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EXHIBIT 10.38
SETTLEMENT AGREEMENT
In the light of a potential sale (the "CML sale") of the entire issued share
capital of Sylvania Lighting International B.V. to Chicago Miniature Lamp Inc.
("CML"), or a wholly owned subsidiary of CML, the parties, being
Sylvania Lighting International B.V. ("SLI")
and
Osram GmbH ("Osram")
have agreed that:
1. If the CML sale does not compete until December 31, 1997, this entire
settlement agreement will be null and void. (For the avoidance of doubt,
if the CML sale does not complete until December 31, 1997, the waiver in
paragraph 2 will cease to have effect in relation to any actions taken
after December 31, 1997 to enable the signing and completion of the CML
sale, but the waiver will be effective in relation to any action taken on
or before December 31, 1997 to enable the signing and completion of the
CML sale; paragraph 7 will become effective on the signing of the letter -
however if the CML sale does not complete until December 31, 1997, Osram
will not have any obligation under paragraph 7 in respect of the period
after December 31, 1997).
2. Osram hereby waives its right of first refusal as defined in clause 10.3 of
the Master Agreement dated 29 January, 1993 between (1) Siemens AG (2)
Osram GmbH (3) Citicorp Capital Investors Europe Limited (4) SLI (as
amended) in relation to the CML sale and only for the purpose to enable
the signing and completion of the CML sale.
3. In the event that the CML sale completes, it is agreed that CML will be
deemed to be 'Lamp Competitor' for the purposes of the various agreements
between the Siemens Group and the Osram Group on the one hand and the
Sylvania Group on the other hand, notably the Research and Development and
Engineering Support Agreement of 29 January, 1993 (as amended) and the
Apparatus Supply Agreement dated 23 December 1994 and the License Agreement
between Osram (1) and SLI (2) dated 29 January 1993 (as amended). Subject
to and with effect from completion of the CML sale, all such agreements
will take effect in accordance with their terms as if on such completion,
the entire share capital of SLI had been acquired by a Lamp Competitor.
The parties agree that upon completion of the CML sale, without any further
notice requirement the Apparatus Supply Agreement, the Research and
Development and Engineering Support Agreement and the Licence Agreement
shall automatically terminate; however all existing licences to use
previously licensed Intellectual Property will continue to be in force
according to the provisions of the respective agreements and the provisions
of clause 12.1 of the Research and Development and Engineering Support
Agreement (Consequences of Termination) will take effect.
4.1 At any time until:
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(i) December 30, 1999 in respect of the Supply Agreement for
Finished Lamps dated January 29, 1997; and
(ii) January 28, 1998 in respect of the supply for Lamp Materials
acc. to Article II of the Framework Agreement for Supply
Contracts dated January 9, 1993.
OSRAM (or respectively OSRAM Sylvania Products Inc) shall have the
option by notice in writing to SLI to elect to extend the Supply
Agreements under (i) and (ii) above until December 31, 2003 and
receive the status of preferred supplier in each case as described
below.
4.2 In the event that OSRAM (or OSRAM Sylvania Products Inc) exercises this
option, the following provisions will take effect:
(a) in par 9 a of the Supply Agreement for Finished Lamps the phrase
"through December 31, 1999" shall be deleted and the phrase "through
December 31, 2003" shall be inserted after the phrase "February 1,
1997"
(b) in the Frame Work Agreement for the Supply Contracts (i) in Section 2.1
the phrase "for a period of 5 years" shall be deleted and the phrase
"for a period until December 21, 2003" shall be inserted before the
phrase "following Closing for all other Lamp Materials" and (ii) in
Section 2.3 (b) the phrase "for a period of five years" shall be
deleted and the phrase "for a period until December 31, 2003" shall be
inserted before the phrase "from Closing".
4.3 All existing finished goods and material supply contracts other than
the ones mentioned under 4.2 will remain in place on its existing
terms.
4.4 In the event that Osram exercises its options under paragraph 4.1, it
will become under the Supply Agreements a preferential supplier under
the following provisions; (all existing SLI contracts with other
suppliers will be allowed to continue to expiry):
(a) In all cases, when a member of the SLI Group intends to place with
third parties a material order for Products, which SLI is not obliged
to place according to the provisions of the Supply Agreement with the
OSRAM Group, SLI shall give what it believes to be the relevant member
of the OSRAM Group written notice of all reasonable details (including
without limitation, Product type and specifications, price, quality,
delivery terms and quality) of the terms upon which such third party
has offered the delivery of such Products to SLI Group.
(b) If the relevant member of the OSRAM Group agrees in writing within 14
working days after receipt of SLI's information under the above to
supply such Products on terms which are at least equal to the terms
offered by third parties (including, without limitation, price,
quantity, availability, delivery terms, specifications and quality),
SLI shall procure that the relevant order is placed with Osram and
Osram will accept the relevant order.
(c) If Osram does not so agree within the time period described in
paragraph (b) or if Osram states that it does not wish to supply a
material order, then the SLI Group will be free to place the relevant
order with a person other than Osram.
For the purposes of this paragraph 4.4 "Products" means all products
covered by the Definitions of "Products" and "Lamp materials" in the
respective Supply Agreements.
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(d) For the purposes of this paragraph 4.4, a material order is an order
whose value will exceed for each Product together with previous orders an
aggregate amount of US$25,000 per calendar year.
(e) If not otherwise agreed in case of an extension of the Supply Agreements,
the provisions of this paragraph 4.4 will cease to have effect on 31
December 2003.
4.5 In this paragraph 4:-
(a) the "Framework Agreement for Supply Contracts" means Article II (Supply
of Lamp Materials) of the Framework Agreement for Supply Contracts dated
29 January 1993 between Osram (1) SLI (2) as amended.
(b) the "Supply Agreement for Finished Lamps" means the Supply Agreement for
Finished Lamps between OSRAM Sylvania Products Inc. (1) SLI (2) made as of
29 January 1997.
(c) The "Supply Agreements" shall mean collectively the Supply Agreement for
Finished Lamps and the Framework Agreement for Supply Contracts.
4.6 The parties will negotiate in good faith to seek to agree terms on which
the agreements referred to in paragraph 4.2 are extended for a further
period of five years.
4.7 Other than as described above, it is intended that the existing
arrangements between the Osram/Siemens Group and the SLI Group remain in
effect on its agreed terms except that:
(i) paragraph 9 (c) of the Supply Agreement for Finished Lamps does not
apply in the case of the CML Sale;
(ii) the Supply Agreement for New Lamp Products dated 29 January 1993
shall be deemed to be terminated.
Both parties undertake not to use the change of ownership or change in
status of the above agreements as a pretext to change (or fail to
continue with) any of today's successful supply arrangements between the
groups worldwide.
5. The parties will negotiate in good faith to seek to agree a patent
licence to be granted to the SLI Group by the Osram Group in respect of
Patents developed by the Osram Group from the date of completion of the
CML Sale for a five year period (to be extended for a further period of
five years with the agreement of the parties). For the avoidance of
doubt, any such licence would exclude use in North America and in the
automobile market and would bear a royalty to be agreed. The parties
will negotiate in good faith to seek to agree terms for the supply of New
Lamp Products by the OSRAM Group to the SLI Group, based on the existing
Supply Agreements with reasonable modifications as required by the
specific situation of New Lamp Products. (For these purposes "New Lamp
Products" mean Lamp Products (as defined in the Supply Agreement for New
Lamp Products dated 29 January 1993 between OSRAM (1) and SLI (2) which
have not been manufactured and sold on a commercial basis by or on behalf
of the OSRAM Group prior to Closing (as defined in that Supply
Agreement), but which are manufactured and sold on a commercial arm's
length basis by, or on behalf of, the OSRAM Group thereafter.
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6. For the avoidance of doubt, any firm orders under the Apparatus Supply
Agreement which have been accepted will remain in place and will not be
affected by this Agreement. Nothing in paragraph 4.2 or 4.4 of this
Agreement will affect any orders placed with third parties at the time
Osram gives notice under paragraph 4.1
7. Osram will reasonably support SLI in preserving and defending any
anti-trust or other regulatory filings throughout the world in relation to
the CML sale only provided that OSRAM shall not be obliged to make any
statements or give any support which in its sole discretion it considers to
be factually incorrect or to be against its own interests.
8. The parties undertake to, and shall procure that their respective
subsidiaries shall hold so far as reasonably possible the existence and
terms of this Agreement and of any supply arrangement arising out of this
Agreement in confidence. No public announcement, communication or circular
(other than and to the extent required by law) concerning the transactions
referred to in this Agreement, the terms and conditions of this Agreement
or the financial affairs of any of the parties to this Agreement shall be
made or dispatched by any party without the prior written consents of the
other party (such consent not to be unreasonably withheld or delayed). SLI
shall be entitled to deliver a copy of this letter to CML and its advisers.
9. This Agreement is governed by English law.
/s/ /s/
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Osram GmbH Sylvania Lighting International B.V.
Munich August 14, 1997
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