EXHIBIT 10.18
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PEOPLEPC BV
SHAREHOLDERS' AGREEMENT
June 30, 2000
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TABLE OF CONTENTS
Page
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1. Certain Definitions...................................................................................... 1
2. Organization and Operation of Company.................................................................... 2
2.1 Organization.................................................................................... 2
2.2 Scope of Operations and Responsibilities........................................................ 3
3. Representations and Warranties of the Parties............................................................ 3
3.1 Investment...................................................................................... 3
3.2 Organization.................................................................................... 3
3.3 Authority....................................................................................... 4
3.4 Government Consents, etc........................................................................ 4
3.5 Investigation................................................................................... 4
3.6 Compliance with 1995 Act on the Supervision of the Securities Trade............................. 4
4. Restrictions on Transferability.......................................................................... 4
5. Restrictive Legends...................................................................................... 4
6. Offering Rights.......................................................................................... 5
7. Financial Information.................................................................................... 6
8. Lockup Agreement......................................................................................... 6
9. Right to Maintain........................................................................................ 7
10. Limitation on Ownership of Company Securities............................................................ 8
11. Right of First Refusal................................................................................... 9
11.1 Grant of Right; Exercise or Right............................................................... 9
11.2 Assignment of Right............................................................................. 10
12. Conversion............................................................................................... 10
12.1 Optional Conversion of Preferred Stock or Class B Common Shares................................. 10
12.2 Automatic Conversion of Preferred Stock......................................................... 10
12.3 Original Issue Price and Conversion Price....................................................... 10
12.4 Adjustment of Conversion Prices................................................................. 11
12.5 Mechanics of Optional and Automatic Conversions................................................. 12
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TABLE OF CONTENT
(continued)
Page
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13. Purchase Rights......................................................................................... 13
14. Voting Agreement with Respect to the Board of Directors................................................. 13
14.1 Election of Directors.......................................................................... 13
14.2 Removal........................................................................................ 13
14.3 Super-majority Vote............................................................................ 13
14.4 Quorum......................................................................................... 14
15. Shareholder Voting...................................................................................... 14
15.1 Approval of Certain Shareholders............................................................... 14
15.2 Class B Common Shares.......................................................................... 15
15.3 Form of Dividend Consideration................................................................. 15
16. Amendment............................................................................................... 15
17. Start-up Expenses....................................................................................... 15
18. Closing Conditions...................................................................................... 15
18.1 Conditions to Obligations of the Parties....................................................... 15
18.2 Conditions to Obligations of the Company....................................................... 16
19. Governing Law........................................................................................... 16
20. Entire Agreement; Conflict.............................................................................. 17
21. Notices, etc............................................................................................ 17
22. Counterparts............................................................................................ 18
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EXHIBITS
A. License Agreement
B. Master Services Agreement
C. Articles of Association
D. Form of Warrant
PEOPLEPC BV
SHAREHOLDERS' AGREEMENT
This Shareholders' Agreement (this "Agreement") is made effective as of
June 30, 2000, by and among (i) PeoplePC BV, a Dutch company (the "Company"),
(ii) PeoplePC, Inc., a Delaware corporation ("PPC U.S."), (iii) Olive Hill
Investments N.V., a company organized under the laws of the Netherlands Antilles
("PPC N.A.") and an indirect wholly owned subsidiary of PPC U.S., (iv) @viso
Limited, a company organized under the laws of the United Kingdom ("@viso") and
an affiliate of both Softbank Corp., a company organized under the laws of Japan
("Softbank") and Vivendi S.A., a company organized under the laws of France
("Vivendi") and (v) Softbank Capital Partners LP, a Delaware limited partnership
("SBCP") and an affiliate of Softbank (PPC U.S., PPC N.A., @viso and SBCP,
together, the "Parties" and each individually, a "Party").
RECITALS
WHEREAS, PeoplePC Intl., Ltd., a company organized under the laws of the British
Virgin Islands ("PPC B.V.I."), the parent company of PPC N.A. and a wholly owned
subsidiary of PPC U.S., desires to license certain technology to PeoplePC U.K.,
Ltd., a company organized under the laws of the United Kingdom ("PPC U.K.") and
currently a wholly owned subsidiary of PPC B.V.I., pursuant to the License
Agreement by and between PPC B.V.I. and PPC U.K. having substantially the form
attached hereto as Exhibit A (the "License Agreement");
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WHEREAS, Vivendi and Softbank desire to associate themselves through their
affiliates, @viso and SBCP, as shareholders of the Company, and to enter into
that certain Master Services Agreement with the Company, PPC U.S., PPC N.A.,
@viso and PPC U.K. having substantially the form attached hereto as Exhibit B
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(the "Services Agreement") for the purpose of protecting and maintaining their
investment in the Company through such affiliates;
WHEREAS, PPC U.S. desires to associate itself through its affiliate, PPC N.A.,
as a shareholder of the Company, and to enter into the Services Agreement with
the Company, PPC U.S., PPC N.A., Softbank, Vivendi, @viso and PPC U.K. for the
purpose of protecting and maintaining its investment in the Company through its
affiliate;
WHEREAS, it is deemed in the best interest of the Company, PPC U.S., PPC N.A.,
@viso and SBCP that all such parties execute this Agreement for the purpose of
continuity and stability of ownership of the Company, to the extent and upon the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of these premises and the mutual covenants
herein set forth, the parties hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
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shall have the following respective meanings:
"affiliate" means any person who controls, or is controlled by or
under common control with, the affiliated party.
"Company Securities" means any of the Company's capital stock, any
securities convertible into or exchangeable for such capital stock, or any other
right to acquire such capital stock (except, in any case, by way of stock
dividends or other distributions or offerings made available to holders of any
such capital stock generally).
"Conversion Stock" means the Company's Class A Common Stock issued or
issuable pursuant to conversion of the Company's Class B Common Stock, Series A
Preferred Shares, Series B Preferred Shares and Warrant Shares issued hereunder,
including any Class A Common Shares issued or issuable in respect of the
foregoing shares upon any stock split, stock dividend, recapitalization or
similar event.
"Holder" means (i) any Party holding Conversion Stock and (ii) any
person holding Conversion Stock to whom the rights under this Agreement have
been transferred or assigned in accordance with the terms hereof.
"IPO" shall mean the Company's initial public offering of Class A
Common Shares.
"PeoplePC" means PPC U.S. and/or its affiliates (except the Company
and PPC U.K.).
"person" shall mean any person, individual, corporation, partnership,
trust or other nongovernmental entity or any governmental agency, court,
authority or other body (whether foreign, federal, state, local or otherwise).
2. Organization and Operation of Company.
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2.1 Organization.
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(a) On or before the date on which the closing conditions in
Section 18 are either accomplished or waived (the "Closing Date") (i) the
Company will amend its deed of incorporation containing the Articles of
Association of the Company such that the Amended Articles of Association shall
be substantially in the form of Exhibit C hereto, (ii) @viso, or an affiliate of
@viso that also agrees to be bound by the terms of this Agreement, will
subscribe to 11,666,667 shares of Series A Preferred Stock, par value EUR.01
("Series A Preferred Shares") for a cash contribution of $35,000,000 and
5,000,000 shares of Series B Preferred Stock, par value EUR.01 ("Series B
Preferred Shares," together with Series A Preferred Shares, "Preferred Shares"
or "Preferred Stock") for a cash contribution of $15,000,000 (iii) SBCP will
receive a warrant to acquire up to 2,380,952 shares of Series A Preferred Stock
(the "Warrant Shares"), which warrant shall have an aggregate exercise price of
$7,142,857 and such other terms as are specified in the warrant attached as
Exhibit D hereto (the "Warrant"), (iv) PPC B.V.I. shall have assigned to PPC
N.A. all of the outstanding shares of PPC U.K., (v) PPC N.A. shall have assigned
to the Company all
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of the outstanding shares of PPC U.K. it received from PPC B.V.I., and (vi)
2,000 shares of the Company, par value EUR10.00, owned by PPC N.A., which
represent all of the outstanding capital stock of the Company prior to the
Closing Date, shall be converted automatically to 30,952,381 Class B Common
Shares, par value EUR.03 (the "Class B Common Shares," together with the Class A
Common Shares (defined below), the "Common Shares" or "Common Stock"). The
Warrant shall become exercisable, and must be exercised (i) at the request of
the Company, but no sooner than six months after the Closing Date or (ii)
immediately prior to (A) an acquisition, sale or merger of or by the Company
resulting in a change in control of the Company, (B) a merger of the Company
with and into PeoplePC, or acquisition of all of the Company's assets or shares
by PeoplePC or (C) the Company's IPO, on terms and conditions more fully set
forth therein.
(b) Initially, up to 7,142,857 Class A Common Shares, par value
EUR.01 (the "Class A Common Shares") (subject to adjustment for stock splits,
combinations and other changes in capitalization) may be issued to a foundation,
which will issue depository receipts therefor to employees, directors and
consultants of the Company pursuant to stock option or award plans adopted by
the Board of Directors of the Company and applicable laws.
2.2 Scope of Operations and Responsibilities.
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(a) Notwithstanding the extent of the objects set forth in its
Articles of Association, the Company will have the right to conduct the Local
Business in the Territory (as such terms are defined in the License Agreement)
and such other activities as may be approved by the Board of Directors in
accordance with the terms of the License Agreement and Section 13.3 hereof.
(b) PeoplePC will provide, pursuant to the License Agreement:
(i) all PeoplePC Technology and PeoplePC Brand (as such terms defined in the
License Agreement) that PeoplePC has a right to license and (ii) certain
technology, maintenance, and technical support in either case which are
necessary and appropriate for the Company to launch and operate its business in
the Territory in the manner presently contemplated.
3. Representations and Warranties of the Parties. Each Party hereby
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represents and warrants to the Company and the other Parties as follows:
3.1 Investment. It will acquire the Company Securities acquired
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pursuant to this Agreement for investment for its own account, not as a nominee
or agent, and not with a view to, or for resale in connection with, any
distribution thereof. It understands that the Company Securities acquired by it
pursuant to this Agreement have not been, and will not be, registered or
qualified for sale to the public (unless sold in connection with a public
offering by the Company) under the Securities Act of 1933, as amended, or
otherwise.
3.2 Organization. It is an entity duly organized and validly existing
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and in good standing under the laws of the jurisdiction of its organization,
with all requisite corporate power and
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authority to own, lease and operate its properties and assets and to carry on
its business as presently conducted and as proposed to be conducted.
3.3 Authority. It has all corporate right, power and authority to
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enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by it and the consummation
by it of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on its behalf. This Agreement has been duly executed
and delivered by it and constitutes a legal, valid and binding obligation,
enforceable in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies,
and to limitations of public policy. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated hereby
will not, conflict with or result in any violation of any obligation under any
provision of its charter documents or any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to it.
3.4 Government Consents, etc. No consent, approval or authorization
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of or designation, declaration or filing with any governmental authority on its
part is required in connection with the valid execution and delivery of this
Agreement, or the subscription for the offer or issuance of the Company
Securities hereunder or upon exercise of the Warrant or the consummation of any
other transaction contemplated hereby.
3.5 Investigation. It has had a reasonable opportunity to discuss the
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Company's business, management and financial affairs with the Company's
management and it has received satisfactory responses from management of the
Company to its inquiries.
3.6 Compliance with 1995 Act on the Supervision of the Securities
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Trade. It is a person who trades or invests in securities in the conduct of its
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profession or trade (which persons include banks, securities intermediaries
(including dealers and brokers), insurance companies, pension funds, other
institutional investors and commercial enterprises which as an ancillary
activity regularly invest in securities).
4. Restrictions on Transferability. No Party shall assign, sell, pledge
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or otherwise transfer its Company Securities except (i) to an affiliate of such
Party which agrees to be bound by the terms of this Agreement as though named as
a party hereto, (ii) with the prior written consent of each other Party, or
(iii) to the Company (to the extent permitted under Dutch law) or any person or
group approved by the Company in accordance with Section 11 below; provided,
however, that any such transfer permitted by the foregoing provisions of this
paragraph shall be made in compliance with applicable securities laws and
Section 8 hereof, and no such transfer otherwise permitted by the foregoing
provisions of this paragraph shall be made to a competitor of the Company, as
determined by the Company's Board of Directors.
5. Restrictive Legends. Each certificate representing Conversion Stock
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shall (unless otherwise permitted by the provisions of Section 4 above) be
stamped or otherwise imprinted with a
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legend in substantially the following form (in addition to any other legends
required by agreement or by applicable securities laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER, A LOCKUP OF 180 DAYS AND RIGHTS OF FIRST
REFUSAL SET FORTH IN A CERTAIN SHAREHOLDERS' AGREEMENT DATED AS OF
JUNE 30, 2000, A COPY OF WHICH MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE COMPANY AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICES.
Each Holder consents to the Company making a notation on its records
and giving stop transfer instructions to any transfer agent of its Company
Securities in order to implement the restrictions on transfer established in
this Agreement.
6. Offering Rights.
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(a) If, following the earlier of (i) four years from the date
hereof and (ii) six months after the IPO, the Company shall receive a written
request from a Holder or Holders of a majority of the Conversion Stock (subject
to adjustment for stock splits, combinations and other changes in
capitalization) to effect a public offering of at least $20,000,000 in proposed
aggregate offering price, the Company shall, as soon as practicable, file or
take other action to allow such an offering of the Conversion Stock which the
Holders request to be offered; provided, however, that the Company shall only be
obligated to effect two such offerings under this Section 6(a). The Company
shall not be obligated to effect any offering within 180 days after the
effective date of a previous offering. In addition, if the equity securities of
the Company are eligible for public sale by a short-form or abbreviated offering
prospectus, each Holder will be entitled to require the Company to effect an
offering of its Conversion Stock in such a manner, provided the proposed
offering price, net of discounts and commissions, is more than $10,000,000. The
Company may postpone for up to 180 days action to effect an offering pursuant to
this Section 6(a) if the Board of Directors determines that such offering could
reasonably be expected to have a material adverse effect on any proposal or plan
by the Company to engage in any acquisition of assets (other than in the
ordinary course of business) or any merger, consolidation, tender offer,
reorganization or similar transaction, or on the Company as a whole.
(b) If the Company prepares documentation in connection with the
public offering of the Company's Class A Common Shares or Conversion Stock
(including any offering for other Holders) other than the IPO or an offering
relating solely to securities in an employee stock option, bonus or other
compensation plan or in connection with an acquisition, merger or other business
combination, the Company shall so notify the Holders and each Holder may have
any portion of its Conversion Stock included in such offering. Notwithstanding
any other provision of
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this Section 6(b), if the underwriters managing such offering advise the Company
in writing that the number of Class A Common Shares or Conversion Stock proposed
to be sold in any such offering is greater than the number which they believe
feasible to sell at that time upon the terms approved by the Company, there
shall be included in such offering and underwriting (i) first, the number of
Class A Common Shares proposed to be sold by the Company and (ii) second, the
number Conversion Stock to be sold by selling Holders on a pro-rata basis based
upon the number of Conversion Stock that each such Holder desires to offer.
(c) In connection with any offering of Conversion Stock effected
pursuant to this Section 6, the selling Holder(s) shall be responsible for any
underwriting discounts and commissions applicable to their Conversion Stock and
the Company shall, to the extent legally permitted, be responsible for all other
expenses, including, without limitation, all filing, printers and accounting
expenses, and fees and disbursements of counsel for the Company and one counsel
for the selling Holder(s).
(d) With respect to any offering effected pursuant to this
Section 6, the Company will, to the extent legally permitted, provide customary
indemnification for the selling Holder(s) and any underwriter of Conversion
Stock sold by them (and any of their directors, officers and controlling
persons) and the selling Holders will, to the extent legally permitted, provide
customary indemnification for the Company (and any of its directors, officers
and controlling persons) and any underwriters.
(e) The rights pursuant to this Section 6 may be assigned by a
Party together with any transfer or assignment of the Conversion Stock, provided
the transfer or assignment complies with the applicable securities laws and the
terms of this Agreement.
(f) The rights granted pursuant to this Section 6 shall
terminate upon the earlier of (i) three years after the IPO and (ii) the date
such Holder is eligible to sell all of its Conversion Stock under a relevant
securities law registration exemption within any three-month period.
7. Financial Information. The Company shall make the following documents
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available to any shareholder upon request: (a) within 90 days after the end of
each fiscal year of the Company, year-end financial reports; (b) within 45 days
after the end of the first three quarters of each fiscal year, quarter-end
financial reports; and (c) within 30 days prior to the end of each fiscal year,
a budget and business plan for the next fiscal year. In addition, the Company
shall, upon reasonable notice, give each such shareholder, during regular
business hours, reasonable access to the properties, documents and records,
financial and otherwise, of the Company, and provide copies or extracts of the
Company's documents and records as such shareholder may reasonably request. The
obligations hereunder shall terminate upon consummation of the IPO.
8. Lockup Agreement. In connection with an underwritten offering by the
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Company, if so requested by the Company or any of the underwriters, the Holders
shall not, directly or indirectly,
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sell, offer or contract to sell (including, without limitation, any short sale),
grant any option to purchase or otherwise transfer or dispose of (other than to
an affiliate or pursuant to gifts to donees who agree to be similarly bound) any
Conversion Stock at any time during the period specified by the Company's Board
of Directors at the request of the underwriters, with such period not to exceed
180 days following the effective date of offering (the "Lockup Period").
9. Right to Maintain.
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(a) The Parties shall cause the Company to grant to PeoplePC,
@viso and, following the exercise of the Warrant, SBCP, the right of first
refusal to acquire its Pro Rata Share of New Securities (as defined in this
Section 9) which the Company may, from time to time, propose to sell and issue.
A "Pro Rata Share," for purposes of this right of first refusal, is the ratio
that (i) the sum of the number of Class A Common Shares and shares of Conversion
Stock then held by PeoplePC, @viso or SBCP, as the case may be, bears to (ii)
the sum of the total number of Class A Common Shares outstanding and shares of
Conversion Stock then held by all Holders.
(b) Except as set forth below, "New Securities" shall mean any
shares of Company Securities, including any class of Common Shares and any
series of Preferred Shares, whether now authorized or not, and rights, options
or warrants to acquire said shares of Common Shares or Preferred Shares, and
securities of any type whatsoever that are, or may become, convertible into or
exchangeable for said shares of Common Shares or Preferred Shares.
Notwithstanding the foregoing, "New Securities" does not include:
(i) Class A Common Shares issued with respect to the
Conversion Stock;
(ii) shares issued or issuable to employees, directors,
consultants and vendors pursuant to an employee stock option plan, stock
purchase plan or similar benefit program or agreement approved by the Board of
Directors, where the primary purpose is not to raise additional equity capital
for the Company;
(iii) as direct consideration for the acquisition by the
Company of another business entity or the merger of any business entity with or
into the Company;
(iv) in connection with a stock split or dividend, or a
recapitalization or reorganization of the Company;
(v) upon the exercise of warrants or options, or upon the
conversion of convertible securities, outstanding on the date hereof or as to
which PeoplePC, @viso or SBCP have been previously offered the right to
participate as contemplated by this Section 9;
(vi) securities issued in the IPO;
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(vii) securities issued pursuant to a strategic
partnership or customer transaction of the Company; or
(viii) securities issued pursuant to this Section 9;
provided, however, that the foregoing exceptions (i)-(viii) shall not apply to
PeoplePC to the extent necessary for PeoplePC to maintain its ownership interest
of the Company's outstanding capital stock at 51% at all times; provided,
further, that where securities are issued as contemplated by this Section 9 as a
result of the issuance of New Securities that are Class A Common Shares, the
right to maintain shall be exercised by acquiring a newly authorized series of
preferred stock having rights, preferences and privileges similar to the Class B
Common Shares, the fair market value of which shall be determined by an
investment bank acceptable to the Holders of three-quarters of the Conversion
Stock.
(c) In the event the Parties cause the Company to undertake an
issuance of New Securities, it shall give written notice of its intention to
each of PeoplePC, @viso and SBCP describing the amount and type of New
Securities, and the price and terms upon which the Company proposes to issue the
same. Each such party shall have 14 days from the date of receipt of any such
notice to agree to acquire up to its respective Pro Rata Share of such New
Securities for the price and upon the terms specified in the notice by giving
written notice to the Company and stating therein the quantity of New Securities
to be acquired. An indication to exercise its right to maintain shall not be
binding upon such party unless and until the Company obtains binding commitments
to acquire all or a part of the securities specified in the notice of the
offering on the terms stated in such notice.
(d) Beginning 14 days after the notice given pursuant to Section
9(c) above, the Company shall have 180 days to issue the New Securities not
elected or eligible to be acquired by PeoplePC, @viso or SBCP at the price and
upon the terms no more favorable to the purchasers of such securities than
specified in the Company's notice. In the event the Company has not issued all
of the New Securities within said 180 day period, the Company shall not
thereafter issue any New Securities without first offering such securities in
the manner provided above.
(e) @viso and SBCP's rights under this Section 9 may be assigned
to any of their affiliates with the Company's consent and will terminate and be
of no further force or effect upon the closing of the Company's IPO. PeoplePC's
rights under this Section 9 shall survive the closing of the IPO.
10. Limitation on Ownership of Company Securities. For a period of ten
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years from the Closing Date, except for shares acquired by SBCP on exercise of
the Warrant, each Party other than PeoplePC shall not (and each such Party shall
not permit any of its affiliates to) acquire, directly or indirectly, beneficial
ownership of any Company Securities or authorize or make a tender, exchange or
other offer, without the written consent of the Company, if the effect of such
acquisition or offer would be to increase the quotient determined by dividing
(a) the number of Company
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Securities beneficially owned by such Party, including without limitation the
Warrant Shares, by (b) the number of shares of Company Securities outstanding,
to more than the value of such quotient as calculated on the Closing Date.
(a) Subject to the limitation set forth in this Section 10,
Company Securities may be acquired by any such Party in the open market or from
third parties; provided, however, that (i) such Party advises management of the
Company as to such Party's plans to acquire additional Company Securities
reasonably in advance of any such acquisition, and (ii) all open market
purchases of Company Securities by such Party shall be made in compliance with
applicable laws and regulations and the provisions of this Agreement.
(b) Such Party will not be obligated to dispose of any Company
Securities if the aggregate percentage ownership of that Party in the Company
Securities is increased as a result of a recapitalization of the Company or a
repurchase of securities by the Company or any other action taken by the Company
or its affiliates, but that Party shall not acquire any additional Company
Securities unless such acquisition would otherwise be permitted under this
Agreement. No such Party shall join a partnership, limited partnership,
syndicate or other group, or otherwise act in concert with any third person, for
the purpose of acquiring, holding, or disposing of Company Securities.
11. Right of First Refusal.
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11.1 Grant of Right; Exercise or Right. Prior to making any sale or
---------------------------------
transfer of Company Securities, other than to an affiliate in accordance with
Section 4, each Party other than PeoplePC shall give the Company the opportunity
to purchase such Company Securities in the following manner:
(a) Such Party shall give notice (the "Transfer Notice") to the
Company in writing of such intention specifying the names of the proposed
purchasers or transferees, the amount of Company Securities proposed to be sold
or transferred, the proposed price per share therefor (the "Transfer Price") and
the other material terms upon which such disposition is proposed to be made.
(b) The Company shall have the right, exercisable by written
notice given by the Company to such Party within five (5) business days after
receipt of such Transfer Notice, to purchase all of the Company Securities
specified in such Transfer Notice for cash per share equal to the Transfer
Price.
(c) If the Company exercises its right of first refusal
hereunder, the closing of the purchase of the Company Securities with respect to
which such right has been exercised shall take place within fifteen (15)
business days after the Company gives notice of such exercise, which period of
time shall be extended if necessary to comply with applicable securities laws
and regulations. Upon exercise of the Company's right of first refusal, the
Company and the Party shall
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be legally obligated to consummate the purchase contemplated thereby and shall
use their best efforts to secure any approvals required in connection therewith.
(d) If the Company does not exercise its right of first refusal
hereunder within the time specified for such exercise, the Party shall be free,
during the period of thirty (30) days following the expiration of such time for
exercise, to sell the Company Securities specified in such Transfer Notice on
terms no less favorable to such Party than the terms specified in such Transfer
Notice; provided, however, such transfer shall be subject to any restrictions
imposed under applicable securities laws and regulations. The transferee who
acquires such Company Securities shall be bound by the provisions of this
Agreement as though named as a party hereto.
11.2 Assignment of Right. In the event that the Company elects to
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exercise a right of first refusal to purchase all of the Company Securities
specified in the Transfer Notice under this Section 11, the Company may specify
prior to the closing of such purchase that PeoplePC is its designee to purchase
all or part (if the balance is purchased by the Company) of the Company
Securities to which such notice relates. If the Company shall designate PeoplePC
as the purchaser pursuant to this Section 11, the giving of notice of acceptance
of the right of first refusal by the Company shall constitute a legally binding
obligation of the Company to complete such purchase if PeoplePC shall fail to do
so.
12. Conversion.
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12.1 Optional Conversion of Preferred Stock or Class B Common Shares.
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As set forth in the Articles of Association, each share of Preferred Stock and
each share of Class B Common Shares shall be convertible, at the option of the
holder thereof, at any time after the date of issuance of such share, into such
number of fully paid and nonassessable Class A Common Shares as is determined by
dividing the Original Issue Price per share of such share of Preferred Stock or
Class B Common Shares, as the case may be, by the Conversion Price per share at
the time in effect for such series or class.
12.2 Automatic Conversion of Preferred Stock. As set forth in the
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Articles of Association, each share of Series A Preferred Stock shall
automatically be converted into Class A Common Shares at the then effective
Conversion Price upon (i) the IPO or (ii) a merger of the Company with and into
PeoplePC, or acquisition of all of the Company's assets or shares by PeoplePC.
The Class B Common Shares shall not automatically convert into Class A Common
Shares at any time.
12.3 Original Issue Price and Conversion Price. The Original Issue
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Price per share of Series A Preferred Shares is $3.00. The Conversion Price per
share of Series A Preferred Shares initially shall be $3.00. The Original Issue
Price per share of Series B Preferred Shares is $3.00. The Conversion Price per
share of Series B Preferred Shares initially shall be $3.00. The Original Issue
Price per share of Class B Common Shares is $3.00. The Conversion Price per
share of Class B Common Shares initially shall be $1.00.
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12.4 Adjustment of Conversion Prices. The Conversion Prices shall be
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subject to adjustment, as applicable, from time to time as follows:
(a) Adjustments for Subdivisions or Combinations of Class A
-------------------------------------------------------
Common Shares. In the event the outstanding Class A Common Shares shall be
-------------
subdivided into a greater number of Class A Common Shares, the Conversion Price
of the Class B Common Shares and each series of Preferred Stock then in effect
shall, concurrently with the effectiveness of such subdivision, be
proportionately decreased. In the event the outstanding Class A Common Shares
shall be combined or consolidated into a lesser number of Class A Common Shares,
the Conversion Price of the Class B Common Shares and each series of Preferred
Stock then in effect shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.
(b) Adjustments for Stock Dividends and Other Distributions. In
-------------------------------------------------------
the event the Company makes, or fixes a record date for the determination of
holders of Class A Common Shares entitled to receive, any distribution
(excluding repurchases of securities by the Company not made on a pro rata
basis) payable in property or in securities of the Company other than Class A
Common Shares, then and in each such event the holders of the Class B Common
Shares and Preferred Stock shall receive, at the time of such distribution, the
amount of property or the number of securities of the Company that they would
have received had their Class B Common Shares and Preferred Stock been converted
into Class A Common Shares on the date of such event.
(c) Adjustments for Reclassifications or Similar Events. If the
---------------------------------------------------
Class A Common Shares shall be changed into the same or a different number of
shares of any other class or classes of stock or other securities or property,
whether by capital reorganization, reclassification or otherwise, then each
share of Class B Common Shares and Preferred Stock shall thereafter be
convertible into the number of shares of stock or other securities or property
to which a holder of the number of shares of Class A Common Shares of the
Company deliverable upon conversion of such Class B Common Shares or shares of
Preferred Stock shall have been entitled upon such capital reorganization,
reclassification or other event.
(d) Adjustments for Diluting Issues. Adjustment to the
-------------------------------
Conversion Prices, if any, as the Company's Board of Directors deems to be
equitable and subject to the last sentence of this Section 12.4(d), shall be
made in the event of any change in the outstanding shares of Company Securities
by reason of any new issuance with an issue price per share less than or equal
to the Conversion Price per share of the Preferred Shares then in effect (a
"Dilutive Issuance"), it being understood that Dilutive Issuances shall not
include issuances (i) upon conversion of shares of Preferred Stock or Class B
Common Stock; (ii) to employees, consultants, officers or directors of the
Company pursuant to a stock grant, stock option plan or stock purchase plan or
similar benefit including without limitation upon the exercise of outstanding
options; (iii) to any party in connection with a transaction or arrangement
which has business purposes and benefits to the Company in the good faith
judgement of the Board of Directors, including, but not limited to, an
acquisition or merger, a strategic alliance or corporate partnering transaction,
a vendor or customer agreement or an asset acquisition or disposition agreement.
Any adjustment of the Conversion Prices shall be made
-11-
by the Company's Board of Directors in the event of a Dilutive Issuance using a
broad-based, weighted average, price-based antidilution formula which adjusts
the Conversion Prices based upon a weighted average of the purchase prices of
outstanding Company Securities and the newly issued Company Securities that
result from a Dilutive Issuance. The determination of the Company's Board of
Directors as to the amount (if any) of adjustment to the Conversion Prices in
response to any Dilutive Issuance shall be final, binding and conclusive as to
all Parties. Notwithstanding the foregoing, no adjustment to the Conversion
Price of the Class B Common Shares under this Section 12.4(d) shall be made
unless it is necessary and only to the extent necessary to maintain PeoplePC's
ownership of Company Securities at 51% at any time.
(e) Payment of Excess Par Value. If an adjustment of the
---------------------------
Conversion Price pursuant to this Section 12.4 implies that the shares to be
converted shall be converted into shares with in the aggregate a larger amount
in par value, the excess in par value shall be issued to the respective
shareholder against the free distributable reserves of the Company. Whereby
fractions of 0.5 or more shall be rounded up and fractions less than 0.5 shall
be rounded down to the next round figure.
(f) Retirement of Shares on Certain Conversion Events. If an
-------------------------------------------------
adjustment of the Conversion Price pursuant to this Section 12.4 implies that
the shares to be converted shall be converted into shares with in the aggregate
a lower amount in par value, the shares which comprise the deficit shall be
transferred by the respective shareholder for no consideration to the Company.
Whereby fractions of 0.5 or more shall be rounded up and fractions less than 0.5
shall be rounded down to the next round figure.
12.5 Mechanics of Optional and Automatic Conversions. Before any
-----------------------------------------------
holder shall be entitled to convert the same into Class A Common Shares pursuant
to Section 12.1, such holder shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the Company or of any transfer agent,
and shall give written notice by mail, postage prepaid, to the Company at its
principal corporate office, of the election to convert the same, and such
conversion shall be deemed to have been made immediately prior to the close
business on the date of such surrender of the shares to be converted. In the
event of an automatic conversion pursuant to Section 12.2, the outstanding
shares of Preferred Stock shall be converted automatically without any further
action by the holder of such shares and whether or not the certificates
representing such shares are surrendered to the Company or the transfer agent
for such Preferred Stock; and the Company shall not be obligated to issue
certificates evidencing the Class A Common Shares issuable upon such automatic
conversion unless the certificates evidencing such shares of Preferred Stock are
either delivered to the Company or the transfer agent for such Preferred Stock
as provided above, or the holder notifies the Company or the transfer agent for
such Preferred Stock that such certificates have been lost, stolen or destroyed
and executes an agreement satisfactory to the Company to indemnify the Company
from any loss incurred by it in connection with such certificates. The Company
shall, as soon as practicable thereafter, issue and deliver to such address as
the holder may direct, a certificate or certificates for the number of Class A
Common Shares to which such holder shall be entitled.
-12-
13. Purchase Rights. If the IPO does not occur within four years of the
---------------
date hereof, @viso and SBCP shall be entitled to purchase all of PeoplePC's
Company Securities, subject to PeoplePC's superseding right to purchase all of
their Company Securities, at a price equal to the then fair market value as
determined (without regard to any control premium) by a process agreed to by
@viso and PeoplePC. PeoplePC shall be entitled to use as consideration, at its
sole election, cash or registered PeoplePC stock.
14. Voting Agreement with Respect to the Board of Directors
-------------------------------------------------------
14.1 Election of Directors. At each annual meeting of the
---------------------
shareholders of the Company, or at any meeting of the shareholders of the
Company at which members of the Board of Directors of the Company are to be
elected, or whenever members of the Board of Directors are to be elected by
written consent, each Party, Holder or transferee that is entitled to vote
agrees to vote or act with respect to their shares:
(a) So as to elect four members of the Company's Board of
Directors designated by PeoplePC; provided that PeoplePC continues to hold at
least 25% of the outstanding capital stock of the Company;
(b) So as to elect two members of the Company's Board of
Directors designated by @viso; provided that after the Company's IPO, @viso
shall be entitled to elect only one director, and only if @viso, SBCP and their
affiliates hold at least 75% of the Company Securities issued to them hereunder
(as adjusted for any recapitalizations, stock combinations, stock dividends,
stock splits and the like); and
(c) So as to elect the President and Chief Executive Officer of
the Company who shall be designated by PeoplePC;
it being understood that for so long as PeoplePC is entitled to designate four
directors hereunder, PeoplePC shall continue to control the daily operating
decisions of the Company (including issues relating to brand management).
14.2 Removal. PeoplePC or @viso, as the case may be, may procure
-------
removal of any or all of its designated directors (and PeoplePC may remove the
President and Chief Executive Officer) at any time and from time to time, with
or without cause (subject to any requirements of law), in their sole discretion,
and after written notice to each of the Parties hereto of the new nominee to
replace such director or officer, each Party, Holder or transferee that is
entitled to vote shall promptly vote its shares of capital stock of the Company
to elect such nominee to the Board of Directors.
14.3 Super-majority Vote. Only prior to the Company's IPO, decisions
-------------------
of the Board of Directors shall require a super-majority, defined as the vote of
five directors, one of which shall be by a director designated by @viso, with
respect to the following transactions (except where
-13-
such transactions or arrangements are contemplated by this Agreement or any
related agreements or documents):
(a) any proposal to the general meeting to distribute a dividend
or other distribution;
(b) any proposal to the general meeting to make any acquisition
in which more than 20% of the stock of the Company is issued, or any sale of
more than 20% of the Company's assets, or any capital expenditure representing
more than 20% of the Company's assets, or to the extent the board of directors
is authorized to resolve upon the issuance of shares pursuant to Article 4 of
the Articles of Association of the Company, a resolution to accomplish any such
sale of assets or capital expenditure;
(c) any material contracts or arrangements with PeoplePC, or
@viso or SBCP or their affiliates, other than contracts or arrangements (i)
contemplated by this Agreement or any related agreements or documents or (ii)
entered into in the ordinary course of business;
(d) any proposal to the general meeting to adopt compensatory
stock option or other equity incentive plans which, in the aggregate, reserve
for issuance more than 15% of the Company Securities at their date of adoption,
or to the extent the board of directors is authorized to resolve upon the
issuance of shares pursuant to Article 4 of the Articles of Association of the
Company, a resolution to accomplish any such stock option or equity incentive
plan; or
(e) a dedication of a material amount of assets to an activity
that is outside the Company's stated purpose.
14.4 Quorum. A quorum shall consist of at least a majority of the
------
directors, with decisions taken by majority vote except as otherwise provided
herein. All directors shall be provided with reasonable notice of not less than
five business days unless otherwise agreed to and the opportunity to attend
meetings of the Board of Directors; provided, however, that attendance at a
meeting shall constitute a waiver of such notice requirement.
15. Shareholder Voting.
------------------
15.1 Approval of Certain Shareholders. Only prior to the Company's
--------------------------------
IPO, the favorable vote of each of @viso and PeoplePC will be required to
approve the following (unless otherwise permitted under this Agreement):
(a) a change in number of directors of the Board of Directors;
(b) an acquisition, sale or merger of or by the Company
resulting in a change of control of the Company, or a liquidation of the
Company; or
-14-
(c) any amendment of the Articles of Association which adversely
affects either @viso or PeoplePC, it being understood that the authorization of
additional shares of capital stock with rights, preferences and privileges
substantially similar to those of the Series A Preferred Shares (other than
rights, preferences and privileges which are related to the price of a new
series of capital stock) in connection with fund raising activities shall, among
other things, not constitute an adverse effect.
In addition, the Parties shall execute and shall procure to cast their
votes in any corporate body of the Company in accordance with the terms of this
Agreement.
15.2 Class B Common Shares. Prior to the Company's IPO, each holder
---------------------
of Class B Common Shares will vote one third of the Class B Common Shares held
by it. Thereafter, the provisions of the Company's Articles of Association shall
govern.
15.3 Form of Dividend Consideration. The Parties agree that at any
------------------------------
general meeting at which the form of consideration of a dividend is to be
determined by the shareholders, the Parties will vote in favor of the form of
consideration voted for by PeoplePC, which shall be either cash or the type of
consideration received by the Company's shareholders in the event that triggers
such dividend payment.
16. Amendment. Except as otherwise provided herein, neither this Agreement
---------
nor any provisions hereof shall be amended, waived, discharged or terminated
without written consent of the Company and the Parties.
17. Start-up Expenses. Upon approval of the Board of Directors, the
-----------------
Company shall reimburse PeoplePC and @viso for reasonable start-up expenses
incurred by PeoplePC and @viso on behalf of the Company; provided, however, that
such reimbursable expenses shall include only third party expenses and not
management time.
18. Closing Conditions.
------------------
18.1 Conditions to Obligations of the Parties. The obligation of each
----------------------------------------
Party to acquire securities pursuant to Section 2.1 is subject to the
fulfillment on or prior to the Closing Date of the following conditions, any or
all of which may be waived at the option of the Party.
(a) All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the Closing Date shall
have been performed or complied with in all material respects.
(b) There shall not then be in effect any order enjoining or
restraining the transactions contemplated by this Agreement.
-15-
(c) There shall not be in effect any law, rule or regulation
prohibiting or restricting such issuance, or requiring any consent or approval
of any person which shall not have been obtained to issue the securities
hereunder, except as otherwise provided in this Agreement.
(d) The Articles of Association in the form attached hereto as
Exhibit C shall have been approved by the Dutch Ministry of Justice.
(e) The License Agreement in the form attached hereto as Exhibit
A and the License Agreement between PPC U.S. and PPC B.V.I. contemplated thereby
shall be in full force and effect and neither party shall be in breach thereof.
(f) The Services Agreement attached hereto as Exhibit B shall be
in full force and effect and the parties thereto shall not be in breach thereof.
18.2 Conditions to Obligations of the Company. The Company's
----------------------------------------
obligation to issue the securities pursuant to Section 2.1 is subject to the
fulfillment on or prior to the Closing Date of the following conditions, any or
all of which may be waived at the option of the Company:
(a) The representations and warranties made by each Party in
Section 3 hereof shall be true and correct in all material respects when made,
and shall be true and correct in all material respects on the Closing Date with
the same force and effect as if they had been made on and as of said date.
(b) All covenants, agreements and conditions contained in this
Agreement to be performed by the Parties on or prior to the Closing Date shall
have been performed or complied with in all material respects.
(c) There shall not then be in effect any order enjoining or
restraining the transactions contemplated by this Agreement.
(d) There shall not be in effect any law, rule or regulation
prohibiting or restricting such issuance, or requiring any consent or approval
of any person which shall not have been obtained to issue the securities
hereunder, except as otherwise provided in this Agreement.
(e) The Articles of Association in the form attached hereto as
Exhibit C shall have been approved by the Dutch Ministry of Justice.
(f) The Parties or any affiliates designated as signatories to
each of the License Agreement, the Services Agreement and the Vivendi
Connectivity Agreement shall have delivered a duly executed counterpart of each
such agreement, each such agreement shall be in full force and effect and the
parties thereto shall not be in breach thereof.
19. Governing Law. This Agreement shall be governed in all respects by the
-------------
internal laws of the State of New York without regard to conflict of laws
provisions. Any claim or
-16-
disagreement arising out of or in connection with this Agreement shall be
referred to arbitration in London, England with three arbitrators under the LCIA
Rules. The arbitration award shall be final and binding upon the parties and
judgment thereon may be entered in any court having jurisdiction.
20. Entire Agreement; Conflict. This Agreement and the exhibits hereto
--------------------------
constitute the full and entire understanding and Agreement among the Parties
regarding the matters set forth herein. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding upon
the successors, assigns, heirs, executors and administrators of the Parties
hereto. In the event of a conflict, inconsistency or disagreement between this
Agreement and the Articles of Association of the Company, the provisions of this
Agreement shall prevail and the Parties shall not claim any rights under the
Articles of Association that are in violation of, or inconsistent with, this
Agreement. If the implementation or performance of this Agreement is in any way
precluded by the Articles of Association, the Parties shall promptly procure the
amendment of the Articles of Association to permit full implementation and
performance hereof.
21. Notices, etc. All notices and other communications required or
------------
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by facsimile
transmission, by hand or by messenger, addressed:
(a) if to a Party, at such Party's address as set forth on the
signature page hereto, or at such other address as such Party shall have
furnished to the Company,
(b) if to the Company, to:
PeoplePC BV
c/o PeoplePC, Inc.
000 Xxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxx
Fax: (000) 000-0000
or at such other address as the Company shall have furnished to the
Parties, with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Xxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered if
delivered personally, if sent by facsimile, the first business day after the
date of confirmation that the facsimile has been successfully transmitted
-17-
to the facsimile number for the party notified, or, if sent by mail, at the
earlier of its receipt or 14 days after the same has been deposited in a
regularly maintained receptacle for the deposit of the United States mail,
addressed and mailed as aforesaid.
22. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original and all of which together shall
constitute one instrument.
-18-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
COMPANY PARTIES
PEOPLEPC BV PEOPLEPC, INC.
By: /s/ Xxxxxx Xxxxx By: /s/ Xxxx Xxxx
-------------------------------- --------------------------------
Name: Xxxxxx Xxxxx Name: Xxxx Xxxx
------------------------------ ------------------------------
Senior Vice President,
Corporate Secretary and
Title: Managing Director Title: General Counsel
----------------------------- ------------------------------
Address: 000 Xxxx Xxxxxx, Xxxxx 0000
---------------------------
Xxx Xxxxxxxxx, XX 00000
---------------------------
OLIVE HILL INVESTMENTS N.V.
By: /s/ X. Xxxxxx
--------------------------------
Name: X. Xxxxxx
------------------------------
Managing Director,
Title: Equity Trust (Curacao) N.V.
-----------------------------
Address:
---------------------------
---------------------------
[Signature Page to Shareholders' Agreement]
@VISO LIMITED
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxxx
-------------------------------
Title: Chief Executive Officer
------------------------------
Address: c/o Macfarlanes
00 Xxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Xxxxxxx
Attention: Xxxxxxx Xxxxxx
Telephone: 00-000-000-0000
Fax: 00-000-000-0000
With a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
XXX
Attention: Xxxxxxx X. Xxxxx, Esq.
Telephone: 000-000-0000
Fax: 000-000-0000
SOFTBANK CAPITAL PARTNERS LP
By: SOFTBANK CAPITAL PARTNERS LLC,
General Partner
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxx
---------------------------
Title: Administrative Member
--------------------------
Address: 0000 Xxxxxx Xxxxxx
------------------------
Xxxxxx Xxxxxx, XX 00000
------------------------
[Signature Page to Shareholders' Agreement]
Exhibit A
License Agreement
LICENSE AGREEMENT
-----------------
THIS LICENSE AGREEMENT (the "Agreement") is entered into on the 11th day of
July, 2000 (the "Effective Date") by and between PeoplePC International (BVI)
Limited, a company organized under the laws of the British Virgin Islands ("PPC-
BVI") and PeoplePC UK, Ltd., a limited company organized under the laws of the
United Kingdom ("PPC-UK") (each a "Party" and collectively, the "Parties").
RECITALS
--------
WHEREAS, PeoplePC, Inc. a Delaware corporation ("PPC-US"), PeoplePC BV, a
corporation organized under the laws of the Netherlands ("PPC-BV"), Olive Hill
Investments NV, a company organized under the laws of the Netherlands Antilles
("PPC-NA"), @viso Limited, a company organized under the laws of the United
Kingdom ("@viso"), and Softbank Capital Partners LP, a limited partnership
organized under the laws of Delaware ("SBCP"), are parties to a Shareholders
Agreement dated June 30, 2000 ("Shareholders Agreement") for the purpose of
continuity and stability of ownership of the PPC-BV and its wholly owned
subsidiaries, including PPC-UK, to the extent and upon the terms and conditions
hereinafter set forth; and
WHEREAS, PPC-US, PPC-BV, @viso, Vivendi S.A., a company organized under the
laws of France ("Vivendi"), and Softbank Corp., a corporation organized under
the laws of Japan ("Softbank") are parties to a Master Services Agreement dated
as of July 11, 2000 (the "Services Agreement") for the purpose of incubating and
maintaining their investment in PPC-BV and its wholly owned subsidiaries,
including PPC-UK; and
WHEREAS, PPC-BVI (a wholly owned subsidiary of PPC-US) has licensed certain
technology and brands from PPC-US and has developed or acquired further
technology and brands under the PPC-US License Agreement (as defined below), and
PPC-BVI desires to license certain technology and brands to PPC-UK and obtain an
assignment of ownership in certain derivative technology and brands, and PPC-UK
desires to obtain a license to such technology and brands and to assign certain
derivative technology and brands to PPC-BVI so that PPC-UK Entities (as defined
below) shall have the exclusive right to conduct the Local Business in the
Territory.
NOW, THEREFORE, in consideration of the agreements described above and the
mutual covenants herein set forth, the Parties hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the meanings
indicated:
1
1.1 "Affiliate" means any person or entity which controls, or is
controlled by or under common control with, the affiliated party where "control"
means direct or indirect ownership of more than fifty percent (50%) of the
Equity Interests.
1.2 "Derivative Work" means a "derivative work" or "compilation" within
the meaning of such terms under the United States Copyright Act, as interpreted
under applicable case law. It is further understood that a Derivative Work
includes any Localization.
1.3 "Documentation" means any instructions, manuals or other materials,
including without limitation on-line help files, regarding the development,
provision, installation, maintenance or use of the PeoplePC Solution.
1.4 "End User" means a customer which obtains a PeoplePC Solution for
personal use and not for further distribution.
1.5 "Equity Interests" means the ownership interests in any entity that
are entitled to vote for the election of the board of directors or equivalent
governing body. A percentage of the Equity Interests of any entity is measured
by the proportion of the total votes that the holder is entitled to cast in the
election of the board of directors or its equivalent.
1.6 "European Brand" means any trademark, trade name, service xxxx, logo,
or domain name on the World Wide Web (including without limitation, derivations
of the PeoplePC Brand) that PPC-UK Entities use in connection with the Local
Business in the Territory.
1.7 "European Technology" means all Technology developed by or for PPC-UK
Entities relating to the Local Business in the Territory that exists now or in
the future, and any modifications, enhancements or Derivative Works of the
PeoplePC Technology made by or for PPC-UK, its parent corporation or its
Affiliates.
1.8 "Global Brand Protocols" means protocols and procedures for use of the
PeoplePC Brand as promulgated by PPC-BVI and its licensors and as modified in
their reasonable discretion from time to time.
1.9 "Local Business" means and shall include the marketing, operation and
provision (directly or through third parties) of PeoplePC Solutions to End Users
located within a specific country or region within the Territory.
1.10 "Localize" and "Localization" means any modification or translation
of the PeoplePC Technology or PeoplePC Brand reasonably necessary to conform
such materials to the local languages, laws and business practices of the
respective country within the Territory and appropriate and necessary for
conduct of the Local Business (including without limitation, the incorporation
of language, currency, user interfaces, look and feel or functional variations).
1.11 "PeoplePC Brand" means PEOPLEPC and any other trademark, trade name,
service xxxx, logo, and domain name on the World Wide Web that PPC-US or its
subsidiaries
2
use or may come to use for its business in the United States and outside of the
Territory and which PPC-US reasonably deems are appropriate for use or adoption
in the Territory.
1.12 "PeoplePC Property" means the PeoplePC Technology, PeoplePC Brand,
European Technology and European Brand.
1.13 "PeoplePC Solution" means those bundles of computer services, or
computer goods and services provided to End Users directly or indirectly under
the PeoplePC Brand or European Brand, now or in the future.
1.14 "PeoplePC Technology" means all Technology relating to the PeoplePC
Solutions that PPC-BVI owns or has the right to license and which exists now or
in the future.
1.15 "PPC-UK Entity" means PPC-UK, its Sub-Licensees and its parent company
PPC-BV.
1.16 PPC-US License Agreement" means the license agreement between PPC-US
and PPC-BVI attached hereto as Exhibit B, as may be amended from time to to
time.
1.17 "Sublicensee" means any party to whom PPC-UK sublicenses all or part
of its rights under this Agreement to use the PeoplePC Property within one or
more countries or regions in the Territory.
1.18 "Technology" means all software (and associated copyrights), trade
secrets, Documentation, proprietary techniques, processes, methods, patents,
copyrights, applications, know-how, content, data, database rights, technical
information and other technology, and any Derivative Works thereof.
1.19 "Territory" means Europe as further defined in Exhibit A hereto.
2. LICENSE GRANTS.
2.1 License. Subject to the terms and conditions of this Agreement,
PPC-BVI hereby grants to PPC-UK, as a contribution to the capital of PPC-UK, the
following perpetual, paid-up, and royalty-free licenses:
(a) An exclusive license to use and exploit the PeoplePC Technology
and European Technology solely for the operation of one or more Local Businesses
within the Territory; and
(b) An exclusive license to use and exploit the PeoplePC Brand
and/or European Brand solely in connection with the operation of one or more
Local Businesses within the Territory and solely in compliance with the Global
Brand Protocols.
2.2 Sublicenses. PPC-UK shall have the right to sublicense the PeoplePC
Property solely to an Affiliate that will operate one or more Local Business(es)
within the Territory and
3
solely subject to the terms of a written agreement that (a) contains terms at
least as restrictive as those set forth in this Agreement, including without
limitation Section 2 and Section 4; (b) protects PPC-BVI's proprietary rights in
the PeoplePC Property at least to the degree set forth in this Agreement,
including without limitation an assignment clause similar to that set forth in
Section 3 and a requirement that the use of the European Brands and PeoplePC
Brands is in accordance with the Global Brand Protocols; (c) grants no ownership
rights in the PeoplePC Technology or European Technology or any modification,
improvement or Derivative Work thereof; and (d) establishes PPC-US as a third
party beneficiary with full legal right to enforce such agreement against such
Sublicensee.
2.3 Reservation. PPC-BVI retains the right to use PeoplePC Property
itself outside of the Territory, and to license PeoplePC Property to third
parties for any use outside of the Territory. During the Term of this Agreement,
PPC-BVI may not license to third parties the PeoplePC Property in the Territory
for Local Business or itself use the PeoplePC Property in the Territory for
Local Business. PPC-BVI retains all rights in the PeoplePC Property not
expressly granted herein.
2.4 Proprietary Marks. PPC-UK shall not itself and shall prohibit its
Sublicensees from obfuscating, removing or altering any of the patent,
copyright, trademark, trade secret, proprietary and other legal notices
contained in, or displayed by the use of, the PeoplePC Technology and European
Technology. PPC-UK further agrees to reproduce, and to require Sublicensees to
reproduce, in each copy of any materials contained within the PeoplePC
Technology and the European Technology, such patent, copyright, trademark, trade
secret, proprietary and other legal notices that are included in the PeoplePC
Technology and European Technology.
2.5 European Brand. PPC-UK and PPC-BVI shall consult on the
appropriateness and development of European Brands. All developed European
Brands shall be subject to the prior approval of PPC-BVI or its designee, which
approval shall not be unreasonably withheld, and all use of a European Brand
shall be in accordance with Section 2.
2.6 Trademarks.
(a) The Parties acknowledge and agree that it is necessary for
PeoplePC to maintain uniform standards governing all material facets of the
PeoplePC Solution in order to provide End Users with high quality, cost
effective and consistent levels of service, and to protect the reputation and
goodwill associated with the "PeoplePC" brand name. Accordingly, PPC-UK agrees
that it shall provide, and shall require that its Sublicensees provide, goods
and services offered under or in relation to the PeoplePC Brand and/or European
Brand that are at least as high in quality as the quality of the goods and
services offered by PPC-US, subject to reasonable variations resulting from
business, legal and technical factors within the Territory. PPC-UK agrees to
comply, and ensure that its Sublicensees comply, with such specific standards
for use of the PeoplePC Brand and/or European Brand as PPC-BVI or its licensors
may, in their reasonable discretion, establish and modify from time to time in
writing in the Global Brand Protocols. In the event that PPC-BVI notifies PPC-UK
that any aspect of the PeoplePC Solution
4
offered by, or marketing materials being used by, it or its Sublicensees are not
in conformity with the quality otherwise expected by PPC-BVI or its licensors,
or that the PeoplePC Brand and/or European Brand licensed hereunder are not
properly used, PPC-UK shall take commercially reasonable actions to modify goods
and services or marketing materials to conform with the quality or trademark
guidelines, including the Global Brand Protocols imposed by PPC-BVI. PPC-BVI and
its licensors shall have the right to monitor the quality of such goods,
services and promotional materials and PPC-UK shall assist PPC-BVI in monitoring
quality by making samples and demonstrations of such use available upon request.
(b) PPC-UK agrees that all goodwill associated with the use of the
PeoplePC Brand and/or European Brand (either directly by PPC-UK or indirectly by
its Sublicensees) shall inure to the benefit of PPC-BVI and its licensors, as
the case may be.
(c) PPC-UK agrees to obtain and maintain the PeoplePC Brand and
European Brand, at its own expense, in those countries within the Territory,
including the preparation and recordation of registered user agreements and/or
licenses necessary or reasonably deemed necessary by PPC-UK in order to comply
with local laws; provided however, that PPC-UK shall consult with PPC-BVI and
its licensors with regard to all such matters. In the event applicable law
requires ownership or registration of a domain name to be in an entity other
than PPC-BVI (or its parent or licensors), the parties shall cooperate and
negotiate in good faith any necessary modification to this Agreement necessary
to obtain or maintain ownership or registration of such domain name.
3. OWNERSHIP AND ENFORCEMENT.
3.1 Ownership. Subject to the rights granted to PPC-UK under Section 2,
all title to and ownership of all PeoplePC Property not expressly granted herein
shall remain the sole and exclusive property of PPC-BVI or its licensors.
Nothing herein shall be construed as granting PPC-UK or any Sublicensee thereof
any ownership rights in the PeoplePC Property.
3.2 Assignment. PPC-BVI shall own all right, title, and interest in the
European Brand, and European Technology, regardless of which Party authors,
creates, contributes or invents such European Brand and European Technology.
PPC-UK hereby transfers, conveys and assigns to PPC-BVI in perpetuity all of its
right, title, and interest in European Brand and European Technology, including
without limitation all copyrights, including the right to make derivative works
and collective works with respect thereto, it being understood, however, that
PPC-UK has, and transfers, no rights with respect to the underlying PeoplePC
Brand and PeoplePC Technology. PPC-BVI will have the exclusive right to apply
for or register copyrights and such other proprietary protections as it wishes.
PPC-UK agrees to execute such documents, render such assistance, and take such
other action as PPC-BVI may reasonably request, at PPC-BVI's expense, to apply
for, register, perfect, confirm, and protect PPC-BVI's rights in the European
Brand and European Technology. PPC-UK hereby waives and agrees not to enforce
any and all moral rights, including any right to identification of authorship or
limitation on subsequent modification, that PPC-UK (or its employees, agents or
consultants) or Sublicensees have or may have in any European Brand and European
Technology.
5
3.3 Enforcement.
(a) Notice. PPC-BVI and PPC-UK shall promptly notify each other of
the use by any third party of the PeoplePC Brand, European Brand or any
trademark(s) similar to the xxxx covered by this Agreement, of which it may
become aware and which could reasonably be considered an infringement or passing
off of the PeoplePC Brand or European Brand or unfair competition. PPC-BVI and
PPC-UK shall also promptly notify each other of the use by any third party of
the European Technology or PeoplePC Technology of which it may become aware and
which could reasonably be considered an infringement or misappropriation of the
PeoplePC Technology or European Technology.
(b) Procedure. PPC-BVI and PPC-UK shall consult with regard to the
issue of whether to bring proceedings against any third party which
misappropriates or infringes PPC-Property within the Territory. PPC-BVI shall
have the right to decide whether or not to bring proceedings against such third
parties for infringement or misappropriation of the PeoplePC Property. Such
proceedings shall be at the expense of PPC-BVI. PPC-UK, at its own cost, shall
cooperate fully with PPC-BVI to whatever extent is deemed reasonably necessary
by PPC-BVI to prosecute such action(s). In the event that PPC-BVI recovers
damages from prosecution of such action(s), PPC-UK shall be entitled to receive
such damages except that PPC-BVI shall be first entitled to retain an amount
equal to its actual costs, expenses, and reasonable attorneys' fees attributable
to such action. PPC-UK shall not settle or compromise any suit for infringement
without the express approval of PPC-BVI, such approval not to be unreasonably
withheld. In the event PPC-BVI decides not to prosecute, and PPC-UK reasonably
determines that the failure to prosecute would adversely affect the rights of
PPC-UK in the Territory under this Agreement, PPC-UK shall have the right, but
not the obligation, to prosecute such action at its own expense. PPC-BVI shall
cooperate fully with PPC-UK to whatever extent is deemed reasonably necessary by
PPC-UK to prosecute such action. In the event that PPC-UK recovers its damages
from prosecution of such action, PPC-UK shall retain amounts received for such
damages except that PPC-BVI shall be entitled to reimbursement of its actual
costs, expenses, and reasonable attorneys' fees attributable to such action (or
in proportionate amounts thereof should PPC-UK recover an insufficient amount
for both parties' such costs and expenses).
4. DELIVERY.
4.1 Initial Delivery of PeoplePC Technology and PeoplePC Brands. As soon
as reasonably practicable after the Effective Date, PPC-BVI (or its licensors)
shall deliver to PPC-UK the software and documentation constituting the PeoplePC
Technology in existence and PeoplePC Brand, which are necessary and appropriate
for the operation of the Local Business by PPC-UK Entities in the Territory.
Included in such delivery, shall be any applicable localized versions of such
PeoplePC Technology or PeoplePC Brand applicable to the operation of the Local
Business in the Territory.
4.2 Delivery of European Technology and European Brands. Throughout the
Term of this Agreement, at regular intervals agreed upon by the Parties in
writing, PPC-UK Entities shall deliver to PPC-BVI (at no charge to PPC-BVI) all
European Technology and European Brands.
6
4.3 Updates. Throughout the Term of this Agreement, at frequency similar
to other similarly situated licensees of the PeoplePC Technology and PeoplePC
Brands or such other regular intervals agreed upon by the Parties in writing,
PPC-BVI (or its licensors) shall deliver to PPC-UK (at no charge to PPC-UK) any
error corrections, updates, upgrades, enhancements or modifications or new
PeoplePC Technology or PeoplePC Brands necessary and appropriate for the
operation of the Local Business in the Territory.
5. CONFIDENTIAL INFORMATION.
5.1 Obligations. The Parties acknowledge that, from time to time, one
Party (the "Disclosing Party") may disclose to the other Party (the "Receiving
Party") information which is marked as "proprietary" or "confidential" or which
would, under the circumstances, be understood by a reasonable person to be
proprietary and nonpublic ("Confidential Information"). The Receiving Party
shall retain such Confidential Information in confidence and shall not disclose
it to any third party without the Disclosing Party's written consent, or use it
except as permitted under this Agreement. Each Party shall use at least the same
procedures and degree of care which it uses to protect its own Confidential
Information of like importance, and in no event less than reasonable care.
5.2 Exceptions. Notwithstanding the foregoing, Confidential Information
will not include information to the extent that:
(a) such information was already known by the Receiving Party
without an obligation of confidentiality at the time of disclosure hereunder;
(b) was generally available to the public at the time of its
disclosure to the Receiving Party hereunder;
(c) became generally available to the public after its disclosure
other than through an act or omission of the Receiving Party in breach of this
Agreement; or
(d) was subsequently lawfully and independently disclosed to the
Receiving Party by a person other than Disclosing Party.
5.3 Permitted Disclosure. The Receiving Party may disclose the other
Party's Confidential Information to the extent such disclosure is required by
order or requirement of a court or other governmental body, but only if the
Receiving Party provides prompt notice thereof to the Disclosing Party to enable
the Disclosing Party to seek a protective order or otherwise prevent or restrict
such disclosure, and Receiving Party shall provide all such reasonable
assistance to Disclosing Party, at Disclosing Party's expense with respect to
Disclosing Party's efforts to seek such protective order or otherwise prevent or
restrict such disclosure.
5.4 Third Party Permitted Disclosure. Notwithstanding the foregoing,
PPC-UK may use or disclose Confidential Information in exercising its rights
hereunder (including sublicensing) or fulfilling its obligations and/or duties
hereunder, provided that such disclosure
7
occurs pursuant to a signed written agreement between PPC-UK and such third
party that contains terms at least as restrictive as those set forth in this
Section 5 and establishes PPC-BVI as a third party beneficiary with full legal
right to enforce such agreement against such third party.
5.5 Remedies. Unauthorized use by any Party of Confidential Information
provided to it by another Party hereunder will diminish the value to the other
Party of such information. Therefore, if a Party breaches any of its
obligations with respect to confidentiality and unauthorized use of Confidential
Information of another Party hereunder, the other Party shall be entitled to
equitable relief to protect its interest therein, including but not limited to
injunctive relief, as well as money damages.
6. REPRESENTATIONS AND WARRANTIES.
6.1 By PPC-BVI.
(a) Authority. PPC-BVI represents and warrants to PPC-UK that (i)
it is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation; (ii) it has full right, power and
authority to enter into this Agreement and to perform all of its obligation
hereunder; (iii) this Agreement constitutes its valid and binding obligation,
enforceable against it in accordance with its terms; and (iv) its execution,
delivery and performance of this Agreement will not result in a breach of any
material agreement or understanding to which it is a party or by which it or any
of its material properties may be bound.
(b) No Claims. PPC-BVI represents and warrants that, as of the Effective
Date of the Agreement, no claim relating to the PeoplePC Technology or PeoplePC
Brand in connection with the Territory has been made or is pending against PPC-
BVI, or to PPC-BVI's knowledge, against any entity from which PPC-BVI has
obtained rights relating to the PeoplePC Technology and/or PeoplePC Brand.
(c) Delivery. PPC-BVI represents and warrants to PPC-UK that in
accordance with Section 4.1 of this Agreement, it will deliver any PeoplePC
Brand and PeoplePC Technology necessary and appropriate for PPC-UK to operate
the Local Business in the Territory.
(d) Disclaimer. TO THE EXTENT PERMITTED IN ITS SUPPLIER AGREEMENTS AND
APPLICABLE LAW, PPC-BVI SHALL PASS THROUGH TO PPC-UK ANY APPLICABLE WARRANTIES
PROVIDED BY SUCH SUPPLIERS. EXCEPT AS EXPRESSLY SET FORTH HEREIN, PPC-BVI DOES
NOT WARRANT THAT THE PEOPLEPC TECHNOLOGY IS ERROR FREE OR WILL SUIT PPC-UK'S OR
ITS SUBLICENSEES' NEEDS. PPC-BVI DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF ACCURACY, COMPLETENESS OR
PERFORMANCE OF THE PEOPLEPC TECHNOLOGY, AND ANY
8
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND NON-
INFRINGEMENT.
6.2 By PPC-UK.
(a) Authority. PPC-UK represents and warrants to PPC-BVI that (i)
it is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation; (ii) it has full right, power and
authority to enter into this Agreement and to perform all of its obligation
hereunder; (iii) this Agreement constitutes its valid and binding obligation,
enforceable against it in accordance with its terms; and (iv) its execution,
delivery and performance of this Agreement will not result in a breach of any
material agreement or understanding to which it is a party or by which it or any
of its material properties may be bound.
(b) Title. PPC-UK represents and warrants that, it shall take all
reasonable and proper action to ensure that all right, title and ownership of
the European Technology and/or European Brand is fully assigned by PPC-UK to
PPC-BVI hereunder such that no third party shall make an infringement or
misappropriation claim in respect of such European Technology and/or European
Brand, including without limitation the inclusion of assignment clauses in
employee and contractor agreements to the extent allowed under applicable law.
(c) Disclaimer. TO THE EXTENT PERMITTED IN ITS SUPPLIER AGREEMENTS
AND APPLICABLE LAW, PPC-UK SHALL PASS THROUGH TO PPC-BVI ANY APPLICABLE
WARRANTIES PROVIDED BY SUCH SUPPLIERS. EXCEPT AS EXPRESSLY SET FORTH HEREIN,
PPC-UK DOES NOT WARRANT THAT THE EUROPEAN TECHNOLOGY IS ERROR FREE OR WILL SUIT
PPC-BVI'S OR ITS SUBLICENSEES' NEEDS. PPC-UK DISCLAIMS ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF ACCURACY,
COMPLETENESS OR PERFORMANCE OF THE EUROPEAN TECHNOLOGY ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.
7. INDEMNIFICATION AND NOTICE.
Each Party shall promptly notify the other Party of any claim by any third
party of which it may become aware that the PeoplePC Property infringes or
constitutes a misappropriation of the intellectual property rights of such third
party. PPC-BVI at its option, and at PPC-UK's expense, will defend or at its
option settle, any claim against PPC-UK alleging infringement of any copyright,
patent, or trademark or misappropriation of a trade secret brought by a third
party to the extent attributable to the use of PeoplePC Property in the
Territory, provided that PPC-UK provides PPC-BVI with: (i) prompt written notice
of such claim, (ii) exclusive control over the defense and settlement of such
claim, (iii) proper and full information to settle or defend any such claim; and
(iv) such other and assistance as requested by PPC-BVI. If PPC-BVI believes, in
its sole discretion, that it is likely that PPC-UK will be prohibited from
exercising its right to use the PeoplePC Property as provided under this
Agreement, then PPC-BVI may, at its sole
9
option and expense: (i) procure the right to use the PeoplePC Property as
provided herein, (ii) replace the PeoplePC Property with other non-infringing
services with equivalent functionality, (iii) suitably modify the PeoplePC
Property so that it does not infringe such third party rights. THE FOREGOING
PROVISIONS OF THIS SECTION 7 STATE THE ENTIRE LIABILITY AND OBLIGATIONS OF PPC-
BVI, AND THE EXCLUSIVE REMEDY OF PPC-UK, WITH RESPECT TO ANY ACTUAL OR ALLEGED
INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS RELATING TO THIS AGREEMENT.
8. LIMITATION OF LIABILITY.
EXCEPT FOR LIABILITY UNDER SECTION 7, IN NO EVENT WILL EITHER PARTY HAVE
ANY LIABILITY FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES,
HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, WHETHER FOR BREACH OF CONTRACT,
TORT OR OTHERWISE, ARISING OUT OF OR RELATED TO THIS AGREEMENT, INCLUDING BUT
NOT LIMITED TO, LOSS OF ANTICIPATED PROFITS, LOSS OF DATA, OR LOSS OF USE, EVEN
IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
9. TERM AND TERMINATION.
9.1 Term. This Agreement shall continue in force from the date hereof
until such time as it is terminated earlier under the provisions of this Section
9.
9.2 Immediate Termination Upon Notice for Change in Control or Substantial
Encumbrance. In the event that the direct or indirect ownership of PPC-UK
undergoes a change in control so that PPC-BVI and its Affiliates ceases to hold
a majority Equity Interest in PPC-UK, or in the event that a substantial portion
of PPC-UK's assets or the conduct of PPC-UK's business shall be substantially
encumbered by extraordinary governmental action or by operation of law, PPC-BVI
may, at its option, terminate this Agreement effective immediately and without
compensation upon written notice given to PPC-UK.
9.3 Termination After Failure to Cure for Failure of Performance. If any
Party shall fail to perform any of its material obligations contained in this
Agreement and shall fail to cure such default within sixty (60) days after
receipt of a notice from the other Party, the Party giving notice shall have the
right to terminate this Agreement immediately and without compensation by giving
written notice to the other Party.
9.4 Cross-Termination with Services Agreement. In the event of
termination of the Services Agreement due to the material default of @viso,
Softbank, or Vivendi in accordance with Section 4 of the Services Agreement
(including the notice and opportunity to cure therein), PPC-BVI shall have the
right to terminate this Agreement immediately and without compensation by giving
written notice to the other Party.
9.5 Effect of Termination.
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(a) License. Upon any termination of this Agreement, PPC-UK shall
immediately cease to exercise all rights and licenses to and of the PeoplePC
Property granted under this Agreement. Within thirty (30) days of the date of
termination, PPC-UK shall, at the option of PPC-BVI, return or destroy any
materials, or copies of materials reflecting or embodying the PeoplePC Property
and PPC-UK shall furnish PPC-BVI with a certificate signed by an executive
officer of PPC-UK verifying that the same has been done.
(b) Confidential Information. Within thirty (30) days of the date of
termination, the Receiving Party shall, at the option of the Disclosing Party,
return or destroy any materials, or copies of materials reflecting or embodying
the Confidential Information of the Disclosing Party and shall furnish the
Disclosing Party with a certificate signed by an executive officer of the
Receiving Party verifying that the same has been done.
(c) Survival. The terms and conditions of the following provisions
shall survive termination or expiration of this Agreement: Section 1, 2.6(b),
3.1, 3.2, 3.3(b), 5, 7, 8, 9.5 and 10. In addition, the termination or
expiration of this Agreement shall not relieve either Party of any liability
under this Agreement that accrued prior to such termination or expiration.
10. MISCELLANEOUS.
10.1 Notices. All notices called for under this Agreement shall be made in
writing and shall be sent by personal delivery or by recognized international
express courier service, confirmation of receipt requested, addressed to a Party
at its address set forth below.
If to PPC-BVI: PeoplePC International (BVI) Limited
Xxxxxx Xxxxx, 0xx Xxxxx, 333
Waterfront Drive,
Xxxxxxx'x Xxx, Road Town,
Tortola, British Virgin Islands
With a copy to: Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Attn: Xxxxxx Xxxxxxxx
Telefax: (000) 000-0000
If to PPC-UK: PeoplePC (UK) Limited
00 Xxxxxxxx Xxxxx
XXXXXX X0X 0XX
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All notices shall be deemed given or made (y) on the date delivered if
delivered personally, by courier or otherwise, or (z) on the third business day
after it is mailed, in all cases to the addressee at the above address or such
other address as may from time to time be designated to the other Party in
writing.
10.2 Non-Waiver. The failure of any Party at any time to require
performance by another party of any provision hereof shall not affect in any
way, or act as a waiver of, the right to require the Party to perform in
accordance with this Agreement at any other time, nor shall the waiver of any
Party of a breach of a provision of this Agreement be held or taken to be a
waiver of the provision itself.
10.3 Severability. If any provision in this Agreement shall be found or
be held to be invalid or unenforceable, then the meaning of said provision shall
be construed, to the extent feasible, so as to render the provision enforceable,
and if no feasible interpretation would save such provision, it shall be severed
from the remainder of this Agreement which shall remain in full force and effect
unless the severed provision is essential and material to the rights or benefits
received by any party. In such event, the Parties shall use best efforts to
negotiate, in good faith, a substitute, valid and enforceable provision or
agreement which most nearly affects the Parties' intent in entering into this
Agreement.
10.4 Assignment. No Party may assign any rights or obligations hereunder
without the prior express written Agreement of the other Parties. Any assignment
in violation of this Section 9.4 shall be void. Subject to the above
restrictions on assignment, this Agreement shall inure to the benefit of and
bind the successors and assigns of the Parties.
10.5 Relationship Between Parties. The Parties shall at all times and
for all purposes be deemed to be independent contractors and neither Party, nor
either Party's employees, representatives, subcontractors or agents, shall have
the right or power to bind the other Party. This Agreement shall not itself
create or be deemed to create a joint venture, partnership or similar
association between the Parties or either Party's employees, subcontractors or
agents.
10.6 Compliance with Laws. Notwithstanding anything to the contrary
contained herein, all rights and obligations of the Parties are subject to prior
compliance with United States and foreign export regulations and such other
United States and foreign laws and regulations as may be applicable. As between
PPC-BVI and PPC-UK, PPC-UK shall pay for all costs and expenses incurred to
obtain all necessary approvals required by the applicable agencies of the
governments within the Territory. Upon request, PPC-BVI agrees to cooperate with
PPC-UK and provide reasonable assistance to PPC-UK as reasonably necessary to
obtain any required approvals.
10.7 Governing Law and Jurisdiction. This Agreement shall be governed by
the laws of the State of California, U.S.A., without reference to conflict of
laws principles. The parties expressly disclaim and waive the application of the
United Nations Convention on Contracts for the International Sale of Goods. All
disputes arising out of this Agreement shall be subject to the exclusive
jurisdiction and venue of the California State courts of San Francisco County
(or, if
12
there is exclusive federal jurisdiction, the United States District Court for
the Northern District of California). Each Party hereby expressly consents to
(i) the personal jurisdiction and venue of these courts, and (ii) service of
process being effected by registered airmail sent to the address set forth
above.
10.8 Taxes. PPC-UK agrees to bear and pay and indemnify PPC-BVI (and/or
PPC-US) (on an after tax basis) one-half of the additional taxes or similar
charges of any kind incurred by PPC-BVI (and/or PPC-US) attributable to grant of
the exclusive right to conduct the Local Business in the Territory, including
the license grants set forth in this Agreement (and/or the PPC-US License
Agreement).
10.9 Entire Agreement; Amendments. This Agreement (and those referenced
in the Recitals within this Agreement) contains the Parties' entire
understanding with respect to the matters contained herein. There are no
promises, covenants or undertakings other than those set forth herein, and
neither Party is relying upon any representations or warranties except as set
forth herein. This Agreement may not be modified except by an agreement in
writing signed by all Parties.
10.10 Headings; Counterparts. Headings to Sections of this Agreement are
to facilitate reference only, do not form a part of this Agreement, and shall
not in any way affect the interpretation hereof. This Agreement may be executed
in two (2) or more U.S. English language counterparts or duplicate originals,
all of which shall be regarded as one and the same instrument, and which shall
be the official and governing version in the interpretation of this Agreement.
13
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute this Agreement.
PeoplePC UK, Ltd. PeoplePC International (BVI), Ltd.
By:__________________________ By:_________________________________
Name:________________________ Name:_______________________________
Title:_______________________ Title:______________________________
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Exhibit A
Territory
The Territory shall consist of the geographical area currently consisting
of the following countries:
Sweden, Finland, Norway (and Svalbard and Jan Mayen Islands), Iceland, Denmark
and the Faroe Islands, Poland, Hungary, Czech Republic, Slovakia (Slovak
Republic), Lithuania, Latvia, Estonia, Italy, Spain, Romania, Portugal and
Madeira and the Azores, Greece, Bulgaria, Andorra, San Marino, Vatican City,
Germany, United Kingdom, Republic of Ireland, France, Netherlands, Belgium,
Austria, Switzerland, Luxembourg, Monaco, and Liechtenstein.
15
Exhibit B
US License Agreement
16
LICENSE AGREEMENT
-----------------
THIS LICENSE AGREEMENT (the "Agreement") is entered into on the 11th day of
July, 2000 (the "Effective Date") by and between PeoplePC International (BVI)
Limited, a company organized under the laws of the British Virgin Islands ("PPC-
BVI") and PeoplePC, Inc., a corporation organized under the laws of Delaware
("PPC-US") (each a "Party" and collectively, the "Parties").
RECITALS
--------
WHEREAS, PPC-BVI (a wholly owned subsidiary of PPC-US) desires to license
and sublicense certain technology and brands from PPC-US and to develop or have
developed further technology and brands so that under this Agreement PPC-BVI and
its Sub-Licensees (as defined below) shall have the exclusive right to conduct
the Local Business in the Territory, and PPC-US desires to license certain
technology and brands to PPC-BVI and obtain an assignment of ownership in
certain technology and brands from PPC-BVI.
NOW, THEREFORE, in consideration of the agreements described above and the
mutual covenants herein set forth, the Parties hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the meanings
indicated:
1.1 "Affiliate" means any person or entity which controls, or is
controlled by or under common control with, the affiliated party where "control"
means direct or indirect ownership of more than fifty percent (50%) of the
Equity Interests.
1.2 "Derivative Work" means a "derivative work" or "compilation" within
the meaning of such terms under the United States Copyright Act, as interpreted
under applicable case law. It is further understood that a Derivative Work
includes any Localization.
1.3 "Documentation" means any instructions, manuals or other materials,
including without limitation on-line help files, regarding the development,
provision, installation, maintenance or use of the PeoplePC Solution.
1.4 "End User" means a customer which obtains a PeoplePC Solution for
personal use and not for further distribution.
1.5 "Equity Interests" means the ownership interests in any entity that
are entitled to vote for the election of the board of directors or equivalent
governing body. A percentage of the Equity Interests of any entity is measured
by the proportion of the total votes that the holder is entitled to cast in the
election of the board of directors or its equivalent.
1
1.6 "European Brand" means any trademark, trade name, service xxxx, logo,
or domain name on the World Wide Web (including without limitation, derivations
of the PeoplePC Brand) that PPC-BVI and its Sublicensees use in connection with
the Local Business in the Territory.
1.7 "European Technology" means all Technology developed relating to the
Local Business in the Territory that exists now or in the future, and any
modifications, enhancements or Derivative Works of the PeoplePC Technology made
by or for PPC-BVI.
1.8 "Global Brand Protocols" means protocols and procedures for use of
the PeoplePC Brand as promulgated by PPC-US and its licensors and as modified in
their reasonable discretion from time to time.
1.9 "Local Business" means and shall include the marketing, operation and
provision (directly or through third parties) of PeoplePC Solutions to End
Users located within a specific country or region within the Territory.
1.10 "Localize" and "Localization" means any modification or translation of
the PeoplePC Technology or PeoplePC Brand reasonably necessary to conform such
materials to the local languages, laws and business practices of the respective
country within the Territory and appropriate and necessary for conduct of the
Local Business (including without limitation, the incorporation of language,
currency, user interfaces, look and feel or functional variations).
1.11 "PeoplePC Brand" means PEOPLEPC and any other trademark, trade name,
service xxxx, logo, and domain name on the World Wide Web that PPC-US or its
subsidiaries use or may come to use for its business in the United States and
outside of the Territory and which PPC-US reasonably deems are appropriate for
use or adoption in the Territory.
1.12 "PeoplePC Property" means the PeoplePC Technology, PeoplePC Brand,
European Technology and European Brand.
1.13 "PeoplePC Solution" means those bundles of computer services, or
computer goods and services provided to End Users directly or indirectly under
the PeoplePC Brand or European Brand, now or in the future.
1.14 "PeoplePC Technology" means all Technology relating to the PeoplePC
Solutions that PPC-US owns or has the right to license and which exists now or
in the future.
1.15 "Sublicensee" means any party to whom PPC-BVI sublicenses all or part
of its rights under this Agreement to use the PeoplePC Property within one or
more countries or regions in the Territory.
1.16 "Technology" means all software (and associated copyrights), trade
secrets, Documentation, proprietary techniques, processes, methods, patents,
copyrights, applications,
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know-how, content, data, database rights, technical information and other
technology, and any Derivative Works thereof.
1.17 "Territory" means Europe as further defined in Exhibit A hereto.
2. LICENSE GRANTS.
2.1 License. Subject to the terms and conditions of this Agreement,
PPC-US hereby grants to PPC-BVI the following perpetual and royalty bearing
licenses:
(a) An exclusive license to use and exploit the PeoplePC Technology
and European Technology solely for the operation of one or more Local Businesses
within the Territory; and
(b) An exclusive license to use and exploit the PeoplePC Brand
and/or European Brand solely in connection with the operation of one or more
Local Businesses within the Territory and solely in compliance with the Global
Brand Protocols.
2.2 Sublicenses. PPC-BVI shall have the right to sublicense the PeoplePC
Property solely to an Affiliate that will operate one or more Local Business(es)
within the Territory and solely subject to the terms of a written agreement that
(a) contains terms at least as restrictive as those set forth in this Agreement,
including without limitation Section 2 and Section 4; (b) protects PPC-US's
proprietary rights in the PeoplePC Property at least to the degree set forth in
this Agreement, including without limitation an assignment clause similar to
that set forth in Section 3 and a requirement that the use of the European
Brands and PeoplePC Brands is in accordance with the Global Brand Protocols; (c)
grants no ownership rights in the PeoplePC Technology or European Technology or
any modification, improvement or Derivative Work thereof; and (d) establishes
PPC-US as a third party beneficiary with full legal right to enforce such
agreement against such Sublicensee.
2.3 Reservation. PPC-US retains the right to use PeoplePC Property
itself, and to license PeoplePC Property to third parties, for any use outside
of the Territory. During the Term of this Agreement, PPC-US may not license, or
itself use, the PeoplePC Property in the Territory for Local Business. PPC-US
retains all rights in the PeoplePC Property not expressly granted herein.
2.4 Proprietary Marks. PPC-BVI shall not itself and shall prohibit its
Sublicensees from obfuscating, removing or altering any of the patent,
copyright, trademark, trade secret, proprietary and other legal notices
contained in, or displayed by the use of, the PeoplePC Technology and European
Technology. PPC-BVI further agrees to reproduce, and to require Sublicensees to
reproduce, in each copy of any materials contained within the PeoplePC
Technology and the European Technology, such patent, copyright, trademark, trade
secret, proprietary and other legal notices that are included in the PeoplePC
Technology and European Technology.
3
2.5 European Brand. PPC-BVI and PPC-US shall consult on the
appropriateness and development of European Brands. All developed European
Brands shall be subject to the prior approval of PPC-US which approval shall not
be unreasonably withheld, and all use of a European Brand shall be in accordance
with Section 2.
2.6 Trademarks.
(a) The Parties acknowledge and agree that it is necessary for
PeoplePC to maintain uniform standards governing all material facets of the
PeoplePC Solution in order to provide End Users with high quality, cost
effective and consistent levels of service, and to protect the reputation and
goodwill associated with the "PeoplePC' brand. Accordingly, PPC-BVI agrees that
it shall provide, and shall require that its Sublicensees provide, goods and
services offered under or in relation to the PeoplePC Brand and/or European
Brand that are at least as high in quality as the quality of the goods and
services offered by PPC-US, subject to reasonable variations resulting from
business, legal and technical factors within the Territory. PPC-BVI agrees to
comply, and ensure that its Sublicensees comply, with such specific standards
for use of the PeoplePC Brand and/or European Brand as PPC-US or its licensors
may, in their reasonable discretion, establish and modify from time to time in
writing in the Global Brand Protocols. In the event that PPC-US notifies PPC-BVI
that any aspect of the PeoplePC Solution offered by, or marketing materials
being used by, it or its Sublicensees are not in conformity with the quality
otherwise expected by PPC-US or its licensors, or that the PeoplePC Brand and/or
European Brand licensed hereunder are not properly used, PPC-BVI shall take
commercially reasonable actions to modify goods and services or marketing
materials to conform with the quality or trademark guidelines, including the
Global Brand Protocols imposed by PPC-US. PPC-US and its licensors shall have
the right to monitor the quality of such goods, services and promotional
materials and PPC-BVI shall assist PPC-US in monitoring quality by making
samples and demonstrations of such use available upon request.
(b) PPC-BVI agrees that all goodwill associated with the use of the
PeoplePC Brand and/or European Brand (either directly by PPC-BVI or indirectly
by its Sublicensees) shall inure to the benefit of PPC-US and its licensors, as
the case may be.
(c) PPC-BVI agrees to obtain and maintain the PeoplePC Brand and
European Brand, at its own expense, in those countries within the Territory,
including the preparation and recordation of registered user agreements and/or
licenses necessary or reasonably deemed necessary by PPC-BVI in order to comply
with local laws; provided however, that PPC-BVI shall consult with PPC-US and
its licensors with regard to all such matters. In the event applicable law
requires ownership or registration of a domain name to be in an entity other
than PPC-US, the parties shall cooperate and negotiate in good faith any
necessary modification to this Agreement necessary to obtain or maintain
ownership or registration of such domain name.
3. OWNERSHIP AND ENFORCEMENT.
4
3.1 Ownership. Subject to the rights granted to PPC-BVI under Section 2,
all title to and ownership of all PeoplePC Property not expressly granted herein
shall remain the sole and exclusive property of PPC-US or its licensors. Nothing
herein shall be construed as granting PPC-BVI or any Sublicensee thereof any
ownership rights in the PeoplePC Property.
3.2 Assignment. PPC-US shall own all right, title, and interest in the
European Brand, and European Technology, regardless of which Party authors,
creates, contributes or invents such European Brand and European Technology.
PPC-BVI hereby irrevocably transfers, conveys and assigns to PPC-US in
perpetuity all of its right, title, and interest in European Brand and European
Technology, including without limitation all copyrights, including the right to
make derivative works and collective works with respect thereto, it being
understood, however, that PPC-BVI has no, and transfers no, rights with respect
to the underlying PeoplePC Brand and PeoplePC Technology. PPC-US will have the
exclusive right to apply for or register copyrights and such other proprietary
protections as it wishes or to direct PPC-BVI to do so. PPC-BVI agrees to
execute such documents, render such assistance, and take such other action as
PPC-US may reasonably request, at PPC-US's expense, to apply for, register,
perfect, confirm, and protect PPC-US's rights in the European Brand and European
Technology. PPC-BVI hereby waives and agrees not to enforce any and all moral
rights, including any right to identification of authorship or limitation on
subsequent modification, that PPC-BVI (or its employees, agents or consultants)
or Sublicensees have or may have in any European Brand and European Technology.
3.3 Enforcement.
(a) Notice. PPC-BVI shall promptly notify PPC-US of the use by any
third party of the PeoplePC Brand, European Brand or any trademark(s) similar to
the xxxx covered by this Agreement, of which it may become aware and which could
reasonably be considered an infringement or passing off of the PeoplePC Brand or
European Brand or unfair competition. PPC-BVI shall also promptly notify PPC-US
of the use by any third party of the European Technology or PeoplePC Technology
of which it may become aware and which could reasonably be considered an
infringement or misappropriation of the PeoplePC Technology or European
Technology.
(b) Procedure. PPC-US and PPC-BVI shall consult with regard to the
issue of whether to bring proceedings against any third party which
misappropriates or infringes PPC-Property within the Territory. PPC-US shall
have the right to decide whether or not to bring proceedings against such third
parties for infringement or misappropriation of the PeoplePC Property. Such
proceedings shall be at the expense of PPC-US. PPC-BVI, at its own cost, shall
cooperate fully with PPC-US to whatever extent is deemed reasonably necessary by
PPC-US to prosecute such action(s). In the event that PPC-US recovers damages
from prosecution of such action(s), PPC-US shall retain all amounts received for
such damages except that PPC-BVI shall be entitled to reimbursement of its
actual costs, expenses, and reasonable attorneys' fees attributable to such
action (or in proportionate amounts thereof should PPC-US recover an
insufficient amount for both parties' such costs and expenses). PPC-BVI shall
not settle or compromise any suit for infringement without the express approval
of PPC-US, such approval
5
not to be unreasonably withheld. In the event PPC-US decides not to prosecute,
and PPC-BVI reasonably determines that the failure to prosecute would adversely
affect the rights of PPC-BVI in the Territory under this Agreement, PPC-BVI
shall have the right, but not the obligation, to prosecute such action at its
own expense. PPC-US shall cooperate fully with PPC-BVI to whatever extent is
deemed reasonably necessary by PPC-BVI to prosecute such action. In the event
that PPC-BVI recovers its damages from prosecution of such action, PPC-BVI shall
retain amounts received for such damages except that PPC-US shall be entitled to
reimbursement of its actual costs, expenses, and reasonable attorneys' fees
attributable to such action (or in proportionate amounts thereof should PPC-BVI
recover an insufficient amount for both parties' such costs and expenses). PPC-
BVI and PPC-US each agree, subject to the foregoing, upon request of the other,
to join the other as a party in any lawsuit or other action to enforce or secure
rights in any of the People PC Property. In such event the Party bringing the
action shall indemnify the Party joining such action for all costs incurred as a
result thereof.
4. DELIVERY and FEES.
4.1 Initial Delivery of PeoplePC Technology and PeoplePC Brands. As soon
as reasonably practicable after the Effective Date, PPC-US shall deliver to PPC-
BVI the software and documentation constituting the PeoplePC Technology in
existence and PeoplePC Brand, which are necessary and appropriate for the
operation of the Local Business by PPC-BVI and its Sub-Licensees in the
Territory. Included in such delivery, shall be any applicable localized versions
of such PeoplePC Technology or PeoplePC Brand applicable to the operation of the
Local Business in the Territory.
4.2 Delivery of European Technology and European Brands. Throughout the
Term of this Agreement, at regular intervals agreed upon by the Parties in
writing, PPC-BVI shall deliver to PPC-US (at no charge to PPC-US) all European
Technology and European Brands.
4.3 Updates. Throughout the Term of this Agreement, at a frequency similar
to other similarly situated licensees of the PeoplePC Technology and PeoplePC
Brands or such other regular intervals agreed upon by the Parties in writing,
PPC-US shall deliver to PPC-BVI any error corrections, updates, upgrades,
enhancements or modifications or new PeoplePC Technology or PeoplePC Brands
necessary and appropriate for the operation of the Local Business in the
Territory.
4.4 Fees. The Fees payable among the Parties are set forth in, and
payment shall be made, in accordance with Exhibit B.
5. CONFIDENTIAL INFORMATION.
5.1 Obligations. The Parties acknowledge that, from time to time, one
Party (the "Disclosing Party") may disclose to the other Party (the "Receiving
Party") information which is marked as "proprietary" or "confidential" or which
would, under the circumstances, be understood by a reasonable person to be
proprietary and nonpublic ("Confidential Information"). The Receiving Party
shall retain such Confidential Information in confidence
6
and shall not disclose it to any third party without the Disclosing Party's
written consent, or use it except as permitted under this Agreement. Each Party
shall use at least the same procedures and degree of care which it uses to
protect its own Confidential Information of like importance, and in no event
less than reasonable care.
5.2 Exceptions. Notwithstanding the foregoing, Confidential Information
will not include information to the extent that:
(a) such information was already known by the Receiving Party
without an obligation of confidentiality at the time of disclosure hereunder;
(b) was generally available to the public at the time of its
disclosure to the Receiving Party hereunder;
(c) became generally available to the public after its disclosure
other than through an act or omission of the Receiving Party in breach of this
Agreement; or
(d) was subsequently lawfully and independently disclosed to the
Receiving Party by a person other than Disclosing Party.
5.3 Permitted Disclosure. The Receiving Party may disclose the other
Party's Confidential Information to the extent such disclosure is required by
order or requirement of a court or other governmental body, but only if the
Receiving Party provides prompt notice thereof to the Disclosing Party to enable
the Disclosing Party to seek a protective order or otherwise prevent or restrict
such disclosure, and Receiving Party shall provide all such reasonable
assistance to Disclosing Party, at Disclosing Party's expense with respect to
Disclosing Party's efforts to seek such protective order or otherwise prevent or
restrict such disclosure.
5.4 Third Party Permitted Disclosure. Notwithstanding the foregoing,
PPC-BVI may use or disclose Confidential Information in exercising its rights
hereunder (including sublicensing) or fulfilling its obligations and/or duties
hereunder, provided that such disclosure occurs pursuant to a signed written
agreement between PPC-BVI and such third party that contains terms at least as
restrictive as those set forth in this Section 5 and establishes PPC-US as a
third party beneficiary with full legal right to enforce such agreement against
such third party.
5.5 Remedies. Unauthorized use by any Party of Confidential Information
provided to it by another Party hereunder will diminish the value to the other
Party of such information. Therefore, if a Party breaches any of its
obligations with respect to confidentiality and unauthorized use of Confidential
Information of another Party hereunder, the other Party shall be entitled to
equitable relief to protect its interest therein, including but not limited to
injunctive relief, as well as money damages.
6. REPRESENTATIONS AND WARRANTIES.
6.1 By PPC-US.
7
(a) Authority. PPC-US represents and warrants to PPC-BVI that (i)
it is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation; (ii) it has full right, power and
authority to enter into this Agreement and to perform all of its obligation
hereunder; (iii) this Agreement constitutes its valid and binding obligation,
enforceable against it in accordance with its terms; and (iv) its execution,
delivery and performance of this Agreement will not result in a breach of any
material agreement or understanding to which it is a party or by which it or any
of its material properties may be bound.
(b) No Claims. PPC-US represents and warrants that, as of the
Effective Date of the Agreement, no claim relating to the PeoplePC Technology or
PeoplePC Brand in connection with the Territory has been made or is pending
against PPC-US, or to PPC-US's knowledge, against any entity from which PPC-US
has obtained rights relating to the PeoplePC Technology and/or PeoplePC Brand.
(c) Delivery. PPC-US represents and warrants to PPC-BVI that in
accordance with Section 4.1 of this Agreement, it will deliver any PPC Brand and
PPC Technology necessary and appropriate for PPC-BVI and its Sub-Licensees to
operate the Local Business in the Territory.
(d) Disclaimer. TO THE EXTENT PERMITTED IN ITS SUPPLIER AGREEMENTS
AND APPLICABLE LAW, PPC-US SHALL PASS THROUGH TO PPC-BVI ANY APPLICABLE
WARRANTIES PROVIDED BY SUCH SUPPLIERS. PPC-US DOES NOT WARRANT THAT THE PEOPLEPC
TECHNOLOGY IS ERROR FREE OR WILL SUIT PPC-BVI'S OR ITS SUBLICENSEES' NEEDS. PPC-
US DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION ANY WARRANTY OF ACCURACY, COMPLETENESS OR PERFORMANCE OF THE PEOPLEPC
TECHNOLOGY, AND ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE AND NON-INFRINGEMENT.
6.2 By PPC-BVI.
(a) Authority. PPC-BVI represents and warrants to PPC-US that (i)
it is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation; (ii) it has full right, power and
authority to enter into this Agreement and to perform all of its obligation
hereunder; (iii) this Agreement constitutes its valid and binding obligation,
enforceable against it in accordance with its terms; and (iv) its execution,
delivery and performance of this Agreement will not result in a breach of any
material agreement or understanding to which it is a party or by which it or any
of its material properties may be bound.
(b) Title. PPC-BVI represents and warrants that, it shall take all
reasonable and proper action to ensure that all right, title and ownership of
the European Technology and/or European Brand is fully assigned by PPC-BVI to
PPC-US hereunder such that no third party shall make an infringement or
misappropriation claim in respect of such European Technology
8
and/or European Brand, including without limitation the inclusion of assignment
clauses in employee and contractor agreements.
(c) Disclaimer. TO THE EXTENT PERMITTED IN ITS SUPPLIER AGREEMENTS
AND APPLICABLE LAW, PPC-BVI SHALL PASS THROUGH TO PPC-US ANY APPLICABLE
WARRANTIES PROVIDED BY SUCH SUPPLIERS. PPC-BVI DOES NOT WARRANT THAT THE
EUROPEAN TECHNOLOGY IS ERROR FREE OR WILL SUIT PPC-US' OR ITS SUBLICENSEES'
NEEDS. PPC-BVI DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
WITHOUT LIMITATION ANY WARRANTY OF ACCURACY, COMPLETENESS OR PERFORMANCE OF THE
EUORPEAN TECHNOLOGY AND ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE AND NON-INFRINGEMENT.
6.3 Third Party Disclaimers. PPC-BVI will use reasonable commercial
efforts to assure that, in any licensing or distribution of the People PC
Solution or other PeoplePC Property to third parties, including end users, its
makes substantively the same disclaimers of liability and limitations of damages
on behalf of PPC-US as are made herein.
7. INDEMNIFICATION AND NOTICE.
PPC-BVI shall promptly notify PPC-US of any claim by any third party of
which it may become aware that the PeoplePC Property infringes or constitutes a
misappropriation of the intellectual property rights of such third party. PPC-US
at its option, and at PPC-BVI's expense, will defend or at its option settle,
any claim against PPC-BVI alleging infringement of any copyright, patent, or
trademark or misappropriation of a trade secret brought by a third party to the
extent attributable to the use of PeoplePC Property in the Territory, provided
that PPC-BVI provides PPC-US with: (i) prompt written notice of such claim, (ii)
exclusive control over the defense and settlement of such claim, (iii) proper
and full information to settle or defend any such claim; and (iv) such other and
assistance as requested by PPC-US. If PPC-US believes, in its sole discretion,
that it is likely that PPC-BVI will be prohibited from exercising its right to
use the PeoplePC Property as provided under this Agreement, then PPC-US may, at
its sole option and expense: (i) procure the right to use the PeoplePC Property
as provided herein, (ii) replace the PeoplePC Property with other non-infringing
services with equivalent functionality, (iii) suitably modify the PeoplePC
Property so that it does not infringe such third party rights. THE FOREGOING
PROVISIONS OF THIS SECTION 6 STATE THE ENTIRE LIABILITY AND OBLIGATIONS OF PPC-
US, AND THE EXCLUSIVE REMEDY OF PPC-BVI, WITH RESPECT TO ANY ACTUAL OR ALLEGED
INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS RELATING TO THIS AGREEMENT.
8. LIMITATION OF LIABILITY.
EXCEPT FOR LIABILITY UNDER SECTION 6, IN NO EVENT WILL EITHER PARTY HAVE
ANY LIABILITY FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES,
HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, WHETHER FOR BREACH OF CONTRACT,
TORT OR OTHERWISE,
9
ARISING OUT OF OR RELATED TO THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO, LOSS
OF ANTICIPATED PROFITS, LOSS OF DATA, OR LOSS OF USE, EVEN IF SUCH PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
9. TERM AND TERMINATION.
9.1 Term. This Agreement shall continue in force from the date hereof
until such time as it is terminated earlier under the provisions of this
Section 9.
9.2 Immediate Termination Upon Notice for Change in Control or
Substantial Encumbrance. In the event that the direct or indirect ownership of
PPC-BVI undergoes a change in control so that PPC-US and its Affiliates ceases
to hold a majority Equity Interest in PPC-BVI, or in the event that a
substantial portion of PPC-BVI's assets or the conduct of PPC-BVI's business
shall be substantially encumbered by extraordinary governmental action or by
operation of law, PPC-US may, at its option, terminate this Agreement effective
immediately and without compensation upon written notice given to PPC-BVI.
9.3 Termination After Failure to Cure for Failure of Performance. If any
Party shall fail to perform any of its material obligations contained in this
Agreement and shall fail to cure such default within sixty (60) days after
receipt of a notice from the other Party, the Party giving notice shall have the
right to terminate this Agreement immediately and without compensation by giving
written notice to the other Party.
9.4 Effect of Termination.
(a) License. Upon any termination of this Agreement, PPC-BVI shall
immediately cease to exercise all rights and licenses to and of the PeoplePC
Property granted under this Agreement. Within thirty (30) days of the date of
termination, PPC-BVI shall, at the option of PPC-US, return or destroy any
materials, or copies of materials reflecting or embodying the PeoplePC Property
and PPC-BVI shall furnish PPC-US with a certificate signed by an executive
officer of PPC-BVI verifying that the same has been done.
(b) Confidential Information. Within thirty (30) days of the date of
termination, the Receiving Party shall, at the option of the Disclosing Party,
return or destroy any materials, or copies of materials reflecting or embodying
the Confidential Information of the Disclosing Party and shall furnish the
Disclosing Party with a certificate signed by an executive officer of the
Receiving Party verifying that the same has been done.
(c) Survival. The terms and conditions of the following provisions
shall survive termination or expiration of this Agreement: Section 1, 2.6(b),
3.1, 3.2, 3.3(b), 5, 7, 8, 9.4 and 10. In addition, the termination or
expiration of this Agreement shall not relieve either Party of any liability
under this Agreement that accrued prior to such termination or expiration.
10. MISCELLANEOUS.
10
10.1 Notices. All notices called for under this Agreement shall be made
in writing and shall be sent by personal delivery or by recognized international
express courier service, confirmation of receipt requested, addressed to a Party
at its address set forth below.
If to PPC-US: PeoplePC, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: General Counsel
Telefax:
With a copy to: Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Attn: Xxxxxx Xxxxxxxx
Telefax: (000) 000-0000
If to PPC-BVI:
PeoplePC International (BVI) Limited
Xxxxxx Xxxxx, 0xx Xxxxx, 333
Waterfront Drive,
Xxxxxxx'x Xxx, Road Town,
Tortola, British Virgin Islands
All notices shall be deemed given or made (y) on the date delivered if
delivered personally, by courier or otherwise, or (z) on the third business day
after it is mailed, in all cases to the addressee at the above address or such
other address as may from time to time be designated to the other Party in
writing.
10.2 Non-Waiver. The failure of any Party at any time to require
performance by another party of any provision hereof shall not affect in any
way, or act as a waiver of, the right to require the Party to perform in
accordance with this Agreement at any other time, nor shall the waiver of any
Party of a breach of a provision of this Agreement be held or taken to be a
waiver of the provision itself.
10.3 Severability. If any provision in this Agreement shall be found or
be held to be invalid or unenforceable, then the meaning of said provision shall
be construed, to the extent feasible, so as to render the provision enforceable,
and if no feasible interpretation would save such provision, it shall be severed
from the remainder of this Agreement which shall remain in full force and effect
unless the severed provision is essential and material to the rights or benefits
received by any party. In such event, the Parties shall use best efforts to
negotiate, in good faith,
11
a substitute, valid and enforceable provision or agreement which most nearly
affects the Parties' intent in entering into this Agreement.
10.4 Assignment. No Party may assign any rights or obligations hereunder
without the prior express written Agreement of the other Parties. Any assignment
in violation of this Section 9.4 shall be void. Subject to the above
restrictions on assignment, this Agreement shall inure to the benefit of and
bind the successors and assigns of the Parties.
10.5 Relationship Between Parties. The Parties shall at all times and for
all purposes be deemed to be independent contractors and neither Party, nor
either Party's employees, representatives, subcontractors or agents, shall have
the right or power to bind the other Party. This Agreement shall not itself
create or be deemed to create a joint venture, partnership or similar
association between the Parties or either Party's employees, subcontractors or
agents.
10.6 Compliance with Laws. Notwithstanding anything to the contrary
contained herein, all rights and obligations of the Parties are subject to prior
compliance with United States and foreign export regulations and such other
United States and foreign laws and regulations as may be applicable. As between
PPC-US and PPC-BVI, PPC-BVI shall pay for all costs and expenses incurred to
obtain all necessary approvals required by the applicable agencies of the
governments within the Territory. Upon request, PPC-US agrees to cooperate with
PPC-BVI and provide reasonable assistance to PPC-BVI as reasonably necessary to
obtain any required approvals.
10.7 Governing Law and Jurisdiction. This Agreement shall be governed by
the laws of the State of California, U.S.A., without reference to conflict of
laws principles. The parties expressly disclaim and waive the application of the
United Nations Convention on Contracts for the International Sale of Goods. All
disputes arising out of this Agreement shall be subject to the exclusive
jurisdiction and venue of the California State courts of San Francisco County
(or, if there is exclusive federal jurisdiction, the United States District
Court for the Northern District of California). Each Party hereby expressly
consents to (i) the personal jurisdiction and venue of these courts, and (ii)
service of process being effected by registered airmail sent to the address set
forth above.
10.8 Taxes. PPC-BVI agrees to bear and pay and indemnify PPC-US (on an
after tax basis) one-half of the additional taxes or similar charges of any kind
incurred by PPC-US attributable to grant of the exclusive right to conduct the
Local Business in the Territory, including the license grants set forth in this
Agreement, but only to the extent that PPC-BVI receives payment for such taxes
and similar charges under Section 10.8 of that certain License Agreement dated
on or about June 28, 2000 between PPC-BVI and PeoplePC UK, Ltd., a limited
company organized under the laws of the United Kingdom.
10.9 Entire Agreement; Amendments. This Agreement (and those referenced
in the Recitals within this Agreement) contains the Parties' entire
understanding with respect to the matters contained herein. There are no
promises, covenants or undertakings other than those set forth herein, and
neither Party is relying upon any representations or warranties except as set
12
forth herein. This Agreement may not be modified except by an agreement in
writing signed by all Parties.
10.10 Headings; Counterparts. Headings to Sections of this Agreement are
to facilitate reference only, do not form a part of this Agreement, and shall
not in any way affect the interpretation hereof. This Agreement may be executed
in two (2) or more U.S. English language counterparts or duplicate originals,
all of which shall be regarded as one and the same instrument, and which shall
be the official and governing version in the interpretation of this Agreement.
13
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute this Agreement.
PeoplePC, Inc. PeoplePC International (BVI), Ltd.
By:_____________________________ By:_________________________________
Name:___________________________ Name:_______________________________
Title:__________________________ Title:______________________________
14
Exhibit A
Territory
The Territory shall consist of the geographical area currently consisting
of the following countries:
Sweden, Finland, Norway (and Svalbard and Jan Mayen Islands), Iceland, Denmark
and the Faroe Islands, Poland, Hungary, Czech Republic, Slovakia (Slovak
Republic), Lithuania, Latvia, Estonia, Italy, Spain, Romania, Portugal and
Madeira and the Azores, Greece, Bulgaria, Andorra, San Marino, Vatican City,
Germany, United Kingdom, Republic of Ireland, France, Netherlands, Belgium,
Austria, Switzerland, Luxembourg, Monaco, and Liechtenstein.
15
Exhibit B
Fees and Payment
To be amended to add fees and payment provisions.
16
Exhibit B
Master Services Agreement
MASTER SERVICES AGREEMENT
This Master Services Agreement (the "Agreement") is entered into as of this
11th day of July, 2000 by and among PeoplePC, Inc., a company organized under
the laws of Delaware with principal offices at 000 Xxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxxxxxxx, XX 00000 ("PPC-US"), PeoplePC (UK) Limited, a company organized under
the laws of the United Kingdom ("PPC-UK"), PeoplePC BV, a Dutch corporation
("PPC-BV"), @viso Limited, a company organized under the laws of the United
Kingdom ("@viso"), Vivendi S.A., a company organized under the laws of France
("Vivendi"), and Softbank Corp., a corporation organized under the laws of Japan
("Softbank") (each a "Party" and collectively the "Parties").
RECITALS
WHEREAS, PPC-US, PPC-BV, Olive Hill Investments NV, a company organized
under the laws of the Netherlands Antilles, @viso, and Softbank Capital Partners
LP, a Delaware limited partnership ("SBCP") are parties to a Shareholders
Agreement dated June 30, 2000 ("Shareholders Agreement") for the purpose of
continuity and stability of ownership of the PPC-BV and its subsidiary PPC-UK,
to the extent and upon the terms and conditions set forth therein; and
WHEREAS, PeoplePC International (BVI) Limited, a company organized under
the laws of the British Virgin Islands ("PPC-BVI") (a subsidiary of PPC-US) and
PPC-UK are parties to a License Agreement dated July 11, 2000 the ("License
Agreement") whereby PPC-BVI licensed certain technology exclusively to PPC-UK;
and
WHEREAS, for the purpose of ensuring the orderly and effective operations
of PPC-BV Entities (as defined below), (i) PPC-BV Entities desire to receive
from PPC-US, @viso, Softbank and Vivendi, certain Operational Assistance (as
defined below), (ii) PPC-BV Entities desire that PPC-US Entities (as defined
below) perform certain services pursuant to contracts which PPC-BV Entities may
enter into which require performance outside the Territory (as defined below) of
which PPC-US Entities is uniquely capable of contracting for; and (iii) PPC-US
Entities desire that PPC-BV Entities perform certain services pursuant to
contracts PPC-US Entities may enter into which require performance within the
Territory of which that PPC-BV Entity is uniquely capable of contracting for;
and
WHEREAS, in partial consideration for (i) PPC-US contributing its
Operational Assistance for the benefit of PPC-BV Entities, (ii) Softbank and
Vivendi using their best efforts to encourage their Majority-Owned Affiliates'
cooperation for the benefit of PPC-BV Entities, and (iii) @viso contributing its
Operational Assistance for the benefit of PPC-BV Entities, each of Softbank,
@viso, and Vivendi, and PPC-US Entities shall not compete with the PPC-BV
Entities in the Territory and the PPC-BV Entities shall not compete with PPC-US
Entities outside of the Territory.
NOW, THEREFORE, in consideration of these premises and the mutual covenants
herein set forth, the Parties hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the meanings
indicated:
1.1 "Ancillary Agreements" means collectively the Shareholders Agreement
and the License Agreement.
1.2 "Contractor's Assistance" shall have the meaning set forth in
Section 2.3.
1.3 "Derivative Work" shall have the meaning set forth in the License
Agreement.
1.4 "End User" means a customer which obtains a PeoplePC Solution for
personal use and not for further distribution.
1.5 "Equity Interests" means the ownership interests in any entity
that are entitled to vote for the election of the board of directors or
equivalent governing body. A percentage of the Equity Interests of any entity
is measured by the proportion of the total votes that the holder is entitled to
cast in the election of the board of directors or its equivalent.
1.6 "European Brand" shall have the meaning set forth in the License
Agreement.
1.7 "European Technology" shall have the meaning set forth in the
License Agreement.
1.8 "Ex-Territory Brand" means any trademark, trade name, service xxxx,
logo, or domain name on the World Wide Web (including without limitation,
derivations of the PeoplePC Brand) developed for use, or registered, outside the
Territory, the United States, and Canada.
1.9 "Execution Services" shall have the meaning set forth in Section 2.2.
1.10 "Operational Assistance" shall have the meaning set forth in Section
2.1.
1.11 "Local Business" means and shall include the marketing, operation and
provision (directly or through third parties) of PeoplePC Solutions to End Users
located within a specific country or region within the Territory.
1.12 "Majority-Owned Affiliate" means any person or entity which controls,
or is controlled by or under common control with, the affiliated party where
"control" means direct or indirect ownership of more than fifty percent (50%) of
the Equity Interests.
1.13 "PeoplePC Brand" shall have the meaning set forth in the License
Agreement.
1.14 "PPC-BV Entities" means PPC-BV and its wholly owned subsidiaries,
including PPC-UK.
1.15 "PPC-US Entities" means PPC-US and its Majority-Owned Affiliates
(excluding only PPC-BV Entities).
1.16 "PeoplePC Solution" means those Products provided to End Users
directly or indirectly under the PeoplePC Brand, European Brand, or Ex-Territory
Brand, now or in the future.
1.17 "Products" means the marketing, provision and distribution
(directly or indirectly) of any combination two or more of the following goods
and services to consumers: (i) Internet access, including e-mail, (ii) computer
hardware (excluding any other Internet appliance such as set top box or pda),
and (iii) membership privileges including the right to purchase certain third
party supplied goods and services.
1.18 "Providing Party" means a Party providing Services hereunder.
1.19 "Receiving Party" means a Party receiving Services hereunder.
1.20 "Services" shall mean Operational Assistance, Execution Services
or Contractor's Assistance.
1.21 "Territory" means Europe as further defined in Exhibit A hereto.
2. SERVICES.
2.1 Operational Assistance. PPC-US and @viso shall provide the services
set forth in Section 2.1.1 and 2.1.2 ("Operational Assistance"):
2.1.1 Subject to the terms and conditions herein, PPC-US at its
own expense (except as set forth in Section 3.1) will provide incubation
services to assist PPC-BV Entities to implement the PeoplePC Solution in the
Territory, including, but not limited to, reasonable technical support of the
PeoplePC Technology (as defined in the License Agreement) necessary and
appropriate to launch PPC Technology in the Territory.
2.1.2 Subject to the terms and conditions herein, @viso at its own
expense (except as set forth in Section 3.1) shall assist in the establishment
of the Local Business in all regions of the Territory, and in particular, shall
contribute significant time, resources, operational, recruiting and
administrative support, including without limitation, support for the execution
of the PeoplePC Solutions in the Territory in accordance with agreements between
PPC-US and each of Ford and Delta.
2.1.3 Neither Softbank, Vivendi, nor @viso shall have the
authority to make any commitments whatsoever on behalf of PPC-BV Entities, as
agent or otherwise, nor to bind any PPC-BV Entity in any respect by virtue of
this Agreement. Without limiting the foregoing, neither Softbank, Vivendi, nor
@viso shall have the authority to enter into contracts with customers or
suppliers on behalf of PPC-BV Entities by virtue of this Agreement.
2.2 Responsibilities and Execution Services. Each of PPC-US and PPC-BV
shall be responsible for the operation of its business within its respective
territory, including without limitation all marketing and advertising,
administrative, financial and legal functions, Buyer's Club
merchant and membership, customer product and service procurement, customer
service and product and service fulfillment, and Internet presence and back-end.
The Parties acknowledge that, from time to time, the PPC-BV Entities or PPC-US
Entities, may enter into agreements with third parties that require the PeoplePC
Solution to be implemented outside the respective territories in which such
PeoplePC entities are licensed. Accordingly each of PPC-US and PPC-BVI agrees to
provide the following services ("Execution Services"):
2.2.1 Subject to the terms and conditions herein and in partial
consideration for the covenant in Section 2.2.2, PPC-BV Entities agree that, for
contracts which include the provision and/or implementation of PPC Solutions to
End Users outside the Territory, PPC-BV Entities or the appropriate third party
will contract with PPC-US Entities to have the sole right to perform such
Execution Services. PPC-Entities shall have no right to provide or implement
the PeoplePC Solutions to End Users outside of the Territory.
2.2.2 Subject to the terms and conditions herein and in partial
consideration for the covenant of PPC-UK in Section 2.2.1, PPC-US Entities agree
that, for contracts which include the provision and/or implementation of PPC
Solution to End Users within the Territory, PPC-US Entities or the appropriate
third party will contract with PPC-BV Entities to have the sole right to perform
such to perform such Execution Services. PPC-US Entities shall have no right to
provide or implement the PeoplePC Solutions to End Users within the Territory
without the prior written permission of PPC-BV.
2.3 Contractor's Assistance. Subject to the terms and conditions herein
including without limitation the payment of Contracting Costs (as defined in
Exhibit B), a Contracting Entity (as defined in Exhibit B) shall upon the
request of a Fulfilling Entity (as defined in Exhibit B), provide reasonable
assistance to a Fulfilling Entity in connection with the fulfillment of
obligations under a Supply Contract (as defined in Exhibit B). Each PPC-US and
PPC-BV acknowledge and agree that PPC-US shall provide Contractor's Assistance
to PPC-BV Entities in connection with the fulfillment of obligations under PPC-
US's Supply Contract with Ford and PPC-US's Supply Contract with Delta.
2.4 Subcontractors. Subject to the terms and conditions of this
Agreement and the Ancillary Agreements, PPC-US and PPC-BV may engage
subcontractors to perform all or any portion of its Execution Services or
Contractor's Assistance under this Agreement provided that any such
subcontractor agrees in writing to be bound by confidentiality obligations at
least as protective as the terms of this Agreement regarding confidentiality,
agrees to such other applicable obligations that may be set forth in the
Ancillary Agreements, and provided further that the Party remains responsible
for the performance of such subcontractor. As used in this Agreement,
"subcontractor" will mean any individual, partnership, corporation, firm,
association, unincorporated organization, joint venture, trust or other entity
engaged to perform hereunder.
2.5 Impracticability. No Party shall be required to provide Services to
the extent the performance of such Service becomes "Impracticable" as a result
of a cause or causes outside the reasonable control of such Party including
unfeasible technological requirements, or to the extent the
performance of such Services would require such Party to violate any applicable
laws, rules or regulations or would result in the breach of any confidentiality
or non-disclosure obligations, software license or other applicable contract.
2.6 Performance. Subject the terms and conditions of this Agreement,
each Party shall maintain sufficient resources to perform its obligations
hereunder. Specific performance metrics for a specific service may be separately
agreed to by the Parties. Where none is set forth, a Party providing Services
hereunder shall exercise the same care and skill as it exercises in performing
similar services for itself. The Party benefiting from such Services shall
provide sufficient resources and timely decisions, approvals and acceptances in
order that the Party providing the Services may accomplish its obligations
hereunder in a timely manner.
2.7 Responsibility For Errors; Delays. A Providing Party's sole
responsibility to a Receiving Party with respect to Services is as follows:
2.7.1 for errors or omissions in such Services, shall be to
furnish correct information, payment and/or adjustment in such Services, at no
additional cost or expense; provided, the Receiving Party must promptly advise
the Providing Party of any such error or omission of which it becomes aware
after having used reasonable efforts to detect any such errors or omissions in
accordance with the standard of care set forth in Section 2.6; and
2.7.2 for failure to deliver any Service because of
Impracticability shall be to use reasonable efforts, subject to Section 2.5, to
make the Services available and/or to resume performing the Services as promptly
as reasonably practicable.
2.8 Good Faith Cooperation; Consents. The Parties will use good faith
efforts to cooperate with each other in all matters relating to the provision
and receipt of Services. Such cooperation shall include exchanging information,
performing true-ups and adjustments, and obtaining all third party consents,
licenses, sublicenses or approvals necessary to permit each Party to perform its
obligations hereunder. Unless separately agreed to by a Receiving Party and a
Providing Party, the costs of obtaining such third party consents, licenses,
sublicenses or approvals shall be borne by the Receiving Party for the relevant
Services. The Parties will maintain in accordance with their standard document
retention procedures, documentation supporting the information relevant to cost
calculations and cooperate with each other in making such information available
as needed in the event of a tax audit, whether in the United States or any other
country.
2.9 Alternatives. If a Providing Party reasonably believes it is unable
to provide a Service because of a failure to obtain necessary consents,
licenses, sublicenses or approvals pursuant to Section 2.8 or because of
Impracticability, the Providing and Receiving Parties shall cooperate to
determine the best alternative approach. Until such alternative approach is
found or the problem otherwise resolved to the satisfaction of such Parties, the
Providing Party shall use reasonable efforts, subject to Section 2.5, to
continue providing the Service. To the extent an agreed upon alternative
approach requires payment above and beyond that which is included in the
Providing
Party's charge for the Service in question, the Parties shall share equally in
making any such payment unless they otherwise agree in writing.
2.10 No Agency. The relationships established by this Agreement are
those of independent contractors, and nothing contained in this Agreement shall
be construed to (i) give any Party hereto the power to direct and control the
day-to-day activities of another; (ii) constitute the Parties as partners, joint
venturers, principal and agent, employer and employee, co-owners, or otherwise
as participants in a joint undertaking; or (iii) allow any Party to create or
assume any obligation on behalf of another Party for any purpose whatsoever.
2.11 Intellectual Property. This Agreement and the performance of this
Agreement will not affect the ownership of any intellectual property rights
allocated in the Ancillary Agreements and ownership of any technology or
intellectual property rights created by virtue of the performance of the
Services hereunder shall be determined by such Ancillary Agreements. No Party
will gain, by virtue of this Agreement, any rights of ownership of copyrights,
patents, trade secrets, proprietary know-how, trademarks or any other
intellectual property rights owned by the other.
2.12 Exclusivity.
2.12.1 In partial consideration for the provision and disclosure
of Confidential Information (as defined in Section 6) hereunder and in the
Ancillary Agreements, as well as for the disclosure of proprietary information
inherent in the Operational Assistance, PPC-BV Entities, PPC-US Entities,
Softbank, @viso, and Vivendi agree that each of Softbank, @viso, and Vivendi
(and their respective Majority-Owned Affiliates), and PPC-US Entities shall not
compete with the PPC-BV Entities in the Territory; provided, however, this
covenant (i) shall not prevent Softbank or Vivendi or their respective Majority-
Owned Affiliates from competing with PPC-BV Entities in the Territory for
Internet access (including e-mail) either directly or indirectly through the
development, marketing, maintenance and provision of horizontal or vertical
portals and (ii) in the case of Majority-Owned Affiliates of Softbank, shall
apply only where the competing operations are a principal business of such
Affiliate and consist of providing personal computers to persons residing in the
Territory based on a model of doing business in which (a) payment for the
personal computer can be made on an installment basis, or payment for the
personal computer (in whole or part) is made by an employer for the benefit of
its employee, and (b) the total price of the personal computer is reduced by the
inclusion of advertising subscription or other services that generate revenue to
the PPC-BV Entities.
2.12.2 In partial consideration for the provision and disclosure
of Confidential Information (as defined in Section 6) hereunder and in the
Ancillary Agreements, as well as for the disclosure of proprietary information
inherent in the Execution Services, PPC-BV Entities and PPC-US Entities agree
that outside the Territory, PPC-BV Entities will not offer, either themselves,
in conjunction with a third party, or on behalf of a third party, Products
outside the Territory.
2.12.3 The Parties hereto agree that, if any court of competent
jurisdiction in a final non-appealable judgment, or other binding public
authority, determines that the time period, a
specified geographical area, specified business limitation or any other relevant
feature of this Section 2.12 is unreasonable, arbitrary or against public
policy, then a lesser time period, geographical area, business limitation or
other relevant feature which is determined to be reasonable, not arbitrary and
not against public policy may be enforced against the applicable Party.
3. FEES.
3.1 Fees. Each Party's fee for performing the Execution Services and
Contractor's Assistance shall be the service fee computed in accordance with
Exhibit B ("Service Fees"). The Operational Assistance shall be provided at no
additional cost to the PPC-BV Entities, except that PPC-US and @viso shall upon
approval of the PPC-BV Board of Directors, be promptly reimbursed by PPC-BV for
the actual third party costs incurred by PPC-US and/or @viso for the provision
of Operational Assistance under this Agreement.
3.2 Manner of Payment. Payment of the Service Fee shall be made
directly to the Providing Party or to such bank as is designated by the
Providing Party, and shall be made in strict compliance with all applicable
governmental regulations and rulings, including the withholding of any taxes
required by law.
3.3 Time of Payment. A Providing Party performing Execution Services
and Contractor's Assistance hereunder shall submit to the Receiving Party
monthly estimates of the Service Fees due and payable under the terms of this
Agreement. Such estimate shall be submitted at the end of each month. Any
estimated Service Fee shall be due and payable fifteen (15) days after the end
of each month during the term of this Agreement in which Services are performed
in either U.S. Dollars or a local currency as specified by such Providing Party.
To the extent not otherwise prohibited under applicable local law, amounts owed
pursuant to this Section 3 may be offset or netted against other indebtedness
among the Receiving and Providing Parties. Estimated payments made pursuant to
this Section 3.3 shall be an advance payment of the amount ultimately determined
to be payable under this Agreement for a fiscal quarter. Any estimated monthly
payment made later than fifteen (15) days after it is due shall incur interest
at the minimum applicable federal rate required under United States federal
income tax laws.
3.4 Quarterly Reports and Payments. Within thirty (30) days after the
end of each of its fiscal quarters, commencing with the first such fiscal
quarter following the execution of this Agreement and continuing throughout the
term of this Agreement, each Providing Party shall submit to each other
Receiving Party for which Execution Services or Contractor's Assistance were
performed a report certified by a responsible officer showing the Service Fee
due and payable by such Receiving Party for such fiscal quarter under the terms
of this Agreement and including the specific data used to calculate such Service
Fee. Each Party will maintain adequate books and records and other support for
the costs incurred in the performance of its duties hereunder. Each Receiving
Party to which a quarterly report is required to be submitted shall have the
right to inspect the books and records of the Providing Party required to submit
such report for purpose of verifying the accuracy of the Service Fee, which
right of inspection may be exercised through duly appointed agents on reasonable
advance notice during ordinary business hours. To the extent that the estimated
monthly payments made by one Receiving Party to a Providing Party under Section
3.3 are more or less than the Service Fee shown to be due and payable in the
applicable quarterly report, the difference shall be paid to the Party to whom
it is owed within fifteen (15) days. Any additional payment owing under this
Section that is made later than fifteen (15) days after it is due shall incur
interest at the minimum applicable federal rate required under United States
federal income tax laws.
4. TERM AND TERMINATION.
4.1 Term. This Agreement shall continue in force from the date hereof
until such time as the License Agreement terminates, unless terminated earlier
under the provisions of this Section 4.
4.2 Termination for Convenience. This Agreement may be terminated by
mutual written agreement of all Parties, for any reason or no reason.
4.3 Immediate Termination Upon Notice for Change in Control or
Substantial Encumbrance. In the event that the direct or indirect ownership of
PPC-BV undergoes a change in control so that PPC-BVI and its Majority-Owned
Affiliates ceases to hold a majority Equity Interest in PPC-BV, or in the event
that a substantial portion of PPC-BV's assets or the conduct of PPC-BV's
business shall be substantially encumbered by extraordinary governmental action
or by operation of law, PPC-BVI may, at its option, terminate this Agreement
effective immediately and without compensation upon written notice given to PPC-
BV.
4.4 Termination of Certain Obligations upon Reduction of Ownership
Interest. In the event that the aggregate ownership interest of Softbank,
Vivendi and @viso is reduced to below 10% of the Equity Interest in PPC-BV, the
respective obligations of Softbank Vivendi and @viso under Sections 2 and 8
hereof shall terminate automatically. In the event that the aggregate ownership
interest of PPC-US Entities is reduced to below 10% of the Equity Interest in
PPC-BV, the respective obligations of PPC-US Entities under Sections 2.12 hereof
shall terminate automatically.
4.5 Termination After Failure to Cure for Failure of Performance. If
@viso, Vivendi or Softbank shall fail to perform any of its material obligations
contained in this Agreement and shall fail to cure such default within sixty
(60) days after receipt of a notice from the PPC-US or PPC-BV, the Party giving
notice shall have the right to terminate this Agreement immediately and without
compensation by giving written notice to all Parties. If PPC-US shall fail to
perform any of its material obligations contained in this Agreement and shall
fail to cure such default within sixty (60) days after receipt of a notice from
@viso, Vivendi or Softbank, the Party giving notice shall have the right to
terminate this Agreement immediately and without compensation by giving written
notice to all Parties.
4.6 Cross-Termination with License Agreement. In the event of
termination of the License Agreement due to the material default of BV in
accordance with Section 8 of the License Agreement, PPC-US shall have the right
to terminate this Agreement immediately and without compensation by giving
written notice to all Parties.
4.7 Effect of Termination. Upon termination of this Agreement, each
Party shall diligently cooperate with the others to effect a smooth and orderly
transition. The provisions of Sections 1, 4, 5, 6 and 8 (excluding only
Section 8.8 and 8.9) and any payment obligations accrued as of the effective
date of termination shall survive the termination of this Agreement for any
reason. All other rights and obligations of the Parties shall cease upon
termination of this Agreement.
5. LIMITATION ON LIABILITY; INDEMNIFICATION.
5.1 IN NO EVENT SHALL ANY PARTY BE LIABLE HEREUNDER TO ANY OTHER PARTY
FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES HOWEVER CAUSED,
ON ANY THEORY OF LIABILITY, AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE
OF ANY LIMITED REMEDY.
5.2 Indemnification. Each Party which performs Services on behalf of
another Party hereunder shall be solely responsible for, and shall indemnify and
hold the other Parties free and harmless from, any and all claims, damages or
lawsuits (including attorneys' fees) arising out of its acts or the acts of its
employees or its agents. In the event of termination by any Party in accordance
with any of the provisions of this Agreement, no Party shall be liable to any
other because of such termination for compensation, reimbursement or damages on
account of the loss of prospective profits or anticipated sales or on account of
expenditures, investments, leases or commitments in connection with the business
or goodwill of any Party.
6. CONFIDENTIALITY.
6.1 Obligations. The Parties acknowledge that, from time to time, one
Party (the "Disclosing Party") may disclose to the other Party (the "Receiving
Party") information which is marked as "proprietary" or "confidential" or which
would, under the circumstances, be understood by a reasonable person to be
proprietary and nonpublic ("Confidential Information"). Confidential
Information includes without limitation, information relating to the business of
marketing and providing PeoplePC Solutions to customers. Each Receiving Party
shall retain such Confidential Information in confidence and shall not disclose
it to any third party without the Disclosing Party's written consent, or use it
except as permitted under this Agreement. Each Party shall use at least the
same procedures and degree of care which it uses to protect its own Confidential
Information of like importance, and in no event less than reasonable care.
6.2 Exceptions. Notwithstanding the foregoing, Confidential
Information will not include information to the extent that:
a. such information was already known by a Receiving Party without an
obligation of confidentiality at the time of disclosure hereunder;
b. was generally available to the public at the time of its disclosure
to a Receiving Party hereunder;
c. became generally available to the public after its disclosure other
than through an act or omission of a Receiving Party in breach of this
Agreement; or
d. was subsequently lawfully and independently disclosed to a
Receiving Party by a person other than Disclosing Party.
6.3 Permitted Disclosure. The Receiving Party may disclose the other
Party's Confidential Information to the extent such disclosure is required by
order or requirement of a court or other governmental body, but only if the
Receiving Party provides prompt notice thereof to the Disclosing Party to enable
the Disclosing Party to seek a protective order or otherwise prevent or restrict
such disclosure, and Receiving Party shall provide all such reasonable
assistance to Disclosing Party, at Disclosing Party's expense with respect to
Disclosing Party's efforts to seek such protective order or otherwise prevent or
restrict such disclosure.
6.4 Remedies. Unauthorized use by any Party of Confidential
Information provided to it by another Party hereunder will diminish the value to
the other Party of such information. Therefore, if a Party breaches any of its
obligations with respect to confidentiality and unauthorized use of Confidential
Information of another Party hereunder, the other Party shall be entitled to
equitable relief to protect its interest therein, including but not limited to
injunctive relief, as well as money damages.
6.6 Return of Confidential Information. On the termination of this
Agreement, each Party shall return to each of the other Parties all records,
notes and other documents and materials that contain or embody any of such other
Party's Confidential Information in its possession as of the effective date of
termination.
7. WARRANTY.
7.1 Limited Service Warranty. Each Party agrees to perform its Service
obligations in a professional and workmanlike manner.
7.2 Authority. Each Party represents and warrants to the other Parties
that (i) it is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation; (ii) it has full
right, power and authority to enter into this Agreement and to perform all of
its obligation hereunder; (iii) this Agreement constitutes its valid and binding
obligation, enforceable against it in accordance with its terms; and (iv) its
execution, delivery and performance of this Agreement will not result in a
breach of any material agreement or understanding to which it is a party or by
which it or any of its material properties may be bound.
7.3 DISCLAIMER. EXCEPT FOR THE EXPRESS WARRANTIES IN THIS SECTION 7,
EACH PARTY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY, BUSINESS
CONTINUITY, NON-INFRINGEMENT OR FITNESS FOR
A PARTICULAR PURPOSE, WITH RESPECT TO THE SERVICES PROVIDED BY IT HEREUNDER.
8. GENERAL PROVISIONS.
8.1 Notices. All notices called for under this Agreement shall be made
in writing and shall be sent by personal delivery or by recognized international
express courier service, confirmation of receipt requested, addressed to the
Parties at its address set forth below.
If to PPC-US:
PeoplePC, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxx, XX 00000
Attn: General Counsel
Telefax: (000) 000-0000
With a copy to: Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Attn: Xxxxxx Xxxxxxxx
Telefax: (000) 000-0000
If to PPC-UK PeoplePC (UK) Limited
00 Xxxxxxxx Xxxxx
Xxxxxx X0X 0XX
Attn: General Counsel
If to PPC-BV PeoplePC BV
c/x Xxxxxxxx Equity
Xx Xxxxxxxxx 0 Xxxxxxx X,
0000 XX, Xxxxxxxxx
Attn: General Counsel
If to @viso: @viso Limited
c/o Macfarlanes
00 Xxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Xxxxxxx
Attention: Xxxxxxx Xxxxxx
Telephone: 00-000-000-0000
Fax: 00-000-000-0000
With a copy to: Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000 XXX
Attention: Xxxxxxx X. Xxxxx, Esq.
Telephone: 000-000-0000
Fax: 000-000-0000
Notice Address for Vivendi [to be provided by Vivendi
within 10 days of the Effective Date]
Notice Address for Softbank [to be provided by Softbank
within 10 days of the Effective Date]
All notices shall be deemed given or made (y) on the date delivered if
delivered personally, by courier or otherwise, or (z) on the third business day
after it is mailed, in all cases to the addressee at the above address or such
other address as may from time to time be designated to the Parties in writing.
8.2 Relationship Between Parties. The Parties shall at all times and
for all purposes be deemed to be independent contractors and neither Party, nor
either Party's employees, representatives, subcontractors or agents, shall have
the right or power to bind the other Party. This Agreement shall not itself
create or be deemed to create a joint venture, partnership or similar
association between the Parties or either Party's employees, subcontractors or
agents.
8.3 Compliance with Laws. Notwithstanding anything to the contrary
contained herein, all rights and obligations of the Parties are subject to prior
compliance with United States and foreign export regulations and such other
United States and foreign laws and regulations as may be applicable.
8.4 Governing Law and Jurisdiction. This Agreement shall be governed
by and construed in accordance with the laws of the State of California, United
States of America, and the United Nations Convention on Contracts for the
International Sale of Goods shall not apply. All disputes arising out of this
Agreement shall be subject to the exclusive jurisdiction and venue of the
California State courts of San Francisco County, California (or, if there is
exclusive federal jurisdiction, the United States District Court for the
Northern District of California). Each Party hereby expressly consents to (i)
the personal jurisdiction and venue of these courts, and (ii) service of process
being effected by registered airmail sent to the address set forth above.
8.5 Non-Waiver. The failure of any Party at any time to require
performance by another party of any provision hereof shall not affect in any
way, or act as a waiver of, the right to require the Party to perform in
accordance with this Agreement at any other time, nor shall the waiver of any
Party of a breach of a provision of this Agreement be held or taken to be a
waiver of the provision itself.
8.6 Severability. If any provision in this Agreement shall be found
or be held to be invalid or unenforceable, then the meaning of said provision
shall be construed, to the extent feasible, so as to render the provision
enforceable, and if no feasible interpretation would save such provision, it
shall be severed from the remainder of this Agreement which shall remain in full
force and effect unless the severed provision is essential and material to the
rights or benefits received by any Party. In such event, the Parties shall use
best efforts to negotiate, in good faith, a substitute, valid and enforceable
provision or agreement which most nearly affects the Parties' intent in entering
into this Agreement.
8.7 Assignment. No Party shall assign this Agreement in whole or in
part, without the prior written consent of the other Parties, which shall not be
unreasonably withheld. Any attempted assignment not having such consent shall be
void and without effect. Subject to the foregoing, this Agreement will bind and
inure to the benefit of the Parties, their respective successors and permitted
assigns.
8.8 Majority-Owned Affiliate Cooperation. Softbank and Vivendi will
use their best efforts to encourage their Majority-Owned Affiliates to do
business and otherwise cooperate with the PPC-BV Entities to establish and grow
the Local Business in the Territory where there are synergies and mutual
benefits. PPC-BV Entities will discuss with Vivendi in good faith the
possibility of doing business and otherwise cooperating with Vizzavi (an
affiliated company of Vivendi to be incorporated) where there are synergies and
mutual benefits.
8.9 Supply Contract. Vivendi agrees that as of, and for the two
months from the Closing Date (as defined in Shareholders Agreement), it shall
cease any ongoing discussions and not enter into any new agreements or
discussions with vendors of corporate connectivity or similar programs other
than PPC-BV Entities.
8.10 Entire Agreement; Amendments. This Agreement (and those
referenced in the Recitals within this Agreement) contains the Parties' entire
understanding with respect to the matters contained herein. There are no
promises, covenants or undertakings other than those set forth herein, and
neither Party is relying upon any representations or warranties except as set
forth herein. This Agreement may not be modified except by an agreement in
writing signed by all Parties.
8.11 Headings; Counterparts. Headings to Sections of this Agreement
are to facilitate reference only, do not form a part of this Agreement, and
shall not in any way affect the interpretation hereof. This Agreement may be
executed in two (2) or more U.S. English language counterparts or duplicate
originals, all of which shall be regarded as one and the same instrument, and
which shall be the official and governing version in the interpretation of this
Agreement.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
effective as of the date first above written.
PeoplePC (UK) Limited PeoplePC, Inc.
By: __________________________ By: _______________________________
Name: ________________________ Name: _____________________________
Title: _______________________ Title: ____________________________
PeoplePC BV @viso, Limited
By: __________________________ By: _______________________________
Name: ________________________ Name: _____________________________
Title: _______________________ Title: ____________________________
Softbank Corp. Vivendi, S.A.
By: __________________________ By: _______________________________
Name: ________________________ Name: _____________________________
Title: _______________________ Title: ____________________________
Exhibit A
Territory
The Territory shall consist of the geographical area currently consisting of the
following countries:
Sweden, Finland, Norway (and Svalbard and Jan Mayen Islands), Iceland, Denmark
and the Faroe Islands, Poland, Hungary, Czech Republic, Slovakia (Slovak
Republic), Lithuania, Latvia, Estonia, Italy, Spain, Romania, Portugal and
Madeira and the Azores, Greece, Bulgaria, Andorra, San Marino, Vatican City,
Germany, United Kingdom, Republic of Ireland, France, Netherlands, Belgium,
Austria, Switzerland, Luxembourg, Monaco, and Liechtenstein.
Exhibit B
Service Fees
1. Additional Definitions:
1.1 "Contracting Costs" means all necessary and reasonable direct costs
which a Contracting Entity incurs in connection with the negotiation and
execution of a Supply Contract including, without limitation, the appropriate
portion of its occupancy costs, employee salaries, overhead, insurance,
depreciation, legal fees and charges, travel expenses, and other professional
fees, plus five percent (5 %) of such costs.
1.2 "Contracting Entity" shall mean the PeoplePC Entity which contracted
in the first instance with a Third Party to provide or market the PeoplePC
Solutions to the Eligible Employees of such Third Party so that they become
PeoplePC Members.
1.3 "Eligible Employees" shall mean those individual employees or
members of a Third Party who qualify for the provision of a PeoplePC Solution
under the terms of a Supply Contract with such Third Party.
1.4 "Fulfilling Entity" shall mean the PeoplePC Entity which is
obligated to market or provide PeoplePC Solutions to the Eligible Employees and
PeoplePC Members located within its the territory that such PPC Entity is
licensed or authorized to conduct the Local Business.
1.5 "Membership Agreements" means the agreement(s) which provide(s) for
the terms and conditions of use and obligations of membership between a PeoplePC
Entity and a user of goods and/or services provided by a PeoplePC Entity.
1.6 "PeoplePC Entity" means an entity that is an Majority-Owned
Affiliate of PeoplePC and has the right to conduct certain PeoplePC business
activities within a defined Territory.
1.7 "PeoplePC Member" means those individuals which enter into
Membership Agreements for the provision of certain goods and/or services by a
PeoplePC Entity.
1.8 "PeoplePC Solution Fees" means those fees due and owing to PeoplePC
Entity for the provision of PeoplePC Solutions to Eligible Employees and
PeoplePC Members as set forth in a Supply Contract.
1.9 "Supply Contract" shall mean an agreement or arrangement entered
into between a Contracting Entity and Third Party relating to the provision
and/or marketing of PeoplePC Solutions to Eligible Employees so that they may
become PeoplePC Members.
1.10 "Third Party" means a corporate or other organizational entity that
enters into a Supply Contract.
2. Fees. Each Fulfilling Entity shall solely bear all of costs incurred in
connection with the provision and marketing of PeoplePC Solutions to Eligible
Employees and PeoplePC Members located within its respective Territory.
2.1 Fees to a Fulfilling Entity. In the event a Contracting Entity
enters into a Supply Contract which provides for the distribution or marketing
of PeoplePC Solutions within the Territory of one or more other Fulfilling
Entities, each Fulfilling Entity shall fulfill such contractual obligations as
applicable in their respective Territory, and each Fulfilling Entity shall be
compensated in the amount set forth under such Supply Contract for the provision
of PeoplePC Solutions to PeoplePC Members located within its respective
Territory. Each Fulfilling Entity shall be entitled to retain all such other
revenue generated by such PeoplePC Members as a result of additional goods and
service provided to such PeoplePC Member by or through such Fulfilling Entity,
including without limitation any Buyer's Club revenues, but in all cases subject
to the terms of the applicable Supply Contract which may provide for the payment
certain fees to the third party which entered into the Supply Agreement.
2.2 Fees to a Contracting Entity. A Fulfilling Entity shall pay to a
Contracting Entity a commission which equals U.S. $100 for each PeoplePC Member
which a Fulfilling Entity acquires as a result of a Supply Agreement entered
into by a Contracting Entity. In addition, within sixty (60) days of the date
time a Supply Contract is entered into, a Contracting Party shall provide to a
Fulfilling Entity a good faith estimate of (1) the proportion of potential
Eligible Employees located within a Fulfilling Entity's Territory, (2) the
Contracting Costs attributable to such Supply Agreement, and (3) that proportion
of the Contacting Entity's Contracting Costs attributable to those PeoplePC
Members located within such Fulfilling Entity's Territory acquired as a result
of the Supply Agreement entered into by a Contracting Entity ("Local Contract
Costs"). The Fulfilling Entity shall reimburse the Contracting Entity the Local
Contract Costs. The Fulfilling Entity and the Contracting Entity may alter the
fees paid under this Section 2.2 upon written mutual agreement.
2.3 Other Costs or Payments. Except as expressly set forth in any
writing or agreement between the PeoplePC Entities, the PeoplePC Entities shall
retain any fees directly obtained from a PeoplePC Member and shall bear all
costs incurred in connection with the operation of its business within its
respective Territory.
3. PPC Member Transfers. In the event a PeoplePC Member after receipt of
its PeoplePC Solution relocates from the Territory of one PeoplePC Entity to
another territory, no fees shall be due to the new Fulfilling Entity to the
Contracting Entity and vice versa.
Exhibit C
Articles of Association
TRANSLATION OF THE
-----------------------------
ARTICLES OF ASSOCIATION OF
---------------------------
PeoplePC N.V.
-------------
Name. Corporate seat.
Article 1.
The name of the company is: PeoplePC N.V.
Its corporate seat is in Amsterdam.
Objects.
Article 2.
The objects of the company are to provide bundled hardware, software, and
internet access packages to individuals or companies as well as to participate
in, to take an interest in any other way in, to conduct the management of and to
finance other companies and business enterprises of whatever nature, to take up
and to make loans, to provide securities, including securities for debts of
others, and finally all activities which are incidental to or which may be
conducive to any of the foregoing.
Share capital and shares.
Article 3.
3.1. a. The authorised share capital of the company amounts to fifty million
Euro (EUR 50,000,000). It is divided into:
- fifty million (50,000,000) Class A common shares with a par value of
ten euro cent (EUR 0,10) each;
- one hundred million (100,000,000) Class B common shares with a par
value of thirty euro cent (EUR 0,30) each;
- one hundred million (100,000,000) Series A preferred shares with a
par value of ten euro cent (EUR 0,10) each;
- fifty million (50,000,000) Series B preferred shares with a par
value of ten euro cent (EUR 0,10) each.
b. The Class A common shares, the Class B common shares, the Series A
preferred shares and the Series B preferred shares shall entitle its
holders to the rights and obligations set forth in these articles of
association as well as to the rights and obligations set forth in the
Shareholders Agreement, dated as of the _________ day of June, two
thousand, as such agreement shall be amended from time to time, by and
among the company and the other parties named therein as well as such
other parties which may become a party thereto after the above date,
such agreement referred to herein as the "Shareholders Agreement", and
such rights and obligations including, but not limited to, any
conversion
rights, redemption rights and preferred rights to distributions as set
forth therein and in these articles of association.
c. Whenever in these articles of association reference is made to the
term "share" this shall be deemed a reference to a Class A common
share, a Class B common share, a Series A preferred share and a Series
B preferred share, and whenever a reference is made to a "shareholder"
this shall be deemed a reference to a holder of a Class A common
share, a holder of a Class B common share, a holder of a Series A
preferred share and a holder of a Series B preferred share, unless
explicitly stated otherwise. Whenever in these articles of association
reference is made to the term "preferred shares" this shall be deemed
a reference to Series A preferred shares and Series B preferred
shares. Whenever in these articles of association reference is made to
the term "common shares" this shall be deemed a reference to Class A
common shares and Class B common shares.
d. Every time a share of a particular class is converted into a share of
another class, in accordance with the provisions of these articles of
association, the number of shares of the authorized share capital in
the form of such class to be converted shall be decreased with such
number of converted shares, simultaneously with an increase of the
number of shares of the class in which such shares are converted.
e. An amendment to the number of shares of a particular class in which
the authorised share capital is divided, shall be filed with the trade
register, within eight (8) days after such amendment.
3.2. a. The shares shall be issued in registered form only. Share certificates
can be issued.
If share certificates have been issued for shares, the transfer of a
share requires delivery upon the company of the corresponding share
certificate. The company may acknowledge the transfer by way of making
an annotation on such share certificate evidencing the
acknowledgement.
b. The shares shall be numbered as follows:
(i) the Class A common shares from A1 onwards;
(ii) the Class B common shares from B1 onwards;
(iii) the Series A preferred shares from Pref A1 onwards; and
(iv) the Series B preferred shares from Pref B1 onwards.
3.3. In respect of the subscription for or acquisition of shares in its share
capital or depositary receipts for shares by other persons, the company
may not grant loans, grant security rights, give a guarantee as to the
price of the shares, grant guarantees in any other manner, or bind itself
either jointly or severally in addition to or for other persons.
Issue of shares.
Article 4.
4.1. The general meeting of shareholders hereinafter referred to as the general
meeting, may resolve that further shares be issued. The general meeting
can designate another corporate
body to this effect for a fixed period not exceeding five years. For such
a resolution a majority of at least two/thirds of the votes shall be
required, if less than half of the issued share capital is present or
represented at the meeting. As long as the designation is in force, the
general meeting can not decide on a share issue. The general meeting, or
as the case may be, the corporate body designated by the general meeting,
shall determine the price and further terms and conditions of the issue,
with due observance of the provisions otherwise relevant thereto in these
articles of association.
4.2. If and when another corporate body is designated to resolve upon the
issuance of shares, the number of shares which it shall be authorised to
issue shall be determined. In addition, the period during which such
designation shall remain in full force and effect, shall be stipulated. A
designation may not exceed a period of five (5) years. The designation can
from time to time be extended for a period not exceeding five (5) years in
each case. Unless such designation provides otherwise, it may not be
withdrawn.
4.3. A valid resolution of the general meeting to issue or to make a
designation shall require a prior or simultaneous resolution of approval
by each group of shareholders of the same class whose rights are
prejudiced by the issue.
4.4. Within eight days after a resolution of the general meeting to issue
shares or to make a designation, the board of directors shall deposit the
full text thereof at the office of the trade register.
4.5. The provisions of the paragraphs 1 to 4 inclusive shall be of
corresponding application to the granting of rights to subscribe for
shares, but shall not apply to the issue of shares to a person exercising
a previously acquired right to subscribe for shares.
4.6. Within eight days after each issue of shares, the board of directors shall
file a statement to that effect at the trade register disclosing the
number and class of the issued shares.
4.7. Shares shall be issued by notarial deed, in accordance with the provisions
set out in section 2:86 of the Civil Code.
Payment for shares.
Article 5.
5.1. Class A common shares shall only be issued against payment in full.
5.2. At the time of issuance, at least twenty five per cent shall be paid upon
the Class B common shares, upon the Series A preferred shares and upon the
Series B preferred shares. Further payments shall be made within one month
after the board of directors shall have requested such payments in writing
from the shareholders.
5.3. Payment must be made in cash, provided that no alternative contribution
has been agreed.
5.4. Payment in cash may be made in a foreign currency, subject to the
company's consent.
Pre-emption rights.
Article 6.
6.1. Upon issue of shares, each shareholder shall have a pre-emption right in
proportion to the aggregate amount of his shares, subject to the
provisions of paragraph 2.
6.2. a. Should a shareholder who is entitled to a pre-emption right not or not
fully exercise such right, the remaining shareholders shall be
similarly entitled to pre-emption rights in respect of those shares
which have not been claimed.
b. If the latter collectively do not or do not fully exercise their pre-
emption rights either, then the general meeting, or as the case may
be, the corporate body designated by the general meeting pursuant to
article 4, shall be free to decide to whom the shares which have not
been claimed shall be issued.
c. There shall be no pre-emptive right with respect to shares issued:
(i) against a contribution other than in cash;
(ii) to employees of the company or of a group company.
6.3. If pre-emption rights exist in respect of an issue of shares, the general
meeting, or as the case may be, the corporate body designated by the
general meeting pursuant to article 4, shall determine, with due
observance of the provisions set out in this article and simultaneously
with the resolution to issue shares, the manner in which and the period
within which such pre-emption rights may be exercised. The pre-emptive
right can be exercised during at least two weeks following the day of the
notification.
The company shall notify all shareholders of an issue of shares in respect
of which pre-emption rights exist and of the period of time within which
such rights may be exercised.
6.4. Pre-emption rights may be limited or excluded for each specific issue by
resolution of the general meeting, unless the corporate body, designated
by the general meeting pursuant to article 4 to resolve upon the issue of
shares, has been designated thereto by the general meeting. A designation
as referred to in the previous sentence may not exceed a period of five
(5) years. The designation can from time to time be extended for a period
not exceeding five (5) years in each case. The designation will only
remain valid as long as such corporate body is the body authorised to
issue shares. Unless such designation provides otherwise, it may not be
withdrawn.
In the proposal to limit or exclude the pre-emption rights, the reasons
for the proposal and the choice for the intended issue price must be
explained in writing.
6.5. For a resolution of the general meeting to limit or exclude the pre-
emption rights or to designate another corporate body authorised for this
purpose in accordance with article 6, paragraph 4 a majority of at least
two/thirds of the votes shall be required, if less than half of the issued
share capital is present or represented at the meeting.
Within eight days after the resolution, the board of directors shall
deposit the full text thereof at the office of the trade register.
6.6. Pre-emption rights may not be disposed of, unless such disposition is
permitted by the Shareholder Agreement, and then only in accordance with
and with due observance of the Shareholder Agreement.
6.7. The provisions of this article shall equally apply to a grant of rights to
subscribe for shares, but shall not apply to an issue of shares to a
person who exercises a previously acquired right to subscribe for shares.
Repurchase of shares.
Article 7.
7.1. Subject to authorisation by the general meeting, the board of directors
may cause the company to acquire such number of fully paid up shares in
its own share capital for consideration that the aggregate par value of
the shares in its share capital to be acquired and already held by the
company and its subsidiary companies does not exceed one/tenth (1/10) of
the issued share capital and without prejudice to the other provisions of
the law with respect thereto.
Decisive for the determination of the percentage mentioned in the
preceding sentence is the company's equity as shown by the most recently
adopted balance sheet, minus the acquisition price for shares in the
company's share capital and any distribution of profits or reserves to
other persons which have become due by the company and its subsidiary
companies after the balance sheet date. No acquisition pursuant to this
paragraph shall be allowed if a period of six months following the end of
a financial year has expired without the annual accounts for such year
having been adopted.
In respect of the authorisation, which validity may not exceed a period of
eighteen months, the general meeting must specify the number of shares
which may be acquired, the manner in which they may be acquired and the
limits within which the price must be set.
7.2. The board of directors shall decide upon the disposal of shares acquired
by the company in its own share capital. In respect of such disposal there
shall be no pre-emptive right.
7.3. If depositary receipts for shares in the company have been issued, such
depositary receipts for shares shall be put on par with shares for the
purpose of the provisions of paragraph 1.
7.4. The company may accept a pledge of its own shares or depositary receipts
only if:
a. the shares are fully paid up;
b. the nominal amount of its own shares and the depositary receipts to be
pledged to it and of those already held or pledged to it do not
together amount more than one/tenth of the issued capital; and
c. the general meeting of shareholders has approved the pledge agreement.
7.5. In the general meeting no votes may be cast in respect of a share held by
the company or a subsidiary company; no votes may be cast in respect of a
share the depositary receipt for which is held by the company or a
subsidiary company. Nonetheless, the holders of a right of usufruct and
the holders of a right of pledge on shares held by the company or a
subsidiary company are not excluded from the right to vote such shares, if
the right of usufruct or the right of pledge was
granted prior to the time such share was held by the company or such
subsidiary company. Neither the company nor a subsidiary company may cast
votes in respect of a share on which it holds a right of usufruct or a
right of pledge.
When determining to what extent the shareholders cast votes, are present
or represented or to what extent the share capital is provided or
represented, no account shall be taken of shares which are not entitled to
voting rights pursuant to the preceding provisions.
7.6. Shares that the company holds in its own share capital shall not be
counted when determining the division of the amount to be distributed on
shares.
Reduction of share capital.
Article 8.
8.1. The general meeting may resolve to reduce the issued share capital in
accordance with section 2:99 of the Civil Code by cancelling shares or by
reducing the par value of shares by an amendment to the articles of
association.
8.2. A resolution to cancel shares can apply to shares which are held by the
company itself or to shares for which the company holds depositary
receipts.
Cancellation of shares can also apply to all preferred shares of the same
class, provided their par value and the share premium paid on such shares
is repaid and with due observance of article 30, paragraph 3.
8.3. Reduction of the par value of shares without repayment on shares shall be
effected pro rata to all shares of the same class.
Partial repayment on shares may only be made pro rata either on all shares
or exclusively on the ordinary shares of the same class or the preference
shares of the same class, respectively. The pro rata requirement may be
waived by agreement of all shareholders concerned.
8.4. For a resolution of the general meeting to reduce the share capital, a
majority of at least two/thirds of the votes cast shall be required, if
less than half of the issued share capital is present or represented at
the meeting. A valid resolution of the general meeting to reduce the share
capital shall require a prior or simultaneous resolution of approval by
each group of shareholders of the same class whose rights are prejudiced
by the reduction.
8.5. The notice of a general meeting at which a resolution referred to in this
article is to be adopted shall include the purpose of the reduction of the
share capital and the manner in which such reduction shall be effectuated.
The resolution to reduce the share capital shall specify the shares to
which the resolution applies and shall describe how such a resolution
shall be implemented.
The company shall file a resolution to reduce the issued share capital
with the office of the trade register in the municipality where the
company has its head office and shall publish such filing in a national
daily newspaper.
A resolution to reduce the share capital shall not take effect as long as
opposition may be instituted. If opposition has been instituted on time,
the resolution shall take effect only upon the withdrawal of the
opposition or upon an order setting aside the opposition becoming
enforceable.
If the company, on account of losses incurred, reduces its share capital
to an amount that is not less than its shareholders equity, the resolution
shall take immediate effect.
Depositary receipts.
Article 9.
9.1. For the purpose of these articles of association, rights of holders of
depositary receipts shall mean the rights conferred by law on holders of
depositary receipts for shares issued with the cooperation of a company,
such as inter alia, the right to receive notices of general meetings, the
right to attend such meetings, the right to address such meetings and the
right to inspect the annual accounts as prepared by the board of
directors, the annual report and the additional information thereto, at
the office of the company, and to obtain a copy thereof at no cost.
9.2. Where hereinafter used in these articles of association holders of
depositary receipts shall refer to holders of depositary receipts issued
for shares with the cooperation of the company, to holders of a right of
usufruct and holders of a right of pledge with voting rights and
furthermore to shareholders with no voting rights.
Shareholders register.
Article 10.
10.1. The board of directors shall maintain a register in which the names and
addresses of all shareholders shall be recorded, stating the date on which
they acquired the shares, the number and class of shares held by each of
them, the date of acknowledgement or service, as well as the amount paid
up on each share and any other information that must be recorded under the
law.
10.2. The register shall be kept up to date.
10.3. Upon request and at no cost, the board of directors shall provide a
shareholder, a holder of a right of usufruct and a holder of a right of
pledge with an extract from the register regarding their respective rights
in respect of a share. If a share is encumbered with a right of usufruct
or a right of pledge, the extract shall specify who is entitled to the
rights of holders of depositary receipts.
10.4. The board of directors shall make the register available at the office of
the company for inspection by the shareholders, as well as by the holders
of a right of usufruct and by the holders of a right of pledge who are
entitled to the rights of holders of depositary receipts.
10.5. Each shareholder, holder of a right of usufruct, holder of a right of
pledge and holder of depositary receipts for shares shall give his address
to the board of directors.
Joint holding.
Article 11.
If shares or depositary receipts for shares issued with the cooperation of the
company are included in a joint holding, the joint participants may only be
represented vis-a-vis the company by a person who has been designated by them in
writing for that purpose. The joint participants may also designate more than
one person.
If the joint holding comprises shares, the joint participants may determine at
the time of the designation of the representative or thereafter - but only
unanimously - that, if a joint participant so wishes, a number of votes
corresponding to his interest in the joint holding will be cast in accordance
with his instructions.
Notices of meetings and notifications.
Article 12.
12.1. Notices of general meetings and notifications shall be given by registered
or regular letter or by bailiff's writ.
Notices of meetings and notifications to shareholders and holders of
depositary receipts shall be sent to the addresses most recently given to
the board of directors. Notifications by shareholders or by holders of
depositary receipts to the board of directors or to the person as referred
to in article 17, paragraph 5, shall be sent to the office of the company.
12.2. The date of a notice of meeting or a notification shall be deemed to be
the date stamped on the receipt issued for a registered letter, or the
date of mailing by the company or the date of service of the writ, as the
case may be.
12.3. Notifications which, pursuant to the law or the articles of association,
are to be addressed to the general meeting may be included in the notice
of such meeting.
Transfer of shares.
Article 13.
Any transfer of shares or of a right of usufruct on shares or the creation or
release of a right of usufruct or of a right of pledge on shares shall be
effected by notarial deed in accordance with the provisions set out in section
2:86 of the Civil Code with due observance of the provisions of article 3,
paragraph 2, under (a).
Save in the event that the company is a party to the transaction the rights
attached to a share may only be exercised after:
a. the company has acknowledged the transaction;
b. the deed has been served upon the company; or
c. the company has acknowledged the transaction on its own initiative by
recording the same in the shareholders register,
all in accordance with the provisions set out in sections 2:86a and 2:86b of the
Civil Code.
Optional conversion rights.
Article 14.
14.1. a. Each holder of Class B common shares, Series A preferred shares and
Series B preferred shares can request the conversion of each of its
shares into Class A common shares on a one-to-one basis, the Class B
common shares with due observance of paragraph 1, under b, hereof.
Each holder of a certain class of shares shall be required to convert
all of its shares of the same class of shares if any are so converted.
The right to so convert the Class B common shares, Series A preferred
shares and Series B preferred shares shall be referred to as the
"conversion right".
b. Upon conversion of Class B common shares the holder thereof shall
transfer two (2) Class A common shares to the company for no
consideration for each Class B common share to be converted.
14.2. A conversion request pursuant to paragraph 1 hereof shall be sent in
writing to the board of directors. In such request the holder of the
respective class of shares shall inform the board of directors of the
number of shares then held by it and to be converted, as well as the date
on which the conversion should take effect, which shall not be earlier
than seven (7) business days after the day on which the written request
has been received by the board of directors. The board of directors shall
inform such holder within seven (7) business days after the date of
conversion that its shares have been converted in conformity with its
request, specifically stating the conversion date and the number of Class
A common shares, into which its shares have been converted. The company
shall not charge such holder of shares any costs in connection with the
request and the conversion.
14.3. The company may, at its discretion, convert Class B common shares, Series
A preferred shares and Series B preferred shares that it holds in its own
share capital into Class A common shares on a one-to-one basis. The
company may, at its discretion, convert Series B preferred shares that it
holds in its own share capital into Series A preferred shares on a one-to-
one basis.
14.4. Each Class B common share, Series A preferred share and Series B preferred
share held by one and the same shareholder includes the conversion right,
so that such rights and such Class B common share, Series A preferred
share and Series B preferred cannot be separately disposed of.
14.5. Upon conversion of a Class B common share, Series A preferred share and
Series B preferred in accordance with this article, the corresponding
conversion right shall have been exercised and extinguished.
Automatic conversion rights.
Article 15.
15.1 Each Series B preferred share shall be automatically converted into a
Series A preferred share upon the occurrence of (i) an acquisition, sale
or merger of or into the company resulting in a change of control of the
company, (ii) a merger of the company with PeoplePC, Inc., established in
Delaware, United States of America, or an affiliate of PeoplePC, Inc., as
the acquiring company, or acquisition of all the Company's assets or
shares by People PC, Inc., or (iii) an initial public offering of shares
in the share capital of the company, on a one to-one basis. In case such
an automatic conversion occurs, subject to article 15, paragraph 4, the
Series B preferred shares shall be entitled to, with due observance of
article 30, paragraph 3, receive a dividend ("Series B dividend") of an
amount calculated as follows: (a) the quotient equal to the per share
consideration to be received by the Company or the shareholders, as the
case may be, in an event as described above divided by the original issue
price per share of the Series B preferred shares shall be calculated
("Rate of return"); (b) if the Rate or return is less than or
equal to four (4), the value of the Series B dividend per share shall
equal the original issue price per share of the Series B preferred shares;
(c) if the Rate of return is greater than four (4) the aggregate value of
Series B dividend shall be zero (0).
15.2. Each Series A preferred share and each Series B preferred share shall be
automatically converted into a Class A common share upon the occurrence of
(i) an initial public offering of shares in the share capital of the
company or (ii) a merger of the company with PeoplePC, Inc., or an
affiliate of PeoplePC, Inc., as the acquiring company, or acquisition of
all the Company's assets or shares by PeoplePC, Inc., on a one-to-one
basis.
15.3. The Class B common shares will not be automatically converted at any time.
15.4. The dividend described in article 15, paragraph 1, shall only be payable
upon the first occurrence of the events described in the first sentence of
article 15, paragraph 1.
Restrictions on the transfer of shares.
Article 16.
16.1. A shareholder who wishes to transfer one or more shares shall be free to
transfer its shares to an affiliate if the board of directors states in
writing that application of paragraph 3 up to and including paragraph 8 of
this article is waived.
The transfer must take place within three months after the board of
directors has made such statement.
If a shareholder is to transfer its shares to a former shareholder by
virtue of the law, paragraph 3 up to and including paragraph 8 of this
article shall not apply.
16.2. In all cases other than referred to in paragraph 1, a transfer of shares -
not including a transfer by the company of shares it has acquired in its
own share capital - may only be effected with due observance of paragraph
3 up to and including paragraph 8.
16.3. The shareholder wishing to transfer one or more shares, shall require the
approval of the general meeting.
The transfer must be effected within three (3) months after the approval
has been granted or is deemed to have been granted.
16.4. The approval shall be deemed to have been granted if the general meeting,
simultaneously with the refusal to grant its approval, does not furnish
the requesting shareholder with the names of one or more interested
parties prepared to purchase all the shares referred to in the request for
approval, against payment in cash, for the purchase price determined in
accordance with paragraph 5 hereof. The company itself can only be
designated as interested party with the approval of the requesting
shareholder.
The approval shall also be deemed to have been granted if, within six (6)
weeks after the request for approval, the general meeting does not take a
decision with respect thereto.
16.5. The purchase price for the shares shall be determined by mutual agreement
between the requesting shareholder and the interested parties accepted by
it.
Failing agreement, the purchase price shall be determined by an
independent expert, to be designated by mutual agreement between the
general meeting and the requesting shareholder.
16.6. Should the general meeting and the requesting shareholder not reach
agreement on the designation of the independent expert, then such
designation shall be made by the President of the Chamber of Commerce and
Industry, within the district in which the company has its head office.
16.7. Once the purchase price of the shares has been determined by the
independent expert, then the requesting shareholder shall be free, during
one (1) month after such determination of the purchase price, to decide
whether it will transfer its shares to the designated interested parties.
Management.
Article 17.
17.1. The company shall be managed by board of directors ("board of directors").
The general meeting shall determine the number of directors, including at
least one chief executive officer hereinafter: "CEO".
A legal entity may be appointed as a director.
17.2. Directors shall be appointed by the general meeting. The general meeting
also determines the terms and conditions of employment of the directors.
17.3. The general meeting may suspend or dismiss a director with due observance
of the provisions of article 25.
If the general meeting has suspended a director, the general meeting shall
within three months after the suspension has taken effect resolve either
to dismiss such director, or to terminate or continue the suspension,
failing which the suspension shall lapse.
A resolution to continue the suspension may be adopted only once and in
such event the suspension may be continued for a maximum period of three
months commencing on the day the general meeting has adopted the
resolution to continue the suspension.
If within the period of continued suspension the general meeting has not
resolved either to dismiss the director concerned or to terminate the
suspension, the suspension shall lapse.
A director who has been suspended shall be given the opportunity to
account for his actions at the general meeting and to be assisted by an
adviser.
17.4. In the event that one or more directors is prevented from acting or is
failing, the remaining directors or the only remaining director shall
temporarily be in charge of the management.
In the event that all directors are or the only director is prevented from
acting or are / is failing, the person designated or to be designated for
that purpose by the general meeting shall temporarily be in charge of the
management.
In the event that one or more directors is failing the person referred to
in the preceding sentence shall take the necessary measures as soon as
possible in order to have a definitive arrangement made.
Article 18.
18.1. With due observance of these articles of association, the board of
directors may adopt rules governing its internal proceedings. Furthermore,
the board of directors may divide their duties among themselves, whether
or not by rule.
18.2. The board of directors shall meet whenever a director so requires. All
directors shall be provided with a notice in writing of such meeting by
the president of the board of directors within five (5) business days.
Whenever in these articles of association the term "business day" is used,
this shall mean a day on which banks are generally open for regular
business in the Netherlands.
18.3. The board of directors shall adopt its resolutions by an absolute majority
of votes cast in a meeting were a majority of the directors has to be
present.
18.4. The board of directors may also adopt resolutions without holding a
meeting, provided such resolutions are adopted in writing, by cable, by
telefax and all directors have expressed themselves in favour of the
proposal concerned.
The board of directors may also adopt resolutions by way of a
videoconference meeting, provided that all directors are able to hear each
other and all directors have expressed themselves in favour of the
proposal concerned.
Representation.
Article 19.
19.1 The board of directors as well as each managing director individually
shall have power to represent the company.
19.2. If a director, acting in his personal capacity, enters into an agreement
with the company or conducts any litigation against the company, the
company may be represented in that matter either by the board of directors
or the other directors, unless the general meeting designates a person for
that purpose or the law provides for the designation in a different
manner. Such person may also be the director in respect of whom there is a
conflict of interest. If a director has a conflict of interest with the
company other than as referred to in the penultimate sentence, he shall,
as in the case of the board of directors or the other directors, have the
power to represent the company.
Authorised signatories.
Article 20.
The board of directors may grant to one or more persons, whether or not employed
by the company, the power to represent the company ("procuratie") or grant in a
different manner the power to represent the company on a continuing basis. The
board of directors may also grant such titles as it may determine to persons, as
referred to in the preceding sentence, as well as to other persons, but only if
such persons are employed by the company.
General meetings.
Article 21.
21.1. The annual general meeting shall be held within six months after the end
of the financial year.
21.2. The agenda for this meeting shall in any case include the following items:
a. the consideration of the written annual report by the board of
directors concerning the company's affairs and the management as
conducted;
b. the adoption of the annual accounts and - with due observance of the
provisions of article 30 - the allocation of profits.
The items referred to above need not be included on the agenda if the
period for preparing the annual accounts and for presenting the annual
report has been extended, or if the agenda includes a proposal to such
effect; the item referred to in a. need not be included on this agenda
either if section 2:403 of the Civil Code applies to the company.
Furthermore, all items which are put on the agenda with due observance of
article 22, paragraph 3, shall be discussed at the annual general meeting.
21.3. A general meeting shall also be convened whenever the board of directors
considers appropriate.
In addition a general meeting shall be convened as soon as one or more
persons, entitled to cast at least one-tenth of the total number of votes
that may be cast, so request the board of directors, stating the items to
be discussed.
Article 22.
22.1. General meetings shall be held in the municipality where the company has
its corporate seat or where the company has its head office.
Resolutions adopted at a general meeting held elsewhere shall be valid
only if the entire issued share capital is represented and all the holders
of depositary receipts for shares are present or represented.
22.2. Shareholders and holders of depositary receipts for shares shall be given
notice of the general meeting by the board of directors or a director.
If in the event as referred to in the second sentence of article 21,
paragraph 3, a director does not convene the meeting such that the meeting
is held within four weeks of receipt of the request, any of the persons
requesting the meeting shall be authorised to convene the same with due
observance of that provided in these articles of association.
The notice shall specify the items to be discussed.
22.3. Notice shall be given not later than on the fifteenth day prior to the
date of the meeting.
If the notice period was shorter or if no notice was sent, no valid
resolutions may be adopted unless the resolution is adopted by unanimous
vote at a meeting at which the entire issued share capital is represented
and all holders of depositary receipts are present or represented.
The provision of the preceding sentence shall equally apply to matters
which have not been mentioned in the notice of meeting or in a
supplementary notice sent with due observance of the notice period.
22.4. The general meeting shall appoint its chairman. The chairman shall
designate the secretary.
22.5. Minutes shall be kept of the business transacted at the meeting unless a
notarial record is prepared thereof. Minutes shall be adopted and in
evidence of such adoption be signed by the chairman and the secretary of
the meeting concerned, or alternatively be adopted by a subsequent
meeting; in the latter case the minutes shall be signed by the chairman
and the secretary of such subsequent meeting in evidence of their
adoption.
22.6. The chairman of the meeting and furthermore each director may at any time
give instructions that a notarial record be prepared at the expense of the
company.
Article 23.
23.1. Each holder of Class A common shares, Series A preferred shares and Series
B preferred shares shall be entitled to one (1) vote for each such share
and each holder of a Class B common shares shall be entitled to three (3)
votes for each such share, all without prejudice to the provisions of
article 7, paragraph 5, hereof.
Blank votes and invalid votes shall be regarded as not having been cast.
23.2. Unless otherwise provided for in these articles of association or by law,
resolutions shall be adopted by an absolute majority of votes cast.
23.3. The chairman shall determine the manner of voting provided, however, that
if any person present who is entitled to vote so requires, voting in
respect of the appointment, suspension and dismissal of persons shall take
place by means of sealed, unsigned ballots.
23.4. In a tie vote concerning the appointment of persons, no resolution shall
have been adopted.
23.5. In a tie vote concerning other matters, the proposal shall have been
rejected.
23.6. Each holder of depositary receipts shall be entitled to attend the general
meetings and to address such meetings, but he shall not be entitled to
cast votes provided, however, that the latter provision shall not apply to
holders of a right of usufruct and holders of a right of pledge of shares
who are put on par with holders of depositary receipts pursuant to
article 9.
23.7. Shareholders and holders of depositary receipts may be represented at a
meeting by a proxy authorised in writing.
23.8. Directors are authorised to attend general meetings and as such they have
an advisory vote at the general meetings.
Article 24.
24.1. Shareholders who are entitled to vote as well as holders of a right of
usufruct and holders of a right of pledge on shares who are put on par
with holders of depositary receipts pursuant to article 9, may adopt any
resolutions which they could adopt at a meeting, without holding a
meeting, provided that the directors have been able to advise regarding
such resolution. Such a resolution can be taken, unless depositary
receipts have been issued with the cooperation of the company.
Such a resolution shall only be valid if all persons entitled to vote have
cast their votes in writing, by cable, by telex or by telefax in favour of
the proposal concerned.
Those who have adopted a resolution without holding a meeting shall
forthwith notify the board of directors of the resolution so adopted.
24.2. A resolution as referred to in paragraph 1 shall be recorded in the minute
book of the general meeting by a director; at the next general meeting the
entry shall be read out by the chairman of that meeting. Moreover, the
documents in evidence of the adoption of such a resolution shall be kept
with the minute book of the general meeting and as soon as the resolution
has been adopted, all persons who have adopted such resolution shall be
notified thereof.
Special resolutions.
Article 25.
25.1. The following resolutions may only be adopted by a majority of two/thirds
of the votes cast at a general meeting, at which the entire issued share
capital at least two/third of the issued share capital is present or
represented:
a. a resolution to amend the articles of association of the company
including one or more of the following articles: 2, 3, 6, 14, 15, 16,
17, 18, 23, 25, 29, 30 and 31;
b. a resolution to dissolve the company; and
c. a resolution to change the number of directors in the board of
directors.
25.2. A resolution to amend the articles of association by which the rights
conferred on holders of shares of a specific class as such are changed
shall require the approval of the relevant class meeting.
25.3. If a proposal to adopt a resolution as referred to in paragraph 1 is made
at a general meeting at which not at least two/third of the issued share
capital is present or represented, a second meeting shall be convened, to
be held not later than four weeks after the first meeting, at which
meeting such a resolution may be adopted validly, irrespective of the
share capital represented, by a majority of at least two/third of the
votes cast.
The notice of the second meeting must set out that and why a resolution
may be adopted irrespective of the part of the share capital represented
at the meeting.
Class meetings.
Article 26.
26.1. A class meeting shall be held whenever a resolution by such meeting is
required.
Furthermore, such meeting shall be held if required by either the board of
directors, or one or more holders of shares of a specific class
representing in the aggregate at least one-tenth of the share capital
issued as shares of that class.
26.2. If one or more holders of shares of a specific class, referred to in
paragraph 1, requires that a class meeting be held, he / they shall so
notify the board of directors.
If in that event none of the directors convenes the meeting such that the
meeting is held within ten days of receipt of the request, each of the
persons requesting shall be authorised to convene the same with due
observance of that provided in these articles of association.
26.3. Articles 21 up to and including 24 shall be equally applicable to
resolutions to be adopted by the holders of shares of a specific class,
provided that the notice shall be sent not later than on the sixth day
prior to the meeting.
Financial year. Annual accounts.
Article 27.
27.1. The financial year shall coincide with the calendar year.
27.2. Annually, within five months after the end of each financial year -
subject to an extension of such period not exceeding six months by the
general meeting on the basis of special circumstances - the board of
directors shall prepare annual accounts and shall make these available at
the office of the company for inspection by the shareholders and the
holders of depositary receipts.
The annual accounts shall be accompanied by the auditor's certificate,
referred to in article 28, if the assignment referred to in that article
has been given, by the annual report, unless section 2:403 of the Civil
Code is applicable to the company, and by the additional information
referred to in section 2:392, subsection 1 of the Civil Code, insofar as
the provisions of that subsection apply to the company.
The annual accounts shall be signed by all directors; if the signature of
one or more of them is lacking, this shall be disclosed, stating the
reasons thereof.
27.3. The company shall ensure that the annual accounts as prepared, the annual
report and the additional information referred to in paragraph 2 shall be
available at the office of the company as of the date of the notice of the
general meeting at which they are to be discussed.
The shareholders and holders of depositary receipts may inspect the above
documents at the office of the company and obtain a copy thereof at no
cost.
27.4. Adoption of the annual accounts by the general meeting shall constitute a
discharge of the board of directors for its management during the
financial year concerned, unless a proviso is made by the general meeting
and without prejudice to the provisions of sections 2:138 of the Civil
Code.
If the company is required, in conformity with article 28, paragraph 1, to
give an assignment to an auditor to audit the annual accounts and the
general meeting has been unable to review the auditor's certificate, the
annual accounts may not be adopted, unless the additional information
referred to in paragraph 2, second sentence, mentions a legal ground why
such certificate is lacking.
27.5. If the annual accounts are adopted in an amended form, a copy of the
amended annual accounts shall be made available to the shareholders and to
the holders of depositary receipts at no cost.
Auditor.
Article 28.
28.1. The company shall give an assignment to an auditor, as referred to in
section 2:393 of the Civil Code, to audit the annual accounts prepared by
the board of directors in accordance with subsection 3 of such section.
The general meeting shall be authorised to give the assignment referred to
above. If the general meeting fails to do so, then the board of directors
shall be so authorised.
The assignment given to the auditor may be revoked at any time by the
general meeting and by the board of directors if it has given such
assignment.
The auditor shall report on his audit to the board of directors and shall
issue a certificate containing its results.
28.2 The board of directors may give assignments to the auditor or any other
auditor at the expense of the company.
Special Dividend
Article 29.
29.1. Upon the occurrence of a legal merger or a consolidation of the company
the holders of Series B preferred shares shall be entitled to an amount
equal to the par value plus the amount of share premium paid on such
shares. After such payment has been made the holders of Series A preferred
shares shall be entitled to an amount equal to the par value plus the
amount of share premium paid on such shares.
The balance of freely distributable reserves then remaining shall be
distributed among the holders of the Class A common shares and Class B
common shares in proportion to the par value of their ownership of common
shares.
29.2. Article 30, paragraph 3, is applicable to distributions mentioned in the
preceding paragraph.
Profit and loss.
Article 30.
30.1. The board of directors is authorised to resolve that profits will be added
to a reserve account of the company.
30.2. Profits remaining undistributed after application of paragraph 1 shall be
at the free disposal of the general meeting.
Distribution of profits pursuant to this article shall be made following
the adoption of the annual accounts from which show that such distribution
is allowed.
30.3. The company may only make distributions to shareholders and other persons
entitled to distributable profits to the extent that its equity exceeds
the total amount of its issued share capital and the reserves to be
maintained pursuant to the law. The company may only make an interim
distribution, if the general meeting so determines, upon the proposal of
the board of directors, provided that the requirements of the first
sentence of this paragraph have been complied with as evidenced by an
interim capital statement, drawn up in accordance with the relevant
statutory provisions.
30.4. A loss may only be applied against reserves maintained pursuant to the law
to the extent permitted by law.
Article 31.
31.1. Dividends shall be due and payable four weeks after they have been
declared, unless the general meeting determines another date on the
proposal of the board of directors.
31.2. Dividends which have not been collected within five years of the start of
the second day on which they became due and payable shall revert to the
company.
31.3. The general meeting may resolve that dividends shall be distributed in
whole or in part in a form other than cash.
31.4. Without prejudice to article 31, paragraph 3, the general meeting may
resolve to distribute all or any part of the reserves.
31.5. Without prejudice to article 31, paragraph 3, interim distributions shall
be made if the general meeting so determines on the proposal of the board
of directors.
Liquidation.
Article 32.
32.1. If the company is dissolved pursuant to a resolution of the general
meeting, it shall be liquidated by the board of directors, if and to the
extent that the general meeting shall not resolve otherwise.
32.2. The general meeting shall determine the remuneration of the liquidators.
The liquidation shall take place with due observance of the provisions of
the law. During the liquidation period these articles of association
shall, whenever possible, remain in full force.
32.4. From the balance of the assets of the company remaining after all
liabilities have been paid, including the Series B dividend mentioned in
article 15, paragraph 1, first of all, if possible, the holders of Series
B preferred shares shall be entitled to an amount equal to the par value
plus the amount of share premium paid on such shares. After such payment
has been made the holders of Series A preferred shares shall be entitled
to an amount equal to the par value plus the amount of share premium paid
on such shares. The balance then remaining shall be distributed among the
holders of the Class A common shares and Class B common shares in
proportion to the par value of their ownership of common shares.
If the assets of the company remaining after all liabilities have been
paid, is not sufficient to pay the amount the Series B preferred shares
and Series A preferred shares are entitled to, the assets remaining after
all liabilities have been paid shall be distributed to the Series B
preferred shares and the Series A preferred shares in proportion to the
amount that should have been paid upon their shares according to this
paragraph 4.
32.5. After the legal entity has ceased to exist, the books, records and other
data of the company shall remain in the custody of the person designated
for that purpose by the liquidators for a period of seven years.
Transitional provision.
Article 33.
The first financial year ends on the thirty-first day of December two thousand.
This article shall cease to be effective and shall lapse after expiry of the
first financial year.
Exhibit D
Form of Warrant
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") OR OTHERWISE QUALIFIED FOR SALE UNDER APPLICABLE
SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i)
QUALIFICATION UNDER APPLICABLE SECURITIES LAWS, (ii) AN OPINION OF COUNSEL
OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
QUALIFICATION IS NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS OR
EQUIVALENT INDICATION OF CONCURRENCE THAT NO QUALIFICATION IS NECESSARY
FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING
WITH THE PROVISIONS OF SECTION 7 OF THIS WARRANT.
PEOPLEPC N.V.
WARRANT
THIS CERTIFIES THAT, for value received, Softbank Capital Partners LP
("Softbank") is entitled to subscribe for and purchase, subject to the
provisions and upon the terms and conditions hereinafter set forth, 2,380,952
shares (subject to adjustment in accordance with Section 4 hereof) of the fully
paid and nonassessable Series A Preferred Stock of PeoplePC N.V., a company
organized under the laws of the Netherlands (the "Company") for an aggregate
cost of $7,142,857 (the "Warrant Price") for Series A Preferred Stock of the
Company. As used herein, (a) the term "Date of Grant" shall mean the date of
the closing of the Company's sale of shares to @viso, (b) the term "Shares"
shall mean the Series A Preferred Stock, par value ten euro cents (EUR 0.10) per
share, to be issued by the Company hereunder and any stock into or for which any
such Series A Preferred Stock may hereafter be converted or exchanged (including
upon the automatic conversion of the Series A Preferred Stock into Class A
Common Stock) and (c) the term "Liquidity Event" shall mean (i) an acquisition,
sale or merger of or into the Company resulting in a change of control of the
Company; (ii) a merger of the Company with PeoplePC, Inc. or an affiliate, with
PeoplePC or an affiliate as the acquiror, or acquisition of all the Company's
assets or shares by PeoplePC, or (iii) an initial public offering of shares in
the share capital of the Company. Capitalized terms used but not defined herein
shall have the meanings ascribed to them in that certain Shareholders Agreement
dated June __, 2000 by and among People PC BV, People PC Inc., Olive Hill
Investments N.V., @viso Limited and Softbank Capital Partners L.P.
1. Term. The purchase right represented by this Warrant may not be
exercised after the earlier of (a) fifteen (15) business days following a
request by the Company that Softbank exercise such right (an "Exercise
Request"), provided that no such Exercise Request shall be made within six (6)
months after the Date of Grant and (b) the occurrence of a Liquidity Event (the
date of occurrence of the earlier of such events, the "Expiration Date").
2. Method of Exercise; Payment; Issuance of New Warrant. Subject to
Section 1 hereof, the purchase right represented by this Warrant may and must be
exercised by the holder hereof, in whole, within fifteen (15) business days
following an Exercise Request (which Request may not occur earlier than six (6)
months following the Date of Grant) or immediately prior to a Liquidity Event by
(a) the surrender of this Warrant (with the notice of exercise substantially in
the form attached hereto as Exhibit A-1 duly completed and executed) at the
principal office of the Company and by the payment to the Company, by certified
or bank check, or by wire transfer to an account designated by the Company (a
"Wire Transfer") in the amount of $7,142,857 or (b) if in connection with a
registered public offering of the Company's securities, the surrender of this
Warrant (with the notice of exercise form attached hereto as Exhibit A-2 duly
completed and executed) at the principal office of the Company together with
notice of arrangements reasonably satisfactory to the Company for payment to the
Company either by certified or bank check or by wire transfer from the proceeds
of the sale of shares to be sold by the holder in such public offering in the
amount of $7,142,857. The person or persons in whose name(s) any certificate(s)
representing the Shares shall be issuable upon exercise of this Warrant shall be
deemed to have become the holder(s) of record of, and shall be treated for all
purposes as the record holder(s) of, the shares represented thereby (and such
shares shall be deemed to have been issued) immediately prior to the close of
business on the date or dates upon which this Warrant is exercised. In the event
of any exercise of the rights represented by this Warrant, certificates for the
shares of stock so purchased shall be delivered to the holder hereof as soon as
possible and in any event within thirty (30) days after such exercise.
3. Stock Fully Paid; Reservation of Shares. All Shares that may be issued
upon the exercise of the rights represented by this Warrant will, upon issuance
pursuant to the terms and conditions herein, be fully paid and nonassessable,
and free from all taxes, liens and charges with respect to the issue thereof.
During the period within which this Warrant remains outstanding and unexpired,
the Company will at all times have authorized, and reserved for the purpose of
the issue upon exercise of the purchase rights evidenced by this Warrant, a
sufficient number of shares of its capital stock to provide for the exercise of
the rights represented by this Warrant.
4. Adjustment of Number of Shares. The number and kind of securities
purchasable upon the exercise of this Warrant shall be subject to adjustment
from time to time upon the occurrence of certain events, as follows:
(a) Subdivision or Combination of Shares. If the Company at any time
while this Warrant remains outstanding and unexpired shall subdivide or combine
its outstanding shares of capital stock into which this Warrant is exercisable,
the number of shares for which the Warrant is exercisable shall be
proportionately increased in the case of a subdivision or decreased in the case
of a combination, effective at the close of business on the date the subdivision
or combination becomes effective.
(b) Reclassification. In case of any reclassification or change of
securities of the class issuable upon exercise of this Warrant (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), the Company shall
duly execute and deliver to the holder of this Warrant a new Warrant (in form
and
substance reasonably satisfactory to the holder of this Warrant), so that the
holder of this Warrant shall have the right to receive, in lieu of the Shares
theretofore issuable upon exercise of this Warrant, the kind and amount of
shares of stock, other securities, money and property receivable upon such
reclassification or change by a holder of the number of Shares then purchasable
under this Warrant. Such new Warrant shall provide for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 4. The provisions of this subparagraph (a) shall similarly apply to
successive reclassifications or changes.
(c) Adjustment for Reorganization, Consolidation, Merger, etc. In case
of any consolidation or merger of the Company with or into any other
corporation, entity or person, or any other corporate reorganization, in which
the Company shall not be the continuing or surviving entity of such
consolidation, merger or reorganization (a "Reorganization"), then, in each
case, the holder of this Warrant, on exercise hereof at any time after the
consummation or effective date of such Reorganization, shall receive, upon
exercise of this Warrant and in lieu of the Shares immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby,
such number, amount and like kind of shares of stock, securities, cash or assets
as may be issued or payable pursuant to the terms of the Reorganization with
respect to or in exchange for the number of Shares immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby as
if such number of Shares were outstanding immediately prior to the
Reorganization, and in any such case appropriate provision shall be made with
respect to the rights and interest of the holders to the end that the provisions
hereof (including, without limitation, provisions for adjustments of the number
of Shares purchasable and receivable upon the exercise of this Warrant) shall
thereafter be applicable, as nearly as may be practicable, in relation to any
shares of stock or securities thereafter deliverable upon the exercise hereof.
(d) Adjustments for Diluting Issues. Adjustment to the number of
Shares issuable on exercise hereof, if any, shall be made by dividing the
Warrant Price by the Conversion Price for the Warrant (as determined and
adjusted in accordance with this Section), if and to the extent the Company's
Board of Directors deems it to be equitable to do so in the event of a Dilutive
Issuance, as defined in Section 12.4(d) of the Shareholders Agreement. Any
adjustment of the Conversion Price for the Warrant shall be made by the
Company's Board of Directors in the event of a Dilutive Issuance by using a
broad-based, weighted average, price-based antidilution formula, which (i)
assumes that the number of Shares (as adjusted) issuable on exercise hereof is
outstanding and such Shares have an Original Issue Price and Conversion Price
equal to the same for the Series A Preferred Stock then in effect, and (ii)
adjusts the Conversion Price based upon a weighted average of the purchase
prices of outstanding Company Securities and the newly issued Company Securities
that result from a Dilutive Issuance. The determination of the Company's Board
of Directors as to the amount (if any) of adjustment to the Conversion Price in
response to any Dilutive Issuance shall be final, binding and conclusive as to
the holder hereof.
5. Notice of Adjustments. Whenever the number of Shares purchasable
hereunder shall be adjusted pursuant to Section 4 hereof, the Company shall make
a certificate signed by its chief financial officer setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated, and the number of Shares
purchasable hereunder after giving effect to such adjustment, and shall cause
copies of such certificate to be mailed (without regard to Section 13 hereof, by
first class mail, postage prepaid) to the holder of this Warrant at such
holder's last known address.
6. Fractional Shares. No fractional Shares will be issued in connection
with any exercise hereunder. Fractions of 0.5 or more shall be rounded up and
fractions of 0.5 shall be rounded down to the next round figure.
7. Compliance with Applicable Securities Laws; Disposition of Warrant or
Shares.
(a) Compliance with Applicable Securities Laws. The holder of this
Warrant, by acceptance hereof, agrees that this Warrant, and the Shares to be
issued upon exercise hereof are being acquired for investment and that such
holder will not offer, sell or otherwise dispose of this Warrant, or any Shares
except under circumstances which will not result in a violation of applicable
securities laws. Upon exercise of this Warrant, unless the Shares being acquired
are registered or qualified for sale under any applicable securities laws or an
exemption from such qualification or registration is available, the holder
hereof shall confirm in writing that the Shares so purchased are being acquired
for investment and not with a view toward distribution or resale in violation of
applicable securities laws and shall confirm such other matters related thereto
as may be reasonably requested by the Company.
(b) Disposition of Warrant or Shares.
(i) The holder hereof may not assign, transfer or otherwise
dispose of this Warrant without the prior written consent of the Company;
provided, however, that the holder may transfer this Warrant to an affiliate
thereof which is not a competitor of the Company as determined by the Company's
Board of Directors.
(ii) The holder hereof agrees to be bound by the restrictions on
transferability (including without limitation the 180-day lock-up agreement),
right of first refusal and other obligations contained in that certain
Shareholders' Agreement dated June ___, 2000, by and among the Company, People
PC, Inc., People PC Investments N.V., and @viso Limited, with respect to any
offer, sale or other disposition of any Shares acquired pursuant to the exercise
of this Warrant.
8. Rights as Stockholders; Information. No holder of this Warrant, as
such, be entitled to vote or receive dividends or be deemed the holder of
Shares, nor shall anything contained herein be construed to confer upon the
holder of this Warrant, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein.
9. Termination. If, for any reason other than the Company's failure to
act in good faith, the Company is not the exclusive vendor worldwide for the
corporate connectivity program of Vivendi
S.A., then Softbank agrees that this Warrant shall cease to be exercisable and
shall become null and void in all respects.
10. Representations and Warranties. The Company represents and warrants to
the holder of this Warrant as follows:
(a) This Warrant has been duly authorized and executed by the Company
and is a valid and binding obligation of the Company enforceable in accordance
with its terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and the rules of law or principles at
equity governing specific performance, injunctive relief and other equitable
remedies;
(b) The Shares have been duly authorized and reserved for issuance by
the Company and, when issued in accordance with the terms hereof will be validly
issued, fully paid and non-assessable;
(c) The rights, preferences, privileges and restrictions granted to
or imposed upon the Shares and the holders thereof are as set forth in the
Articles of Association of the Company;
(d) The execution and delivery of this Warrant are not, and the
issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be inconsistent with the Company's Articles of
Association, do not and will not contravene any law, governmental rule or
regulation, judgment or order applicable to the Company, and do not and will not
conflict with or contravene any provision of, or constitute a default under, any
indenture, mortgage, contract or other instrument of which the Company is a
party or by which it is bound or requires the consent or approval of, the giving
of notice to, the registration or filing with or the taking of any action in
respect of or by, any government authority or agency or other person, except for
the filing of notices pursuant to federal, state and other national securities
laws, which filings will be effected by the time required thereby; and
(e) There are no actions, suits, audits, investigations or
proceedings pending or, to the knowledge of the Company, threatened against the
Company in any court or before any governmental commission, board or authority
which, if adversely determined, will have a material adverse effect on the
ability of the Company to perform its obligations under this Warrant.
11. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
12. Notices. Any notice, request, communication or other document required
or permitted to be given or delivered to the holder hereof or the Company shall
be delivered, or shall be sent by certified or registered mail, postage prepaid,
to each such holder at its address as shown on the books of the Company or to
the Company at the address indicated therefor on the signature page of this
Warrant.
13. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets, and all of the obligations of
the Company relating to the Shares issuable upon the exercise or conversion of
this Warrant shall survive the exercise, conversion and termination of this
Warrant and all of the covenants and agreements of the Company shall inure to
the benefit of the successors and assigns of the holder hereof; provided that
the requirements of Section 8(b) above are satisfied.
14. Lost Warrants or Stock Certificates. The Company covenants to the
holder hereof that, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.
15. Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. The language in this Warrant shall be
construed as to its fair meaning without regard to which party drafted this
Warrant.
16. Governing Law. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of New York.
17. Severability. The invalidity or unenforceability of any provision of
this Warrant in any jurisdiction shall not affect the validity or enforceability
of such provision in any other jurisdiction, or affect any other provision of
this Warrant, which shall remain in full force and effect.
18. Entire Agreement; Modification. This Warrant constitutes the entire
agreement between the parties pertaining to the subject matter contained in it
and supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter.
PEOPLEPC N.V.
__________________________________
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
EXHIBIT A-1
NOTICE OF EXERCISE
------------------
To: PeoplePC, N.V. (the "Company")
1. The undersigned hereby elects to purchase __________ shares of Series A
Preferred Stock of the Company pursuant to the terms of the attached Warrant,
and tenders herewith payment of the purchase price of such shares in full.
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name or names as are specified
below:
________________________________________
(Name)
________________________________________
(Address)
________________________________________
(Address)
3. The undersigned represents that the aforesaid shares being acquired for
the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares, all except as in
compliance with applicable securities laws.
_______________
(Date)
______________________________
(Signature)
EXHIBIT A-2
NOTICE OF EXERCISE
------------------
To: PeoplePC, N.V. (the "Company")
1. Contingent upon and effective immediately prior to the closing (the
"Closing") of the Company's public offering, the undersigned hereby elects to
purchase __________ shares of Series A Preferred Stock of the Company pursuant
to the terms of the attached Warrant.
2. Please deliver to the custodian for the selling stockholders a stock
certificate representing __________ shares of __________ stock..
3. The undersigned has instructed the custodian for the selling
stockholders to deliver to the Company $7,142,857.
_______________
(Date)
________________________________
(Signature)
