EX-10.3 3 d655315dex103.htm EX-10.3 EX-10.3

Exhibit 10.3

Annex to report Art. 583, 596 and 598 of the Belgian Company Code dated 7 April 2014

 

2014 WARRANTS

RULES AND REGULATIONS

1. Definitions

The terms below shall have the following meanings:

 

Offer    The offer of the Warrants of which the Selected Participant will be notified in accordance with Article 4.2.2 of this report;
General Meeting    The General Meeting of the Company
Employment agreement    The agreement within the meaning of the Act on Employment Agreements of July 3, 1978 (or an agreement under a legal system other than the Belgian system that is substantively equivalent) on the basis of which a person in a dependent relationship provides services to the Company or an Affiliated Company;
Beneficiary    The person who in accordance with Article 4.3.6.2 has been designated by the Warrantholder to exercise the Warrantholder’s rights associated with the Warrants after his death;
Director’s term of office    A term of office as a director of the Company or of an Affiliated Company
Date of the Offer    The date on which the Person Authorized by the Board of Directors offers the Warrants to the Selected Participants in accordance with the second paragraph of Article 4.2.2;
Securities    Stocks, bonds and other securities that may or may not represent capital and may or may not confer a voting right, as well as securities that give the right to registration for or acquisition of securities or to conversion into securities;
End of the employment agreement or director’s term of office    The actual date on which the end, for whatever reason, of the employment agreement between the respective Selected Participant and the Company or Affiliated Company, or the end of the director’s term of office of the Selected Participant at the Company or Affiliated Company, becomes effective, with the exception of a termination coupled with a simultaneous hiring within the framework of a (perhaps new) employment agreement with the Company or an Affiliated Company or by a (possibly new) appointment as a director of the Company or Affiliated Company;

 

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Selected Participant   

The person to whom Warrants will be offered by the Person Authorized by the Board of Directors.

 

The Selected Participants under the SOP are the persons who at the time of the offer are connected to the Company or to an Affiliated Company by means of an employment agreement (under the condition that they are already employed for at least one year) or director’s term of office and to whom Warrants will be offered by the Person Authorized by the Board of Directors.

Person Authorized by the Board of Directors    The person to whom the Board of Directors of the Company grants an authorization to take all actions necessary and useful with respect to the offer of the warrants and to implement the issuance of warrants. The Person Authorized by the Board of Directors shall be a director who is not himself a Selected Participant.
Registration Form    The form that the Selected Participant must fill out and sign to accept or decline warrants offered to him/her, and that (in case of acceptance) includes an authorization to undertake a registration before a notary for the Warrants offered to him/her;
Transfer    The sale, offer, forward sale or pledge of securities or the granting of usufruct or any other right to them or the granting of call or put options to securities or the disposal of them in any other way, or the entry into any swap or other agreement that wholly or partially transfers the economic advantages of or ownership of securities, regardless of whether such transfer is made for payment or not, by means of a general legal succession or in another way and regardless of whether such operation is settled by means of delivery of securities, in cash or in any other way;
Board of Directors    The Board of Directors of the Company:

 

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Exercise period    The period or periods within which the Warrantholders can exercise the Warrants granted to them in order to obtain ordinary shares of the Company in accordance with Article 4.3.5;
Strike price    The price for obtaining one ordinary share upon exercise of one Warrant, as provided herein;
Company    Materialise NV, with registered office at Technologielaan 15, 3001 Leuven, and with Company No. BTW BE 0441.131.254 (Leuven Register of Legal Entities);
Affiliated Company    A company affiliated with the Company as defined in Article 11 of the Belgian Company Code;
Warrant    A warrant issued by the Company that grants to the Selected Participant the right to subscribe to one ordinary share in accordance with the Plan and Registration Form
Warrantholder    The person who is registered in the Warrant Register of the Company as the holder of one or more Warrants.

2. Issue price and strike price of the Warrants

The Warrants will be offered at no charge.

Each Warrant confers on its holder the right to register for one ordinary share under the conditions described below.

In light of the Law of March 26, 1999 and Article 598 of the Belgian Company Code, the strike price of the Warrant shall be equal to the actual value of the ordinary shares of the Company as established by the Company, with the understanding that the strike price cannot be lower than the book value of the shares as shown in the most recent annual accounts that have been completed and ratified by the authorized management body prior to the date of the offer.

The strike price of the Warrant will per Warrant be equal to the issue price (expressed in EUR) of one new share (consisting of a contribution in capital and an issue premium) for the “First Capital Increase” referred to in the decisions of the general meeting of shareholders held on 23 April 2014.

3. Consequences for the existing shareholders, holders of non-equity founders’ shares, warrantholders and convertible bond holders

Reference is made to the special report of the Board of Directors prepared in accordance with articles 583, 596 and 598 of the Belgian Company Code relating to the proposed issuance of the Warrants and the withdrawal of the preemptive right of the current shareholders in favor of the employees and the current directors of the Company and its daughter companies with the issuance of the Warrants.

 

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4. Issuance and exercise conditions of the Warrants

4.1. Number of ordinary shares

Each Warrant gives the Warrantholder the right to register for one (1) ordinary share.

4.2. Offer of, registration for and definitive acquisition (“vesting”) of the Warrants

4.2.1. Eligible persons

The Warrants will be offered to the Selected Participants.

The Company will apply the appropriate tax and quasi-tax (social contributions etc.) treatment resulting from the no-cost registration for the Warrants by the Selected Participants who accept the Offer, to which the Law of March 26, 1999 is applicable.

4.2.2. Offer of Warrants to the Selected Participants

The Board of Directors will decide to which Selected Participants the Warrants will be offered.

The Selected Participants will be notified of this Offer by the Person Authorized by the Board of Directors.

A form will also be made available to the Selected Participants that states the number of Warrants that have been offered as well as the issuance and exercise conditions of these Warrants. A registration form will be attached to the notification.

4.2.3. Registration period

Every Selected Participant shall have an acceptance period of sixty (60) calendar days after the Date of the Offer for each beneficiary to give notice to the Company using the Registration Form whether he/she accepts or declines the Warrants offered to him/her. The acceptance period will be defined in written form by the Person Authorized by the Board of Directors for each beneficiary in the notification of the offer that is made to the beneficiary by the Person Authorized by the Board of Directors in accordance with Article 4.2.2.

The acceptance can relate to all or a portion of the offered Warrants. For the sake of full clarity, it is specified that no fractional Warrants will be issued.

In case of acceptance, it is mandatory that the registration form be returned. Any Selected Participant who has not given the Company notice of his acceptance by means of the Registration Form prior to the expiration of the period of sixty (60) calendar days after the Date of the Offer shall be irrevocably deemed to have declined the Offer. The offer shall expire upon expiration of this period of sixty (60) calendar days and no acceptance of Warrants will be possible after that.

 

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The Registration form includes a (required) authorization to have the registration for the Warrants by the respective Selected Participant confirmed before a notary.

4.2.4. Grant of the Warrants

After expiration of the aforementioned period of sixty (60) days, the Person Authorized by the Board of Directors shall proceed within a reasonable period to confirm implementation of the issue of the Warrants, in the amount of the number of Warrants for which registration is made by the Selected Participants.

4.2.5. Definitive acquisition of the Warrants (“vesting”)

Without prejudice to the other exercise conditions of the Warrants (including Article 4.3.6 and 4.3.7), the Warrants that are granted to a Selected Participant are only definitively acquired (and consequently exercisable during the Exercise Period) for a period of four years; the first tranche of 25% of the Warrants will be definitively acquired on October 1 of the fourth calendar year after their grant, the second tranche of 25% of the Warrants will be definitively acquired on October 1 of the fifth calendar year, the third tranche of 25% of the Warrants will be definitively acquired on October 1 of the sixth calendar year, and the last tranche of 25% of the Warrants will be definitively acquired on October 1 of the seventh calendar year, in each case on the condition that this person is still bound by an employment agreement with the Company or an Affiliated Company or has a mandate of Director at the relevant date of the definitive acquisition.

Definitive acquisition always refers to whole Warrants. In the event that 25% of the total number of Warrants that have been granted to the respective Selected Participant is not a whole number, then this number shall be rounded down and then one additional Warrant shall be definitively acquired for the year in which the sum of the orphaned fractions until that time adds up to one (in other words, this additional Warrant forms the sum of the fraction(s) of one Warrant that was or were orphaned in the definitive acquisition for the prior tranche(s)).

Upon termination of the employment agreement or director’s term of office of the respective Selected Participant, no additional Warrants will be definitively acquired anymore as from the date of notification of the termination of the employment agreement or director’s term of office (unless otherwise provided by the Board of Directors).

4.3. Other conditions of the Warrants

4.3.1. Issue price

Registration for the Warrants can be undertaken at no charge.

 

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4.3.2. Registered type

The Warrants shall be of the registered type and shall be entered in the register of warrantholders that will be kept at the registered office of the Company.

4.3.3. Strike price

The strike price (as provided above in Article 3 of this report) will be recorded as capital in an amount equal to the par value that the ordinary shares have at the time of the issuance of ordinary shares as a result of the exercise of the respective Warrant. The amount in excess of the par value will be recorded as an issue premium that, as if capital, will comprise a third-party guarantee, and that will be recorded in a non-disposable reserve account that can be diminished or written off only by a resolution of the Company’s general shareholders’ meeting deliberating in accordance with the rules applicable for amendments of the bylaws.

4.3.4. Term of the Warrant

The term of the Warrants under the SOP shall expire ten years after the resolution to issue them.

4.3.5. Exercise periods

Without prejudice to Articles 4.2.5, 4.3.6 and 4.3.7, the definitively acquired Warrants can only be exercised, in conformity with Article 4.3.11, as from the Definitive Acquisition in accordance with Article 4.2.5 and only during the month of October of each year (the “Exercise period(s)”). The Board of Directors shall be authorized to provide for additional exercise periods.

The Warrantholder shall be at liberty not to exercise all or any of the definitively acquired Warrants in the course of any exercise period and to postpone the exercise of the unexercised Warrants to a later exercise period, subject nonetheless to the exceptions and restrictions contained in Articles 4.3.6 and 4.3.7.

The outstanding exercisable Warrants that have not been exercised at the time of completion of the final exercise period shall automatically expire and become worthless.

The Board of Directors can decide to provide one or more additional exercise period(s) between the start of the fourth calendar year following the calendar year in which the Date of the Offer occurred and the end of the final exercise period as described above.

4.3.6. Exercisability of the Warrants: exceptions and restrictions

4.3.6.1. End of the employment agreement or director’s term of office

(i) End of the employment agreement or director’s term of office due to just cause

 

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Upon termination of: (i) the employment agreement for just cause (within the meaning of Article 35 of the Law of July 3, 1978); or (ii) the director’s term of office on serious grounds, in relation to the Selected Participant who is also a Warrantholder, which occurs prior to the exercise of the Warrants, the unexercised Warrants of the respective Selected Participant shall automatically expire at that time (regardless of whether the Warrants were definitively acquired in accordance with Article 4.2.5) and shall become worthless.

(ii) End of the employment agreement or the director’s term of office due to reasons other than those cited in Articles 4.3.6.1.(i), 4.3.6.2 and 4.3.6.3

Upon termination of the employment agreement or the director’s term of office of a Selected Participant who is also a Warrantholder, for reasons other than those cited in Articles 4.3.6.1.(i), 4.3.6.2 and 4.3.6.3, the Warrants definitively acquired at that time (according to Article 4.2.5) can be exercised during the next-following exercise period.

The Warrants of the respective Selected Participant that are not exercised during this exercise period, in deviation from Article 4.3.5, second paragraph, cannot be transferred to a later exercise period and shall expire immediately and automatically upon expiration of this exercise period and become worthless (regardless of whether they were definitively acquired in accordance with Article 4.2.5).

In the event of exercise of the Warrants in the cases described in this Article 4.3.6.1.(ii), the applicability of the call option as provided in Article 4.3.10 must also be taken into account.

4.3.6.2. Death

If a Warrantholder dies while a Warrant has still not been exercised and is or can become exercisable according to the issue and exercise conditions, all definitively acquired and not yet exercised Warrants of the Warrantholder shall be transferred to the Beneficiary of the Warrantholder and these definitively acquired Warrants shall be exercised by the Beneficiary at the time and according to the procedures provided in the issuance and exercise conditions. The Warrants of the respective Warrantholder that at the time of his death are not yet definitively acquired in accordance with Article 4.2.5 shall automatically expire and become worthless.

A Warrantholder can designate only his/her spouse and/or one or more other legal heirs as Beneficiary.

The designation as well as the revocation and redesignation of a Beneficiary must be made in written form.

In the absence of any valid designation in accordance with the two preceding paragraphs, the persons who are the statutory heirs of the Warrantholder according to the applicable inheritance law shall be deemed to be the Beneficiary. If there are several heirs, all heirs acting in concert or, as the case may be, one person designated by the heirs acting in concert shall be deemed to be the beneficiary.

In the event of exercise by the Beneficiary, however, the applicability of the call option provided under 4.3.10 must be taken into account, which shall be transferred to the Beneficiary upon transfer of the Warrants to the Beneficiary.

 

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4.3.6.3. Retirement

Upon termination of the employment agreement or director’s term of office of the Selected Participant who is also a Warrantholder, as a result of his statutory retirement or attainment of the authorized retirement age, the Selected Participant shall retain his definitively acquired Warrants and he can exercise them without impairment at the time and according to the procedures provided in the issue and exercise conditions. The Warrants of the respective Warrantholder that at the time of his retirement are not yet definitively acquired in accordance with Article 4.2.5 shall automatically expire and become worthless.

4.3.7. Accelerated exercise of the Warrants

4.3.7.1. Cases of accelerated exercise of the Warrants

In the cases cited below, the Warrantholder shall have the right to an accelerated exercise of his Warrants, regardless of whether they are already definitively acquired in accordance with Article 4.2.5, according to the formal procedures cited below and in observance of and with assumption of the potential tax consequences associated with the accelerated exercise:

 

(i) winding-up of the Company;

 

(ii) sale of all or nearly all of the assets of the Company;

 

(iii) change of control of the Company.

The tax consequences of an accelerated exercise are exclusively at the expense of the respective Warrantholder.

The Company shall notify the Warrantholders in written form if one of the above-cited events arises.

If the Warrantholder does not wish to perform an accelerated exercise of his Warrants whenever event (i) or (ii) arises as cited above, these Warrants shall expire by law and become worthless, subject to a contrary resolution by the Board of Directors.

4.3.8. Nontransferability of the Warrants

The Warrants are not transferable, except in case of death of a Warrantholder, in which case Warrants held by the Warrantholder at the time of death shall be transferred to the Beneficiary according to the procedures of Article 4.3.6.2. The Board of Directors may also grant exceptions to this nontransferability.

The potential tax consequences of a transfer on the basis of an obligation under the bylaws shall be at the expense of the Warrantholder.

 

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4.3.9. Ordinary shares to which a Warrant gives a right

4.3.9.1. Each Warrant gives the right to register for one ordinary share of the Company without reference of Class.

The ordinary shares that are issued upon the exercise of the Warrants shall confer the right to dividends as of the start of the accounting year in which the Warrants are exercised or, if the Warrants are exercised at a time when the annual meeting has not yet made a resolution on the allocation of the net income of the preceding accounting year, from the start of the accounting year preceding the accounting year in which the Warrants are exercised.

4.3.9.2. The Company will only be required to issue ordinary shares in favor of the Warrantholder in response to the exercise of Warrants on condition that the rules cited in Article 4.3.11 are fulfilled. No fractions of ordinary shares will be issued upon exercise of a Warrant.

In case of exercise of Warrants, the common shares will be issued as soon as reasonably possible after the end of the respective exercise period, taking into account the required administrative and corporate law formalities, in accordance with Article 591 of the Belgian Company Code.

After the issue of ordinary shares in response to the exercise of Warrants, the Board of Directors will ensure that these new ordinary shares are registered in the share register of the Company under the name of the registrant. The Company shall do what is required, as soon as reasonably possible, to have these new ordinary shares admitted for stock market trading, in this case under the form of an American Depositary Receipts which represent those shares.

4.3.10. Call option to the ordinary shares to which a Warrant gives a right

Upon (and as a condition of) acceptance of the Warrants, the Selected Participant shall also grant a call option in favor of the Company to all ordinary shares that he has acquired in response to the exercise of the Warrants.

This call option shall become exercisable for six months after the end of the employment agreement or director’s term of office or, if later, within six months after the exercise of the Warrants that takes place after the end of the employment agreement or director’s term of office of the respective Selected Participants), and can be exercised for all or some of the ordinary shares acquired by the Selected Participant (or the Beneficiary) in response to the exercise of the Warrants. The price per share for which the call option can be exercised shall be determined as follows:

4.3.10.1. ‘Good Leaver’

If the call option is exercised with reference to the cases described in Art. 4.3.6.1. (ii), Art. 4.3.6.2. or Art. 4.3.6.3., the respective Selected Participant (or the respective Beneficiary) will transfer to the Company all ordinary shares that he acquired in response to the exercise of the Warrants, at the following price: whatever is higher between (i) the net asset value (items 10 to 15 of the general chart of accounts) on the basis of the most recently ratified annual accounts, or (ii) 5 times the average audited EBITDA of the past two accounting years, reduced thereafter by the net financial debt.

 

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If the Company is listed on the stock market at the time of exercise of the call option, the price will be equal to the price according to the market price at such time.

4.3.10.2. ‘Bad Leaver’

If the call option is exercised with reference to the cases described in Art. 4.3.6.1. (i), the respective Selected Participant will transfer to the Company all ordinary shares that he acquired in response to the exercise of the Warrants, at the following price: whatever is lower between (i) the strike price, or (ii) the net asset value (items 10 to 15 of the general chart of accounts) on the basis of the most recently ratified annual accounts.

If the Company is listed on the stock market at the time of exercise of the call option, the price will be equal to the price according to the market price at such time.

4.3.11. Exercise procedure

An exercisable Warrant is only validly exercised if, by no later than the last day of the respective exercise period:

 

  (i) the Board of Directors receives a registered letter (with proof of receipt) addressed to the registered office of the Company and directed to the Board of Directors, stating that Warrants are being exercised. This letter must explicitly state the number of Warrants to be exercised; and

 

  (ii) the Board of Directors receives the full payment for the ordinary shares for which registration is undertaken as a result of the exercise of the Warrants, by bank transfer to an account of the Company, the account number of which shall be communicated by the Company; and

 

  (iii) the Board of Directors receives proper evidence of the right of this person or these persons to exercise the Warrant, if the warrants are exercised by a person or persons other than the Selected Participant; and

 

  (iv) the Board of Directors receives declarations and documents that the Board of Directors deems necessary or advisable in order to comply with applicable statutory or regulatory provisions, which the Board of Directors requests to have submitted.

The Board of Directors shall have the authority to change the above procedure and/or allow deviations from it at its discretion.

Regardless of the time within the exercise period at which the aforementioned actions are taken, the Warrants shall be deemed to be exercised on the last day of this exercise period.

 

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4.3.12. Costs and taxes

Stamp fees, stock transaction taxes and other similar fees and taxes levied upon exercise of Warrants and/or the acquisition of ordinary shares shall be at the expense of the Warrantholders.

4.4. Change to the capital structure of the Company - reservation of rights

Contrary to Article 501 of the Belgian Company Code, and without prejudice to the statutory exceptions, the Company may make all decisions that it deems necessary in relation to its capital, its bylaws or its management, including but not limited to a capital decrease with or without distribution to the shareholders, a capital increase through incorporation of reserves in which new shares may or may not be created, a capital increase through in-kind contributions, a capital increase through cash contributions in which the preemptive rights of existing shareholders may or may not be limited or withdrawn, an issuance of profit-sharing certificates, convertible bonds, preferred shares, bonds cum warrants, ordinary bonds or naked warrants, an amendment to the bylaws in relation to the distribution of profits or the distribution of net assets after liquidation or other rights associated with the common shares, a share split, a distribution of share dividends, a dissolution of the Company, a merger, a split or a contribution or transfer of a universality of goods or of a branch of activity whether or not connected with the exchange of shares. The Company may make such decisions even if they (might) lead to a diminishment of the benefits granted to the Warrantholders by the issuance conditions of the Warrants and the law, except if such a diminishment were clearly the sole goal of these decisions.

In case of a merger or split, the Board of Directors shall make all reasonable efforts to ensure that the Warrants still outstanding at the time of this operation are replaced by warrants in the merger company or the split companies in accordance with the conversion ratio that is applied to the ordinary shares of the Company that exist at that time.

4.5. Exercise of the Warrants in accordance with the law

If the Warrantholder exercises Warrants on the basis of Article 501 of the Belgian Company Code, then the common shares acquired in this way shall not be transferable, until the Warrants would be exercisable otherwise (i.e. without that kind of exercise) in accordance with the issuance and exercise conditions. The potential tax consequences of that kind of exercise shall be at the expense of the Warrantholder.

Article 501 of the Belgian Company Code establishes the following: “in case of an increase of the corporate capital through contributions in cash, the warrantholders may exercise their warrant, notwithstanding any conflicting provision in the bylaws or in the issue conditions, and may participate as shareholders in the new issue, as the case may be, to the extent that existing shareholders possess that right”.

 

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4.6. Miscellaneous provisions

4.6.1. Applicable law

The Warrants and the issuance and exercise conditions of the Warrants shall be governed by the laws of Belgium.

4.6.2. Competent courts

Disputes regarding the Warrants or their issuance and exercise conditions shall be under the exclusive jurisdiction of the Courts and Tribunals of the registered office of the Company.

4.6.3. Notifications

All notifications to the Warrantholder shall occur by registered letter to the address given in the register of warrantholders or by written notification with proof of receipt.

All notifications to the Company, the Board of Directors or the Person Authorized by them shall be validly made by means of registered letter to the address of the registered office of the Company or by written notification with proof of receipt.

All notifications shall be deemed received by three days after the postmark of the registered letter. Changes of address must be communicated in accordance with this provision.

 

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