EXHIBIT 4.27
EXECUTION COPY
INVESTMENT AGREEMENT
STEPMIND
AMONG THE UNDERSIGNED:
- MR. ▇▇▇▇▇ ▇▇▇▇▇▇▇,
a French national, born on July 4, 1962, in Quimper, France, residing at ▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ Issy les Moulineaux, France,
- ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇,
a French national, born on April 14, 1949, in Plogastel Saint-Germain,
France, residing at ▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
(hereinafter collectively referred to as the "FOUNDERS")
- REMOTE REWARD SAS,
a French societe par actions simplifiee with a share capital of EUR
90,481,410, with its registered office at 4 ter ▇▇▇ ▇▇ ▇'▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇, registered in the Commercial Registry under the number 433458304
RCS Nanterre, represented by Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇, in his capacity as
President,
(hereinafter "REMOTE REWARD"),
AND
- AGF INNOVATION 3, AGF INNOVATION 4, AGF INNOVATION 5, fonds communs de
placement dans l'innovation,
each represented by its managing company, AGF PRIVATE EQUITY, a French
societe par actions a directoire et conseil de surveillance with a share
capital of Euros 1,000,000, with its registered office at ▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Cedex 09, registered in the Commercial Registry under the
number 414 735 175 RCS Paris, duly empowered to so represent each such
entity, itself represented by ▇▇. ▇▇▇▇▇▇▇▇▇ Lautour, duly empowered for the
purpose hereof,
(hereinafter "AGF PE"),
- MIGHTY WEALTH GROUP LIMITED,
an international business company incorporated in the British Virgin Islands,
with a share capital of USD 50,000, with its registered office at Palm Grove
House, P.O. Box 438, Road Town, Tortola, BVI, registered under the number
565041, represented by ▇▇. ▇▇▇▇ ▇▇▇▇▇▇, in his capacity as Director,
(hereinafter "MWGL"),
- NAM TAI ELECTRONICS INC.
a company incorporated in the British Virgin Islands, under registration
number 3805, with its registered office at McW. ▇▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, P.O. Box 3342, Road Town, Tortola, British Virgin Islands,
represented by ▇▇. ▇▇▇▇▇▇ ▇▇, in his capacity as chief executive officer,
(hereinafter "NAM TAI"),
(AGF PE, MWGL and Nam Tai are hereinafter collectively referred to as the
"INVESTORS" and individually as an "INVESTOR"),
(The Founders, Remote Reward and the Investors being hereinafter collectively
referred to as the "PARTIES" and individually as a "PARTY").
RECITALS:
1. STEPMIND is a French societe anonyme, with a registered capital of
Euros 34,709,907.90, having its registered office at 4 ter, ▇▇▇ ▇▇
▇'▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, registered with the Registry of Commerce and
Companies under number 432 237 949 RCS Nanterre (hereinafter the
"COMPANY"). The Company was incorporated on June 19, 2000.
2. The Company is engaged primarily in the business of the design and
development of baseband integrated circuits, radio frequency integrated
circuits (transceivers), as well as system and protocol stacks that
address Wide Area Networks (GSM/GPRS/EDGE) and Wireless Local Area
networks (802.11a, 802.11b, 802.11g, hiperlan 2) standards.
3. On the date hereof, the Company's share capital consists of 6,463,670
shares, all of the same category, with a par value of Euros 5.37 each.
Following the authorization by the Company's extraordinary
shareholders' meeting dated June 19, 2002, the Board of Directors of
the Company granted on June 19, 2002, November 26, 2002 and June 18,
2003, respectively, 915,471, 76,060 and 32,140 employee warrants (Bons
de Souscription de Parts de Createur d'Entreprise) (the "EMPLOYEE
WARRANTS"), 1,012,683 of which remain validly granted as of the date
hereof.
Set forth in EXHIBIT A is the allocation of the capital of the Company
on a Fully Diluted basis (i) as of the date hereof and (ii) immediately
prior to the completion of the First Capital Increase (as defined
below).
4. The Board of Directors of the Company called on October 22, 2003 a
general meeting, to be held on November 12, 2003, to decide on (i) a
reduction in the share capital of a total amount of Euros 9,943,063.561
by reduction of the par value of the shares from Euros 5.37 to Euros
3.8317 (to offset past losses of the Company) and on (ii) a reduction
in the share capital of a total amount of Euros 24,702,207.64 by
reduction of the par value of the shares from Euros 3.8317 to Euro 0.01
by allocation of such amount to a special "premium" account.
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5. Subject to the terms and conditions set forth in this Agreement and its
Exhibits (the "AGREEMENT"), the Investors desire to participate in a
total investment in the Company in two installments for an aggregate
maximum amount of fifteen million one thousand six hundred eighty two
Euros and fifty eight cents (EUR 15,001,682.58) in consideration for
the subscription by the Investors for 3,858,678 ABSA Shares (as defined
below) (the "INVESTMENT").
6. The Parties have executed on the date hereof a shareholders' agreement
(the "SHAREHOLDERS' AGREEMENT") and ▇▇▇▇▇ ▇▇▇▇▇▇▇, Remote Reward and
the Investors have executed on the date hereof a representations and
warranties agreement with respect to the Company's activity, assets and
liabilities (the "REPRESENTATIONS AND WARRANTIES AGREEMENT"); the
Shareholders' Agreement and the Representations and Warranties
Agreement shall enter into force on the Closing Date (as defined
below).
7. The purpose of this Agreement is to set forth the details and terms of
the Investment, the conditions therefor, and the mutual covenants of
the Parties with respect thereto.
NOW, THEREFORE, THE PARTIES HERETO AGREE:
ARTICLE 1 - DEFINITIONS
"ABSA SHARES": has the meaning ascribed thereto in Section
2.1, and shall include reference to the ABSA
Shares 1, the ABSA Shares 2 and/or the ABSA
Shares 3, as the context requires.
"ABSA SHARES 1": has the meaning ascribed thereto in Section
2.3.
"ABSA SHARES 2": has the meaning ascribed thereto in Section
2.4.
"ABSA SHARES 3": has the meaning ascribed thereto in Section
3.4.
"AGF PE": has the meaning ascribed thereto in the
Preamble.
"AGREEMENT": has the meaning ascribed thereto in the
recitals.
"BSPCE": has the meaning ascribed thereto in Section
7.1.
"CLASS A SHAREHOLDERS": means the holders of Class A Shares.
"CLASS A SHARES": means (i) the 6,463,670 existing ordinary
shares of the Company and (ii) all the
ordinary shares to be subscribed for by
exercise of the Employee Warrants.
"CLASS B SHAREHOLDERS": means the holders of Class B Shares.
"CLASS B SHARES": means (i) the new preferred shares to be
issued in connection with the First and
Second Capital Increases and (ii) the new
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preferred shares to be issued upon exercise
of the Warrants, in each case having the
rights and privileges described in the
Shareholder Resolutions, as summarized in
Section 2.2.2 below.
"CLOSING DATE": means the date on which the First Closing
occurs.
"COMPANY": has the meaning ascribed thereto in the
recitals of this Agreement.
"CONTRACTUAL
UNDERTAKING": has the meaning ascribed thereto in Article
4.
"EMPLOYEE WARRANTS": has the meaning ascribed to it in the
recitals of this Agreement.
"ESCROW AGENT": has the meaning ascribed thereto in Section
2.2.
"ESCROW AGREEMENT": has the meaning ascribed to it in Section
2.2.
"EXTRAORDINARY
SHAREHOLDERS MEETING": means the Extraordinary Shareholders Meeting
of the Company contemplated by Section 3.1.
"FIRST CAPITAL INCREASE": has the meaning ascribed thereto in Section
2.1.
"FIRST CLOSING": has the meaning ascribed thereto in Section
2.3.
"FOUNDERS": has the meaning ascribed thereto in the
Preamble.
"FULLY DILUTED": refers to the capital of the Company, on an
as-if-converted basis, i.e., assuming that
all Securities giving right to a portion of
the capital and/or voting rights of the
Company have been exercised, except the
Warrants or Warrants 2004.
"INVESTMENT": has the meaning ascribed thereto in the
recitals of this Agreement.
"INVESTORS": has the meaning ascribed thereto in the
Preamble.
"LIQUIDATION
PREFERENCE": has the meaning ascribed thereto in Section
3.2.
"NET PROCEEDS OF
LIQUIDATION": has the meaning ascribed thereto in Section
3.2.
"NOTICE": has the meaning ascribed thereto in Article
13.
"OBJECTION PERIOD": means the twenty-day period following the
filing of the minutes of the extraordinary
shareholders meeting to be held on November
12, 2003, referred to in paragraph 4 of the
recitals
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and in Section 3(a), during which the
creditors of the Company may challenge the
second reduction in the share capital of the
Company described Section 3(a).
"PARTIES": has the meaning ascribed thereto in the
Preamble.
"PER SHARE VALUE": has the meaning ascribed thereto in Section
3.3.
"REMOTE REWARD": has the meaning ascribed thereto in the
Preamble.
"REPRESENTATIONS AND
WARRANTIES AGREEMENT": has the meaning ascribed to it in the
recitals of this Agreement.
"SECOND CAPITAL INCREASE": has the meaning ascribed thereto in Section
2.1.
"SECOND CLOSING DATE": means, alternatively, (i) the date on which
the ABSA Shares 2 shall be subscribed for
and fully paid by the Investors, or (ii) the
date on which the Warrants 2004 shall be
exercised and the ABSA Shares 3 shall be
subscribed for and fully paid by the
Investors.
"SECURITY": any security or right, which at any time
reflects a portion of the capital of the
Company or which gives a right, immediately
or in the future, by way of conversion,
exchange, reimbursement or exercise of a
coupon or in any other manner whatsoever, to
the attribution, exchange or subscription to
a security representing a portion of the
capital or voting rights of the Company.
"SHAREHOLDER
RESOLUTIONS": has the meaning ascribed to it in Section
3.1 of this Agreement.
"SHAREHOLDERS
AGREEMENT": has the meaning ascribed to it in the
recitals of this Agreement.
"SHARES": means the outstanding shares of the Company
as at the date hereof.
"TRANSACTION
DOCUMENTS": means this Agreement, the Shareholders'
Agreement and the Representations and
Warranties Agreement
"TRIGGERING
TRANSACTION": has the meaning ascribed thereto in Section
3.3 of this Agreement.
"VALUATION CRITERIA": has the meaning ascribed thereto in Section
3.3.
"WARRANTS": has the meaning ascribed to it in Section
2.3.
"WARRANTS 2004": has the meaning ascribed to it in Section
2.3.
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ARTICLE 2 - TERMS AND CONDITIONS OF THE INVESTMENT
2.1 DESCRIPTION OF THE INVESTMENT
On the terms and subject to the conditions of this Agreement, the
Investors shall subscribe for an aggregate of 3,858,678 actions a bons
de souscription d'actions ("ABSA SHARES").
The Investment shall consist in two successive capital increases of the
Company:
- as described more fully in Section 2.3, and subject to the
satisfaction of the conditions set forth in Article 4, a first
increase in the Company's share capital in a total amount, issuance
premium included, of seven million four hundred eighty eight
thousand six hundred ninety three Euros and sixty cents (EUR
7,488,693.60) (the "FIRST CAPITAL INCREASE"), which will be
completed on January 2, 2004; and
- as described more fully in Section 2.4, a second increase in the
Company's share capital in a total amount, issuance premium
included, of seven million five hundred twelve thousand nine hundred
eighty eight Euros and ninety eight cents (EUR 7,512,988.98) (the
"SECOND CAPITAL INCREASE"), which will be completed on or before
March 15, 2004. The Second Capital Increase will be (i) if any of
the conditions set forth in Article 8 does not exist on February 23,
2004, pursuant to subscription by the Investors for the ABSA Shares
2, or (ii) if all of the conditions set forth in Article 8 exist on
February 23, 2004, by exercise of the Warrants 4 and subscription by
the Investors for the ABSA Shares 3.
The proceeds of the Investment shall be used to fund the capital
requirements of the Business Plan of the Company attached as EXHIBIT G
hereto, as such Business Plan may be duly modified after the Closing by
the Board of Directors of the Company, to fund the capital requirements
of future Business Plans to be duly approved by the Board of Directors
of the Company and generally to meet the cash requirements of the
Company in the ordinary course.
Set forth on EXHIBIT B is the allocation of the Company's share
capital, on a Fully Diluted basis, (i) immediately following the
consummation of the First Capital Increase and (ii) immediately
following the consummation of the Second Capital Increase.
2.2 PAYMENTS IN ESCROW
Each Investor undertakes to pay into escrow, on or before December 19,
2003 (or, if later, within two (2) business days after satisfaction of
the conditions set forth in Sections 4(a) and (b)), its total maximum
share of the Investment, pursuant to the terms of an escrow agreement
(the "ESCROW AGREEMENT") to be executed among the Investors, the
Company and HSBC, as the escrow agent thereunder (the "ESCROW AGENT"),
such escrow agreement to be agreed upon between the Investors, the
Company and the Escrow Agent. The amount to be so paid into escrow by
each Investor is as follows:
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- AGF Innovation 3: Euros 3,000,337;22,
- AGF Innovation 4: Euros 2,500,281
- AGF Innovation 5: Euros 1,000,112.40;
- MWGL: Euros EUR 4,250,475.98; and
- Nam Tai: Euros 4,250,475.98.
The Escrow Agreement shall instruct the Escrow Agent as follows:
- within two (2) business days after the date on which the Escrow
Agent shall have received subscription forms from all of the
Investors for the number of ABSA Shares 1 set forth opposite their
names in Section 2.3, but not earlier than January 2, 2004, the
Escrow Agent shall transfer to the Company's account opened for the
purposes of the First Capital Increase the amounts held in escrow
corresponding to the amount of the First Capital Increase and to the
Company's regular account any interest earned thereon;
- if the Escrow Agent has not received the subscription forms of all
of the Investors on or before January 15, 2004, then the Escrow
Agent shall transfer to each Investor its pro rata portion of the
First Capital Increase and of the Second Capital Increase, together
with the interest earned thereon (unless otherwise instructed by
each Investor with respect to its portion thereof).
The amounts held in escrow and corresponding to the amount of the
Second Capital Increase shall be released by the Escrow Agent in
accordance with Article 8 below.
2.3 THE FIRST CAPITAL INCREASE
The First Capital Increase shall consist of 2,858,280 ABSA Shares (the
"ABSA SHARES 1") per value of Euro 0.01, which shall be issued for a
global subscription price of Euros 7,488,693.60, resulting in a global
premium of Euros 7,460,110,80. The price per ABSA Share 1 shall be
Euros 2.62, i.e. with a premium of Euros 2.61 per ABSA Share 1.
Subject to the satisfaction of the conditions set forth in Article 4,
each Investor agrees severally, and not jointly, to so subscribe for
the number of ABSA Shares 1 for the subscription price set forth
opposite such Investor's name below:
- AGF Innovation 3: 571,656 ABSA Shares 1 for a price of Euros
1,497,738.72, AGF Innovation 4: 476,380 ABSA Shares 1 for a price of
Euros 1,248,115.60 and AGF Innovation 5: 190,552 ABSA Shares 1, for
a price of Euros 499,246.24;
- MWGL: 809,846 ABSA Shares 1, for a total subscription price of Euros
2,121,796.52;
- Nam Tai: 809,846 ABSA Shares 1, for a total subscription price of
Euros 2,121,796.52.
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Each ABSA Share 1 shall consist of one Class B Share, with attached
thereto:
- one anti-dilution warrant as described under Article 3.3 below (the
"WARRANTS");
- and one additional warrant as described under Article 3.4 below (the
"WARRANTS 2004").
No Investor shall be bound to subscribe to its part of the ABSA Shares
1 as mentioned above in case of breach by any other Investor of its
obligation to subscribe, as provided in Section 11.3 below.
The closing of the subscription for the ABSA Shares 1 by the Investors
(the "FIRST CLOSING") is subject to the satisfaction or waiver by the
Investors of the conditions set forth in Article 4 below and shall
occur on the later of (i) January 2, 2004 and (ii) the third business
day following satisfaction, or waiver by the Investors, of the
conditions set forth in Article 4 below. If the Closing has not
occurred on or before January 15, 2004, then, as provided in Article 11
below, any Investor may terminate this agreement as to such Investor.
2.4 THE SECOND CAPITAL INCREASE
The Second Capital Increase shall consist of 1,000,398 ABSA Shares (the
"ABSA SHARES 2") par value of 0.01 Euro, which shall be issued for a
global subscription price of Euros 7,512,988.98, resulting in a global
premium of Euros 7,502,985.00. The price per ABSA Share 2 shall be
Euros 7.51, i.e. with a premium of Euros 7.50 per ABSA Share 2.
If any of the conditions set forth in Article 8 does not exist as
determined pursuant to the procedure set forth in Article 8, each
Investor agrees severally, and not jointly, to subscribe for the number
of ABSA Shares 2 set forth opposite such Investor's name:
- AGF Innovation 3: 200,080 ABSA Shares 2 for a price of Euros
1,502,600.80, AGF Innovation 4: 166,733 ABSA Shares 2 for a price of
Euros 1,252,164.83 and AGF Innovation 5: 66,693 ABSA Shares 2 for a
price of Euros 500,864.43;
- MWGL: 283,446 ABSA Shares 2, for a total subscription price of Euros
2,128,679.46;
- Nam Tai: 283,446 ABSA Shares 2, for a total subscription price of
Euros 2,128,679.46.
Each ABSA Share 2 shall consist of one Class B Share with one Warrant
attached thereto.
No Investor shall be bound to subscribe to its portion of the ABSA
Shares 2 as mentioned above in case of breach by any other Investor of
its obligation to subscribe, as provided in Section 11.3 below.
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ARTICLE 3 - CORPORATE ACTION
3.1 RESOLUTIONS
Remote Reward and the Founders undertake to cause the Company to
convene an Extraordinary Shareholders Meeting to be held on or prior to
December 15, 2003 to approve the resolutions attached hereto as EXHIBIT
C (the "SHAREHOLDERS RESOLUTIONS"), providing for the First Capital
Increase and the Second Capital Increase, the creation of the Class B
Shares, the Warrants and the Warrants 2004 comprising the ABSA Shares
1, the creation of the Class B Shares and the Warrants comprising the
ABSA Shares 2, the waiver by the shareholders of the Company to their
preferential rights to subscribe for the ABSA Shares 1 and for the ABSA
Shares 2 and the Class B Shares to be issued upon exercise of the
Warrants and the Warrants 2004 and the other matters set forth therein
relating to the Investment and the terms and conditions thereof.
The Founders shall inform the Investors as to the scheduled date of the
Extraordinary Shareholders Meeting. At the Extraordinary Shareholders
Meeting, the Founders and Remote Reward undertake to vote to approve
the Shareholders Resolutions; provided, however, that such contractual
obligation to vote in favor of the Resolutions shall not apply to the
resolution therein concerning increase of the share capital of the
Company to the benefit of employees of the Company.
3.2. RIGHTS AND PRIVILEGES ATTACHED TO CLASS B SHARES
As set forth in the Shareholders Resolutions, two categories of shares
of the Company shall be created by the Extraordinary Shareholders
Meeting, with the rights and privileges as more fully set forth
therein, which are summarized as follows:
All existing shares of the Company shall be converted into Class A
Shares, and shares to be subscribed for upon exercise of the Employee
Warrants shall be Class A Shares.
The Class B Shares shall entitle their holders to receive a liquidation
preference in case of winding-up of the Company (the "LIQUIDATION
PREFERENCE"), pursuant to which any net proceeds of liquidation, after
paying up all liabilities of the Company (except for the unpaid portion
of any Shareholder Loans (as such term is defined in the Shareholders'
Agreement)) and after reimbursement to all shareholders, regardless of
their share category, of the nominal value of their shares (the "NET
PROCEEDS OF LIQUIDATION"), shall be used to reimburse the Class B
Shareholders in priority as set forth below, with the balance of the
Net Proceeds of Liquidation to be distributed to Class A Shareholders
pro-rata based on their respective shareholding interests; provided,
however, that there shall be no Liquidation Preference if the Net
Proceeds of Liquidation are greater than (i) twenty-nine million nine
hundred sixty-six thousand and six hundred and seventy Euros (EUR
29,966,670) (if the ABSA Shares 2 are subscribed for by the Investors)
or (ii) fourteen million nine hundred eighty-three thousand and three
hundred and thirty-five Euros (EUR 14,983,335) (if the ABSA Shares 2
are not subscribed for by the Investors).
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3.2.1 If the ABSA Shares 2 are subscribed for by the Investors, then
the amount of the Liquidation Preference shall be calculated as follows:
(a) if Net Proceeds of Liquidation are less than ten million Euros
(EUR 10,000,000):
- then the Liquidation Preference payable to all Class
B Shareholders shall be an amount Y, calculated in
Euros:
Y = X * 0.8
where X equals the Net Proceeds of Liquidation
and
- the Liquidation Preference payable to each Class B
Shareholder shall be equal to an amount Z, calculated
in Euros:
Z = (Y ) * (N/NB)
where N equals the number of Class B Shares held by
such Class B Shareholder and NB equals the total
number of Class B Shares issued.
(b) if the Net Proceeds of Liquidation are at least ten million
Euros (EUR 10,000,000), but less than twenty million Euros
(EUR 20,000,000):
- then the Liquidation Preference payable to all Class
B Shareholders shall be an amount Y, calculated in
Euros as follows:
Y = (EUR 6,000,000) + (X * 0.2)
where X equals the Net Proceeds of Liquidation:
and
- the Liquidation Preference payable to each Class B
Shareholder shall be equal to an amount Z, calculated
in Euros :
Z = (Y ) * (N/NB)
where N equals the number of Class B Shares
held by such Class B Shareholder and NB equals the
total number of Class B Shares issued.
(c) if the Net Proceeds of Liquidation is at least twenty million
Euros (EUR 20,000,000), but less than twenty-nine million nine
hundred sixty-six thousand and six hundred and seventy Euros
(EUR 29,966,670):
- then the Liquidation Preference payable to all Class
B Shareholders shall be equal to EUR 10,000,000; and
- the Liquidation Preference payable to each Class B
Shareholder shall be equal to an amount Z, calculated
in Euros :
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Z = (EUR 10,000,000) * (N/NB)
where N equals the number of Class B Shares
held by such Class B Shareholder and NB equals the
total number of Class B Shares issued.
3.2.2 If the ABSA Shares 2 are not subscribed for by the Investors,
then the amount of the Liquidation Preference shall be calculated as
follows:
(a) if Net Proceeds of Liquidation are less than five million
Euros (EUR 5,000,000):
- then the Liquidation Preference payable to all Class
B Shareholders shall be an amount Y, calculated in
Euros:
Y = X * 0.8
where X equals the Net Proceeds of
Liquidation
and
- the Liquidation Preference payable to each Class B
Shareholder shall be equal to an amount Z, calculated
in Euros:
Z = (Y ) * (N/NB)
where N equals the number of Class B Shares
held by such Class B Shareholder and NB equals the
total number of Class B Shares issued.
(b) if the Net Proceeds of Liquidation are at least five million
Euros (EUR 5,000,000), but less than ten million Euros (EUR
10,000,000):
- then the Liquidation Preference payable to all Class
B Shareholders shall be an amount Y, calculated in
Euros as follows:
Y = (EUR 3,000,000) + (X * 0.2)
where X equals the Net Proceeds of
Liquidation: and
- the Liquidation Preference payable to each Class B
Shareholder shall be equal to an amount Z, calculated
in Euros :
Z = (Y ) * (N/NB)
where N equals the number of Class B Shares
held by such Class B Shareholder and NB equals the
total number of Class B Shares issued.
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(c) if the Net Proceeds of Liquidation is at least ten
million Euros (EUR 10,000,000), but less than fourteen million
nine hundred eighty-three thousand and three hundred and
thirty-five Euros (EUR 14,983,335):
- then the Liquidation Preference payable to all Class
B Shareholders shall be equal to EUR 5,000,000; and
- the Liquidation Preference payable to each Class B
Shareholder shall be equal to an amount Z, calculated
in Euros :
Z = (EUR 5,000,000) * (N/NB)
where N equals the number of Class B Shares held by
such Class B Shareholder and NB equals the total number of
Class B Shares issued.
3.3 WARRANTS
The Shareholder Resolutions provide for the rights and characteristics
of the Warrants, which are summarized as follows:
The Warrants shall expire on the fifth anniversary of the Extraordinary
Shareholders Meeting. Notwithstanding the foregoing, any unexercised
Warrants shall be deemed to be null and void upon listing of the Shares
of the Company on a regulated market.
Each Warrant shall give the right to subscribe for a number of Class B
Shares as hereafter determined, at a subscription price equal to the
then par value of Class B Shares, without any premium.
The Warrants shall become exercisable upon the occurrence of any of the
following transactions (a "TRIGGERING TRANSACTION") with respect to the
share capital of the Company if the Company issues any Security,
including any Security issued in respect of any merger (fusion) or any
partial contribution of assets (apport partiel d'actifs), but not
including any Security issued:
- as a result of the exercise of warrants (bons de
souscription d'actions, bons de souscription de parts
de createur d'entreprise, options de souscription
d'actions) issued in favour of employees or
consultants of the Company or any of its
subsidiaries;
- as a result of the incorporation of premiums or
reserves into the share capital of the Company;
- as a result of the prior exercise of the Warrants or
the Warrants 2004;
provided, that the issuance price, exchange value, conversion value,
subscription price or repurchase price per share to which the Security
gives a right (or the average price per such share) at which the
Triggering Transaction occurs (the "PER SHARE VALUE") is less than "P"
(as defined below), it being understood that this price shall be
adjusted to take into account, if necessary, any other transactions
that would have occurred prior to the Triggering Transaction and which
would have resulted in an adjustment of the rights of the holders of
Warrants pursuant to French law.
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In the event the Per Share Value is not a determined cash amount, the
Founders and Remote Reward, on the one hand, and the Investors, on the
other hand, shall in good faith consult with each other in order to
agree with respect to the Per Share Value. If the Founders and Remote
Reward, on the one hand, and the Investors, on the other hand, are
unable to agree with respect to the Per Share Value within five (5)
days after the request of any of the Investors, Remote Reward or the
Founders, then any of the Founders, Remote Reward or any Investor may
request by notice to the others that such Per Share Value be determined
by an expert evaluation as set forth below. Within 10 days after any
such notification, the Founders and Remote Reward, on the one hand, and
the Investors, on the other hand, shall each designate by notice to the
other an expert, which shall be a first-rank investment bank with
offices in Paris, with demonstrated significant experience in mergers
and acquisitions in Europe and in particular in the valuation of
companies in the telecommunications industry with activities in Europe.
If either of the Founders and Remote Reward, on the one hand, or the
Investors, on the other hand, shall fail to so designate such an
expert, such expert shall be designated by the Paris Tribunal de
Commerce, ruling in refere proceedings without appeal, based on request
by the other. Any expert so appointed shall act as a third party within
the meaning of article 1592 of the French Civil Code, and not as an
arbitrator.
The experts shall be instructed to determine the Per Share Value based
on valuation methods relevant to the Triggering Transaction and the
entities concerned, including, as applicable, the cash requirements of
the relevant entity and considering the valuation method of
price-per-engineer (if the relevant entity is in the telecom industry,
with consideration given to the relative weight of design functions as
compared to other activities of such the relevant entity and to
software engineers as compared to hardware engineers) (collectively,
the "VALUATION CRITERIA").
Each expert so designated shall be instructed by the appointing party
to deliver its determination to all of the Parties and to the Company,
together with all supporting calculations and justification within
fifteen (15) days after its appointment. The Parties shall cause the
Company to provide to both experts all supporting documentation
reasonably requested by either expert in respect of its determination
and shall otherwise cooperate with the experts. The Founders and Remote
Reward, on the one hand, shall bear the fees and expenses of the expert
appointed by or on behalf of them, and the Investors, on the other
hand, shall bear the fees and expenses of the expert appointed by or
behalf of them.
If the higher of the Per Share Values as determined by the two experts
does not exceed the lower of the Per Share Value by an amount equal to
or greater than 33% of the lower of such Per Share Values, then the Per
Share Value shall be deemed to be the average of the two Per Share
Values as determined by the two experts. If, however, the higher of the
Per Share Values as determined by the two experts exceeds the lower of
such Per Share Values by an amount equal to or greater than 33% of the
lower of such Per Share Values, then the Founders, Remote Reward and
the Investors shall meet within ten (10) days after the receipt of the
second expert evaluation in order to agree with respect to the Per
Share Value. If they shall fail to so agree, a third expert shall be
designated in accordance with the following paragraph.
13
The third expert shall be appointed by the Paris Tribunal de Commerce
based on request by any of the Parties hereto, and shall be a
first-rank investment bank with offices in Paris, with demonstrated
significant experience in mergers and acquisitions in Europe and in
particular the valuation of companies in the telecommunications
industry with activities in Europe and with no conflict of interest
with any of the shareholders or of the Company. The expert shall be
instructed to base its determination of the Per Share Value on the
Valuation Criteria and to deliver its determination to the Parties and
the Company within fifteen (15) days after its appointment. The Parties
hereto shall share equally the fees and expenses of such expert. The
Per Share Value shall be deemed to be the average of (i) the Per Share
Value as determined by such third expert and (ii) the Per Share Value
determined by one of the two first experts that shall be the closest to
the Per Share Value determined by such third expert.
Upon occurrence of a Triggering Transaction, a holder of Warrants shall
be entitled to exercise its Warrants, in whole or in part, at any
moment prior to the expiration of the Warrants. For the avoidance of
doubt, if, upon occurrence of a Triggering Transaction, a holder of
Warrants does not exercise part or all of its Warrants in the
conditions set forth above, such holder would be entitled to exercise
any remaining Warrants in the conditions set forth above with respect
to any further Triggering Event.
In case the Warrants would become exercisable in the conditions set
forth above, each Warrant shall give the right to subscribe for, at the
par value of the Class B Shares of the Company on the exercise date, a
number "NA" of Class B Shares, determined as follows:
P - V
NA = ---------------
V - VN
Where:
"P" equals (i) in the event that the ABSA Shares 2 are subscribed for
by the Investors, EUR 3.89, or (ii) in the event that the ABSA Shares 2
are not subscribed for by the Investors, EUR 1.94, such amounts to be
adjusted, if necessary, to take into account any division or grouping
of the shares which would result in an adjustment of the rights of the
holders of the Warrants under French law,
"VN" is the par value of a Class B Share on the exercise date (i.e.
Euro 0.01 on the Closing Date),
"V" is the average Per Share Value in the Triggering Transaction.
It being specified that "NA" shall, in any case, be capped at a number
of six (6).
14
As an example, assuming that (i) the ABSA Shares 2 have been subscribed
for and (ii), during the exercise period of the Warrants, shares are
issued for a price per share equal to EUR 2.50 (V), and the par value
of B Shares remains EUR 0.01 (VN), each Warrant would entitle its
holder to subscribe, at par value, to the following number shares:
3.89 - 2.50 1.39
NA = ---------------- = ------------
2. 50 - 0.01 2.49
NA = 0.558
Each holder of Warrants shall be entitled to subscribe only a whole
number of Class B Shares. The total number of Class B Shares resulting
from the exercise of the Warrants by each Investor shall be rounded
down to a whole number of shares in case of decimals.
3.4 WARRANTS 2004
The Shareholder Resolutions provide for the rights and characteristics
of the Warrants 2004, which are summarized as follows:
The Warrants 2004 shall be exercisable from March 16, 2004 until April
15, 2004, provided that the Warrants 2004 may only be exercised if the
Investors shall not be required in accordance with Article 8 of this
Agreement to subscribe for the ABSA Shares 2. The Warrants 2004 shall
thus become null and void (i) on the date of subscription for the ABSA
Shares 2, or (iii) in any case on April 15, 2004, if not validly
exercised prior thereto.
The Warrants shall give the right to subscribe for a total number of
1,000,398 ABSA Shares, each comprised of one Class B Share, per value
Euro 0.01 per Share, with one Warrant attached thereto (the "ABSA
SHARES 3").
Each Warrant 2004 shall give the right to subscribe for 0.35 ABSA
Shares 3.
ARTICLE 4 - CONDITIONS TO THE FIRST CLOSING
The obligation of each Investor to subscribe for the ABSA Shares 1 created by
the First Capital Increase is subject to the following conditions being
satisfied (or waived by such Investor):
(a) approval by the extraordinary shareholders meeting of the Company
to be held on November 12, 2003 of:
(i) the reduction in the share capital of a total amount
of Euros 9,943,063.561 by reduction of the par value
of the shares from Euros 5.37 to Euros 3.8317 on the
basis of the report of the statutory auditor of the
Company;
(ii) the reduction in the share capital of a total amount
of Euros 24,702,207.64
15
by reduction of the par value of the shares from
Euros 3.8317 to Euro 0.01 on the basis of the report
of the statutory auditor of the Company, subject to
the absence of objections of the creditors of the
Company during the Objection Period;
(b) approval by the Extraordinary Shareholders Meeting of the
Shareholder Resolutions and in particular of:
(i) the creation of two categories of shares, the
approval of the rights and obligations attached to
each category of shares and the modifications to be
made accordingly to the articles of association of
the Company, on the basis of a report of a special
appraiser ("Commissaire aux avantages particuliers")
in accordance with Section L 225-147 of the French
Commercial Code and the conversation of existing
shares to class A shares, subject to the final
completion of the Capital Increase;
(ii) the conversion of existing shares to Class A Shares;
(iii) the creation of the Class B Shares and the Warrants
constituting the ABSA Shares 1 and the ABSA Shares 2,
the approval of the First Capital Increase and of the
Second Capital Increase and a waiver by the Current
Shareholders of their preferential rights to
subscribe for the ABSA Shares 1 and for the ABSA
Shares 2, on the basis of the report of the statutory
auditor of the Company and of a report of a special
appraiser ("commissaire aux avantages particuliers")
in accordance with Section L 225-147 of the French
Commercial Code;
(iv) the appointment of new members of the board of
directors of the Company so that the composition of
the board is in full compliance with the
Shareholders' Agreement on the Closing Date, subject
to the final completion of the Capital Increase;
(v) amendment of the statuts of the Company to reflect
the actions taken in the Shareholder Resolutions; and
(vi) the cancellation of all warrants (BSPCE) issued by
the Company to the benefit of employees or managers
of the Company except the Employee Warrants (i.e. all
warrants issued prior to June 19, 2002), with the
approval of all holders of such warrants.
(c) expiration of the Objection Period without any creditor of the
Company having challenged the second reduction in the share capital
referred to in Section 3(a)(ii);
(d) execution by each holder of Employee Warrants (except for any such
holder who is a party to the Shareholders Agreement) of (i) a
French translated version of the Contractual Undertaking attached
as EXHIBIT D (the "CONTRACTUAL UNDERTAKING") and (ii) a waiver
letter in the form attached in EXHIBIT E hereto;
(e) absence of any resignation, dismissal, disability or death
affecting any Key Employee (as defined in the Shareholders
Agreement);
16
(f) execution by each of the Key Employees of a French version of the
agreement, substantially in the form attached as EXHIBIT F hereto,
providing for non-compete commitments;
(g) the purchase, at the Closing, by Remote Reward of the ten Shares
held by ▇▇▇▇ ▇▇▇▇▇▇▇;
(h) compliance by the Founders with the provisions of Article 5
hereunder;
(i) absence of any significant change to the Business Plan of the
Company as attached in EXHIBIT G hereto; and
(j) execution by Remote Reward and ▇▇▇▇▇ ▇▇▇▇▇▇▇ of the share pledge
agreements referenced in Section 3.9 of the Representations and
Warranties Agreement.
ARTICLE 5 - DOCUMENTS TO BE EXCHANGED AT FIRST CLOSING
5.1. At the First Closing, each Investor shall deliver to the Escrow Agent
(with copy to the Company) a duly executed subscription form (bulletin
de souscription) for the number of ABSA Shares 1 subscribed for by it
as provided in Section 2.3.
5.2. At the First Closing, each Investor shall receive:
(a) all documents relating to the reductions in the share capital
of the Company mentioned in Paragraph 4 of the Recitals and in
Section 3(a) above, and in particular: (i) certified copies
(certifiees conformes) of the minutes of the meeting of the
Board of Directors dated October 15, 2003, of the minutes of
the meeting of the Works Council of the Company dated October
17, 2003, of the minutes of the meeting of the Board of
Directors dated October 22, of the report of the Board to the
shareholders meeting dated November 12, 2003, of the minutes
of the shareholders meeting to be held on November 12, 2003
and of the acknowledgment by the President that no creditor
has challenged such reduction, (ii) copies of the reports of
the statutory auditors of the Company on the reductions in the
share capital, (iii) and all documents evidencing that all
publication formalities regarding such capital reduction have
been duly performed;
(b) a certified copy (certifiee conforme) of the minutes of the
Extraordinary Shareholders Meeting;
(c) a certified copy of the minutes of the board meeting that
convened the Extraordinary Shareholders Meeting;
(d) a certified copy of the report of the board to the
Extraordinary Shareholders Meeting;
(e) a certified copy of the amended statuts of the Company;
17
(f) a copy of the special appraiser's (commissaire aux avantages
particuliers) reports;
(g) a copy of the statutory auditor's reports to the general
meeting to be held on November 12, 2003, regarding the
reductions in the share capital referenced in Paragraph 4 of
the recitals, and to the Extraordinary Shareholders Meeting,
regarding the First and Second Capital Increases;
(h) a copy of the Contractual Undertaking executed by all current
holders of Employee Warrants (except those who are parties to
the Shareholders' Agreement);
(i) a copy of the non-compete agreement executed by the Key
Employees;
(j) an attestation d'inscription en compte (share certificate) by
the Company reflecting the recording of such Investor on the
books of the Company as a holder of the number of Class B
Shares and Warrants subscribed for by it;
(k) evidence of the purchase by Remote Reward of the ten Shares
owned by ▇▇▇▇ ▇▇▇▇▇▇▇;
(l) a copy of the waiver letters executed by all holders of
Employee Warrants; and
(m) a copy of the share pledge agreements referenced in Section
3.9 of the Representations and Warranties Agreement, executed
by Remote Reward and ▇▇▇▇▇ ▇▇▇▇▇▇▇.
ARTICLE 6 - MANAGEMENT OF THE COMPANY UNTIL THE FIRST CLOSING DATE
Except as required to comply with the terms of this Agreement, the Founders
shall manage the Company and conduct its Business as a bon pere de famille (in a
reasonably prudent manner) and shall cause the Company not to take any material
action out of the ordinary course prior to the Closing Date without the prior
unanimous agreement of the Investors. In particular, the Company shall not take
any of the actions set forth in Section 2.3 paragraphs (ii) and (iii) of the
Shareholders' Agreement without the unanimous consent of the Investors, such
consent not to be unreasonably withheld.
ARTICLE 7 - MANAGEMENT OF THE COMPANY AFTER THE FIRST CLOSING DATE
7.1. EMPLOYEE WARRANTS
The Parties shall cause the Company to create, immediately after the
Closing Date, an additional warrant pool (in the form of bons de
souscription de parts de createur d'entreprise ("BSPCE")) for the
benefit of the employees of the Company, giving right to up to an
aggregate amount of 230,000 new Class A Shares, i.e. 1.99% of the total
number of Shares immediately following the consummation of the Second
Capital Increase, on a Fully Diluted basis, under conditions (vesting,
duration, etc.) to be determined by the Board of Directors, which shall
be allocated as indicated on
18
Schedule 2.22(ii) of the Representations and Warranty Agreement. The
Parties agree that, as a prior condition to the granting to any
employee of the Company of any such BSPCEs, such employee shall be
required to enter into a Contractual Undertaking (except for any such
employee who is a party to the Shareholders Agreement or has prior to
such grant already executed the Contractual Undertaking).
The Parties shall promptly after the Closing Date cause the Company to
cancel the existing Employee Warrants with the approval of their
holders and to issue 1,023,671 new BSPCEs with the same conditions of
the existing Employee Warrants except for (i) the exercise price of
such BSPCE, which shall be Eur 3.89, and (ii) the vesting period which
shall be reduced, if applicable, to take into account the vesting
already acquired by holders of Employee Warrants. The Parties shall
cause the Board of Directors of the Company to take all action
necessary (A) to grant to all employees holding Employee Warrants as of
the Closing Date the same number of such new BSPCEs as the number of
Employee Warrants held by them on the Closing Date and (B) to grant all
or a portion of the remainder of such 1,023,671 BSPCEs as follows:
▇▇▇▇▇ ▇▇▇▇ (770 new BSPCEs), ▇▇▇▇▇ ▇▇▇▇▇ (770 new BSPCEs), ▇▇▇▇▇
▇▇▇▇▇▇▇ (1,920 new BSPCEs, provided that he becomes an employee of the
Company) and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (such number of such new BSPCEs, not to
exceed 5,000, to be granted in accordance with the terms of his current
bonus arrangement based on 2003 performance).
7.2 MANAGEMENT - INSURANCE
7.2.1 The Parties shall use commercially reasonable efforts to obtain, within
90 days after the Closing Date, proposals from recognized and
established insurance providers in order for the Company to enter into
an individual life insurance policy of not less than Euros 1 million
for each Key Employee and ▇▇▇▇▇ ▇▇▇▇▇▇▇ (Key man insurance) with the
Company designated as beneficiary.
The Parties shall submit the proposals received to the Board of
Directors of the Company in order for the Board of Directors to decide
upon such proposals within three months after the date hereof.
7.2.2 The Founders shall use commercially reasonable efforts to obtain,
within 90 days after the date hereof, proposals from recognized and
established insurance providers in order for the Company to enter into
a Directors and Officers Liability insurance policy (without payment of
an excessive premium).
7.3 ISSUANCE PREMIUM
The Parties agree that the issuance premium resulting from the transactions
contemplated hereby shall be used to offset, if applicable, future losses of the
Company and agree to take all actions as shareholders of the Company to ensure
that such issuance premium is not distributed to the shareholders of the Company
before the expiry of a one (1)-year period from the Closing Date.
19
ARTICLE 8 - CONDITIONS TO THE SUBSCRIPTION OF THE ABSA SHARES 2
The Investors shall subscribe for the ABSA Shares 2 unless all of the following
conditions exist, as of February 23, 2004:
1. The WLAN solution does not meet the current expectations for such
solution in all of the following ways:
(i) the Balsa 1 chip area is not less than 30 mm2,
(ii) the current consumption of the Balsa 1 chip, when the chip is
in active mode, is more than 250 mA,
(iii) performance of the physical layer (modem) are not compliant
with IEEE 802.a/b/g standards,
(iv) the Salsa "alpha" critical CISF reaction times are not
achieved, and
(v) the Salsa "alpha" RAM code plus data total footprint is not
more than 256 Kilo Octets.
2. Stepmind has not received purchase commitments, in writing, for ▇▇▇▇▇
GSM/GPRS or GSM/GPRS/EDGE radio chips to be included in handset
platforms having a yearly production plan of at least two million
units.
3. Following a WLAN pipeline qualification process, pursuant to which two
members of the Board of Directors (one of whom shall be a
representative of AGF PE on the Board of Directors) shall participate
in contacts, organized by the Company, with potential customers of
▇▇▇▇▇ W2 and Salsa, at least two potential customers shall not have
confirmed orally or in writing that (i) if the specifications shown by
the MPWa versions of ▇▇▇▇▇ W2 and Salsa are confirmed with the
production versions, then they consider that the Company's offer is
competitive on a technical basis and that they will afford the Company
the possibility to participate in a selection process during 2004, and
(ii) based on the specifications of the Company's products, they
project any aggregate requirement of (x) at least 1,000,000 units of
▇▇▇▇▇ W2 or (y) at least 150,000 units of Salsa, for which their
decision will be made during the subsequent twelve (12) months.
20
The Parties agree to cause the Board of Directors of the Company to meet not
earlier than February 23, 2004, but not later than March 5, 2004 (and, in any
event, as close as possible to the dates of the 3GSM Convention to be held in
Cannes) in order to discuss and decide in good faith whether the foregoing
conditions exist as of February 23, 2004. The Parties undertake to cause their
respective representatives on the Board of Directors to be present or
represented at such meeting, and, if such meeting is not held on that date (or
such other date as shall be agreed in writing by all parties hereto), as a
result of the failure to achieve the required quorum, then, (i) if the
representatives of AGF PE shall have failed to be present or represented at such
meeting, but the representatives of Remote Reward and ▇▇▇▇▇ ▇▇▇▇▇▇▇ were present
or represented at such meeting, it shall be deemed for purposes of this
Agreement that all of the foregoing three conditions do not exist (and the
Investors shall then be committed to subscribe for the ABSA Shares 2), or (ii)
if the representatives of AGF PE were present or represented at such meeting,
but the representatives of ▇▇▇▇▇ ▇▇▇▇▇▇▇ and Remote Reward were not present or
represented at such meeting, it shall be deemed for purposes of this Agreement
that all of the foregoing three conditions do exist (and the Investors shall
then not be committed to subscribe for the ABSA Shares 2),.
The Parties shall cause the Board of Directors to provide to each Party and the
Escrow Agent, within three (3) days after such meeting, a copy of the minutes of
the Board of Directors, signed by at least 5/7ths of the directors present or
represented at such meeting, setting forth the discussions of the Board of
Directors and its decision as to whether all of the three conditions set forth
above exist as of February 23, 2004.
Unless all of the three conditions set forth above are met as of February 23,
2004, the Investors shall execute and deliver to the Escrow Agent (with a copy
to the Company) the bulletins de souscription providing for the subscription by
the Investors for the ABSA Shares 2 within two (2) business days following
receipt of the minutes of the meeting of the Board of Directors mentioned above
(or the deemed non-existence of the four conditions set forth above, as the case
may be).
The Escrow Agreement shall instruct the Escrow Agent as follows with respect to
the Second Capital Increase:
In the event the minutes of the meeting of the Board of Directors convened to
decide with respect to the existence of the three conditions set forth above
shall indicate the decision of the Board of Directors that any of the three
conditions set forth above did not exist as of February 23, 2004, then the
Escrow Agent shall, within two (2) business days after receipt from all of the
Investors of the bulletins de souscription for the Second Capital Increase,
transfer all funds held in escrow to the Company, to the account opened
specifically for the purpose of the Second Capital Increase and transfer any
interest earned thereon to the regular account of the Company (the coordinates
of both accounts to be provided to the Escrow Agent by the Company)
In the event such minutes shall indicate the decision of the Board of Directors
that all of the three conditions set forth above existed as of February 23,
2004, or in case the Escrow Agent has not received the minutes of the Board duly
signed in accordance with the provisions hereof, then the Escrow Agent shall,
within two (2) business days after receipt by the Escrow Agent of such minutes,
transfer all funds held in escrow corresponding to the amount of the Second
Capital Increase, together with any interest earned thereon, to the Investors,
such
21
funds to be allocated among the Investors pro rata based on their portion of the
Second Capital Increase as set forth in Section 2.4 above.
In the event that the Escrow Agent has not received the minutes of the Board of
Directors on or before March 15, 2004, the Escrow Agent shall transfer all funds
held in escrow corresponding to the amount of the Second Capital Increase,
together with any interest earned thereon, to the Investors, such funds to be
allocated among the Investors pro rata based on their portion of the Second
Capital Increase as set forth in Section 2.4 above.
ARTICLE 9 - MANAGEMENT OF THE COMPANY FROM THE CLOSING DATE TO THE SECOND
CLOSING DATE
From the Closing Date until the Second Closing Date, the Parties agree that no
shareholders' meeting shall be convened and no decision shall be made by the
shareholders during a general meeting without the prior approval of all
Investors.
ARTICLE 10 - LAW - JURISDICTION
This Agreement shall be governed by and construed in accordance with French law.
Any dispute arising out of or relating to this Agreement shall be submitted to
the jurisdiction of the competent court in the jurisdiction of the Court of
Appeals of Paris, to which the Parties hereby irrevocably agree.
ARTICLE 11 - TERM AND TERMINATION OF THIS AGREEMENT
11.1 This Agreement shall become effective upon its signature and shall
cease being effective after all undertakings and obligations of all
Parties under this Agreement or pursuant to the provisions of this
Agreement have been fulfilled or waived, or until this Agreement has
been validly terminated in accordance with this Article 11, except for
provisions which by nature are intended to remain in effect following
such fulfillment, waiver or termination, including in particular
Article 20.
11.2 If the Closing has not occurred on or before January 15, 2004, then (i)
any Investor may terminate this agreement as to such Investor and (ii)
the Founders and Remote Reward may terminate this Agreement, unless, in
each case, the failure of the Closing to occur shall be attributable to
the breach by the Party wishing to so terminate this Agreement of any
of its obligations hereunder.
11.3 If any Investor shall breach its obligation to subscribe set forth in
Section 2.3 or Section 2.4:
- any other Investor may terminate this Agreement as to itself
and thus not be obligated to subscribe for its portion, as
applicable, of the ABSA Shares 1 or ABSA Shares 2; and
22
- the Founders and Remote Reward may collectively terminate this
Agreement as to all Parties, immediately upon notice to the
other Parties, without prejudice to any right of any party to
seek damages from the breaching party.
ARTICLE 12 - MODIFICATION OF THE AGREEMENT
No modification to the Agreement shall be effective unless contained in a
writing signed by a duly authorized representative of each of the Parties.
ARTICLE 13 - NOTICE BETWEEN THE PARTIES
Any notice, request, formal notice or other communication pursuant to the
provisions of this Agreement ("NOTICE") shall be made in writing to the
addresses mentioned below and shall be deemed to have been properly served: (i)
on the date of delivery, in the case of delivery by hand to the Party on which
notice must be served; (ii) for all Parties other than the Founders, on the date
of transmission, in the case of transmission by fax, followed by telephone
confirmation of receipt immediately following completion of the transmission;
(iii) on the third day following pre-paid delivery by a recognized express
international courier service (e.g., DHL). The addresses for Notice to the
Founders shall be the residential addresses set forth on page 1 of this
Agreement. Any Party may change its address or the name of the addressee for
purposes of this Article 10 by sending the other Parties a written notice of its
new address in the manner provided above.
Party: AGF Innovation 3, AGF Innovation 4 or AGF Innovation 5, notice
to be sent to AGF PE at the following address:
Address: ▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ CEDEX 09
Attention: Guillaume Lautour/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Tel: ▇▇ ▇▇ ▇▇ ▇▇ ▇▇
Fax: ▇▇ ▇▇ ▇▇ ▇▇ ▇▇
Party: Mighty Wealth Group Limited
Address: ▇▇▇▇ ▇▇, ▇▇/▇, ▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇▇▇, ▇ ▇▇ ▇▇▇▇ Street, San
Po Kong, Kowloon, Hong Kong
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Tel: ▇▇▇-▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇▇-▇▇▇▇
Party: Nam Tai Electronics, Inc.
c/o Nam Tai Group Management Limited
Address: ▇▇/▇, ▇▇▇▇▇ Merchants Tower
Shun Tak Centre
▇▇▇-▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇
Tel: (▇▇▇) ▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇▇ ▇▇▇▇
23
Party: REMOTE REWARD
Address: 4 ter, ▇▇▇ ▇▇ ▇'▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Attention: President (▇▇▇▇▇ ▇▇▇▇▇▇▇)
Tel: ▇▇.▇▇.▇▇.▇▇.▇▇
Fax: ▇▇.▇▇.▇▇.▇▇.▇▇
ARTICLE 14 - NO WAIVER
The failure to partially or totally exercise any right whatsoever resulting from
the provisions of the Agreement shall not be deemed a waiver of this right or
any other right arising from the Agreement for the future.
ARTICLE 15 - ENTIRE AGREEMENT
This Agreement, with its exhibits, sets forth the entire agreement of the
Parties with respect to the business referred to herein. Those documents shall
prevail over any negotiations, discussions, communications, understandings or
prior agreements between the Parties relating to the subject matter of this
Agreement and over any earlier drafts of this Agreement which are all subsumed
in these documents.
ARTICLE 16 - SUPPLEMENTARY AGREEMENTS; WAIVERS
No supplementary agreement or amendment to this Agreement shall be valid unless
memorialized by a writing signed by the Parties hereto.
Waiver by a Party of any condition or waiver of enforcement of a breach of any
provision, term or covenant contained in this Agreement at one or more times
shall not be considered or construed as a recurring or continuing waiver of that
condition or of the right to enforce a breach of any other provision, term or
covenant of this Agreement.
ARTICLE 17 - SUCCESSORS, HEIRS AND ASSIGNS; NO THIRD-PARTY BENEFICIARIES
This Agreement shall inure to the benefit of and be binding on the Parties and
their respective successors, heirs and assigns, regardless of whether they are
minors or otherwise under a disability, provided however that unless otherwise
expressly provided for herein, no Party may assign or delegate any of the
obligations created under this Agreement without the prior written consent of
the other Parties.
ARTICLE 18 - GENERAL COVENANT
The Parties hereto shall sign and deliver all documents, provide all information
and take or prevent the taking of all reasonable and lawful measures that may be
necessary or appropriate to the achievement of the objective of this Agreement.
24
ARTICLE 19 - SEVERABILITY
This Agreement shall be deemed severable and the fact that any term or provision
hereof may be invalid or impossible to perform shall not affect the validity or
enforceability of this Agreement or of any other term or provision hereof. In
addition, the Parties shall replace any invalid or unenforceable term or
provision hereof with a valid and enforceable provision as similar as possible
to the invalid or unenforceable provision.
ARTICLE 20 - CONFIDENTIALITY
The Parties undertake to keep this Agreement strictly confidential. No Party
shall disclose or permit the disclosure of the existence or of all or any part
of this Agreement to third parties except:
- with the prior consent of the other Parties,
- in the case of litigation between the Parties,
- if the disclosure of certain information is requested by any competent
authorities by law or regulation, including any regulatory authorities,
- to the Parties' legal counsel and to the commissaire aux comptes of the
Company and to the commissaire aux avantages particuliers to be
designated as provided herein.
ARTICLE 21 - REPRESENTATIONS AND WARRANTIES
21.1 Each Party represents and warrants to the other Parties as of the date
hereof and as of the Closing Date:
- that it is duly established under the law of the jurisdiction in which
it is established and is in good standing in such jurisdiction;
- that it has full power and authority to execute and deliver the
Transaction Documents;
- that the execution and delivery of the Transaction Documents by such
Party of each Transaction Documents to which it is a party, and the
performance by such Party of all of its obligations set forth therein
has been, or prior to the Closing Date will be, duly authorized and
approved by all requisite corporate action, except for such actions
that are specifically intended by the terms of the Transaction
Documents to be approved after the Closing Date;
- that the Transaction Documents to which such Party is a party, when
executed and delivered, taking into account their respective effective
dates, will be valid and binding obligations of such Party in
accordance with their terms and will not breach any legal or regulatory
provisions nor any organizational documents of such Party; and
- that the execution and delivery of the Transaction Documents to which
such Party is a party by such Party do not conflict with and will not
result in any default, violation, modification, suspension or
termination of any contract or undertaking to which such Party is a
party.
25
21.2 MWGL hereby represents that it is 100% owned and controlled by ▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇. ▇▇▇▇ ▇▇▇▇▇▇.
Executed in eight (8) original counterparts.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------- -----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Date: November 28, 2003 Date: November 28, 2003
Place: Paris Place: Paris
REMOTE REWARD AGF Innovation 3
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ Guillaume Lautour
----------------------------- -----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇ Name: Guillaume Lautour
Date: November 28, 2003 Date: November 28, 2003
Place: Paris Place: Paris
AGF Innovation 4 AGF Innovation 5
By: AGF Private Equity By: AGF Private Equity
By: /s/ Guillaume Lautour By: /s/ Guillaume Lautour
----------------------------- -----------------------------
Name: Guillaume Lautour Name: Guillaume Lautour
Date: November 28, 2003 Date: November 28, 2003
Place: Paris Place: Paris
MIGHTY WEALTH GROUP LIMITED NAM TAI ELECTRONICS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇
----------------------------- -----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇
Date: December 10, 2003 Date: December ▇, ▇▇▇▇
▇▇▇▇▇: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇: Hong Kong
26
27
LIST OF EXHIBITS
EXHIBIT A Allocation of the Fully Diluted share capital (i) as of the
date hereof and (ii) immediately prior to the closing of the
First Capital Increase
EXHIBIT B Allocation of the Fully Diluted share capital (i) immediately
after the closing of the First Capital Increase and (ii)
immediately after the closing of the Second Capital Increase.
EXHIBIT C Shareholder Resolutions
EXHIBIT D English draft of the Contractual Undertaking to be executed in
French by holders of Employee Warrants
EXHIBIT E Draft waiver letter to be executed by each holder of Employee
Warrants
EXHIBIT F English draft of the non-compete agreement
EXHIBIT G Business Plan
28
EXECUTION COPY
================================================================================
SHAREHOLDERS' AGREEMENT
OF
STEPMIND
DATED NOVEMBER 27, 2003
================================================================================
SHAREHOLDERS' AGREEMENT
This Shareholders' Agreement (this "AGREEMENT") is entered into on the 27th day
of November, 2003,
AMONG THE UNDERSIGNED:
- MR. ▇▇▇▇▇ ▇▇▇▇▇▇▇,
a French national, born on July 4, 1962 in Quimper, residing at ▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ Issy les Moulineaux ,
- ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇,
a French national, born on April 14, 1949, in Plogastel Saint-Germain,
France, residing at ▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
(collectively referred to herein as the "FOUNDERS" and individually as a
"FOUNDER")
- REMOTE REWARD SAS,
a French societe par actions simplifiee with a share capital of EUR
90,481,410, with its registered office at 4 ter ▇▇▇ ▇▇ ▇'▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇, registered in the Commercial Registry under the number 433458304
RCS Nanterre, represented by Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇, in his capacity as President,
(hereinafter "REMOTE REWARD"),
AND:
- AGF INNOVATION 3, AGF INNOVATION 4 AND AGF INNOVATION 5,
fonds communs de placement dans l'innovation, each represented by its
managing company, AGF Private Equity, a French societe par actions a
directoire et conseil de surveillance with a share capital of EUR 1,000,000,
with its registered office at ▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Cedex 09,
registered in the Commercial Registry under the number 414 735 175 RCS Paris,
which is duly authorized to so represent each such entity, itself represented
by ▇▇. ▇▇▇▇▇▇▇▇▇ Lautour, duly empowered for the purpose hereof,
(hereinafter collectively referred to as "AGF PE", being specified that, when
necessary in this Agreement, all investment funds managed by AGF PE
shall be considered as one Person or Shareholder),
- MIGHTY WEALTH GROUP LIMITED,
an international business company incorporated in the British Virgin Islands,
with a share capital of USD 50,000, with its registered office at Palm Grove
House, P.O. Box 438, Road Town, Tortola, BVI, registered under the number
565041, represented by ▇▇. ▇▇▇▇ ▇▇▇▇▇▇, in his capacity as Director,
(hereinafter "MWGL"),
3
- NAM TAI ELECTRONICS INC.
a company incorporated in the British Virgin Islands, under registration
number 3805, with its registered office at McW. ▇▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, P.O. Box 3342, Road Town, Tortola, British Virgin Islands,
represented by ▇▇. ▇▇▇▇▇▇ ▇▇, in his capacity as chief executive officer,
(hereinafter "NAM TAI"),
(hereinafter collectively referred to as the "INVESTORS" and individually as
an "INVESTOR"),
(The Founders, Remote Reward and the Investors being hereinafter collectively
referred to as the "PARTIES" and individually as a "PARTY").
IN THE PRESENCE OF:
- STEPMIND, a French societe anonyme, with a registered capital of EUR
34,709,907.90, having its registered office at 4 ter, ▇▇▇ ▇▇ ▇'▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇, registered with the Registry of Commerce and Companies under number
432 237 949 RCS Nanterre, represented by ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ acting as
President-Directeur General,
(hereinafter the "COMPANY")
RECITALS:
WHEREAS,
On the date hereof, the Company's share capital consists of 6,463,670 shares,
all of the same category, with a par value of EUR 5.37 each.
Following the authorization by the Company's extraordinary shareholders' meeting
on June 19, 2002, the Board of Directors of the Company issued on June 19, 2002,
November 26, 2002 and June 18, 2003, respectively, 915,471, 76,060 and 32,140
employees' warrants (Bons de Souscription de Parts de Createur d'Entreprise)
(the "EMPLOYEE WARRANTS"), 1,012,683 of which remain validly granted as of the
date hereof.
Set forth in EXHIBIT A is the allocation of the Company's Fully Diluted share
capital (i) on the date hereof and (ii) immediately prior to the completion of
the Investment (as defined below).
The Company is engaged primarily in the business of the design and development
of baseband integrated circuits, radio frequency integrated circuits
(transceivers), as well as system and protocol stacks that address Wide Area
Networks (GSM/GPRS/EDGE) and Wireless Local Area networks (802.11a, 802.11b,
802.11g, hiperlan 2) standards.
30
4
The Parties have entered into an investment agreement as of the date hereof
("INVESTMENT AGREEMENT"). Pursuant to terms and subject to the conditions of the
Investment Agreement, the Investors have agreed to subscribe for an aggregate of
3,858,678 actions a bons de souscription d'actions (the "ABSA SHARES"), to be
subscribed for in two installments:
- subscription by the Investors of an aggregate of 2,858,280 ABSA Shares
1 (as defined below), for a total subscription price of EUR
7,488,693.60, each ABSA Share 1 to be comprised of one Class B Share,
with one Warrant and one Warrant 2004 (as such terms are defined below)
attached thereto, the foregoing subscription referred to as the "FIRST
CAPITAL INCREASE");
- subscription by the Investors for either (i) an aggregate of 1,000,398
ABSA Shares 2 (as defined below), for a total subscription price of EUR
7,512,988.98, each ABSA Share 2 to be comprised of one Class B Share
with one Warrant attached thereto, or (ii) an aggregate of 1,000,398
ABSA Shares 3 (as defined below) by exercise of the Warrants 2004, each
ABSA Share 3 to be comprised of one Class B Share with one Warrant
attached thereto, with (i) or (ii) being referred to as the "SECOND
CAPITAL INCREASE").
Set forth on EXHIBIT B is the allocation of the share capital of the Company on
a Fully Diluted basis (i) immediately following the First Capital Increase and
(ii) immediately following the Second Capital Increase.
The Founders, Remote Reward and the Investors have agreed to enter into this
Agreement to reflect their agreements regarding the management of the Company
and the sales of the Company's securities.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
ARTICLE I - DEFINITIONS
The terms defined in this Article 1 shall have the meanings ascribed to them
below when used in this Agreement:
"ABSA Shares" has the meaning ascribed to it in the recitals and shall include,
as required by the context, reference to the ABSA Shares 1, the ABSA Shares 2
and/or the ABSA Shares 3.
"ABSA Shares 1" has the meaning ascribed to it in the Investment Agreement.
"ABSA Shares 2" has the meaning ascribed to it in the Investment Agreement.
"ABSA Shares 3" has the meaning ascribed to it in the Investment Agreement.
"Accepting Security Holder" has the meaning ascribed to it in Section 5.3 of
this Agreement.
5
"Affiliate": shall mean
(i) with respect to Remote Reward or any Founder, (a) any Person that
directly or indirectly controls him or it, is controlled by him or it,
or is under common control with him or it; provided, that such Person
is a commercial company having legal personality and with its
registered seat or office in Europe and the legal representative of
such Affiliate is and remains, as the case may be, ▇▇▇▇▇ ▇▇▇▇▇▇▇ or
▇▇▇▇▇ ▇▇▇▇▇▇▇ and (b) with respect to any Founder, the spouse, linear
ascendants or linear descendants of such Founder;
(ii) with respect to AGF PE, (a) any Person that directly or indirectly
controls it, is controlled by it, or is under common control with it,
(b) any venture enterprise investment fund for which such Person is the
management company or any investment fund for which such Person is the
manager, and (c) any Affiliate (as defined in (a) or (b), of the
management company or manager of such investment fund; provided, in
each case, that such Person, or the managing company or manager of such
Person is a commercial company having legal personality and with its
registered seat or office in Europe;
(iii) with respect to MWGL, any company having legal personality, which is
wholly owned and controlled by ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇.
▇▇▇▇; and (iv) with respect to Nam Tai, any Person that directly or
indirectly controls it, is controlled by it, or is under common control
with it.
"Agent" has the meaning ascribed to it in Section 5.2 of this Agreement.
"AGF PE" has the meaning ascribed to it in the Preamble of this Agreement.
"AGF PE Directors" has the meaning ascribed to it in Section 2.1 of this
Agreement.
"Agreement to be Bound" means an agreement (i) signed by the proposed transferee
of any Security, (ii) pursuant to which the transferee agrees, subject to
completion of the Transfer concerned, to become a party to this Agreement, and
(iii) as a result of which he will be bound by all of the obligations hereunder
and be entitled to all of the rights hereunder applying to the transferor.
"Board of Directors" means the board of directors of the Company.
"Bona Fide Offer" means a firm, irrevocable, written offer for the Transfer of a
specific number of Securities, which specifies (i) the number and kind of
Securities of which transfer is contemplated, (ii) the price or other
consideration offered for such Securities; (iii) the terms and conditions of the
offer and (iv) the name and address of the proposed transferee and of those
Persons who directly or indirectly have ultimate control over the proposed
transferee, (v) if the proposed transferee is a Third Party, an Agreement to be
Bound executed by such Third Party and (vi) if such proposed transfer would
trigger any Proportional Co-Sale Right or any Tag Along right, an irrevocable
commitment from the proposed transferee to purchase that number of Securities
that any Shareholder(s) would be entitled to sell pursuant to such right(s).
"Business Day" shall mean any day other than a Saturday, a Sunday or a day in
which banks in Hong Kong or Paris are authorized or required to close.
6
"Class B Shares" means the Class B Shares of the Company created by the
Shareholders Resolutions as contemplated in the Investment Agreement.
"Closing Date" means the date on which the First Capital Increase is
consummated.
"Company" has the meaning ascribed to it in the Preamble of this Agreement.
"control" shall have the meaning given in article L.233-3 of the Commercial
Code.
"Co-Selling Investor" has the meaning ascribed to it in Section 4.3 of this
Agreement.
"Dissenting Offerees" has the meaning ascribed to it in Section 4.2 of this
Agreement.
"Employee Warrants" has the meaning ascribed thereto in the recitals of this
Agreement.
"Exit Notice" has the meaning ascribed to it in Section 5.3 of this Agreement.
"First Capital Increase" has the meaning ascribed to it in the recitals of this
Agreement.
"Former Affiliate" has the meaning ascribed to it in Section 4.5 of this
Agreement.
"Former Controlling Party" has the meaning ascribed to it in Section 4.5 of this
Agreement.
"Founders" has the meaning ascribed to it in the Preamble of this Agreement.
"Fully Diluted" refers to the capital of the Company, on an as-if-converted
basis, i.e. assuming that all Securities giving right to a portion of the
capital and/or voting rights of the Company have been exercised, except the
Warrants and the Warrants 2004.
"Investment Agreement" has the meaning ascribed thereto in the recitals of this
Agreement.
"IPO" means the admission of the Securities of the Company to listing on a
regulated exchange market.
"Key Employees" means, on the date hereof, the following persons:
- ▇▇▇▇-▇▇▇▇▇ Dornstetter
- ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
- ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
and any other person designated as a Key Employee by the Board of Directors in
accordance with Section 2.3 of this Agreement.
"Listing" has the meaning ascribed to it in Section 5.1 of this Agreement.
"Majority Shareholders" has the meaning ascribed to it in Section 4.6 of this
Agreement.
"New Controlling Party" has the meaning ascribed to it in Section 4.5 of this
Agreement.
"Notice of Acceptance" has the meaning ascribed to it in Section 4.2 of this
Agreement.
7
"Offered Securities" has the meaning ascribed to it in Section 4.2 of this
Agreement.
"Offerees" has the meaning ascribed to it in Section 4.2 of this Agreement.
"Other Investors Directors" has the meaning ascribed to it in Section 2.1 of
this Agreement.
"Other Security Holders" has the meaning ascribed to it in Section 5.3 of this
Agreement.
"Person" means any individual, legal entity, or organization, or any agency,
authority or other governmental subdivision, whether having legal personality or
not.
"Pre-Emptive Right" means the pre-emptive right of the Parties set forth in
Section 4.2 of this Agreement.
"Pre-Emptive Right Transaction" has the meaning ascribed to it in Section 4.5 of
this Agreement.
"Preference Amount" has the meaning ascribed to it in Section 6.1 of this
Agreement.
"Proceeds" has the meaning ascribed to it in Article VI of this Agreement.
"Proportional Co-Sale Right" means the proportional co-sale right of the
Investors set forth in Section 4.3.
"Purchaser" has the meaning ascribed to it in Section 4.6 of this Agreement.
"Remaining Co-Sale Shares" has the meaning ascribed to it in Section 4.3 of this
Agreement.
"Remote Reward" has the meaning ascribed to it in the Preamble of this
Agreement.
"Representations and Warranties Agreement" means the representations and
warranties agreement among Remote Reward, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Investors
executed as of the date hereof.
"Re-Sale Transaction" has the meaning ascribed to it in Section 4.5.
"Re-Selling Party" has the meaning ascribed to it in Section 4.5.
"Result Notice" has the meaning ascribed to it in Section 4.7 of this Agreement.
"Second Capital Increase" has the meaning ascribed to it in the recitals of this
Agreement.
"Securities" means all series of shares of the Company and any security
entitling the holder thereof (including through beneficial ownership or legal
ownership of Shares), by way of conversion, subscription, exercise of an option
or any other conceivable means, to a financial interest or a voting right in the
Company, as well as any subscription right in connection with an issuance of
Securities of the Company.
"Security Holder" means a holder of Securities, as evidenced by the corporate
books and records.
8
"Shareholder" means a holder of Shares, as evidenced by the corporate books and
records.
"Shares" means the shares of the Company.
"Tag Along Right" means the tag along right of the Parties set forth in Section
4.4.
"Tagging Offeree" has the meaning set forth in Section 4.4 of this Agreement.
"Third Party" means, on a given date, any Person who is not a party to this
Agreement on such date.
"Transaction" has the meaning ascribed to it in Article VI of this Agreement.
"Transaction Documents" means any of the following documents: the Investment
Agreement, this Agreement, and the Representations and Warranties Agreement.
"Transfer" when used in connection with any Security of the Company means, the
act of transferring, selling, assigning, pledging, hypothecating, granting a
security interest in or a lien on, placing in trust (voting or otherwise),
contributing as a capital contribution or in any other manner, including by way
of a merger, encumbering or disposing, directly or indirectly, voluntarily or
otherwise, of any Security so designated, including any transfer of Securities
by an individual to his or her heirs or spouse, including as a result of death
or the liquidation of marital community property.
"Transfer Proposal" has the meaning ascribed to it in Section 4.2 of this
Agreement.
"Transfer Proposal Date" has the meaning ascribed to it in Section 4.2 of this
Agreement.
"Transfer Proposal Notice" has the meaning ascribed to it in Section 4.2 of this
Agreement.
"Transferee" has the meaning ascribed to it in Section 4.5 of this Agreement.
"Transferor" has the meaning ascribed to it in Section 4.2 of this Agreement.
"Valuation of the Company" has the meaning ascribed to it in Article VI of this
Agreement.
"Valuation Criteria" has the meaning ascribed to it in Section 4.2 of this
Agreement.
"Warrants" means the anti-dilution warrants attached to each ABSA Share
subscribed for by the Investors, as more fully described in the Investment
Agreement.
"Warrants 2004" means the warrants attached to the ABSA Shares 1 giving the
right to subscribe, upon exercise thereof, for a determined number of ABSA
Shares 3, as more fully described in the Investment Agreement.
9
ARTICLE II - MANAGEMENT OF THE COMPANY
SECTION 2.1 BOARD OF DIRECTORS
The Board of Directors shall be composed of 7 members.
AGF PE shall be entitled to appoint two (2) members of the Board of Directors
(the "AGF PE DIRECTORS"), the Investors (other than AGF PE) shall together be
entitled to appoint two (2) members of the Board of Directors (the "OTHER
INVESTORS DIRECTORS"), ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall be entitled to appoint one (1) member
of the Board of Directors and Remote Reward shall be entitled to appoint one (1)
member of the Board of Directors.
The rights of each Party mentioned above to appoint members of the Board of
Director shall be subject to such Party holding at least 5% of the share capital
of the Company on a Fully Diluted basis.
The directeur general of the Company shall be appointed as the seventh Director.
Each Party shall vote in favor of the candidates reasonably proposed by the
other Parties, in accordance with the above provisions, at each Shareholders'
Meeting held for the purpose of electing directors or re-appointing directors
and the Parties shall ensure that their representatives, in case of appointment
of members to the Board of Directors by the Board (cooptation), vote in favor of
the candidates reasonably proposed by the other Parties in accordance with the
above provisions at any meeting of the Board of Directors voting on such an
appointment.
If a director chosen from among the candidates proposed by a Party ceases being
a director for any reason, the other Parties' representatives (in the event of a
cooptation) shall vote in favor of a Person reasonably chosen among the Persons
which the Party has designated to fill the vacant director's seat.
If a Party wishes to remove a director whom it nominated in accordance with this
Article, the other Parties shall vote in favor of such removal.
The members of the Board of Directors shall be reimbursed for their reasonable
travel and out-of-pocket expenses incurred to attend physically one meeting of
the Board of Directors annually, and any meeting where the physical presence of
the members of the Board of Directors is required in accordance with applicable
law based on the agenda for the meeting, upon presentation of the relevant
receipts, such travel to be business class and to include not more than two
nights of hotel stay at a reasonably priced hotel.
10
SECTION 2.2 MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors shall meet as often as necessary and, in any event, at
least once per calendar quarter.
The President of the Board of Directors shall, upon joint request by one of the
AGF PE Directors and one of the Other Investors Directors, call a meeting of the
Board to be held not later than seven (7) Business Days following the receipt of
any such request, provided that the directors making such request shall
undertake to attend such requested board meeting.
Notice convening a meeting of the Board of Directors must be given five (5)
Business Days before the meeting, or such shorter notice period as may be agreed
by all members of the Board of Directors.
All meetings of the Board of Directors may be held by telephone or
videoconference to the full extent permitted by law.
Except as provided herein, the quorum requirements for meetings of the Board of
Directors shall be as provided by applicable law.
With respect to any meeting of the Board of Directors called to consider any of
the matters referred to in Section 2.3 (ii) or (iii) hereunder, in addition to
the quorum requirements for meetings of the Board of Directors as provided by
applicable law, a quorum shall be deemed to exist only if at least one of the
AGF PE Directors and at least one of the Other Investors Directors attend or are
represented at such meeting. If such meeting cannot be held because neither of
the AGF PE Directors or neither of the Other Investor Directors are present or
represented at such meeting, a second meeting of the Board of Directors shall be
called with the same agenda as the first meeting, not earlier than five (5)
Business Days after the date scheduled for the previous meeting. The quorum
requirements for such second meeting, and any subsequent meeting held with the
same agenda, shall be as required by applicable law, without the requirement
that one of the AGF PE Directors and one of the Other Investors Directors be
present or represented.
SECTION 2.3 DELIBERATIONS OF THE BOARD OF DIRECTORS
(i) All decisions of the Board of Directors shall require the approval of
the majority of the Directors present or represented at such meeting,
except for the appointment of the directeur general, which shall
require the vote of two-thirds of the Directors present or represented
at such meeting, and for the decisions listed below. The President of
the Board of Directors shall not have a casting vote.
11
(ii) The Parties represented on the Board of Directors shall take all
actions to ensure that none of the following actions are taken or
approved by the Board of Directors, the President of the Board of
Directors, or any manager of the Company, and that none of the
following actions are submitted by the Board of Directors or by such
Parties to the approval of the shareholders' meeting, without the prior
approval of a majority of 6/7ths of the Board of Directors present or
represented at a valid meeting of the Board of Directors:
(a) Amend the articles of association (statuts) of the Company or
equivalent document in respect of foreign subsidiaries;
(b) Acquire, sell, transfer, lease, pledge or otherwise dispose of
(whether by a single transaction or a series of related
transactions) the whole or any material part of its business
or assets (except for current assets realized in the ordinary
course of trading) representing more than EUR 500,000 per
transaction, not provided for in the approved annual budget;
(c) Create, acquire, establish, sell, transfer, merge or otherwise
dispose of any subsidiary or of any interest in any other
company, group or entity;
(d) Take any steps to wind-up or have an administrator appointed
over the management of the Company;
(e) Conclude any legal arrangement which grants an exclusive or
controlling right to any party of the Company's intellectual
property or otherwise materially changes the management of the
Company's intellectual property;
(f) Issue or grant any right, option or warrant to subscribe for
or otherwise acquire any share of the Company to any Founders,
except as the same may result from a statutory right to
subscribe;
(g) Conclude or amend any agreement between the Company and any of
its shareholders, officers or managers (directly or
indirectly);
(h) Increase or decrease the share capital of the Company;
(i) Authorize the issuances of any securities having a preference
over or on a par with Class B Shares or change the rights,
preferences or privileges of the Class B Shares; and
(j) Change the number of members of the Board of Directors.
The Parties shall procure that none of the above-mentioned decisions
shall be taken with respect to any subsidiary of the Company without
submitting it to the prior approval of the Board of Directors of the
Company at the majority defined in this Section 2.3 (ii).
(iii) The Parties represented on the Board of Directors shall take all
actions to ensure that none of the following actions are taken or
approved by the Board of Directors, the President of the Board of
Directors, or any manager of the Company, and that none of the
following actions are submitted by the Board of Directors or by such
Parties to the approval of the shareholders' meeting, without the prior
approval of a majority of 5/7ths of the members of the Board of
Directors present or represented at a valid meeting of the Board of
Directors:
(a) Approve any change in the Business Plan;
(b) Introduce or effect any change in the nature of the Company's
business, except as provided in the approved Business Plan;
12
(c) Approve the annual budget and the annual financial
statements;
(d) Contract any commitment not provided for in the approved
annual budget including any guarantee, pledge or other
security in excess of EUR 200,000, whether in a single
transaction or a series of related transactions;
(e) Incur any indebtedness for borrowed money in excess of a
maximum aggregate sum outstanding at any time of EUR 200,000;
(f) Pay or otherwise declare a dividend or other distribution;
(g) Appoint (or change the remuneration or amend the employment
agreement of) the officers and managers (mandataires sociaux)
of the Company, the Key Employees and, more generally of the
directeur financier, directeur des ventes or any other
directeur, and any employee with a gross compensation
(including any bonus or commission and the value for taxation
purposes of any benefits in kind) in excess of EUR 100,000 per
annum;
(h) Make any changes in the statutory auditors or accounting
reference date;
(i) Decide any IPO;
(j) Issue or grant any right, option or warrant to subscribe for
or otherwise acquire any share of the Company (except to the
Founders), except as the same may result from a statutory
right to subscribe, or create any stock purchase plans;
(k) Designate any person as a Key Employee;
(l) Grant dismissal indemnities in addition to those required by
applicable law; and
(m) Decide, with respect to any Key Employee, whether to exercise
the option to require such Key Employee to be bound by its
non-compete undertaking as provided in the non-compete
agreement attached as EXHIBIT D hereto.
The Parties shall procure that none of the above-mentioned decisions
shall be taken with respect to any subsidiary of the Company without
submitting it to the prior approval of the Board of Directors of the
Company at the majority defined in this Section 2.3(iii).
(iv) The Parties undertake to vote against any resolution submitted by any
Shareholder to any meeting of the shareholders of the Company
concerning any of the actions listed in paragraphs (ii) and (iii) above
that has not been approved by the requisite majority of the Board of
Directors in accordance with paragraphs (ii) and (iii) above.
SECTION 2.4 PROVISION OF INFORMATION
(a) The Parties shall cause the Board of Directors to cause the Directeur
General of the Company to provide the Parties with the following
information:
- Monthly, within 15 days after the end of each calendar month: balance
sheet, statement of cash flow and income statement, including a report on
the material events having occurred during the relevant month and
including such other information as requested by Investors;
13
- Quarterly, within 30 days after the end of each calendar term: quarterly
financial statements (balance sheet, statement of cash flow and income
statement) un-audited consolidated quarterly financial statements,
together with a report on recent developments as well as on the financial,
commercial and technical forecasts of the Company;
- Yearly, within ninety days after the end of each fiscal year, the annual
financial statements (balance sheet, statement of cash flow and income
statement) and, as the case may be, the consolidated annual financial
statements together with the statutory auditor's report;
- Yearly, within thirty days prior to the beginning of each fiscal year,
annual budget relating to the up-coming fiscal year including the income
statements for each quarter, the monthly cash forecasts, the input/output
plan in the investment expenditures of the Company and its subsidiaries,
as the case may be;
- At the request of any Investors, the Minutes of the Board and
Shareholder's meeting.
(b) The Parties shall provide the directeur general of the Company with a copy
of the executed Representations and Warranties Agreement, and shall
instruct the directeur general to notify the Parties hereto promptly of
any fact of which the directeur general has knowledge which is reasonably
likely to result in a claim for indemnification thereunder as provided
therein.
(c) Any Party or Parties that individually or collectively hold more than 10%
of the share capital of the Company on a non-diluted basis may convene by
notice to the other Parties that hold more than 10% of the share capital
of the Company on a non-diluted basis an informational meeting, in which
all such Parties may participate by telephone or videoconference, to
discuss the matters set forth in such notice and any other matters
notified to all such Parties by facsimile at least 24 hours prior to the
scheduled informational meeting. Such informational meetings shall occur
at least once every six weeks.
(d) In addition to the foregoing rights to receive information, each Investor
may conduct one or more audits of the Company's books, records,
commercial, financial and strategic documentation on reasonable notice to
the Company, to be conducted in a manner not to unreasonably interfere
with the Company's operations. The Investors agree to cooperate reasonably
with each other in respect of any such audits in order to avoid multiple
audits. The reasonable costs of one audit per year shall be borne by the
Company; the costs of any additional audit shall be borne by the Investor
conducting the audit; provided, that if the Board of Directors in its good
faith judgment shall determine that the results of the audit were
materially beneficial to the Company, then the Board of Directors shall
authorize the reimbursement by the Company of, and the Company shall
reimburse, the reasonable fees and expenses related to such audit.
14
ARTICLE III - CONTRACTUAL UNDERTAKING
The Parties agree that the granting after the date hereof of any Securities to
any employee or manager of the Company shall be conditioned upon the prior
execution by such employee or manager of a French translated version of the
draft Contractual Undertaking attached as EXHIBIT C hereto. Each Party hereby
empowers the President of the Board of Directors to execute, on its behalf, any
such Contractual Undertaking.
ARTICLE IV - TRANSFERS OF SHARES
SECTION 4.1 RESTRICTIONS ON TRANSFER
(a) The following Transfers are not subject to any restriction (provided
that the assignee, if it is a Third Party, agrees to be bound by this
Agreement in accordance with Section 13.4 below):
(i) Transfers of Securities by any Party to one of its Affiliates,
provided that (A) such transferring Party provides reasonable
evidence to the other Parties that such transferee is
effectively an Affiliate and provided further that, (B) in the
event where such Affiliate ceases to be an Affiliate of such
Party, the Securities so Transferred shall be Transferred back
to the initial Party (in case of failure to do so, the
Securities held by such Affiliate would become subject to the
provisions of Section 4.5 below); provided, however, that no
Founder shall Transfer Securities to his spouse, linear
ascendants or linear descendant under this Section 4.1(a)
without the prior consent of AGF PE, such consent not to be
unreasonably withheld and such consent to be provided, in
particular, where such Founder (A) demonstrates that such
Transfer is advantageous for such Founder for tax or estate
planning purposes, and (B) provides reasonable assurance that
such Transfer will not materially negatively affect the
management, financial situation or prospects of the Company or
the liquidity of the Investors Securities;
(ii) Transfers of Securities by any Party that is an investment
fund, in preparation for liquidation, to its owners or members
or to other investment funds on the secondary market;
provided, however, that there are no more than ten such
owners, members or other funds;
(iii) Transfers of one Share by a Party to a member of the Board of
Directors, and Transfer by such member of the Board of
Directors back to such Party;
(iv) Transfers of Securities in accordance with Section 6.2;
(v) Transfers of Securities made in accordance with the provisions
of Article V and VIII;
(vi) Transfers of Securities by a Founder as may be required by the
provisions of the Representations and Warranties Agreement
signed on the date hereof;
15
(vii) Transfers of Securities by Remote Reward to Alkantz in
accordance with the call option agreement referred to in
Article X.
Any Transfer of Security made in accordance with the provisions of this
Section 4.1 shall be notified to the President of the Board of
Directors and to the Parties.
In all other cases, Securities shall only be Transferred in strict
accordance with all of the terms, provisions and conditions of this
Agreement.
(b) In addition to the other restrictions on Transfer set forth herein, as
an essential condition to the investment of the Investors contemplated
by the Investment Agreement, each Founder and Remote Reward undertake
not to Transfer any Security directly or indirectly owned by him or it
from the date hereof until the earlier of (i) December 31, 2006 or (ii)
a Listing, except as permitted pursuant to Section 4.1(a) above and in
the following cases:
- in case of a Transfer of at least 95% of the Securities of the
Company in accordance with Section 4.6 hereof;
- in case of exercise of his or its rights under Section 4.4
hereof;
- Transfer(s) of up to a maximum number of Shares representing
in the aggregate during the above-mentioned period, not more
than 10% of the Shares owned by him or it as of the Closing
Date.
SECTION 4.2 PRE-EMPTIVE RIGHT
(a) If one or several Parties (a "TRANSFEROR") receive(s) a Bona Fide Offer
from a Third Party or a Party, which it (or they) accept(s), subject to
the rights of the other Parties as provided herein, or addresse(s) a
Bona Fide Offer to a Third Party or a Party, for all or any portion of
its (their) Securities (the "OFFERED SECURITIES"), the Transferor shall
give the President of the Board of the Company and the other Parties
hereto written notice (the "TRANSFER PROPOSAL NOTICE") of its decision
to Transfer, together with a copy of the Bona Fide Offer, and shall
offer (the "TRANSFER PROPOSAL") to sell the Offered Securities to the
other Shareholders which are Parties hereto (jointly referred to as the
"OFFEREES"), subject to the provisions of paragraph (b) below, for cash
consideration and on the other terms contained in the Bona Fide Offer.
If applicable, the Transfer Proposal Notice shall also contain the
information needed by any Offeree to exercise its Proportional Co-Sale
Right and its Tag Along Right.
If the proposed transferee is a Party, (i) it shall be entitled to
exercise its Pre-Emptive Right under this Section 4.2(a) as if it were
an Offeree, (ii) the Transfer Proposal Notice shall indicate whether,
in case of exercise by any Offeree of its Pre-Emptive Rights, the
proposed transferee wishes to exercise its Pre-Emptive Rights, and
(iii) if the proposed transferee so indicates that it wishes to
exercise its Pre-Emptive Rights, such proposed transferee shall be
considered to be an Offeree for the purposes of paragraphs (c) to (h)
hereafter (with the exception of paragraphs (f) to (h)) and, for
computing purposes, shall be deemed to have exercised its Pre-Emptive
Right on all the Offered Securities.
16
(b) Any Offeree that wishes to exercise its Pre-Emptive Right shall have
thirty (30) days from the date of receipt of the Transfer Proposal
Notice (the "TRANSFER PROPOSAL DATE") to accept the Transfer Proposal
by giving written notice to the Transferor and to the President of the
Board of the Company (the "NOTICE OF ACCEPTANCE"). In the Notice of
Acceptance the Offeree must specify the number of Offered Securities
that it wishes to purchase through exercise of its Offeree's
Pre-Emptive Right and, if applicable, must indicate whether it agrees
to purchase through the exercise of its Pre-Emptive Right any
Securities of any Party that exercises its Proportional Co-Sale Right
or its Tag Along Right. Each Notice of Acceptance shall be
unconditional and irrevocable, subject to paragraph (d) below.
(c) Any portion of the consideration for the Offered Shares to be paid in
accordance with the Bona Fide Offer which is in securities listed on a
regulated market where the average daily value of transactions on such
security over the six (6) months preceding the Transfer Proposal Date
exceeds five hundred thousand euros (EUR 500,000) (it being understood
that the French Marche Libre shall not be considered as a regulated
market), shall be deemed to be valued at the average closing price over
the twenty (20) trading days prior to the Transfer Proposal Date.
(d) If the consideration to be paid pursuant to the Bona Fide Offer is not
entirely in cash or in cash and securities listed on a regulated market
where the average daily amount of transactions on such security over
the six (6) months preceding the Transfer Proposal Date exceeds five
hundred thousand euros (EUR 500,000) (it being understood that the
French Marche Libre shall not be considered as a regulated market), the
Transferor shall offer to the Offerees, in the Transfer Proposal
Notice, terms for the payment of consideration by the Offerees for the
Offered Securities which are substantially equivalent in cash to those
set out in the Bona Fide Offer. If the Offerees accepting the Transfer
Proposal believe in good faith that the terms offered by the Transferor
are not as advantageous as those offered in the Bona Fide Offer
(hereinafter the "DISSENTING OFFEREES") they may reject such terms by
so notifying the Transferor and the President of the Board of the
Company in the Notice of Acceptance. Any Dissenting Offeree must
provide notice of such rejection to all other Parties hereto. If the
terms of the offer are not so rejected by any Offeree, they shall be
deemed accepted all Offerees that accepted the Transfer Proposal.
If any Dissenting Offeree shall so reject the fairness of the
consideration proposed by the Transferor, if all Dissenting Offerees
and the Transferor cannot reach an agreement on the consideration
within ten (10) days of receipt of the Notice of Acceptance or if the
Transferor does not withdraw the Transfer Proposal within ten (10) days
after the expiration of the foregoing ten (10)-day period, then any of
the Transferor or Dissenting Offerees may request by notice to the
others that the cash value of the consideration set forth in the Bona
Fide Offer for all of the Offered Securities shall be determined by an
expert evaluation as set forth below.
17
Within 10 days after any such notification, the Transferor, on the one
hand, and the and the Dissenting Offerees, on the other hand, shall
each designate by notice to the other an expert, which shall be a
first-rank investment bank with offices in Paris and with demonstrated
significant experience in mergers and acquisitions in Europe and in
particular in the valuation of companies in the telecommunications
industry with activities in Europe. If either of the Transferor, on the
one hand, or the Dissenting Offerees, on the other hand, shall fail to
so designate such an expert, such expert shall be designated by the
Paris Tribunal de Commerce ruling in refere proceedings, without
appeal, based on request by the other group, and any other Offeree that
exercised its Pre-Emptive Right hereunder shall be entitled to be
heard. Any expert so appointed shall act as a third party within the
meaning of article 1592 of the French Civil Code, and not as an
arbitrator.
The two experts shall be instructed to determine the cash value of the
consideration set forth in the Bona Fide Offer based on valuation
methods relevant to the Bona Fide Offer and the entity concerned,
including, as applicable, the cash requirements of the relevant entity
and considering the valuation method of price-per-engineer (if the
relevant entity is in the telecom industry, with consideration given to
the relative weight of design functions as compared to other activities
of such the relevant entity and to software engineers as compared to
hardware engineers) (collectively, the "VALUATION CRITERIA").
Each expert so designated shall be instructed by the appointing party
to deliver its determination to all of the Transferor, the Dissenting
Offerees, any other Offeree that exercised its Pre-Emptive right or its
Tag-Along Right hereunder and to the Company, together with all
supporting calculations and justification within fifteen (15) days
after its appointment. The Parties shall cause the Company to provide
to both experts all supporting documentation reasonably requested by
either expert in respect of its determination and shall otherwise
cooperate with the experts. The Transferor, on the one hand, shall bear
the fees and expenses of the expert appointed by or on behalf of it,
and the Dissenting Offerees, on the other hand, shall bear the fees and
expenses of the expert appointed by or behalf of them.
If the higher of the valuations of the consideration as determined by
the two experts does not exceed the lower of the valuations of the
consideration by an amount equal to or greater than 33% of the lower of
such valuations of the consideration, then the valuation of the
consideration shall be deemed to be the average of the two valuations
of the consideration as determined by the two experts. If, however, the
higher of the valuations of the consideration as determined by the two
experts exceeds the lower of such valuations of the consideration by an
amount equal to or greater than 33% of the lower of such valuations of
the consideration, then the Transferor and all Offerees shall meet
within ten (10) days after the receipt of the second expert evaluation
in order to agree with respect to the Per Share Value. If they shall
fail to so agree, a third expert shall be designated in accordance with
the following paragraph.
18
The third expert shall be appointed by the Paris Tribunal de Commerce
based on the first request by any of the Transferor or the Dissenting
Offerees, and shall be a first-rank investment bank with offices in
Paris, with demonstrated significant experience in mergers and
acquisitions in Europe and in particular in the valuation of companies
in the telecommunications industry with activities in Europe and with
no conflict of interest with any of the Shareholders or of the Company.
The expert shall be instructed to base its determination of the
valuation of the consideration on the Valuation Criteria and to deliver
its determination to the Parties and the Company within fifteen (15)
days after its appointment. The Parties hereto shall share equally the
fees and expenses of such expert. The valuation of the consideration
shall be deemed to be the average of (i) the valuation of the
consideration as determined by such third expert and (ii) the valuation
of the consideration determined by one of the two first experts that
shall be the closest to the valuation of the consideration determined
by such third expert.
The cash value of the consideration for the Offered Securities as
determined by the expert procedure described above shall be binding on
the Dissenting Offerees and also on the other Offerees.
If such cash value so determined by the expert procedure is greater
than 110% of the consideration mentioned in the Transfer Proposal
Notice, any Offeree that accepted the Transfer Proposal shall be
entitled to decide not to pursue the purchase of the Offered Securities
by giving the Transferor notice thereof in writing within ten (10) days
from the date of determination of the valuation of the consideration as
set forth above. In such case, if applicable, any such withdrawing
Offeree shall be entitled to exercise immediately its Proportional
Co-Sale Right or its Tag Along Right.
The Transferor shall also be entitled not to proceed with the
contemplated Transfer by giving the other Parties notice of its
decision within the ten (10)-day period specified above, if the cash
consideration for the Offered Securities so determined by the expert
procedure is less than 90% of the cash consideration set forth
determined by the Transferor in the Transfer Proposal Notice.
(e) If the aggregate number of Securities that the Offerees wish to preempt
pursuant to the Notices of Acceptance (taking into account, if
applicable, any withdrawal by any Offeree of its Notice of Acceptance
as permitted pursuant to paragraph (d) above following determination of
the value of consideration in accordance with the expert procedure) is
lower than the number of Offered Securities (increased, if applicable,
by the Securities of any Party that exercises its Tag Along Right),
this Pre-Emptive Right shall not apply.
(f) In the event the Pre-Emptive Right does apply in accordance with the
preceding paragraphs:
19
(i) In the event the Transferor is an Investor, the Offered
Securities (increased, if applicable, by the Securities of any
Party that exercises its Tag Along Right) shall be allocated,
as a first-rank right, among the Investors who exercised their
Pre-Emptive Rights in accordance with Section 4.2(b) above,
pro rata based on the ratio which the number of Shares held by
each such Investor bears to the number of Shares held by all
Investors who so exercised their Pre-Emptive Rights, but
limited, for each such Investor, to the number of Securities
it wished to pre-empt based on its Notice of Acceptance.
The remaining Offered Securities (increased, if applicable, by
the Securities of any Party that exercises its Tag Along
Right), if any, shall be allocated, as a second-rank right,
among those of the Founders and Remote Reward that exercised
their Pre-Emptive Rights in accordance with Section 4.2(b)
above, pro rata based on the ratio which the number of Shares
held by each of them bears to the number of Shares held by
those of them that exercised their Pre-Emptive Rights.
(ii) If the Transferor is a Founder or Remote Reward (subject to
Section 4.1(b) above), the Offered Securities (increased, if
applicable, by the Securities of any Party that exercises its
Tag Along Right) shall be allocated, as a first-rank right,
among those of the Founders and Remote Reward that exercised
their Pre-Emptive Rights in accordance with Section 4.2(b)
above, pro rata based on the ratio which the number of Shares
held by each of them bears to the number of Shares held by
those of them that exercised their Pre-Emptive Rights, but
limited, for each of them, to the number of Securities it
wished to pre-empt based on its Notice of Acceptance.
The remaining Offered Securities (increased, if applicable, by
the Securities of any Party that exercised its Tag Along
Right), if any, shall be allocated, as a second-rank right,
among the Investors that exercised their Pre-Emptive Rights in
accordance with Section 4.2(b) above, pro rata based on the
ratio which the number of Shares held by each such Investor
bears to the number of Shares held by all such Investors who
exercised their Pre-Emptive Right.
In connection with the allocation of Securities under this
Section 4.2(f), Securities shall be rounded off to the closest
whole number.
(g) The purchase price for the Offered Securities which are to be purchased
by the Offerees who accept said Transfer Proposal in accordance with
this Section 4.2 shall be payable to the Transferor in cash on the
later to occur of (i) sixty (60) days after the Transfer Proposal Date
or (ii) in the event the value of the consideration is rejected by any
Dissenting Offeree, thirty (30) days after the date on which the
Transferor and the Offerees agree with respect to such consideration or
such consideration is conclusively determined in accordance with the
expert procedure as provided in paragraph (d) above.
20
Unless otherwise agreed by the Transferor and the Offerees accepting
the Transfer Proposal, transfer to the Offerees of title to the Offered
Securities (together with, if applicable, the Securities of the Parties
who exercise their Proportional Co-Sale Right or their Tag Along Right)
shall take place concurrently with the payment of the price, at the
registered office of the Company, during working hours. At that time,
the Transferor shall deliver the share transfer order required to
properly transfer the Offered Securities (together with, if applicable,
the Securities of the Parties who exercise their Proportional Co-Sale
Right or their Tag Along Right) to the relevant Offerees in
consideration for payment of the corresponding sale price.
(h) The Transferor may proceed with the transfer of the Offered Securities
pursuant to the Bona Fide Offer only if the Pre Emptive Rights
hereunder do not apply, in accordance with paragraph (e) above;
provided, that:
- the Transfer of the Offered Securities in accordance with the
Bona Fide Offer occurs within thirty (30) days after the later
to occur of (i) expiration of the 30-day period set forth in
Section 4.2(b) for submitting Notices of Acceptance, where
there is no Dissenting Offeree, or (ii) in the event the value
of the consideration is rejected by any Dissenting Offeree,
thirty (30) days after the date on which the Transferor and
the Offerees agree with respect to such consideration or such
consideration is conclusively determined in accordance with
the expert procedure described in paragraph (d) above;
- the necessary steps are taken by the Transferor to provide for
the exercise of the Proportional Co-Sale Right and Tag Along
Right, where applicable; and
- if the transferee is not a Party, it shall have duly executed
and delivered to the Parties hereto an Agreement to be Bound.
(i) If the Bona Fide Offer concerns at least 95 % of the share capital of
the Company on a non-diluted basis, the Parties agree that all time
limits mentioned in paragraphs (a) to (h) above shall be modified as
follows:
- the Offerees shall have ten (10) days after the date of
receipt of the Transfer Proposal Notice to exercise their
Pre-Emptive Right and to send the Notice of Acceptance in
accordance with paragraph (b);
- in case the terms of the Offer are rejected in accordance with
paragraph (d), the concerned Parties shall try to reach an
agreement on the consideration within three (3) days from the
Notice of Acceptance; if they fail to reach an agreement
within this three-day period, the price of the Offered Shares
shall be determined in accordance with the expert procedure,
in accordance with paragraph (d) above, each expert thus
appointed being instructed to submit its valuation within 15
days after its appointment; in view of the valuation resulting
from the expert procedure and in the specific cases provided
for in paragraph (d), the concerned Parties shall give notice
of their decision not to pursue the purchase or, when
applicable, the Transfer of concerned Securities within three
(3) days from the date of determination of the valuation of
the consideration;
21
- payment of the purchase price of the Offered Securities by the
Offerees shall take place on the last to occur of (i) fifteen
(15) days after the Transfer Proposal Date or (ii) in the
event the value of the consideration is rejected by any
Dissenting Offeree, five (5) days after the date on which the
Transferor and the Offerees agree with respect to such
consideration or such consideration is conclusively determined
in accordance with the expert procedure described in paragraph
(d) above.
Except for the foregoing modifications to the applicable time limits,
all other provisions of this Section 4.2 will be applicable without any
modification.
SECTION 4.3 PROPORTIONAL CO-SALE RIGHT (DROIT DE SORTIE PROPORTIONNELLE)
If, in accordance with Section 4.2(a), the Transferor is a Founder or Remote
Reward, and if the proposed Transfer described in the Transfer Proposal does not
trigger the application of Section 4.4 hereof, each Investor shall be entitled
to choose to participate in said Transfer as follows:
(a) Each Investor wishing to participate in the Bona Fide Offer (a
"CO-SELLING INVESTOR"), instead of exercising its Pre-Emptive Right in
accordance with Section 4.2 of this Agreement, shall so notify the
Transferor and the President of the Board of the Company in writing
during the thirty (30) day period set forth in Section 4.2(b) above
(or, in case the consideration is rejected by a Dissenting Offeree in
accordance with Section 4.2(d), within ten days after the value of the
consideration is agreed by the Transferor and the Offerees or is
determined in accordance with the expert procedure as provided in
Section 4.2(d)).
(b) Each Co-Selling Investor shall be entitled, in accordance with the
terms of the Bona Fide Offer, to Transfer, at the same time and on the
same terms and conditions as the Transferor, a number of Securities
equal to the total number of Offered Securities multiplied by a
fraction, the numerator of which is the total number of Shares held by
the Co-Selling Investor, and the denominator of which is the aggregate
number of Shares collectively held by all Co-Selling Investors and the
Shares held by the Transferor, such that the number of Securities to be
transferred to the proposed transferee is equal to the number of
Offered Securities set forth in the Transfer Proposal; provided that
the Co-Selling Investor may not participate with respect to less than
such number of Securities so determined.
(c) In the event any Investor shall not wish to exercise its Proportional
Co-Sale Right hereunder, then, unless such Investor exercise its
Pre-Emptive Right hereunder, then the remaining Co-Selling Investors
may Transfer, in accordance with the terms of the Bona Fide Offer, at
the same time and on the same terms as the Transferor, such number of
Shares which such Investor would have been permitted to Transfer
pursuant to its Proportional Co-Sale Right (the "REMAINING CO-SALE
SHARES"), each other Investor to be permitted to Transfer a portion of
such Remaining Co-Sale Shares determined pro rata based on the number
of Shares held by each other Co-Selling Investor.
The Co-Selling Investors shall not be required to give any representations and
warranties (other than standard non-operational representations and warranties
such as regarding due ownership of the Shares being Transferred and due
authorization to Transfer such Shares), nor agree to any non-compete
undertaking, in connection with the Transfer.
22
In order to ensure that the proposed transferee purchases from all Co-Selling
Investors such number of Securities as determined above, the Transfer of the
Offered Securities to the proposed transferee by the Co-Selling Investors shall
occur simultaneously with such transfer by the Transferor in accordance with
Section 4.2(h) above, failing which the Transferor shall be bound to purchase
the Offered Securities sold by the Co-Selling Investors.
SECTION 4.4 TAG ALONG RIGHT (DROIT DE SORTIE TOTALE)
If, as a result of the Transfer contemplated in the Transfer Proposal (or
successive Transfers over the 12-month period preceding the date of the Transfer
Proposal to the same proposed transferee(s)), the proposed transferee(s) (acting
jointly as that term is defined in article L.233-10 of the Commercial Code)
would have control over 50% or more of the share capital or voting rights of the
Company (on a non-diluted basis), then the following Tag Along Right shall
apply:
(i) each Party wishing to participate in the Bona Fide Offer (a "TAGGING
OFFEREE"), instead of exercising its Pre-Emptive Right in accordance
with Section 4.2 above, shall notify the Transferor and the President
of the Board of the Company in writing during the thirty (30)-day
period set forth in Section 4.2(b) above (or, in case the consideration
is rejected by a Dissenting Offeree in accordance with Section 4.2(d),
within ten days after the value of the consideration is agreed by the
Transferor and the Offerees or is determined in accordance with the
expert procedure as provided in Section 4.2(d)), that it wishes to
exercise its Tag Along Right provided by this Section 4.4;
(ii) each Tagging Offeree shall be entitled, in accordance with the terms of
the Bona Fide Offer, to Transfer, at the same time and on the same
terms and conditions as the Transferor Shareholder(s) (subject to the
provisions of Article VI if the Tagging Offeree is an Investor), all or
a portion of its Securities, at its own choice, to the proposed
transferee.
In the event the Tag Along Right hereunder is triggered by successive Transfers
of Securities over the 12-month period preceding the date of the Transfer
Proposal, the purchase price to be received by the Tagging Offeree(s) shall be
the higher of (i) the price set forth in the Bona Fide Offer triggering the
application of the Tag Along Right or (ii) the average of the Transfer prices
paid by the proposed transferee pursuant to such previous successive Transfers.
The Tagging Offerees shall not be required to give any representations and
warranties (other than standard non-operational representations and warranties
such as regarding due ownership of the Shares being Transferred and due
authorization to Transfer such Shares) or agree to any non-compete undertaking,
in connection with the Transfer.
23
In order to ensure that the proposed transferee purchases from all Tagging
Offerees the Securities to be sold pursuant to the exercise of the Tag Along
Right above, the Transfer of the such Securities to be sold pursuant to the
exercise of the Tag Along Right above to the proposed transferee by the Tagging
Offerees shall occur simultaneously with the transfer of the Offered Securities
by the Transferor in accordance with Section 4.2(h) above, failing which the
Transferor shall be bound to purchase the Offered Securities sold by the Tagging
Offerees.
SECTION 4.5 TRANSFERS FROM A PARTY TO AN AFFILIATE - CHANGE IN CONTROL
In the event that (i) in accordance with Section 4.1 a Party (the "FORMER
CONTROLLING PARTY") has Transferred part or all of its Securities to an
Affiliate and such Affiliate ceases to be an Affiliate (the "FORMER Affiliate")
of the Former Controlling Party (the Person newly controlling the Former
Affiliate being referred to as the "NEW CONTROLLING PARTY"), (ii) there occurs a
change of control of Remote Reward (the Person formerly controlling Remote
Reward being in such case referred to as the "FORMER CONTROLLING PARTY" and the
Person newly controlling Remote Reward being in such case referred to as the
"NEW CONTROLLING PARTY"), or (iii) MWGL ceases to be wholly owned and controlled
by ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇, each other Party shall have the
right, during the 24 month period following such event, to exercise its
Pre-Emptive Right and purchase the Securities held by the Former Affiliate,
Remote Reward, or MWGL, as the case may be, in accordance with Section 4.2, as
if the concerned Former Affiliate, Remote Reward, or MWGL had transferred all of
its Securities to a Third Party, with the price to be determined in accordance
with paragraph (c) below and with the pre-empted Securities to be allocated
pursuant to the provisions of Section 4.2(f) among the Offerees who exercise
their pre-emptive rights hereunder.
If the New Controlling Party, as a result of the change of control of the Former
Affiliate, of Remote Reward, or of MWGL, as the case may be, holds more than 50%
of the share capital or voting rights of the Company (on a non diluted basis),
and if a Party does not wish to exercise its Pre-Emptive Right as described
above, such change of control shall trigger the Tag Along Right set forth in
Section 4.4 above, with each such Party (as a Tagging Offeree) being entitled to
sell all the Securities that such Party holds to, at such Party's option, the
Former Affiliate, Remote Reward, or MWGL, as the case may be, or the New
Controlling Party (the "Transferee").
In case of exercise of either the Pre-Emptive Right or the Tag Along Right
provided above, the price of the Securities to be sold shall be the fair market
value of the Securities as agreed by the Former Affiliate, Remote Reward
(provided, that in the event of a change of control of Remote Reward due to the
death of ▇▇▇▇▇ ▇▇▇▇▇▇▇, references to Remote Reward in this paragraph shall be
replaced by a reference to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ or, if he shall not be
available, to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or, if she shall not be available, to ▇▇▇▇▇
▇▇▇▇▇▇▇), or MWGL, as the case may be, on the one hand and the Offerees on the
other hand. Failing such agreement, the Former Affiliate, Remote Reward, or
MWGL, as the case may be, shall indicate to the Offerees its estimate of such
fair market value, and such fair market value shall be determined in accordance
with the expert procedure set forth Section 4.2(d) (the two first experts being
appointed in such case by the Former Affiliate, Remote Reward, or MWGL, as the
case may be, on the one hand, and by the Offerees, on the other hand). If the
fair market value as determined in accordance with the expert procedure is less
than 90% of such value as
24
estimated by the Former Affiliate, Remote Reward, or MWGL, as the case may be,
prior to the determination in accordance with the expert procedure, than any
Offeree may elect not to Transfer its Securities, by so notifying to the Former
Affiliate, Remote Reward, or MWGL, as the case may be, prior to the expiration
of the 10-day period after determination of the fair market value in accordance
with the expert procedure.
Such transfers shall otherwise be in accordance with the provisions set
forth in Sections 4.2 and 4.4 above.
Notwithstanding the foregoing, with respect to any Transfer under this
Section 4.5 pursuant to an exercise of a Pre-Emptive Right (a
"PRE-EMPTIVE RIGHT TRANSACTION"), in the event there shall be a sale by
any Party that exercised its Pre-Emptive Right of any Securities (the
"RE-SELLING PARTY") within nine (9) months following the Pre-Emptive
Right Transaction, to any third party purchaser (a "RE-SALE
TRANSACTION") for consideration per Share that exceeds the
consideration per Share in the Pre-Emptive Right Transaction, then, the
Re-Selling Party shall pay to the Party that was required to transfer
shares to the Re-Selling Party in the Pre-Emptive Right Transaction an
amount equal to a percentage of the difference between the per-Share
consideration in the Pre-Emptive Right Transaction and the per-Share
consideration in the Re-Sale Transaction, multiplied by the number of
shares that were Transferred in the Pre-Emptive Right Transaction, as
follows (i) if the Re-Sale Transaction occurs within three (3) months
after the Pre-Emptive Right transaction, such percentage shall be 100%,
(ii) if such Re-Sale Transaction occurs three (3) months or more after,
but less than six (6) months after, the Pre-Emptive Right, such
percentage shall be 66% and, (iii) if such Re-Sale Transaction occurs
six (6) months or more after, but less than nine (9) months after, the
Pre-Emptive Right, such percentage shall be 33%.
As soon as any Party has knowledge of any event likely to trigger any of the
pre-emptive or exit rights described in this Article, it shall notify such event
to the President of the Board of the Company, who shall immediately inform the
other Parties.
25
SECTION 4.6 DRAG ALONG RIGHT (SORTIE FORCEE)
(a) If a Transfer that would give rise to an obligation to send a Transfer
Proposal would result in the Transfer of 95% or more of the Securities
of the Company (on a non-diluted basis), then the Transfer Proposal
shall be sent to all Shareholders and the President of the Board of
Directors, and such Transfer Proposal may, at the Transferor's option,
reference the Drag-Along Right provided by this Section 4.6 and the
Contractual Undertaking. Such a proposed Transfer shall be subject to
the time limits set forth in Section 4.2(i).
(b) If Shareholders representing 75 % or more of the Company's capital and
voting rights (on a non-diluted basis) (hereinafter the "MAJORITY
SHAREHOLDERS") notify the Transferor and the President of the Board of
Directors within ten (10) days after the date of the Transfer Proposal
that they wish to accept such Bona Fide Offer from the proposed
transferee (the "PURCHASER"), then the Majority Shareholders may then
provide joint notice to all Shareholders that they wish to exercise the
Drag Along Right provided by this Section 4.6.
(c) If, with respect to the proposed Transfer, the Pre-Emptive Rights
provided under Section 4.2 shall have been validly exercised with
respect to all of the Offered Securities as provided by Section 4.2(e),
then (i) the pre-empting Offerees may, at their option, by notice to
the Parties that are not pre-empting Offerees, elect to exercise a
drag-along right to purchase all Securities held by such other Parties,
or (ii) such other Parties may, by notice to the pre-empting Offerees,
exercise a tag-along right to sell to the pre-empting Offerees all of
their Securities, in each case on the terms and for the consideration
set forth in the Transfer Proposal or as determined in accordance with
Section 4.2(d), as applicable. In each case, the Securities to be
Transferred to the pre-empting Offerees shall be allocated among the
pre-empting Offerees pro rata based on the percentage of Offered
Securities that would otherwise be purchased by such pre-empting
Offerees. Such Transfers shall occur simultaneously with the Transfer
pursuant to the Pre Emptive Right as contemplated in Section 4.2(i).
(d) If, however, with respect to the proposed Transfer, the Pre-Emptive
Rights provided under Section 4.2 shall not have been validly exercised
with respect to all of the Offered Securities as provided by Section
4.2(e), then the Drag Along Right provided herein shall be valid, and
all Parties shall transfer their securities to the proposed transferee
upon the terms and conditions, and for the consideration, set forth in
the Transfer Proposal. Such Transfers shall occur simultaneously on the
date which is thirty (30) days after the expiration of the 10-day
period provided in paragraph (b) above, or such other date as may be
agreed by the transferee and the transferors. The Parties other than
the Transferor shall not be required to give any representations and
warranties (other than standard non-operational representations and
warranties such as regarding due ownership of the Shares being
Transferred and due authorization to Transfer such Shares) or agree to
any non-compete undertaking, in connection with the Transfer.
26
In the event that the proposed transferee wishes to acquire more than
95 % of the Securities but less than 100% of the Securities of the
Company, the number of Securities to be sold by the shareholders who
did not wish to exercise their tag-along right in accordance with
Article 4.4 above shall be allocated among them on a prorata basis.
If any Party shall fail to execute its obligations pursuant to this
Article, the Majority Shareholders may deposit, on an escrow account,
opened in the books of the Caisse des Depots et Consignations, in the
name of each defaulting Party, the price for the Securities of the
defaulting Minority Shareholders. In such event, the mere delivery to
the Company of the Transfer Proposal referencing their intention to
exercise the provisions of this paragraph together with the receipt of
the deposit of the applicable price on an escrow account will be deemed
to be a valid share transfer form and shall bind the Company to book
the corresponding transfers on the share transfer register and on the
shareholders' accounts.
SECTION 4.7 CENTRALIZATION OF THE OFFERS BY THE BOARD OF DIRECTORS
The Parties hereby empower the Board of Directors of the Company to centralize
the notices received by the Parties and to organize the Transfer of Securities
pursuant to the provisions of this Article 4. To this end, copies of all notices
under Article 4 shall be provided to the President of the Board, who shall
notify the Parties, within a five (5)-Business Day period following the
expiration of the thirty (30)-day period indicated in Section 4.2(b) (or, if
applicable, of the ten (10) day period indicated in Section 4.2(d)), if
applicable (as such periods may be shortened as provided in Section 4.2(i), the
result of the centralizing of the offers by the Board of Directors of the
Company (the "RESULT NOTICE"). The Transfer of Securities under this Section 4.7
shall occur within the periods set forth by the Board of Directors in the Result
Notice in application of the terms hereof.
ARTICLE V - LISTING OR OTHER LIQUIDITY EVENT
5.1 Without prejudice to the rules of majority under Section 2.3 above to
decide on such IPO, the Parties hereby declare their common desire, and
agree that it is their common intention, to achieve an IPO on a
regulated European or North-American stock exchange operating regularly
(hereinafter referred to as the "LISTING") or some other commercially
appropriate transaction pursuant to which the Investors would transfer
their Shares at a price at least equal to market value on or before
December 31, 2007.
No listing of securities of subsidiaries shall occur prior to a
Listing.
The Investors shall be entitled to subscribe to Shares in connection
with any Listing on terms and conditions that are as favorable as the
most favorable obtained in this regard by any other Shareholder and
pro-rata to their shareholding in the Company as at the date of the
Listing or other event, failing which, upon timely notice by any
Investor, the Company shall not pursue such Listing.
27
The Company will bear all of its expenses incurred in connection with
an IPO. If the Company's Securities are listed on a US market, the
Company will grant to the Investors customary demand and piggyback
registration rights.
5.2 In case no Listing or transaction pursuant to which the Investors have
transferred their Shares at a price at least equal to the fair market
value thereof has occurred on or before December 31, 2007, then, upon
notice by any Investor to the Parties and the Company on or before
December 31, 2009, the Investors shall consult and attempt to agree in
good faith based on a list of candidates proposed by each of the
Investors and by Remote Reward, with respect to an investment bank,
which shall be a first-rank investment bank with offices in Paris, with
demonstrated significant experience in mergers and acquisitions in
Europe and in particular in the valuation of companies in the
telecommunications industry in Europe, with no conflict of interest
with any Party, to be appointed by the Shareholders (hereinafter
referred to as the "AGENT"). If the Investors are not able to agree
with respect to the identity of the Agent within 90 days after such
notice to all Parties, then upon request by any Investor, the Agent
shall be designated promptly by the President of the Board of Directors
among the candidates proposed by each of the Investors and Remote
Reward.
The Agent shall be appointed to sell 100% of the Securities of the
Company at the then most advantageous terms, as soon as possible and at
the latest, if possible, within six (6) months after its appointment.
Each of the Party shall be entitled to present to the Agent an offer to
take over 100% of the Securities of the Company.
5.3 Once the Agent has identified one or several potential purchasers
wishing to acquire the Securities held by the Investors at a price
calculated prorata based on the market value of 100 % of the Securities
of the Company, he shall so notify the President of the Board and the
Parties, such notice to include the identity of the proposed
purchaser(s), the terms and conditions of the proposed purchase
(subject to, if applicable, the provisions of Article VI) and the
number of Securities proposed to be purchased (the "EXIT NOTICE"). If,
within the ten (10)-day period following the Exit Notice, any Investor
elects to accept the offer from the potential purchaser (the "ACCEPTING
SECURITY HOLDERS"), it shall so notify the other Parties (the "OTHER
SECURITY HOLDERS") and the President of the Board of the Company. If
the Accepting Security Holders do not collectively accept the offer set
forth in the Exit Notice with respect to all of the Securities proposed
to be purchased therein, then the Other Security Holders shall be bound
to Transfer to the potential purchaser a number of Securities such that
such potential purchaser is able to purchase all of the Securities set
forth in the Exit Notice, with each such Other Security Holder being
bound to Transfer, under the terms and conditions set forth in the Exit
Notice (subject to, if applicable, the provisions of Article VI), to
the potential purchaser a number of Securities equal to such deficiency
multiplied by a fraction, the numerator of which is the number of
Shares held by such Other Security Holder and the denominator of which
is the total number of Shares held by such Other Security Holder. The
Other Security Holders shall not be required to give any
representations and warranties (other than standard non-operational
representations and warranties such as regarding due
28
ownership of the Shares being Transferred and due authorization to
Transfer such Shares), nor agree to any non-compete undertaking, in
connection with the Transfer.
The obligation of any Other Security Holder to Transfer Securities to
the potential purchaser under the foregoing provisions shall only apply
if the Transfer of the Securities to the proposed purchaser is
consummated within three months after date of the Exit Notice.
The provisions of the Section 4.6(c) shall be applicable mutatis
mutandis to this provision.
ARTICLE VI - ALLOCATION OF TRANSFER PROCEEDS
For the purposes of this Article VI:
- "TRANSACTION" means (a)(i) the merger or consolidation of the Company
into or with one or more entities, (ii) the merger or consolidation of
one or more persons into or with the Company if, in the case of (i) or
(ii), the Shareholders of the Company prior to such merger or
consolidation do not retain at least a majority of the voting power of
the surviving entity (on a non-diluted basis), or (b) the voluntary
Transfer to another Person of the share capital of the Company if,
after such Transfer, the Shareholders of the Company prior to such
Transfer do not retain at least a majority of the voting power of the
Company (on a non-diluted basis).
- "PROCEEDS" shall mean the aggregate net proceeds of the Transaction
received by all Security Holders participating in the Transaction or by
the Company, as the case may be, whether cash, securities, assets or
some other form of consideration.
- "VALUATION OF THE COMPANY" shall mean the valuation for 100 % of the
share capital of the Company on a Fully Diluted basis taken into
account in the Transaction to calculate the compensation received by
the Shareholders for their Shares. (i.e. for instance valuation of the
Company taken into account to calculate the exchange ratio in case of
merger or contribution in kind of the Shares).
In the event the Transaction is not entirely paid in cash, the Founders
and Remote Reward, on the one hand, and the Investors, on the other
hand, shall in good faith consult with each other in order to agree
with respect to the Valuation of the Company. If the Founders and
Remote Reward, on the one hand, and the Investors, on the other hand,
are unable to agree with respect to the Valuation of the Company within
five (5) days after the request of any of the Investors, Remote Reward
or the Founders, then any of the Founders, Remote Reward or any
Investor may request by notice to the others that such Valuation of the
Company be determined in accordance with the expert procedure as
provided in Section 4.2.(d) above (and in such case the two first
experts shall be appointed by the Founders and Remote Reward, on the
one hand, and by the Investors, on the other hand).
29
SECTION 6.1 ALLOCATION OF THE TRANSFER PROCEEDS
In respect of the first Transaction after the date hereof, in which the
Valuation of the Company is less than (i) twenty nine million, nine hundred
sixty six thousand, six hundred seventy euros (EUR 29,966,670) (in the event the
ABSA Shares 2 are subscribed for by the Investors) or (ii) fourteen million nine
hundred eighty-three thousand and three hundred and thirty-five euros (EUR
14,983,335) (in the event the ABSA Shares 2 are not subscribed for by the
Investors), then, in consideration for the risks incurred by the Investors by
subscribing for the ABSA Shares while the Company is in a development stage, the
Parties expressly agree that the Proceeds of the Transaction, shall be allocated
in priority to the Investors as set forth below (the amount to be so allocated
to the Investors or any Investor, the "PREFERENCE AMOUNT"), with the remainder
of the Proceeds to be allocated to the other Shareholders pro rata as if the
priority allocation did not exist:
A - CALCULATION OF THE PREFERENCE AMOUNT IF THE ABSA SHARES 2 ARE
SUBSCRIBED FOR BY THE INVESTORS.
If the ABSA Shares 2 are subscribed for by the Investors, then the
Preference Amount shall be calculated as follows:
(a) if the Valuation of the Company is less than ten million euros (EUR
10,000,000), then:
(i) in respect of a Transaction pursuant to which 100% of the
share capital is Transferred or a Transaction by way of merger
or consolidation, then the Preference Amount to be received by
the Investors as a group shall be an amount Y or a portion of
the Proceeds of the Transaction valued at Y, as follows:
Y = X * 0.8
where X equals the Proceeds of the Transaction
- the Preference Amount payable to each Investor shall
be equal to an amount Z, calculated in Euros:
Z = (Y ) * (N/NB)
where N equals the number of Shares held by such
Investor and NB equals the total number of Shares held by all
Investors;
(ii) in respect of any Transaction in which less than 100% of the
share capital of the Company is Transferred, then the
Preference Amount to be received by the Investors as a group
shall be an amount Y or a portion of the Proceeds of the
Transaction valued at Y, as follows:
Y = P (X * 0.8)
where X represents the Proceeds of the Transaction, and P
represents a fraction, the numerator of which is the number of Shares
Transferred by the Investors
30
in the Transaction, and the denominator of which is the total number of
Shares owned by the Investors.
the Preference Amount payable to each Investor shall be equal
to an amount Z, calculated in Euros:
Z = (Y ) * (N/NB)
where N equals the number of Shares transferred by such
Investor in the Transaction and NB equals the total number of Shares
Transferred by all Investors in the Transaction.
(b) if the Valuation of the Company in the Transaction is at least ten
million Euros (EUR 10,000,000), but less than twenty million Euros (EUR
20,000,000) then:
(i) in respect of a Transaction pursuant to which 100% of the
share capital is Transferred or a Transaction by way of merger
or consolidation, then:
- the Preference Amount to be received by the Investors
as a group shall be an amount Y or a portion of the
Proceeds of the Transaction valued at Y, as follows:
Y = (EUR 6,000,000) + (X * 0.2)
where X equals the Proceeds of the Transaction
- the Preference Amount payable to each Investor shall
be equal to an amount Z, calculated in Euros:
Z = (Y) * (N/NB)
where N equals the number of Shares held by such
Investor and NB equals the total number of Shares
held by all Investors.
(ii) in respect of any Transaction in which less than 100% of the
share capital of the Company is Transferred, then:
- the Preference Amount to be received by the Investors
as a group shall be an amount Y or a portion of the
Proceeds of the Transaction valued at Y, as follows:
Y = (P) * (EUR 6,000,000) + (X * 0.2)
where X represents the Proceeds of the Transaction,
and P represents a fraction, the numerator of which
is the number of Shares Transferred by the Investors
in the Transaction, and the denominator of which is
the total number of Shares owned by the Investors.
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- the Preference Amount payable to each Investor shall
be equal to an amount Z, calculated in Euros:
Z = (Y ) * (N/NB)
where N equals the number of Shares transferred by
such Investor in the Transaction and NB equals the
total number of Shares Transferred by all Investors
in the Transaction.
(c) if the Valuation of the Company is at least twenty million Euros (EUR
20,000,000), but less than twenty nine million, nine hundred sixty six
thousand and six hundred and seventy euros (EUR 29,966,670) then:
(i) in respect of a Transaction pursuant to which 100% of the
share capital is Transferred or a Transaction by way of merger
or consolidation, then:
- the Preference Amount to be received by the Investors
as a group shall be ten million euros (EUR
10,000,000) or a portion of the Proceeds of the
Transaction valued at ten million euros (EUR
10,000,000), and
- the Preference Amount payable to each Investor shall
be equal to an amount Z, calculated in Euros:
Z = (EUR 10,000,000) * (N/NB)
where N equals the number of Shares held by such
Investor and NB equals the total number of Shares
held by all Investors.
(ii) in respect of any Transaction in which less than 100% of the
share capital of the Company is Transferred, then:
- the Preference Amount to be received by the Investors
as a group shall be an amount Y or a portion of the
Proceeds of the Transaction valued at Y, as follows:
Y = (P) * (EUR 10,000,000)
where P represents a fraction, the numerator of which
is the number of Shares Transferred by the Investors
in the Transaction, and the denominator of which is
the total number of Shares owned by the Investors.
- the Preference Amount payable to each Investor shall
be equal to an amount Z, calculated in Euros:
Z = (Y ) * (N/NB)
where N equals the number of Shares transferred by
such Investor in the Transaction and NB equals the
total number of Shares Transferred by all Investors
in the Transaction.
32
B - CALCULATION OF THE PREFERENCE AMOUNT IF THE ABSA SHARES 2 ARE NOT
SUBSCRIBED FOR BY THE INVESTORS
If the ABSA Shares 2 are not subscribed for by the Investors, then the
Preference Amount shall be calculated as follows:
(a) if the Valuation of the Company is less than five million Euros (EUR
5,000,000), then:
(i) in respect of a Transaction pursuant to which 100% of the
share capital is Transferred or a Transaction by way of merger
or consolidation, then the Preference Amount to be received by
the Investors as a group shall be an amount Y or a portion of
the Proceeds of the Transaction valued at Y, as follows:
Y = X * 0.8
where X equals the Proceeds of the Transaction
- the Preference Amount payable to each Investor shall
be equal to an amount Z, calculated in Euros:
Z = (Y ) * (N/NB)
where N equals the number of Shares held by such
Investor and NB equals the total number of Shares held by all
Investors;
(ii) in respect of any Transaction in which less than 100% of the
share capital of the Company is Transferred, then the
Preference Amount to be received by the Investors as a group
shall be an amount Y or a portion of the Proceeds of the
Transaction valued at Y, as follows:
Y = P (X * 0.8)
where X represents the Proceeds of the Transaction, and P
represents a fraction, the numerator of which is the number of Shares
Transferred by the Investors in the Transaction, and the denominator of
which is the total number of Shares owned by the Investors.
the Preference Amount payable to each Investor shall be equal
to an amount Z, calculated in Euros:
Z = (Y ) * (N/NB)
where N equals the number of Shares transferred by such
Investor in the Transaction and NB equals the total number of Shares
Transferred by all Investors in the Transaction.
33
(b) if the Valuation of the Company in the Transaction is at least five
million Euros (EUR 5,000,000), but less than ten million Euros (EUR
10,000,000) then:
(i) in respect of a Transaction pursuant to which 100% of the
share capital is Transferred or a Transaction by way of merger
or consolidation, then:
- the Preference Amount to be received by the Investors
as a group shall be an amount Y or a portion of the
Proceeds of the Transaction valued at Y, as follows:
Y = (EUR 3,000,000) + (X * 0.2)
where X equals the Proceeds of the Transaction
- the Preference Amount payable to each Investor shall
be equal to an amount Z, calculated in Euros:
Z = (Y) * (N/NB)
where N equals the number of Shares held by such
Investor and NB equals the total number of Shares
held by all Investors.
(ii) in respect of any Transaction in which less than 100% of the
share capital of the Company is Transferred, then:
- the Preference Amount to be received by the Investors
as a group shall be an amount Y or a portion of the
Proceeds of the Transaction valued at Y, as follows:
Y = (P) * (EUR 3,000,000) + (X * 0.2)
where X represents the Proceeds of the Transaction,
and P represents a fraction, the numerator of which
is the number of Shares Transferred by the Investors
in the Transaction, and the denominator of which is
the total number of Shares owned by the Investors.
- the Preference Amount payable to each Investor shall
be equal to an amount Z, calculated in Euros:
Z = (Y ) * (N/NB)
where N equals the number of Shares transferred by
such Investor in the Transaction and NB equals the
total number of Shares Transferred by all Investors
in the Transaction.
34
(c) if the Valuation of the Company is at least ten million Euros (EUR
10,000,000), but less than fourteen million nine hundred eighty-three
thousand and three hundred and thirty-five Euros (EUR 14,983,335) then:
(i) in respect of a Transaction pursuant to which 100% of the
share capital is Transferred or a Transaction by way of merger
or consolidation, then:
- the Preference Amount to be received by the Investors
as a group shall be five million euros (EUR
5,000,000) or a portion of the Proceeds of the
Transaction valued at five million euros (EUR
5,000,000), and
- the Preference Amount payable to each Investor shall
be equal to an amount Z, calculated in Euros:
Z = (EUR 5,000,000) * (N/NB)
where N equals the number of Shares held by such
Investor and NB equals the total number of Shares
held by all Investors.
(ii) in respect of any Transaction in which less than 100% of the
share capital of the Company is Transferred, then:
- the Preference Amount to be received by the Investors
as a group shall be an amount Y or a portion of the
Proceeds of the Transaction valued at Y, as follows:
Y = (P) * (EUR 5,000,000)
where P represents a fraction, the numerator of which
is the number of Shares Transferred by the Investors
in the Transaction, and the denominator of which is
the total number of Shares owned by the Investors.
- the Preference Amount payable to each Investor shall
be equal to an amount Z, calculated in Euros:
Z = (Y ) * (N/NB)
where N equals the number of Shares transferred by
such Investor in the Transaction and NB equals the
total number of Shares Transferred by all Investors
in the Transaction.
SECTION 6.2 MISCELLANEOUS
For the purposes of this Article VI, the Parties agree that, in the event of any
contact with a Third Party in connection with a Transaction, they will inform
the Third Party of the existence of the provisions of this Article VI and of the
resulting allocation of the purchase price.
35
The Parties acknowledge that such Third Party(ies) shall be required as a term
and condition of the Transaction to directly pay to the Investors their share of
the Proceeds determined pursuant to the provisions of this Article and, as a
consequence, the Parties shall refrain from entering into any agreement
providing for a Transaction pursuant to which the Proceeds would not be so
allocated to the Parties in accordance with the provisions of this Article.
If, however, the allocation of the Proceeds directly resulting from the
Transaction cannot, due to requirements of law, be modified to reflect the
foregoing allocation (e.g., contribution in kind of shares, merger), then the
Parties other than the Investors shall be bound to Transfer to the Investors,
upon any Investor's request, prior to the closing of the considered Transaction,
Shares of the Company, at a price of Euro 0.01 per Share, so that, as a result
of the contemplated Transaction and of such Transfers of Shares to the
Investors, each Investor would receive a share of the Proceeds in accordance
with the allocation of Proceeds calculated as mentioned above.
If, for any reason whatsoever, the Transfer of Shares in accordance with the
preceding paragraph has not occurred prior to the closing of the considered
Transaction, the Parties shall immediately upon receipt of the Proceeds
re-allocate such Proceeds among themselves in accordance with the foregoing
allocations.
ARTICLE VII - ISSUES OF SECURITIES - ANTIDILUTION
It is the intention of the Parties that each Party shall be given the
opportunity to maintain its percentage shareholding in the Company. The Parties
thus undertake not to vote in favor of any resolution submitted to the
shareholders of the Company that would have the effect of extinguishing the
shareholders' preferential subscription right unless each Party shall have been
offered to participate in the relevant transaction so as to maintain its
percentage holding in the Company's equity to the same level as immediately
prior to the such transaction.
36
ARTICLE VIII - OTHER COMMITMENTS
SECTION 8.1 FUNDING COMMITMENTS OF REMOTE REWARD
In the event the Board of Directors should determine in good faith at any
meeting of the Board of Directors held after the end of the year 2004 and before
the end of the year 2005 that, as a result of a mere delay in the revenues of
the Company that is not linked to a significant decrease in the amount of
potential sales that are projected in the commercial pipeline of the Company as
compared to the projected figures provided in the business plan attached as
EXHIBIT G OF THE INVESTMENT AGREEMENT), it is unlikely that the Company will be
able to meet its ordinary course cash requirements beyond the forty five
(45)-day period immediately following such meeting, Remote Reward hereby
irrevocably undertakes to grant to the Company one or more shareholders loans
(the "SHAREHOLDER LOANS"), within ten (10) days after a request by the Board of
Directors, such Shareholder Loans to be used by the Company to fund the ordinary
course cash requirements of the Company (at the time of the initial meeting of
the Board of Directors that determined that the cash deficiency exists, as
determined in the amended business plan prepared by the Board of Directors at
such meeting) (the "MONTHLY CASH REQUIREMENT") during the six-month period
following the 45-day period referred to above. The aggregate amount of such
Shareholder Loans shall not exceed the lesser of (i) six (6) times the MONTHLY
CASH REQUIREMENT and (ii) EUR 5,000,000.
Such Shareholder Loans shall bear interest at an annual rate of EURIBOR plus one
base point.
The Shareholder Loans shall be repayable upon demand by Remote Reward on the
later of (i) January 1, 2006 and (ii) the expiration of a ten (10)-month period
following the date of granting of such Shareholder Loan; provided, that Remote
Reward shall not request the repayment of all or any portion of the Shareholder
Loans to the extent such repayment would endanger the financial situation of the
Company and in particular it shall only request repayment to the extent that the
Company has enough cash for such repayment.
The Shareholder Loans shall be repaid by the Company, at Remote Reward's
discretionary option, to be notified to the Company and to all Parties, (i) in
cash, (ii) by compensation with the subscription price to be paid by Remote
Reward to subscribe for new shares to be issued by the Company; such shares
shall be issued at a price to be agreed upon between the Parties, or, failing
such agreement, to be determined in accordance with the expert procedure set
forth in Section 4.2(d) above or (iii) a combination of (i) and (ii).
In the event of liquidation of the Company prior to the repayment in full of the
Shareholder Loans, Remote Reward hereby agrees that its rights to repayment of
the Shareholder Loans (or the remaining unpaid portion thereof) shall be
subordinated to the right of the holders of the Class B Shares to receive the
Liquidation Preference pursuant to Article 19-3(a), (b) or (c), as applicable,
of the amended by-laws of the Company as of the Closing Date.
In the event of a Transaction prior to the repayment in full of the Shareholder
Loans, Remote Reward hereby agrees that its right to repayment of the
Shareholder Loans (or the remaining unpaid portion thereof) shall be
subordinated to the right of the Investors to receive the Preference Amount in
respect of such Transactions, with the result that the Preference
37
Amount in respect of such Transaction shall be calculated as if the Valuation
and the Transfer Proceeds had been increased by the nominal value of the
Shareholder Loans then unpaid by the Company.
As an example for the last paragraph, assuming that (i) the ABSA Shares 2 have
been subscribed for by the Investors, (ii) that a Transaction concerning 100 %
of the share capital of the Company occurs (whereby the Investors would transfer
100 % of their Shares), (ii) the Valuation of the Company in such Transaction is
EUR 15,000,000, (iii) the Transfer Proceeds are EUR 15,000,000 and (iii) the
remaining amount of the Shareholder Loans is EUR 2,000,000,
then the Preference Amount due to the Investors shall be calculated as if there
had been no Shareholder Loans, i.e. as if the Transaction occurred with a
Valuation of EUR 17,000,000, with Transfer Proceeds of EUR 17,000,000 and the
Preference Amount due to the Investors would consequently be EUR 9,400,000
(instead of EUR 9,00,000 if the Valuation and Transfer Proceeds had not been
changed as mentioned above).
SECTION 8.2 COMMITMENTS OF REMOTE REWARD TO THE COMPANY
Remote Reward hereby undertakes to counter-guarantee the guarantee granted by
the Company to the benefit of ANVAR, as reflected in the Interim Financial
Accounts (as defined in the Representations and Warranties Agreement).
Consequently, in the event that the Company is required to pay any amount to
ANVAR pursuant to the guarantee granted to ANVAR by the Company, Remote Reward
hereby undertakes to indemnify and hold harmless the Company, and to pay to the
Company the same amount in cash, within ten (10) days of such payment by the
Company.
SECTION 8.3 NON COMPETE AGREEMENT
The Parties shall use their best efforts to obtain from all Key Employees
designated as such by the Board of Director after the Closing Date the execution
of a French translated version of the draft non-compete agreement attached as
EXHIBIT D hereto.
ARTICLE IX - REPRESENTATIONS AND WARRANTIES OF THE PARTIES
SECTION 9.1 REPRESENTATIONS AND WARRANTIES OF THE PARTIES
Each Party represents and warrants to the other Parties as of the date
hereof and as of the Closing Date:
- that it is duly established under the law of the jurisdiction in which
it is established and is in good standing in such jurisdiction;
- that it has full power and authority to execute and deliver the
Transaction Documents;
38
- that the execution and delivery of the Transaction Documents by such
Party of each Transaction Documents to which it is a party, and the
performance by such Party of all of its obligations set forth therein
has been, or prior to the Closing Date will be, duly authorized and
approved by all requisite corporate action, except for such actions
that are specifically intended by the terms of the Transaction
Documents to be approved after the Closing Date;
- that the Transaction Documents to which such Party is a party, when
executed and delivered, taking into account their respective effective
dates, will be valid and binding obligations of such Party in
accordance with their terms and will not breach any legal or regulatory
provisions nor any organizational documents of such Party; and
- that the execution and delivery of the Transaction Documents to which
such Party is a party by such Party do not conflict with and will not
result in any default, violation, modification, suspension or
termination of any contract or undertaking to which such Party is a
party.
SECTION 9.2 REPRESENTATION AND WARRANTY OF MWGL
MWGL hereby represents that it is 100% owned and controlled by ▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇. ▇▇▇▇ ▇▇▇▇▇▇.
ARTICLE X - RESTRICTIONS CONCERNING OTHER AGREEMENTS
No Party hereto shall enter into any agreement or contract with any other Person
(including any Party hereto) concerning the management or business of the
Company or the Securities, including but not limited to contracts or agreements
concerning the purchase, sale or voting of any Securities which are contrary
hereto.
Notwithstanding the foregoing, Alkanz Co. Ltd. has been or will be appointed to
act as an intermediary for the completion of the Investment pursuant to a
Consultancy Agreement among the Company, Alkanz Ltd. and Remote Reward. Pursuant
to such agreement, Alkanz Ltd. is entitled to receive (i) a fee payable in cash
in an amount of EUR 63,654 upon completion of the First Capital Increase by MWGL
and EUR 63,861 upon subscription by MWGL for the ABSA Shares 2, and (ii) 16,197
ordinary shares upon completion of the First Capital Increase and 5,669 ordinary
shares upon subscription by MWGL for the ABSA Shares 2 or exercise of the
Warrants 2004. The cash portion of the fees shall be paid by the Company and the
share portion shall be assumed by Remote Reward by execution of a call option
agreement between Alkanz Co. Ltd. and Remote Reward.
39
ARTICLE XI - GOVERNING LAW - CHOICE OF FORUM
SECTION 11.1 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with French law.
SECTION 11.2 CHOICE OF FORUM
Any dispute arising out of or relating to this Agreement shall be submitted to
the jurisdiction of the competent court in the jurisdiction of the Court of
Appeals of Paris, to which the Parties hereby irrevocably consent.
ARTICLE XII - TERM
SECTION 12.1 TERM
This Agreement shall be in effect as from the Closing Date, and shall not take
effect if the Investment Agreement shall be validly terminated in accordance
with its terms.
The provisions of this Agreement shall expire ten (10) years as from the Closing
Date.
SECTION 12.2 TERMINATION
(a) This Agreement shall terminate with respect to a Party whenever that
Party ceases being a Security Holder (otherwise than as a result of a
Transfer to an Affiliate), provided, that this shall not affect the
rights of any other Party.
(b) In addition, this Agreement shall terminate by operation of law upon an
IPO of the Securities of the Company.
ARTICLE XIII - MISCELLANEOUS PROVISIONS
SECTION 13.1 NOTICES
Any notice, request, formal notice or other communication pursuant to the
provisions of this Agreement ("NOTICE") shall be made in writing to the
addresses mentioned below and shall be deemed to have been properly served: (i)
on the date of delivery, in the case of delivery by hand to the Party on which
notice must be served; (ii) for all Parties other than the Founders, on the date
of transmission, in the case of transmission by fax, followed by telephone
confirmation of receipt immediately following completion of the transmission; or
(iii) on the third day following pre-paid delivery by a recognized international
express courier service (e.g., DHL). The addresses for Notice to the Founders
shall be the residential addresses set forth on page 1 of this Agreement. Any
Party may change its address or the name of the addressee for purposes of this
Article 13.1 by sending the other Parties a written notice of its new address in
the manner provided above.
40
Party: AGF Innovation 3, AGF Innovation 4 or AGF Innovation 5, notice
to be sent to AGF PE at the following address:
Address: ▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ Cedex 09
Attention: Guillaume Lautour / ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Tel: ▇▇ ▇▇ ▇▇ ▇▇ ▇▇
Fax: ▇▇ ▇▇ ▇▇ ▇▇ ▇▇
Party: Mighty Wealth Group Limited
Address: ▇▇▇▇ ▇▇, ▇▇/▇, ▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇▇▇, ▇ ▇▇ ▇▇▇▇ Street,
San Po Kong, Kowloon, Hong Kong
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Tel: ▇▇▇-▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇▇-▇▇▇▇
Party: Nam Tai Electronics, Inc.
Address: ▇/▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇/▇., ▇▇▇▇▇ Merchants Tower,
Shun Tak Centre,
▇▇▇-▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇
Tel: (▇▇▇) ▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇▇ ▇▇▇▇
Party: REMOTE REWARD
Address: 4 ter, ▇▇▇ ▇▇ ▇'▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Attention: President (▇▇▇▇▇ ▇▇▇▇▇▇▇)
Tel: ▇▇.▇▇.▇▇.▇▇.▇▇
Fax: ▇▇.▇▇.▇▇.▇▇.▇▇
SECTION 13.2 ENTIRE AGREEMENT
This Agreement, with its exhibits, set forth the entire agreement of the Parties
with respect to the business referred to herein. Those documents shall prevail
over any negotiations, discussions, communications, understandings or prior
agreements between the Parties relating to the subject matter of this Agreement
and over any earlier drafts of the Agreement which are all subsumed in these
documents.
On the Closing Date, this Agreement shall supersede and render null and void any
other agreements existing between some or all of the Parties governing their
relationships as Security Holders of the Company (except for the Contractual
Undertakings executed in accordance with Article III above).
41
SECTION 13.3 SUPPLEMENTARY AGREEMENTS; WAIVERS
No supplementary agreement or amendment to this Agreement shall be valid unless
memorialized by a writing signed by the Parties hereto.
Waiver by a Party of any condition or waiver of enforcement of a breach of any
provision, term or covenant contained in this Agreement at one or more times
shall not be considered or construed as a recurring or continuing waiver of that
condition or of the right to enforce a breach of any other provision, term or
covenant of this Agreement.
SECTION 13.4 SUCCESSORS, HEIRS AND ASSIGNS; NO THIRD-PARTY BENEFICIARIES
This Agreement shall inure to the benefit of and be binding on the Parties and
their respective successors, heirs and assigns, regardless of whether they are
minors or otherwise under a disability, provided however that unless otherwise
expressly provided for herein, no Party may assign or delegate any of the
obligations created under this Agreement without the prior written consent of
the other Parties.
If a Third Party or an Affiliate should acquire Securities previously held by a
Party, said Third Party or Affiliate, as the case may be, shall have the same
obligations and, provided that the Securities were acquired fully in compliance
with this Agreement, the same rights as the original Party, and to this effect,
shall sign an Agreement to be Bound. Any such Third Party or Affiliate, as well
as any Third Party or Affiliate that becomes an owner of newly issued
Securities, shall be required to sign an Agreement to be Bound.
In addition, no issuance of Securities to the benefit of a Third Party shall be
decided by the Parties until such Third Party duly executes an Agreement to be
Bound. Prior to the execution of any such Agreement to be Bound, the Parties
shall agree on the rights and obligations of the Third Party under this
Agreement.
For practical reasons, the Parties empower the President of the Board of the
Company to execute, on their behalf, the Agreement to be Bound with the
potential transferee or subscriber of new Shares of the Company.
SECTION 13.5 GENERAL COVENANT
The Parties hereto shall sign and deliver all documents, provide all information
and take or prevent the taking of all measures that may be necessary or
appropriate to achievement of the purpose of the objects of this Agreement.
42
SECTION 13.6 SEVERABILITY
This Agreement shall be deemed severable and the fact that any term or provision
hereof may be invalid or impossible to perform shall not affect the validity or
enforceability of this Agreement or of any other term or provision hereof. In
addition, the Parties shall replace any invalid or unenforceable term or
provision hereof with a valid and enforceable provision as similar as possible
to the invalid or unenforceable provision.
SECTION 13.7 ELECTION OF DOMICILE
For the performance hereof, the Parties elect domicile at their respective
domiciles or principal offices as first above written.
SECTION 13.8 CONFIDENTIALITY
The Parties undertake to keep this Agreement strictly confidential, and no Party
shall disclose or permit the disclosure of the existence or of all or any part
of this Agreement to any third party except (i) with the prior consent of the
other Parties, (ii) in the case of litigation between the Parties (and then only
to the extent required to be disclosed in connection with the proceedings and
pleadings related to such litigation), (iii) to the extent disclosure is
required by any law or regulation, including disclosure to any regulatory
authorities, or (iv) to the Parties' legal counsels.
Each Investor undertakes to maintain the confidentiality of any confidential
information or trade secrets of the Company made known to such Investor by
virtue of its investment in the Company or its representation on the Board of
Directors and shall not divulge such confidential information or trade secrets
to any third party except (i) with the prior consent of the other Parties, (iii)
to the extent disclosure of such information is required by any law or
regulation, including disclosure to any regulatory authorities or (iv) to such
the Investor's legal counsel.
[Remainder of page intentionally left blank]
43
IN WITNESS WHEREOF the Parties hereto have executed this Agreement as of the
date first set forth above.
In nine (9) original copies,
--------------------------- -------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
REMOTE REWARD AGF INNOVATION 3
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------- By: AGF Private Equity
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
By: /s/ Guillaume Lautour
-----------------------
Name: Guillaume Lautour
AGF INNOVATION 4 AGF INNOVATION 5
By: AGF Private Equity By: AGF Private Equity
By: /s/ Guillaume Lautour By: /s/ Guillaume Lautour
------------------------ -----------------------
Name: Guillaume Lautour Name: Guillaume Lautour
Mighty Wealth Group Limited Nam Tai Electronics, Inc.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇
----------------------- -------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇
STEPMIND S.A.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
44
LIST OF EXHIBITS
EXHIBIT A Allocation of the share capital (i) as of the date hereof
and (ii) immediately prior to the Closing Date
EXHIBIT B Allocation of the share capital (i) immediately after the
consummation of the First Capital Increase and (ii)
immediately after the consummation of the Second Capital
Increase
EXHIBIT C English draft of the Contractual Undertaking to be executed in
French
EXHIBIT D English draft of the non-compete agreement to be executed in
French by Key Employees
EXECUTION COPY
======================================
REPRESENTATIONS AND WARRANTIES
AGREEMENT
BY AND AMONG
AGF INNOVATION 3
AGF INNOVATION 4
AGF INNOVATION 5
MIGHTY WEALTH GROUP LIMITED
NAM TAI ELECTRONICS, INC.
AND
▇▇▇▇▇ ▇▇▇▇▇▇▇
REMOTE REWARD SAS
DATED: NOVEMBER 27, 2003
CONFIDENTIAL
2
REPRESENTATION AND WARRANTIES
AGREEMENT
This Representations and Warranties Agreement (this "AGREEMENT") is entered into
on the 27th day of November 2003,
AMONG THE UNDERSIGNED:
- AGF INNOVATION 3, AGF INNOVATION 4 AND AGF INNOVATION 5,
fonds communs de placement dans l'innovation, each represented by its
managing company, AGF Private Equity, a French societe par actions a
directoire et conseil de surveillance with a share capital of Euros
1,000,000, with its registered office at ▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ Cedex 09, registered in the Commercial Registry under the number
414 735 175 RCS Paris (collectively referred to as "AGF PE"),
represented by ▇▇. ▇▇▇▇▇▇▇▇▇ Lautour, duly empowered for the purpose
hereof,
- MIGHTY WEALTH GROUP LIMITED,
an international business company incorporated in the British Virgin
Islands, with a share capital of USD 50,000, with its registered office
at Palm Grove House, P.O. Box 438, Road Town, Tortola, BVI, registered
under the number 565041, represented by ▇▇. ▇▇▇▇ ▇▇▇▇▇▇, in his
capacity as Director,
(hereinafter "MWGL"),
- NAM TAI ELECTRONICS INC.
a company incorporated in the British Virgin Islands, under
registration number 3805, with its registered office at McW. ▇▇▇▇▇▇ &
Co., ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, P.O. Box 3342, Road Town, Tortola, British
Virgin Islands, represented by ▇▇. ▇▇▇▇▇▇ ▇▇, in his capacity as chief
executive officer,
(hereinafter "NAM TAI"),
(hereinafter collectively referred to as the "INVESTORS" and
individually as an "INVESTOR"),
3
AND:
- MR. ▇▇▇▇▇ ▇▇▇▇▇▇▇,
a French national, born on July 4, 1962 in Quimper, residing at ▇▇, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Issy les Moulineaux ,
(hereinafter "THE FOUNDER"),
- REMOTE REWARD SAS,
a French societe par actions simplifiee with a share capital of Euros
90,481,410, with its registered office at 4 ter ▇▇▇ ▇▇ ▇'▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇, registered in the Commercial Registry under the number
433458304 RCS Nanterre, represented by Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇, in his
capacity as President,
(hereinafter "REMOTE REWARD"),
(The Founder and Remote Reward being hereinafter collectively referred
to as the "GUARANTORS").
(The Guarantors and the Investors being hereinafter collectively
referred to as the "PARTIES" and individually as a "PARTY").
WHEREAS:
1. STEPMIND is a French societe anonyme, with a registered capital of
Euros 34,709,907.90, having its registered office at 4 ter, ▇▇▇ ▇▇
▇'▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, registered with the Registry of Commerce and
Companies under number 432 237 949 RCS Nanterre (hereinafter the
"COMPANY"). The Company was incorporated on June 19, 2000.
2. The Company is engaged primarily in the business of the design and
development of baseband integrated circuits, radio frequency integrated
circuits (transceivers), as well as system and protocol stacks that
address Wide Area Networks (GSM/GPRS/EDGE) and Wireless Local Area
networks (802.11a, 802.11b, 802.11g, hiperlan 2) standards (the
"BUSINESS").
3. On the date hereof, the Company's share capital consists of 6,463,670
shares, all of the same category, with a par value of Euros 5.37 each.
4
Following the authorization by the Company's extraordinary
shareholders' meeting on June 19, 2002, the Board of Directors of the
Company granted on June 19, 2002, November 26, 2002 and June 18, 2003,
respectively, 915,471, 76,060 and 32,140 employee warrants (Bons de
Souscription de Parts de Createur d'Entreprise) (the "EMPLOYEE
WARRANTS"), 1,012,683 of which remain validly granted as of the date
hereof.
4. The Board of Directors of the Company called on October 22, 2003 a
general meeting, to be held on November 12, 2003, to decide on (i) a
reduction in the share capital of a total amount of Euros 9,943,063.561
by reduction of the par value of the shares from Euros 5.37 to Euros
3.8317 (to offset past losses of the Company) and on (ii) a reduction
in the share capital of a total amount of Euros 24,702,207.64 by
reduction of the par value of the shares from Euros 3.8317 to Euro 0.01
by allocation of such amount to a special "premium" account.
5. Subject to certain conditions being met, the Investors desire to
participate in an investment in the Company (hereinafter the
"INVESTMENT") for an aggregate maximum amount of fifteen million one
thousand six hundred eighty-two Euros and fifty-eight (EUR
15,001,682.58). Pursuant to the terms and conditions defined in the
investment agreement executed on the date hereof between the Parties
and ▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "INVESTMENT AGREEMENT"), the Investors have
agreed to subscribe for an aggregate of 3,858,678 actions a bons de
souscription d'actions (the "ABSA SHARES"), to be subscribed for in two
installments:
- subscription by the Investors for an aggregate of 2,858,280
ABSA Shares 1 for a total subscription price of EUR
7,488,693.60 (the "TRANCHE 1 INVESTMENT");
- depending on the circumstances, either (i) subscription by the
Investors for an aggregate of 1,000,398 ABSA Shares 2, for a
total subscription price of EUR 7,502,985, or (ii) exercise by
the Investors of their Warrants 2004, giving the Investors the
right to subscribe for an aggregate of 1,000,398 ABSA Shares 3
(the "TRANCHE 2 INVESTMENT").
6. The Parties have also executed on the date hereof a shareholders'
agreement (the "SHAREHOLDERS' AGREEMENT") which shall enter into force
on the Closing Date (as defined below).
Unless otherwise specified, the transactions described above shall be
referred to as the "TRANSACTIONS".
7. In consideration of their Investment, the Investors requested the
Guarantors to make certain representations and warranties with respect
to the Company's activities, assets and liabilities which are set forth
in this Agreement. This Agreement shall enter into force on the Closing
Date.
8. The purpose of this Agreement is to set forth the terms and conditions
of such representations and warranties and indemnification therefor in
the case of inaccuracies therein.
5
NOW, THEREFORE, the Parties hereto agree as follows:
1. CERTAIN DEFINITIONS
For the purposes of this Agreement, including the above recitals, the following
terms shall mean:
"ABSA SHARES" has the meaning ascribed to it in the
recitals and shall include, as the context
requires, reference to the ABSA Shares 1,
the ABSA Shares 2 and/or the ABSA Shares 3;
"ABSA SHARES 1" has the meaning ascribed to it in the
Investment Agreement;
"ABSA SHARES 2" has the meaning ascribed to it in the
Investment Agreement;
"ABSA SHARES 3" has the meaning ascribed to it in the
Investment Agreement;
"AGREEMENT" means the present agreement and its
Schedules;
"ALKANZ AGREEMENT" has the meaning ascribed to it Section
2.3.4;
"BENEFIT PLANS" has the meaning ascribed to it in Section
2.16.2;
"BUSINESS" has the meaning ascribed to it in paragraph
2 of the recitals;
"CLAIM" has the meaning ascribed to it in Section
3.3;
"CLAIM NOTICE" has the meaning ascribed to it in Section
3.3;
"CLOSING DATE" means the date on which the ABSA Shares 1
shall be subscribed for and fully paid up by
the Investors, in accordance with the
Investment Agreement;
"CONTRACTS" has the meaning ascribed to it in Section
2.17;
"DAMAGES" has the meaning ascribed to it in Section
3.1;
"EMPLOYEES" has the meaning ascribed to it in Section
2.16.1;
"EMPLOYEE WARRANTS" has the meaning ascribed to it in the
recitals of this Agreement;
"ENCUMBRANCES" means any and all pledges, claims,
privileges, liens, mortgages, charges,
community property interests, security
interests, "nantissements", "hypotheques",
"privileges", "suretes", or similar
encumbrances, as well as any "servitudes",
or easements, provided, that
6
the term "Encumbrance" shall not include any
license;
"FINANCIAL ACCOUNTS" has the meaning ascribed to it in Section
2.9.1 of this Agreement;
"FULLY DILUTED" refers to the capital of the Company, on an
as-if-converted basis, i.e. assuming that
all securities giving right to a portion of
the capital and/or voting rights of the
Company have been exercised, except for the
Warrants and the Warrants 2004 (as such
terms are defined in the Investment
Agreement) attached to the ABSA shares;
"GOVERNMENTAL AUTHORITY" means any domestic or foreign court or other
judicial authority or governmental,
regulatory or administrative body,
department, agency, commission, authority or
instrumentality;
"GUARANTEE" means any obligation or undertaking, which
may be in the form of a written guarantee,
letter of comfort or letter of intent
relating thereto, contingent or otherwise,
of any person, directly or indirectly, (i)
to guarantee the indebtedness of any other
person, (ii) to indemnify or hold harmless
any other person or (iii) to pay money to a
third party for the benefit of another
person;
"INTELLECTUAL PROPERTY RIGHTS" has the meaning ascribed to it in Section
2.13;
"INVESTMENT AGREEMENT" has the meaning described to it in paragraph
5 of the recitals;
"JUDGMENTS" means any judgments, orders, injunctions,
writs, decrees, rulings or awards of any
court, arbitrator or other Governmental
Authority;
"KNOWLEDGE OF THE GUARANTORS" means after due inquiry by the Guarantors,
in order to verify the accuracy of the
representations and warranties by the
Guarantors herein, of (i) with ▇▇▇▇▇
▇▇▇▇▇▇▇, in his capacity as directeur
general of the Company and (ii) each other
manager of the Company reasonably likely in
view of his/her functions to have knowledge
with respect to the subject matter of any
particular representation and warranty;
"LAW" means any applicable laws, regulations,
directives, statutes and rules of any
Governmental Authority;
7
"MATERIAL ADVERSE EFFECT" when used with respect to any event,
circumstance, condition, fact, effect, or
other matter, shall mean that such event,
circumstance, condition, effect or other
matter is reasonably likely to have a
negative material effect on:
(i) the current or prospective
business, assets, financial
condition, results or operations of
the Company taken as a whole; or
(ii) the ability of a Party or of the
Company to fulfill on a timely
basis any material obligation under
this Agreement or to carry out the
Transactions;
but there shall be excluded therefrom any
effect resulting from (i) any change after
the date of this Agreement in the Law,
French Generally Accepted Accounting
Principles (French GAAP) or interpretations
thereof, or (ii) changes in exchange rates,
interest rates or in economic, business or
financial market conditions generally;
"NET CASH POSITION" means, (i) the sum of the following line
items in the Company's balance sheet:
valeurs mobilieres de placement, creances
(clients et comptes rattaches), creances
(autres creances) et disponibilites, minus
(ii) the total Dettes set forth in the
Company's balance sheet (not including
dettes fiscales et sociales);
"ORGANIZATIONAL DOCUMENTS" when used with respect to any Person having
legal personality, shall mean its statuts,
articles of incorporation, by-laws or
similar constitutive document;
"PERMITS" means any permits, authorizations,
approvals, registrations and licenses
granted by or obtained from any Governmental
Authority;
"PERSON" means a natural person, company,
partnership, economic interest group,
association, trust or unincorporated
organization, or a government or any agency
or political subdivision thereof;
"PREMISES" means the premises that the Company uses to
carry on its Business;
"PROCEEDING" means any claim, action, suit, dispute or
legal, administrative, arbitration or other
alternative dispute resolution proceeding or
investigation (whether civil, criminal or
administrative);
"REPRESENTATIVE OF THE means ▇▇▇▇▇ ▇▇▇▇▇▇▇, who is appointed by
GUARANTORS" each of the Guarantors to act on behalf of
the Guarantors for the exercise of the
Guarantee;
8
"REPRESENTATIVE OF THE means AGF PE, who is appointed by each of
INVESTORS" the Investors to act on behalf of the
Investors for the exercise of the Guarantee;
"SECOND CLOSING DATE" means the consummation of the Tranche 2
Investment;
"SHAREHOLDERS' AGREEMENT" has the meaning ascribed to it in paragraph
6 of the recitals of this Agreement;
"SHARES" has the meaning ascribed to in Section
2.3.1;
"ST AGREEMENT" has the meaning ascribed to in Section
2.17.1;
"TAX" means taxes, duties, levies, fees,
assessments and governmental charges of any
kind, whether payable directly or by
withholding, including without limitation,
income, franchise, property, sales, customs,
value added, employment, gains, and social
security taxes and charges due to any
mandatory scheme (including in respect of
pension and retirement contributions, family
allowance contributions and all other
contributions assessed on salaries),
together with any interest, penalties or
additions to tax with respect thereto,
imposed by any Governmental Authority;
"TRANCHE 1 INVESTMENT" has the meaning ascribed to it in the
recitals;
"TRANCHE 2 INVESTMENT" has the meaning ascribed to it in the
recitals;
"TRANSACTION DOCUMENTS" means any of the following documents:
- this Agreement,
- the Shareholders' Agreement,
- the Investment Agreement;
"TRANSACTIONS" has the meaning ascribed to it in the
recitals;
"WARRANTS" has the meaning ascribed to it in the
Investment Agreement;
"WARRANTS 2004" has the meaning ascribed to it in the
Investment Agreement.
2. REPRESENTATIONS AND WARRANTIES
The Guarantors represent and warrant to the Investors that both as of the date
hereof and as of the Closing Date (or, only as specifically provided below, as
of the Second Closing Date):
2.1 AUTHORIZATION - POWER AND AUTHORITY
2.1.1 The Guarantors have full power and authority to execute and deliver the
Transaction Documents.
9
2.1.2 The execution and delivery of this Agreement and the other Transaction
Documents has been, and the implementation by the Company of all
actions resulting from the Transaction Documents has been, or prior to
the Closing Date will be, duly authorized and approved by all requisite
corporate action, except for such actions that are specifically
intended by the terms of the Transaction Documents to be approved after
the Closing Date.
2.1.3 This Agreement and the other Transactional Documents, when executed and
delivered, taking into account the effective date set forth herein and
therein, will be valid and binding obligations of the Guarantors in
accordance with their terms and will not breach any legal or regulatory
provisions nor any Organizational Documents of the Company or of Remote
Reward. The execution and delivery of this Agreement and the
Transaction Documents do not conflict with and will not result in any
default, violation, modification, suspension or termination of any
contract or undertaking to which the Guarantors or the Company is a
party.
2.2 DUE INCORPORATION AND MANAGEMENT
The Company is duly and validly incorporated under French Law as a
societe anonyme. Its Organizational Documents are in compliance with
applicable Law.
The corporate bodies of the Company were validly appointed and have
validly operated, and all decisions by the aforesaid corporate bodies
have been made in accordance with applicable Law.
With the exception of the Shareholders' Agreement, there is no
agreement relating to the management of the Company.
The Company has all requisite corporate power, authorizations and
authority to own its properties and assets and to carry on the Business
as conducted as of the date hereof.
2.3 THE SHARES
2.3.1 The share capital of the Company prior to the completion of the Tranche
1 Investment, will be of an amount of EUR 64,636.70, consisting of
6,463,670 ordinary shares (the "SHARES"), with a nominal value of EUR
0.01 per share. All such shares are validly issued, fully paid and,
other than as contemplated in the Transaction Documents, free from any
Encumbrances. The allocation of the share capital on a Fully Diluted
basis (i) as of the date hereof, and (ii) immediately prior to the
completion of the Tranche 1 Investment, is described in SCHEDULE 2.3.1.
The Shares and the Employee Warrants are the only outstanding interests
in the share capital of the Company.
2.3.2 None of the Shares have been issued and, to the Knowledge of the
Guarantors, none of the Shares have been transferred, in violation of
any pre-emptive or similar rights of any other Person or of any
securities law of any jurisdiction applicable to such issuance.
10
Since the incorporation of the Company, no interim dividend or other
distribution has been declared on the Shares or has been paid or agreed
to be paid from the reserves of the Company.
All Shares give right to one single voting right and to dividends in
proportion to the share capital that such shares represent.
All Shares give right to the same rights and there exist no statutory
or extra-statutory provisions relating to double voting rights or to
the limitation of the voting right in the shareholders meetings of the
Company.
With the exception of the provisions of the Shareholders' Agreement and
except as provided in the current statuts of the Company, the Shares
are transferable, subject to no restrictions.
2.3.3 SCHEDULE 2.3.3 sets forth the accurate share capital of the Company on
a Fully Diluted basis (i) immediately following subscription for the
ABSA Shares 1 in accordance with the terms of the Investment Agreement
and (ii) immediately following the Second Closing.
2.3.4 Except for the Employee Warrants, as set forth in the statuts of the
Company as of the date hereof, as contemplated in the Transaction
Documents and as set forth in the next paragraph, no Person has any
outstanding or authorized option, warrant, bond, right, call,
commitment, subscription right, conversion right, exchange right,
pre-emptive right or other securities or agreements (written or oral,
firm or conditional) or any right or privilege (whether by Law,
pre-emptive or contractual) that may by its terms be converted into an
option, warrant, bond, right, call, commitment, subscription right,
conversion right, exchange right, pre-emptive right or other security
or agreement pursuant to which (i) the Guarantors and/or the Company is
or may be committed to issue, sell, transfer or otherwise dispose of,
redeem or acquire any of the Shares or any other interest in the share
capital of the Company, other than as contemplated by the Investment
Agreement, or (ii) the Company and/or the Guarantors has/have granted,
or may be obligated to grant, to any Person other than the Parties, a
right to participate in the revenues or profits of the Company.
Notwithstanding the foregoing, Alkanz Co. Ltd. has been or will be
appointed to act as an intermediary for the completion of the
Investment pursuant to a Consultancy Agreement among the Company,
Alkanz Ltd. and Remote Reward. Pursuant to such agreement, Alkanz Ltd.
is entitled to receive (i) a fee payable in cash in an amount of EUR
63,654 upon completion of the First Capital Increase by MWGL and EUR
63,861 upon subscription by MWGL for the ABSA Shares 2, and (ii) 16,197
ordinary shares upon completion of the First Capital Increase and 5,669
ordinary shares upon subscription by MWGL for the ABSA Shares 2 or
exercise of the Warrants 2004. The cash portion of the fees shall be
paid by the Company and the share portion shall be assumed by Remote
Reward by execution of a call option agreement between Alkanz Co. Ltd.
and Remote Reward.
11
2.4 ISSUANCE OF THE ABSA SHARES RESERVED FOR THE INVESTORS
The ABSA Shares 1 to be issued to the Investors shall, at the Closing
Date and, the ABSA Shares 2 or the ABSA Shares 3, as the case may be,
shall, at the Second Closing Date, be issued in accordance with the
Investment Agreement, free from any Encumbrances, subject to the
provisions of the Shareholders' Agreement.
The ABSA Shares will be validly issued and in particular will not be
issued in violation of any preemptive right or similar rights
applicable to such issuance.
2.5 BANKRUPTCY
The Company has not been declared unable to meet its debts as they fall
due, been held in default by lenders under any material debt financing,
nor been subject to bankruptcy or equivalent proceedings. No
administrative receiver or manager has been appointed to manage any of
the properties, assets or business of the Company. The Company has not
been subject to any proceedings provided for by French Statute
n(degree)84-148 dated March 1, 1984 relating to prevention and
treatment of companies' difficulties or any similar regulation, and, in
particular, the Company is not in a cessation de payment position. No
meeting of the board of directors or the shareholders has been convened
at which a resolution has been proposed, and no resolution has been
passed, for the dissolution or liquidation of the Company or split
(scission) of the Company.
2.6 GOING CONCERN (FONDS DE COMMERCE)
The going concern (fonds de commerce) of the Company is free and clear
of all Encumbrances, except for Encumbrances in the ordinary course of
business. The Company is not a party to any contract granting to any
third party any rights with respect to its fonds de commerce (including
location-gerance or societe en participation). The fonds de commerce of
the Company has been created, and was not acquired, by the Company.
Since the incorporation of the Company, there has been no Material
Adverse Effect concerning the fonds de commerce of the Company, to the
Knowledge of the Guarantors or which the Guarantors should reasonably
be expected to have known, which has a significant negative effect on
the current value of the Company. It is acknowledged that the reserves
by the statutory auditor set forth in the Interim Accounts (as defined
below) do not constitute such a Material Adverse Effect.
2.7 INTERESTS IN OTHER PERSONS
The Company does not own any shareholding, equity interest or voting
rights in any company incorporated under the Law of any jurisdiction,
and the Company is not a member of any economic interest grouping,
partnership, association or unlimited
12
liability legal entity or other entity of any kind, or its equivalent
under foreign law, excluding memberships in any professional
association and investments in valeurs moblieres de placement
(including 7,800 shares of STMicroelectronics).
The Company does not serve as legal representative, manager or
director, or member of a supervisory board and, more generally, does
not hold a similar position, in law or in fact, in any company,
grouping, partnership, association, unlimited liability legal entity or
other entity whether or not a legal entity or its equivalent under
foreign law.
2.8 PRODUCTS
The products provided or sold by or on behalf of the Company comply
with applicable Law and to the Knowledge of the Guarantors, do not
contain any material defects, (other than ordinary course defects that
are customary in the relevant industry or those disclosed in SCHEDULE
2.8), which are reasonably likely to materially negatively affect the
conduct of the Business.
Based on the reports summarized and attached as SCHEDULE 2.8, the
Company has reasonably concluded that the products covered thereby have
satisfactorily passed the internal tests of the Company, in each case
taking into account the relevant stage of development of each such
product.
2.9 FINANCIAL ACCOUNTS - CORPORATE AND FINANCIAL RECORDS - ACCOUNTS
RECEIVABLE - OFF BALANCE SHEET LIABILITIES
2.9.1 Attached as SCHEDULE 2.9.1(I) are (i) the audited financial accounts of
the Company as of December 31, 2002, together with the notes thereto
and (ii) the interim unaudited financial accounts of the Company as of
July 31, 2003, which were subject to a limited review by the statutory
auditor of the Company, together with the notes thereto (the "INTERIM
ACCOUNTS") (the Interim Accounts and the December 31, 2002 accounts
being collectively referred to as the "FINANCIAL ACCOUNTS").
The Financial Accounts (i) were prepared in accordance with generally
accepted French accounting principles ("FRENCH GAAP") applied on a
consistent basis and (ii) are true, complete and accurate and, except
as set forth on Schedule 2.9.2(II), present fairly the entirety of the
assets and liabilities and the financial position of the Company at the
date thereof, subject, in the case of the Interim Accounts, to normal
year-end adjustments.
2.9.2 The corporate records, account books, files and other corporate and
financial records of the Company have been fully, properly and
accurately kept, completed and maintained in accordance with all
applicable legal and administrative requirements in all material
respects, and do not require any material rectification. All such
records are under the exclusive ownership and control of the Company or
its outside advisors.
13
2.9.3 All notes and accounts receivable, payable to, or for the benefit of,
the Company reflected in the Financial Accounts are valid, current and
collectible in the ordinary course of business in amounts not less than
the aggregate amount thereof (net of related reserves reflected in the
Financial Accounts) carried on in the books of the Company and, to the
Knowledge of the Guarantors, will not to be subject to any
counterclaims or set-offs.
2.9.4 Except as reflected in the Interim Accounts, the Company does not have
any off-balance sheet liabilities (engagements hors bilan) other than
those reflected in the Financial Accounts, and in particular, has not
granted any Guarantees (in any form whatsoever, including as a comfort
letter), sureties or warranties with regard to the performance of
obligations contracted by third parties (including shareholders,
corporate officers or members of their staff). The Company has no
material contingent liabilities, except current liabilities, which
could be reasonably expected to have, either in any individual case or
in the aggregate, a Material Adverse Effect.
2.9.5 The Net Cash Position of the Company as of October 31, 2003 is set
forth on SCHEDULE 2.9.5.
2.10 TAX MATTERS
2.10.1 The Company has properly and timely filed, or caused to be filed with
all appropriate Governmental Authorities, all Tax returns, reports and
declarations required by applicable Law, each of which returns, reports
and declarations correctly reflects the Tax liabilities and all other
information required to be reported therein. All Taxes required to be
paid by the Company have been paid in full when due. The Company has
not performed any action outside the ordinary course of business which
creates or will create a tax liability not recorded in the Financial
Accounts.
Except as set forth on SCHEDULE 2.10.1, there are no audits,
investigations or claims pending or threatened in writing relating to
Taxes. No deficiencies for any Taxes which remain unpaid have been
assessed against the Company.
2.10.2 Except as set forth on SCHEDULE 2.10.2, the Company does not benefit
from any favorable Tax treatment depending on undertakings of the
Company, which will continue to bind the Company after the Closing
Date.
2.11 REAL PROPERTY
2.11.1 The Company may validly use the Premises
The use of the Premises is in compliance with any material provision of
applicable Law with respect to operating the Business.
The Company does not own any real property.
14
2.11.2 The terms and conditions of the leases under which the Company leases
the Premises are subject to the laws and regulations applicable to
commercial leases ("baux commerciaux") (i.e. Articles L.145-1 up to
L.145-60 of the French Commercial Code).
2.12 PERSONAL PROPERTY
The equipment, furniture, fixtures and other items of tangible personal
property owned, leased or used by the Company (hereafter the "MACHINERY
AND EQUIPMENT") are in good operating condition and repair subject to
normal wear and tear and are in the possession and under the control of
the Company. Except for office equipment and vehicles subject to
ordinary course business leases, the Company owns outright and has good
and marketable title, free and clear of any Encumbrance, to such assets
and the Company is not in breach or default with respect to any assets
leased by them.
The machinery and equipment are sufficient and adequate to allow the
Company to carry on its business as presently conducted.
2.13 INTELLECTUAL PROPERTY
2.13.1 To the Knowledge of the Guarantors, the Company validly owns or has a
valid right to use all of the intellectual property rights, including
but not limited to patents, trademarks, trade names, processes,
software, trade names, domain names, that are necessary for the Company
to carry on its Business as currently conducted (the "INTELLECTUAL
PROPERTY RIGHTS").
The Company has taken all measures consistent with industry practice in
order to ensure the protection of all Intellectual Property Rights
owned by it.
The Company has not been notified of any claim that has been filed, nor
has the Company received any claim or threat of a claim in writing,
alleging that the Intellectual Property Rights owned by the Company
infringe or conflict with the Intellectual Property Rights of any third
party, nor, to the Knowledge of the Guarantors has the Company been
notified or received any such claim relating to Intellectual Property
Rights which are used, but not owned, by the Company.
In particular, the Company validly owns all of the Intellectual
Property Rights developed by any current and former employees and all
current and former consultants and independent contractors of the
Company during their employment or in connection with their retention
by the Company.
2.13.2 To the Knowledge of the Guarantors, the Intellectual Property Rights
owned by the Company do not conflict with any proprietary, public or
registered rights of any third party and do not conflict with any other
rights of any third party and there are no infringements of such rights
by any third party.
15
2.14 INSURANCE
The Company maintains valid and non-expired insurance policies against
loss, damage and liability with customary and usual provisions. All
premiums relating to such insurance have been paid when due. The
Company has not committed any act or omission reasonably expected to
lead to the termination, rescission or detrimental amendment of any or
all of the insurance policies.
The Company has not received written notice of cancellation of any
insurance policy and there is no fact or event, to the Knowledge of the
Guarantors, that provides a basis for any such cancellation.
2.15 LITIGATION
There are no Proceedings pending or, to the Knowledge of the
Guarantors, threatened, against the Company or the Founder (that would
prevent him from holding his office) and there is no other dispute, to
the Knowledge of the Guarantors, which could reasonably be expected to
lead to such Proceedings.
2.16 EMPLOYEES
2.16.1 SCHEDULE 2.16.1 sets forth an accurate and complete list of all
employees of the Company (collectively, the "EMPLOYEES") as of the date
hereof. Such list contains (i) the name of each Employee, (ii) his/her
job title and (iii) the current annual compensation paid or payable.
The Company has not committed itself, except in the usual course of
business or as set forth in Article 7 of the Investment Agreement or in
Section 2.22(iii) below, to increasing the remuneration and benefits or
modifying the employment agreements of the employees.
2.16.2 With the exception of the Employee Warrants, as set forth on SCHEDULE
2.16.2 or in Section 2.222(iii) below, or as contemplated in Article 7
of the Investment Agreement, there are no severance or other similar
contracts and no pensions or retirement benefits, deferred
compensation, bonus, profit sharing, stock purchase or stock option
schemes, vacation benefits, sickness or disability benefits, company
saving plans or employee funds or similar employee benefit plans or
arrangements or other forms of incentive compensation or
post-retirement insurance benefits or early retirement agreements of
the Company (such plans, funds or arrangements, the "BENEFIT PLANS")
which provide for any individual or collective terms beyond mandatory
applicable statutory or regulatory obligations. The Company complies
with all mandatory applicable statutory or regulatory obligations
concerning Benefit Plans.
2.16.3 All employment contracts to which the Company is a party or is bound
have been entered into under ordinary and customary conditions.
16
2.16.4 No sum is due to any former employee or any current or former director
(including any mandataires sociaux) of the Company in relation to their
employment agreement or as consideration of their duties as directors
other than rights and expense reimbursements already determined in
their amount but not due yet.
2.16.5 The Company is in compliance in all material respects with all
applicable legal requirements and agreements (in particular labor and
social security regulations, as well as applicable collective
bargaining agreements towards employees and ex-employees) relating to
employment, employment practices, termination of employment, wages,
bonuses and terms and conditions of employment, including employee
compensation matters.
2.17 CONTRACTS
2.17.1 All contracts that are material to the Business, to which the Company
is a party (the "CONTRACTS") are valid, binding and, to the Knowledge
of the Guarantors, enforceable in accordance with their terms and the
Company is not in breach of any Contract in such a way as to give rise
to any material liability of the Company or to justify the termination
of such Contract.
There is no pending or, to the Knowledge of the Guarantors, any
threatened, commercial litigation with the agents, distributors,
suppliers, of any nature whatsoever, likely to affect the good
performance, the qualification of the Contracts or their renewal.
2.17.2 None of the Contracts entitles the counterparty to terminate, modify or
accelerate any obligations or rights under such Contract according to
its express terms as a result of the consummation of the Transactions.
Except for the Cooperation Agreement, dated June 30, 2003, between the
Company and ST Microelectronics NV (the relevant provision of such
agreement being attached as SCHEDULE 2.17.2), none of the Contracts
entitles the counterparty to terminate, modify or accelerate any
obligations or rights under the relevant Contract according to its
express terms as a result of (i) a change in control of the Company,
(ii) the modification of the share capital of the Company or (iii) the
termination of the employment or office of the Founder in the Company.
The Company has not received or given written notice that it or any
other party is in material default under any Contract. The Company has
not renounced any right resulting from any Contract that could have a
Material Adverse Effect.
2.17.3 Except as set forth on SCHEDULE 2.17.3, the Company is not a party to
any contract providing any non-competition commitment by the Company
nor any restriction on the right of the Company to conduct its Business
in any specific market or territory.
17
2.18 COMPLIANCE WITH LAW
The operations of the Company have been and are conducted in all
material respects in compliance with the Permits that are necessary up
for the conduct of the Business, with all applicable Law relating to
the Business or the Company's assets and with all Judgments applicable
to the Company.
The Company has executed, when necessary and in accordance with
applicable Law, all required declarations and notifications to all
competent authorities.
2.19 DEBTS
The Company is not a party and is not bound to any loan agreement,
repurchase agreement, mortgage, security agreement, guarantee (except
as disclosed in the Interim Accounts) or other document or arrangement
relating to the borrowing of money or for lines of credit, not
including the advance in the amount of EUR 850,000 to the Company by
ANVAR disclosed in Section 2.21 below, which is reimbursable by the
Company in whole or in part depending upon the success of the
underlying product.
2.20 RELATIONSHIPS BETWEEN THE COMPANY AND THE SHAREHOLDERS
No shareholder of the Company directly or indirectly has any
indebtedness to the Company for borrowed money, nor does the Company
have any indebtedness to any shareholder of the Company for borrowed
money. No shareholder owns, in whole or in part, any asset, of any
nature whatsoever, necessary for the Company to carry on its Business.
No shareholder has granted a guarantee of any nature whatsoever to the
Company or is the beneficiary of a guarantee of any nature whatsoever
granted by the Company. The Guarantors have not made any shareholder
loan (compte courant) to the Company which has not been repaid in full.
The contracts entered into by the Company which fall into the scope of
Article L.225-38 of the French Commercial Code have been validly
authorized or ratified by the competent corporate bodies of the
Company.
All transactions between the Company, on the one hand, and the
Guarantors, on the other hand, were achieved on prices, terms and
conditions which were no less favorable to the Company than would be
negotiated in an arm's-length transaction with independent third
parties other than the Company.
2.21 SUBSIDIES
Except as set forth on SCHEDULE 2.21, the Company does not currently
benefit from any subsidy, aid, Tax break, grant program, loan at a
preferential rate, special contract or lease or similar benefit made
available to the Company by a Governmental Authority.
18
2.22 EVENTS THAT OCCURRED SINCE JULY 31, 2003
Since July 31, 2003:
(i) There has been no Material Adverse Effect specific to the
Company and the Business.
(ii) There has been no significant increase in the expenses or
commitments of the Company, except in the ordinary course of
business or as contemplated or disclosed herein.
(iii) Except as set forth on SCHEDULE 2.22(iii) or as contemplated
in Article 7 of the Investment Agreement (x) the Company has
not hired or given notice of termination of employment to any
employee or manager (mandataire social) of the Company and no
employee or manager has resigned from his or her position and
(y) there has not been any substantial change in the
employment agreement or in the conditions applicable to any
employee or manager of the Company.
(iv) The Company has not executed any distribution agreement or
sales agent contract; provided, that the Company is in the
process of negotiating and may execute prior to the Closing
Date certain sales representative or distributor agreements as
set forth on SCHEDULE 2.22(iv).
(v) Except as contemplated in the Transaction Documents, the
Company has not made, agreed to make or entered into any:
- investment for an amount exceeding 200,000 Euros;
- transfer of assets for an amount exceeding 100,000
Euros;
- issuance of any security or undertaking to issue any
security of the Company;
- pledge or guarantee granted by the Company on any of
its assets;
- substantial change to any Contract to which the
Company is a party (except that it has been orally
agreed with the non-exclusive sales representative of
the Company in Korea that such sales representative
may market to Samsung Mobile at a reduced commission
(2% instead of 4% for other accounts));
- termination of any agreement with any significant
customer or supplier of the Company.
2.23 DUE INQUIRY
The representations and warranties contained in this Agreement do not
contain any untrue, inaccurate or incomplete statement of a material
fact or omit to state any material fact necessary in order to make any
such representations or warranties not misleading. In particular, the
Guarantors have made due inquiry, in order to verify the
19
accuracy of the representations and warranties by the Guarantors set
forth herein, of (i) ▇▇▇▇▇ ▇▇▇▇▇▇▇, in his capacity as directeur
general of the Company, and (ii) each other manager of the Company
reasonably likely in view of his or her functions to have knowledge
with respect to the subject matter of any particular representation and
warranty.
3. INDEMNIFICATION BY THE GUARANTORS
3.1 SCOPE OF THE GUARANTEE
From and after the Closing Date and subject to the provisions of this
Article, the Guarantors, acting jointly and severally (solidairement et
conjointement), undertake to indemnify the Investors in respect of any
of the following ("DAMAGE" or "DAMAGES"):
(i) any liability or loss incurred or sustained by the Company
which should have been, but which was not, accounted for (or,
if accounted for, which was insufficiently accounted for) in
the Financial Accounts, and which was not subject to any
reserve (or, if subject to a reserve, was subject to an
insufficient reserve), in the Financial Accounts, in each case
to the extent the origin or cause is found in, or which
otherwise results from, an event that occurred or a
circumstance that existed prior to the Closing Date, excluding
any liability or loss that was incurred or sustained by the
Company in the ordinary course (including in connection with
the transactions contemplated in the Transaction Documents);
(ii) any claim, liability, loss, expense (including legal and
accounting expense) or damages incurred or sustained by the
Company, relating to or arising out of any inaccuracy in any
representation or warranty contained in this Agreement and
relating to any event occurring or any condition existing at
or prior to the Closing Date; and
(iii) any amounts required to be paid by the Company as a result of
in in relation to the tax audit disclosed on SCHEDULE 2.10.1.
provided, that in no event shall the Guarantors be deemed to provide
any guarantee whatsoever with respect to the amount of tax loss
carryforwards included in the Financial Accounts.
With respect to any Damage, the Guarantors shall pay to each Investor a
percentage of such Damage equal to the percentage ownership of such
Investor in the capital of the Company as set forth opposite such
Investor's name on SCHEDULE 3.1 hereto.
As an exception to the above, the Guarantors, acting jointly and
severally, undertake to pay to the Investors 100% of the amount of any
Damage imposed upon or incurred by the Investors, relating to or
arising out of, directly or indirectly, any inaccuracy or breach of the
representation and warranty contained in Section 2.4 of this Agreement.
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3.2 OBLIGATION TO INFORM
From the effective date of this Agreement until the expiration of the
Claims Period, the Representative of the Guarantors shall notify the
Representative of the Investors of any information or event which is
reasonably likely to result in any Damage, within thirty (30) days
following actual Knowledge by any Guarantor of such information. The
Representative of the Guarantors shall send in a timely manner to the
Representative of the Investors a copy of all documents relating to the
potential exercise of this guarantee, and shall transmit to the
Representative of the Investors upon their first request all additional
information or documents requested by the Representative of the
Investors. Provided, that the failure of the Representative of the
Guarantors to comply with this provision shall not increase the rights
of the Investors hereunder to any indemnification except insofar as
such failure shall itself increase the amount of Damages otherwise
existing.
3.3 CLAIM NOTICE
The Representative of the Investors shall deliver to the Representative
of the Guarantors a notice setting forth any claim for indemnification
(a "CLAIM NOTICE"), including but not limited to any claim by any third
party or any litigation or pre-litigation procedure, likely to
reasonably entail the exercise of this Guarantee (a "CLAIM"). The Claim
Notice shall also set forth a description, in reasonable detail, of the
events justifying, in the bone fide opinion of the Investors, the
exercise of the Guarantee.
Failing any answer from the Representative of the Guarantors or any
Guarantor within sixty (60) days as from the receipt of the Claim
Notice, the corresponding indemnification shall be deemed accepted by
the Guarantors.
3.4 ASSESSMENT OF THE AMOUNT OF INDEMNIFICATION TO BE PAID TO THE INVESTORS
The Guarantors shall be jointly and severally liable for the payment to
the Investors of any amount of indemnification due in compliance with
the terms of this Guarantee. As between the Guarantors, the final
liability of each of the Guarantors for the payment of such amount
shall be in proportion to their shareholdings in the Company as of the
date of receipt of the corresponding Claim Notice. Without limiting the
joint and several nature of the liability of the Guarantors hereunder,
the Investors shall not seek from any Guarantor the portion of
indemnification due by the other Guarantor unless and until such other
Guarantor shall have failed to make timely payment of such
indemnification due hereunder in accordance with Section 3.8 hereof.
The Investors shall not be entitled to make a claim for indemnification
other than for the payment of the amount equal to interests and
penalties for late payment relating to any tax reassessment resulting
in a mere transfer of income or charges from one fiscal year to
another, and which does not generate any additional tax burden for the
Company in relation to that which it would have borne in the absence of
such reassessments.
21
The amount of Damage shall be calculated after deduction of:
- the reintegration of the amount after Tax of any reserve or
provision, which has its origin, cause or source in the Damage
in question;
- any insurance proceeds or other contribution that the Company
has received as of the date of assessment of the Damage with
respect thereto;
- or any other benefit to the Company that directly offsets such
Damage (except for any immediate or potential Tax benefit).
3.5 DURATION OF THE GUARANTEE
The representations and warranties of the Parties hereto shall survive
the Closing Date and shall remain in full force and effect for a period
of eighteen months after the Closing Date; provided, however, the
representations and warranties related to Taxes to which the Company is
or may become liable shall survive until the expiration of the statute
of limitations applicable thereto, increased by three months. The
Representative of the Investors must provide written notification, with
a reasonable description, of all Claims, even if the amount of the
corresponding Damage is not yet final, to the Representative of the
Guarantors on or before the expiration of the survival period relevant
to such claim (the "CLAIMS PERIOD").
The Guarantors shall remain liable after expiration of the Claims
Period indicated above for any Damage resulting from or related to any
Claim which has been validly notified by the Investors (even if the
amount of such Damage is not yet final when claimed) prior to the
expiration of the Claims Period.
With respect to any claim for indemnification hereunder relating to or
arising from any fact that is reasonably foreseeable to result in any
basis for a claim for indemnification hereunder, of which the directeur
general of the Company had actual knowledge prior to the expiration of
the Claims Periods but which was not disclosed to the Investors prior
to the expiration of the Claims Period, the Claims Period shall be
extended to the earlier of (i) 30 days after the date on which any
Investor shall be notified of such fact or (ii) September 30, 2006.
3.6 TRIGGERING THRESHOLD
No indemnification shall be due unless the aggregate amount of Damages
(excluding Damages contemplated in Section 3.1(iii) above) exceeds EUR
200,000. If such condition is met, the Investors shall be indemnified
as from the first Euro of Damages.
22
3.7 CEILING
The aggregate amount of indemnification that may be paid to the
Investors under this Agreement shall not exceed two thirds of the
aggregate amount invested by the Investors in accordance with the
Investment Agreement (i.e., EUR 5,000,000 (in the event the ABSA Shares
2 are not subscribed for) or EUR 10,000,000 (in the event the ABSA
Shares 2 are subscribed for)).
The limitations sets forth above in Sections 3.6 and 3.7 shall not
apply to any Damage resulting from any fraudulent act or omission by
any Guarantor.
3.8 PAYMENT
Any amount owed to the Investors by the Guarantors under this Article 3
shall be paid to the Investors within seventy (70) days after the
receipt by the Guarantors of the Claim Notice in the event the
Guarantors agree with the amount owed to the Investors as set forth in
the Claim Notice or do not timely respond to the Claim Notice as set
forth above.
In case of dispute between the Investors and the Guarantors with
respect to the amount owed to the Investors set forth in the Claim
Notice, any amount owed to the Investors by the Guarantors under this
Article 3 shall be paid to the Investors within forty (40) days after
the final agreement between the Investors and the Guarantors on such
amount or, failing any such agreement, within forty (40) days after an
enforceable non-appealable decision of a court in accordance with
Section 4.1.
3.9 GUARANTEE OF THE GUARANTEE
The payment by the Guarantors under this Agreement are guaranteed by
pledge agreements (comptes d'instruments financiers) to be executed on
the Closing Date between the Investors and each Guarantor, pursuant to
which each of the Guarantors pledges 75 % of all the Shares it owns as
of the Closing Date as described on SCHEDULE 2.3.1 in favor of the
Investors as a guarantee of their indemnification obligations under
this Agreement; provided, that (i) such pledge may be exercised only to
the extent any Guarantor shall not have made timely payment, as
provided in Section 3.8, of any indemnification due hereunder and (ii)
in the event such pledge is exercised, the value of the Shares shall be
determined as of the date of the related Claim Notice by agreement by
the Parties or, failing such agreement, in accordance with the
valuation procedure set forth in Section 4.2(d) of the Shareholders'
Agreement.
23
4. MISCELLANEOUS
4.1 LAW - JURISDICTION
This Agreement shall be governed by and construed in accordance with
French law.
Any dispute arising out of or relating to this Agreement shall be
submitted to the Commercial Court of Paris (Tribunal de Commerce de
Paris), to which the Parties hereby irrevocably agree.
4.2 MODIFICATION OF THE AGREEMENT
No modification to the Agreement shall be effective unless contained in
a writing signed by a duly authorized representative of each of the
Parties.
4.3 NOTICE BETWEEN THE PARTIES
Any notice, request, formal notice or other communication pursuant to
the provisions of this Agreement ("NOTICE") shall be made in writing to
the addresses set forth below and shall be deemed to have been properly
served: (i) on the date of delivery, in the case of delivery by hand to
the Party on which notice must be served; (ii) for all Parties other
than the Founder, on the date of transmission, in the case of
transmission by fax, followed by telephone confirmation of receipt
immediately following completion of the transmission; or (iii) on the
third day following pre-paid delivery by a recognized express
international courier service (e.g., DHL). The address for Notice to
the Founder shall be the residential addresses set forth on page 1 of
this Agreement. Any Party may change its address for purposes of this
Section 4.3 by sending the other Parties a written notice of its new
address in the manner provided above.
Party: AGF Innovation 3, AGF Innovation 4 or AGF Innovation
5, notice shall be sent to AGF PE at the following
address:
Address: ▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ CEDEX 09
Attention: Guillaume Lautour/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Tel: ▇▇ ▇▇ ▇▇ ▇▇ ▇▇
Fax: ▇▇ ▇▇ ▇▇ ▇▇ ▇▇
Party: Mighty Wealth Group Limited
Address: ▇▇▇▇ ▇▇, ▇▇/▇, ▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇▇▇, ▇ ▇▇ ▇▇▇▇ Street,
San Po Kong, Kowloon, Hong Kong
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Tel: ▇▇▇-▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇▇-▇▇▇▇
24
Party: Nam Tai Electronics, Inc.
Address: ▇/▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇/▇., ▇▇▇▇▇ Merchants Tower,
Shun Tak Centre,
▇▇▇-▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇
Tel: (▇▇▇) ▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇▇ ▇▇▇▇
Party: REMOTE REWARD
Address: 4 ter, ▇▇▇ ▇▇ ▇'▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Attn: President (▇▇▇▇▇ ▇▇▇▇▇▇▇)
Tel: ▇▇.▇▇.▇▇.▇▇.▇▇
Fax: ▇▇.▇▇.▇▇.▇▇.▇▇
4.5 NO WAIVER
The failure to partially or totally exercise any right whatsoever
resulting from the provisions of the Agreement shall not be deemed a
waiver of this right or any other right arising from the Agreement for
the future.
4.6 ENTIRE AGREEMENT
This Agreement, with its schedules, sets forth the entire agreement of
the Parties with respect to the business referred to herein. Those
documents shall prevail over any negotiations, discussions,
communications, understandings or prior agreements between the Parties
relating to the subject matter of this Agreement and over any earlier
drafts of this Agreement which are all subsumed in these documents.
4.7 SUPPLEMENTARY AGREEMENTS; WAIVERS
No supplementary agreement or amendment to this Agreement shall be
valid unless memorialized by a writing signed by the Parties hereto.
Waiver by a Party of any condition or waiver of enforcement of a breach
of any provision, term or covenant contained in this Agreement at one
or more times shall not be considered or construed as a recurring or
continuing waiver of that condition or of the right to enforce a breach
of any other provision, term or covenant of this Agreement.
25
4.8 SUCCESSORS, HEIRS AND ASSIGNS; THIRD-PARTY BENEFICIARIES
This Agreement shall inure to the benefit of and be binding on the
Parties and their respective successors, heirs and assigns, regardless
of whether they are minors or otherwise under a disability, provided,
however, that unless otherwise expressly provided for herein, no Party
may assign or delegate any of the obligations created under this
Agreement without the prior written consent of the other Parties.
As an exception to the above, in case of transfer of the ABSA Shares by
the Investors in accordance with Section 4 of the Shareholders'
Agreement, the Investors may transfer the benefit of this Agreement to
the transferee of such ABSA Shares without the prior written consent of
the Guarantors.
4.9 GENERAL COVENANT
The Parties hereto shall sign and deliver all documents, provide all
information and take or prevent the taking of all reasonable and lawful
measures that may be necessary or appropriate to achievement of the
purpose of the objects of this Agreement.
4.10 SEVERABILITY
This Agreement shall be deemed severable and the fact that any term or
provision hereof may be invalid or impossible to perform shall not
affect the validity or enforceability of this Agreement or of any other
term or provision hereof. In addition, the Parties shall replace any
invalid or unenforceable term or provision hereof with a valid and
enforceable provision as similar as possible to the invalid or
unenforceable provision.
4.11 HEADINGS, CONSTRUCTION
The headings in this Agreement are provided for convenience only and
will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections
of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word "including" does not limit the
preceding words or terms.
4.12 CONFIDENTIALITY
The Parties undertake to keep this Agreement strictly confidential. No
Party shall disclose or permit the disclosure of the existence or of
all or any part of this Agreement to third parties except:
- with the prior consent of the other Parties,
26
- in the case of litigation between the Parties, in which event,
only information strictly necessary for the defense of each
party may be disclosed,
- if the disclosure of certain information is requested by any
competent authorities by law or regulation, including any
regulatory authorities,
- to the Parties' legal counsel.
4.13 DISCLOSURE
Any item disclosed on any schedule or with respect to any
representation and warranty set forth herein shall be deemed to be
disclosed with respect to all representations and warranties where such
deemed disclosure is reasonable. Without limiting the foregoing, the
description of the disclosure of the Alkanz Contract, including the
cash payable and the shares of the Company to be transferred in
accordance with the terms of such contract, shall be deemed to be
disclosed to the Investors in respect of each relevant representation
and warranty.
IN WITNESS THEREOF, the Parties have entered into this Agreement on November 27,
2003, in eight (8) original counterparts.
Mighty Wealth Group Limited REMOTE REWARD
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------- ----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇ Name: Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Nam Tai Electronics, Inc.
By: /s/ ▇▇▇▇▇▇ ▇▇
--------------------------- ---------------------------------
Name: ▇▇▇▇▇▇ ▇▇ Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇
AGF Innovation 3 AGF Innovation 4
By: AGF Private Equity By : AGF Private Equity
By: /s/ Guillaume Lautour By : /s/ Guillaume Lautour
---------------------------- -----------------------------
Name: Guillaume Lautour Name : Guillaume Lautour
AGF Innovation 5
By : AGF Private Equity
By: /s/ Guillaume Lautour
----------------------------
Name: Guillaume Lautour
27
LIST OF SCHEDULES
SCHEDULE 2.3.1: Allocation of the share capital on a Fully Diluted
basis (i) as of the date of signature and (ii) prior
to the completion of the Tranche 1 Investment
SCHEDULE 2.3.3: Allocation of the share capital on a Fully Diluted
basis of the Company (i) after subscription of the
ABSA Shares 1 and (ii) after the Second Closing
SCHEDULE 2.8 Reports regarding product testing
SCHEDULE 2.9.1(i): Audited financial accounts of the Company as of
December 31, 2002 and interim unaudited financial
accounts as of July 31, 2003
SCHEDULE 2.9.1(ii) Exception to financials statement representation.
SCHEDULE 2.9.5 Net Cash Position of the Company as of October 31,
2003
SCHEDULE 2.10.1 Tax audit
SCHEDULE 2.10.2 Description of favorable Tax treatment
SCHEDULE 2.16.1: List of all employees of the Company as of date of
execution, including name, title and current annual
compensation
SCHEDULE 2.16.2 List of all Benefit Plans in excess of statutory
minimums
SCHEDULE 2.17.2 Change of Control provision of the ST Agreement
SCHEDULE 2.17.3 List of all Contracts including non-compete
commitment or otherwise restricting the right of the
Company to do business in any specific territory
SCHEDULE 2.21 List of subsidies, tax breaks, aids, loan at
preferential rate, etc.
SCHEDULE 2.22(iii) Description of new hires, terminations and changes in
conditions of employment.
SCHEDULE 2.22(iv) List of sales representative or distributor contracts
under negotiation.
SCHEDULE 3.1 Percentage of Damages to be indemnified for each
Investor