Exhibit 4.3
-----------
CONFORMED COPY
AGREEMENT
This letter agreement (this "Agreement") is made as of
December 19, 2001, by and between Gemplus International S.A. ("GISA"), Zenzus
Holdings Limited and Xxxx Xxxxxx ("ML"). GISA, Zenzus and ML hereby agree as
follows:
1. ML Cessation of Office and Dr. Ing. Hasso Freiherr von
Falkenhausen Co-optation. Pursuant to the decision of the Board of Directors of
GISA (the "Board"), and in consideration of the provisions of this Agreement, ML
hereby irrevocably ceases, effective January 10, 2002 his office as Chairman of
the Board and resigns, effective such date, from all other positions that he
holds with GISA and any of its subsidiaries and affiliates (collectively, the
"Company") (including his position as the Chairman of the Supervisory Board of
Gemplus SA), except for his position as a nonexecutive director of GISA. ML will
transfer any director's qualifying shares (or any other shares owned as a
required minority shareholder) he owns in subsidiaries or affiliates of GISA to
the designee of GISA or any applicable subsidiary or affiliate (including the
share owned in Gemplus Finance S.A.). ML will execute all documents necessary to
carry out these actions. It is understood that Dr. Ing. Hasso Freiherr von
Falkenhausen will be elected as interim Chairman of the Board to succeed ML.
2. Continuation as Director. If he so wishes, ML will remain a
nonexecutive director of GISA until the 2004 annual general meeting of GISA
shareholders (the "2004 Meeting"), as long as ML owns directly or indirectly at
least 10% of the issued and outstanding shares of GISA. Consistent with his
position as a nonexecutive director, ML will no longer maintain office space or
secretarial staff at the Company, will refrain from communication with
management, employees and representatives of the Company (other than consistent
with his role as a nonexecutive director) and will not involve himself in the
management of the Company. ML will make himself available to consult with the
interim Chairman and the interim CEO.
3. Compensation and Amendment to Term of Loan. ML shall be
paid the amount of U.S. $12 million as specified in the indemnity letter issued
by GISA to ML and approved by a resolution of the shareholders on April 19, 2000
(the "Indemnity Letter"), as follows: (A) U.S. $2 million shall be paid on
January 11, 2002, and (B) the remainder of U.S. $10 million shall be paid in
full promptly after ML shall have regularized the arrangements for his existing
option loans, as amended herein, by (i) executing one or more notes evidencing
the loans as fixed term loans payable in full, together with all accrued
interest, on December 31, 2003, and (ii) executing a loan and pledge agreement
acknowledging ML's indebtedness for the option loans and the lender's ability to
foreclose on ML's option shares (but not the free shares) in repayment of the
loans upon default, and otherwise substantially similar to the form attached
hereto. Neither GISA nor Zenzus nor any affiliate shall have any right to
purchase ML's free or option shares other than in the case of the option shares
in connection with a foreclosure pursuant to the loan and pledge agreement. ML
shall also receive ordinary director compensation from GISA on the same basis as
other nonexecutive directors of GISA. The payments to ML described in this
Agreement are in lieu of any other payments that might otherwise be due to him
by reason of the existence, modification or termination of his employment,
director or consulting relationships with the Company and its subsidiaries and
affiliates.
4. Other Director Resignations and Co-optations. It is
understood that (i) Xxxxxxx Xxxxx will resign effective December 19, 2001 as
Chief Executive Officer and as a director of GISA, and that he will be replaced
on an interim basis as CEO by Xxx X. Xxxxxxxxxx, who will resign from the Board,
(ii) Xxxxxx Xxxxxx will resign as a director of GISA effective December 19, 2001
and Xxxxx Xxxxxxxxx will be elected a director and Vice Chairman of the Board
effective the same date, and (iii) Xxxxxxxx Xxxxxx will resign as a director of
the Board effective December 19, 2001 and will be replaced by an independent
director nominated by ML and agreeable to all of the Search Committee and a
majority of the Board.
5. Search Committee. A Committee of the Board (the "Search
Committee") consisting of Xxxxx Xxxxxxxxx, Xxx Xxxxx Nam and Dr. Ing. Hasso
Freiherr von Falkenhausen, will be appointed to conduct the search for a
permanent CEO. ML agrees to consult with the Search Committee on CEO candidates.
6. Mutual Releases. GISA on behalf of itself and all of its
subsidiaries and affiliates hereby releases ML, his heirs, successors and
assigns from any and all claims, known or unknown, which GISA and any of its
subsidiaries and affiliates may have against ML arising on or prior to the date
of this release, except claims for the payments described in this Agreement. ML
hereby releases GISA, all of its subsidiaries and affiliates, and its and their
respective officers, directors, shareholders and employees from any and all
claims, known or unknown, which ML or his heirs, successors or assigns may have
against any of them arising on or prior to the date of this release, except
claims for the payments described in this Agreement. Each of the parties desire
that these releases constitute a settlement under Luxembourg law, and agree to
execute and deliver all further documentation necessary or appropriate to
achieve that result.
7. Communications. The Company will disseminate to its
employees a letter from ML relating to the management changes, whose text shall
be subject to the Company's approval. The Company will consult with ML
concerning the text of the Company's press release and the letter to employees
and provide a copy of the text to ML for comment.
8. Shareholder Action. ML will vote his shares in favor of the
election of the newly-appointed temporary directors at the next annual general
meeting of shareholders.
9. Governing Law; Arbitration. This Agreement will be governed
by the law of Luxembourg. Should disagreements arise between the parties,
whether by reason of this Agreement or its interpretation or other issues in
relation to this Agreement, any such dispute shall be settled through
arbitration by an arbitration court consisting of a panel of three arbitrators.
Each of the disagreeing parties shall appoint one arbitrator. The two appointed
arbitrators shall together choose the third arbitrator. The court of arbitration
shall have its place in London, England. The language of arbitration shall be
English. The arbitration court shall also determine which party shall pay the
legal costs. The sentence of the arbitration court will be rendered in
application of the law principles governing this Agreement and in application of
the arbitration procedures provided for in the "Nouveau Code de Procedure
Civile". The sentence of the arbitration court shall be definitive and without
appeal.
10. Board Approvals. This Agreement has been approved by the
Board of Directors of GISA (with ML abstaining), and is subject to ratification
if necessary by appropriate corporate authority of Zenzus.
Gemplus International S.A. Zenzus Holdings Limited
/s/ Xxxx X. Xxxxxxx /s/ Xxxxxxx Xxxx
---------------------------------- -----------------------------------
Name:Xxxx X. Xxxxxxx Name: Xxxxxxx Xxxx
Title: Director Title: Attorney in fact
Xxxx Xxxxxx
/s/ Xxxxx X. Xxxxxxxxxxxxxx /s/ Xxxx Xxxxxx
---------------------------------- -----------------------------------
Name:Xxxxx X. Xxxxxxxxxxxxxx
Title: Director
2
FORM OF PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this
"Agreement") is dated as of [__________] and entered into by and between
[__________] ("Grantor"), and [__________] (together with it successors and
assigns, "Secured Party").
PRELIMINARY STATEMENTS
WHEREAS, Secured Party has agreed to loan Grantor the
principal amount of [__________] (the "Loan") in accordance with that certain
Promissory Note made by Grantor, dated as of the date hereof (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the
"Note") to finance Grantor's acquisition of [__________] shares of common stock
of [__________] (such shares of common stock, the "Property") pursuant to the
[__________], dated as of [__________], by and between Secured Party and
[__________];
WHEREAS, it is a condition precedent to the making of the Loan
by Secured Party that Grantor shall grant the security interest and undertake
the obligations contemplated by this Agreement; and
WHEREAS, it is intended that the security interest granted
hereunder secure the Loan until the Principal Amount and Interest (each term as
defined in the Note) are paid in full by Grantor.
NOW, THEREFORE, in consideration of the premises and in order
to induce Secured Party to make the Loan and for other good and valuable
consideration, the receipt and adequacy of which are hereby conclusively
acknowledged, Grantor hereby agrees with Secured Party as follows:
1. Grant and Pledge of Security. Grantor hereby assigns and
pledges to Secured Party, and hereby grants to Secured Party a security interest
in, all of Grantor's right, title and interest in and to the Property, whether
now or hereafter acquired, and any interest of Grantor in the entries on the
books of [__________] or any financial intermediary pertaining to the Property,
and all dividends, cash, warrants, rights, instruments and other property or
proceeds from time to time received, receivable or otherwise distributable in
respect of or in exchange for any or all of the Property (collectively, the
"Pledged Collateral"). Simultaneously with the execution of this Agreement,
Grantor shall deliver, or shall cause to be delivered, to Secured Party the
share certificates representing the Property, together with the Assignment
Separate From Certificates (the "Assignment") (in the form attached hereto as
Exhibit A) signed by Grantor, and such certificates and Assignment shall remain
in the possession of Secured Party until this Agreement is terminated, at which
time, Secured Party shall return the certificates and Assignment to Grantor.
Notwithstanding the foregoing, in the event Grantor wishes to dispose of all or
part of the Pledged Collateral in order to satisfy the Secured Obligations (as
defined in Section 2 hereof), Secured Party shall permit such disposition in a
manner mutually acceptable to the parties hereto, including in accordance with
Section 5(c) of the Note, (including without limitation delivering the
certificates to a third-party purchaser or broker in order to effectuate such
sale or disposition), provided the proceeds of any such sale or disposition
shall first be used to satisfy the Secured Obligations in full. In the case of
an Acceleration Event (as defined in the Note), Grantor hereby appoints Secured
Party as his true and lawful attorney to take such action as may be necessary or
appropriate to cause the Pledged Collateral to be transferred into the name of
Secured Party or any assignee of Secured Party and to take any other action on
behalf of Grantor permitted hereunder or under applicable law.
2. Security for Obligations. This Agreement secures, and the
Pledged Collateral is collateral security for, all obligations of every nature
of the Grantor now or hereafter existing under the Note (all such obligations
collectively, the "Secured Obligations").
3. No Assumption. Notwithstanding any of the foregoing, this
Agreement shall not in any way be deemed to obligate Secured Party to assume any
of Grantor's obligations, duties, expenses or liabilities now existing or
hereafter drafted or executed (collectively, the "Grantor Obligations") unless
Secured Party expressly agrees to assume any or all of such Grantor Obligations
in a separate written instrument.
4. Further Assurances and Covenants of Grantor. Grantor agrees
that from time to time, at the expense of Grantor, Grantor will promptly execute
and deliver all further instruments and documents, and take all further action,
that may be necessary or desirable, or that Secured Party may reasonably
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable Secured Party to exercise and
enforce its rights and remedies hereunder with respect to any Pledged
Collateral. Grantor shall not, without the prior written consent of Secured
Party, which may be granted or withheld in Secured Party's sole discretion,
sell, assign (by operation of law or otherwise), pledge or otherwise dispose of
or hypothecate all or any part of the Pledged Collateral, except for transfers
of the Pledged Collateral to a family trust or family partnership controlled by
the Grantor for estate planning purposes. Notwithstanding the foregoing, in the
event Grantor wishes to dispose of all or part of the Pledged Collateral in
order to satisfy the Secured Obligations, Secured Party shall permit such
disposition in a manner mutually acceptable to the parties hereto (including
without limitation delivering the certificates to a third-party purchaser or
broker in order to effectuate such sale or disposition), provided the proceeds
of any such sale or disposition shall first be used to satisfy the Secured
Obligations in full.
5. Event of Default; Grantor's Failure to Perform. In the case
of an Event of Default (as defined in the Note) or Grantor's failure to perform
any term of this Agreement, in addition to all of Secured Party's other rights
and remedies at law and in equity, Secured Party shall have the right, upon five
days prior notice to Grantor, to dispose in any manner of all or any portion of
the Pledged Collateral and to apply the proceeds as follows: (i) first to pay
Secured Party's expenses (including reasonable attorney's fees) in connection
with collection of the Note; (ii) second, to apply so much of the remaining
proceeds as may be necessary to pay the unpaid Principal Amount and Initial
Interest (as defined in the Note) accrued under the Note; and (iii) third, to
pay any remaining amount of the proceeds to Grantor.
6. Continuing Security Interest; Transfer of Loan. This
Agreement shall create a continuing security interest in the Pledged Collateral
and shall (a) remain in full force and effect until the indefeasible payment in
full of the Secured Obligations, (b) be binding upon Grantor, its successors and
assigns, and (c) inure, together with the rights and remedies of Secured Party
hereunder, to the benefit of Secured Party and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), neither
party may transfer their rights or obligations under this Agreement, except that
Secured Party may assign or otherwise transfer the Note and this Agreement to
any successor-in-interest, including without limitation any purchaser of
substantially all of the assets of Secured Party or to any affiliate of the
Secured Party. Upon the indefeasible payment in full of all Secured Obligations,
the security interest granted hereby shall terminate and all rights to the
Pledged Collateral shall revert to Grantor.
7. Amendments. No amendment, modification, termination or
waiver of any provision of this Agreement, or consent to any departure by
Grantor herefrom, shall in any event be effective unless the same shall be in
writing and signed by Secured Party, and, in the case of any such amendment or
modification by Grantor, such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given.
8. Notices. Any notice or other communication herein required
or permitted to be given hereunder shall be given in accordance with Section 9
of the Note.
9. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of Secured Party in the exercise of any power,
right, privilege or option hereunder shall impair such power, right, privilege
or option or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right, privilege or
option preclude any other or further exercise thereof or of any other power,
right, privilege or option. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
10. Severability. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
11. Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
12. Waiver of Jury Trial. THE GRANTOR AND THE SECURED PARTY
HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
ARISING OUT OF OR IN ANY WAY CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
13. Governing Law; Terms; Assignment. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF CALIFORNIA. This
Agreement shall inure to the benefit of, and be binding upon, Secured Party and
its successors and assigns and be binding upon Grantor and Grantor's legal
representatives, heirs and legatees, distributees, assigns and transferees by
operation of law. This Agreement shall be assignable in full or in part by the
Secured Party to any affiliate of the Secured Party without the consent of the
Grantor.
14. Counterparts. This Agreement may be executed in one or
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
IN WITNESS WHEREOF, Grantor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
GRANTOR: [__________]
-------------------------------------
SECURED PARTY: [__________]
By:
----------------------------------
Name:
Title:
Exhibit "A"
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Pledge and Security
Agreement dated as of [__________], the undersigned hereby sells, assigns and
transfers unto [__________], [__________] shares of the Common Stock of
[__________] standing in the undersigned's name on the books of said corporation
represented by certificate No. [___________] herewith, and does hereby
irrevocably constitute and appoint attorney-in-fact to transfer the said stock
on the books of the said corporation with full power of substitution in the
premises.
Dated as of: [__________].
----------------------------
