EXHIBIT 10.4
INVESTORS' RIGHTS AGREEMENT
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THIS INVESTORS' RIGHTS AGREEMENT (this "Agreement") is made as
of the 7th day of August, 2006 among Paketeria GmbH, a limited liability company
incorporated under the laws of Germany, Data Systems & Software Inc., a Delaware
corporation (the "Investor"), and each shareholder of the Company, all of which
are listed on Schedule A hereto (each a "Shareholder" and collectively, the
"Shareholders"), and any additional Person that becomes a party to this
Agreement in accordance with Section 8.1 and Section 9.1 hereof.
RECITALS
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WHEREAS, the Company, the Shareholders and the Investor are
parties to the Common Stock Purchase Agreement of even date herewith (the
"Purchase Agreement"); and
WHEREAS, in order to induce the Company to enter into the
Purchase Agreement and to induce the Investor to invest funds in the Company
pursuant to the Purchase Agreement, the Investor, the Company and each
Shareholder of the Company hereby agree that this Agreement shall govern the
rights of the Investor to cause the Company to register shares of Common Stock
issuable to the Investor, to receive certain information from the Company, and
to participate in future equity offerings by the Company, and shall govern
certain other matters as set forth in this Agreement;
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions. For purposes of this Agreement:
1.1 "Affiliate" means, with respect to any specified Person, any
other Person who or which, directly or indirectly, controls, is controlled by,
or is under common control with such specified Person, including without
limitation any partner, officer, director, manager or employee of such Person
and any venture capital fund now or hereafter existing that is controlled by or
under common control with one or more general partners or managing members of,
or shares the same management company with, such Person.
1.2 "Common Stock" means shares of the Company's common stock
("Stammkapital") or - after conversion of the Company into a Stock Corporation
("AG")- of its "Grundkapital".
1.3 "Derivative Securities" means any securities or rights
convertible into, or exercisable or exchangeable for, Common Stock, including
options and warrants.
1.4 "Founders" means each of Xxxx Xxxxxx and Xxxxx Xxxxxx
1.5 "GAAP" means generally accepted accounting principles in the
United States.
1.6 "Immediate Family Member" means a child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, of a natural person referred to herein.
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1.7 "IPO" means the Company's first underwritten public offering,
after its conversion into a Stock Corporation, of its Common Stock.
1.8 "Key Employee" means any executive-level employee (including
division director and vice president-level positions) as well as any employee
who, either alone or in concert with others, develops, invents, programs, or
designs any Company Intellectual Property (as defined in the Purchase
Agreement).
1.9 "New Securities" means, collectively, equity securities of the
Company, whether or not currently authorized, as well as rights, options, or
warrants to purchase such equity securities, or securities of any type
whatsoever that are, or may become, convertible or exchangeable into or
exercisable for such equity securities.
1.10 "Permitted Issuances" means (i) shares of Common Stock or the
Derivative Securities therefor issued by reason of a dividend, stock split,
split-up, conversion or other distribution on shares of Common Stock; (ii) the
issuance of securities pursuant to the conversion, exercise, or exchange of
Derivative Securities outstanding on the date hereof; (iii); (iv) shares of
Common Stock issued in the IPO; or (v) securities of the Company that otherwise
are excluded by the affirmative vote or consent of the Investor
1.11 "Person" means any individual, corporation, partnership, trust,
limited liability company, association or other entity.
1.12 "Prospective Transferee" means any Person to whom a Founder
proposes to make a Proposed Founder Transfer.
1.13 "Registrable Securities" means (i) the shares of Common Stock
issued to the Investor pursuant to the Purchase Agreement; (ii) the shares of
Common Stock issuable upon conversion of the Long Term Note (as defined in the
Purchase Agreement), (iii) the shares of Common Stock transferable to the
Investor pursuant to the M & R Option Agreement (as defined in the Purchase
Agreement), (iv) any shares of Common Stock acquired by the Investor after the
date hereof; (v) any shares of Common Stock issued or issuable upon conversion
of any capital stock of the Company acquired by the Investor after the date
hereof; and (vi) any shares of Common Stock issued as (or issuable upon the
conversion or exercise of any warrant, right, or other security that is issued
as) a dividend or other distribution or otherwise with respect to, or in
exchange for or in replacement of, the shares referenced in clauses (i) through
(v) above.
2. Registration Rights.
2.1 Demand Registration. In the event that the securities of the
Company or any successor thereof shall at any time be tradeable in any public
market, whether as a result of registration, qualification, or otherwise, the
Company shall, at the request of the holders of a majority of the Registrable
Securities, undertake and complete, at the sole cost and expense of the Company,
such regulatory and other procedures as shall permit the holders of the
Registrable Securities to resell the Registrable Securities held thereby (or by
their transferees) into such public market from time to time without
restriction.
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3. Information and Observer Rights.
3.1 Delivery of Financial Statements. From the date hereof through
December 31, 2006, the Company shall deliver to the Investor (i) each financial
statement the Company is required to produce pursuant to German law, including
any financial statement applicable to the year ended December 31, 2006, and (ii)
as soon as practicable, but in any event at least thirty (30) days prior to
December 31, 2006, a budget and business plan for fiscal year 2007, prepared on
a monthly basis, including balance sheets, income statements, and statements of
cash flow for such months and, promptly after prepared, any other budgets or
revised budgets prepared by the Company. Beginning as of January 1, 2007, the
Company shall deliver to the Investor:
(a) as soon as practicable, but in any event within one hundred
twenty (120) days after the end of each fiscal year of the Company, (i) a
balance sheet as of the end of such year; (ii) statements of profit and loss and
of cash flows for such year; and (iii) a statement of stockholders' equity as of
the end of such year, audited and certified by independent public accountants of
regionally recognized standing selected and appointed by the Company's
shareholders' meeting;
(b) as soon as practicable, but in any event within thirty (30)
days of the end of each fiscal quarter, an unaudited income statement and
statement of cash flows for such quarter, an unaudited balance sheet and
statement of stockholders' equity as of the end of such quarter, all prepared in
accordance with GAAP (except that the financial report may (i) be subject to
normal year-end audit adjustments and (ii) not contain all notes thereto that
may be required in accordance with GAAP), and a management's discussion
reporting on additional metrics, including employment;
(c) as soon as practicable, but in any event thirty (30) days
before the end of each fiscal year, a budget and business plan for the next
fiscal year, prepared on a monthly basis, including balance sheets, income
statements, and statements of cash flow for such months and, promptly after
prepared, any other budgets or revised budgets prepared by the Company; and
(d) such other information relating to the financial condition,
business, prospects, or corporate affairs of the Company as the Investor may
from time to time reasonably request.
If, for any period, the Company has any subsidiary whose accounts are
consolidated with those of the Company, then in respect of such period the
financial statements delivered pursuant to the foregoing sections shall be the
consolidated and consolidating financial statements of the Company and all such
consolidated subsidiaries.
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3.2 Inspection. Without prejudice to the rights of the Investor
under Statutory Law, the Company shall permit the Investor, at the Investor's
expense, to visit and inspect the Company's properties; examine its books of
account and records; and discuss the Company's affairs, finances, and accounts
with its officers, directors, Key Employee and independent public accountant
during normal business hours of the Company as may be reasonably requested by
the Investor; provided, however, that the Company shall not be obligated
pursuant to this Section 3.2 to provide access to any information that it
reasonably considers to be a trade secret or confidential information (unless
covered by an enforceable confidentiality agreement, in form acceptable to the
Company) or the disclosure of which would adversely affect the attorney-client
privilege between the Company and its counsel.
3.3 Further Information. The Company shall provide the Investor
prompt written notice of material events and communications (oral or in writing)
with and from any Person interested in acquiring the Company or forming
strategic relationships.
3.4 Confidentiality. The Investor agrees that it will keep
confidential and will not disclose, divulge, or use for any purpose (other than
to monitor its investment in the Company) any confidential information obtained
from the Company pursuant to the terms of this Agreement, unless such
confidential information (a) is known or becomes known to the public in general
(other than as a result of a breach of this Section 3.4 by the Investor), (b) is
or has been independently developed or conceived by the Investor without use of
the Company's confidential information, or (c) is or has been made known or
disclosed to the Investor by a third party without a breach of any obligation of
confidentiality such third party may have to the Company; provided, however,
that the Investor may disclose confidential information (i) to its attorneys,
accountants, consultants, and other professionals to the extent necessary to
obtain their services in connection with monitoring its investment in the
Company; (ii) to any prospective purchaser of any Registrable Securities from
the Investor, if such prospective purchaser agrees to be bound by the provisions
of this Section 3.4; (iii) to any Affiliate, partner, member, stockholder, or
wholly owned subsidiary of such Investor in the ordinary course of business,
provided that the Investor informs such Person that such information is
confidential and directs such Person to maintain the confidentiality of such
information; or (iv) as may otherwise be required by law, provided that the
Investor promptly notifies the Company of such disclosure and takes reasonable
steps to minimize the extent of any such required disclosure. The Company
acknowledges that certain officers of the Investor are in the business of
venture capital investing and therefore review the business plans and related
proprietary information of many enterprises, including enterprises that may have
products or services that compete directly or indirectly with those of the
Company. Nothing in this Agreement shall preclude or in any way restrict such
officers of the Investor from investing or participating in any particular
enterprise, regardless of whether such enterprise has products or services that
compete with those of the Company.
4. Rights to Future Stock Issuances.
4.1 Right of First Offer. Subject to the terms and conditions of
this Section 4.1 and applicable securities laws, if the Company proposes to
offer or sell any New Securities, the Company shall first offer such New
Securities to the Investor. The Investor shall be entitled to apportion the
right of first offer hereby granted to it among itself and its Affiliates in
such proportions as it deems appropriate.
(a) The Company shall give notice (the "Offer Notice") to the
Investor, stating (i) its bona fide intention to offer such New Securities, (ii)
the number of such New Securities to be offered, and (iii) the price and terms,
if any, upon which it proposes to offer such New Securities.
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(b) By notification to the Company within thirty (30) days after
the Offer Notice is given, the Investor, through itself and/or its Affiliates,
may elect to purchase or otherwise acquire, at the price and on the terms
specified in the Offer Notice, up to that portion of such New Securities which
equals the proportion that the Common Stock issued and held and any other
Derivative Securities then held, by the Investor bears to the total Common Stock
of the Company then outstanding (assuming full conversion and exercise of all
Derivative Securities). The closing of any sale pursuant to this Section 4.1(b)
shall occur within sixty (60) days of the date that the Offer Notice is given.
(c) If all New Securities referred to in the Offer Notice are not
elected to be purchased or acquired as provided in Section 4.1(b), the Company
may, during the ninety (90) day period following the expiration of the period
provided in Section 4.1(b), offer and sell the remaining unsubscribed portion of
such New Securities to any Person or Persons at a price not less than, and upon
terms no more favorable to the offeree than, those specified in the Offer
Notice. If the Company does not enter into an agreement for the sale of the New
Securities within such period, or if such agreement is not consummated within
thirty (30) days of the execution thereof, the right provided hereunder shall be
deemed to be revived and such New Securities shall not be offered unless first
reoffered to the Investor in accordance with this Section 4.1.
(d) The right of first offer in this Section 4.1 shall not be
applicable to Permitted Issuances.
4.2 Termination. The covenants set forth in Section 4.1 shall
terminate and be of no further force or effect immediately before the
consummation of the IPO.
5. Right of Co-Sale.
(a) Exercise of Right. Subject to the terms and conditions of
this Section 5 and applicable securities laws, if any Founder intends to sell
any capital stock (including any Common Stock) to any third party (a "Proposed
Founder Transfer"), such Founder must deliver written notice (the "Proposed
Transfer Notice") to the Investor not later than forty-five (45) days prior to
the consummation of such Proposed Founder Transfer; such Proposed Transfer
Notice shall contain the material terms and conditions (including price and form
of consideration) of the Proposed Founder Transfer and the identity of the
Prospective Transferee. The Investor shall have the right to, and may elect to,
participate on a pro rata basis in the Proposed Founder Transfer (the "Right of
Co-Sale") as set forth in Section 5(b) below and otherwise on the same terms and
conditions specified in the Proposed Transfer Notice (provided that if such
Founder is selling capital stock other than Common Stock, the price set forth in
the Proposed Transfer Notice shall be appropriately adjusted into Common Stock).
If the Investor desires to exercise its Right of Co-Sale, the Investor must give
the selling Founder written notice to that effect within fifteen (15) days after
receipt of the Proposed Transfer Notice, and upon giving such notice the
Investor shall be deemed to have effectively exercised the Right of Co-Sale and
such selling Founder shall not consummate such Proposed Founder Transfer without
the inclusion of the shares of Common Stock of the Investor as to which the
Right of Co-Sale has been exercised.
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(b) Shares Includable. Upon exercise of the Right of Co-Sale, the
Investor may include in the Proposed Founder Transfer all or any part of such
Investor's Common Stock equal to the product obtained by multiplying (i) the
aggregate number of shares of Common Stock owned by the Investor immediately
before consummation of the Proposed Founder Transfer by (ii) a fraction, the
numerator of which is the number of shares of capital stock to be sold in the
Proposed Founder Transfer, and the denominator of which is the total number of
shares of capital stock owned by the Founders immediately prior to the
consummation of the Proposed Founder Transfer. In the event that the Investor
exercises such Right of Co-Sale in accordance with the terms and conditions set
forth herein, and the Prospective Transferee is unwilling to purchase the shares
described in the Proposed Transfer Notice plus the number of shares that the
Investor is entitled to sell pursuant to the Right of Co-Sale, the number of
shares of capital stock that the selling Founder may sell in the Proposed
Founder Transfer shall be reduced on a pro rata basis.
(c) Delivery of Certificates. The Investor shall effect its
participation in the Proposed Founder Transfer by delivering to the selling
Founder, no later than fifteen (15) days after the Investor's exercise of the
Right of Co-Sale, a duly executed power of attorney relating to the sale of the
number of shares of Common Stock that the Investor elects to include in the
Proposed Founder Transfer.
(d) Purchase Agreement. The parties hereby agree that the terms
and conditions of any sale pursuant to this Section 5 will be memorialized in,
and governed by, a written purchase and sale agreement with customary terms and
provisions for such a transaction and the parties further covenant and agree to
enter into such an agreement as a condition precedent to any sale or other
transfer pursuant to this Section 5.
(e) Deliveries. The shares covered by the power of attorney that
the Investor delivers to the selling Founder pursuant to Section 5(c) above will
be transferred to the Prospective Transferee against payment therefor in
consummation of the sale contemplated by the Proposed Founder Transfer pursuant
to the terms and conditions specified in the Proposed Transfer Notice and the
purchase and sale agreement, and the selling Founder shall concurrently
therewith remit or direct payment to the Investor of that portion of the sale
proceeds to which the Investor is entitled by reason of its participation in
such sale. If any Prospective Transferee or Transferees refuse(s) to purchase
securities subject to the Right of Co-Sale from the Investor exercising its
Right of Co-Sale hereunder, no Founder may sell any capital stock to such
Prospective Transferee or Transferees unless and until, simultaneously with such
sale, such Founder purchases all securities subject to the Right of Co-Sale from
the Investor on the same terms and conditions (including the proposed purchase
price) as set forth in the Proposed Transfer Notice.
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(f) Additional Compliance. If any Proposed Founder Transfer is
not consummated within sixty (60) days after receipt of the Proposed Transfer
Notice by the Investor, the Founder proposing the Proposed Founder Transfer may
not sell any capital stock unless they first comply in full with each provision
of this Section 5. The exercise or election not to exercise any right by the
Investor hereunder shall not adversely affect its right to participate in any
other purchases or sales of capital stock subject to this Section .
(g) Violation of Co-Sale Right. If any Founder purports to sell
any capital stock in contravention of the Right of Co-Sale (a "Prohibited
Transfer"), the Investor may, in addition to such remedies as may be available
by law, in equity or hereunder, require such Founder to purchase from the
Investor the number of shares of Common Stock that the Investor would have been
entitled to sell to the Prospective Transferee under this Section 5 had the
Prohibited Transfer been effected pursuant to and in compliance with the terms
of Section 5. The sale will be made on the same terms and subject to the same
conditions as would have applied had the Founder not made the Prohibited
Transfer, except that the sale (including, without limitation, the delivery of
the purchase price) must be made within twenty (20) days after the Investor
learns of the Prohibited Transfer, as opposed to the timeframe prescribed in
Section 5(f). Such Founder shall also reimburse the Investor for any and all
reasonable and documented out-of-pocket fees and expenses, including reasonable
legal fees and expenses, incurred pursuant to the exercise or the attempted
exercise of the Investor's rights under Section 5.
6. Anti-Dilution Protection.
(a) If at any time or from time to time after the date of this
Agreement, the Company issues or sells, or is deemed by the express provisions
of this Section 6 to have issued or sold, Additional Shares of Common Stock (as
defined in Section 6(d) hereof), for an Effective Price (as defined in Section
6(d)) less than the then applicable Adjusted Price Per Share (as defined in
Section 6(d)), then in each such case, in consideration of the Investor's
payment of the requisite par value of the Common Stock to be issued pursuant to
this Section 6.1(a), the Company shall issue an additional share of Common Stock
to the Investor, as of the opening of business on the date of such issue or
sale, the nominal Euro value of such additional share to be calculated by using
the following formula:
D = ((A * B)/C) - B
For purpose of the foregoing formula:
A = Adjusted Price Per Share.
B Nominal amount of the Common Stock of the Company
issued to the Investor pursuant to the Purchase
Agreement.
C = Effective Price of Additional Shares of Common Stock.
D = Nominal value of the additional share of Common Stock
to be issued to the Investor.
If D is not divisible by 50, the nominal value of the additional share of
Common Stock to be issued to the Investor shall be the value that results from
rounding D to the next higher value divisible by 50.
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(b) For the purpose of the adjustment required under this Section
6, the consideration received by the Company for any issue or sale of securities
shall (i) to the extent it consists of cash, be computed at the net amount of
cash received by the Company after deduction of any underwriting or similar
commissions, compensation or concessions paid or allowed by the Company in
connection with such issue or sale but without deduction of any expenses payable
by the Company, (ii) to the extent it consists of property other than cash, be
computed at the fair value of that property as determined in good faith by the
managing directors of the Company, and (iii) if Additional Shares of Common
Stock, Convertible Securities (as defined in Section 6(c)) or rights or options
to purchase either Additional Shares of Common Stock or Convertible Securities
are issued or sold together with other stock or securities or other assets of
the Company for a consideration which covers both, be computed as the portion of
the consideration so received that may be reasonably determined in good faith by
the managing directors to be allocable to such Additional Shares of Common
Stock, Convertible Securities or rights or options.
(c) For the purpose of the adjustment required under this Section
6, if the Company issues or sells (i) stock or other securities convertible
into, Additional Shares of Common Stock (such convertible stock or securities
being herein referred to as "Convertible Securities") or (ii) rights or options
for the purchase of Additional Shares of Common Stock or Convertible Securities
and if the Effective Price of such Additional Shares of Common Stock is less
than the Price Per Share, in each case the Company shall not be deemed to have
issued the Additional Shares of Common Stock at the time of the issuance of such
rights or options or Convertible Securities. The adjustment to the Adjusted
Price Per Share shall occur upon the issuance of shares of Common Stock issued
due to the sale or upon the conversion or exercise of such rights or options or
Convertible Securities.
(d) For purposes of this Section 6, the following terms shall
have the meaning assigned below:
(i) "Additional Shares of Common Stock"
shall mean all shares of Common Stock issued by the Company or
deemed to be issued pursuant to this Section 6, other than
Permitted Issuances.
(ii) "Adjusted Price Per Share" shall mean
initially, (euro)50.70 for each Euro nominal value of shares
of Common Stock of the Company (subject to adjustment for any
splits, reserve splits, combinations or similar events) and
shall be reduced to the Effective Price as used in the
application of this Section 6 to the immediately prior sale or
issuance of Additional Shares of Common Stock.
(iii) "Effective Price" of Additional Shares
of Common Stock shall mean the quotient determined by dividing
the aggregate nominal value of Additional Shares of Common
Stock issued or sold, or deemed to have been issued or sold by
the Company under this Section 6 into the aggregate
consideration received, or deemed to have been received by the
Company for such issue under this Section 6 for such
Additional Shares of Common Stock.
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7. Protective Provisions. Without the prior written approval of the
Investor (in addition to any stockholder approval as may be required by
applicable statute, the organizational documents of the Company, agreement or
otherwise) the Company or its shareholders or subsidiaries (if any) shall not:
(i) liquidate, dissolve, re-capitalize or reorganize the
Company or any of its subsidiaries (if any), merge or consolidate, or enter into
any agreement to merge or consolidate, the Company or any of its subsidiaries
(if any) with or into any other entity, or effect a share exchange pursuant to
which any of the outstanding shares of Common Stock are converted into other
securities or property;
(ii) declare dividends or distribution of any kind, other than
dividends payable pro rata to all holders of Common Stock solely in the issuance
of shares of Common Stock;
(iii) materially change the nature of the business in which
the Company is engaged as of the time of such determination;
(iv) approve any transaction or series of related transactions
in excess of (euro) 10,000 per annum with any officer, manager, director or
shareholder of the Company or any of its subsidiaries or any affiliate of an
officer, manager, director of shareholder of the Company or any of its
subsidiaries (including Immediate Family Members);
(v) increase the annual cash compensation of the Company's
chief executive officer above a gross amount of (euro) 150,000 per annum;
(vi) sell, lease, exchange, transfer, convey or otherwise
dispose, directly or indirectly, in a single transaction or a series of related
transactions, of all or substantially all of the property or business of the
Company or any of its subsidiaries (if any) or effect any transaction or series
of related transactions in which more than fifty percent (50%) of the voting
power of the Company or any of its subsidiaries (if any) is disposed of;
(vii) except to the extent required by mandatory law, commence
any voluntary bankruptcy proceeding, liquidation, reorganization, dissolution,
conservation, delinquency or receivership proceeding, or a proceeding similar to
any of the foregoing or permit any involuntary bankruptcy proceeding to remain
unstayed for more than 30 days from the date of the petition for involuntary
bankruptcy;
(viii) amend the organizational documents of the Company so as
to adversely affects the rights, preferences, restrictions or privileges of the
Investor;
(ix) create any subsidiary by the Company or any of its
subsidiaries (if any), other than a wholly-owned subsidiary;
(x) incur any indebtedness by the Company or any of its
subsidiaries (if any), directly or indirectly, in a single transaction or a
series of related transactions, in excess of (euro) 215,000, or enter into any
agreement pursuant to which the Company or any of its subsidiaries (if any) ,
directly or indirectly, in a single transaction or a series of related
transactions, may be obligated to pay amounts, or provide goods or services so
that the total aggregate value of such obligations and the aforementioned
indebtedness exceeds (euro) 500,000;
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(xi) redeem, purchase or otherwise acquire (or pay into or set
aside for a sinking fund for such purpose) any share or shares of Common Stock
(such covenant to also prohibit, without limitation, any redemption, whether
voluntary or not, under Sec. 10 of the Restated Articles of the Company);
provided, however, that this restriction shall not apply to the repurchase of
shares of Common Stock from employees or other persons performing services for
this Company or any of its subsidiaries (if any) pursuant to agreements under
which this Company has the option to repurchase such shares upon the occurrence
of certain events, such as the termination of employment; or
(xii) authorize, issue or create any additional security or
class of stock of the Company or, any other type of instrument that is
convertible into or exchangeable into a security or class of stock of the
Company.
8. Additional Covenants.
8.1 Transfer. No shares of the capital stock of the Company held by
a Shareholder, including the Founders, may be transferred (or encumbered) other
than with the Investor's prior written consent until such time as the later of
(i) any shares of the Company's equity securities are publicly traded, and (ii)
the third anniversary of the date hereof. The Investor's consent cannot be
withheld if such proposed transfer is to an Immediate Family Member (or trusts
or partnerships wholly owned or benefiting such parties) of such Shareholder,
provided, that such transfer shall be contingent upon the transferee providing a
written instrument to the Company notifying the Company of such transfer and
such transferee becoming a party to this Agreement by executing and delivering
an additional counterpart signature page to this Agreement to the Company.
Notwithstanding the foregoing, up to five percent (5%) of the shares of capital
stock held by Xxxx Xxxxxx as of the date hereof, may by transferred without the
Investor's prior written consent to a third party, provided, such third party is
an employee of the Company as of the effective date of such transfer and,
provided, further, that such transfer shall be contingent upon the transferee
providing a written instrument to the Company notifying the Company of such
transfer and such transferee becoming a party to this Agreement by executing and
delivering an additional counterpart signature page to this Agreement to the
Company. Thereafter, in each such case of permissible transfer hereunder,
following the delivery of the required written instrument and signature page to
the Company, such transferee shall be deemed a "Shareholder" for all purposes
hereunder.
8.2 Shareholder Action. The Shareholders shall duly and promptly and
in the form required by law, resolve any shareholder resolution, enter into any
agreement, execute any transaction and perform any other action (whether legal
or factual ) that is or may become necessary in order to enable the Company to
fulfill its obligations and covenants under this Agreement, the Purchase
Agreement or any other part of the Transaction Agreements (as defined in the
Purchase Agreement), including, without limitation, the issuance of capital
stock upon any conversion of the Long Term Note (as defined in the Long Term
Note). The obligation pursuant to the immediately preceding sentence to perform
any action required in connection with any conversion of the Long Term Note
includes, without limitation, the shareholders' resolution for the increase of
the Company's share capital as required under the terms of the Long Term Note,
the admission of the Conversion Holder as sole subscriber to the new share under
such capital increase, the waiver of any shareholder other than the Conversion
holder to participate in such capital increase, the cooperation in the
subscription by the Conversion Holder of the new share, and the filing of the
Capital Increase to the Commercial Register.
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Notwithstanding Section 9.9 hereof, each party hereto consents to the
non-exclusive jurisdiction of the courts of competent jurisdiction of the
Republic of Germany with respect to any action brought by the Conversion Holder
(as defined in the Long Term Note) to enforce its rights to convert such Long
Term Note.
8.3 Administrative Board. The parties shall establish an
Administrative Board as provided by Sec. 7 of the Restated Articles of
Association, by executing a shareholders' resolution substantially in the form
attached to this Agreement as Exhibit 8.3. The Investor will always have the
right to nominate at least 50% of the members of this Administrative Board. One
member appointed by the Investor shall be appointed chairman. The Shareholders
shall at any time implement such nominations by passing the required
shareholders' resolutions and shall abstain from any resolutions and actions in
contravention thereof.
9. Miscellaneous.
9.1 Successors and Assigns. The Investor hereby agrees that it shall
not, and may not, assign any of its rights and obligations hereunder, unless
such assignee provides a written instrument to the Company notifying the Company
of such assignment and agreeing in writing to be bound by the terms of this
Agreement. The terms and conditions of this Agreement inure to the benefit of
and are binding upon the respective successors and permitted assignees of the
parties. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and
permitted assignees any rights, remedies, obligations or liabilities under or by
reason of this Agreement, except as expressly provided herein. During the term
of this Agreement, the Company shall condition any issuance of New Securities by
the Company upon the purchaser of such New Securities agreeing to be bound, in
writing, by the terms of this Agreement as a "Shareholder" hereunder.
9.2 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to its
principles of conflicts of laws.
9.3 Titles and Subtitles. The titles and subtitles used in this
Agreement are for convenience only and are not to be considered in construing or
interpreting this Agreement.
9.4 Notices. All notices, requests, and other communications given
or made pursuant to this Agreement shall be in writing and shall be deemed
effectively given (i) upon personal delivery to the party to be notified; (ii)
when sent by confirmed electronic mail or facsimile if sent during normal
business hours of the recipient, and if not so confirmed, then on the next
business day; (iii) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or (iv) one (1) day
after deposit with a nationally recognized overnight courier, specifying
next-day delivery, with written verification of receipt. All communications
shall be sent to the respective parties at their addresses as set forth on the
signature page or Schedule A hereto, or to such email address, facsimile number,
or address as subsequently modified by written notice given in accordance with
this Section 9.4. If notice is given to the Company, a copy shall also be sent
to [Name], [Address], [fax number] Attention: [ ].
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9.5 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance, and either retroactively or
prospectively) only with the written consent of the Company and the Investor
unless notarization is required for such amendment. The Company shall give
prompt notice of any amendment or termination hereof or waiver hereunder to any
party hereto. Any amendment, termination, or waiver effected in accordance with
this Section 9.5 shall be binding on all parties hereto, regardless of whether
any such party has consented thereto. No waivers of or exceptions to any term,
condition, or provision of this Agreement, in any one or more instances, shall
be deemed to be or construed as a further or continuing waiver of any such term,
condition, or provision.
9.6 Severability. In case any one or more of the provisions
contained in this Agreement is for any reason held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision of this Agreement, and such invalid,
illegal, or unenforceable provision shall be reformed and construed so that it
will be valid, legal, and enforceable to the maximum extent permitted by law.
9.7 Aggregation of Stock. All shares of Registrable Securities held
or acquired by Affiliates shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement.
9.8 Entire Agreement. This Agreement (including any Schedules and
Exhibits hereto) constitutes the full and entire understanding and agreement
between the parties with respect to the subject matter hereof, and any other
written or oral agreement relating to the subject matter hereof existing between
the parties is expressly canceled.
9.9 Dispute Resolution. Subject to Section 8.2 hereof, the parties
(a) hereby irrevocably and unconditionally submit to the jurisdiction of the
state courts of New York and to the jurisdiction of the United States District
Court for the Southern District of New York for the purpose of any suit, action
or other proceeding arising out of or based upon this Agreement, (b) agree not
to commence any suit, action or other proceeding arising out of or based upon
this Agreement except in such courts, and (c) hereby waive, and agree not to
assert, by way of motion, as a defense, or otherwise, in any such suit, action
or proceeding, any claim that it is not subject personally to the jurisdiction
of the above-named courts, that its property is exempt or immune from attachment
or execution, that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper or that this
Agreement or the subject matter hereof may not be enforced in or by such court.
9.10 Delays or Omissions. No delay or omission to exercise any
right, power, or remedy accruing to any party under this Agreement, upon any
breach or default of any other party under this Agreement, shall impair any such
right, power, or remedy of such nonbreaching or nondefaulting party, nor shall
it be construed to be a waiver of or acquiescence to any such breach or default,
or to any similar breach or default thereafter occurring, nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. All remedies, whether under this
Agreement or by law or otherwise afforded to any party, shall be cumulative and
not alternative.
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9.11 Waiver of Jury Trial. Each party hereto waives any right it may
have to a trial by jury in any action or proceeding directly or indirectly
arising out of or relating to this Agreement or the transactions contemplated
hereby (whether based on contract, tort, equity or any other theory). Each party
certifies that no representative, agent or attorney of the other party has
represented, expressly or otherwise, that the other parties to this Agreement
would not, in the event of litigation, seek to enforce the foregoing waiver and
acknowledges that all parties hereto have been induced to enter into this
Agreement by, among other things, the waivers and certifications contained in
this Section 9.11.
[Signature Page(s) Follow(s)]
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
COMPANY:
PAKETERIA GmbH
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
Address:
---------------------------------------
---------------------------------------
Telephone No.:
---------------------------------------
Fax No.:
---------------------------------------
Email:
---------------------------------------
INVESTOR:
DATA SYSTEMS & SOFTWARE INC.
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
Address:
---------------------------------------
---------------------------------------
Telephone No.:
---------------------------------------
Fax No.:
---------------------------------------
Email:
---------------------------------------
SHAREHOLDER
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
Address:
---------------------------------------
---------------------------------------
Telephone No.:
---------------------------------------
Fax No.:
---------------------------------------
Email:
---------------------------------------
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SHAREHOLDER
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
Address:
---------------------------------------
---------------------------------------
Telephone No.:
---------------------------------------
Fax No.:
---------------------------------------
Email:
---------------------------------------
SHAREHOLDER
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
Address:
---------------------------------------
---------------------------------------
Telephone No.:
---------------------------------------
Fax No.:
---------------------------------------
Email:
---------------------------------------
SHAREHOLDER
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
Address:
---------------------------------------
---------------------------------------
Telephone No.:
---------------------------------------
Fax No.:
---------------------------------------
Email:
---------------------------------------
SHAREHOLDER
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
Address:
---------------------------------------
---------------------------------------
Telephone No.:
---------------------------------------
Fax No.:
---------------------------------------
Email:
---------------------------------------
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SCHEDULE A
Investor
Data Systems & Software Inc.
000 Xxxxx 00
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxx X. Xxxxx
President and Chief Executive Officer
With a copy to:
Reitler Xxxxx & Xxxxxxxxxx LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxxx, Esq.
Shareholders
Xxxx Xxxxxx
Kornblumenring 3
00000 Xxxxxx, Xxxxxxx Xxxxxxxx of Germany
Phone Number
Fax Number
Email
Xxxx Xxxxx
Address
------------------------------------
Phone Number
-------------------------------
Fax Number
---------------------------------
Email
--------------------------------------
Xxxxxx Xxxxxx
Address
------------------------------------
Phone Number
-------------------------------
Fax Number
---------------------------------
Email
--------------------------------------
Xxxx Xxxxx
Address
------------------------------------
Phone Number
-------------------------------
Fax Number
---------------------------------
Email
--------------------------------------
Xxxxxxx Xxxxx
Address
------------------------------------
Phone Number
-------------------------------
Fax Number
---------------------------------
Email
--------------------------------------
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