1 ENTERPRISE INVESTMENT FUND SLHF.
1.1 The Enterprise Investment Fund slhf. is a limited partnership established and registered in Reykjavík in accordance with Icelandic laws and regulatory instruments. Its address is in Reykjavík, Iceland. The national ID number of the Enterprise Investment Fund slhf. is 651109-0510.
1.2 The General Partner and the shareholders prepare this agreement so as to set provisions on several aspects of their interactions as shareholders in the company and as shareholders in the General Partner.
2 DEFINITIONS AND INTERPRETATION
2.1 Section headings in this document are used solely for reference and have no effect whatsoever on the meaning or interpretation of this agreement.
2.2 In this agreement, the use of the grammatical masculine, feminine, and neuter genders, as well as the grammatical singular and plural, shall be understood to imply the other where required by context.
3.1 The Enterprise Investment Fund slhf. will invest paid-in capital in Icelandic companies that have a sound operational foundation, in all business sectors.
3.2 The role of the Enterprise Investment Fund slhf. (FSÍ) is to participate in and shape the financial and operational revitalisation of the Icelandic economy in the wake of the financial system collapse. The FSÍ intends to invest in promising Icelandic companies in all economic sectors. The aim of the Enterprise Investment Fund slhf. is to build up strong companies with the potential of becoming leaders in their field while generating sound returns for their investors. The Fund is authorised to invest abroad to the extent necessary – for example, due to overseas market penetration by Icelandic companies – not least when the possibility exists of a merger with companies owned by the Enterprise Investment Fund slhf.
3.3 The Enterprise Investment Fund slhf. will also participate in bridge investments and/or supplemental investments so as to promote the streamlining or merger of companies.
4 INVESTMENT STRATEGY
4.1 The Board of Directors of the FSÍ shall formulate the Fund’s investment strategy upon receipt of a statement from the Advisory Board; cf. Article 16.
4.2 The FSÍ’s operations will emphasise compliance with guidelines on sound corporate governance. In deciding on investments in limited liability companies, the Fund will consider the OECD Principles of Corporate Governance, as well as the Guidelines on Corporate Governance issued by the Iceland Chamber of Commerce, the Iceland Stock Exchange (OMX Nordic Exchange in Iceland), and the Confederation of Icelandic Employers (SA). It will also give consideration to the newly issued Guidelines on Governance of Public Entities, published by the Iceland Chamber of Commerce, the Nasdaq OMX Nordic Exchange in Iceland, and the Confederation of Icelandic Employers (SA). Furthermore, it will refer to the Icelandic Federation of Labour’s (ASÍ) rules on socially responsible investment and to set rules on internal operations.
4.3 The FSÍ will actively carry out its ownership duties and will share suggestions and comments on the operation, policy, and governance of the companies in which it invests, both at board meetings and shareholders’ meetings and through direct interactions with the management of the companies concerned.
4.4 The provisions of the Administrative Procedures Act pertaining to eligibility of board members will apply to the treatment of individual matters and to decision-making within the Board of the FSÍ. This implies that, at meetings of the FSÍ Board, members will not participate in discussions or decisions concerning companies in which they have interests at stake. As appropriate, the FSÍ will emphasise using the same policy is followed by the boards of companies in which it invests.
4.5 The FSÍ intends to place strong emphasis on carrying out its tasks as an investor in a responsible manner and basing its activities on important social values and sound governance practice, so as to protect the interests of the Fund as an investor to the maximum extent possible.
4.6 On the basis of this, the FSÍ intends to adopt and publicise a shareholder policy. The core of the shareholder policy will be that the FSÍ is a primary investor that, in addition to achieving excellent returns on its holdings, aims to promote the growth and success of the firms in which it invests. Furthermore, the Fund will refer to the United Nations Principles for Responsible Investment (UNPRI). The Principles, which extend to environmental, social, and corporate governance issues, have been endorsed by several Icelandic pension funds. The FSÍ will also adopt its own general guidelines regarding environmental issues, social responsibility, and human rights.
4.7 Investments will not be restricted to specified economic sectors. It is permissible to invest in other investment funds if their investment policy satisfies the FSÍ’s requirements and can be accommodated within the FSÍ’s investment policy.
4.8 The size of companies in which the Fund invests will be subject to a minimum. The Fund intends to diversify its investment risk as regards economic sectors and other factors.
4.9 There will be no limitations on FSÍ shareholdings in companies. In general, however, the Fund’s holding will be in the 20-55% range, which confers a suitable amount of influence over the management of the firms in question.
4.10 The FSÍ will involve itself in the operation and management of the companies concerned through direct participation in their boards of directors.
4.11 The Enterprise Investment Fund slhf. is authorised to invest in companies together with other parties (joint investors). If the FSÍ decides to invite FSÍ shareholders to engage in joint investments, shareholders shall be offered the opportunity to invest in proportion to their share capital contribution.
5 THE GENERAL PARTNER – FSÍ (ENTERPRISE INVESTMENT FUND) GP EHF.
5.1 The Enterprise Investment Fund slhf.’s general partner will be FSÍ (Enterprise Investment Fund) GP ehf., national ID no. 491109-2110, a private limited liability company established and registered in Reykjavík in accordance with Icelandic laws and rules.
5.2 The owner of FSÍ GP ehf. is the holding company Eignarhaldsfélag lífeyrissjóda ehf. (EL), national ID no. 691298-3299, Saetún 1, Reykjavík. When the Enterprise Investment Fund slhf. has been established, EL’s shares in FSÍ GP ehf. will be sold to shareholders in the Enterprise Investment Fund slhf. in proportion to their holdings in the Fund.
5.3 The Board of Directors of FSÍ GP ehf. shall comprise up to seven members and up to four alternates. The Board takes decisions on behalf of the Enterprise Investment Fund slhf., which is an independent legal entity. FSÍ GP ehf. is responsible for seeking out new investments and conducting due diligence analyses on them; evaluating, monitoring and following up, and administering the disposal of the Enterprise Investment Fund slhf.’s assets, and handling the Fund’s daily operations and management.
6 INVESTMENT PLEDGES
6.1 The Enterprise Investment Fund slhf. shall seek out investment pledges for up to ISK 60,000,000,000.00 – sixty billion Icelandic krónur.
6.2 The Board of FSÍ GP ehf. is authorised to approve investment pledges in excess of this maximum.
7 INVESTMENT IN THE ENTERPRISE INVESTMENT FUND SLHF.
7.1 FSÍ GP ehf. pledges to invest in the Enterprise Investment Fund slhf. for ISK 4 million.
7.2 Other parties pledge to invest in the Enterprise Investment Fund slhf. through share capital increases, as is specified in the subscription registers. If, during the Fund’s period of operation, it proves impossible to find enough investment projects for the Enterprise Investment Fund slhf. to utilise the total share capital pledges, these amounts will be reduced proportionally.
7.3 Each participant’s minimum investment in the Enterprise Investment Fund slhf. is ISK 50,000,000.00, with the exception of FSÍ GP ehf., whose contribution is set at ISK 4,000,000.00. The Board of FSÍ GP ehf. is authorised to grant exemptions from this minimum if it considers such an exemption warranted.
7.4 When the Board has decided to increase share capital, a notice (call) to this effect shall be sent to shareholders at an e-mail address or fax number provided by the shareholders. The notice of a share capital increase shall include the necessary information on shareholders’ rights and responsibilities in connection with the subscription.
7.5 Shareholders agree to exercise their priority right to subscribe for shares and are obliged to subscribe for new shares each time the Board decides to increase share capital. They shall do this by subscribing for the proposed new shares in an amount proportional to their current share capital holdings. Shareholders hereby grant the Board the irrevocable authority to pledge them by subscription in accordance with the subscription register, which includes the maximum investment of individual shareholders.
7.6 It is not possible to pay for new shares with netting of debt or by any means other than in cash. Subscriptions to new shares shall be recorded in the subscription register, which shall be signed by the Board of the Fund.
7.7 In addition, the Board, or those who assume the management of the Fund, shall be authorised to increase its share capital in accordance with an authorisation in the Articles of Association, 6.1. through subscription for new shares. Shareholders are not obliged to participate in share capital increases in excess of the amount they have pledged according to the subscription register.
8 CALL-IN OF CAPITAL
8.1 As the Enterprise Investment Fund slhf. engages in investments, investment pledges will be called in from shareholders on a pro rata basis, with the exception of FSÍ GP ehf. The investment pledges will be until 28. february 2015. Payment shall be remitted no later than 20 days after FSÍ GP ehf. has requested it.
8.2 FSÍ GP ehf. is also authorised to call in investment pledges in order to ensure that the Enterprise Investment Fund slhf. has sufficient cash on hand. Such call-ins, however, may not cause the Fund’s cash to exceed 10% of investment pledges.
9.1 Shareholders are required to contribute capital to the Enterprise Investment Fund slhf. in accordance with their investment pledges when requested to do so by FSÍ GP ehf. If a shareholder does not fulfil this obligation, even though FSÍ GP ehf. has explicitly requested payment to the Enterprise Investment Fund slhf. in accordance with the shareholder’s investment pledge and has verifiably allowed the shareholder one month to comply with the request, the shareholder’s holding in previous investments will be reduced by 50% and the holding in question shall revert to the Enterprise Investment Fund slhf., and the shareholder shall thereafter lose the right to capital gains on the investments concerned. This does not exempt the shareholder from payment of its portion of the Enterprise Investment Fund slhf. administration fee. In the event of non-payment, FSÍ GP ehf. is authorised to invite other investors to utilise the relinquished investment pledge.
10 OTHER INVESTORS IN THE ENTERPRISE INVESTMENT FUND SLHF.
10.1 Parties other than the FSÍ pension funds may participate in the investment if authorised to do so by FSÍ GP ehf. Institutional investors other than pension funds will be permitted to invest in the Enterprise Investment Fund slhf. at a later time, provided that they fulfil all of the requirements that it is appropriate to make of institutional investors. The total holdings of other institutional investors may never exceed 49% of FSÍ slhf. share capital, however.
11 PERIOD OF VALIDITY
11.1 The Enterprise Investment Fund slhf. shall operate until 28. february 2019. The Board of FSÍ GP ehf. is authorised, however, to extend the Fund’s period of operation twice, for one year at a time. The maximum period of operation is therefore until 28. februar 2021.
12 INVESTMENT PERIOD
12.1 It is assumed that new investments will be concluded within three years from the first closure. The first closure is considered to occur on the day that subscriptions or binding investment pledges have been given by shareholders. The general partner shall specify the date of the first closure. Additional investments may be added until the end of the Enterprise Investment Fund’s period of operation. Investment pledges are binding throughout the Fund’s entire period of operation.
13.1 The Board of FSÍ GP ehf. may close the Enterprise Investment Fund slhf. for further investment by new shareholders when it considers such closure warranted (first closure). FSÍ GP ehf. aims to have the first closure as soon as possible. After the first closure, it may be that the Fund will be opened again for investments by new shareholders. This is only permissible, however, within one year after the first closure. New shareholders gaining access to the Enterprise Investment Fund slhf. after the first closure shall pay, proportionally, the amount charged to other shareholders since the first closure, including the FSÍ GP ehf. administration fee, with interest equal to the Central Bank of Iceland policy interest rate, with plus a premium decided by the Board of FSÍ GP ehf., which shall be calculated as of the date of the first closure.
14 ADDITIONAL INVESTMENTS
14.1 After the investment period is over, the Enterprise Investment Fund slhf. is authorised to undertake further investments if such investments are conducive to protecting or increasing the value of the Fund’s previous investments. However, the amount of such investments may not exceed the amount of the investment pledges that have not been called in.
15 RESTRICTIONS ON INVESTMENT SIZE
15.1 No single investment may constitute more than 15% of the Enterprise Investment Fund slhf.’s total investment pledges unless it receives special approval from the Advisory Board.
16 ADVISORY BOARD
16.1 The Board of the Enterprise Investment Fund slhf. appoints a eighteen-member Advisory Board, upon receipt of nominations from shareholders. It is prohibited to appoint Board members or alternate Board members to the Advisory Board. The Advisory Board is a consultative body that gives advice on the investment strategy set by the Board of the Fund. It discusses issues related to the interpretation of the agreement, as well as issues that could result in conflicts of interests. The Advisory Board does not discuss individual investments. Furthermore, FSÍ GP ehf. may request that the Advisory Board discuss other matters pertinent to the Enterprise Investment Fund slhf.
16.2 The Advisory Board convenes upon request by FSÍ GP ehf.; however, it shall also convene if requested by 1/5 of Advisory Board members or by shareholders representing 1/5 of Enterprise Investment Fund slhf. investment pledges, or if a shareholder requests that the Advisory Board address a specified issue regarding a conflict of interests or the interpretation of the agreement.
17 LOANS AND GUARANTEES
17.1 The Enterprise Investment Fund slhf. may take a bridge loan, pursuant to a decision by the Board of FSÍ GP ehf., in order to cover its financial requirement if it should need to initiate an investment before capital is received in accordance with investment pledges. However, the Enterprise Investment Fund slhf.’s total debt and/or guarantees may not exceed 10% of total investment pledges at any given time.
17.2 The Enterprise Investment Fund slhf. may also act as a guarantor or provide loan facilities as follows:
- to companies in the Enterprise Investment Fund slhf. portfolio, or to legal entities connected with the development of those companies;
- in order to defray the cost of operating the Enterprise Investment Fund slhf.
18.1 The net profit (sales proceeds less direct sales expenses) from the sale of Enterprise Investment Fund slhf. assets, dividend payments, and/or investment income shall be paid to shareholders pro rata, so that shareholders first receive the principal of all investments, plus a premium for the profit. The principal is paid in the form of a share capital reduction, and the premium is paid as the shareholder’s share in the profit of the Enterprise Investment Fund slhf. Disbursements shall take place as soon as possible once the profit on specific assets has been determined and payments have been received.
18.2 Disbursements shall be in the form of cash or listed securities except upon the winding-up of the Enterprise Investment Fund slhf., in which instance they may be in the form of unlisted securities. In that case, an impartial assessor shall be engaged to appraise their value.
19 TRANSFER OF SHARES AND RECALL
19.1 A shareholder may sell, hypothecate, or transfer his share; cf. Article 10.1.
19.2 Upon transfer, the party transferring the share pledges to continue as a party to this agreement and to guarantee that the transferee honours his obligations according to the provisions of the agreement, cf. Article 8.1, without penalty to other shareholders in the event that the transferee does not honour those obligations. However, the Board of FSÍ GP ehf., the general partner of the Enterprise Investment Fund slhf., may exempt the transferring party from guaranteeing that the transferee honours his obligations upon transfer.
19.3 All attempts to transfer that are not in accordance with this agreement shall be invalidated and rendered void. The company shall not validate any transfer that has taken place in contravention of the provisions of this Article or any other explicit provision of this agreement, and it shall not allow any changes to its shareholder register appear in its books following such attempts at transfer.
20 ADMINISTRATION FEE
20.1 The Enterprise Investment Fund slhf. shall reimburse FSÍ GP ehf. for cost outlays related to the operation of the Fund.
20.2 An administration fee is paid out of the Enterprise Investment Fund slhf.’s cash holdings. If necessary, FSÍ GP ehf. may demand payment of investment pledges for payment of administration fees.
21 PAYMENT FOR FSÍ GP EHF.’S SERVICES
21.1 FSÍ GP ehf. may receive payment from the companies in which the Fund invests; for example, remuneration for board membership. FSÍ GP ehf. is authorised to use such payments to defray expenses related to the administration and operation of the Enterprise Investment Fund slhf.
22 INITIAL EXPENSES
22.1 The Enterprise Investment Fund slhf. shall bear all expenses relating to the Fund’s establishment, such as legal fees, public levies, payments to intermediaries during the acquisition of investment pledges, and other expenses that can be considered a normal part of the establishment of the company.
23 OTHER EXPENSES
23.1 The Enterprise Investment Fund slhf. will defray all expenses relating to the administration and operation of the Enterprise Investment Fund slhf. and FSÍ GP ehf., such as employee salaries, leasing of premises, and general administrative expenses. The Enterprise Investment Fund slhf. will defray all direct expenses in connection with the purchase and sale of investments, including sales commissions, public levies, contract preparation costs, legal fees, compensatory damages, and expenses connected with the closure or winding-up of the Enterprise Investment Fund slhf. The Enterprise Investment Fund slhf. will also pay expenses due to non-fulfilment of investment pledges or due to restructuring or changes in the activities of the Enterprise Investment Fund slhf.
24.1 The Enterprise Investment Fund slhf. is not an independent tax entity. Each individual shareholder is responsible for taxes and other public levies related to the activities of the Enterprise Investment Fund slhf., in accordance with the tax liability of each pursuant to tax law.
25 ACCOUNTING REQUIREMENTS
25.1 In its accounts, the Enterprise Investment Fund slhf. shall maintain an account for each individual shareholder. The accounts shall include the investment pledge, incoming and outgoing payments, and accrued expenses for the shareholder in question.
26 DISCLOSURE REQUIREMENTS
26.1 Each year, the Enterprise Investment Fund slhf. will send its shareholders audited annual financial statements. Each quarter, shareholders have access unaudited quarterly financial statements. In addition, the Enterprise Investment Fund slhf. will provide shareholders with all the information that they need in order to fulfil their disclosure requirements vis-à-vis the authorities, including tax returns and information submitted to the Financial Supervisory Authority.
27 LIMITS ON LIABILITY
27.1 FSÍ slhf. shareholders agree that FSÍ GP ehf. and its employees and related parties shall not be held liable to the Enterprise Investment Fund slhf. or its shareholders for actions that it may have taken or not taken, except in cases involving fraud, wilful violation, or gross negligence. Furthermore, FSÍ GP ehf. and its employees shall not be liable for damages due to errors or misdeeds of related parties such as securities brokers or other parties acting as agents of the Enterprise Investment Fund slhf. or FSÍ GP ehf. Shareholders are not liable to the Enterprise Investment Fund slhf. in excess of their investment pledges.
28 APPLICABLE LEGISLATION AND RESOLUTION OF DISPUTES
28.1 Concerning points not covered by this agreement, the provisions of the Act on Public Limited Companies, no. 2/1995, and other applicable Icelandic laws shall apply.
28.2 Shareholders shall attempt to resolve all disputes in good faith. If they cannot resolve their dispute in good faith, the shareholder(s) concerned may refer the dispute to the District Court of Reykjavík.
29 COMPREHENSIVE AGREEMENT
29.1 This agreement contains all of the terms on which the parties have agreed and which concern the substance of the agreement, and it shall supplant all written and oral agreements, attempted negotiations, written correspondence, obligations, and messages between the parties that have occurred prior to or concurrent with this agreement and pertain to this subject.
30.1 All notifications and correspondence in accordance with this agreement shall be sent in writing and delivered to the recipient or sent by registered air mail, by e-mail, or by telefax to the relevant party’s address, his telefax number, or the e-mail address specified in Article 30.2. Unless otherwise provided for in this agreement, each notification or other communication shall be considered valid or delivered (i) on the date of receipt, if delivered by hand; (ii) eight working days after the date it was sent, if sent by air mail as a registered letter; or (iii) one day after the date it was sent, if sent by e-mail or fax, with confirmation of receipt.
30.2 Notifications and communications shall be addressed as follows:
To FSÍ (Enterprise Investment Fund) GP ehf.:
FSÍ (Enterprise Investment Fund) GP ehf.