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By this private instrument, entered into by and between,
MICROTECH CORPORATION, a company organized and existing under the laws of the State of __________, United States, with head offices at ________________________, herein represented by _____________, lawyer, at ______________, and INTERNATIONAL DISTRIBUTORS LTD, a company organized and exiting at ____________, _____________ with its Articles of Association duly registered with the ____________________Board of Trade under _________________, on [Date] duly enrolled with the managing-directors Messrs. _______________, and as Consenting Party:
INTERNATIONAL DISTRIBUTORS LTD, a company organized and offices at _____________ hereafter referred to simply as the "COMPANY".
1.1 The COMPANY was organized for the purposes of consolidating the distribution and service of MICROTECH products in (Country).
1.2 The capital of the COMPANY on this date is $------, divided into (--) quotas, with the par value of $------ each, distributed in the following manner:
QUOTAHOLDER NO per cent
1.3 MICROTECH and INTERNATIONAL DISTRIBUTORS LTD wish to be quotaholders in a limited liability company for the purpose of distributing product.
1.4 MICROTECH and INTERNATIONAL DISTRIBUTORS LTD wish to establish supplementary terms and conditions to govern their participation in the COMPANY, in addition to the rules contained in the attached Articles of Association of the COMPANY and in any other agreements executed by the parties relating to this Joint Venture.
1.5 In consideration of the undertakings and covenants herein contained and pursuant to the provisions of Article 118 of Law Number 6.404, of December 15, 1976 (the Corporation Law), the parties mutually agree to enter into this Quotaholders Agreement, which shall govern MICROTECH's and INTERNATIONAL DISTRIBUTORS LTD's relationship regarding their participation in the COMPANY
1.6 Dividend Payments. The COMPANY shall, unless otherwise resolved at a quotaholders' meeting, pay dividends annually to its quotaholders according to their interests in the maximum amount allowed by law out of the after-tax profits of the COMPANY for each fiscal year, calculated on an annual, non-cumulative basis.
1.7 Unanimous Quotaholder Approval. The following matters shall require the unanimous approval of the quotaholders:
1.7.1 Any amendment to the company's Articles of Association;
1.7.2 The acquisition, sale, transfer or disposal of a substantial amount of the assets of the Company;
1.7.3 Any combination, merger or reorganization of the Company with another Company;
1.7.4 Any acts or decisions which may impair, materially affect or dilute MICROTECH's or INTERNATIONAL DISTRIBUTORS LTD's financial and/or equity interest in the Company, or result in a substantial reduction of profits payable to either of the quotaholders including without limitation, the execution of any agreements, deeds, contracts and documents, the granting of rights to third parties, managers or quotaholders, the creation of reserves and provisions, capital expenditures, borrowings, the granting of guarantees and the acquisition, transfer, sale or encumbrance of any assets and intellectual property rights. This provision is not meant to restrict the day-to-day operations of Company, and shall not apply to agreements, contracts or documents executed in the normal ordinary course of Company's business in the licensing, distribution and servicing of MICROTECH's products in (Country);
1.7.5 Any decision regarding bankruptcy, creditors agreement ("concordate"), dissolution and liquidation of the Company, as well as the appointment of the liquidator.
1.8 MICROTECH and INTERNATIONAL DISTRIBUTORS LTD their successors and any new subscribers to this Agreement undertake to exercise their voting rights always having in view the best interests of the Company, and the obligations undertaken in the present Agreement shall not be invoked in order to release any of the quotaholders from legal responsibility in the exercise of voting rights, in accordance with the Corporation Law.
2.0 BOARD OF DIRECTORS OF THE COMPANY
2.1 Purpose of this Agreement. The parties shall vote their quotas of the Company and use their best efforts to cause their representatives on the Board and the officers and employees of the Company to act to achieve the purposes set forth in this Agreement, including without limitation the provisions of this Article 2.
2.2 The Board of Directors.
2.2.1 The Board of Directors of the Company (the "Board") will consist of (--) directors, of whom (--) will be nominees of MICROTECH and (--) of INTERNATIONAL DISTRIBUTORS LTD; provided, however that on the mutual consent of MICROTECH and INTERNATIONAL DISTRIBUTORS LTD, and in accordance with (Country) law, the number of the directors of the Company may be (--) or ten (--), and in each case MICROTECH and INTERNATIONAL DISTRIBUTORS LTD shall each nominate half of such number of directors.
2.2.2 The Chairman of the Board and the Vice-Chairman of the Board shall each serve a term of three years. INTERNATIONAL DISTRIBUTORS LTD shall designate one of their directors as Chairman of the Board, and MICROTECH shall designate one of its directors as Vice-Chairman of the Board. Each designation made under this subparagraph shall require the approval of MICROTECH or INTERNATIONAL DISTRIBUTORS LTD, as the case may be, which approval may not be unreasonably withheld.
2.2.3 The parties agree to case their votes as quotaholders of the Company so as to elect as directors the persons nominated respectively by MICROTECH and INTERNATIONAL DISTRIBUTORS LTD hereunder as directors. Written notice of MICROTECH's or INTERNATIONAL DISTRIBUTORS LTD's desire to nominate a new individual as its nominated director or remove or substitute any director appointed shall be given to MICROTECH or INTERNATIONAL DISTRIBUTORS LTD, as applicable, and filed with the principal office of the Company.
2.3 Vacancies. If the position of a director of the Company becomes vacant for any reason, the parties shall cause their quotas to be voted to elect as director a person nominated by whichever of MICROTECH and INTERNATIONAL DISTRIBUTORS LTD nominated the director whose office is vacant.
2.4 Consultations. MICROTECH and INTERNATIONAL DISTRIBUTORS LTD shall each, when requiring the appointment or removal of a director under this Article, consult with the other party before giving notice.
2.5. Board Meetings. Meetings of the Board shall be held at such times as the Board or the Chairman or any two directors shall determine provided that unless otherwise agreed to by the directors a meeting of the Board shall be held at least twice a year. No business will be transacted at any meeting of the Board unless there is present a majority of the directors in office. All resolutions of the board must be adopted by a majority of the votes of all the members in office. In the absence of the Chairman, the Vice Chairman will chair the meeting of the Board with full power and authority of the Chairman in every respect.
2.6.1 The directors nominated as Chairman and Vice-Chairman under Section 2.2.2 hereof shall also be nominated as President and Executive-Vice President, respectively of the Company.
2.6.2 The Parties shall cause their directors to vote so that the persons nominated pursuant to this paragraph are elected.
2.7 Agenda. The agenda of a Board Meeting shall be sent to all directors at least fourteen (--) days in advance and in the case of directors residing outside the Republic of Brazil. Such agenda shall be sent by telex, facsimile or the quickest means and confirmed by airmail letter. Such notice requirement may be modified or eliminated by prior agreement of all directors.
3.0 AUDITOR, ACCOUNTANT, AND FISCAL YEAR
3.1 Auditor. The Company will have one (1) internal auditor who shall be appointed by the quotaholders.
3.2 Accountant. The external auditor of the Company will be the Accountant.
3.3 Fiscal Year. The Company shall unless the quotaholders otherwise agree close its accounts as of 31 December of each year.
4.1 Management by the Board. The Company will be managed by the Board. The principal functions of the Board will be the establishment of overall policies for the Company and the consideration of extraordinary transactions which are not a part of the day-to-day business.
4.2 Functions of the Board.
4.2.1 The Board shall delegate its managing powers to an executive committee of the Board which shall be comprised of one director nominated by MICROTECH, the Director Superintendent, and the other nominated by INTERNATIONAL DISTRIBUTORS LTD, the Marketing Director, (the "Executive Committee"), which structure may be modified from time to time as deemed appropriate by the Board. The Executive Committee shall have authority to decide the following matters:
(a) Long-term and annual operating and investment budgets.
(b) Long-term and annual programs relative to changes in the Company's activities, finance, or marketing.
(c) Transfer or acquisition of assets with a value not exceeding $------.
(d) Establishment of basic policies for the operation of the Company regarding investments, loans, personnel, travel, funding, foreign exchange, the establishment of branches and representative offices, and, except for members of the Executive Committee, compensation.
(e) Delegation of Executive Committee authority.
(f) Any other matter in addition to the above deemed appropriate by the Executive Committee if such matter is within the authority granted to the Executive Committee by the Board; otherwise such matter shall be referred to the Board.
4.2.2 Notwithstanding anything in this Agreement to the contrary, if the Executive committee decides it is inconvenient or inexpeditious for Executive Committee approval to be obtained in any instance (s), any or all of the foregoing matters may be undertaken by the board. In the event the Executive Committee is unable to reach a decision on any such matter, it shall be referred to the Board.
5.0 RESTRICTIONS ON TRANSFER
5.1 No Transfer. Except as otherwise provided herein, no party may sell, assign or otherwise transfer or encumber its quota in the COMPANY, or purchase or otherwise acquire control of any quotas, except that any party may freely transfer its quotas to an affiliate ("Affiliate" which is any company in which a party owns or controls more than (--%) of the voting stock or shares of such company) the voting quotas of which it owns more than (--%). No party may transfer less than all of its quotas without each other party's prior written consent, except to such an Affiliate. Any transfer under this Section shall require the prior approval of MICROTECH or INTERNATIONAL DISTRIBUTORS LTD, as applicable, which approval shall not be unreasonably withheld.
5.2 Restriction in Articles of Association. The parties agree that the Articles of Association will contain a provision to the effect that any transfer of quotas of the COMPANY must be in accordance with the procedure provided in Section 5.3, and a legend to that effect shall be placed on all quota certificates, if any, of the COMPANY
5.3 Right of First Refusal.
5.3.1 Each party hereto hereby extends to the other parties, and will extend to any subsequent quotaholder, the right of first refusal with respect to the acquisition of the quotas of the COMPANY held by it. Accordingly, if at any time any party hereto desires to transfer its quotas of the COMPANY other than to an Affiliate, such party shall first offer in writing to sell its quotas to the other quotaholders or any nominee of any of them, at the higher of (1) book value, the determination of which shall include, the value of reserves in loan loss provision and real property whose book value is below fair market value, or (2) fair market value, both as determined by an authorized securities company mutually acceptable to and selected by MICROTECH and INTERNATIONAL DISTRIBUTORS LTD, or, if MICROTECH and INTERNATIONAL DISTRIBUTORS LTD fail to select such company, selected by the Accountant on written request of MICROTECH or INTERNATIONAL DISTRIBUTORS LTD made more than thirty days after the date of the relevant offer to sell. Notwithstanding the foregoing, such quota price may be otherwise agreed on by MICROTECH and INTERNATIONAL DISTRIBUTORS LTD Such amount shall be payable in United States dollars if MICROTECH is selling its shares and in the national currency of Brazil if INTERNATIONAL DISTRIBUTORS LTD is selling its shares. Any value calculated in Brazilian currency and payable in United States dollars shall be indexed as of the calculation date up until the effective payment date in accordance with the variation of the General Price Index of the Fundaco Getulio Vargas ("IGP-FGV").
5.3.2 The quotaholders receiving such first offer will have (--) days therefrom to respond. If such offer is accepted, the sale shall be consummated no earlier than the (--) day, or later than the (--) day, after the date such acceptance is received. The buying quotaholders will be each entitled to purchase the portion of the offered quotas proportionate to its then existing percentage interests in the Company's remaining quotas, as well as a like portion of any quotas not purchased by a quotaholder entitled to buy.
5.3.3 To the extent such first offer to sell is declined or not answered by the receiving quotaholders within the initial (--) day period described above, the quotaholder making the offer shall have the right to offer and sell, within (--) days after the elapse of the initial one hundred and (--) days as aforesaid, all such quotas of the COMPANY not being purchased by a quotaholder to any other person, natural or juridical, at a price equal to or greater than such book or market value established under Section 5.3.1.
5.3.4 If the sale to an outside party is not carried out within such (--) day period, the right of first refusal is automatically reinstated, any previous sales to quotaholders in respect of the relevant offering are automatically rescinded, and the quotaholders will revert to their ownership positions prior to the relevant first offer made under Section 5.3.1.
5.4 Assumption of Obligations. No transfer of the quotas of the COMPANY in accordance with this Article 5 is valid unless the transferee first agrees in writing prior to such transfer to be bound by and fulfill all of the obligations and duties of the transferor hereunder.
5.5 Government Approval. Transfer of quotas hereunder shall be subject to any required approval or validation of the Brazilian government and shall not become effective until such approval or validation has been obtained.
5.6 Calculations. For purposes of this Section the local books maintained in accordance with Brazilian generally accepted accounting principles shall be used to calculate book values.
6.1 In the event of a Deadlock Notice ("Deadlock Notice" means a statement in writing, signed by all the directors nominated by either MICROTECH or INTERNATIONAL DISTRIBUTORS LTD that negotiations have failed to result in an agreement on the applicable matter (--) days' prior written notice of intent to issue such a statement must be given by MICROTECH or INTERNATIONAL DISTRIBUTORS LTD, as applicable) by the quotaholders or the Board for a period of at least the previous (--) months, the parties shall negotiate for the purchase of MICROTECH's quotas by INTERNATIONAL DISTRIBUTORS LTD, or vice versa.
6.2 If such negotiations do not result in a mutually acceptable agreement within (--) days of the date of the Deadlock Notice, the parties agree to cause the liquidation of the COMPANY as quickly as possible. Any purchase, sale or liquidation shall be made subject to any relevant governmental requirements.
6.3 If a Deadlock Notice is withdrawn prior to expiration of such (--) day period, the obligations of the parties to negotiate a quota purchase shall cease and, if no other Deadlock Notice has been issued and not withdrawn, a subsequent Deadlock Notice will be required to invoke the procedure of this Section.
7.1 Obligation of Confidentiality. The parties hereto agree to keep confidential and not to disclose to any third party, excluding Affiliates, except to the extent that disclosures may be required by this Agreement or applicable law or regulation, any and all technical, economic, financial or marketing information acquired from another party hereto (including information acquired during the period of negotiations preceding the execution hereof) or from the COMPANY unless disclosure of such information is expressly permitted by this Agreement, the Board, or the Executive Committee. No disclosure shall be made in violation of any legal restriction or established business practice.
7.2 Obligation not to Use. The parties hereto agree that they shall not use any information described in Section 7.1 obtained from another party hereto or from the COMPANY for any purpose whatsoever except in a manner expressly provided for in this Agreement.
7.3 Exceptions to Obligation of Secrecy. The obligations undertaken by the parties hereto pursuant to Sections 7.1 and 7.2 shall not apply to any such information which,
7.3.1 at the time of acquisition or thereafter is in the public domain by publication or otherwise through no fault of the acquiring party; or
7.3.2 was in possession of the acquiring party prior to the time of acquisition; or
7.3.3 was acquired from a third party imposing no obligation of confidentiality.
7.4 Survival of Obligations. The obligations of the parties under Sections 7.1 and 7.2 (but subject to Section 7.3) shall be valid for (--) years from the time of acquisition of each item of information, and shall survive the termination of this Agreement.
8.0 TERM OF VALIDITY
8.1 The present Quotaholders Agreement shall be in force for a period of five (5) years from the date of execution by the parties to this Agreement, and may be extended for additional periods of one (1) year, by decision of the parties taken at least (--) months prior to the final closing of each term.
9.0 PROPER BUSINESS PRACTICES
9.1 No signatory hereto will pay, promise, offer or authorize payment of anything of value in any form to any person or organization, either directly or indirectly, through an agent, representative, subcontractor or other third party, to obtain or retain business, where such payment, promise, offer or authorization is contrary to applicable laws, including without limitation the United States Foreign Corrupt Practices Act and/or United States Export Administration Law.
10.0 GENERAL PROVISIONS
10.1 For the purposes of Article 118 of Law Number 6.404/76, a copy of this Instrument shall be filed at the head-office of COMPANY
10.2 All notifications shall be given in writing, accompanied by a notice of receipt, to the addressees indicated in the preamble of this Agreement. However, any of the parties may, by giving written notification to the other party, accompanied by a notice of receipt, alter the address assigned for delivery of notifications.
10.3 This Agreement is executed in an irrevocable and irretractable manner and all obligations and rights herein provided are binding on the parties, their legal representatives, transferees, successors and assignees under any circumstance, on participation by a collateral creditor, usufructuaries with a voting right and any third parties, purchasers or subscribers of quotas of the COMPANY, which must necessarily subscribe this Agreement.
10.4 Each party undertakes to compensate the other party for any actual losses, damages, costs and expenses resulting from its failure to comply with any of the obligations under this Agreement.
10.5 In the event any of the obligations herein contained are not fulfilled by either of the parties, the party wishing to remedy the breach may specifically enforce this Agreement under the provisions of Article 118, third paragraph, of Law Number 6.404/76.
10.6 If any provision of this Agreement is deemed to be invalid or unenforceable in accordance with its terms, all other provisions shall be and continue to be valid and enforceable in accordance with their terms.
10.7 If the IGP-FGV is extinguished or is no longer calculated or no longer accurately reflects the devaluation of the (Country) currency, such index shall be replaced by another index maintained by a reputable institution or by government authorities chosen by the parties in good faith, which index accurately reflects devaluation.
10.8 This Agreement shall be governed and interpreted in accordance with the laws of the (Country). The parties hereby agree to the sole exclusive jurisdiction of the courts of the City of _____________.
IN WITNESS WHEREOF, the parties have executed this Agreement in three (3) counterparts, in the presence of the two (2) undersigned witnesses.
For the purposes of Article 118 of Law Number 6.404/76 a copy of this Agreement was filed at the head-office of COMPANY, on the date of its execution.
*** If Required By State Law ***
This Section for Notary:
State of _________
County of ________ [COUNTY]
On [DATE] before me, [NAME OF NOTARY], notary, personally appeared [NAME OF PERSON(S) INVOLVED], personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
Witness my hand and official seal.
My commission expires: _____