SUMIDA: SUMIDA AG

Response to questions arising from the settlement of 27 August 2009

August 29th 2009

On 27 August 2009, VOGT electronic AG reached a settlement with two shareholders to end the rescission proceedings against the approval resolution concerning the domination agreement with Sumida VOGT GmbH (Munich I District Court, ref.: 5HK O 7215/09) and in this settlement undertook, in accordance with Section 131 AktG [German Stock Corporation Act], to publish written replies to the following questions on its homepage:

1. Is it the case that a shareholder, irrespective of a notice to terminate the domination
agreement during a legal challenge and in the two months thereafter, has a put option?

“Yes. If, at the time of the notice to terminate the domination agreement, a legal challenge regarding the judicial determination of the compensation and the indemnity under the domination agreement in accordance with Section 1 No. 1 SpruchG I is still pending, a shareholder, irrespective of the notice to terminate the domination agreement, has a put option in accordance with Section 305 AktG for up to two months following the day on which the decision on the petition last ruled upon in the legal challenge was announced in the electronic Federal Gazette.”

2. Amending the debtor warrant agreement before the conclusion and entry into effect of the domination agreement was in the interests of VOGT electronic AG because, due to the quicker service of the debtor warrant bond, a tax expense is incurred which then leads to a tax saving. How is a tax saving likely to arise if VOGT has tax loss carryovers of EUR 59 million? Does quicker service not lead to a more rapid outflow of liquidity and is that not chargeable to VOGT AG? How high is the interest effect arising from this?

“Amending the debtor warrant agreement before the conclusion and entry into effect of the domination agreement was in the interests of VOGT electronic AG because, due to the quicker service of the debtor warrant bond, a tax expense is incurred which then leads to a tax saving. No tax loss carryovers of EUR 59 million are available. In VOGT electronic AG only EUR 16.7 million of loss carryovers exist. Moreover, these are subject to a high tax risk. Since the entry of the Sumida Corporation in February 2006 the loss carryovers are encumbered with the risk that the Tax Office approves a “shell company purchase”, which in future would lead to the loss of all tax loss carryovers existing at this time. According to a legally binding ruling of the Tax Office, the requirements for the existence of a “shell company purchase” are fundamentally met. For this reason, the tax loss carryovers were also not activated in the IFRS Group financial statement. The government tax audit for the period 2005 to 2007 has in fact already begun, but has not yet ended, so that at the moment no decision has yet been taken about the loss carryovers. Nevertheless, as part of the corporate valuation for the domination agreement and the delisting in favor of the minority shareholders, as a precaution it was assumed that the loss carryovers are to be regarded as a special valuation, so that the shareholders are not disadvantaged due to the decision which has not yet been taken about the loss carryovers.
Quicker service of the debtor warrant bond does not lead to a noticeably more rapid outflow of liquidity if the annual surplus accruing due to the absence of service of the debtor warrant bond were distributed. If reserves were accumulated from the annual surplus though, a more rapid outflow of liquidity could occur by comparison.
An interest effect detrimental to VOGT AG could only occur if the outflow of liquidity had to be compensated for by borrowing. The level of such an interest effect cannot be determined specifically, because this depends upon many different factors which are currently not fully known. In all probability, however, the negative interest effect would be lower than any tax payment.“

3. Why could the board, at the extraordinary general meeting on 19 March 2009, not quantify expected synergy effects due to the entry into effect of the domination agreement?

“The executive board of the company came to the conclusion, in the context of the preparation of the domination agreement, that in the event of the collaboration with the companies of the Sumida Group considerable potential synergies exist in certain areas. The areas in which potential synergies exist were explained in detail in the joint report of the executive board of VOGT electronic AG and the management of Sumida VOGT GmbH on the domination agreement. At the time of the extraordinary general meeting on 19 March 2009 there was still no sufficient factual basis for an exact calculation, because the precise form of the planned collaboration is only taking shape as it is being implemented - a process which has since begun. As the potential synergies can only be enhanced by the conclusion of a domination agreement, the executive board and Sumida VOGT GmbH decided, among other things, in favor of the conclusion of the domination agreement.”

For further information on VOGT electronic AG please refer to the 2008 annual financial statement of VOGT electronic AG and the 2008 GROUP financial statement of the VOGT electronic Group.

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