced, as mutually agreed by the Parties acting in good faith (it being understood that the Liquidity Reserve may be reduced and distributed to the Seller's shareholders in an amount of EUR 542,000 without further consent of the Purchaser in case the Tax Audits are finalized and it has not been challenged as a result of the Tax Audits that the PLTA was orderly consummated and executed (durchgeführt), and (b) such cash amount can be replaced by adequate security (i.e. parental guarantee, bank guarantee or any form of insurance), in form and substance as may be reasonably required by the Purchaser.

10.3.2

The amount stated in Section 10.3.1 shall serve as collateral with regard to any Tax Claims, including but not limited to those arising out of or in connection with the 2017 tax audit with respect to the Group Entities. If and to the extent that such tax audit results in a change of the audited tax returns causing a Tax Claim the amount as stated in Section 10.3.1 shall not be taken out of the Seller (other than for paying such Tax Claims) by any means if and to the extent not all Tax Claims are fulfilled.

10.4

W&I Insurance Premium

11.

RESTRUCTURING AND ABB SALE

11.1.1

Seller's Indemnification obligations. With Section 13 remaining unaffected and subject to any limitations set forth in Sections 11.1.2 and 11.1.3 below, the Seller shall indemnify and hold harmless (freistellen) the Purchaser, or at the Purchaser's election, the respective Group Entities or their respective legal successors from and against all liabilities, costs, losses and any comparable financial obligations out of or in connection with

(a)

the corporate restructuring of the Business, comprising of (i) the carve out of KEYMILE LLC (Russia), (ii) the liquidation of KEYMILE Kft. (Hungary), KEYMILE SP z.o.o. (Poland), KEYMILE Asia Pte. Ltd., and (iii) the merger of HYTEC GmbH and Riverside KM HYTEC GmbH, regarding in each case any liability or obligation resulting from any of the aforementioned restructuring measures;

(b)

the ABB SPA, in particular any liability or obligation of the Group Entities thereunder and any transaction contemplated by the ABB SPA, except of any liability or obligation resulting from breaches set out in Section 11.1.2 below; and

(c)

the redundancy process including but not limited to the transfer and/or termination of the employees as listed in Exhibit 11.1.l(c).

11.1.2

Purchaser's Indemnities. The Purchaser shall indemnify and hold harmless (freistellen) the Company and the Seller or their respective legal successors from and against all liabilities and obligations out of or in connection with any breaches of any post-closing obligations of the Group Entities under the ABB SPA in the time after Closing, in particular any non-compete or non-solicit obligation under Section 19 of the ABB SPA, in a way that no claim of ABB Schweiz AG resulting out of any such breach will lead to a reduction of the Escrow Amount to be paid out to the Seller.