Common use of Material Tax Consequences Clause in Contracts

Material Tax Consequences. for Employees Who are Tax Residents in Germany. The following is a general summary of the tax consequences of the exchange of options under the offer for German tax residents. This discussion is based on the local tax law as of the date of the offer, which is subject to change, possibly on a retroactive basis. This summary does not discuss all of the tax consequences that may be relevant to you in light of your particular circumstances, nor is it intended to be applicable in all respects to all categories of option holders. You will not be subject to tax when the new option is granted. When you exercise the option, you will be subject to income tax on the difference between the fair market value of the shares on the date of exercise and the exercise price. The income recognized would be compensation to you. When you sell the shares, you will not be subject to tax on any additional gain provided that: (i) you have held the stock for more than 12 months; (ii) you have not, during the last five years, held 10% or more of the stated capital of E.piphany; and (iii) the stock is not held as a business asset. Effective January 1, 2002, the 10% limit will be lowered to 1% such that in order to satisfy the foregoing conditions, you cannot have held 1% of more of the state capital of E.piphany. Consequently, you normally will not be subject to tax at the time of sale on the additional gains if you hold the shares for more than 12 months.