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`
`Name
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`www.sec.gov/Archives/edgar/data/1085763/000091205702025731/a2082178220-f.htm
`founders‘ warrants
`stock option or
`exercised in 2001
`founders‘ warrant
`
`Position
`
`Philippe Faurie
`
`CEO, Arguin Communications
`
`Christophe Seveau
`
`Director of Engineering, Wavecom
`Asia-Pacific Ltd.
`
`Philippe Calvez
`
`Michelle Célie
`
`Director of UMTS Program,
`Wavecom S.A.
`
`Vice President, Software, Arguin
`Communications
`
`Antoine Bassompierre
`
`Research and Development Manager,
`Wavecom S.A.
`
`Antoine Dambre
`
`Hervé Gagnard*
`
`Philippe Beché
`
`Philippe Thomasse
`
`Vice President Engineering, Arguin
`Communications
`
`Director of Corporate Development
`and Communications
`Director of Baseband Research &
`
`Development, Wavecom S.A.
`Research and Development Engineer,
`Wavecom S.A.
`
`Philippe Guillemette*
`
`Director of Research and Development
`
`12A80
`3553
`9500
`2500
`5901
`3591
`5536
`1970
`6900
`
`4569
`1559
`2979
`2967
`3550
`1220
`2968
`1932
`3523
`468
`
`€2.29
`€4.57
`€2.29
`€4.57
`€2.29
`€4.57
`€2.29
`€4.57
`€2.29
`
`€2.29
`€4.57
`€2.29
`€4.57
`€2.29
`€4.57
`€2.29
`€4.57
`€2.29
`€4.57
`
`Included in the group "executive officers and senior employees".
`
`The exercise prices of options and founders’ warrants are based upon the fair market value of the underlying shares on the date
`of the grant. Prior to our initial public offering, the fair market value was determined based upon a number of factors, including the
`price to earnings ratio for comparable publicly traded companies, our business prospects for the particular year and cash
`constraints. Based upon our increased value implied by the initial public offering price of our shares, we recorded a compensation
`charge relating to our stock options and founders‘ warrants granted in September 1998 and in February and April 1999.
`
`Options expire ten years after the grant date. Founders’ warrants, which were issued to our French tax resident employees expire
`after five years, as is required by French law. Any founders’ warrants remaining unexercised at the expiration date automatically
`convert to stock options with a five-year term remaining. Founders’ warrants were issued to French employees to take advantage of
`favorable tax treatment for both employees and Wavecom. These tax benefits are not available for stock options in France. Other
`than the expiration dates, the terms of the founders’ warrants are identical to the stock options.
`
`The following table sets forth information concerning outstanding options, founders’ warrants and warrants at March 31, 2002.
`
`Number of
`shares
`
`Exercise price
`per share
`
`379956
`29534
`414559
`1500
`149900
`15900
`172970
`15900
`38500
`487990
`61900
`594546
`427900
`
`mmmmmmmmmmmmm
`
`2.29
`4.57
`4.57
`4.57
`139.52
`150.00
`103.23
`103.23
`136.62
`69.86
`26.68
`34.66
`41.09
`
`Expiration date
`
`September 20, 2008
`February 8, 2009
`February 24, 2009
`April 26, 2009
`March 29, 2010
`March 14,2005
`June 26,2010
`June 26,2005
`July 23, 2010
`December 19, 2010
`March 13,2011
`June 29,2011
`December 19, 2011
`
`Employees and independent contractors
`
`The number of employees and independent contractors as of the end of each of the past three years is as follows:
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`Independent contractors
`d
`temporafynemployees
`
`Employees
`
`Year ended
`
`December3 1, 2001
`December 31, 2000
`December3l, 1999
`
`422
`225
`132
`
`163
`97
`85
`
`The majority of our employees are located in France, while 42 were located in Asia at December 31, 2001 (2000: 1 1; 1999:
`4) and 51 were located in the United States at December 31, 2001 (2000: 3; 1999: 2).
`
`As of December 31, 2001, of our 585 employees and independent contractors, 47 were engaged in sales and marketing (2000:
`33; 1999: 22), 108 in production, assembly and quality control (2000: 51; 1999: 35), 354 in research and development (2000: 188;
`1999: 130) and 76 in general and administrative services (2000: 52; 1999: 30).
`
`We believe that the level of competency of our personnel and the spirit of team work and cooperation that exists among them
`are our principle resources and this allows us to have a stable environment and to attract the best talent. For this reason, we strive
`for employee retention through different methods, including competitive compensation and option and warrant programs. The
`options and warrants granted to our employees represent potentially 14.4% of our fully-diluted share capital. We believe that we
`have good relations with our employees and their representatives and that, for this reason, we have a low rate of employee turnover
`(5% in 2001 and 6.2% in 2000).
`
`Employment contracts with all of our employees in France are subject to the provisions of the convention collective SYNTEC,
`the collective bargaining agreement applicable to employees in our industry. In addition, as is required by French law, our
`management holds periodic meetings with employee representatives of the Workers Committee (comité d’entreprise).
`
`French employers are subject to a law limiting the workweek to 35 hours. This law is implemented on the basis of two
`employee categories. In this respect, we established an implementation plan with respect to both categories, in 2000, for which we
`received final validation in 2001 by the collective bargaining organization with which we negotiated.
`
`Item 7. Major Shareholders and Related Party Transactions
`
`Major Shareholders
`
`The following table sets forth certain information regarding beneficial ownership of our shares (including ADSs) as for each
`person known by us to own beneficially more than 5% of our outstanding shares (none of whom has voting rights which are
`different from our other shareholders) of June 14, 2002, based on our legal share capital of 14,810,614 shares as of that date. To our
`knowledge, we are not directly or indirectly owned or controlled by any corporation or by any foreign government.
`
`Name of beneficial owner
`
`Michel Alard(l)
`Aram Hékimian(2)
`Delphis
`Lansdowne Pa1tners(3)
`J.P. Morgan(4)
`
`Shares beneficially owned
`
`Number
`
`Percent
`
`2,198,737
`2,332,373
`1,061,962
`752,653
`851,607
`
`14.8
`15 .7
`7.2
`5.1
`5.7
`
`(1)
`
`(2)
`
`Michel Alard's share total includes 42,358 shares owned by a personal investment company owned and controlled jointly
`by Mr Alard and his wife; 234,198 shares held of record by Mr. Alard's wife; 779,790 shares held of record by his son; and
`780,000 shares held of record by his daughter. Mr. Alard has the right to vote 696,000 of the shares held by his daughter
`and 696,000 of the shares held by his son. Mr. Alard disclaims beneficial ownership of the 234,198 shares owned by his
`wife, 84,000 shares owned by his daughter and 83,790 shares owned by his son.
`
`Aram Hékimian's share total includes 184,491 shares held ofrecord by Mr. Hékimian's wife and 1,400,000 shares held by
`his minor children. Mr. Hekimian has the right to vote or sell the shares owned by his minor children. Mr. Hékimian
`disclaims beneficial ownership of all shares owned by his wife.
`
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`(4)
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`
`Number of shares or ADRs held as of January 31, 2002, the date at which Lansdowne Partners declared to Wavecom to have
`crossed the 5% shareholding threshold, as required by our by-laws.
`
`Number of shares or ADRs held as of May 1, 2002, the date at which J.P. Morgan declared to Wavecom to have crossed the
`5% shareholding threshold, as required by our by-laws.
`
`Major changes in ownership
`
`Several of our directors and executive officers sold shares in our initial public offering in June 1999, in our follow-on public
`offering in June 2000 and during the course of 200 1. The following table sets forth the related changes in these holdings as a
`percentage of our outstanding shares:
`
`Name
`
`Michel Alard
`Aram Hékimian
`
`Delphis
`André Jolivet
`
`Distribution of Shareholdings
`
`Percentage at
`January 1,
`1999
`
`27.3
`27.5
`
`13.7
`27.4
`
`Percentage at
`December 31, 1999
`
`Percentage at
`December 31, 2000
`
`Percentage at
`December 31, 2001
`
`19.4
`19.5
`
`10.0
`19.5
`
`16.4
`16.6
`
`8.6
`14.7
`
`16.3
`16.6
`
`9.1
`<5 .0
`
`The approximate number of record holders of our ADSs and shares in the U.S. on June 14, 2002 was 3 registered holders of
`ADSs and no registered holders of shares. Our ADSs held in the U.S. represented approximately 6.2% of our issued and outstanding
`shares as of such date. Our ADSs are issued by The Bank of New York, as depositary. Each ADS evidences one share.
`
`Related Party Transactions
`
`In December 2000, we entered into a consulting agreement with Delphis. Delphis, represented by Marc Fourrier, is a major
`shareholder and member of our board of directors. The agreement calls for Mr. Fourrier to provide consulting services in the areas of
`corporate organization, information systems and general management from time to time, but for a maximum of two days per week.
`Such services are compensated at the rate of €1 ,448 per day. During the year ended December 31, 2001, Delphis was paid €17,303
`(€8,826 in 2000).
`
`In November 2001, we loaned $200,000 to a senior employee. The loan bears a market rate of interest, is repayable in three
`years and is secured by a lien on the employee's residence. As of June 14, 2002, the outstanding principal balance of this loan was
`$200,000.
`
`We were not a party to any other related-party transactions during 2001.
`
`Item 8. Financial Information
`
`Financial Statements
`
`See Item 18 and the financial statements beginning on page F-1 of this annual report.
`
`Legal Proceedings
`
`We are not currently a party to any material legal proceedings or aware of any threatened or potential material legal
`proceedings.
`
`Dividends
`
`Wavecom did not declare any dividends in 1999, 2000 or in 2001. We intend to retain any future earnings for investment in
`the development and expansion of our business and do not expect to pay any cash dividends on our shares in the foreseeable
`future.
`
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`Item 9. The Offer and Listing
`
`Price Range of Shares and ADSs
`
`Our shares have been listed on the Euronext Nouveau Marché of the Paris Bourse since June 14, 1999 and our ADSS have been
`quoted on the Nasdaq National Market under the symbol "WVCM" since June 9, 1999. The following table sets forth the range of
`high and low closing sale prices of our shares and ADSs for the periods indicated:
`
`Year ended December 31, 2000
`First Quarter
`
`Second Quarter
`
`Third Quarter
`
`Fourth Quarter
`
`Year ended December 31, 2001
`First Quarter
`
`Second Quarter
`
`Per Share
`
`Per ADS
`
`High
`
`Low
`
`High
`
`Low
`
`166.90 €
`
`127.00 €
`
`161.50 €
`
`1%
`
`138.00 €
`
`66.00 $
`
`76.10 $
`
`113.50
`
`$
`
`53.00 $
`
`67.00 €
`
`44.20 €
`
`17.17
`
`16.70
`
`$
`
`$
`
`$
`
`168.87
`
`110.00
`
`149.75
`
`119.50
`
`67.13
`
`36.60
`
`30.00
`
`$
`
`$
`
`$
`
`$
`
`$
`
`$
`
`$
`
`64.50
`
`70.00
`
`104.00
`
`44.00
`
`15.00
`
`15 .25
`
`15.75
`
`Third Quarter
`
`Fourth Quarter
`November 2001
`
`December 2001
`
`Year ending December 31, 2002
`January 2002
`
`February 2002
`March 2002
`
`April 2002
`
`May 2002
`
`June 2002 (through June 24, 2002)
`
`34.00 €
`
`45.06 €
`42.65 €
`
`45.06 €
`
`46.50 €
`
`38.07 €
`37.73
`
`40.20 €
`
`48.28 €
`
`43.70 €
`
`16.06
`
`37.51
`31.75
`
`$
`$
`
`39.00 $
`
`35.60 $
`
`34.00 $
`28.75
`$
`
`27.90 $
`
`37.30 $
`
`37.20 $
`
`39.99
`28.75
`
`35.75
`
`41.56
`
`33.75
`32.89
`
`36.50
`
`44.85
`
`41.65
`
`$
`$
`
`$
`
`$
`
`$
`$
`
`$
`
`$
`
`$
`
`16.96
`39.60
`
`39.99
`
`30.50
`
`29.60
`24.81
`
`24.10
`
`33.76
`
`36.00
`
`On June 24, 2002, the last reported sale price for our ADSs on the Nasdaq National Market was $36.00 per ADS and the last
`reported sale price for our shares on the Nouveau Marché was €37.20 per share.
`
`Item 10. Additional Information
`
`Memorandum and articles of association
`
`General
`
`This section summarizes the material rights of holders of our shares under French law and the material provisions of our by-
`laws or statuts. The description of our share capital is only a summary and does not describe everything that our by-laws contain.
`Copies of our by-laws are publicly available from the registre du commerce et des sociétés in Nanterrc, France, and an English
`translation of our by-laws is attached as exhibit 1 to this annual report. A description of certain limitations affecting shareholders of
`a French company and the material rights of holders of our ADSs may be found in Amendment No. 1 to our registration statement
`on Form F-1, registration number 333-1 1764, dated and filed with the Securities and Exchange Commission on June 6, 2000, under
`the headings "Limitations Affecting Shareholders of a French Company" and "Descriptions of American Depositary Receipts,"
`respectively.
`
`Objects and purposes
`
`Our objects and purposes, as specified in Article 3 of our by-laws, are, in France and abroad: fundamental and applied research;
`and the development of systems and products in the areas of radio-transmission, radio-communication, telecommunications,
`electronics and data processing markets; and, within these sectors: the design, manufacturing and commercialization of
`components, products and software; any provision of services; the registration and exploitation of patterns, patents, trademarks,
`and manufacturing processes; the establishment, organization, and delivery of lectures, seminars, debates, conferences and more
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`€
`€
`€
`€
`€
`€
`€
`€
`€
`€
`€
`€
`€
`€
`€
`€
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`
`generally of any activity relating to training schemes; the publishing of books, newspapers, information bulletins, articles and the
`distribution of any audio-visual aids; the direct or indirect holding of shares within any existing companies or companies to be set
`up, the business purposes of which is linked, related or similar to that of the company; and more generally, any industrial,
`commercial, financial, civil, personal property or real estate operations directly or indirectly linked to the business purposes
`hereabove stated or related or similar to business purposes or likely to facilitate the performance or development thereof.
`
`Directors
`
`For additional information regarding our board of directors, please see "Item 6—Directors, Senior Management and Employees
`—Board of Directors." and "—Compensation of Directors and Officers."
`
`Composition ofshare capital
`
`We have only one class of shares. As of June 24, 2002, this class consisted of 14,810,614 authorized ordinary shares, nominal
`value €l per share, resulting in a share capital of€14,8l0,6l4 in nominal value, all of which shares were outstanding as of such
`date. All of our outstanding shares are fully paid. Each share is entitled to one vote on all matters submitted to our shareholders.
`
`Dividend and liquidation rights
`
`We may make dividend distributions to our shareholders from net income in each fiscal year (after deductions for depreciation
`and reserves), as increased or reduced by any profit or loss carried forward from prior years, and less any contributions to reserves.
`These distributions are also subject to the requirements of French law and our by-laws.
`
`Under French law, we must allocate 5% of our net profits in each fiscal year to a legal reserve fund until the amount in that
`filtld is equal to 10% of the nominal amount of our share capital. The legal reserve is distributable only upon our liquidation.
`
`Upon recommendation of our board of directors, our shareholders may decide to allocate all or a part of any distributable
`profits among special or general reserves, to carry them forward to the next fiscal year as retained earnings, or to allocate them to
`the shareholders as dividends. Shareholders holding a certain percentage (1 .83% of a share capital of€148 million) of our shares
`may require our board of directors to propose the declaration of a dividend at an ordinary general meeting of shareholders. If
`shareholders at this meeting approve the proposal, dividends are declared.
`
`Our by-laws provide that reserves that are available for distribution under French law and our by-laws may be distributed as
`dividends, subject to shareholder approval and other limitations. We may distribute dividends in shares instead of paying cash
`dividends.
`
`If our interim income statement certified by our auditors shows that we have made distributable profits since the end of the
`preceding fiscal year, our board of directors may, subject to French law and regulations, distribute interim dividends without the
`approval of shareholders. An interim dividend may not exceed distributed profits.
`
`Under French law, we must distribute dividends to our shareholders pro rata according to their share holdings. Dividends are
`payable to holders of shares outstanding on the date of the shareholders’ meeting approving the distribution of dividends or, in the
`case of interim dividends, on the date our board of directors meets and approves the distribution of interim dividends. The actual
`dividend payment date is decided by our shareholders at an ordinary general meeting, or by our board of directors, if no decision is
`taken by our shareholders. The payment of the dividends must occur within nine months of the end of our fiscal year. Under French
`law, dividends not claimed within five years of the date ofpayment revert to the French State.
`
`In the event that Wavecom is liquidated, our assets remaining after payment of our debts, liquidation expenses and all of our
`other remaining obligations will be distributed first to repay the nominal value of our shares. After these payments have been made,
`any surplus will be distributed pro rata among the holders of shares based on the nominal value of their shareholdings.
`
`Changes in share capital
`
`We may increase our share capital only with approval of our shareholders at an extraordinary general meeting. There are two
`methods to increase share capital: the issuance of additional shares (including the creation of a new class of shares) and the increase
`in the nominal value of existing shares. We may issue additional shares for cash or for assets contributed in kind, upon the
`conversion of debt securities that we may have issued, by capitalization of our reserves or, subject to certain conditions, in
`satisfaction of our indebtedness. Although currently we have only one class of shares, French law pennits different classes of shares
`to have different liquidation, voting and dividend rights.
`
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`We may decrease our share capital only with the approval of our shareholders at an extraordinary general meeting. There are
`two methods to reduce our share capital: the reduction of the number of shares outstanding and the decrease in the nominal value
`of our shares. The conditions under which the share capital may be reduced will vary depending upon whether the reduction is
`attributable to losses. We may reduce the number of outstanding shares either by an exchange of shares or by the repurchase and
`cancellation of our shares. Any decrease must meet the requirements of French company law, which states that all the holders of
`shares in each class of shares must be treated equally unless the affected shareholders otherwise agree.
`
`Attendance and voting at shareholders’ meetings
`
`French companies may hold either ordinary or extraordinary general meetings of shareholders. Ordinary general meetings are
`required for matters that are not specifically reserved by law to the extraordinary general meetings: the election of the members of
`the board of directors, the appointment of statutory auditors, the approval of a management report prepared by the board of
`directors, the approval of the annual accounts, the declaration of dividends and the issuance of bonds. Extraordinary general
`meetings are required for approval of amendments to our by-laws, modification of shareholders’ rights, mergers, increases or
`decreases in share capital (including a waiver of preferential subscription rights), the creation of a new class of shares, the
`authorization of the issuance of investment certificates or securities convertible or exchangeable into shares and for the sale or
`transfer of substantially all of our assets.
`
`Our board of directors is required to convene an annual general meeting of shareholders for approval of the annual accounts.
`This meeting must be held within six months of the end of our fiscal year. However, the president of the tribunal de commerce, the
`French commercial court, may order an extension of this six-month period. We may convene other ordinary and extraordinary
`meetings at any time during the year. Meetings of shareholders may be convened by our board of directors or, if it fails to call a
`meeting, by our statutory auditors or by a court-appointed agent. A shareholder or shareholders holding at least 5% of our share
`capital, a duly authorized association of shareholders holding their shares in registered form for at least two years and holding a
`certain percentage of our voting rights, or the Employee Committee or another interested party under certain circumstances, may
`request that the court appoint an agent. The notice of a meeting must state the agenda for the meeting.
`
`French law requires that a preliminary notice of a listed company's general shareholders‘ meeting be published in the Bulletin
`des Annonces Légales Obligatoires ("BALO") at least 30 days prior to the meeting. The preliminary notice must first be sent to the
`French securities authority, the Commission des Opérations de Bourse ("COB") with an indication of the date it is to be published
`in the BALO. The COB also recommends that such preliminary notice be published in a newspaper of national circulation in
`France. The preliminary notice must include the agenda of the meeting and a draft of the resolutions that will be submitted to a
`shareholders’ vote. Within 10 days ofpublication, one or more shareholders holding a certain percentage (1 .83% of a share capital
`of€l4.8 million) of our share capital, or a duly authorized association of shareholders holding their shares in registered form for at
`least two years and holding a certain percentage of our voting rights (as of today 1.83%) may propose additional resolutions.
`
`Notice of a general shareholders‘ meeting must be sent by mail at least 15 days before the meeting to all holders of registered
`shares who have held their shares for more than one month. However, in the case where quorum was not met and the original
`meeting was adjourned, this time period is reduced to six days. Notice of the meeting must also be published in BALO, after having
`first been sent to the COB. The notice must include the agenda of the meeting and a draft of the resolutions that will be submitted
`to a shareholders‘ vote.
`
`Attendance and the exercise of voting rights at both ordinary and extraordinary general meetings of shareholders are subject to
`certain conditions. Under our by-laws, in order to participate in any general meeting, a holder of registered shares must have the
`shares registered in its name in a shareholder account maintained by or on behalf ofWavecom at least one day prior to the meeting.
`Similarly, a holder of bearer shares must obtain a certificate (certificat d’immobilisation) from the accredited financial intennediary
`(intermédiairefinancier habilité) with whom the holder has deposited its shares. This certificate must indicate the number of bearer
`shares held and evidence the holding of such shares in its account until the date of the meeting. The certificate must be deposited at
`a place specified in the notice of the meeting at least one day before the meeting.
`
`Subject to the above restrictions, all of our shareholders have the right to participate in our general meetings, either in person
`or by proxy. Shareholders may vote, either in person, by proxy or by mail, and their votes are counted in proportion to the number
`of shares they hold. A shareholder may grant a proxy to his or her spouse, to another shareholder or, if the shareholder is a
`corporation, to a legal representative. A shareholder may grant a proxy to us by returning a blank proxy form. In this last case, the
`chairman of the shareholders’ meeting will vote the shares in favor of all resolutions proposed by the board of directors and against
`all others. Proxy fonns will be sent to shareholders upon request. In order to be counted, proxies must be received prior to the
`general shareholders‘ meeting at our registered office or at another address indicated in the notice convening the meeting. We must
`send our shareholders fonns to vote by mail and these forms must be received by us at least three days prior to the date of a meeting
`in order to be valid. Under French law, our shares held by entities controlled directly or indirectly by Wavecom are not entitled to
`voting rights. There is no requirement that a shareholder have a iggiimum number of shares in order to be able to attend or beM2M
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`represented at an extraordinary general meeting.
`
`Under French law, a quorum requires the presence, in person or by proxy (including those voting by mail) of shareholders
`having at least (1) 25% of the shares entitled to vote in the case of an ordinary general shareholders’ meeting or at an extraordinary
`general meeting where shareholders are voting on a capital increase by capitalization of reserves, profits or share premium, or
`(2) 33.3% of the shares entitled to vote in the case of any other extraordinary general shareholders’ meeting. If a quorum is not
`present at any meeting, the meeting is adjourned. There is no quorum requirement when an ordinary general meeting is reconvened,
`but the reconvened meeting may consider only questions which were on the agenda of the adjoumed meeting. When an
`extraordinary general meeting is reconvened, the quorum required is 25 % of the shares entitled to vote, except where the
`reconvened meeting is considering capital increases through capitalization of reserves, profits or share premium. For these matters,
`no quorum is required at the reconvened meeting. If a quorum is not present at a reconvened meeting requiring a quorum, then the
`meeting may be adjourned for a maximum of two months.
`
`At an ordinary general meeting, approval of any resolution requires the affirmative vote of a simple majority of the votes of the
`shareholders present or represented by proxy. The approval of any resolution at an extraordinary general meeting requires the
`affinnative vote of a two-thirds majority of the votes cast, except that any resolution to approve a capital increase by capitalization
`of reserves only requires the affirmative vote of a simple majority of the votes cast. Notwithstanding these rules, a unanimous vote
`is required to increase shareholders’ liabilities. Abstention from voting by those present or represented by proxy is counted as a
`vote against any resolution submitted to a vote.
`
`In addition to the right to obtain certain infonnation regarding Wavecom, any shareholder may, during the two-week period
`preceding a shareholders‘ meeting, submit written questions relating to the agenda for the meeting to our board of directors. Our
`board of directors is required to respond to these questions during the meeting.
`
`As set forth in our by-laws, shareholders‘ meetings are held at our registered office or at any other location specified in the
`written notice.
`
`Preferential subscription rights
`
`Holders of our shares have preferential rights to subscribe on a pro rata basis for an additional number of our shares or any of
`our other equity securities or other securities giving a right, directly or indirectly, to equity securities issued by us for cash.
`Shareholders may waive their preferential rights, either individually or, under certain circumstances, as a group at an extraordinary
`general meeting. During the subscription period relating to a particular offering of shares, shareholders may transfer their
`preferential subscription rights that they have not previously waived. To the extent permitted under French law, we intend to seek
`shareholder approval to waive preferential subscription rights at each annual general meeting of shareholders.
`
`Form and holding of shares
`
`Form ofshares
`
`Our by-laws provide that our shares may be held in either registered or bearer form at the option of the shareholder. Shares
`traded on the Nouveau Marché are cleared and settled through Sicovam, a continuous net settlement system. We may use the
`procedure known as titres au porteur identifiable according to which Sicovam will, upon our request, disclose to us the name,
`nationality, address and number of shares held by each shareholder. This information may be requested only by us and may not be
`communicated to third parties.
`
`Holding ofshares
`
`In accordance with French law concerning the "dematerialization" of securities, the ownership rights of shareholders are
`represented by book entries instead of share certificates. Registered shares are entered into an account maintained by us or by a
`representative that we have nominated, while shares in bearer fonn must be held in an account maintained by an accredited
`financial intemiediary on the shareholder's behalf.
`
`With respect to all shares in registered form we maintain a share account with Sicovam which is administered by BNP Paribas
`Group, acting through Paribas. In addition, we maintain accounts in the name of each shareholder either directly or, at a
`shareholder's request, through such shareholders accredited intennediary, in separate accounts maintained by BNP Paribas Group,
`acting through Paribas on our behalf. Each shareholders account shows the name and number of shares held and, in the case of
`shares registered through an accredited financial intermediary, the fact that they are so held. BNP Paribas Group, acting through
`Paribas, as a matter of course, issues confirmations to each registered shareholder as to shares registered in a shareholder's account,
`but these confinnations do not constitute documents of title.
`
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`Shares held in bearer form are held and registered on the shareholder's behalf in an account maintained by an accredited
`financial intennediary and are credited to an account at Sicovam maintained by the intermediary. Each accredited financial
`intermediary maintains a record of shares held through it and will issue certificates of inscription for the shares that it holds.
`Transfers of shares held in bearer fonn only may be made through accredited financial intennediaries and Sicovam.
`
`Repurchase and redemption of shares
`
`Under French law, we may not acquire our shares except:
`
`(1)
`
`(2)
`
`(3)
`
`to reduce our share capital under certain circumstances with the approval of our shareholders at an extraordinary
`general meeting,
`
`to provide shares for distribution to employees under a profit- sharing or share option plan, and
`
`for a specific purpose (including stabilization of quotations on a French regulated stock exchange) approved by our
`shareholders at an ordinary general meeting, such shareholders‘ authorization being given for a period to be decided
`by the shareholders‘ resolution and which may not exceed 18 months.
`
`The amounts repurchased under (2) and (3) may not, in either case, result in us holding more than 10% of our issued shares. In
`the event that such repurchases result in us holding more than 10% of our issued shares, we are required to transfer any shares in
`excess of the 10% threshold within one year. French law requires that we cancel any shares in excess of this 10% limit that have not
`been transferred within the one-year period. Shares repurchased under (3) may be cancelled by an extraordinary general
`shareholders’ meeting, although no more than 10% of our registered capital may be cancelled in any 24-month period.
`
`With respect to (3) above, at a general meeting of shareholders held on April 29, 1999, our s