OFFERING MEMORANDUM Global Offering of up to ... - Nordex

corporation income tax a special tax rate is applicable under certain preconditions. In the event that
during the assessment period 2002 dividends are distributed which stem from earnings made in earlier
years by the distributing company, which were burdened with a corporate income tax of 45% (EK 45),
40% (EK 40) respectively, these dividend distributions are subject to a special tax rate of 45%, 40%
respectively on part of the Company. Operating expenses of the Company related in financial terms to
such equity interests reduce with priority the Company’s income burdened with 25%; such operating
expenses can generally not be deducted from the Company’s income burdened with 45%, 40%
respectively. The special tax rate is also applicable for other distributions (for example ‘‘hidden
distribution’’) to the Company in its assessment period 2002, which are not based on the resolution
ordering the distribution of profits pursuant to the provisions of corporate law.
If the Company receives in the assessment period 2002 domestic dividends subject to the special tax
rate of 45%, 40% respectively the Company’s final balances of the so called EK 45, EK 40 respectively
which have to be determined as of September 30, 2001 will be increased retroactively. On September
30, 2001 all final balances of the Company’s equity (EK) will be determined – probably retroactively –
and converted into EK 02 and EK 40. Within this conversion corporation income tax credit could be lost.
As of September 30, 2002 the remaining corporation income tax credit in the amount of 1/6 of the
resolved EK 40 will be determined. If the Company distributes dividends to its shareholders up to the
year 2017 the Company’s corporation income tax credit and the corporation income tax liability will be
reduced to an amount of 1/6 of the respective dividend distribution. If during this period the Company
receives dividend distributions, which led at the distributing company to a reduction of corporation
income tax credit as set out above, the Company’s corporation income tax credit is increased by this
amount. Corporation income tax credits which are not reduced until the year 2017 will be lost.
Dividend distributions received by the Company from domestic corporations in 2002 for the year 2001
are tax exempt, if the distributing corporation has a business year corresponding to the calendar year.
If the distributing corporation has a fiscal year not corresponding to the calendar year, the dividend
distributions executed for the fiscal year ending in 2001 will be tax exempt. Special rules apply in cases
where the distributing domestic corporation builds an incomplete business year.
From the assessment period 2002 dividend distributions received by the Company from foreign
corporations are – subject to certain exceptions – tax exempt. However, 5% of the foreign dividends are
deemed as non deductible business expense.
Taxation of Dividends
Shareholders Subject to Unlimited Tax Liability in Germany
Dividend payments made by the Company before September 30, 2002 are subject to withholding tax at
a rate of 25% of the dividend approved by the shareholders’ general meeting (‘‘cash dividend’’, that is
the dividend less corporate income tax and withholding tax). For such distributions paid after October
1, 2002 the withholding tax is reduced to 20% of the cash dividend. A solidarity surcharge of 5.5% is
levied in both cases, increasing the effective tax liability to 26.375% until September 30, 2002 or 21.1%
after October 1, 2002. Withholding tax and the solidarity surcharge are deducted from the tax liability
as part of the assessment. Instead, individuals who hold the shares as part of private assets may also
have part or all of their withholding tax reimbursed or exempted if they have submitted an application
for exemption or a non-assessment certificate. Otherwise the withholding tax is levied, regardless if or
to what extent the distribution is tax exempt on the level of the shareholder.
Dividends distributed by Nordex up to September 30, 2002 to individuals who hold the shares as part of
private assets (private investors) are fully subject to German income tax plus the solidarity surcharge. In
the case of such dividend distributions by Nordex, the income from capital assets (gross dividend) of
private investors consists of (i) the net amount actually received (net dividend) plus (ii) the possibly
withholding tax withheld amounting to 25% of the cash dividend plus the solidarity surcharge of 5.5%
on this amount (a total of 26.375% of the cash dividend) and (iii) the corporation income tax withheld
by the company (corresponding to the corporation income tax credit). Up to September 30, 2002,
private investors can offset the withholding tax withheld (plus solidarity surcharge) and the
corporation income tax withheld by the company (excluding the solidarity surcharge paid by the
101