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1.

BASICS

 

1.1	Definitions

 

 

	A Shares	shall mean the registered shares of the Company with a par value of CHF 3 each.
	Accounting Standards	shall mean US GAAP.
	Acquisition	has the meaning ascribed to such term in Section 5.3.2(ix)
	Agreement	means this Joint Venture & Shareholders' Agreement dated as of the date first written above.
	Affiliate	means a Person who, directly or indirectly, Controls, is Controlled by, or is under common Control of, a Party.
	Articles of Association	means the Articles of Association of the Company agreed upon by the Shareholders to be the initial form as attached hereto as Annex A.
	Asset Transfer	has the meaning ascribed to such term in Section 5.3.2(viii)
	B Shares	shall mean the registered shares of the Company with a par value of CHF 7 each.
	Battery Cells	shall have the meaning ascribed to such term in the License Agreements.
	Battery Management System	shall have the meaning ascribed to such term in the License Agreements.
	Battery Pack	shall have the meaning ascribed to such term in the License Agreements.
	Board	shall mean the board of directors of the Company.
	Board Member	shall have the meaning ascribed to such term in Section 3.3.1.
	Business Day	shall mean a day where banks are generally open for business in Switzerland and in the United States of America.
	Business Plan	Shall mean the business plan of the Company to be prepared and agreed by the Parties as soon as reasonably possible and any subsequent business plan of the Company agreed upon by the Board from time to time.
	Buyer	has the meaning ascribed to such term in Section 6.4.1
	Call Option Notice	has the meaning ascribed to such term in Section 6.6.2.

	Call Option Price	has the meaning ascribed to such term in Section 6.6.2.
	CEMS	shall have the meaning ascribed to such term in the License Agreements.
	Charger	shall have the meaning ascribed to such term in the License Agreements.
	CO	shall mean the Swiss Code of Obligations as amended from time to time.
	Company	shall mean JV NewCo AG (final name to be agreed by the Shareholders), with domicile in Zug, Switzerland.
	Confidential Information	has the meaning ascribed to such term in Section 8.1.
	Control	shall mean as used with respect to any Person (a) the possession, directly or indirectly, of the power to direct or cause to direct the board or the management of such Person through the ownership of voting shares or other rights, by contract or otherwise, or (b) the ownership, directly or indirectly, of a majority of the voting shares or equity interests in such Person.
	Convertible Note	means the convertible note regarding LTC dated on the same date as this Agreement.
	DC-DC Converter	shall have the meaning ascribed to such term in the License Agreements.
	DILO	shall mean Dilo Trading AG, with domicile in Zug, Switzerland, an Affiliate of LTC.
	Drag-Along Notice	has the meaning ascribed to such term in Section 6.5.1.
	Drag-Along Right	has the meaning ascribed to such term in Section 6.5.1.
	Effective Date	shall mean the date of this Agreement first written above.
	Entitled Shareholder	has the meaning ascribed to such term in Section 6.6.1.
	Escrow Agent	has the meaning ascribed to such term in Section 9
	Escrow Agreement	has the meaning ascribed to such term in Section 9

	Fair Market Value	shall mean the value of a Share as per a bona fide valuation made by a reputable investment bank or other appraiser agreed upon by the Shareholders applying a valuation methodology generally recognized as standard market practice in the field of corporate finance at the time of valuation, also taking into consideration, if possible, comparables in the market. The name of the investment bank or other appraiser will be agreed upon by the Board. The costs of the valuation shall be borne by the Company. The valuation so determined shall be binding upon the Shareholders or their respective successors, receivers or trustees.
	Financing Documents	shall mean the Securities Purchase Agreement, the Convertible Note and the Investor Rights Agreement, together with all Schedules, Appendices and Annexes thereto.
	FN	has the meaning ascribed to such term in the introduction of this Agreement.
	FN Research	shall mean Frazer-Nash Research Limited, with domicile in Mytchett, United Kingdom, an Affiliate of FN
	FN Technology	shall have the meaning ascribed to such term in the FN License Agreement.
	GAIA	shall mean GAIA Akkumulatorenwerke GmbH, with domicile in Nordhausen, Germany, an Affiliate of LTC.
	Investor Rights Agreement	means the Investor Rights Agreement regarding LTC dated on the same date as this Agreement.
	IPO	shall have the meaning ascribed to such term in Section 5.3.2(vii).
	Kamkorp	shall mean Kamkorp Limited, a private limited liability company incorporated under the laws of England & Wales and having its registered address at Mytchett Place Road, Mytchett, Surrey GU16 6DQ, United Kingdom.
	License Agreements	shall mean the license agreements between the Company as licensee and each of LTC and/or any of its Affiliates and FN and/or any of its Affiliates as licensor, respectively, regarding the licensing of the LTC and FN Technologies, respectively, to the Company, which are attached to this Agreement as Annex B and C in the form agreed by the Parties. The License Agreements are to be executed within three (3) days following incorporation and registration in the commercial register of the Company.

	LTC	Shall mean Lithium Technology Corporation, a Delaware, USA corporation with registered office at 10379B Democracy Lane, Fairfax, VA 22030, USA
	LTC-Company	has the meaning ascribed to such term in the introduction of this Agreement.
	LTC Technology	shall have the meaning ascribed to such term in the LTC License Agreement.
	Non-Payer	Shall have the meaning meaning ascribed to such term in Section 4.2.4.
	Notice of Acceptance	has the meaning ascribed to such term in Section 6.4.3.
	Offered Shares	has the meaning ascribed to such term in Section 6.4.2.
	Offer Notice	has the meaning ascribed to such term in Section 6.4.2.
	Offer Price	has the meaning ascribed to such term in Section 6.4.2.
	Organizational Rules	shall mean the organizational rules for the Board and the management of the Company agreed upon by the Shareholders to be in the initial form as attached hereto as Annex D.
	Own	shall mean, with respect to any know-how, patents or other intellectual property rights, possession by a Party of the ability (whether by ownership, license or otherwise) to grant access to, to grant use of, or to grant a license or a sublicense of or under such know-how, patents or intellectual property rights without violating the terms of any law, agreement or other arrangement with any third party.
	Party	Means a party to this Agreement.
	Person	shall mean an individual, a partnership, a corporation, an association, a limited liability company, a joint stock company, a trust, a joint venture, an investment fund, an unincorporated organisation, or a governmental entity (or any department, agency or political subdivision thereof).
	Qualified Consent of the Shareholders	shall mean a consent of all shareholders of the Company representing 85% of all voting rights and 85% of the par value of all Shares.
	Relevant Market	shall mean the automotive industry and any other industry in which mass volume application of CEMS and/or Battery Packs is possible and commercially feasible.
	Securities Purchase Agreement	means the securities purchase agreement regarding LTC dated on the same date as this Agreement.

	Seller	has the meaning ascribed to such term in Section 6.4.1
	Shareholder	shall mean LTC-Company and FN and any other Person holding one or more Shares at any given time.
	Shares	shall mean the A Shares and the B Shares of the Company collectively outstanding at any given time, and Share shall mean each of the Shares.
	Tag-Along Notice	has the meaning ascribed to such term in Section 6.5.1.
	Tag-Along Right	has the meaning ascribed to such term in Section 6.5.1.
	Technologies	shall mean the LTC Technology and the FN Technology collectively.
	Terminating Shareholder	has the meaning ascribed to such term in Section 11.1.4.
	Transfer	shall mean any transfer or disposition (whether by operation of law or otherwise) of all or part of the ownership rights attached to Shares, for consideration or for free, irrespective of the legal qualification of such transfer.

 

2.	GENERAL RULE

 

2.1	This Agreement shall apply to all present and future Shares which following the incorporation of the Company are owned or thereafter will be acquired at any time during the term of this Agreement by the present or future Shareholders or their permitted assignees or successors, as the case may be.

 

2.2

The Shareholders shall always act, whether as Shareholders and/or, to the extent possible and legally permissible, through the Board Members nominated by them or as principals of the management of the Company, in the spirit of and in accordance with the provisions of this Agreement, and therefore shall always undertake all reasonable efforts, in particular with regard to their voting rights as Shareholders and/or, to the extent possible and legally permissible, through the Board Members designated by them, in order to fulfill their obligations under and give effect to the provisions and principles laid down in this Agreement.

 

3.	INCORPORATION OF THE COMPANY

 

3.1	Incorporation of the Company

 

 

 

3.2	Incorporation Capital and Voting Rights

 

3.2.1

The Company shall initially have a nominal share capital of CHF 420,000 divided into 70,000 A Shares and 30,000 B Shares. The Shareholders undertake to subscribe for the Shares as follows:

 

	Shareholder	Shares in the Company	Economic Ownership	Voting Rights	Par Value (CHF)
	FN	70,000 A Shares (with a par value of CHF 3 each)	50%	70%	210,000.00
	LTC-Company	30,000 B Shares (with a par value of CHF 7 each)	50%	30%	210,000.00
	Total	100,000 Shares	100%	100%	420,000.00

 

3.2.2

The issue price for each A Share shall be CHF 7 (consisting of CHF 3 as par value and CHF 4 as issuing premium) and FN undertakes to pay-in an aggregate amount of CHF 490,000.00 for all 70,000 A Shares, with the CHF 280,000 issuing premium to be booked in the accounts of the Company accordingly.

 

3.2.3

The issue price for each B Share shall be CHF 16 1/3 (consisting of CHF 7 as par value and CHF 9 1/3 as issuing premium) and LTC-Company undertakes to pay-in an aggregate amount of CHF 490,000.00 for all 30,000 B Shares, with the CHF 280,000 issuing premium to be booked in the accounts of the Company accordingly.

 

3.2.4

The Articles of Association will provide that each Share will have one vote irrespective of its par value and the voting rights of each Shareholder are determined by the number of Shares owned. Hence, FN will have 70% of the voting rights and LTC-Company will have 30% of the voting rights.

 

3.3	Initial Composition of the Board

 

3.3.1

Each Shareholder shall have the right to nominate two (2) members of the Board. FN shall always be entitled to designate the Chairperson of the Board who shall have a casting vote as defined in the Organizational Rules (all members of the Board, including the Chairperson, hereinafter the Board Members). The Board shall initially consist of the following four (4) members nominated as follows:

 

 

-

Mr. Kamal Siddiqi, Chairperson nominated by FN

 

-

Mr. William Tet Hin Chia, Member nominated by FN

 

-

Mr. Fred Mulder, Member nominated by LTC

 

-

Mr. Theo Kremers, Member nominated by LTC

 

 

3.3.2

The Shareholders undertake to elect the Board Members mentioned above at the incorporation meeting of the Company for a term lasting until the next annual shareholders' meeting of the Company at which the annual report of the preceding business year is approved. Thereafter and during the term of this Agreement, the Shareholders undertake to elect Board Members in accordance with Section 5.4.

 

3.3.3

At or promptly following the incorporation meeting, the Board so elected as per this Section 3.3 shall pass resolutions (i) that (A) each Board Member appointed by FN shall have signatory power for the Company collectively with either the independent Board Member or a Board Member appointed by LTC; (B) each Board Member appointed by LTC shall have signatory power for the company collectively with either the independent Board Member or a Board Member appointed by FN; and (C) the independent Board Member shall have signatory power for the company collectively with any other Board Member; (ii) appointing Mr. Kamal Siddiqi as Chairperson of the Board (with single signatory powers solely for the purpose of the registration with the competent commercial register) and (iii) adopt the Organizational Rules for the Company.

 

3.4	Initial Auditors of the Company

 

 

4.	USE OF FUNDS AND FURTHER FINANCING

 

4.1	Use of Funds upon Incorporation

 

 

 

4.2	Commitment for further Financing

 

4.2.1

The Shareholders agree and hereby undertake to provide additional financing to the Company up to a maximum amount of CHF 510,000 per Shareholder and CHF 1,020,000 in the aggregate. Such financing commitment shall be called upon by resolution by the Board upon (a) a Qualified Consent of the Shareholders thereto; or (b) either of the following conditions being met:

 

(i)

the Company's available cash reserves drop below CHF 200,000 (or foreign currency equivalent); or

 

(ii)

the Company's last annual balance sheet shows that one-half of the Company's share capital and the legal reserves are no longer covered pursuant to Art. 725 para. 1 CO (i.e. loss of capital).

 

4.2.2

Upon either of the conditions in Section 4.2.1 being fulfilled, the Board is obligated to immediately call upon the financing commitments of the Shareholders either in form of

 

(i)

a capital increase, whereby each Shareholder shall subscribe for the same class of Shares it already holds; or

 

(ii)

à fonds perdu contributions to the Company to be booked directly into equity of the Company without issuing any additional Shares; or

 

(iii)

in form of Shareholders' loans with or without subordination.

 

4.2.3

Any calling upon the financing commitment of the Shareholders under Section 4.2.1 by the Board can extend to the entire commitment amounts or any part thereof (up to the aggregate amount of such committed amounts) and shall always be made for equal amounts for each Shareholder.

 

4.2.4

In the event that either Shareholder (hereinafter the Non-Payer) does not pay-in the full amount of its commitment within the time period set by the respective Board resolution, the Non-Payer shall be excluded from the respective financing round. In such situation, the financing shall, irrespective of the initial form of financing resolved by the Board, be completed in the form of an ordinary capital increase, under which only the other Shareholder shall be entitled to subscribe for so many Shares of the class he already owns as represents its portion of the financing called upon, plus, at the other Shareholder's discretion, for any additional amount up to the amount of additional financing the Non-Payer would otherwise have subscribed for. The issue price in such capital increase shall be equal to the respective par value of the Shares class to be issued.

 

 

4.3	Future Financing of the Company

 

4.3.1

The Parties expect that the initial share capital of the Company plus the amounts committed by the Shareholders under Section 4.2.1, together with the revenues from its business activities, should be sufficient to achieve break-even.

 

4.3.2

In the event that within the scope of the Business Plan from time to time additional financing is required, the Board shall resolve upon such financing (including on the form and the amount) and offer each Shareholder to participate on a pro rata basis in such financing, provided that if such financing is resolved to be made in form of a capital increase, each Shareholder shall be offered to subscribe for a pro rata number of Shares on a Share class-by-Share class basis. For the avoidance of doubt, the Parties understand that, subject to Section 4.2.1 above, no Shareholder shall be under any obligation to participate in any future financing of the Company, but that the Company may offer newly to be issued shares to the other Shareholder or other Persons and may issue new classes of shares with preferential rights to the current Shares resulting in dilution of the Shareholders not participating.

 

4.3.3

The subscription right may only be excluded for an important reason by the meeting of Shareholders as provided for in article 652b para 2 CO and, for the avoidance of doubt, by the principles developed by jurisdiction and doctrine in connection with such article.

 

5.	CORPORATE GOVERNANCE

 

 

5.1	Equal Economic treatment of the Shareholders

 

5.1.1

Each Shareholder shall be treated in economic terms, including without limitation payment of royalties pursuant to the Licence Agreements, dividends and liquidation proceeds (but not voting rights), equal according to the par value of its shareholding. There shall be neither separate payments nor other advantages of an economic value to or for a specific Shareholder based on the class of Shares it holds.

 

5.2	Dividend Policy

 

5.2.1

The Shareholders agree that the Company shall not pay any dividends in the first full business year after incorporation and accumulate any profits generated (if any) unless otherwise agreed by Qualified Consent of the Shareholders.

 

5.2.2

As from the second (2nd) full business year after incorporation, the Company shall, and the Shareholders undertake to vote in favour of any such resolution, declare and pay out dividends amounting to 50% of the accumulated profits as shown in the balance sheet of the Company at the disposition of the Shareholders' pursuant to and subject to articles 674 and 675 CO, unless otherwise agreed by Qualified Consent of the Shareholders. The remaining 50% of the accumulated profits shall be carried forward to new account and be used as working capital of the Company, unless otherwise agreed by Qualified Consent of the Shareholders.

 

 

5.3	Resolutions by the General Meeting

 

5.3.1

The general meetings of Shareholders (each a General Meeting) will take their resolutions and make their elections in accordance with the procedural rules laid down by the law and the Articles of Association. Each Shareholder shall have the right to request an extraordinary General Meeting if the Shareholder reasonably deems such a meeting necessary. Invitations to any General Meeting shall be made by registered mail no later than 20 days before the date for which the General Meeting is scheduled to the addresses entered in the Company's share register.

 

5.3.2

Notwithstanding the foregoing, the Shareholders agree that:

 

(i)

any repurchase of Shares other than (a) pursuant to an equity incentive plan or restricted stock agreements with directors, employees, consultants or service providers or (b) upon exercise of the Company’s right of first refusal under an employee stock option agreement;

 

(ii)

modification of the Accounting Standards and/or the format of the annual accounts;

 

(iii)

approval of the annual accounts;

 

(iv)

amendment of the Articles of Association;

 

(v)

any resolution on the allocation of the disposable profit, in particular but not limited to any set-off of profits, any allocation to any reserves, any formation of reserves and any declaration and subsequent payment of dividends or other distributions by the Company with respect to the Shares in deviation of Section 5.2;

 

(vi)

any further financing required by the Company under Section 4.2.1 (a) (but not if either of the conditions under Section 4.2.1 (b) (i) or (ii) are met);

 

(vii)

any resolution resolving for the preparation of an initial public offering (an IPO), including a resolution to increase the capital to be made available into an IPO;

 

 

(viii)

any agreement or resolution by the Company regarding any direct or indirect sale of all or substantially all of the material assets belonging to the Company or the exclusive license of substantially all of the intellectual property assets that are material to the Company's business (an Asset Transfer);

 

(ix)

any acquisition, consolidation, merger or de-merger of the Company with or into any other corporation or other entity or Person, or any other corporate reorganization (an Acquisition);

 

(x)

any increase or decrease in the number of the Board Members as provided for in Section 3.3;

 

(xi)

the election of another auditor of the Company than the initially elected auditors pursuant to Section 3.4;

 

(xii)

passing any resolution for dissolution, liquidation and winding up the Company; and

 

(xiii)

all decisions listed in article 704 para. 1 CO;

 

 

5.4	Board of Directors

 

5.4.1

The Board shall have the powers, rights and duties as set out in, and its meetings and passing of resolutions shall be governed by, the CO and other applicable laws, the Articles of Association and the Organizational Rules.

 

5.4.2

Any nomination by a Shareholder of Board Members as provided for in Section 3.3.1 shall be supported by the other Shareholder in good faith unless such other Shareholder has important reasons to consider the nominated Board Member unfit or unsound to fulfil the required tasks as Board Member. In any such a case, the Shareholder having the right to nominate such Board Member may make another proposal.

 

5.4.3

A Shareholder having nominated a Board Member shall have the right at all times to remove and replace such Board Member, and the other Shareholder shall cast its votes in support of any such replacement.

 

5.4.4

The Company shall reimburse the Board Members' reasonable out-of-pocket expenses incurred in the pursuit of the Company's business including for material travel and communication as well as reasonable expenses incurred in attending Board meetings, committee meetings or otherwise representing the Company. The independent Board Member shall receive a compensation to be agreed upon by the Board.

 

 

5.5	Board Committees and Management

 

5.5.1

The Board may establish Committees for specific tasks and delegate certain duties and powers to such Committees as provided for in the Organizational Rules. The Parties agree that at least one Board Member appointed by LTC will take place in the audit committee of the Company.

 

5.5.2

The Board may also delegate all or part of the day-to-day management of the Company to a CEO and/or an executive management pursuant and subject to the Organizational Rules.

 

6.	TRANSFER OF SHARES

 

6.1	Transfer Restrictions in the Articles of Association

 

 

6.2	Pledges and Encumbrances

 

 

6.3	Intra-Group Transfers

 

6.3.1

The following rules regarding the Transfer of Shares shall not apply if one Shareholder transfers all or any of the Shares to an Affiliate of such Shareholder, provided that in each case the acquiring Affiliate accepts all rights and obligations under this Agreement and becomes a party hereto by execution of a deed of adherence.

 

6.3.2

In the event that a Shareholder only transfers a portion of the Shares held by it to an Affiliate and retains holding in the remaining Shares, then both such Shareholder and its Affiliate must accept all rights and obligations under this Agreement and become a party to this Agreement by execution of a deed of adherence. In each case, the Shareholders undertake to accept the adherence of such Affiliate to this Agreement.

 

6.3.3

In the event that a Shareholder jointly with an Affiliate holds Shares and such Affiliate is proposed to cease to be an Affiliate of such Shareholder, then such event constitutes a proposed Transfer of the Shares held by such Affiliate and will be subject to the provisions of Section 6.4, unless such Affiliate prior to such event either re-transfers the Shares held by it to the respective Shareholder or to another Affiliate.

 

 

6.4	Right of First Refusal

 

6.4.1

If a Shareholder (hereinafter a Seller) desires to Transfer all or part of the Shares held by him to any Person (hereinafter a Buyer) pursuant to a bona fide offer of such Buyer, the Seller shall first grant to the other Shareholder (hereinafter the Other Shareholder) a right to acquire such Shares at the same terms and conditions than those offered by the Buyer, pursuant to the following provisions.

 

6.4.2

The Seller must first send to the Other Shareholder and to the Company (with a copy to the Escrow Agent) a written notice indicating the intent to Transfer Shares (the Offer Notice), which shall state at least (i) the number and type of Shares subject to the proposed Transfer (the Offered Shares), (ii) the price per Offered Share offered by the Buyer (the Offer Price), (iii) the name and address of the Buyer, and (iv) the other terms and conditions offered by the Buyer. Furthermore, if the Buyer is a privately held legal entity, the Seller shall provide the Other Shareholder with the identity of the Buyer's shareholders or beneficial owners controlling each at least 20% of such Buyer.

 

6.4.3

The Other Shareholder shall have the right to exercise its right of first refusal with respect to all, but not only part of the Offered Shares, by giving a written notice (a Notice of Acceptance) to the Seller (with a copy to the Company and the Escrow Agent) within thirty (30) Business Days upon receipt of the Offer Notice. In the event that the Other Shareholder has served a Notice of Acceptance, the Seller is then obliged to sell and transfer the Offered Shares against payment of the Offer Price to the Other Shareholder within ten (10) Business Days after receipt of the Notice of Acceptance in accordance with the terms and conditions set forth in the Offer Notice.

 

6.5	Tag-Along Right / Drag-Along Right

 

6.5.1

In the event that the Other Shareholder does not want to exercise its right of first refusal under Section 6.4, as an alternative, the Other Shareholder shall be entitled to co-sell all its Shares to the Buyer (Tag-Along Right) at the Offer Price and under the terms and conditions set forth in the Offer Notice, and the Seller shall be obligated to procure that the Other Shareholder may co-sell its Shares in accordance with such Tag-Along Right. The Shareholder willing to exercise its Tag-Along Right shall give a notice thereof (a Tag-Along Notice) to the Seller (with a copy to the Company and the Escrow Agent) within thirty (30) Business Days upon receipt of the Offer Notice. The Other Shareholder shall then be obligated to sell its Shares to such third party as part of the same transaction and at the same terms and conditions as set forth in the Offer Notice.

 

6.5.2

In case neither the right of first refusal nor the Tag-Along Right is exercised, the Seller shall have the right to obligate the Other Shareholder to co-sell all its Shares, but not only part thereof, to the Buyer on the same terms and conditions (a Drag-Along Right), or it is free to sell the Offered Shares to the Buyer on the agreed terms and conditions within ninety (90) Business Days after the Offer Notice. The Shareholder exercising its Drag-Along Right shall give a notice thereof (a Drag-Along Notice) to the Other Shareholder (with a copy to the Company and the Escrow Agent) at least thirty (30) Business Days prior to the date of Transfer.

 

 

6.6	Call Option

 

6.6.1

In the event that

 

(i)

A Party breaches this Agreement and the other Party provides thirty (30) days’ prior written notice to the other Party upon or after such breach by the other Party and the breaching party has not cured such breach within the thirty-day period following such written notice by the non-breaching party or, if such breach is not susceptible of cure within such thirty-day period, the breaching Party has not taken appropriate steps to commence such cure during such thirty-day period and continued to diligently pursue such cure in a manner reasonably assuring such cure within a reasonable period of time thereafter; or

 

(ii)

a Shareholder (or the Shares held by a Shareholder) or in case of LTC Company also LTC or GAIA or DILO, or in case of FN also Kamkorp or FN Research are subject to compulsory execution proceedings, including but not limited as a result of a declaration of bankruptcy, a seizure (Pfändung) maintained for at least thirty (30) days in respect of all or substantially all of its assets, an opening of a moratorium procedure (Nachlassstundung), an agreement with major creditors or any similar restructuring or bankruptcy event; or

 

(iii)

a Shareholder (or any of its respective Affiliate(s) being a party to such agreements) is in breach of any of the Financing Documents (but only if FN Is not in breach of its obligations under Section 2.6 of the Securities Purchase Agreement) or the License Agreements and has not duly and timely cured such breach (where applicable) in accordance with the terms of such agreements;

 

 

6.6.2

The call option referred to in Section 6.6.1 may be exercised within ninety (90) Business Days following the notice by the concerned Shareholder under Section 6.6.1 or after the Entitled Shareholder otherwise learned about the event triggering the Call Option and notified the concerned Shareholder accordingly, whatever is the earlier, at 90% of the net equity value of the Shares (pro rate equity of the Company) based on the last audited financial statements of the Company (the Call Option Price). The Entitled Shareholder willing to exercise the call option referred to in Section 6.6.1 shall give a notice thereof (a Call Option Notice) to the concerned Shareholder (with a copy to the Company and the Escrow Agent). The concerned Shareholder undertakes to, and its receiver, trustee or similar body or authority shall be obliged to, Transfer its Shares to the Entitled Shareholder within ten (10) Business days from the date of the Call Option Notice against payment of the Call Option Price.

 

 

6.6.3

In case that

 

(i)

this Agreement is terminated by either Shareholder in accordance with Section 11.1.4; or

 

(ii)

in the event of a change of Control at either LTC-Company or LTC (or GAIA or DILO as licensors under the LTC License Agreement) (other than a change of Control by FN) or FN (or Kamkorp or FN Research);

 

 

7.	REALISATION OF INVESTMENT

 

7.1	IPO / Mandatory Conversion

 

7.1.1

In the event that the Shareholders agree to initiate the process for an IPO of the Company, then each Shareholder consents to vote in favour of an amendment of the capital structure of the Company and convert its Shares into Shares with a uniform par value without taking into account the voting rights in case of an IPO and to vote for an increase of the share capital if such resolutions are required in view of an IPO. Each Shareholder waives its subscription right in respect to a capital increase made for such Initial Public Offering.

 

7.1.2

The Shareholders will agree to a customary lock-up period required in connection with an Initial Public Offering or strategic sale of the Company.

 

7.2	Voluntary Conversion

 

 

 

8.	CONFIDENTIALITY

 

8.1

The Shareholders undertake that each of them, and will procure that each of their respective nominated Board Members, will not at any time hereafter divulge or communicate to any Person (other than where relevant to their officers, employees or professional advisers bound by a confidentiality undertaking not less stringent than this and whose position makes it necessary to know the same) (the Authorized Recipient) any information on the Company's business or affairs or about the content of this Agreement (hereinafter Confidential Information) except for such information that:

 

(i)

was known or used by such Authorised Recipient prior to the date of disclosure to such Authorised Recipient as demonstrated by legally admissible evidence available to such Authorised Recipient;

 

(ii)

either before or after the date of the disclosure to such Authorised Recipient is lawfully disclosed to such Authorised Recipient by sources other than the Company lawfully in possession of the Confidential Information;

 

(iii)

either before or after the date of the disclosure to such Authorised Recipient becomes published or otherwise part of the public domain through no fault or omission on the part of such Authorised Recipient;

 

(iv)

is independently developed by or for such Authorised Recipient without reference to or in reliance upon the Confidential Information as demonstrated by competent written records; or

 

(v)

is required to be disclosed by such Shareholder, respectively Board Member, to comply with applicable laws or regulations or to defend or prosecute litigation, provided that such Shareholder, respectively Board Member, provides prior written notice of such disclosure to the Company (if and where permitted) and takes reasonable and lawful actions to avoid or minimize the degree of such disclosure.

 

8.2

A Shareholder or its agent or representative may disclose any Confidential Information relating to the Company to a prospective Buyer with the written consent of the Company, provided that a confidentiality agreement is entered into by the Shareholder with the prospective Buyer to ensure the confidential treatment of the Confidential Information pursuant to the terms of this Agreement. Further, disclosure by the Company of the identity of any Shareholder and its investment position and disclosure by any Shareholder of its investment and the size thereof in the Company shall not constitute a breach of this Section.

 

 

8.3	The duty to keep Confidential Information confidential survives this Agreement.

 

9.	TECHNOLOGY WARRANTY BY THE SHAREHOLDERS

 

9.1	To induce the other Shareholder to enter into this Agreement, each Shareholder represents and warrants to the other Shareholder with respect to the Technologies licensed to the Company under the License Agreements as follows:

 

9.2	FN represents and warrants to LTC-Company as of the Effective Date that the FN Technology exists and:

 

(a)

meets OEM criteria;

 

(b)

is capable to fully fulfil its intended functionality and fully achieve its intended purposes and performance levels under the License Agreement between the Company and FN, including without limitation (together with the LTC Technology) the design, production, marketing and sale of the Products for use and sale to the Relevant Market; and

 

(c)

that the FN Technology shall be as advanced, complete, accurate and reliable as required by the Company to exercise and enjoy the license granted under the License Agreement between the Company and FN as at the date of the license grant.

 

9.3	LTC-Company represents and warrants to FN as of the Effective Date that the LTC Technology exists and:

 

(a)

meets OEM criteria;

 

(b)

is capable to fully fulfil its intended functionality and fully achieve its intended purposes and performance levels under the License Agreement between the Company and LTC and its respective Affiliates, including without limitation (together with the FN Technology) the design, production, marketing and sale of the Products for use and sale to the Relevant Market; and

 

(c)

that the LTC Technology shall be as advanced, complete, accurate and reliable as required by the Company to exercise and enjoy the license granted under the License Agreement between the Company and LTC and its respective Affiliates as at the date of the license grant.

 

9.4

In case that a Shareholder alleges a material non-compliance by the other Shareholder with Sections 9.2 and 9.3, respectively, such Shareholder shall notify the other Shareholder in writing of such alleged non-compliance setting forth in all reasonable detail the reasons and facts thereof. Any such notice for alleged material non-compliance of the technology warranties by each Shareholder under this Section 9.4 may only be given in accordance with Section 11.5 and before the second anniversary of the Effective Date. Upon receipt of such notice, the Parties undertake to meet as promptly as possible to discuss and possibly resolve the issues of such alleged material non-compliance within two (2) months after such notice.

 

 

9.5

In the event that the Shareholders may not agree to a mutually acceptable resolution of the issue raised in the notice pursuant to Section 9.4, the Shareholder having issued such notice shall be entitled to initiate arbitration proceedings against the other Shareholder in accordance with Section 12.2 to have finally determined whether or not there is a material non-compliance with the technology warranty under Section 9.2 or 9.3, as the case may be. In the event that such arbitration proceedings result in an award ascertaining a material non-compliance under the technology warranties, then the Shareholder having issued the notice pursuant to Section 9.4 (or its Affiliates being the licensors under the respective License Agreement) has the right to (i) forthwith terminate the License Agreement to which it is a party and (ii) forthwith demand that the Company and the other Shareholder terminate the License Agreement to which the other Shareholder is a party, by written notice within one (1) month following receipt of such arbitration award and without any termination costs being payable by any party to the License Agreements, it being understood that such Shareholder may only elect both under (i) and (ii) hereinbefore (but not only one of both). Following the demand to terminate the License Agreement to which the Shareholder having issued the notice pursuant to Section 9.4, each of the Company and the other Shareholder shall take all necessary steps to promptly terminate such License Agreement. After the unused expiration of such one (1) month period, this rights under (i) and (ii) above shall be forfeited.

 

9.6

In the event that the Shareholders (or their respective Affiliates being the licensors under the License Agreements) have terminated the License Agreements pursuant to Section 9.5, the Shareholders shall in good faith mutually determine the future of the Company, including without limitation a wind-down, sale or liquidation.

 

9.7

The Parties understand, acknowledge and agree that the remedies under Section 9.4 and 9.5 in case of an alleged material non-compliance of the technology warranties under this Section 9 shall be the sole and exclusive remedies, and that in particular the call option under Section 6.6 shall not apply and no Party may claim any damages under what title ever from another Party as a result of an alleged (or actual) material non-compliance of the technology warranties be ascertained by the arbitration award.

 

10.	ENFORCEMENT OF THIS AGREEMENT

 

10.1	Deposition of Shares with Escrow Agent

 

 

 

10.2	Obligations of the Escrow Agent

 

 

11.	FINAL PROVISIONS

 

11.1	Duration and Ordinary Termination

 

11.1.1

This Agreement shall enter into force and become effective as of the Effective Date upon execution by all Parties.

 

11.1.2

This Agreement shall expire at the earlier of:

 

(i)

the tenth (10th) anniversary of the Effective Date, provided a Shareholder notifies the other Shareholder in writing and not less than six (6) months prior to such tenth anniversary of its intention to terminate this Agreement;

 

(ii)

completion of an IPO;

 

(iii)

completion of a Transfer of all Shares to a third Person in accordance with the provisions of this Agreement; and

 

(iv)

all Shares of the Company are owned by the same Shareholder.

 

11.1.3

If no Shareholder timely notifies the other Shareholder of its intention to terminate under Section 11.1.2(i) above, this Agreement will be renewed for a subsequent term of one (1) year, such term being self renewable, unless a Shareholder notifies the other Shareholder in writing and not less than 6 month prior to the end of such subsequent term of its intention to terminate this Agreement.

 

11.1.4

If one Shareholder terminates the Agreement in accordance with Section 11.1.2(i) (the Terminating Shareholder), the other Party shall have the right to exercise the call option in accordance with Section 6.6.3(i).

 

11.2	Relationship to Articles of Association / Discrepancies

 

 

 

 

11.3	Assignment

 

 

11.4	Severability

 

 

11.5

Notices

 

 

11.6	Entire Agreement

 

 

11.7	Modification / Amendment of this Agreement

 

 

11.8

Costs

 

 

 

11.9	No Forfeiture of Rights

 

 

12.	APPLICABLE LAW AND JURISDICTION

 

12.1	Applicable law

 

 

12.2	Jurisdiction

 

 

 

 

 

 

 

 

 

 

Name: /s/ Theo M.M. Kremers Title:  CEO of LTC

Name: Title:

 

 

 

 

Name: /s/ Dr. iur. Toni Russi Title: Member of the Board

 

 

 

Name: (on behalf of GAIA Holding B.V.)   /s/ Theo M.M. Kremers

Name: (on behalf of Cicco Holding AG)   /s/ Dr. iur. Toni Russi

 

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