Joint Spin-Off Report

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Joint Spin-Off Report [Convenience translation – not legally binding] Joint Spin-off Report of the executive boards of Continental Aktiengesellschaft and Vitesco Technologies Group Aktiengesellschaft regarding the spin-off of the participations held in Vitesco Technologies 1. Beteiligungsgesellschaft mbH & Co. KG, in Vitesco Technologies 2. Beteiligungsgesellschaft mbH & Co. KG, in Vitesco Technologies 1. Verwaltungs GmbH, and in Vitesco Technologies 2. Verwaltungs GmbH TABLE OF CONTENTS Page I. Introduction ........................................................................................................ 1 II. Initial situation – the legal entities involved in the spin-off and the Continental Group prior to the spin-off ................................................................................. 3 1. Overview of the Continental Group ....................................................... 3 2. Continental AG as transferring entity .................................................... 4 3. Group sectors of the Continental Group ................................................ 7 4. Other business activities of the Continental Group ............................. 10 5. VT Group AG as acquiring entity ........................................................ 10 III. Decision to make Vitesco Technologies independent ..................................... 13 1. Reasons for the decision to make Vitesco Technologies independent 13 2. Decision in favor of the spin-off .......................................................... 15 3. Decision in favor of a complete spin-off ............................................. 17 4. Decision in favor of the spin-off by absorption ................................... 17 IV. Subject of the spin-off ...................................................................................... 18 1. Participations to be spun-off ................................................................ 18 2. Vitesco Technologies GmbH ............................................................... 19 3. Business operations of Vitesco Technologies...................................... 20 V. The operational and organizational transformation of Vitesco Technologies into an independent group prior to the spin-off ............................................... 22 1. Establishment of the corporate structure of Vitesco Technologies ..... 23 2. Intercompany agreements within the meaning of Section 291 AktG or similar provisions of foreign law ......................................................... 25 3. Financing.............................................................................................. 25 4. Equity ................................................................................................... 26 5. Pension plans ....................................................................................... 28 6. Compliance .......................................................................................... 29 7. Insurance .............................................................................................. 30 8. Intellectual property rights ................................................................... 30 9. IT .......................................................................................................... 31 10. Termination of intra-group agreements and transitional services........ 32 11. Use of the name “Continental” and related logos ................................ 32 12. Taxes .................................................................................................... 33 13. State aid ................................................................................................ 33 14. Joint contracts with third parties .......................................................... 34 - i - VI. Legal implementation of the spin-off .............................................................. 34 1. Overview .............................................................................................. 34 2. Transferring entity and acquiring entity .............................................. 35 3. Spin-off pursuant to Section 123(2) no. 1 UmwG (spin-off by absorption) ........................................................................................... 35 4. Spin-off Assets ..................................................................................... 36 5. Spin-off and Transfer Agreement ........................................................ 36 6. Spin-off Effective Date ........................................................................ 36 7. Spin-off audit report ............................................................................. 36 8. Shareholders’ meetings of Continental AG and VT Group AG .......... 37 9. Capital increase for implementation of the spin-off; audit of post- formation acquisition and contribution in kind .................................... 37 10. Application for registration and registration of the spin-off in the commercial register .............................................................................. 38 11. Effects of the registration ..................................................................... 40 12. Allocation of the shares; fractional entitlements; stock exchange listing and trading; ADR program .................................................................. 40 13. Ownership structure in the Vitesco Technologies Group after the spin- off ......................................................................................................... 43 14. External costs and taxes related to the transformation into an independent group, the spin-off and the planned stock exchange listing .............................................................................................................. 44 VII. Explanation and reasons for the share allocation ratio .................................... 46 VIII. Accounting, tax and other effects of the spin-off ............................................ 47 1. Accounting effects of the spin-off ....................................................... 47 2. Tax effects of the spin-off .................................................................... 60 3. Other effects of the spin-off ................................................................. 71 IX. The Vitesco Technologies Group after the spin-off ........................................ 74 1. Business operations of the Vitesco Technologies Group after the spin- off ......................................................................................................... 74 2. Financial condition and results of operations of VT Group AG and of the Vitesco Technologies Group after the spin-off .............................. 85 3. Legal structure of VT Group AG and of the Vitesco Technologies Group after the spin-off ..................................................................... 107 X. The Continental Group after the spin-off....................................................... 116 1. Business operations of the Continental Group after the spin-off ....... 116 2. Financial condition and results of operations of Continental AG and of the Continental Group after the spin-off ............................................ 117 - ii - 3. Legal structure of Continental AG and of the Continental Group after the spin-off ......................................................................................... 119 XI. Relationship between the Continental Group and the Vitesco Technologies Group after the spin-off ................................................................................. 120 1. Supply and service relationships ........................................................ 120 2. Other relationships ............................................................................. 125 XII. Consequences of the spin-off for the employees and their representative bodies ........................................................................................................................ 126 1. Consequences of the spin-off for the employees ............................... 126 2. Consequences of the spin-off for the representative bodies of the employees under works constitution law ........................................... 128 3. Consequences of the spin-off for the employee participation in the supervisory board ............................................................................... 130 XIII. Description of the Spin-off and Transfer Agreement with Annexes ............. 132 1. Spin-off and Transfer Agreement ...................................................... 132 2. Group Separation Agreement ............................................................ 140 - iii - I. Introduction The executive board of Continental Aktiengesellschaft, a German stock corpo- ration with registered office in Hanover, registered in the commercial register of the Hanover Local Court (Amtsgericht) under HRB 3527 (Continental AG and, together with its dependent companies, collectively referred to as the Continental Group), has resolved to have Vitesco Technologies GmbH with registered office in Hanover (registered in the commercial register of the Han- over Local Court (Amtsgericht) under HRB 217030), together with its direct and indirect subsidiaries and shareholdings (collectively referred to as Vitesco Technologies), listed on the stock exchange as an independent group by way of a spin-off by absorption (Abspaltung zur Aufnahme) in accordance with the German Transformation Act (Umwandlungsgesetz – UmwG). It
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