SHAREHOLDERS' AGREEMENT
[WEBHELP]
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SHAREHOLDERS' AGREEMENT
BETWEEN
(1) Monsieur OLIVIER DUHA, of French nationality, MARRIED, of legal age,
residing at 40 rue Marjolin, 92300 Levallois-Perret; and
Monsieur FREDERIC JOUSSET, of French nationality, SINGLE, of legal age,
residing at 14 rue Vignon, Paris 75009
Hereinafter referred to as the "A SHAREHOLDERS"
OF THE FIRST PART,
(2) EUROP@WEB B.V. a company duly organized and validly existing according to
the laws of Netherlands, having a share capital of 500,065,300 Euros,
registered at the Chamber of Commerce and Industry for Amsterdam under
number 33235092, having its registered office at Locatellikade 1,
Parnassustoren - 1076 AZ Amsterdam - Netherlands, and represented by Mrs.
Maria van der Sluijs-Plantz, duly authorized for the purposes hereof,
Hereinafter referred to as the "B SHAREHOLDER"
OF THE SECOND PART,
(3) WEBHELP.COM INC., a company duly organized and validly existing
according to the laws of Delaware, having an paid-in share capital of
US$ 42,341,601 registered in the State of Delaware , having its
registered office at 1220 North Market Street, Suite 606, Wilmington,
Delaware, DE 19801, and represented by Mr Kerry ADLER, duly authorized
for the purposes hereof,
Hereinafter referred to as the "C SHAREHOLDER",
OF THE THIRD PART,
(4) THE PERSONS AND COMPANIES LISTED AT SCHEDULE 1
Hereinafter referred to as the "D SHAREHOLDERS",
OF THE FOURTH PART,
Collectively referred to as the "Shareholders" or the "Parties"
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WHEREAS
A. Webhelp.fr (hereafter referred to as the "COMPANY") is a French SOCIETE
ANONYME, in the course of incorporation which is to carry out the
activity of a human assisted internet search engine to be operated
through a software currently used in the Webhelp.com site and owned by
the C Shareholder.
B. Upon incorporation, the Company will have a share capital of EURO 40,000
divided into 4,000,000 shares of EURO 0.01 each. Its object will be the
provision of internet services to companies and individuals and in
particular the provisions of human assistance services , its statutory
auditors will be Michel Caderas de Kerleau and the deputy statutory
auditors will be the company Caderas Martin SA and its accounting year
will end on December 31 of each year.
C Upon incorporation the Company will ratify the Relevant Contracts entered
into by the Shareholders or some of them on behalf of the Company,
pursuant to the undertaking referred to at article 4.3 hereof.
D. The C Shareholder and the Company have entered into a Technology and
Trademark Agreement and Services Agreement providing for (i) the license
by the C Shareholder of the software and other proprietary rights used in
the Webhelp.com site to the Company, but solely for use in the French
language (the "LICENSE"), (ii) the co-ownership of the Webhelp trademark
on the French territory, (iii) the provision of services by the C
Shareholder to the Company and (iv) the issue of 19.88 % of the Company's
issued share capital to the C Shareholder, as partial consideration for
the provision of services under the Services Agreement .
E. The B Shareholder have agreed to participate in the organization and
development of the Company by subscribing to an increase of the share
capital of the Company entitling them to a 30% percentage holding in the
Company.
F. The Parties have agreed to enter into a shareholders' agreement
(hereafter referred to as the "Agreement"), in order to regulate their
respective rights and obligations with respect to the Shares and with
respect to the Company's organisation and management.
1. DEFINITIONS
For the purpose of this Agreement, each of the following terms will have
the meaning described below:
"A DIRECTORS" means the directors appointed by the A Shareholders
pursuant to Article 4.1 (b) and (c).
"ACTIVITY OF THE COMPANY" means the development, promotion, operation and
management of a real-time online human assisted search engine on the
internet, in the French language, as such activity may vary from time to
time in order to reflect and be consistent with the development of
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the activity of the C Shareholder insofar as (i) such activity relates to
the Webhelp service and (ii) the Company follows such development of
activity.
"AGREEMENT" means this shareholder's agreement and any Schedule thereto.
"B DIRECTORS" means the directors appointed by the B Shareholders
pursuant to Article 4.1 (b) and (c).
"B SHAREHOLDER'S GROUP" means any entity:
(i) that the B Shareholder controls, directly or indirectly,
(ii) which, directly or indirectly, controls the B Shareholder,
(iii) which is under the same direct or indirect control as the B
Shareholder,
"CONTROL" being understood for the purposes of this definition
within the meaning of Article 355-1 of the French law of July 24
1966.
(iv) and/or any investment funds for which an entity of the B
Shareholder's Group (as defined here above) provides the
management.
"C DIRECTORS" means the directors appointed by the C Shareholders
pursuant to Article 4.1 (b) and (c).
"CLOSING DATE" means the date at which the share capital increase
entitling the B Shareholder to 30 % of the Company's share capital
(pursuant to article II.2 of the Subscription Agreement) shall
take effect.
"COMPETING ACTIVITY" is defined at Article 8.3.
"COMPETITIVE BUSINESS" means engaging in any outsourced customer
relations services, Internet Search, general interest Internet
portal (such as Yahoo!, MSN, AOL or Excite).
"DRAG ALONG RIGHT" is defined at Article 6.12.
"EXCLUSIVITY PERIOD" is defined at Article 8.1.
"EXPERT" means the expert referred to in the definition of
Valuation Procedure below.
"FAIR MARKET VALUE" of the Shares shall mean the fair market value
either agreed between the Shareholders or, in the absence of
agreement, as determined in accordance with the Valuation
Procedure below, it being provided that in the determination of
the Fair Market Value, regard shall be had to the following
principles : the Fair Market Value shall be determined as if the
Technology and Trademark Agreement and the Services
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Agreement are, at the time of such determination, in full force
and effect without regard to any possible termination of such
agreements.
"MARKET VALUE PER SHARE" is defined at Article 5.3(A).
"NON-TRANSFERRING SHAREHOLDER is defined at Article 6.3.
PREEMPTION EXERCISE NOTICE is defined at Article 6.4 (i).
PREEMPTION RIGHT is defined at Article 6.2.
"PROPOSED SHARE CAPITAL INCREASE " means the amount by which it is
proposed that the share capital will be increased in each share
capital increase pursuant to article 5.
REPLY is defined at Article 6.4.
"PERMITTED TRANSFERS" SHALL REFER TO PERMITTED TRANSFERS AS
DESCRIBED AT ARTICLE 8.1.
"PRE-MONEY VALUE" is defined at Article 5.3(A).
"RELEVANT CONTRACTS" means the agreements entered into by the
Shareholders or any of them on behalf of the Company prior to
incorporation of the Company set forth at Schedule 4.
"SERVICES AGREEMENT" means the services agreement set forth at
Schedule 3.
"SHARES" means (i) any share that has been issued or is to be
issued, representing a portion of the capital of the Company, (ii)
any rights attached thereto, including preferential subscription
rights, and / or (iii) any securities, warrants, bonds or other
rights giving right, either immediately or in the future, via
conversion, exchange, reimbursement, presentation of a warrant, or
in any way whatsoever, to the subscription to, or allocation of, a
share representing a portion of the capital of the Company, as
defined here above.
"SHAREHOLDER" means any person holding SHARES of the Company and
having adhered to this Agreement in accordance with the provisions
of Article 12.7 hereafter.
"SUBSCRIPTION AGREEMENT" means the subscription agreement
("Protocole d'Accord") entered into between the parties on the
date hereof, a copy of which is set forth at Schedule 5.
"TAG ALONG RIGHT" is defined at Article 6.11.
"TAG ALONG EXERCISE NOTICE" is defined at Article 6.4 (ii).
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"TAG ALONG SHAREHOLDER" is defined at Article 6.4 (ii).
"TECHNOLOGY AND TRADEMARK AGREEMENT" means the technology license
and trademark coownership agreement set forth at Schedule 2.
"TERMINATION DATE is defined at Article 8.3.
"TRANSFER" means all operations, whether in return for
consideration or free of charge, leading to the immediately or
future transfer (whether by sale, pledge, granting of interest in
or otherwise) of full ownership, bare title or beneficial
ownership of the Shares or any interest therein.
"TRANSFER NOTICE " is defined at Article 6.3.
"VALUATION PROCEDURE" means the following procedure:
In the event of disagreement concerning the Fair Market Value of
the Shares in the instances set out below, any of the Parties
involved may request, within the time limits provided for in this
Agreement, the designation of a leading investment bank having an
international reputation and active on the French Internet market
to act as expert (hereafter, the "EXPERT") responsible for
determining the Fair Market Value of the Shares in accordance with
the provisions of Article 1843-4 of the French Civil Code.
In the event of disagreement among the relevant Parties with
respect to the name of the Expert, at the end of a period of eight
(8) days following the notification of the request for an expert
appraisal, each such relevant Party shall appoint an Expert within
ten (10) days, the valuation of the Company which is adopted then
being equal to the average of the valuation of the Experts. In the
event that one of the relevant Parties does not designate an
Expert within the above time limit, the Party shall be deemed not
to intend to designate an Expert and the other Expert(s)
designated by the other Parties shall be deemed to be acting on
behalf of all the Parties in question.
The Expert(s) appointed pursuant to the above paragraph will
submit their conclusions to all Parties concerned at the same time
within thirty (30) days of being appointed.
Except as otherwise provided for herein, (i) in the event that a
sole Expert is appointed, his fees and expenses shall be borne
equally by the relevant Parties, it being specified that, for the
purposes of this Agreement, the A Shareholders shall be deemed to
form a single Party and shall decide between themselves how their
share of the Expert's expenses and fees shall be divided and (ii)
in the event of there being more than one Expert, each Party shall
bear the fees and expenses of the Expert that the Party has
designated.
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2. OBJECT OF THIS AGREEMENT
The purpose of this Agreement is to define the relations between the
Shareholders of the Company. This Agreement shall enter into effect on
the date hereof .
It is expressly provided that :
(i) Article 5 of this Agreement shall not apply to the share
capital increases described at articles II.1 and II.2 of
the Subscription Agreement, nor to the exercise by the A
Shareholders of their share warrants (BSA) pusuant to
article II.1.1 of the Subscription Agreement ;
(ii) Article 6 of this Agreement shall not apply to the share
transfers described at article I.8 of the Subscription
Agreement.
3. SHAREHOLDING
3.1 On the Closing Date, there shall be four separate categories of
shareholders : the A Shareholders, the B Shareholder, the C
Shareholder and the D Shareholders who shall respectively hold the
numbers of Shares set forth below (following the exercise by the A
Shareholders of their share warrants (BSA)).
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Number of shares Share Capital and Voting
Rights (%)*
-----------------------------------------------------------------------------------------
"A Shareholders" 2,884,000 46.78 %
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"B Shareholder" 1,850,000 30 %
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"C Shareholder" 1,226,000 19.88 %
-----------------------------------------------------------------------------------------
"D Shareholders" 206,000 3.34 %
-----------------------------------------------------------------------------------------
(* : percentage of the non diluted share capital of the Company)
4. ORGANIZATION AND MANAGEMENT OF THE COMPANY
4.1 MANAGEMENT OF THE COMPANY
a) Subject to the terms set forth herein, the Company shall be
managed by a Board of Directors composed of not less than 5
and not more than 7 members.
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b) Upon incorporation of the Company, the Board of Directors
shall be composed as follows:
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CATEGORY Name of Director
-------------------------------------------------------------------------
A Director Olivier Duha
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A Director Frederic Jousset
-------------------------------------------------------------------------
A Director Jerome Maton
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B Director Europ@web (who shall initially be
represented by Pierre Louette)
-------------------------------------------------------------------------
B Director Ghislain Lescuyer
-------------------------------------------------------------------------
C Director Webhelp.com Inc. (who shall initially be
represented by M. Kerry Adler)
-------------------------------------------------------------------------
c) Subsequently, the composition of the Board shall insofar as
possible reflect the shareholdings of the Company subject
always to the following principles :
(i) for such time as the A Shareholders shall hold at
least 25% of the share capital of the Company, the A
Shareholders shall be entitled to appoint three (3)
directors (the "A DIRECTORS") it being specified
that (1) the appointment of the third A Director
shall require the consent of the B and C
Shareholders, (such consent not being unreasonably
withheld) and (2) such third A Director shall be
chosen from a list of proposed directors which shall
be submitted by the A Shareholders; if and for such
time as the percentage holding of the A Shareholders
in the Company falls below 25% but as long as it is
at least equal to 15 % , the number of A Directors
shall be reduced to two (2); if and for such time as
the percentage holding of the A Shareholders in the
Company falls below 15% but as long as it is at
least equal to 5 % , the number of A Directors shall
be reduced to one (1) ;
(ii) for such time as the B Shareholders shall hold at
least 25% of the share capital of the Company, the B
Shareholders shall be entitled to appoint two (2)
directors (the "B DIRECTORS"); if and for such time
as the percentage holding of the B Shareholders in
the Company falls below 25% but as long as it is at
least equal to 10 % , the number of B Directors
shall be reduced to one (1) ;
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(iii) for such time as the C Shareholders shall hold at
least 25% of the share capital of the Company, the C
Shareholders shall be entitled to appoint two (2)
directors (the "C DIRECTORS"); if and for such time
as the percentage holding of the C Shareholders in
the Company falls below 25% but as long as it is at
least equal to 10 % , the number of C Directors
shall be reduced to one (1), it being specified that
so long as the Technology and Trademark Agreement
remains in force, the C Shareholders shall be
entitled to at least one director regardless of the
percentage of the C Shareholder's shareholding.
(iv) Should the allotment of the registered capital
between the Shareholders be significantly modified,
the Parties shall negotiate in good faith a new
composition of the Board of Directors in order to
reflect this new allotment.
d) The Company's first President shall be Olivier Duha (it
being specified that this appointment shall not be subject
to the right of veto provided for at (e) below).
Resolutions shall be adopted at simple majority subject to
the rights of veto set forth below. The President shall
have a casting vote. The first Company's Managing Director
(Directeur General) shall be Frederic Jousset. Upon expiry
of 18 months following the Closing Date, and upon
proposition by Olivier Duha and Frederic Jousset to this
effect, the Board shall consider the possibility of
appointing Frederick Jousset as President of the Company ,
and Olivier Duha as the Managing Director of the Company.
e) RIGHTS OF VETO
(i) The following decisions may not be made without the
prior approval, in any written form, of at least one
of the B Directors (and, for decisions submitted to
the Shareholders, the B Shareholder):
- the approval of, or changes to, the annual /
quarterly budget and/or annual business plan;
- the approval of the decision to undertake any
investment not provided for in the annual /
quarterly budget for an amount over
EURO 50,000;
- entering into, amending or terminating any
agreement representing commitments for the
Company in excess of an aggregate amount of
EURO 50,000, or of more than a 6-month term,
except when specifically provided for in the
annual / quarterly budget;
- entering into, amending or terminating any
strategic partnership or joint venture
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agreement;
- entering into, amending or terminating any
agreement between the Company and one of its
Shareholders or Directors;
- creating any subsidiaries or branches, or
acquiring, through a purchase, a subscription
or otherwise, any participation or other
interest in a company or other entity, or
transferring or disposing of, through a sale
or otherwise, any shares or other interests
held by the Company in another entity unless
such matters are within the normal and
ordinary course of business, such as the
purchase of unit trusts (SICAV) or other
financial investments provided that they do
not exceed EURO 30,000 for each such
financial investment or EURO 70,000 for each
unit trust (SICAV);
- any transfer, through a sale, a lease, a
license or otherwise, of assets, including
intangible assets, which are significant or
necessary for the Company to conduct its
business activities;
- the granting of any guarantee by the Company
for an amount exceeding EURO 30,000, or the
granting of any pledge or other encumbrance
on the assets of the Company where the value
of such assets exceeds EURO 30,000 or for
assets which are necessary for the Company to
conduct its business activities;
- entering into, amending or terminating any
employment agreement involving a fixed gross
annual remuneration of more than EURO 70,000,
except when specifically provided for in the
annual / quarterly budget;
- granting of any increases in remuneration in
excess of twenty (20) percent (%) of annual
gross remuneration of more than EURO 70,000
or other benefits to employees of the Company
not provided for in the annual / quarterly
budget, and other than those which are
mandatory due to labour legislation or
collective bargaining agreements;
- the approval of the terms, or of any change,
in employee profit-sharing programs
(including stock option schemes or other
similar schemes);
- entering into, changing or terminating any
lease, purchase, exchange or sale of a
building, unless specifically provided for in
the annual / quarterly budget;
- any change in bank signature authorizations;
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- any issue or granting of Shares except as
provided in the Subscription Agreement and
except (i) for the next share capital
increases of the Company effected pursuant to
the provisions of Article 5 hereof ; and (ii)
in respect of the next share capital
increase, provided that at least US $ 6
million shall be raised in nominal and
premium (irrespective of the pre-money
valuation of the Company ) it being provided
that this amount shall be raised to US $ 8
million if the US $ 6 million amount does not
allow the B Shareholder to raise its
shareholding to 40 % pursuant to article 5
hereof;
- any distribution of dividends by the Company;
- any modifications of the by-laws (STATUTS) of
the Company unless relating to a share
capital increase;
- any decision relating to an initial public
offering of the Company;
- any new loan or borrowing for an overall
amount in excess of EURO 50,000, unless
specifically provided for in the annual /
quarterly budget;
- the decision to change any of the financial
threshholds provided for in this article 4
(e) (i) which shall be decided by the Board
of Directors.
It being expressly provided that the B Shareholder
shall have the sole discretion to increase the
financial threshholds provided for in this article 4
(e) (i) by written notice to the other Shareholders
and to the Company, and any such notice shall
operate as an amendment to this Agreement.
(ii) The following decisions may not be made
without the prior approval, in any written
form, of one of the B and (as long as both
the Technology and Trademark Agreement and
the Service Agreement remain in full force
and effect), one of the C Directors (and, for
decisions submitted to the Shareholders, the
B Shareholder and (as long as both the
Technology and Trademark Agreement and the
Service Agreement remain in full force and
effect), the C Shareholder):
- the merger or consolidation of the Company
with any other entity, or the liquidation or
dissolution of the Company;
- any transfer or granting of Shares to any
entity involved in a Competitive Business;
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- the transfer or pledging of rights under the
Technology and Trademark Agreement and the
Services Agreement;
- a change of the Activity of the Company
except where the change of the Activity of
the Company reflects a change of activity of
the C Shareholder;
together with the following matters but only if and
to the extent that each of these may have a direct
negative impact on the C Shareholder's activities :
- entering into, amending or terminating any
strategic partnership or joint venture
agreement;
- creating any subsidiaries or branches, or
acquiring, through a purchase, a subscription
or otherwise, any participation or other
interest in a company or other entity, or
transferring or disposing of, through a sale
or otherwise, any shares or other interests
held by the Company in another entity unless
such matters are within the normal and
ordinary course of business, such as the
purchase of unit trusts (SICAV) or other
financial investments provided that they do
not exceed EURO 30,000 for each such
financial investment or EURO 70,000 for each
unit trust (SICAV);
- any transfer, through a sale, a lease, a
license or otherwise, of assets, including
intangible assets, which are significant or
necessary for the Company to conduct its
business activities;
- the granting of any guarantee by the Company
for an amount exceeding EURO 30,000, or the
granting of any pledge or other encumbrance
on the assets of the Company where the value
of such assets exceeds EURO 30,000 or for
assets which are necessary for the Company to
conduct its business activities;
- entering into, amending or terminating any
agreement between the Company and one of its
Shareholders or Directors;
It being specified that the C Director's or C Shareholder's
(as the case may be) rights hereabove shall be consistent
with the rights granted to the C Shareholder pursuant to
the Technology and Trademark Agreement.
f) Exercise of Rights of Veto
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The rights of veto shall be exercised in the following
manner :
(i) the Company (and notably the President or the general
manager (directeur general)) shall notify in writing the B
and/or C Director or Shareholder (as the case may be) of
any proposed transaction or other matter which involve the
above rights of veto giving sufficient details as to the
nature of the transaction or other matter so as to allow
the B and/or C Director or Shareholder (as the case may be)
to exercise its right of veto with a proper understanding
of the issues involved.
(ii) The B and/or C Director or Shareholder (as the case
may be) shall reply to the said notification as soon as
possible and in any event not later than 15 days from the
date of notification.
(iii) In the absence of reply by the relevant B and/or C
Director or Shareholder (as the case may be) within the
time limit provided at (ii) above, the B and/or C Director
or Shareholder (as the case may be), shall be deemed to
have approved such matter or transaction, it being
specified that the 15 day time limit shall only run as from
the date on which the B and/or C Director or Shareholder
(as the case may be) shall have received sufficient details
as to the nature of the transaction or other matter so as
to allow such B and/or C Director or Shareholder (as the
case may be) to exercise its right of veto with a proper
understanding of the issues involved.
g) Board Meetings and Strategic Committee Meetings
(i) Board meetings shall be held at least quarterly in
Paris and shall be convened with reasonable notice
specifying the nature of business to be discussed. At the C
Shareholder's request, minutes may be held in English
provided that the minutes are established in French.
(ii) There shall also be held monthly strategic committee
meetings (which may also be convened at any time at one
member's reasonable request). The strategic committee
meetings shall include at least a representative of the B
Shareholder . The other members of the stategic committee
shall be chosen by the Board. it being specified that all
members who are not members of the Board shall enter into a
confidentiality undertaking in relation to matters to be
discussed. It is further noted that on expiry of two years
following the Closing Date, the Board shall reconsider the
frequency of strategic committee meetings.
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4.2 SHAREHOLDERS' RIGHT TO INFORMATION
Each of the A, B and C Shareholders shall be entitled to the
following :
(a) the audited, financial statements (comprising the
balance sheet, income statement and notes to financial
statements) within 90 days of the close of the Company's
accounting year;
(b) the monthly and quarterly financial statements
(comprising the balance sheet (it being specified that if
it is not practicable to provide monthly balance sheets,
these shall be provided quarterly), income statement, notes
to financial statements and cash flow statement within
thirty days of the close of any such period;
(c) a monthly information letter stating the Company's
progress in terms of the business plan (including, in
particular, performance milestones for the period) within
10 days following each such month;
(d) any such information regarding the state of affairs of
the Company as such Shareholders may reasonably request;
(e) at least 30 days prior to the beginning of the year to
which they relate, the annual marketing expenses to be
submitted to the C Shareholder for approval pursuant to
article 3.6 of the Transfer and Technology Agreement
The D Shareholders shall be entitled to such information as
is legally available to all shareholders.
The provisions of (b) and (c) above will be applicable as soon as
the said statements and information letters can be prepared.
4.3 SHAREHOLDERS' UNDERTAKING TO RATIFY RELEVANT CONTRACTS
The Shareholders undertake to procure that the Company shall, upon
incorporation, ratify the Relevant Contracts which shall have been
entered into by the Shareholders or any of them. To this end, each
of the Shareholders agrees to vote and agrees to procure that its
representative director (s) if any shall vote in favour of such
resolution for the ratification by the Company of Relevant
Contracts. To the extent that the Technology and Trademark
Agreement and the Services Agreement require ratification by the
Company, this article 4.3 shall apply likewise to such agreements.
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4.4 CONFIDENTIALITY UNDERTAKING
Each of the Shareholders undertakes and undertakes to procure that
its representative directors, shareholders, employees or any
person having access to such Shareholder's information shall keep
any information whatsoever relating to the Company disclosed
pursuant to this Agreement (including without limitation,
information disclosed pursuant to article 4.2 above) or otherwise
together with any information relating to this Agreement, or the
negotiations leading up to this Agreement strictly confidential
until such time as the information falls in the public domain and
ceases to be confidential.
5. SHARE CAPITAL INCREASES
5.1 RIGHTS OF THE SHAREHOLDERS
The Shareholders acknowledge that the Company may need to raise
additional funds by way of capital increases.
Subject to Articles 5.3 and 5.4 below, any capital increase to be
made by the Company will be first offered for subscription by its
Shareholders, on a pro-rata basis. If the whole amount of the
capital increase is not subscribed by the Shareholders, the
remaining Shares to be subscribed shall be allocated among the
Shareholders which are willing to subscribe more Shares, up to the
number of Shares requested by each of them and on a pro-rata
basis.
Except as provided below, the Shareholders undertake that there
shall be no waiver or disapplication of preferential subscription
rights without the express consent of the Shareholder whose rights
are being waived or disapplied.
5.2 B SHAREHOLDER CONDITIONAL CALL OPTION EXERCISABLE ON SUBSEQUENT
SHARE CAPITAL INCREASES
It is noted that the A Shareholders grant the B Shareholders a
conditional call option to purchase a certain number of shares (as
specified at article 9.3.2 below) exercisable on the next capital
increase to be made by the Company after the Closing Date
conditional upon the pre-money valuation (on a fully diluted
basis) of the Company, being less than twelve (12) million US
dollars. The conditions of exercise of this conditional call
option are further specified at article 9.3.1 below.
5.3 B SHAREHOLDER - SPECIFIC RIGHTS ON SHARE CAPITAL INCREASES
The B Shareholder shall be granted an opportunity to participate
in any future capital increases carried out by the Company in
order to raise additional funds (until the date of an initial
public offering) in the manner described below.
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If the Company decides to raise additional funds through a share
capital increase of the Company, and upon any such fund raising,
the amount of the proposed share capital increase (the "PROPOSED
SHARE CAPITAL INCREASE") and the Market Value Per Share will be
determined either by agreement between the Shareholders or
pursuant to article 5.3 (B) below.
(A) If the Shareholders agree on a proper valuation of the
Company, the Parties agree that the share capital increase
shall be reserved to the B Shareholder who shall be offered
the opportunity to subscribe to such number of new issued
Shares as will enable the B Shareholder to increase or
maintain its total percentage holding in the Company to 40%
(after taking into account the dilution resulting from the
share capital increase in favour of the C Shareholder
referred to at Article 5.4 below) of the fully diluted
share capital of the Company, for a price per Share equal
to:
(a) 70 % of the Market Value Per Share, where the
Pre-Money Value is greater than or equal to 22.8
million US dollars;
(b) 16 million US dollars divided by the total
number of Shares on issue immediately prior to the
proposed capital increase (on a fully diluted
basis), where the Pre-Money Value is less than 22.8
million US dollars, and at least equal to 16million
US dollars;
(c) The Market Value Per Share, where the Pre-Money
Value is less than 16 million US dollars (it being
understood that this provision shall only apply to
the residual share capital increase required in
order for the B Shareholder to achieve a 40 %
shareholding in the Company following exercise by
the B Shareholder of its conditional call option
pursuant to article 9.3.2 below;
Where :
- "MARKET VALUE PER SHARE" shall mean the price
per Share (which shall include the aggregate
of amounts allocated both to nominal and
premium share capital accounts) agreed
between the Shareholders or agreed to be paid
by the third party investor (s) upon a
proposed share capital increase.
- "PRE-MONEY VALUE" shall mean the Market Value
Per Share multiplied by the number of Shares
composing the share capital of the Company,
on a fully diluted basis, as in effect
immediately before the proposed capital
increase.
17
Additionally, immediately following the above share
capital increase, a subsequent share capital
increase shall be effected in order to allow the C
Shareholder to maintain its percentage of
shareholding in the Company on the terms set forth
at article 5.4 below ;
If the Proposed Share Capital Increase is not
entirely subscribed by the B and C Shareholders
pursuant to this article 5.3 (A), the difference
shall be offered for subscription to all of the
Shareholders PRO RATA to their shareholdings in
accordance with article 5.1;
It being understood that the Shareholders shall
waive their preferential subscription rights in
order to give effect to the above reserved share
capital increases.
(B) If however the Shareholders cannot agree to the
Market Value per Share, and one or several third
party investors are interested in subscribing for
Shares through a share capital increase, such
capital increase of the Company shall be made in
accordance with the following principles:
a) The third party investor(s) shall be entitled to
participate in the proposed share capital increase
of the Company, only if it/they meet(s) the
following criteria:
(i) Each third party investor must submit a BONA
FIDE binding offer to the Company.
(ii) Each third party investor must have a
recognized reputation of expertise with respect to
the Internet or as an investment firm.
(iii) If there are more than one third party
investors at least two of the binding offers
presented by them must cover 50 % or more of the
total proposed share capital increase of the
Company, and the total of these binding offers must
cover at least 100% of the total proposed share
capital increase of the Company.
(iv) If there is only one third party investor
willing to invest in the Company, the offer must
cover at least 100% of the total proposed capital
increase of the Company.
b) If the third party investor(s) interested in the
fund raising meet(s) the above criteria, the share
capital increase shall be authorised by the
Shareholders and shall be reserved :
(i) in part to the said third party investor (s)
for the amount of the proposed share capital
increase on the terms approved by the
Shareholders in accordance with the terms set
forth herein, and
18
(ii) in part to the B Shareholder who shall be
offered the opportunity to subscribe to such
number of new issued Shares as will enable
the B Shareholder to increase or maintain its
total percentage holding in the Company to
40% (after taking into account the dilution
resulting from the share capital increase in
favour of the third party investor pursuant
to (b) (i) above and in favour of the C
Shareholder referred to at article 5.4 below)
of the fully diluted share capital of the
Company, for a price per Share calculated in
the same manner as the price per Share
provided at Article 5.3 (A) above.
(iii) in part to the C Shareholder (who,
alternatively may exercise its preferential
subscription rights, the other shareholders
renouncing to their own preferential
subscription rights) such that immediately
following the above share capital increases
in favour of the third party and the B
Shareholder, a subsequent share capital
increase shall be effected in order to allow
the C Shareholder to maintain its percentage
of shareholding in the Company on the terms
set forth at article 5.4 below.
It being understood that the Shareholders shall
waive their preferential subscription rights in
order to give effect to the above reserved share
capital increases.
It being further understood that the share capital
increases in favour of the B and C Shareholders
above shall be taken into account in the Proposed
Share Capital Increase such that the share capital
increase in favour of the third party (ies) shall be
equal to the Proposed Share Capital Increase less
the share capital increase reserved to the B
Shareholder pursuant to (ii) above, less the share
capital increase reserved to the C Shareholder
pursuant to (iii) above.
c) If due to the exercise of the B Shareholder's
subscription right above, any one third party
investor decides not to participate in the capital
increase of the Company and that, within two (2)
months from such decision (which period shall be
reduced to two (2) weeks if the Company is faced
with immediate cash needs at the time of the capital
increase), no other third party agrees to replace
the initial third party investor, each of the A, B,
C and D Shareholders shall have the right to
subscribe PRO RATA to their respective shareholdings
and if the capital increase is not entirely
subscribed, the subscribing Shareholders shall have
the right to subscribe for additional shares
pro-rata to their respective Shareholdings until no
share capital is remaining on terms identical to the
third party subscribers as approved by the
Shareholders.
d) If however, the share capital increase is not
entirely subscribed by the Shareholders pursuant
19
to 5.3 (B) (c) above within the 2 month period
referred to above (which can be reduced to 2 weeks
if the Company is faced with immediate cash needs at
the time of the capital increase), then within 15
days of the end of such 2 month period (which can be
reduced to 2 weeks if the Company is faced with
immediate cash needs at the time of the capital
increase), the B Shareholder shall be obliged to
subscribe to the remaining number of Shares on
financial conditions identical to those set forth in
clause 5.3 (B) (b) (ii) above such that the capital
increase (as submitted to the third party investors)
is entirely subscribed, it being provided that the B
Shareholder shall not be obliged to subscribe to
such remaining number of Shares once the Company
shall have raised US $ 20 million in share capital
(nominal and premium included) .
For the purposes of this clause, "immediate cash
needs" shall refer to cash requirements of the
Company to be disbursed within 15 days in accordance
with the approved annual and quarterly budgets.
e) if the third party investor(s) does/do not meet the
criteria set forth under Article 5.3 (B) (a) above,
the capital increase shall be conducted by the
Company in accordance with Articles 5.3 (A) or 5.1
above.
5.4 C SHAREHOLDER
In the event of a share capital increase of the Company :
a) Until such time as the Company has raised
$ 5,000,000 in share capital (which shall include
the aggregate of amounts allocated both to nominal
and premium share capital accounts), part of the
share capital increase shall be reserved in favour
of the C Shareholder who shall be offered the
opportunity to subscribe to such number of new
issued Shares (at the nominal value thereof),
as will enable the C Shareholder to maintain its
percentage of shareholding at 19.88 % as specified
pursuant to article 3 above.
b) Once the Company shall have raised $ 5,000,000 in
share capital (which shall include the aggregate of
amounts allocated both to nominal and premium share
capital accounts) , the C Shareholder shall have a
preferential subscription right to subscribe to such
number of new issued Shares (on terms identical to
the third party investor's terms of subscription) as
will enable the C Shareholder to maintain its
percentage shareholding interest in the Company at
the level it was immediately prior to such share
capital increase. Such preferential subscription
right will not be waived without the express prior
written consent of the C Shareholder.
It being provided that the Shareholders shall waive and/or
assign their preferential subscription rights
20
in favour of the C Shareholder in order to give effect to
the above, and that neither the B Shareholder nor the C
Shareholder shall be diluted as a result of the exercise of
the above rights by the other B Shareholder or C
Shareholder as the case may be.
6. TRANSFERS OF SHARES
6.1 Transfers for Shares shall be prohibited save for transfers
made pursuant to this Article 6.
6.2 PRE-EMPTION RIGHTS
Subject to articles 6.13 and 6.14, if a Shareholder
receives a BONA FIDE binding offer for its shares from a
third party or another Shareholder and wishes to make a
Transfer of all or part of its Shares under such offer
(such transferring Shareholder hereafter referred to as the
"TRANSFEROR"), such Shareholder undertakes to grant the
other Shareholders a pre-emption right in accordance with
Articles 6.3 through 6.10 below (the "PRE-EMPTION RIGHT")
or a tag-along right in accordance with Articles 6.3, 6.4
and 6.11 below (the "TAG ALONG RIGHT") in respect of all of
the Company's Shares that it wishes to Transfer in the
terms set forth below.
6.3 NOTIFICATION OF A PLANNED TRANSFER
The Transferor must give prior notice (hereafter the
"TRANSFER NOTICE") to the other Shareholders (hereafter the
"NON-TRANSFERRING SHAREHOLDERS") regarding the terms and
conditions for the proposed Transfer in order to enable
them to exercise their pre-emption rights or tag-along
rights as stipulated in this Article 6.
The Transfer Notice shall include the number of Shares
offered for Sale, the price offered by the proposed
transferee for these Shares, the main terms and conditions
of the proposed Transfer, and any relevant information
allowing to identify the proposed transferee.
6.4 RESPONSE TO TRANSFER NOTICE
The Non-Transferring Shareholders shall have a period of
twenty one (21) days as from the receipt of the Transfer
Notice to reply to the Transferor with a copy to the other
Shareholders (hereafter the "REPLY"). The Reply shall state
either that:
(i) the Non-Transferring Shareholder intends to exercise
its Pre-emption Rights stating the number of Shares
of the Company in relation to which it wishes to
exercise its Pre-emption Right (hereafter the
"PRE-EMPTION EXERCISE NOTICE"), or
(ii) the Non-Transferring Shareholder waives its
Pre-emption Right and announces its wish to
21
exercise its Tag-Along Right provided for in Article
6.11 below (hereafter the "TAG-ALONG EXERCISE
NOTICE"),
(iii) the Non-Transferring Shareholder intends to exercise
its Pre-emption Rights in accordance with its
Pre-emption Exercise Notice, but failing a
pre-emption by the Shareholders of all the Shares
which are the subject of the Transfer, it wishes to
exercise its Tag-Along Right provided for in Article
6.11 below;
(iv) the Non-Transferring Shareholder does not wish to
exercise either its Pre-emption Right or its
Tag-Along Right.
In the absence of Reply within the said period of twenty
one (21) days from receipt of the Transfer Notice, the
Non-Transferring Shareholder shall be deemed to have waived
his Pre-emption or Tag-Along Rights.
6.5 PRICE OF TRANSFER
If the proposed Transfer consists purely and simply of a
sale of Shares for cash to one or more specified
transferees, the price of exercise of the Pre-emption Right
shall be equal to the price of the sale, as provided for in
the Transfer Notice.
In the event that the planned transaction is other than a
pure and simple sale of Shares, without the sale price
being stipulated in cash, the Preemption Right shall be
exercised in consideration for a price equal to the
valuation of the Shares proposed by the Transferor in his
Transfer Notice.
6.6 EXPERT VALUATION
In the event of disagreement on the valuation provided for
in the Transfer Notice, any Shareholder may request within
five (5) days of receipt of the Transfer Notice, that the
Company's Shares be valued in accordance with the Valuation
Procedure. The price applicable for the exercise by the
Shareholders of their Pre-emption Right shall be the lower
price between that offered by the Transferor and that fixed
by the Valuation Procedure.
6.7 DISCONTINUANCE OF THE TRANSFER
Following valuation by Valuation Procedure :
(i) the Transferor shall be entitled to discontinue the
Transfer provided that he notifies the
Non-Transferring Shareholders of this within seven
(7) days of receipt of the valuation report from the
Expert(s), in which case a Pre-emption Right cannot
be exercised on the Shares in
22
question. In the event that the Transferor exercises
its right to discontinue the Transfer of its Shares,
he shall be liable for all of the fees and expenses
incurred by the Expert(s).
(ii) equally, the Non-Transferring Shareholders who have
indicated their intention to exercise their
Pre-emption Right shall be entitled to discontinue
the exercise of their Pre-emption Right provided
that they each notify the Transferor within seven
(7) days of receipt of the conclusions of the Expert
or Experts. In the event that a Non-transferring
Shareholder exercises its right to discontinue the
pre-emption, such Shareholder who requested the
implementation of the Valuation Procedure shall be
liable for all of the fees and expenses incurred by
the Valuation Procedure.
6.8 EXERCISE OF PRE-EMPTION RIGHT
Subject to Article 6.14 below, the Shareholders shall have
a Pre-emption Right on the Shares of the Transferor which
are subject to the Transfer Notice, on a pro-rata basis. In
the event that the beneficiaries of a Pre-emption Right
wish to exercise their right on a number of Shares greater
than or equal to the number of Shares which are the subject
of the proposed Transfer, the Shares shall be allocated
among them up to their respective request and pro rata to
their respective equity interests in the Company.
The Pre-emption Right may only be exercised collectively or
individually if, upon completion of the above procedure,
all the Shares which are the subject of this proposed
Transfer have been the subject of the pre-emption.
It is expressly provided that if the proposed transferee is
a Shareholder, the latter will be deemed to have exercised
his pre-emption rights by virtue of the offer, it being
provided that to the extent that the said transferee
Shareholder wishes to purchase all but not part only of the
Shares, he shall not be under an obligation to purchase
part only of the Shares provided that he shall have
specified this in his offer for the purchase of the Shares.
6.9 IMPLEMENTATION OF PRE-EMPTION RIGHT
In the event of the exercise of the Pre-emption Right on
all of the Shares offered, the Transfer and all of its
terms and conditions (including payment of the price,
except when provision for a longer time limit for payment
was made in the Transfer Notice) must be implemented no
later than fifteen (15) days after the expiration of the
twenty one (21) day time period referred to at Article 6.4
above. However, in the event of an Valuation Procedure, the
Transfer shall take place within fifteen (15) days of the
receipt of the conclusions of the Expert(s), except if the
right is discontinued as provided for above.
6.10 ABSENCE OF EXERCISE OF PRE-EMPTION RIGHT
23
Failing the exercise of the above Pre-emption Right on all
the Shares offered within the time limits provided for
above, subject to Article 6.12 below and subject to the
exercise of the Tag-Along Right or Drag-Along Rights below,
the Transfer to the transferee may take place freely and
according to the conditions described in the Transfer
Notice, on condition that such a Transfer takes place
within fifteen (15) days after the expiration of the twenty
one (21) day time period referred to at Article 6.4 above,
or, as the case may be, within fifteen (15) days from the
expiration of the seven (7) day time period referred to at
Article 6.7(ii) above. Beyond this time limit, the
pre-emption and tag-along procedures must be re-initiated.
6.11 TAG-ALONG RIGHT
Subject to Article 6.14, if a Shareholder receives a BONA
FIDE binding offer for its shares from a third party or
another Shareholder and wishes to make a Transfer of all or
part of its Shares under such offer, such Transferor
undertakes to grant the other Shareholders a Tag Along
Right in accordance with the principles set forth below.
In the event that a Non-Transferring Shareholder serves a
Tag-Along Exercise Notice pursuant to Article 6.2 (the
"TAG-ALONG SHAREHOLDER") and failing pre-emption by the
Non-Transferring Shareholders of all the Shares offered
under the Transfer Notice, such Tag Along Shareholder shall
have the right to require the proposed third party
transferee to acquire all or part of its Shares, at the
same price and under the same payment terms as specified in
the Transfer Notice, on the following terms:
(i) If the Shares to be transferred by one or more
Transferor, as provided in the Transfer Notice,
represent less than 50% of the share capital of the
Company, the Tag Along Shareholder(s) shall be
offered to Transfer to the third party transferee a
number of Shares equal to :
Tag Along Shares = Offered Shares x [A / B]
WHERE :
- "TAG ALONG SHARES" means the number of Shares
which the Tag Along Shareholder is entitled
to Transfer to the third party transferee;
- "OFFERED SHARES" means the Shares to be
Transferred by the transferor, as provided in
the Transfer Notice;
- "A" means the total number of Shares held by
the Tag Along Shareholder in the Company;
24
- "B" means the aggregate number of Shares held
by all the Tag Along Shareholders and the
Transferor in the Company.
(ii) If the Shares to be transferred by one or more
Transferors (in one or more successive related
Transfers), as provided in the Transfer Notice(s),
represent 50% or more of the share capital of the
Company, the Tag Along Shareholder(s) shall be
entitled to Transfer all their Shares to the third
party transferee.
(iii) In both cases above, the Tag along right must be
exercised in accordance with the following
conditions:
a) The Tag Along Right must be exercised within
the period of twenty one (21) days from
receipt of the Transfer Notice referred to at
Article 6.2 above, failing which the
Tag-Along Shareholder shall be deemed to have
renounced its Tag Along Right.
b) Any transfer of Shares pursuant to the
exercise of the Tag Along Right shall take
place within fifteen (15) days from the
expiry of the above twenty one (21) day time
period during which the Tag Along Right may
be exercised pursuant to Article 6.2 above,
or, as the case may be, within fifteen (15)
days from the expiration of the seven (7) day
time period referred to at Article 6.7(ii)
above.
c) Should the Tag Along Right be exercised, no
Transfer of Shares can be executed by the
Transferor unless the Tag-Along Shareholder
has been able to Transfer to the proposed
transferee its Shares, as provided above.
6.12 DRAG ALONG RIGHTS
In the event that a Shareholder or Shareholders (the
"CALLING SHAREHOLDER(S)") who hold(s) at least 70% of the
Company's share capital receive(s) a BONA FIDE binding
offer from an independent third party for the acquisition
for cash of all of its (their) Shares, the following
provisions shall apply :
(a) In the event that the third party offeror is willing
to maintain the C Shareholder in the Company, the
Calling Shareholder(s) shall have the right to call
all, but not less than all, of the Shares held by
the other Shareholders with the exception of the C
Shareholders at a price per Share and on terms
identical to the price and terms offered by the
independent third party (the "DRAG ALONG RIGHT"),
provided the other Shareholders have not exercised
their Pre-emption Right in accordance with Articles
6.3 through 6.10 above.
25
(b) In the event that the third party offeror is not
willing to maintain the C Shareholder in the
Company, the Calling Shareholder (s) shall have the
right to call all, but not less than all, of the
Shares held by the other Shareholders at a price per
Share and on terms identical to the price and terms
offered by the independent third party (the "DRAG
ALONG RIGHT"), provided the other Shareholders have
not exercised their Pre-emption Right in accordance
with Articles 6.3 through 6.10 above. In this event,
the C Shareholder shall be entitled to terminate the
Technology and Trademark Agreement within 90 days of
the transfer of their Shares pursuant to the terms
set forth at article 7.10 of the Technology and
Trademark Agreement.
(c) The Drag Along Right shall be exercised on the
following terms.
(i) The Calling Shareholder(s) must notify the other
Shareholders of its intention to exercise the
Drag-Along Right within seven (7) days of the expiry
of the period during which the Non-Transferring
shareholders may exercise their Pre-emption or
Tag-Along Rights referred to at Articles 6.3 through
6.10 (Pre-emption Right) and 6.3, 6.4 and 6.11 (Tag
Along Rights) above.
(ii) Upon notification by the Calling Shareholder(s)
pursuant to this Article 6.12, the other
Shareholders (with the exception of the C
Shareholder in the case of 6.12 (a) above) will be
under an obligation to sell their Shares on the same
terms at which the Calling Shareholder(s) shall sell
their Shares to the third party transferee.
6.13 CONSENT OF C SHAREHOLDER FOR TRANSFERS TO COMPETITIVE
BUSINESSES
Notwithstanding the foregoing and notwithstanding the
exceptions provided at article 6.14 below, in accordance
with Article 4.1(e) (ii) above, there shall be no Transfer
of Shares to an entity carrying out a Competitive Business
without the prior consent of the C Shareholder.
In the event of Transfer of Shares in breach of the this
article 6.13, the other Shareholders shall have a call
option (PRO RATA to their then current respective
shareholdings, it being specifed that if some Shareholders
do not exercise the call option, the remaining Shareholders
may call PRO RATA to respective shareholdings over uncalled
shares ) over the remaining shares held by the Shareholder
in breach ("Breaching Shareholder") which shall be
exercisable as follows :
(i) within 21 days of the other Shareholders becoming
aware of the breach, they shall serve written notice
on the Breaching Shareholder of their intention to
exercise the call option;
(ii) The relevant parties shall negotiate in good faith
the price of exercising the promise provided for
above which shall reflect the Fair Market Value of
the Shares concerned which in the
26
event of a disagreement between the relevant Parties
shall be determined in accordance with the Valuation
Procedure.
(iii) The Transfer to the other Shareholder (s) shall take
place within fifteen (15) days of the notice given
by each such other Shareholder of his intention to
exercise the call option, or of the determination of
the price of the Shares, whichever the later.
6.14 EXCEPTIONS
The rules set forth in this Article 6 above shall not be
applicable to the following Transfers of shares:
(i) Transfers of Shares to an individual or legal entity
designated as a member of the Board of Directors of
the Company, up to the number of shares required by
the Company's by-laws (STATUTS) and on condition
that the transferee undertakes to retransfer these
Shares to the original Transferor upon leaving his
position as Company Director;
(ii) Sales of Shares between the B Shareholder and a
member of the B Shareholder's Group provided the
transferee is not a Competitive Business, and
provided further that the transferee must first have
subscribed to this Agreement in accordance with the
provisions of Article 12.7 below.
(iii) The Transfer by any of the A Shareholders of his
Shares to the remaining Shareholders or some of
them, following the occurrence of a Triggering
Event, in accordance with Article 9.1 below ;
(iv) The Transfer by any one of the A Shareholders of his
Shares to another A Shareholder;
(v) The Transfer of Shares to the C Shareholder as a
result of the exercise of the Call Option granted to
the C Shareholder pursuant to article 9.2 below;
(vi) The Transfer of Shares to the B Shareholder as a
result of the exercise of the Call Options granted
to the B Shareholder pursuant to 9.3.1 and 9.3.2
below;
(vii) The Transfer of Shares to non -Breaching
Shareholders as a result of the exercise of the Call
Option granted pursuant to article 6.13 above;
(viii) The Transfer of Shares from the D Shareholders to
family-held companies in which the transferring D
Shareholder holds a controlling interest (it being
specified that "controlling interest" shall be
understood as the right to exercise at least 51 % of
voting rights of the company), and provided always
that :