0001157523-15-001159.txt : 20150415 0001157523-15-001159.hdr.sgml : 20150415 20150415165134 ACCESSION NUMBER: 0001157523-15-001159 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20150415 FILED AS OF DATE: 20150415 DATE AS OF CHANGE: 20150415 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEQUANS COMMUNICATIONS CENTRAL INDEX KEY: 0001383395 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 000000000 STATE OF INCORPORATION: I0 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-35135 FILM NUMBER: 15772214 BUSINESS ADDRESS: STREET 1: 19 LE PARVIS STREET 2: BATIMENT CITICENTER CITY: PARIS LA DEFENSE STATE: I0 ZIP: 92073 BUSINESS PHONE: 0170721600 MAIL ADDRESS: STREET 1: 19 LE PARVIS STREET 2: BATIMENT CITICENTER CITY: PARIS LA DEFENSE STATE: I0 ZIP: 92073 6-K 1 a51078919.htm SEQUANS COMMUNICATIONS S.A. 6-K a51078919.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K


REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of April 2015

Commission File Number: 001-35135


Sequans Communications S.A.
(Translation of Registrant’s name into English)

15-55 boulevard Charles de Gaulle
92700 Colombes, France
Telephone : +33 1 70 72 16 00
(Address of Principal Executive Office)



Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: Form 20-F R Form 40-F £
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): Yes £ NoR
 
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): Yes £ NoR
 
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.  

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934: Yes £ NoR
 
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_______________.

Exhibits 4.1, 4.2 and 99.1 to this report, furnished on Form 6-K, shall be incorporated by reference into each of the following Registration Statements under the Securities Act of 1933, as amended, of the registrant: Form S-8 (File Nos. 333-177919, 333-180487, 333-187611 and 333-194903) and Form F-3 (File No. 333-198758).
 
 

 
 
Entry into a Material Definitive Agreement
 
On April 14, 2015, Sequans Communications S.A. (the “Company”) entered into a convertible note agreement (the “Agreement”) with Nokomis Capital Master Fund, LP, one of the Company’s existing shareholders (the “Holder”), regarding the issuance and sale of a convertible note in the principal amount of $12 million (the “Note”), which Note shall be convertible into the Company’s American Depositary Shares (“ADSs”), each representing one ordinary share, nominal value €0.02 per share, at a conversion rate of 540.5405 ADSs for each $1,000 principal amount of the Note (the “Conversion Rate”), subject to certain adjustments, which equates to an initial conversion price of $1.85 per ADS (the “Conversion Price”).  The transactions contemplated by the Agreement, including the issuance of the Note, closed on April 15, 2015.

The Note is an unsecured obligation of the Company, will mature on the third anniversary of the issuance date and is not redeemable prior to maturity at the option of the Company. The accreted principal amount of the Note is convertible at any time or times on or after the issuance date until maturity, in whole or in part, into ADSs at the Conversion Rate, subject to certain adjustments for significant corporate events, including dilutive issuances, dividends, stock splits and other similar events.  Interest accrues on the unconverted portion of the Note at the rate of 7% per year, paid in kind annually on the anniversary of the issuance of the Note.  The Note also provides for customary events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the Note to become or to be declared due and payable.

If, during the 12 months following issuance of the Note, the Company issues any ADSs, ordinary shares or other securities (with certain exceptions) at an effective or maximum sales price (including, as applicable, the effective or maximum conversion or exchange price) (the “Other Sale Price”) below the effective Conversion Price of the Note, then the Conversion Rate shall be adjusted such that the Conversion Price will thereafter equal the Other Sale Price.  If, however, the Other Sale Price is more than 30% below the effective Conversion Price of the Note, then the Conversion Rate shall be adjusted such that the Conversion Price will thereafter equal 70% of the Other Sale Price.

In the event of a recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company’s assets or other transaction, which in each case results in the Company’s shareholders receiving stock, securities or assets with respect to or in exchange for their ADSs or ordinary shares, the Holder shall elect, at its option, either (a) to require the Company to repurchase for cash the entire accreted principal amount of the Note or (b) to convert the Note in its entirety.
 
The Note contains customary ongoing covenants of the Company.  In addition, the Note provides that the Company will not grant a consensual security interest or pledge its personal property assets to a third party lender (with certain limited exceptions) during the time that the Note is outstanding.  Any amendment or waiver of the terms of the Note requires the affirmative consent of the Holder.

B. Riley & Company acted as advisor for the transaction.
  
Other Events
 
On April 15, 2015, the Company issued a press release announcing the issuance and sale of the Note. A copy of the Agreement, the Note and the related press release are attached hereto as exhibits 4.1, 4.2 and 99.1, respectively. The summary description above is qualified in its entirety by reference to the terms of the Agreement and the Note, which are incorporated herein by reference.
 
 
 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
SEQUANS COMMUNICATIONS S.A.
 
(Registrant)
 
     
Date: April 15, 2015
By:  
 /s/ Deborah Choate
 
   
Deborah Choate 
 
   
Chief Financial Officer
 
 
 
 

 
 
EXHIBIT INDEX
 
The following exhibits are filed as part of this Form 6-K:
 
Exhibit
Description
   
4.1
Convertible Note Agreement, dated April 14, 2015
4.2
Convertible Promissory Note, dated April 14, 2015
99.1
Press release dated April 15, 2015
 
EX-4.1 2 a51078919ex4_1.htm EXHIBIT 4.1 a51078919ex4_1.htm
Exhibit 4.1
 
Execution Version
 
 
CONVERTIBLE NOTE AGREEMENT
 
This Convertible Note Agreement (this “Agreement”) is made as of April 14, 2015, by and between Sequans Communications S.A., a société anonyme incorporated in the French Republic (the “Company”), and Nokomis Capital Master Fund, LP, a Cayman Islands exempted limited partnership (the “Purchaser”).
 
RECITALS
 
WHEREAS, the Purchaser desires to subscribe from the Company and the Company desires to issue a convertible promissory note in substantially the form attached to this Agreement as Exhibit A, in the original principal amount of $12,000,000 (the “Note”), which shall be convertible on the terms stated therein into the Company’s ADSs, indirectly through the conversion into Ordinary Shares (as defined below) (the ADSs issued or issuable upon conversion of the Note into the Underlying Shares and delivery of those Underlying Shares to the Depositary are referred to herein as the “Conversion Shares” and, together with the Note, the “Securities”).  As used herein, “Ordinary Shares” means the ordinary shares, nominal value €0.02 per share, of the Company, “ADS” means an American Depositary Share representing one such Ordinary Share, “ADR” means an American Depositary Receipt evidencing the ADSs and “Underlying Shares” means the Ordinary Shares underlying the ADSs.
 
NOW THEREFORE, on and subject to the terms hereof, the parties hereto agree as follows:
 
ARTICLE I
DEFINED TERMS
 
The terms defined in this Article I (except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this Agreement shall have the respective meanings specified in this Article I. The terms defined in this Article I include the plural as well as the singular.
 
Accreted Principal Amount” shall have the meaning specified in Section 2.2.  For the avoidance of doubt, “Accreted Principal Amount” shall include any accrued and unpaid interest at the time of any determination of such “Accreted Principal Amount.”
 
ADR” shall have the meaning specified in the recitals.
 
ADS” shall have the meaning specified in the recitals.
 
Affiliates” shall have the meaning specified in Section 3.8.
 
Agreement” shall have the meaning specified in the preamble.
 
Beneficial Ownership Limitation” shall have the meaning specified in Section 5.2(a).
 
Closing” shall have the meaning specified in Section 2.3.
 
 
 

 
 
Closing Date” shall have the meaning specified in Section 2.3.
 
Company” shall have the meaning specified in the preamble.
 
Company Reports” shall have the meaning specified in Section 4.1.
 
Company’s Knowledge” shall have the meaning specified in Section 4.12.
 
Concert Parties” shall have the meaning specified in Section 5.2(a).
 
Conversion Shares” shall have the meaning specified in the recitals.
 
Deposit Agreement” shall have the meaning specified in Section 5.1.
 
Depositary” shall have the meaning specified in Section 5.1.
 
E&Y” shall have the meaning specified in Section 4.9.
 
Enforceability Exceptions” shall have the meaning specified in Section 3.2.
 
Environmental Laws” shall have the meaning specified in Section 4.20.
 
Evaluation Date” shall have the meaning specified in Section 4.24.
 
Exchange Act” shall have the meaning specified in Section 3.7.
 
HALDE” shall have the meaning specified in Section 4.18.
 
IFRS” shall have the meaning specified in Section 4.10.
 
Intellectual Property Rights” shall have the meaning specified in Section 4.21.
 
Interest Payment Date” shall have the meaning specified in Section 2.2.
 
Issue Price” shall have the meaning specified in Section 2.1.
 
Material Adverse Effect” shall have the meaning specified in Section 4.2.
 
Material Contract” shall have the meaning specified in Section 4.14.
 
Material Permits” shall have the meaning specified in Section 4.13.
 
Note” shall have the meaning specified in the recitals.
 
OFAC” shall have the meaning specified in Section 4.23.
 
Ordinary Shares” shall have the meaning specified in the recitals.
 
Person” shall have the meaning specified in Section 4.23.
 
 
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PIK Amount” shall have the meaning specified in Section 2.2.
 
Purchase” shall have the meaning specified in Section 2.3.
 
Purchaser” shall have the meaning specified in the preamble.
 
Regulation D” shall have the meaning specified in Section 3.3.
 
Sanctions” shall have the meaning specified in Section 4.23.
 
SEC” shall have the meaning specified in Section 3.8.
 
Securities” shall have the meaning specified in the recitals.
 
Securities Act” shall have the meaning specified in Section 3.3.
 
Short Sales” shall have the meaning specified in Section 3.7.
 
Subsidiary” shall have the meaning specified in Section 4.2.
 
Underlying Shares” shall have the meaning specified in the recitals.
 
Voting Power” shall have the meaning specified in Section 3.4.
 
ARTICLE II
ISSUANCE OF NOTE
 
Section 2.1                      Issuance of Note.  Subject to the terms set forth in this Agreement, at the Closing (as defined herein), the Company agrees to issue the Note, and Purchaser agrees to subscribe the Note at the issue price of 100% of the principal amount of the Note (the “Issue Price”).
 
Section 2.2                      Interest Applicable.  Interest shall accrue on the Accreted Principal Amount of the Note (in each case computed on the basis of a 365/366-day year and the actual number of days elapsed in any year) at an annual rate equal to 7.0% per annum or (if less) at the highest rate then permitted under applicable law, which shall be payable by adding such interest to the Accreted Principal Amount of the Note on each Interest Payment Date (as defined below), and on the final maturity of the Note (the “PIK Amount”).  At any time, the outstanding principal amount of the Note, including all PIK Amounts added thereto through such time, is referred to herein as the “Accreted Principal Amount.”  The Company shall pay to the holder of the Note all accrued interest (including interest on the Accreted Principal Amount) on each anniversary date of the Note (each, an “Interest Payment Date”), including the final maturity date of the Note.  Interest shall accrue on any principal payment due under the Note (including as to accrued interest added to the principal) until such time as payment therefor is actually delivered to the holder of the Note.
 
 
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Section 2.3                      Closing.  Subject to Sections 6.1 and 6.2, the closing (the “Closing”) of the issuance and subscription of the Note (the “Purchase”) shall occur on a date (the “Closing Date”) no later than three business days after the date of this Agreement.  At the Closing, (a) Purchaser shall deliver or cause to be delivered to the Company the Issue Price, and (b) the Company shall issue to Purchaser the Note.
 
Section 2.4                      Maturity, Payment and Conversion.  The provisions pertaining to maturity, payment, conversion and acceleration of the Note are set forth in the form of Note attached hereto as Exhibit A.
 
Section 2.5                      Subordination.  With the exception of up to $10 million of secured indebtedness owed to Natixis under the factoring agreement between the Company and Natixis, the Note and the interest accrued under the Note are the senior obligations of the Company and will rank pari passu in right of payment with all other senior and unsubordinated obligations of the Company.
 
Section 2.6                      No Preferential Right to Subscription.  Pursuant to article L.225-132 of the French commercial code, the decision to issue the Note automatically waives the right for any existing shareholder of the Company to a preferential right (droit préférentiel de souscription) for the subscription of the Underlying Shares to be issued by the Company upon conversion of the Note.
 
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASER
 
Purchaser hereby makes the following representations and warranties, each of which is and shall be true and correct on the date hereof and at the Closing, to the Company, and all such representations and warranties shall survive the Closing:
 
Section 3.1                      Power and Authorization.  Purchaser is duly organized, validly existing and in good standing, and has the power, authority and capacity to execute this Agreement, to perform its obligations hereunder, and to consummate the Purchase.
 
Section 3.2                      Valid and Enforceable Agreement; No Violations.  This Agreement has been duly executed and delivered by Purchaser and constitutes a legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except that such enforcement may be subject to (a) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally, and (b) general principles of equity, whether such enforceability is considered in a proceeding at law or in equity (such qualifications in clauses (a) and (b) being the “Enforceability Exceptions”).  This Agreement and consummation of the Purchase will not violate, conflict with or result in a breach of or default under (i) Purchaser’s organizational documents, (ii) any agreement or instrument to which Purchaser is a party or by which Purchaser or any of its assets are bound, or (iii) any laws, regulations or governmental or judicial decrees, injunctions or orders applicable to Purchaser.
 
 
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Section 3.3                      Accredited Investor/Qualified Institutional Buyer.  Purchaser is an “accredited investor” within the meaning of Rule 501(a) of Regulation D (“Regulation D”) promulgated under the Securities Act of 1933, as amended (the “Securities Act”).  The information Purchaser has provided in writing to the Company as set forth on Purchaser’s signature page hereto is true, correct and complete, as of the date hereof and as of the Closing Date in all material respects.
 
Section 3.4                      5% Stockholder Status.  Purchaser and its affiliates (within the meaning of Rule 144 promulgated under the Securities Act) collectively beneficially own and will beneficially own after the Closing Date (i) 5% or more of the Company’s outstanding Ordinary Shares (including Ordinary Shares represented by ADSs) and (ii) 5% or more of the voting power to elect members of the Company’s board of directors (“Voting Power”), and Purchaser hereby acknowledges and agrees that it will comply in all material respects with all applicable provisions of the Securities Exchange Act of 1934 as a result of such holdings.  Purchaser is not a subsidiary, affiliate or, to its knowledge, otherwise closely-related to any director or officer of the Company or any other beneficial owner of 5% or more of the outstanding Ordinary Shares (including Ordinary Shares represented by ADSs) or Voting Power.
 
Section 3.5                      Restricted Note and Stock.  Purchaser (a) acknowledges (i) that the issuance of the Note pursuant to this Agreement and the issuance of any Conversion Shares have not been registered, nor does the Company have a plan or intent to register such issuance of the Note or Conversion Shares, under the Securities Act or any state securities laws, (ii) the Note and, subject to the conversion of the Note into Underlying Shares to be delivered to the Depositary for issuance of the Conversion Shares, the Conversion Shares are being offered and sold in reliance upon exemptions provided in the Securities Act and state securities laws for transactions not involving any public offering and, therefore, cannot be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of unless they are subsequently registered and qualified under the Securities Act and applicable state laws or unless an exemption from such registration and qualification is available and (iii) the Note and Conversion Shares are “restricted securities” as that term is defined in Rule 144 promulgated under the Securities Act and (b) is purchasing the Note and Conversion Shares for investment purposes only for the account of the Purchaser and not with any view toward a distribution thereof or with any intention of selling, distributing or otherwise disposing of the Note or Conversion Shares in a manner that would violate the registration requirements of the Securities Act.  The Purchaser is able to bear the economic risk of holding the Note and Conversion Shares for an indefinite period and has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risk of its investment in the Note and Conversion Shares.
 
Section 3.6                      Legends.  Purchaser understands and agrees that any certificates, book-entry or ADRs representing the Note and Conversion Shares shall bear the restrictive legend set forth in the form of Note attached hereto as Exhibit A or in Section 7.3 below, respectively.
 
 
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Section 3.7                      No Illegal Transactions.  Purchaser has not, directly or indirectly, and no person acting on behalf of or pursuant to any understanding with it has, engaged in any transactions in the securities of the Company (including, without limitation, any Short Sales (as defined below) involving any of the Company’s securities) since the time that Purchaser was first contacted by the Company or any other person regarding the transactions contemplated by this Agreement or an investment in the Company.  Purchaser covenants that neither it nor any person acting on its behalf or pursuant to any understanding with it will engage, directly or indirectly, in any transactions in the securities of the Company (including Short Sales) prior to the time the transactions contemplated by this Agreement are publicly disclosed.  “Short Sales” include, without limitation, all “short sales” as defined in Rule 200 of Regulation SHO promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, short sales, swaps, derivatives and similar arrangements (including on a total return basis), and sales and other transactions through non-U.S. broker-dealers or foreign regulated brokers.
 
Section 3.8                      Adequate Information; No Reliance.  Purchaser acknowledges and agrees that (a) Purchaser has been furnished with all materials it considers relevant to making an investment decision to enter into the Purchase and has had the opportunity to review the Company’s filings and submissions with the Securities and Exchange Commission (the “SEC”), including, without limitation, all information filed or furnished pursuant to the Exchange Act and all information incorporated into such filings and submissions, (b) Purchaser has sufficient knowledge and expertise to make an investment decision with respect to the transactions contemplated hereby, (c) Purchaser has had a full opportunity to speak directly with directors, officers and “Affiliates” (as that term is defined in Rule 501(b) of Regulation D under the Securities Act) of the Company and to ask questions of the Company and such directors, officers and Affiliates of the Company concerning the Company, its business, operations, financial performance, financial condition and prospects, and the terms and conditions of the Purchase, and to obtain such additional information as it deems necessary to verify the accuracy of the information furnished to it and has asked such questions, received such answers and obtained such information as it deems necessary, (d) Purchaser has had the opportunity to consult with its accounting, tax, financial and legal advisors to be able to evaluate the risks involved in the Purchase and to make an informed investment decision with respect to the Purchase and (e) Purchaser is not relying, and has not relied, upon any statement, advice (whether accounting, tax, financial, legal or other), representation or warranty made by the Company or any of its affiliates or representatives, except for (A) the publicly available filings and submissions made by the Company with the SEC under the Exchange Act, and (B) the representations and warranties made by the Company in this Agreement.
 
Section 3.9                      Purchaser’s Reporting Requirement.  The Company has made no representations to Purchaser regarding Purchaser’s reporting requirements with the SEC related to Purchaser’s present or future ownership in the Company, and Purchaser acknowledges and agrees that it is the responsibility of Purchaser to ensure that the Purchaser complies with any disclosure and reporting requirements of the SEC applicable to the Purchaser as a result of the Purchaser’s purchase of the Note and any subsequent conversion thereof.
 
Section 3.10                      No Public Market.  Purchaser understands that no public market exists for the Note, and that there is no assurance that a public market will ever develop for the Note.
 
Section 3.11                      No General Solicitation or Advertising.  The offer to enter into the purchase of the Note was directly communicated to Purchaser, and Purchaser was able to ask questions of and receive answers concerning the terms of this transaction.  At no time was Purchaser presented with or solicited by any leaflet, newspaper or magazine article, radio or television advertisement, or any other form of general advertising or solicited or invited to attend a promotional meeting otherwise than in connection and concurrently with such communicated offer.
 
 
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Section 3.12                      Legal Opinions.  Purchaser acknowledges and understands that a legal opinion is being delivered by counsel to the Company in reliance on, and assuming the accuracy of, the foregoing representations and warranties of Purchaser.
 
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
The Company hereby makes the following representations and warranties, each of which is and shall be true and correct on the date hereof and at the Closing, to Purchaser, and all such representations and warranties shall survive the Closing.
 
Section 4.1                      Exchange Act Filings.  The Company has filed or furnished, as applicable, on a timely basis all forms, statements, certifications, reports and documents required to be filed or furnished by it with the SEC pursuant to the Exchange Act or the Securities Act since December 31, 2013 (the “Company Reports”).  The Company Reports, when they became effective or were filed with or furnished to the SEC, as the case may be, conformed in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations thereunder and none of such documents contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and any further documents so filed or furnished after the date hereof and on or prior to the Closing, when such documents become effective or are filed with the SEC, as the case may be, will conform in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations of the SEC thereunder and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.  On or before the first business day following the date of this Agreement, the Company shall issue a publicly available press release or file with the SEC a Report on Form 6-K disclosing the material terms of the transactions contemplated hereby.
 
Section 4.2                      Due Incorporation.  Each of the Company and each of its Subsidiaries has been duly organized and is validly existing as a corporation or other legal entity in good standing (or the foreign equivalent thereof) under the laws of its jurisdiction of incorporation or organization.  Each of the Company and its Subsidiaries is duly qualified to do business and is in good standing as a foreign corporation or other legal entity in each jurisdiction in which its ownership or lease of its properties or the conduct of its business requires such qualification and has all power and authority (corporate or other) necessary to own or hold its properties and to conduct the businesses in which each is engaged, except where the failure to so qualify or have such power or authority (i) would not have and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the condition (financial or otherwise), results of operations, assets or business of the Company and its Subsidiaries, taken as a whole, or (ii) impair in any material respect the ability of the Company to perform its obligations under this Agreement or the Note or to consummate any transactions contemplated hereby  or thereby (any such effect as described in clauses (i) or (ii), a “Material Adverse Effect”).  As used in this Agreement, “Subsidiary” shall have the meaning set forth in Rule 1-02 of Regulation S-X of the SEC.
 
 
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Section 4.3                      Subsidiaries.  The membership interests or capital stock, as applicable, of each Subsidiary have been duly authorized and validly issued, are fully paid and nonassessable and, except to the extent set forth in the Company Reports, are owned by the Company directly, free and clear of any claim, lien, encumbrance, security interest, restriction upon voting or transfer or any other claim of any third party.
 
Section 4.4                      Due Authorization.  The Company has the full right, power and authority to enter into this Agreement and to perform and to discharge its obligations hereunder; and this Agreement and the performance by the Company of its obligations hereunder have been duly authorized, and this Agreement has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity.
 
Section 4.5                      The Note and the Conversion Shares.  The Note has been duly authorized and, when issued and delivered upon sale, will have been duly executed, authenticated, issued and delivered and will constitute a valid and legally binding obligation of the Company.  The Ordinary Shares to be issued by the Company upon conversion in whole or in part of the Note have been duly authorized for issuance.  Upon subscription by the holder of the Note for the number of Ordinary Shares issuable in connection with the conversion in whole or in part of the Note, such Ordinary Shares shall constitute Underlying Shares to be deposited with the Depositary for the issuance of Conversion Shares in the form of ADRs.  When issued in accordance with the terms of the Note, such Conversion Shares evidenced by such ADRs, and the Underlying Shares, will be validly issued, fully paid and nonassessable and free of any preemptive or similar rights, and the Purchaser will be entitled to the rights specified therein and in the Deposit Agreement; no preemptive right, resale right, right of first refusal or similar rights exist with respect to any of the Ordinary Shares in the form of the Conversion Shares and the issuance thereof will be free of any restriction upon the voting or transfer thereof pursuant to the laws of France or the Company’s statuts or any agreement or other instrument to which the Company is a party.  The Note and the Conversion Shares will be issued in compliance with all U.S. federal and state securities laws and the securities laws of any other applicable jurisdiction.
 
Section 4.6                      Capitalization.  As of the date hereof, the share capital of the Company consists of 59,144,741 issued Ordinary Shares, fully paid, and with a par value of €0.02 each, and total authorized capital of 80,691,189 Ordinary Shares.  All of the outstanding shares of capital stock of the Company have been duly authorized, validly issued and are fully paid and nonassessable and were issued in compliance with all applicable securities laws and were not issued in violation of any preemptive right, resale right, right of first refusal or similar right.  Other than 138,900 Ordinary Shares reserved for future issuance under the Company’s equity plans and 6,407,548 Ordinary Shares issuable upon the exercise of outstanding stock options, founders warrants and warrants granted pursuant to the Company’s equity plans, the Company has no shares of capital stock reserved for issuance, with the exception of the 15,000,000 shares authorized for issuance in connection with the Note to be issued pursuant hereto.  Except as set forth above or pursuant to this Agreement, the Company does not have outstanding any options to purchase, or any rights or warrants to subscribe for, or any securities or obligations convertible into, or any contracts or commitments to issue or sell, any shares of capital stock, or any such warrants, convertible securities or obligations.
 
 
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Section 4.7                      No Default, Termination or Lien.  The execution, delivery and performance of this Agreement by the Company, the issuance and delivery of the Note by the Company, the issuance and delivery of the Conversion Shares in accordance with the terms of the Note, the consummation of the transactions contemplated hereby and thereby, and compliance by the Company with the terms of this Agreement will not (with or without notice or lapse of time or both) conflict with or result in a breach or violation of any of the terms or provisions of, constitute a default under, give rise to any right of termination or other right or the cancellation or acceleration of any right or obligation or loss of a benefit under, or give rise to the creation or imposition of any lien, encumbrance, security interest, claim or charge upon any property or assets of the Company or any Subsidiary pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound or to which any of the property or assets of the Company or any of its Subsidiaries is subject, nor will such actions result in any violation of the provisions of the organizational documents of the Company or any of its Subsidiaries or any law, statute, rule, regulation, judgment, order or decree of any court or governmental agency or body, domestic or foreign, having jurisdiction over the Company or any of its Subsidiaries or any of their properties or assets.
 
Section 4.8                      No Consents.  No consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company of its obligations under this Agreement, except such as may be required by the securities or blue sky laws of the various states and the New York Stock Exchange in connection with the offer and issuance of the Note.
 
Section 4.9                      Independent Accountants.  Ernst & Young Audit (“E&Y”), who have certified certain financial statements and related schedules included or incorporated by reference in the Company Reports, is an independent registered public accounting firm as required by the Securities Act and the Exchange Act and the rules and regulations thereunder and the Public Company Accounting Oversight Board (United States).  Except as pre-approved in accordance with the requirements set forth in Section 10A of the Exchange Act, E&Y has not been engaged by the Company to perform any “prohibited activities” (as defined in Section 10A of the Exchange Act).
 
Section 4.10                      Financial Statements.  The financial statements, together with the related notes and schedules, included in the Company Reports present fairly in all material respects the financial condition of the Company and its consolidated Subsidiaries as of the respective dates thereof and the results of operations and cash flows of the Company and its consolidated Subsidiaries for the respective periods covered thereby, all in conformity with International Financial Reporting Standards (“IFRS”) applied on a consistent basis throughout the entire period involved, except as otherwise disclosed in the Company Reports.  Such financial statements, together with the related notes and schedules, comply in all material respects with the Securities Act, the Exchange Act, and the rules and regulations thereunder.  No other financial statements or supporting schedules or exhibits are required by the Exchange Act or the rules and regulations thereunder to be filed with the SEC.
 
 
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Section 4.11                      No Material Adverse Change.  There has not occurred any material adverse change, or any development involving a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its Subsidiaries, taken as a whole, from that set forth or contemplated in the Company Reports filed prior to the date hereof.
 
Section 4.12                      Legal Proceedings.  There are no legal or governmental proceedings, actions, suits or claims pending or, to the Company’s Knowledge, threatened to which the Company or any of its Subsidiaries is a party or to which any of the properties or assets of the Company or any of its Subsidiaries is subject (i) other than proceedings accurately described in all material respects in the Company Reports and proceedings that would not have and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, or (ii) that are required to be described in the Company Reports and are not so described; and there are no statutes, regulations, contracts or other documents to which the Company or any of its Subsidiaries is subject or by which the Company or any of its Subsidiaries is bound that are required to be described in the Company Reports or to be filed as exhibits to the Company Reports that are not described or filed as required.  Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any legal or governmental proceedings, actions, suits or claims of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.  For purposes of this Agreement, “Company’s Knowledge” means the actual knowledge (after due inquiry) of the executive officers (as defined in Exchange Act Rule 3b-7) of the Company or its Subsidiaries.
 
Section 4.13                      Regulatory Permits.  Each of the Company and its Subsidiaries possesses or has applied for all certificates, authorizations, licenses, franchises, permits, orders and approvals issued or granted by the appropriate governmental or regulatory authorities, agencies, courts, commissions or other entities, whether federal, state, local or foreign, or applicable self-regulatory organizations necessary to conduct its business as currently conducted, except (i) where the failure to possess such certificates, authorizations, licenses, franchises, permits, orders and approval, individually or in the aggregate, has not and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect (“Material Permits”) and (ii) as accurately described in all material respects in the Company Reports, and neither the Company nor any of its Subsidiaries has received any written notice of proceedings relating to the revocation or material adverse modification of any such Material Permits (except as accurately described in all material respects in the Company Reports), and to the Company’s Knowledge, there are no facts or circumstances that would give rise to the revocation, termination or material adverse modifications of any Material Permits.
 
Section 4.14                      Material Contracts.  Except for the Material Contracts, the Company and its Subsidiaries are not party to any agreements, contracts or commitments that are material to the business, financial condition, assets or operations of the Company and its Subsidiaries or that would be required to be filed pursuant to Item 19 and the Instructions as to Exhibits of Form 20-F.  Neither the Company nor any of its Subsidiaries is in material default under or in material violation of, nor has received written notice of termination or default under any Material Contract.  For purposes of this Agreement, “Material Contract” means any contract of the Company that was filed as an exhibit to the Company Reports pursuant to Item 19 and the Instructions as to Exhibits of Form 20-F.
 
 
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Section 4.15                      Investment Company Act.  Neither the Company nor any of its Subsidiaries is or, after giving effect to the Purchase and the application of the proceeds thereof, will become an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the SEC thereunder.
 
Section 4.16                      No Price Stabilization.  Neither the Company, its Subsidiaries nor any of the Company’s or its Subsidiaries’ officers, directors or affiliates has taken or will take, directly or indirectly, any action designed or intended to stabilize or manipulate the price of any security of the Company, or which caused or resulted in, or which would in the future reasonably be expected to cause or result in, stabilization or manipulation of the price of any security of the Company.
 
Section 4.17                      Title to Property.  The Company and its Subsidiaries have good and marketable title to all real and personal property owned by them which is material to the business of the Company and its Subsidiaries, taken as a whole, in each case free and clear of all liens, encumbrances and defects of title except such as are described in the Company Reports or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and its Subsidiaries; and any real property and buildings held under lease by the Company and its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries, in each case except as described in the Company Reports.
 
Section 4.18                      No Labor Disputes.  Neither the Company nor any of the Subsidiaries is engaged in any unfair labor practice; except for matters which would not, individually or in the aggregate, have a Material Adverse Effect, (i) there is (A) no discrimination complaint or unfair labor practice complaint pending or, to the Knowledge of the Company or the Subsidiaries, threatened against the Company or any of the Subsidiaries before the Haute Autorité de Lutte contre les Discriminations et pour l’Egalité (“HALDE”) or the National Labor Relations Board, respectively, and no grievance or arbitration proceeding arising out of or under collective bargaining agreements is pending or, to the Knowledge of the Company or the Subsidiaries, threatened, (B) no strike, labor dispute, slowdown or stoppage pending or, to the Knowledge of the Company or the Subsidiaries, threatened against the Company or any of the Subsidiaries and (C) no union representation dispute currently existing concerning the employees of the Company or any of the Subsidiaries, (ii) to the Knowledge of the Company or the Subsidiaries, no union organizing activities are currently taking place concerning the employees of the Company or any of the Subsidiaries and (iii) there has been no violation of any federal, state, local or foreign law or collective bargaining agreement relating to discrimination in the hiring, promotion or pay of employees, any applicable wage or hour laws or retirement benefits, or any provision of the Employee Retirement Income Security Act of 1974, as amended, or the rules and regulations promulgated thereunder concerning the employees of the Company or any of the Subsidiaries.
 
 
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Section 4.19                      Taxes.  The Company (i) has timely filed all necessary federal, state, local and foreign income and franchise tax returns (or timely filed applicable extensions therefore) that have been required to be filed and (ii) is not in default in the payment of any taxes which were payable pursuant to said returns or any assessments with respect thereto, other than any which the Company is contesting in good faith and for which adequate reserves have been provided and reflected in the financial statements included in the Company Reports.  The Company does not have any tax deficiency that has been or, to the Company’s Knowledge, is reasonably likely to be asserted or threatened against it, provided that the French tax authority has recently commenced a tax audit of the Company.
 
Section 4.20                      Compliance with Environmental Laws.  Except as disclosed in the Company Reports, neither the Company nor any of its Subsidiaries is in violation of any statute, rule, regulation, decision or order of any governmental agency or body or any court, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “Environmental Laws”), or to the Company’s Knowledge, operates any real property contaminated with any substance that is subject to any Environmental Laws, is liable for any off-site disposal or contamination pursuant to any Environmental Laws, or is subject to any claim relating to any Environmental Laws, which violation, contamination, liability or claim would or would reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect; and the Company is not aware of any pending investigation which might lead to such a claim.
 
Section 4.21                      Intellectual Property Rights.  The Company and its Subsidiaries own or possess, or have the right to use, adequate trademarks, trade names and other rights to inventions, know-how, patents, copyrights, confidential information and other intellectual property (collectively, “Intellectual Property Rights”) necessary to conduct the business now operated by them, or presently employed by them, and have not received any notice of infringement of or conflict with asserted rights of others with respect to any Intellectual Property Rights, except such as would not and would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect.
 
Section 4.22                      Foreign Corrupt Practices Act.  Neither the Company nor any of its Subsidiaries, nor to the Company’s Knowledge, any director, officer, employee or other person associated with or acting on behalf of the Company or any of its Subsidiaries, has: (i) used any Company funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from Company funds; (iii) caused the Company or any of its Subsidiaries to be in violation of any provision of the United States Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment from Company funds.
 
 
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Section 4.23                      OFAC and Similar Laws.  None of the Company, any of its Subsidiaries or, to the Company’s Knowledge, any director, officer, agent, employee, affiliate or representative of the Company or any of its subsidiaries is an individual or entity (“Person”) currently the subject or target of any sanctions administered or enforced by the United States Government, including, without limitation, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority (collectively, “Sanctions”), nor is the Company or any of its Subsidiaries located, organized or resident in a country or territory that is the subject of Sanctions; and the Company will not directly or indirectly use the proceeds of the issuance of the Note, or lend, contribute or otherwise make available such proceeds to any subsidiaries, joint venture partners or other Person, to knowingly fund any activities of or business with any Person, or in any country or territory, that, at the time of such funding, is the subject of Sanctions or in any other manner that will result in a violation by any Person (including any Person participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions.
 
Section 4.24                      Disclosure Controls and Procedures.  The Company has established and maintains disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) that are effective in all material respects to ensure that material information relating to the Company, including any consolidated Subsidiaries, is made known to its chief executive officer and chief financial officer by others within those entities.  The Company’s certifying officers have evaluated the effectiveness of the Company’s controls and procedures as of the end of the period covered by the most recently filed annual report under the Exchange Act (such date, the “Evaluation Date”).  The Company presented in its most recently filed annual report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date.  Since the Evaluation Date, there have been no material changes in the Company’s internal controls (as such term is defined in the rules of the SEC under the Exchange Act) or, to the Company’s Knowledge, in other factors that could affect the Company’s internal controls.
 
Section 4.25                      Accounting Controls.  The Company and its Subsidiaries maintain a system of internal accounting and other controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with IFRS and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  Except as described in the Company Reports, since the end of the Company’s most recent audited fiscal year, there has been (A) no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and (B) no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
 
Section 4.26                      Absence of Material Changes.  Subsequent to the respective dates as of which information is given in the Company Reports, and except as may be otherwise disclosed in such Company Reports, there has not been (i) any Material Adverse Effect, (ii) any transaction which is material to the Company, (iii) any obligation, direct or contingent (including any off-balance sheet obligations), incurred by the Company, which is material to the Company, (iv) any dividend or distribution of any kind declared, paid or made on the capital stock of the Company, (v) any change in the capital stock (other than a change in the number of outstanding Ordinary Shares or ADSs due to grants of stock under the Company’s stock incentive plans existing on the date hereof or the issuance of shares upon the exercise of outstanding options or warrants) or any issuance of options, warrants, convertible securities or other rights to purchase the capital stock (other than grants of stock options under the Company’s stock option plans existing on the date hereof) of the Company.
 
 
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Section 4.27                      Brokers Fees.  Neither the Company nor any of its Subsidiaries is a party to any contract, agreement or understanding with any person (other than the Engagement Letter, dated March 30, 2015, between the Company and B. Riley & Co., LLC) that would give rise to a valid claim against the Company for a brokerage commission, finder’s fee or like payment in connection with the offering and issuance of the Note or any transaction contemplated by this Agreement.
 
Section 4.28                      Listing and Maintenance Requirements.  The Company is subject to and in compliance in all material respects with the reporting requirements of Section 13 or Section 15(d) of the Exchange Act, as applicable.  The ADSs are registered pursuant to Section 12(b) of the Exchange Act and are listed on the New York Stock Exchange, and the Company has taken no action designed to, or reasonably likely to have the effect of, terminating the registration of the ADSs under the Exchange Act or delisting the ADSs from the New York Stock Exchange, nor has the Company received any notification that the SEC or the New York Stock Exchange is contemplating terminating such registration or listing.  The Conversion Shares will be duly authorized for listing on the New York Stock Exchange immediately upon conversion of the Note in accordance with the terms of the Note and the issuance of the ADSs by the Depositary following the deposit of the Underlying Shares.
 
Section 4.29                      Sarbanes-Oxley Act.  The Company is in compliance in all material respects with all applicable provisions of the Sarbanes-Oxley Act of 2002 and all applicable rules and regulations promulgated thereunder or implementing the provisions thereof that are then in effect.
 
Section 4.30                      New York Stock Exchange Approval Rules.  No further approval of the stockholders of the Company under the rules and regulations of the NYSE is required for the Company to issue and deliver the Notes to Purchaser or the Conversion Shares upon conversion of the Note.
 
Section 4.31                      No General Solicitation.  Neither the Company nor any person acting on its or their behalf has engaged in any general solicitation or general advertising in connection with the offering or issuance of the Note, including but not limited to the methods described in Rule 502(c) under the Securities Act.
 
Section 4.32                      Integration.  No offers and sales of securities of the same or similar class as the Note have been made by the Company or on its behalf during the six-month period ending with the date of this Agreement and no such offers or sales are currently being made or contemplated (in each case, whether pursuant to outstanding warrants, options, convertible or exchangeable securities, acquisition agreements or otherwise).  Neither the Company nor any other person acting on its behalf will, directly or indirectly, offer or sell any securities of the same or similar class as the Note, or take any other action, so as to cause the offer and issuance of the Note to fail to be entitled to the exemption afforded by Regulation D under the Securities Act.
 
 
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ARTICLE V
OTHER AGREEMENTS
 
Section 5.1                      Depositary.  As more fully described in the Note, upon conversion of all or any portion of the Note in accordance with the terms thereof, the Company will cause the Depositary to deliver the relevant number of Conversion Shares to the Purchaser against deposit of the Underlying Shares, pursuant to the Deposit Agreement dated as of April 14, 2011 (the “Deposit Agreement”) among the Company, The Bank of New York Mellon, as depositary (the “Depositary”), and the owners and holders from time to time of the ADSs issued thereunder, and the Purchaser shall cooperate with the Company and the Depositary in connection therewith.
 
Section 5.2                      Beneficial Ownership Limitation.
 
(a)           Purchaser shall not request that the Note be converted, and the Company shall not effect the conversion of the Note to the extent that, after giving effect to such issuance after conversion, Purchaser (together with Purchaser’s affiliates, and any other person or entity acting as a group together with Purchaser or any of Purchaser’s affiliates (collectively, the “Concert Parties”)), would beneficially own ADSs or Ordinary Shares in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of ADSs or Ordinary Shares beneficially owned by Purchaser and its Concert Parties shall include the number of Ordinary Shares issuable upon conversion of the portion of the Note with respect to which such determination is being made, but shall exclude the number of Ordinary Shares which would be issuable upon (A) conversion of the remaining portion of the Note beneficially owned by Purchaser and (B) conversion or exercise of the unexercised or unconverted portion of any loan to or securities of the Company (or any successor thereto) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by Purchaser or any of its Concert Parties.  Except as set forth in the preceding sentence, for purposes of this Section 5.2, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act, and the rules and regulations promulgated thereunder, it being acknowledged by Purchaser that the Company is not representing to Purchaser that such calculation is in compliance with Section 13(d) of the Exchange Act and Purchaser is solely responsible for any schedules required to be filed in accordance therewith.  To the extent that the limitation contained in this Section 5.2 applies, the determination of whether and the extent to which the Note may be converted (in relation to other loans or securities owned by Purchaser together with any affiliates) shall be made in good faith by Purchaser in consultation with its own counsel.  In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  For purposes of this Section 5.2, in determining the number of outstanding Ordinary Shares (including Ordinary Shares represented by ADSs), Purchaser may rely on the number of outstanding Ordinary Shares (including Ordinary Shares represented by ADSs) as reflected in (x) the Company’s (or its successor’s) most recent periodic or annual report, as the case may be, filed with the SEC (y) a more recent public announcement by the Company (or its successor) or (z) any other notice by the Company or the Company’s depositary (or its successor or successor’s depositary) setting forth the number of Ordinary Shares (including Ordinary Shares represented by ADSs) outstanding.  Upon the written or oral request of Purchaser, the Company shall within two business days confirm orally and in writing to Purchaser the number of Ordinary Shares (including Ordinary Shares represented by ADSs) then outstanding.  In any case, the number of Ordinary Shares (including Ordinary Shares represented by ADSs) outstanding shall be determined after giving effect to the conversion or exercise of loans or securities of the Company, including the Note, by Purchaser or its Concert Parties since the date as of which such number of outstanding Ordinary Shares (including Ordinary Shares represented by ADSs) was reported.  The “Beneficial Ownership Limitation” shall be 9.99% of the number of Ordinary Shares (including Ordinary Shares represented by ADSs) outstanding immediately after giving effect to the issuance of the Conversion Shares issuable upon conversion of the Note.  Purchaser, upon not less than 61 days’ prior notice to the Company, may increase or decrease (including, for the avoidance of doubt, to 0%) the percentage constituting the Beneficial Ownership Limitation, and the provisions of this Section shall continue to apply to such increased or decreased Beneficial Ownership Limitation.  Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company.  The provisions of this Section 5.2 shall be construed and implemented in a manner otherwise than in strict conformity with the terms hereof in order to correct such terms (or any portion thereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.  The limitations contained in this Section 5.2 shall apply to any successor to Purchaser.
 
 
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(b)           Notwithstanding the foregoing, the limitations contained in this Section 5.2 shall not restrict or limit any conversion or prepayment of the Note in connection with a Change in Control as contemplated by the Note.
 
Section 5.3                      Supplemental Listing Application.  Within two business days following the Closing Date, the Company shall file with the New York Stock Exchange a Supplemental Listing Application reflecting the transactions contemplated hereby.
 
Section 5.4                      Listing of Shares; Certificates.  The Company covenants that all Conversion Shares will, at all times that the Note is convertible, be duly approved for listing subject to official notice of issuance on the New York Stock Exchange.  The Company covenants that the certificates, if any, representing the ADRs to be issued to evidence any Conversion Shares issued upon conversion of Note will comply with applicable law.
 
ARTICLE VI
CONDITIONS TO CLOSING
 
Section 6.1                      Purchaser’s Conditions Precedent.  The obligation of Purchaser to complete the Purchase is subject to the satisfaction of each of the following conditions precedent:
 
(a)           each of the representations and warranties of the Company contained in this Agreement shall be true and correct as of the Closing Date, with the same effect as though those representations and warranties had been made on and as of the Closing Date, except to the extent that any such representation or warranty is made as of a specified date, in which case such representation or warranty need only be true and correct as of such date;
 
 
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(b)           the Company shall have duly performed and complied in all material respects with all covenants and agreements contained in this Agreement that are required to be performed or complied with by it at or before the Closing;
 
(c)           no court or other governmental or regulatory authorities, agencies, commissions or other entities, whether federal, state, local or foreign, shall have enacted, issued, promulgated, enforced or entered any law (whether temporary, preliminary or permanent) that is in effect and restrains, enjoins or otherwise prohibits consummation of the transactions contemplated by this Agreement, and there shall not be pending by or before any such entity any suit, action or proceeding in respect thereof;
 
(d)           Orrick, Herrington & Sutcliffe LLP, U.S. counsel to the Company and Orrick, Herrington & Sutcliffe (Europe) LLP, French counsel to the Company, shall have furnished to Purchaser opinions satisfactory in form and substance to the Purchaser and addressed to the Purchaser; and
 
(e)           the Chief Executive Officer and Chief Financial Officer of the Company shall have delivered to Purchaser a certificate, dated as of the Closing Date, certifying to their knowledge, after reasonable inquiry, as to the matters set forth in paragraphs (a) and (b).
 
Section 6.2                      Company Conditions Precedent.  The obligation of the Company to complete the issuance of the Note to Purchaser contemplated by this Agreement is subject to the satisfaction of each of the following conditions precedent:
 
(a)           each of the representations and warranties of Purchaser contained in this Agreement shall be true and correct as of the Closing Date, with the same effect as though those representations and warranties had been made on and as of the Closing Date, except to the extent that any such representation or warranty is made as of a specified date, in which case such representation or warranty need only be true and correct as of such date;
 
(b)           Purchaser shall have duly performed and complied in all material respects with all covenants and agreements contained in this Agreement that are required to be performed or complied with by it at or before the Closing;
 
(c)           no court or other governmental or regulatory authorities, agencies, commissions or other entities, whether federal, state, local or foreign, shall have enacted, issued, promulgated, enforced or entered any law (whether temporary, preliminary or permanent) that is in effect and restrains, enjoins or otherwise prohibits consummation of the transactions contemplated by this Agreement, and there shall not be pending by or before any such entity any suit, action or proceeding in respect thereof; and
 
(d)           the Manager of the general partner of Purchaser shall have delivered to the Company a certificate, dated as of the Closing Date, certifying to their knowledge, after reasonable inquiry, as to the matters set forth in paragraphs (a) and (b).
 
 
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ARTICLE VII
CERTAIN COVENANTS
 
Section 7.1                      Rights of the Holder of the Note.  Pursuant to the provisions of article L.228-98 al. 1 of the French commercial code, the Company is expressly authorized to modify its corporate form or corporate purpose after the execution of this Agreement.
 
Pursuant to article L.228-99 of the French commercial code, if after the issuance of the Note, (i) the rules pertaining to distribution or to the share capital amortization are modified, or (ii) if securities granting a subscription right to specific investors are issued, or (iii) in the event of any distribution of available reserves or of share premium or (iv) in the event of the issuance of preferred shares modifying the apportionment of distribution between shareholders, then the Company shall immediately amend the terms and conditions of the Note so as to maintain the right of its holder.
 
The provisions of this Section 7.1 are without prejudice to the application of the provisions pertaining to the adjustment of the Conversion Rate (as defined in the Note) as set forth in the form of Note attached as Exhibit A hereto.
 
Section 7.2                      Certain Actions.  Each of the Company and Purchaser shall reasonably cooperate with each other and use (and shall cause their respective affiliates to use) reasonable efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on its part under this Agreement and applicable law and stock exchange listing standards to consummate the transactions contemplated by this Agreement as soon as practicable.
 
Section 7.3                      Legends.  To the extent reasonably necessary under applicable law, any certificate, book-entry or ADR representing Conversion Shares which are issued following conversion of the Note and deposit of the Underlying Shares with the Depositary shall have endorsed, to the extent appropriate, upon its face the following words:
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY JURISDICTION.  SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, ASSIGNED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (I) A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES THAT IS EFFECTIVE UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAW, OR (II) ANY EXEMPTION FROM REGISTRATION UNDER SUCH ACT, OR APPLICABLE STATE SECURITIES LAW, RELATING TO THE DISPOSITION OF SECURITIES, INCLUDING RULE 144.
 
Section 7.4                      Legend Removal.  Upon the request of Purchaser or any transferee or proposed transferee thereof, the Company shall instruct the Depositary to remove the legend contemplated by Section 7.3 of this Agreement (and shall revoke any related stop transfer or similar instructions to its registrar and transfer agent), if the Conversion Shares are covered by an effective registration statement under the Securities Act or if such person provides reasonable evidence and an opinion of counsel to the effect that a sale, transfer or assignment of such Conversion Shares may be made without registration under the Securities Act or that such Conversion Shares are eligible for resale pursuant to Rule 144 under the Securities Act.
 
 
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ARTICLE VIII
MISCELLANEOUS
 
Section 8.1                      Representation of the Holder of the Note.  The holder of the Note will exercise all rights and obligations granted to the masse pursuant to the provisions of articles L.228-46 et seq. of the French commercial code.
 
Section 8.2                      Entire Agreement.  This Agreement and any documents and agreements executed in connection with the Purchase embody the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersede all prior and contemporaneous oral or written agreements, representations, warranties, contracts, correspondence, conversations, memoranda and understandings between or among the parties or any of their agents, representatives or affiliates relative to such subject matter, including, without limitation, any term sheets, emails or draft documents.
 
Section 8.3                      Construction.  References in the singular shall include the plural, and vice versa, unless the context otherwise requires.  References in the masculine shall include the feminine and neuter, and vice versa, unless the context otherwise requires.  Headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meanings of the provisions hereof.  Neither party, nor its respective counsel, shall be deemed the drafter of this Agreement for purposes of construing the provisions of this Agreement, and all language in all parts of this Agreement shall be construed in accordance with its fair meaning, and not strictly for or against either party.
 
Section 8.4                      Governing Law.  This Agreement shall in all respects be construed in accordance with and governed by the substantive laws of the French Republic, without reference to its choice of law rules.
 
Section 8.5                      Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.  Any counterpart or other signature hereon delivered by facsimile shall be deemed for all purposes as constituting good and valid execution and delivery of this Agreement by such party.
 
Section 8.6                      Certain Definitional Provisions.  Unless the express context otherwise requires: the words “hereof”, “herein”, and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; any references herein to a specific Section, Schedule or Annex shall refer, respectively, to Sections, Schedules or Annexes of this Agreement; wherever the word “include”, “includes”, or “including” is used in this Agreement, it shall be deemed to be followed by the words “without limitation”; and references herein to any gender includes each other gender.
 
[Signature Page Follows]
 
 
19

 
 
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed as of the date first above written.
 
 
  THE COMPANY
   
  SEQUANS COMMUNICATIONS S.A.
   
   
  By: /s/ Georges Karam
  Name: Georges Karam
  Title: Chairman & CEO
   
   
   
  PURCHASER
   
  NOKOMIS CAPITAL MASTER FUND, LP
   
  By: NOKOMIS CAPITAL, L.L.C., 
  its general partner 
   
  By: /s/ Brett Hendrickson
  Name: Brett Hendrickson
 
Title: Portfolio Manager
 
 
[Signature page to Convertible Note Agreement]
 
 
 

 
 
EXHIBIT A
 
FORM OF CONVERTIBLE PROMISSORY NOTE
 

 
 
 
 
A-1
 
EX-4.2 3 a51078919ex4_2.htm EXHIBIT 4.2 a51078919ex4_2.htm
Exhibit 4.2
 
Executive Version
 
THE SECURITY REPRESENTED BY THIS INSTRUMENT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  ACCORDINGLY, THIS SECURITY MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THE TRANSFER OF THIS SECURITY IS ALSO SUBJECT TO THE CONDITIONS SPECIFIED IN THE CONVERTIBLE NOTE AGREEMENT, DATED AS OF APRIL 14, 2015, AS AMENDED AND MODIFIED FROM TIME TO TIME, BETWEEN SEQUANS COMMUNICATIONS S.A. (THE “COMPANY”) AND THE PURCHASER PARTY THERETO.  THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITY UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER.  UPON WRITTEN REQUEST, A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF WITHOUT CHARGE.
 
SEQUANS COMMUNICATIONS S.A.
 
CONVERTIBLE PROMISSORY NOTE
 
April 14, 2015 $12,000,000.00
 
SEQUANS COMMUNICATIONS S.A., a société anonyme incorporated in the French Republic (the “Company”), hereby promises to pay to the order of Nokomis Capital Master Fund, LP, a Cayman Islands exempted limited partnership (the “Purchaser”), the principal amount of Twelve Million and 00/100 Dollars ($12,000,000.00) plus the portion of the Accreted Principal Amount (as defined below) in excess thereof.  This Note is being issued pursuant to a Convertible Note Agreement, dated as of April 14, 2015 (the “Purchase Agreement”), between the Company and Purchaser.  The Purchase Agreement contains terms governing the rights of the holder of this Note, and all provisions of the Purchase Agreement are hereby incorporated herein in full by reference.  Unless otherwise indicated herein, capitalized terms used in this Note have the same meanings set forth in the Purchase Agreement.
 
ARTICLE I
DEFINED TERMS
 
The terms defined in this Article I (except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this Note shall have the respective meanings specified in this Article I. The words “herein,” “hereof,” “hereunder,” and words of similar import refer to this Note as a whole and not to any particular Article, Section or other subdivision. The terms defined in this Article I include the plural as well as the singular.
 
 
 

 
 
Accreted Principal Amount” shall have the meaning specified in Article II.  For the avoidance of doubt, “Accreted Principal Amount” shall include any accrued and unpaid interest at the time of any determination of such “Accreted Principal Amount.”
 
ADSs” shall have the meaning specified in Section 3.2.
 
Closing Sale Price” shall have the meaning specified in Section 5.1(e).
 
Company” shall have the meaning specified in the preamble.
 
Conversion Date” shall have the meaning specified in Section 5.1(b).
 
Conversion Rate” shall have the meaning specified in Section 5.2.
 
Deposit Agreement” shall have the meaning specified in Section 5.1(d)(iiii).
 
Depositary” shall have the meaning specified in Section 5.1(d)(ii).
 
Distributed Assets” shall have the meaning specified in Section 5.4(d).
 
Event of Default” shall have the meaning specified in Section 4.1.
 
Excluded Issuance” shall have the meaning specified in Section 5.3(c).
 
Expiration Date” shall have the meaning specified in Section 5.4(f).
 
Expiration Time” shall have the meaning specified in Section 5.4(f).
 
Interest Payment Date” shall have the meaning specified in Article II.
 
Issuable Maximum” shall have the meaning specified in Section 5.1(c).
 
Ordinary Shares” shall have the meaning specified in Section 3.2.
 
Organic Change” shall have the meaning specified in Section 5.5.
 
Other Conversion Rate” shall have the meaning specified in Section 5.3(a).
 
PIK Amount” shall have the meaning specified in Article II.
 
Purchase Agreement” shall have the meaning specified in the preamble.
 
Purchaser” shall have the meaning specified in the preamble.
 
Securities Act” shall have the meaning specified in the legend above.
 
Spin-Off” shall have the meaning specified in Section 5.4(d).
 
Spin-Off Valuation Period” shall have the meaning specified in Section 5.4(d).
 
 
2

 
 
Trigger Event” shall have the meaning specified in Section 5.4(d).
 
Underlying Shares” shall have the meaning specified in Section 5.1(d)(i).
 
ARTICLE II
PAYMENT OF INTEREST
 
Interest shall accrue on the Accreted Principal Amount (in each case computed on the basis of a 365/366-day year and the actual number of days elapsed in any year) at an annual rate equal to 7.0% per annum or (if less) at the highest rate then permitted under applicable law, which shall be payable by adding such interest to the Accreted Principal Amount on each Interest Payment Date (as defined below), and on the final maturity hereof (the “PIK Amount”).  At any time, the outstanding principal amount of this Note, including all PIK Amounts added thereto through such time, is referred to in this Note as the “Accreted Principal Amount.”  The Company shall pay to the holder of this Note all accrued interest (including interest on the Accreted Principal Amount) on each anniversary date of this Note (each, an “Interest Payment Date”), including the final maturity date of this Note.  Interest shall accrue on any principal payment due under this Note (including as to accrued interest added to the principal) until such time as payment therefor is actually delivered to the holder of this Note.
 
ARTICLE III
PAYMENT OF PRINCIPAL ON NOTE
 
Section 3.1 Scheduled Payment.  Unless converted as set forth below, the Accreted Principal Amount (including any accrued and unpaid interest) of this Note shall be due and payable on April 14, 2018.
 
Section 3.2 Conversion.  Notwithstanding any provision contained in this Article III, the holder of this Note may convert, indirectly through the procedure set forth in Section 5.1(d), all or any portion of the Accreted Principal Amount (including any accrued and unpaid interest) of this Note into the Company’s American Depositary Shares (“ADSs”), each representing one ordinary share of the Company, nominal value €0.02 per share (“Ordinary Shares”), in accordance with Article V, until such time as such Accreted Principal Amount (including any accrued and unpaid interest) has been paid.  For the avoidance of doubt, any reference in this Note to the conversion of the Note into ADSs shall mean the issuance of ADSs following conversion of the Note in accordance with the procedure set forth in Section 5.1(d).
 
ARTICLE IV
EVENTS OF DEFAULT; REMEDIES ON DEFAULT
 
Section 4.1 Event of Default.  An “Event of Default” shall exist if any of the following conditions or events shall occur and be continuing:
 
(a) the Company defaults in the payment of principal or interest on the Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise and such failure to pay is not cured within three (3) business days after the occurrence thereof; or
 
 
3

 
 
(b) the Company defaults in the performance of, or compliance with, any material term contained in the Purchase Agreement or the Note and the default is not remedied within thirty (30) days after the Company receives written notice of the default from the holder of the Note (any such written notice to be identified as a “notice of default” and to refer specifically to this Section 4.1(b)); or
 
(c) the Company (i) is generally not paying, or admits in writing its inability to pay its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property or (v) is adjudicated as insolvent or to be liquidated;
 
(d) any representation, warranty or certification made herein or pursuant to the Purchase Agreement by the Company was not true or correct in any material respect as of the time made;
 
(e) the Company, any subsidiary of the Company or any of their respective affiliates fails to pay principal when due (whether at stated maturity or otherwise), or an uncured default exists that results in the acceleration of maturity, of any indebtedness for borrowed money of the Company, any subsidiary of the Company or any of their respective affiliates in an aggregate amount in excess of $10,000,000 (or its foreign currency equivalent), unless such indebtedness is discharged, or such acceleration is rescinded, stayed or annulled, within any applicable cure period set forth in the relevant agreement or instrument;
 
(f) one or more final non-appealable judgments for the payment of money in any aggregate amount in excess of $10,000,000 shall be rendered against the Company, any subsidiary of the Company or any of their respective affiliates and the same shall remain undischarged for a period of sixty (60) days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to levy upon assets or properties of the Company, any subsidiary of the Company or any of their respective affiliates to enforce any such judgment; or
 
(g) a court or governmental authority of competent jurisdiction enters an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of the Company, or any such petition shall be filed against the Company and such petition shall not be dismissed within sixty (60) days.
 
Section 4.2 Acceleration.
 
(a) If an Event of Default with respect to the Company described in subsection (c) of Section 4.1 has occurred, the Note shall automatically become immediately due and payable.
 
 
4

 
 
(b) If any other Event of Default has occurred and is continuing, the holder of the Note may at any time at his, her or its option, by notice to the Company, declare the Note to be immediately due and payable.
 
(c) Upon the Note becoming due and payable under this Section 4.2, whether automatically or by declaration, the Note will forthwith mature and the entire unpaid Accreted Principal Amount (including any accrued and unpaid interest) shall all be immediately due and payable, in each and every case without presentment, demand, protest or further notice, all of which are hereby waived.
 
Section 4.3 Other Remedies.  If any Event of Default has occurred and is continuing, and irrespective of whether the Note has become or has been declared immediately due and payable under Section 4.2, the holder of the Note may proceed to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise.
 
Section 4.4 No Waivers or Election of Remedies; Expenses.  No course of dealing and no delay on the part of the holder of the Note in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder’s rights, powers or remedies.  The Company shall pay the Accreted Principal Amount (including any accrued and unpaid interest) of the Note without any deduction for any setoff or counterclaim.  No right, power or remedy conferred by the Purchase Agreement or by the Note upon the holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise.  The Company will pay to the holder of the Note on demand such further amount as shall be sufficient to cover all reasonable costs and expenses of such holder incurred in any enforcement or collection under this Article IV, including, without limitation, reasonable attorneys’ fees, expenses and disbursements.
 
Section 4.5 Waiver of Demand.  The Company hereby waives diligence, presentment, protest and demand and notice of protest and demand, dishonor and nonpayment of this Note, and expressly agrees that this Note, or any payment hereunder, may be extended from time to time and that the holder hereof may accept security for this Note or release security for this Note, all without in any way affecting the liability of the Company hereunder.
 
ARTICLE V
CONVERSION
 
Section 5.1 Conversion Procedure.
 
(a) At any time prior to the payment of this Note in full, the holder of this Note may convert all or any portion of the outstanding Accreted Principal Amount (including any accrued and unpaid interest) of this Note into a number of ADSs (excluding any fractional ADS) equal to the product obtained by dividing (i) the portion of the Accreted Principal Amount designated by such holder to be converted, by (ii) the Conversion Rate then in effect.
 
 
5

 
 
(b) Except as otherwise expressly provided herein, each conversion of this Note shall be deemed to have been effected as of the close of business on the date on which this Note has been surrendered for conversion at the principal office of the Company (the “Conversion Date”).  At such time as such conversion has been effected, the rights of the holder of this Note as such holder to the extent of the conversion shall cease, and the Person or Persons in whose name or names the ADSs are to be issued upon such conversion shall be deemed to have become the holder or holders of record of the ADSs represented thereby.
 
(c) Notwithstanding anything herein to the contrary, including any adjustments to the Conversion Rate pursuant to Sections 5.3, 5.4 or 5.5, the Company may not issue, upon conversion of this Note, a number of ADSs that would exceed 15,000,000 (subject to adjustment as provided in Section 5.4 below) Ordinary Shares and ADSs as of the date of issuance of such ADSs (such number of shares, the “Issuable Maximum”).  If, pursuant to any adjustment to the Conversion Rate contemplated in this Article V, the conversion of the Note would result in the issuance of ADSs that would exceed the Issuable Maximum, then the Conversion Rate shall be further adjusted such that that maximum number of ADSs issuable upon conversion of the Note shall not exceed the Issuable Maximum.
 
(d) As soon as possible after a conversion has been effected (but in any event within five (5) business days in the case of clause (i) below), the holder of this Note shall subscribe for the number of Ordinary Shares issuable upon conversion (in whole or in part) of this Note, and the Company shall do the following:
 
(i) register the issuance to the converting holder of the number of Ordinary Shares issuable upon conversion (in whole or in part) of this Note (the “Underlying Shares”) in the Company’s share transfer registry;
 
(ii) issue the Underlying Shares and deposit such Underlying Shares with The Bank of New York Mellon, as depositary (the “Depositary”), in the name and on behalf of the holder of the Note;
 
(iii) cause the Depositary to issue and deliver to the converting holder certificates or a book-entry transfer for the number of ADSs to which Purchaser shall be entitled against deposit of the Underlying Shares, pursuant to the Deposit Agreement dated as of April 14, 2011 (the “Deposit Agreement”) among the Company, the Depositary and the owners and holders from time to time of the ADSs issued thereunder; and
 
(iv) deliver to the converting holder a new Note representing any portion of the Accreted Principal Amount (including any accrued and unpaid interest) that was represented by the Note surrendered to the Company in connection with such conversion, but which was not converted or which could not be converted because it would have required the issuance of a fractional Ordinary Share.
 
The converting holder shall cooperate with the Company and the Depositary to facilitate the process outlined above, including through the execution of a subscription form for the Ordinary Shares satisfactory to the converting holder and the execution of a power of attorney authorizing the Company to deliver the Underlying Shares to the Depositary on such holder’s behalf.
 
 
6

 
 
(e) If a fractional ADS would, except for the provisions hereof, be deliverable upon conversion of this Note, the Company, in lieu of delivering such fractional share, shall in the event the conversion is being consummated in connection with repayment in full of the Note, pay in cash an amount equal to the market price of such fractional share based on the closing price of the ADSs on the New York Stock Exchange (the “Closing Sale Price”) on the Conversion Date.
 
(f) The issuance of the Underlying Shares and ADSs upon conversion of this Note shall be made without charge to the holder hereof for any issuance tax in respect thereof or other cost incurred by the Company in connection with such conversion and the related issuance of Underlying Shares and ADSs, unless the tax is due because the holder requests such Underlying Shares and ADSs to be issued in a name other than the holder’s name, in which case the holder shall pay the tax.  Upon conversion of this Note, the Company shall take all such actions as are necessary in order to ensure that the Ordinary Shares and ADSs issuable with respect to such conversion shall be validly issued, fully paid and nonassessable.
 
(g) The Company shall not close its books against the transfer of Ordinary Shares or ADSs issued or issuable upon conversion of this Note in any manner which interferes with the timely conversion of this Note.
 
(h) The conversion of this Note shall be subject to the Beneficial Ownership Limitations set forth in Section 5.2 of the Purchase Agreement, which are incorporated herein by reference.
 
Section 5.2 Conversion Rate.  The initial Conversion Rate shall be 540.5405 Ordinary Shares (subject to adjustment as provided in this Article V, the “Conversion Rate”) per US$1,000 Accreted Principal Amount (including any accrued and unpaid interest) of the Note.  To address dilution of the conversion rights granted under the Notes, the Conversion Rate shall be subject to adjustment from time to time pursuant to Sections 5.3, 5.4 and 5.5.
 
Section 5.3 Adjustment of Conversion Rate upon Issuance of Ordinary Shares or ADSs.
 
(a) If at any time during the twelve months following the date hereof, the Company issues any Ordinary Shares, ADSs, preferred equity securities or any securities convertible into, or exchangeable for Ordinary Shares or a preferred equity security, other than an Excluded Issuance, at an effective rate per US$1,000 invested (the “Other Conversion Rate”) greater than the effective Conversion Rate, the Conversion Rate applicable to the portion of the Note not yet converted shall automatically be adjusted so that the Conversion Rate shall not, in any event, be less than, after giving effect to all other adjustments contained herein, the Other Conversion Rate.  The Company agrees to execute and deliver to Purchaser such supplemental documentation giving effect to this Section 5.3(a) as Purchaser may reasonably request.
 
(b) Notwithstanding the foregoing, if at any time during the twelve months following the date hereof, the Company issues any Ordinary Shares, ADSs, preferred equity securities or any securities convertible into, or exchangeable for Ordinary Shares or a preferred equity security, other than an Excluded Issuance, then, if the Other Conversion Rate is more than 42.8572% above the effective Conversion Rate, the Conversion Rate applicable to the portion of the Note not yet converted shall automatically be adjusted so that the Conversion Rate shall not, in any event, be less than, after giving effect to all other adjustments contained herein, 142.8572% of the Other Conversion Rate.
 
 
7

 
 
(c) An “Excluded Issuance” shall mean (i) securities issued pursuant to stock splits, stock dividends or similar transactions; (ii) ADSs or Ordinary Shares (or options or warrants therefor) issued or issuable to employees, consultants, officers, directors of the Company or other persons performing services for the Company pursuant to stock option plans, restricted stock plans, option issuance agreements, warrant issuance agreements or other agreements approved by the Board of Directors; (iii) securities issued or issuable to an entity as a component of any bona fide business relationship with such entity primarily for the purpose of (A) joint venture, technology licensing or development activities, (B) distribution, supply or manufacture of the Company’s products or services or (C) any other arrangements involving corporate partners, directly or via their controlled investment funds, that are primarily for purposes other than raising capital, the terms of which business relationship with such entity are approved by the Board of Directors; (iv) ADSs or Ordinary Shares issued upon conversion of the Note; (v) securities issued or issuable in any other transaction for which exemption from these price-based antidilution provisions is approved before or after issuance of the securities by Purchaser and (vi) collectively, any other issuances of Ordinary Shares, ADSs, preferred equity securities or any securities convertible into, or exchangeable for Ordinary Shares, ADSs or a preferred equity security between the date hereof and the maturity date of this Note in an amount not to exceed 500,000 ADSs or Ordinary Shares (on an as-converted or exchanged basis) in the aggregate.
 
Section 5.4 Other Adjustments to Conversion Rate.  If the number of Ordinary Shares represented by each ADS is changed, after the date of this Note, for any reason other than one or more of the events described in this Section 5.4, the Company shall make an appropriate adjustment to the Conversion Rate such that the number of Ordinary Shares represented by the ADSs upon which conversion of the Notes is based remains the same.  In addition, the Conversion Rate shall be adjusted from time to time by the Company as follows:
 
(a) In case the Company shall, at any time or from time to time while any of the Notes are outstanding, pay a dividend in Ordinary Shares (directly or in the form of ADSs) or make a distribution in Ordinary Shares to all or substantially all holders of Ordinary Shares (other than a dividend or distribution in connection with a transaction to which Section 5.5 applies), then the Conversion Rate shall be adjusted based on the following formula:
 
CR1 = CR0  ×
OS1
 
OS0
 
 
where
 
CR0
=
the Conversion Rate in effect at 5:00 p.m., New York City time, on the trading day immediately preceding the ex-dividend date for such dividend or distribution;
     
CR1
=
the Conversion Rate in effect on the ex-dividend date for such dividend or distribution;
 
 
8

 
 
OS0
=
the number of Ordinary Shares outstanding at 5:00 p.m., New York City time, on the trading day immediately preceding the ex-dividend date for such dividend or distribution; and
     
OS1
=
the number of Ordinary Shares that would be outstanding immediately after, and solely as a result of, such dividend or distribution.
 
Any adjustment made pursuant to this Section 5.4(a) shall become effective immediately prior to 9:00 a.m., New York City time, on the ex-dividend date for such dividend or distribution. If any dividend or distribution that is the subject of this Section 5.4(a) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors publicly announces its decision not to pay or make such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared. For purposes of this Section 5.4(a), the number of Ordinary Shares outstanding at 5:00 p.m., New York City time, on the trading day immediately preceding the ex-dividend date for such dividend or distribution shall not include Ordinary Shares held in treasury, if any. The Company will not pay any dividend or make any distribution on Ordinary Shares held in treasury, if any.
 
(b) In case outstanding Ordinary Shares (directly or in the form of ADSs) shall be subdivided or split into a greater number of Ordinary Shares or combined or reverse split into a smaller number of Ordinary Shares (in each case, other than in connection with a transaction to which Section 5.5 applies), the Conversion Rate shall be adjusted based on the following formula:
 
CR1 = CR0  ×
OS1
 
OS0
 
 
where

CR0
=
the Conversion Rate in effect at 5:00 p.m., New York City time, on the trading day immediately preceding the effective date of such subdivision or combination;
     
CR1
=
the Conversion Rate in effect on the effective date of such subdivision or  combination;
     
OS0
=
the number of Ordinary Shares outstanding at 5:00 p.m., New York City time, on the trading day immediately preceding the effective date of such subdivision or combination; and
     
OS1
=
the number of Ordinary Shares that would be outstanding immediately after, and solely as a result of, such subdivision or combination.
 
Any adjustment made pursuant to this Section 5.4(b) shall become effective immediately prior to 9:00 a.m., New York City time, on the effective date of such subdivision or combination.
 
 
9

 
 
(c) In case the Company shall issue rights (other than rights issued pursuant to a shareholders’ rights plan or a dividend or distribution on Ordinary Shares in Ordinary Shares as set forth in (a) above) or warrants to all or substantially all holders of its Ordinary Shares (whether direct or in the form of ADSs), other than an issuance in connection with a transaction to which Section 5.5 applies, entitling them to purchase, for a period expiring within 45 calendar days of the date of issuance, Ordinary Shares (directly or in the form of ADSs) at a price per Ordinary Share less than the average of the Closing Sale Prices of the ADSs divided by the number of Ordinary Shares then represented by each ADS during the 10 consecutive trading day period ending on the trading day immediately preceding the ex-dividend date for the distribution, the Conversion Rate shall be adjusted based on the following formula:
 
CR1 = CR0  ×
OS0+X
 
OS0+Y
 
 
where

CR0
=
the Conversion Rate in effect at 5:00 p.m., New York City time, on the trading day immediately preceding the ex-dividend date for such issuance;
     
CR1
=
the Conversion Rate in effect on the ex-dividend date for such issuance;
     
OS0
=
the number of Ordinary Shares outstanding at 5:00 p.m., New York City time, on the trading day immediately preceding the ex-dividend date for such issuance;
     
X
=
the total number of Ordinary Shares issuable (directly or in the form of ADSs) pursuant to such rights or warrants; and
     
Y
=
the number of Ordinary Shares equal to the quotient of (x) aggregate price payable to exercise such rights or warrants, divided by (y) the average of the Closing Sale Prices of the ADSs during the 10 consecutive trading day period ending on the trading day immediately preceding the ex-dividend date for such issuance.
 
Any adjustment made pursuant to this Section 5.4(c) shall become effective immediately prior to 9:00 a.m., New York City time, on the ex-dividend date for such issuance. If any rights or warrants described in this Section 5.4(c) are not so issued, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors publicly announces its decision not to issue such rights or warrants, to the Conversion Rate that would then be in effect if such issuance had not been declared. To the extent that such rights or warrants are not exercised prior to their expiration or Ordinary Shares are otherwise not delivered pursuant to such rights or warrants upon the exercise of such rights or warrants, the Conversion Rate shall be readjusted to the Conversion Rate that would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on the basis of delivery of only the number of Ordinary Shares actually delivered. In determining the aggregate price payable to exercise such rights and warrants, there shall be taken into account any consideration received by the Company for such rights or warrants and the value of such consideration (if other than cash, to be determined in good faith by the Board of Directors). For purposes of this Section 5.4(c), the number of Ordinary Shares outstanding at 5:00 p.m., New York City time, on the trading day immediately preceding the ex-dividend date for such issuance shall not include Ordinary Shares held in treasury, if any. The Company will not issue any such rights or warrants in respect of Ordinary Shares held in treasury, if any.
 
 
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(d) In case the Company shall, by dividend or otherwise, distribute to all or substantially all holders of its outstanding Ordinary Shares (whether direct or in the form of ADSs) of any class of capital stock of the Company or evidences of its indebtedness or assets (including securities, but excluding (i) any dividends or distributions referred to in Section 5.4(a), (ii) any rights or warrants referred to in Section 5.4(c), (iii) any dividends or distributions referred to in Section 5.4(e), (iv) any dividends or distributions in connection with a transaction to which Section 5.5 applies, or (v) any Spin-Offs to which the provisions set forth below in this Section 5.4(d) applies) (any of the foregoing hereinafter in this Section 5.4(d) called the “Distributed Assets”), then, in each such case, the Conversion Rate shall be adjusted based on the following formula:
 
CR1 = CR0 ×
SP0
 
SP0 – FMV
 
 
where

CR0
=
the Conversion Rate in effect at 5:00 p.m., New York City time, on the trading day immediately preceding the ex-dividend date for such distribution;
     
CR1
=
the Conversion Rate in effect on the ex-dividend date for such distribution;
     
SP0
=
the average of the Closing Sale Prices of the ADSs multiplied by the number of Ordinary Shares then represented by each ADS during the 10 consecutive trading day period ending on the trading day immediately preceding the ex-dividend date for such distribution; and
     
FMV
=
the fair market value on the ex-dividend date for such distribution of the Distributed Assets so distributed applicable to one Ordinary Share, as determined in good faith by the Company’s board of directors.
 
 
In the event where there has been a payment of a dividend or other distribution on the Ordinary Shares (directly or in the form of ADSs) or shares of capital stock of any class or series, or similar equity interest, of or relating to a Subsidiary or other business unit of the Company (a “Spin-Off”) that are, or when issued, will be, traded or listed on the New York Stock Exchange, the Nasdaq Global Market, the Nasdaq Global Select Market or any other U.S. national securities exchange or market, then the Conversion Rate shall instead be adjusted based on the following formula:

CR1 = CR0 ×
FMV0 + MP0
 
MP0
 
 
where

CR0
=
the Conversion Rate in effect at 5:00 p.m., New York City time, on the trading day immediately preceding the ex-dividend date for such distribution;
     
CR1
=
the Conversion Rate in effect on the ex-dividend date for such distribution;
 
 
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FMV0
=
the average of the Closing Sale Prices of the Distributed Assets applicable to one Ordinary Share during the ten consecutive trading day period commencing on and including the effective date of the Spin-Off (the “Spin-Off Valuation Period”); and
     
MP0
=
the average of the Closing Sale Prices of the ADSs multiplied by the number of Ordinary Shares then represented by each ADS during the Spin-Off Valuation Period.
 
Any adjustment made pursuant to this Section 5.4(d) shall become effective immediately prior to 9:00 a.m., New York City time, on the ex-dividend date for such distribution. If any dividend or distribution of the type described in this Section 5.4(d) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors publicly announces its decision not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.
 
Rights or warrants distributed by the Company to all holders of Ordinary Shares (whether direct or in the form of ADSs) entitling the holders thereof to subscribe for or purchase shares of the Company’s capital stock (either initially or under certain circumstances), which rights or warrants, until the occurrence of a specified event or events (“Trigger Event”): (i) are deemed to be transferred with such Ordinary Shares; (ii) are not exercisable; and (iii) are also issued in respect of future issuances of Ordinary Shares, shall be deemed not to have been distributed for purposes of this Section 5.4 (and no adjustment to the Conversion Rate under this Section 5.4 will be required) until the occurrence of the earliest Trigger Event, whereupon such rights and warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Conversion Rate shall be made under this Section 5.4(d). If any such right or warrant, including any such existing rights or warrants distributed prior to the date of this Note, are subject to events, upon the occurrence of which such rights or warrants become exercisable to purchase different securities, evidences of indebtedness or other assets, then the date of the occurrence of any and each such event shall be deemed to be the date of distribution and record date with respect to new rights or warrants with such rights. In addition, in the event of any distribution (or deemed distribution) of rights or warrants, or any Trigger Event or other event (of the type described in the preceding sentence) with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the Conversion Rate under this Section 5.4 was made, (1) in the case of any such rights or warrants that shall all have been redeemed or repurchased without exercise by any holders thereof, the Conversion Rate shall be readjusted upon such final redemption or repurchase to give effect to such distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or repurchase price received by a holder or holders of Ordinary Shares with respect to such rights or warrants (assuming such holder had retained such rights or warrants), made to all holders of Ordinary Shares as of the date of such redemption or repurchase, and (2) in the case of such rights or warrants that shall have expired or been terminated without exercise by any holders thereof, the Conversion Rate shall be readjusted as if such rights and warrants had not been issued.
 
 
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No adjustment of the Conversion Rate shall be made pursuant to this Section 5.4(d) in respect of rights or warrants distributed or deemed distributed on any Trigger Event to the extent that such rights or warrants are actually distributed to Purchaser upon conversion by Purchaser of this Note.

(e) In case the Company shall pay a dividend or otherwise distribute to all or substantially all holders of its Ordinary Shares (direct or in the form of ADSs) a dividend or other distribution of exclusively cash excluding (x) any dividend or distribution in connection with the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary and (y) any dividend or distribution in connection with a transaction to which Section 5.5 applies, then the Conversion Rate shall be adjusted based on the following formula:
 
CR1 = CR0 ×
SP0
 
SP0 – DIV
 
 
where

CR0
=
the Conversion Rate in effect at 5:00 p.m., New York City time, on the trading day immediately preceding the ex-dividend date for such dividend or distribution;
     
CR1
=
the Conversion Rate in effect on the ex-dividend date for such dividend or distribution;
     
SP0
=
the average of the Closing Sale Prices of the ADSs multiplied by the number of Ordinary Shares then represented by each ADS during the 10 consecutive trading day period ending on the trading day immediately preceding the ex-dividend date for such distribution; and
     
DIV
=
the amount in cash per Ordinary Share the Company distributes to holders of its Ordinary Shares.
 
 
Any adjustment made pursuant to this Section 5.4(e) shall become effective immediately prior to 9:00 a.m., New York City time, on the ex-dividend date for such dividend or distribution. If any dividend or distribution of the type described in this Section 5.4(e) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors publicly announces its decision not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.
 
(f) In case of purchases of the Ordinary Shares (directly or in the form of ADSs) pursuant to a tender offer or exchange offer made by the Company or any Subsidiary of the Company for all or any portion of the Ordinary Shares (directly or indirectly in the form of ADSs), to the extent that the fair market value, as determined in good faith by the Company’s Board of Directors, of cash and any other consideration included in the payment per Ordinary Share (or equivalent payment per Ordinary Share represented by the ADSs) exceeds the Closing Sale Price of the ADSs divided by the number of ADSs then represented by each ADS on the trading day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender offer or exchange offer (as it may be amended) (the “Expiration Date”), the Conversion Rate shall be adjusted based on the following formula:
 
 
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CR1 = CR0 ×
FMV + (SP1 x OS1)
 
SP1 x OS0
 
 
where

CR0
=
the Conversion Rate in effect at 5:00 p.m., New York City time, on the Expiration Date;
     
CR1
=
the Conversion Rate in effect immediately after 5:00 p.m., New York City time, on the Expiration Date;
     
FMV
=
the fair market value, on the Expiration Date, of the aggregate value of all cash and any other consideration paid or payable for Ordinary Shares (directly or indirectly in the form of ADSs) validly tendered or exchanged and not withdrawn as of the Expiration Date, as determined in good faith by the Company’s board of directors;
     
OS1
=
the number of Ordinary Shares outstanding immediately after the last time tenders or exchanges may be made pursuant to such tender offer or exchange offer (the “Expiration Time”), after giving effect to the purchase of all Ordinary Shares or ADSs, as the case may be, accepted for purchase or exchange in such tender or exchange offer;
     
OS0
=
the number of Ordinary Shares outstanding immediately before the Expiration Time; and
     
SP1
=
the average of the Closing Sale Prices of the ADSs multiplied by the number of Ordinary Shares then represented by each ADS during the ten consecutive trading day period commencing on the Trading Day immediately after the Expiration Date.
 
 
Any adjustment made pursuant to this Section 5.4(f) shall become effective immediately prior to 9:00 a.m., New York City time, on the trading day immediately following the Expiration Date. If the Company, or one of its Subsidiaries, is obligated to purchase Ordinary Shares (directly or indirectly in the form of ADSs) pursuant to any such tender or exchange offer, but the Company or such Subsidiary is permanently prevented by applicable law from effecting all such purchases or all such purchases are rescinded, the Conversion Rate shall be readjusted to be the Conversion Rate that would then be in effect if such tender or exchange offer had not been made. Except as set forth in the preceding sentence, if the application of this Section 5.4(f) to any tender offer or exchange offer would result in a decrease in the Conversion Rate, no adjustment shall be made for such tender offer or exchange offer under this Section 5.4(f).

(g) In cases where:
 
(i) the fair market value, as determined in good faith by the Company’s Board of Directors, of Distributed Assets and cash, including with respect to a Spin-Off, as to which Sections 5.4(d) and 5.4(e) apply, applicable to one Ordinary Share, distributed to holders of the Ordinary Shares (whether direct or in the form of ADSs) equals or exceeds the average of the Closing Sale Prices of the ADSs multiplied by the number of Ordinary Shares then represented by each ADS during the ten consecutive trading day period ending on the trading day immediately preceding the ex-dividend date for such distribution, or
 
 
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(ii) the average of the Closing Sale Prices of the ADSs multiplied by the number of Ordinary Shares then represented by each ADS during the ten consecutive trading day period ending on the trading day immediately preceding the ex-dividend date for such distribution exceeds the fair market value, as determined in good faith by the Company’s Board of Directors, of such Distributed Assets or cash so distributed by less than $1.00, rather than being entitled to an adjustment in the Conversion Rate, Purchaser will be entitled to receive upon conversion, in addition to the ADS, the kind and amount of assets, debt securities or rights, warrants or options comprising the distribution, if any, that Purchaser would have received if Purchaser had converted this Note immediately prior to the record date for determining the shareholders entitled to receive the distribution.
 
(h) In addition to those adjustments required by clauses (a)-(g) of this Section 5.4, and to the extent permitted by applicable law and subject to the applicable rules of The New York Stock Exchange and any other securities exchange on which any of the Company’s securities are then listed, the Company from time to time may increase the Conversion Rate by any amount for a period of at least twenty (20) Business Days if the Board of Directors determines that such increase would be in the Company’s best interest, and the Company may (but is not required to) increase the Conversion Rate to avoid or diminish any income tax to holders of the Ordinary Shares or the ADSs or rights to purchase Ordinary Shares or ADSs in connection with a dividend or distribution of Ordinary Shares or ADSs (or rights to acquire Ordinary Shares or ADSs) or similar event.
 
(i) All calculations under this Article V shall be made in good faith by the Company in accordance with this Article V, and shall be made to the nearest cent or to the nearest one-ten thousandth (1/10,000) of an Ordinary Share, as the case may be. No adjustment need be made for rights to purchase Ordinary Shares (directly or indirectly in the form of ADSs) pursuant to a Company plan for reinvestment of dividends or for any issuance of Ordinary Shares (directly or indirectly in the form of ADSs) or convertible or exchangeable securities or, except as provided in this Section 5.4, rights to purchase Ordinary Shares (directly or indirectly in the form of ADSs) or convertible or exchangeable securities.  The Company shall certify to the Purchaser that all calculations are made in compliance with this Article V, and shall show the Purchaser in detail the facts upon which such calculations and adjustments were made.
 
(j) For purposes of this Section 5.4, the number of Ordinary Shares at any time outstanding shall not include Ordinary Shares held in the treasury of the Company but shall include Ordinary Shares issuable in respect of scrip certificates issued in lieu of fractions of Ordinary Shares. The Company will not pay any dividend or make any distribution on Ordinary Shares held in the treasury of the Company.
 
(k) Notwithstanding any of the foregoing clauses in this Section 5.4, the applicable Conversion Rate will not be adjusted pursuant to this Section 5.4 if the Purchaser participates in the transaction that would otherwise give rise to adjustment pursuant to this Section 5.4 on an as-converted basis.
 
 
15

 
 
Section 5.5 Reorganization, Reclassification, Consolidation, Merger or Sale.  Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company’s assets or other transaction, which in each case is effected in such a manner that holders of Ordinary Shares (whether direct or in the form of ADSs) are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Ordinary Shares is referred to herein as an “Organic Change.”  In the event of an Organic Change prior to repayment in full of the Note, Purchaser shall elect, at its option, either (i) to require the Company to repurchase for cash all, but not less than all, of the Note at a price equal to the Accreted Principal Amount (including any accrued and unpaid interest) or (ii) to convert all, but not less than all, of the Note, in each case effective immediately prior to such Organic Change.
 
Section 5.6 Notices.
 
(a) Immediately upon any adjustment of the Conversion Rate, the Company shall send written notice thereof to the holder of this Note, setting forth in reasonable detail and certifying the calculation of such adjustment.
 
(b) The Company shall send written notice to the holder of this Note at least twenty (20) days prior to the date on which the Company closes its books or takes a record (i) with respect to any dividend or distribution upon Ordinary Shares (directly or in the form of ADSs), any subdivision, stock split, reverse stock split or combination, or any tender offer or exchange offer, (ii) with respect to any pro rata subscription offer to holders of Ordinary Shares (whether direct or in the form of ADSs) or (iii) for determining rights to vote with respect to any Organic Change, dissolution or liquidation.
 
(c) The Company shall also give at least twenty (20) days prior written notice to the holder of this Note of the date on which any Organic Change, dissolution or liquidation shall take place.
 
ARTICLE VI
NEGATIVE PLEDGE
 
For so long as the Note is outstanding, the Company will not grant a consensual security interest or pledge its personal property assets to another third-party lender in connection with debt for borrowed money (other than purchase money security interests or capital leases incurred in the ordinary course of business and up to $10 million of secured indebtedness owed to Natixis under the factoring agreement between the Company and Natixis) without the consent of Purchaser (such consent not to be unreasonably withheld, conditioned or delayed, in particular in the case of a security interest or pledge granted or made to a strategic corporate partner or joint venture partner as a component of a financing transaction or other business relationship with a strategic corporate partner or joint venture partner (whether directly or involving an investment fund controlled by the relevant strategic corporate partner or joint venture partner)).
 
ARTICLE VII
AMENDMENT AND WAIVER
 
The provisions of the Note may only be amended with the holder’s consent.
 
 
16

 
 
ARTICLE VIII
CANCELLATION
 
After the entire Accreted Principal Amount (including any accrued and unpaid interest) at any time owed on this Note has been paid in full or this Note has been converted in full to ADSs or other property, this Note shall be surrendered to the Company for cancellation and shall not be reissued.
 
ARTICLE IX
PAYMENTS
 
This Note is payable without relief from valuation or appraisement laws.  All payments to be made to the holder of the Note shall be made in the lawful money of the United States of America in immediately available funds; provided, that the Company shall not have the right to pre-pay outstanding principal of the Note without the consent of the holder.
 
ARTICLE X
PLACE OF PAYMENT
 
Payments of principal and interest shall be delivered to Purchaser at the following address:  Nokomis Capital Master Fund, LP, 2305 Cedar Springs Road, Suite 420, Dallas, TX 75201, or to such other address or to the attention of such other person as specified by prior written notice to the Company.
 
ARTICLE XI
GOVERNING LAW
 
(a) THIS NOTE AND ALL ISSUES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE FRENCH REPUBLIC (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW).
 
(b) The parties agree that the competent courts within the jurisdiction of the Paris Court of Appeal (Cour d’Appel de Paris) shall have exclusive jurisdiction (and are deemed to be a convenient forum for each party) as to resolution of any dispute.
 
 
17

 
 
IN WITNESS WHEREOF, the Company has executed and delivered this Note on April 14, 2015.
 
  SEQUANS COMMUNICATIONS S.A.  
       
       
 
By:
/s/ Georges Karam  
  Name: Georges Karam  
  Title: Chairman & CEO  
 
 
 
[ Signature page to Note]
EX-99.1 4 a51078919ex99_1.htm EXHIBIT 99.1 a51078919ex99_1.htm
Exhibit 99.1
 
Sequans Communications Announces $12 Million Debt Financing
 
PARIS--(BUSINESS WIRE)--April 15, 2015--4G chipmaker Sequans Communications S.A. (NYSE: SQNS) today announced that it has completed the sale of a convertible note in the principal amount of $12 million to a single institutional investor in a private placement transaction. The company intends to use the proceeds for general corporate purposes.
 
"We have achieved an important financing goal," said Georges Karam, Sequans CEO. "Particularly gratifying is the confidence in the company indicated by this transaction with an existing Sequans investor."
 
The convertible note will mature in April 2018 and will bear interest at a rate of 7% per year, paid in kind annually on the anniversary of the issuance of the note. The note will be convertible, at the holder’s option, into the company’s American Depositary Shares (“ADSs”) at a conversion rate of 540.5405 ADSs for each $1,000 principal amount of the note, subject to certain adjustments, which equates to an initial conversion price of $1.85 per ADS.
 
B. Riley & Company acted as advisor for the transaction.
 
This press release includes a summary of the general terms of the transaction. The complete terms of the financing are included in a Form 6-K to be filed by Sequans with the Securities and Exchange Commission on April 15, 2015.
 
The convertible note and underlying shares have not been registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This press release does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale of any securities in any jurisdiction in which such offering sold would be unlawful.
 
 
 

 
 
Forward Looking Statements
 
This press release contains forward-looking statements All statements other than present and historical facts and conditions contained in this release are forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). These statements are only predictions and reflect our current beliefs and expectations with respect to future events and are based on assumptions and subject to risk and uncertainties and subject to change at any time. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Actual events or results may differ materially from those contained in the projections or forward-looking statements. Some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation: (i) the contraction or lack of growth of markets in which we compete and in which our products are sold, including LTE and WiMAX markets, (ii) unexpected increases in our expenses, including manufacturing expenses, (iii) our inability to adjust spending quickly enough to offset any unexpected revenue shortfall, (iv) delays or cancellations in spending by our customers, (v) unexpected average selling price reductions, (vi) the significant fluctuation to which our quarterly revenue and operating results are subject due to cyclicality in the wireless communications industry and transitions to new process technologies, (vii) our inability to anticipate the future market demands and future needs of our customers, (viii) our inability to achieve new design wins or for design wins to result in shipments of our products at levels and in the timeframes we currently expect, (ix) our inability to execute on strategic alliances; and (x) other factors detailed in documents we file from time to time with the Securities and Exchange Commission. Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.
 
About Sequans Communications
 
Sequans Communications S.A. (NYSE: SQNS) is a 4G chipmaker and leading provider of single-mode LTE chipset solutions to wireless device manufacturers worldwide. Founded in 2003, Sequans has developed and delivered six generations of 4G technology and its chips are certified and shipping in 4G networks, both LTE and WiMAX, around the world. Today, Sequans offers two LTE product lines: StreamrichLTE™, optimized for feature-rich mobile computing and home/portable router devices, and StreamliteLTE™, optimized for M2M devices and other connected devices for the Internet of Things. Sequans is based in Paris, France with additional offices in the United States, United Kingdom, Israel, Hong Kong, Singapore, Taiwan, South Korea, and China. Visit Sequans online at www.sequans.com; www.facebook.com/sequans; www.twitter.com/sequans
 
CONTACT:
Sequans Communications S.A.
Media Relations: Kimberly Tassin, +1-425-736-0569, Kimberly@sequans.com
Investor Relations: Claudia Gatlin, +1-212-830-9080, Claudia@sequans.com