TRANSACTION MEMORANDUM

PUBLISHED IN CONJUNCTION WITH THE CAPITAL INCREASE AND SHARE ISSUE FOR CASH CONSIDERATION OF 618,467 NEW SHARES THAT MAY BE INCREASED TO 817,922 NEW SHARES WITH NO PREFERENTIAL SUBSCRIPTION RIGHTS OR PREFERENTIAL SUBSCRIPTION PERIOD

A statutory notice will be published in the Bulletin des annonces légales obligatoires on May 15, 2006.

Pursuant to Articles L. 412-1 and L. 621-8 of the French Monetary and Financial Code, the French Autorité des Marchés Financiers (French financial market authority – “AMF”) registered this prospectus under visa no. 06-135 dated May 10, 2006, in accordance with Articles 211-1 to 216-1 of its general regulations.

This prospectus has been prepared by the issuer under the responsibility of the signatories. Pursuant to Article L. 621-8-1 of the French Monetary and Financial Code, the AMF granted this visa after verifying “if the document is complete and comprehensible, and if the information it contains is consistent”. It does not imply either an approval of the benefits of the transaction or authentication of the accounting and financial data presented.

This prospectus consists of:

• The Reference Document of the Company registered by the AMF on April 28, 2006 under number R.06-0044, (the “Reference Document” established in accordance with the provisions of appendix I of EC regulation n° 809/2004 of April 29, 2004.

• The present transaction memorandum, established in accordance with the provisions of appendix III of EC regulation n° 809/2004 of April 29, 2004, and

• The summary prospectus (contained in the present transaction memorandum)

Copies of this prospectus are available free of charge at the registered office of ARCHOS at 12 rue Ampère – ZI Igny – 91430 Igny and from BNP Paribas. The prospectus can be viewed on the websites of ARCHOS (www.archos.com) and the AMF (www.amf-france.org).

Lead underwriter and book runner

PAGES

SUMMARY PROSPECTUS ...... 1

1. Key points of the offering and forecast timetable ...... 1 2. Dilution ...... 4 3. Background information concerning ARCHOS and its financial statements...... 5 4. Forecasts and trends...... 6 5. Summary of the principal risk factors...... 6 6. Members and organization of the administrative, management, supervisory and executive bodies ...... 7 7. Major shareholders...... 7 8. Related-party Transactions...... 9 9. Employees...... 9 10. Additional information...... 9

1. PERSON RESPONSIBLE FOR THE PROSPECTUS ...... 10 1.1 Person responsible for the prospectus...... 10 1.2 Declaration of the person responsible for the prospectus...... 10 1.3 Person responsible for the financial information...... 10 2. MARKET RISKS THAT COULD HAVE A MATERIAL IMPACT ON THE INVESTMENT SECURITIES OFFERED...... 10 3. UNDERLYING NFORMATION ...... 11 3.1 Net working capital...... 11 3.2 Shareholders’ equity and net debt under IFRS...... 12 3.3 Interest of natural and legal persons participating in the offering ...... 12 3.4 Reasons for the offering and use of the proceeds...... 12 4. INFORMATION ABOUT SHARES TO BE ADMITTED FOR TRADING ON EUROLIST BY EURONEXTTM ...... 13 4.1 Nature, category and dividend entitlement date of the transferable securities offered and admitted for trading ...... 13 4.2 Applicable law and competent courts...... 13 4.3 Nature of shares and account registration procedures...... 13 4.4 Currency of issue ...... 14 4.5 Rights attached to the new shares...... 14 4.6 Authorisations...... 15 4.6.1 General Meeting authorising the issue...... 15 4.6.2 Decisions of the board of directors and the Chairman of the board and Managing Director of the Company ...... 17 4.7 Date scheduled for the issue of new shares ...... 17 4.8 Restrictions on free trading in new shares ...... 17 4.9 French regulations covering public offers...... 18 4.9.1 Obligatory offer to purchase ...... 18 4.9.2 Price guarantee...... 18

i 4.9.3 Public buy-back offer and obligatory repurchase...... 18 4.9.4 Squeeze-out ...... 18 4.10 Takeover bids launched by third parties on the equity of the issuer during the last financial year or the current one...... 18 4.11 Tax status of the shares ...... 18 4.11.1 French tax residents...... 19 4.11.2 Non-resident tax status ...... 22 5. TERMS AND CONDITIONS OF THE OFFERING ...... 23 5.1 Offering terms and conditions, statistics, estimated timetable and subscription application procedures...... 23 5.1.1 Terms and conditions of the offering ...... 23 5.1.2 Amount of the issue ...... 23 5.1.3 Subscription period and procedure...... 23 5.1.4 Forecast timetable...... 24 5.1.5 Revocation/Suspension of the offering ...... 25 5.1.6 Reducing subscriptions ...... 25 5.1.7 Subscription minimum and/or maximum ...... 25 5.1.8 Revoking subscription orders ...... 25 5.1.9 Payment of funds and terms for issuing the shares...... 25 5.1.10 Terms and publication of the results of the offering ...... 26 5.1.11 Exercise procedure and negotiability of subscription rights ...... 26 5.2 Securities distribution and allocation scheme...... 26 5.2.1 Categories of potential investors – Countries in which the offering will be open – Restrictions applicable to the offering ...... 26 5.2.2 Intent to subscribe by the Company's principal shareholders or by the members of its administrative, management or supervisory bodies ...... 28 5.2.3 Preliminary allocation Information...... 28 5.2.4 Notice to subscribers...... 28 5.2.5 Extension Facility and over-allocation option ...... 29 5.3 Setting the subscription price ...... 29 5.3.1 Method used for setting the price ...... 29 5.3.2 Price publication procedure...... 30 5.3.3 Restriction on or elimination of the pre-emptive right...... 30 5.3.4 Price disparity ...... 30 5.4 Placement and guarantee ...... 30 5.4.1 Coordinates of the Lead Underwriter and Book runner ...... 30 5.4.2 Coordinates of the intermediaries in charge of financial services and depositaries in each country concerned ...... 30 5.4.3 Guarantee...... 30 5.4.4 Effective date of the underwriting contract ...... 31 6. ADMISSION FOR TRADING AND TRADING PROCEDURES...... 31 6.1 Admission for trading ...... 31

ii 6.2 Listing markets...... 31 6.3 Simultaneous issue of ARCHOS shares ...... 31 6.4 Liquidity contract...... 32 6.5 Stabilisation...... 32 7. HOLDERS OF SECURITIES WISHING TO SELL THEM AND DISPOSAL RESTRICTION AGREEMENTS...... 32 7.1 Persons or entities intending to sell the Company's equity shares...... 32 7.2 Agreement on issue and disposal restrictions...... 32 8. EXPENSES RELATED TO THE OFFERING...... 33 9. DILUTION...... 33 9.1 Dilution amount and percentage immediately resulting from the offering ...... 33 9.2 Effect of the issue on the position of the shareholder base...... 34 10. OTHER INFORMATION...... 35 10.1 Adviser with a link to the offering ...... 35 10.2 Persons responsible for auditing the accounts...... 35 10.2.1 Statutory auditors...... 35 10.2.2 Alternate auditors...... 35 10.3 Expert's report...... 35 10.4 Information contained in the prospectus coming from a third party...... 35 10.5 Updating of information concerning the Company...... 36 10.5.1 Free translation of Auditors' report on the estimated items appearing in Chapter 13 of the Company's Reference Document registered with the AMF (Autorité des marchés financiers) on April 28, 2006, under number R.06-0044 ...... 36 10.5.2 Conversion of 50% of the convertible bonds held by EchoStar completed on April 14, 2006 37

iii iv SUMMARY PROSPECTUS

Warning to the reader

This summary should be read as an introduction to the prospectus. Any decision to invest in the financial instruments covered by the transaction should be based on a complete review of the prospectus. If legal action regarding the information contained in the prospectus is filed with the courts, depending on the national legislation of the member states of the European Union or that of the parties to the European Economic Area Agreement, the investor plaintiff may have to incur costs of translation of the prospectus prior to commencement of the court proceedings. Persons who prepared the summary, including its translation if applicable,, and who applied for its authorization by notification to the AMF as specified under Article 212-42 of the AMF’s general regulations, can only be held liable if the contents of the summary are misleading, inaccurate or contradictory in relation to the other parts of the prospectus.

For purposes of this summary, unless otherwise stated, the company ARCHOS SA is referred to as “Company” or “ARCHOS”. The “Group” relates to ARCHOS and its subsidiaries.

1. Key points of the offering and forecast timetable

Number of new shares issued Issue of 618,467 new shares, each with a par value of €0.50, amounting to a capital increase at par value of €309,233.50.

Objective of the issue To enable the Company to strengthen its shareholders’ equity, meet its working capital requirements and foster a pro-active research and development policy.

Extension Facility Depending on the volume of demand, the number of shares initially issued may be increased by 92,770 shares (the “Extension Facility”), amounting to some 15% of the initial number, thereby increasing the par value of the initial capital increase to €355,618.50. This decision will be taken by May 15, 2006.

Over-Allocation Option In order to provide for potential over-allocations, the Company will grant BNP Paribas an Over-Allocation Option which, if exercised in full, will result in the Company increasing the total par value of the capital increase by 15% thereby increasing the maximum par value of the capital increase to €408,961 representing 817,922 new shares, should the Extension Facility be employed. This option may be exercised, in whole or in part, on one occasion, by June 14, 2006 at the latest.

Subscription price The subscription price, which may not be lower than €35, shall be determined by the Chairman and Chief Executive Officer of the Company between May 11, 2006 and May 15, 2006 following completion of the order book.

Pursuant to Article L. 225-136 of the French Commercial Code and Article 155-5 of Decree no. 67-236 dated March 23, 1967, the subscription price shall be at least equal to the weighted average price of ARCHOS shares on the Eurolist market of EuronextTM during the three final stock market sessions preceding the opening of the order book, less a discount of 5%, amounting to €42.18 and will not exceed €48.50. In any case, the subscription price shall not be less than €42.18 and not more than €48.50.

Percentage of capital and voting The 618,467 new shares, excluding exercise of the rights represented by the new Extension Facility and/or the Over-Allocation Option, will shares account for 7.86% of ARCHOS’ capital stock and voting rights at this date. Should the Extension Facility and the Over-Allocation Option be exercised in full, the 817,922 new shares will account for 10.40% of ARCHOS’ capital stock and voting rights.

Gross proceeds and net proceeds Based on a minimum indicative price of €42.18 per new of the issue share, the gross proceeds of the issue, excluding exercise of the Extension Facility and the Over- Allocation Option, will amount to €26,086,938.06, including issue premium. If applicable, this amount may be increased to €34,499,949.96 in the event that the Extension Facility and the Over-Allocation Option are exercised in full.

The estimated net proceeds of the issue, excluding exercise of the Extension Facility and the Over- Allocation Option, will amount to around €24,585,000. If applicable, this amount may be increased to around €32,600,000 in the event that the Extension Facility and the Over-Allocation Option are exercised in full.

Preferential subscription rights and The issue will exclude preferential subscription rights preferential subscription period and any preferential subscription period for shareholders of the Company.

Placements - as a private placement to institutional investors in France and abroad, excluding certain countries notably USA, Canada and Japan; and - offered to the general public in France, individuals and/or legal entities.

Allocation procedure In consultation with the Company, BNP Paribas will be responsible for allocating the issued shares. The subscription applications from the public will be allocated shares such that any clear imbalance suffered by individual investors, between allocating shares to their subscription applications and allocating shares to subscription applications from institutional investors. The share allocation ratio for the public shall be mentioned in the admission notice to the share listing published by Euronext Paris S.A. on May 17, 2006 and in a press release from the Company. If subscriptions do not meet the volume of the entire issue, the board of directors may employ one or more of the following facilities: limit the issue to the amount subscribed provided this is at least three-fourths of the issue originally decided, to freely share out all or part of the unsubscribed securities, or to offer all or part of them to the public Underwriting The subscription of all new shares offered in conjunction with the offering will be underwritten by BNP Paribas in accordance with conditions established by an

2 underwriting agreement that will be signed with the Company as of the date of setting the final subscription price, which will occur between May 11, 2006 and May 15, 2006. This underwriting agreement does not constitute a completion guarantee as defined by Article L. 225-145 of the French Commercial Code.

The underwriting agreement may be terminated by BNP Paribas in certain circumstances until the point of settlement-delivery of the share issue.

Commitments of the Company The Company will undertake to BNP Paribas, that for a period of 120 calendar days with effect from the date of signing the underwriting guarantee, neither itself nor its subsidiaries will carry out any issue, offer or transfer of shares or investment securities giving direct or indirect access to ARCHOS shares subject to the usual exceptions.

Commitments of the principal Henri Crohas and EchoStar Communications shareholders Corporation (« EchoStar ») undertake to BNP Paribas, and subject to the usual exceptions, not to offer, transfer or sell shares of the Company or securities giving access to the Company’s capital until they have held said shares for a period of 120 calendar days with effect from the date of signing the underwriting guarantee, with the exception of transfers (i) having obtained the prior written agreement of BNP Paribas or (ii) traded off market to one or more investors who must undertake towards BNP Paribas to retain the shares purchased for the remaining period of the undertaking to hold the shares.

Subscription intention of the Henri Crohas and EchoStar will not subscribe to this principal shareholders share issue. The Company is not aware of the subscription intentions of other shareholders, including those holding over 5% of the equity.

Dividend entitlement date From January 1, 2006 Listing Eurolist by Euronext™ Compartment C (ISIN code of the shares: FR0000182479)

Forecast timetable

April 19, 2006 Board of directors’ decision on the principle to issue the new shares.

May 10, 2006 AMF visa for the prospectus including a price range.

May 11, 2006 before market opens Press release stating the principal features of the issue.

May 11, 2006 Beginning of the subscription period for the public and the order book for institutional investors.

From May 11, 2006 until May 15, 2006 End of the order book for institutional investors. at 5pm Potential exercise of the Extension Facility.

Decision of the Chairman and Chief Executive Officer establishing the subscription price.

3 Signature of the underwriting agreement.

Press release announcing the subscription price.

May 12, 2006 Publication in the press of the summary prospectus and subscription price (if the latter has been established)

May 15, 2006 Publication of the BALO notice.

May 15, 2006, at 5pm End of the subscription period for the public.

May 17, 2006 Publication of the certificate from Euronext Paris S.A. regarding listing of the new shares stating the subscription price and the final amount of the capital increase.

May 19, 2006 Issue of the new shares (excluding exercise of the Over- Allocation Option).

- Settlement-delivery.

Admission of the new shares for trading.

June 14, 2006 Final deadline for exercise of the Over-Allocation Option.

2. Dilution

Impact of the issue on the proportion of shareholders’ equity based on consolidated shareholders’ equity, Group share as of December 31, 2005 of €18,347 billion and on the number of shares making up the capital stock at the same date of 6,758,169 shares:

En euros Equity proportion of one share Basis post Diluted basis Undiluted basis conversion (1) (2) Prior to issue of new shares 2.71 2.65 2.64 After issue of 618,467 new shares 5.82 5.36 5.16 After issue of 618,467 new shares and after exercise of the Extension Facility 6.25 5.74 5.52 After issue of 618,467 new shares and après exercise of the Extension Facility and the Over-Allocation Option 6.72 6.16 5.91 (1) After taking into account capital raised and shares following the conversion of 50% of the convertible bonds into stock on April 14, 2006 (2) After conversion of the remaining 25% of the convertible bonds into stock and after exercise of stock- options

4 3. Background information concerning ARCHOS and its financial statements

History and development

Founded in 1988 by Henri Crohas, the Company initially developed and sold multimedia terminals connected to a Vidéotex server via the Minitel network. In 1994, the Company moved into miniature peripherals for laptop computers (PCMCIA cards, CD-ROM readers, etc.).

After 1999, the Company refocused its sales strategy and developed sales under its own brand. Its Jukebox 6000 launched the mass market for MP3 pocket players with hard disk. In 2002, ARCHOS turned to the digital video market by launching Jukebox Multimédia, the first video pocket player and a forerunner in the business, capable of storing, recording and reading video in MPEG4 format, together with digital photos and MP3 music.

2005 reinforced this positioning with increasingly innovative products, such as the Gmini XS 100, the AV 700, the Gmini XS 202, the AV 500, the Gmini 500, etc.

In March 2006, the Company launched more innovative products: the AV 700 TV, the first personal stereo unit receiving DTT and capable of making digital quality recordings, and the ARCHOS 104, an MP3 unit with a color screen.

Financial statements

Selected financial information

Year ended Year ended Year ended Year ended thousands of euros 12/31/05 12/31/04 12/31/04 12/31/03 IFRS IFRS French GAAP French GAAP

Revenues 103,134 58,325 59,796 54,244 Gross margin 26,884 12,843 13,997 10,695 Operating expenses 23,192 20,161 19,381 18,388 Operating income 3,692 -7,318 -5,384 -7,693 Income tax -1,050 2,698 2,069 2,981 Net income 606 -4,508 -3,203 -4,993

Shareholders’ equity and net debt under IFRS as of March 31, 2006 in accordance with the recommendations of the CESR (CESR 127)

Unaudited figures as of March 31, 2006:

€thousands Mar 31, 06 IFRS Current liabilities 3,220 Guaranteed liabilities 155 Secured liabilities 0 Unsecured and unguaranteed liabilities 3,065 Non current liabilities (excluding current portion) 3,760 Guaranteed liabilities 0 Secured liabilities 0 Unsecured and unguaranteed liabilities 3,760 Shareholders’ equity, Group share 18,347 Capital stock 3,379 Legal reserve 137 Other reserves 14,831

5 Breakdown of net financial debt Mar 31, 06 €thousands IFRS A. Cash 2,348 B. Cash equivalents 159 C. Investments and marketable securities 0 D. Cash and cash equivalents (A)+(B)+(C) 2,507 E. Short-term financial receivables 27,729 F. Short-term bank debt 3,220 G. Short-term portion of medium and long-term debt 0 H. Other short-term borrowings 41,769 I. Short-term financial debt (F)+(G)+(H) 44,990 J. Net short-term debt (I)-(E)-(D) 14,753 K. Bank loans due in more than 1 year 0 L. Bonds issued 3,760 M. Other loans due in more than 1 year 0 N. Net medium and long-term debt (K)+(L)+(M) 3,760 O. Net debt (J)+(N) 18,513

The breakdown of debt was prepared prior to conversion of 50% of the convertible bonds into stock on April 14, 2006. Details of this conversion and for the levels of debt and shareholders’ equity after conversion of the three tranches are stated under paragraph 10.5 of the transaction memorandum.

Net working capital

In view of the proceeds from the share issue and capital increase, ARCHOS believes it holds sufficient net working capital to meet its current liabilities for the following 12 months with effect from the date of this prospectus.

4. Forecasts and trends

ARCHOS posted sales of €29m in the first quarter of 2006, up 73% over the same period of the previous year. Information on trends is covered in detail under paragraph 12 of the Company’s Reference Document.

Forecasts are detailed under paragraph 13 of the Company’s Reference Document.

5. Summary of the principal risk factors

ARCHOS operates in a rapidly changing environment, which leads to some risks. The risks facing the Company include technological, operational and financial risks. The Company is also exposed to other risks that are currently unknown or that it considers being immaterial, which could have a negative impact on its business.

Prior to any investment decision, investors should refer to chapter 4 of the Company’s Reference Document registered by the AMF on April 28, 2006, which lists these risks in detail, and should take account of the investment risks of the shares offered such as price volatility of the Company’s shares, dilution of current shareholders, which are presented under paragraph 2 of the prospectus.

If the risks crystallize, they are liable to have a significant adverse impact on the Company’s business, earnings, financial situation and prospects or on the share price and on the share issue.

6 6. Members and organization of the administrative, management, supervisory and executive bodies

Members of the Board of Directors:

- Henri Crohas - Isabelle Marlier-Crohas - Giuseppe Agnello - Jean Rizet - Jean-Marc Wormser - Michelle Ann Tadros - Markus Wayne Jackson - Steven Bruce Schaver - Thomas Abramovici

Statutory auditors:

- Principal auditors: Price Waterhouse Coopers Audit and Frédéric Bitbol - Secondary auditors: Yves Nicolas and Charles Zenaty

7. Major shareholders

Breakdown of Company shareholders and voting rights based on a TPI dated February 20, 2006 and changes following EchoStar’s conversion of convertible bonds into stock on April 14, 2006 and Henri Crohas’ exercise of his sales option to Spencer Trask of 36,900 shares dated March 10, 2006:

Number of % of Number of Shareholders % of voting rights shares capital voting rights Corporate officers* Henri Crohas 3,191,766 40.59% 3,191,766 40.59% Isabelle Crohas 2,000 0.03% 2,000 0.03% Giuseppe Agnello 6,056 0.08% 6,056 0.08% Jean Rizet 2,176 0.03% 2,176 0.03% Jean-Marc Wormser 96,875 1.23% 96,875 1.23% Michelle Ann Tadros 1 0.00% 1 0.00% Markus Wayne 1 0.00% 1 0.00% Steven Schaver 1 0.00% 1 0.00% Thomas Abramovici** 0 0.00% 0 0.00%

Other shareholders EchoStar 1,659,119 21.10% 1,659,119 21.10% Remote Reward 389,223 4.95% 389,223 4.95% SIS SEGAINTERSETTLE 2.51% 2.51% AG 197,732 197,732 RBC DEXIA INVEST.SCES 1.31% 1.31% BK 102,950 102,950 M.M WARBURG & CO 0.71% 0.71% LUXEMBOURG 55,564 55,564 GEISSWILLER 53,000 0.67% 53,000 0.67% FRANCE FUTUR 50,000 0.64% 50,000 0.64% JP MORGAN CHASE 0.51% 0.51% BANK NA 40,311 40,311 MARIANNE 40,000 0.51% 40,000 0.51% BANK OF NEW YORK 35,720 0.45% 35,720 0.45% HSBC AM SMALL CAP 0.45% 0.45% FRANCE 35,000 35,000 TEBBOUCHE 32,213 0.41% 32,213 0.41% BUGNET 31,425 0.40% 31,425 0.40%

7 DE VIENNE 30,000 0.38% 30,000 0.38% HSBC MICROCAPS 30,000 0.38% 30,000 0.38% HSBC SECURITIES 0.33% 0.33% SERVICES 26,100 26,100 FCP ALEF 22,750 0.29% 22,750 0.29% KBC SECURITIES NON 0.28% 0.28% RESIDENT 22,140 22,140 Other shareholders 1,712,125 21.77% 1,712,125 21.77%

Total 7,864,248 100.00% 7,864,248 100.00%

* Each director must own at least one share of stock. ** Mr. Abramovici has owned one share since April 20, 2006.

On April 26, 2006, EchoStar informed the AMF, that, acting individually, on April 14, 2006 it had increased its interest in the Company’s capital and voting rights in excess of the thresholds of 10%, 15% and 20% and held 1,659,119 ARCHOS shares representing the same number of voting rights, being 21% of ARCHOS’ capital and voting rights.

In addition to this statement, EchoStar made the following declaration of intent on May 2, 2006:

“We declare in respect of the coming twelve months: - that we are currently acting in concert and intend to continue to act in concert with Mr. Henri Crohas; - that we do not intend to increase our equity interest in ARCHOS with the possible exception of converting all or some of the convertible bonds en shares that we hold in ARCHOS; - that we reserve the right to sell all or some of our shares in ARCHOS; and - that we do not intend to request the appointment of an additional representative to the board of directors of ARCHOS”.

Henri Crohas, in conjunction with the partial execution of an undertaking to sell shares pursuant to an agreement with Spencer Trask, stated on April 7, 2006 that he sold the following shares to Spencer Trask on March 10, 2006: - 8,000 ARCHOS shares at a price of €5.59; and - 28,900 ARCHOS shares at a price of €3.59.

As shown in chapter 18.4 of the Company’s Reference Document, the number of shares held by Henri Crohas to date is liable to decrease by 75,400 shares in the event that Spencer Trask decides to exercise his option of total purchase.

These declarations are available on the AMF’s website (www.amf-france.org).

Breakdown of Company shareholders and voting rights on the assumption that EchoStar converts the final tranche of convertible bonds and Henri Crohas exercises all sales options to Spencer Trask:

Shareholders Number of shares Equity % Number of voting rights % of voting rights

Henri Crohas 3,106,366 36.90% 3,106,366 36.90% EchoStar 2,212,159 26.28% 2,212,159 26.28% Sub-total of shareholders acting in concert 5,318,525 63.19% 5,318,525 63.19%

Other shareholders 3,098,763 36.81% 3,098,763 36.81%

Total 8,417,288 100.00% 8,417,288 100.00%

8 8. Related-party Transactions

Type Amount in 2005 Co-contracting party

USD 120,000 ARCHOS, Inc. management fee ARCHOS, Inc €95,577

£78,000 ARCHOS UK management fee ARCHOS UK €113,846

ARCHOS Deutschland management fee €120,000 ARCHOS Deutschland

Distribution of ARCHOS products USD 13,968,175 ARCHOS, Inc by ARCHOS, Inc. €11,290,881

Distribution of ARCHOS products £10,678,317 ARCHOS UK by ARCHOS UK €15,656,110

Distribution of ARCHOS products €9,976,059 ARCHOS Deutschland by ARCHOS Deutschland

Logistical services billing RMB528,368 ARCHOS Asia Ltd performed by ARCHOS Asia Ltd €57,815

9. Employees

The average number of Group employees in the year ended December 31, 2005 was 172.

10. Additional information

Capital stock

At the date of this summary, the Company’s capital stock amounts to €3,932,124 consisting of 7,864,248 shares each with a par value of €0.50 including one preference share with a par value of €0.50 held by EchoStar. EchoStar also holds 553,040 convertible bonds entitling it to subscribe to 553,040 shares.

Deed of incorporation and by-laws

The Company is a société anonyme (joint stock company) under French law governed by its bylaws and Livre II of the French Commercial Code.

Documents available to the public

All legal and financial documents that shareholders are entitled to receive can be viewed at the Company’s registered office.

9 For purposes of this prospectus, unless otherwise stated, the company ARCHOS SA is referred to as “Company”. The “Group” relates to ARCHOS and its subsidiaries.

1. PERSON RESPONSIBLE FOR THE PROSPECTUS

1.1 Person responsible for the prospectus

Mr. Henri Crohas, Chairman of the Board of Directors and Chief Executive Officer of ARCHOS.

1.2 Declaration of the person responsible for the prospectus

I certify, having taken all reasonable steps to this effect, that the information contained in this prospectus, to my knowledge, faithfully reflects reality and does not include any omission liable to alter its interpretation.

I have received an end-of-engagement letter from the statutory auditors, in which they state that they have audited the information relating to the financial situation and the accounts provided in this prospectus and have read the entire prospectus.

Henri Crohas Chairman of the Board of Directors and Chief Executive Officer of ARCHOS

1.3 Person responsible for the financial information

Loïc Poirier Chief Financial Officer of the Company ARCHOS 12, rue Ampère ZI Igny 91430 Igny Tel : +33 (0)1 69 33 16 90 Fax : +33 (0)1 69 33 74 35 E-mail : [email protected]

2. MARKET RISKS THAT COULD HAVE A MATERIAL IMPACT ON THE INVESTMENT SECURITIES OFFERED

The Company is subject to all risk factors stated under chapter 4 of the Company’s Reference Document registered by the AMF on April 28, 2006.

In addition to these risks described under chapter 4 of the Reference Document, the investor should take account of the following factors and other information included in this prospectus before taking a decision to invest in the shares of the Company. An investment in the Company’s shares involves risk. All material risks that the Company has identified as of the date of this prospectus are described in the Reference Document plus the information given below. However, other risks and uncertainties, of which the Company as of the date of this document is unaware, or which it considers to be immaterial, could affect its business. If one of the risks described below were to occur, the Company’s business, financial situation, earnings or prospects could be impacted. In this event, the Company’s share price could fall and investors could lose the full amount or part of their investments in the Company’s shares.

Dilution of current shareholders

Under the planned issue, current shareholders will suffer a major dilution in their interest in the Company’s capital and voting rights.

10 Volatility of the Company’s share price

In the last few years, stock markets have fluctuated significantly often without any relation to the results of the companies whose shares are traded. Market fluctuations and the general state of the economy could increase the volatility of the Company’s share price.

Sales of the Company’s shares may be made during or after the share allocation that could have an adverse impact on the share price

Stock market sales of a certain number of the Company’s shares, or the belief that such sales could occur during or after the share allocation, could have an adverse impact on the Company’s share price. The Company cannot forecast the potential effect on the share price of stock market sales of the Company’s shares.

Lack of a completion guarantee

All new shares included in this share issue (excluding shares issued under the Over-Allocation Option) will be underwritten by BNP Paribas. This does not constitute a completion guarantee as defined by Article L. 225-145 of the French Commercial Code. Accordingly, the underwriting agreement will include a termination clause habitually used for this type of agreement that BNP Paribas may cancel until completion of the settlement-delivery of the new shares issued in the event of certain circumstances (see paragraph 5.1.5).

In this case, this share issue would be cancelled.

Impossibility to establish the subscription price

If, following completion of the order book, the subscription price is lower than €35 or if it is not possible to establish the price at a level at least equal to the weighted average price of ARCHOS shares on the Eurolist market of Euronext TM during the three final stock market sessions preceding the commencement of the order book, less a discount of 5%, the offering would be cancelled. No new shares would then be issued and the share subscriptions received to date under the public offering in France and the private institutional placement would be cancelled. A press release would then be published without delay that would be printed in at least one daily financial newspaper distributed nationally to notify the public thereof. However, the decision could be taken to extend the subscription period and the preparation of the order book, in which case the new period would be stated in a press release issued, at the latest, by the day preceding the initial closing date of the public subscription period and published in two daily financial newspapers distributed nationally.

3. UNDERLYING NFORMATION

3.1 Net working capital

On receipt of the proceeds from the share issue and capital increase, ARCHOS believes it holds sufficient net working capital to meet its current liabilities for the following 12 months with effect from the date of this prospectus.

11 3.2 Shareholders’ equity and net debt under IFRS

In accordance with the recommendations of the CESR (CESR 127), the Company’s debt and shareholders’ equity as of March 31, 2006 break down as follows:

Unaudited figures as of March 31, 2006:

€thousands Mar 31, 06 IFRS Current liabilities 3,220 Guaranteed liabilities 155 Secured liabilities 0 Unsecured and unguaranteed liabilities 3,065 Non current liabilities (excluding current portion) 3,760 Guaranteed liabilities 0 Secured liabilities 0 Unsecured and unguaranteed liabilities 3,760 Shareholders’ equity, Group share 18,347 Capital stock 3,379 Legal reserve 137 Other reserves 14,831

Unaudited figures as of March 31, 2006:

Breakdown of net financial debt Mar 31, 06 €thousands IFRS A. Cash 2,348 B. Cash equivalents 159 C. Investments and marketable securities 0 D. Cash and cash equivalents (A)+(B)+(C) 2,507 E. Short-term financial receivables 27,729 F. Short-term bank debt 3,220 G. Short-term portion of medium and long-term debt 0 H. Other short-term borrowings 41,769 I. Short-term financial debt (F)+(G)+(H) 44,990 J. Net short-term debt (I)-(E)-(D) 14,753 K. Bank loans due in more than 1 year 0 L. Bonds issued 3,760 M. Other loans due in more than 1 year 0 N. Net medium and long-term debt (K)+(L)+(M) 3,760 O. Net debt (J)+(N) 18,513

The breakdown of debt was prepared prior to conversion of 50% of the convertible bonds into stock on April 14, 2006. Details of this conversion and the levels of debt and shareholders’ equity after conversion of the three tranches are shown under paragraph 10.5 of the transaction memorandum.

3.3 Interest of natural and legal persons participating in the offering

Not applicable.

3.4 Reasons for the offering and use of the proceeds

The share issue and capital increase, which are the subject of this transaction memorandum, will enable the Company to build its equity capital, meet its working capital requirements and to foster a pro-active research and development policy.

12 On the basis of a minimum indicative price of €42.18, the gross proceeds of the new share issue is estimated at approximately €26,086,938.06, excluding use of the Extension Facility and the Over- Allocation Option. It could be increased to around €34,499,949.96 in the event of full exercise of the Extension Facility and the Over-Allocation Option.

On the basis of a minimum indicative price of €42.18, the net proceeds of the new share issue is estimated at approximately €24,585,000, excluding use of the Extension Facility and the Over- Allocation Option. It could be increased to around €32,600,000 in the event of full exercise of the Extension Facility and the Over-Allocation Option.

4. INFORMATION ABOUT SHARES TO BE ADMITTED FOR TRADING ON EUROLIST BY EURONEXTTM

4.1 Nature, category and dividend entitlement date of the transferable securities offered and admitted for trading

The Company has decided to issue 618,467 new shares, which may be increased to a maximum of 817,922 shares in the event of full exercise of the Extension Facility concerning 92,770 shares and the Over-Allocation Option concerning 106,685 shares.

The New Shares issued are ordinary shares of the Company of the same category as the existing shares of the Company. They rank for dividend from January 1, 2006.

Consequently, they will immediately rank pari passu with the existing shares of the Company already traded on Eurolist by Euronext TM Compartiment C as soon as they are available for trading.

They will be traded under the same as the Company’s existing shares - ISIN code FR0000182479.

4.2 Applicable law and competent courts

The New Shares are issued under French law and the competent courts in the event of a dispute will be those with jurisdiction for the registered office of the Company if the Company is the defendant and will be designated on the basis of the type of dispute if the Company is the plaintiff, unless otherwise provided under the New Code of Civil Procedure.

4.3 Nature of shares and account registration procedures

The new shares may take the form of registered shares or bearer shares, as the subscriber chooses.

In application of the provisions of Article L. 211-4 of the French Monetary and Financial Code, all shares of whatever kind will be in electronic form and they therefore must be registered in accounts held by the Company or an authorised intermediary. The rights of the shareholders will be represented by entries in their names with:

- BNP Paribas Securities Services, appointed by the Company simple registered shares; - An authorised financial intermediary of the owner's choice and BNP Paribas Securities Services, appointed by the Company for registered shares under management; - An authorised financial intermediary of the owner's choice for bearer shares.

Transfer of ownership of the new shares will result from their entry to the purchaser's account in accordance with the provisions of Article L.431-2 of the French Monetary and Financial Code.

A request will be made for admission of the new shares to the operations of Euroclear France as the central custodian, and to the settlement-delivery systems of Euroclear Bank S.A./N.V., and Clearstream Banking S.A./N.V. The new shares will be entered to account as of May 19, 2006.

13 4.4 Currency of issue

The new shares are issued in euros.

4.5 Rights attached to the new shares

Upon issue the new shares will be subject to all the stipulations of the articles of association of the Company. Under present French legislation and ARCHOS’s current articles of association, the main rights attached to the new shares are described below:

Dividend entitlement

The new shares issued shall give the right, for financial year 2006 and future financial years, with equal nominal value, to the same dividend as that which may be distributed to the other shares with the same dividend date.

The general meeting of shareholders held to approve the accounts for the financial year may, at the proposal of the Board of Directors, authorise the payment of a dividend to all shareholders.

The general meeting of shareholders may grant each shareholder, for all or part of the dividend or interim dividends distributed, an option to receive payment of the dividend or the interim dividend either in cash or in shares issued by the Company, in accordance with the legal and regulatory provisions in force. The dividends shall lapse within the legal time limits of five years in favour of the State.

Voting rights

The voting rights attached to the shares are proportional to the percentage of capital that they represent and each share shall be entitled to at least one vote. At the date of this prospectus, there is no provision in the Articles allowing the existence of double voting rights.

Pre-emptive right to subscribe to securities of the same category

Under existing French legislation and notably Article L. 225-132 of the Code de Commerce any increase in capital in cash entitles shareholders in proportion to their existing holdings to a preemptive right to subscribe to new shares.

If the general meeting of shareholders decides on or authorises a capital increase, it may, pursuant to Article L.225-135 of the Code de Commerce, remove the preferential right of subscription for the whole of the capital increase or for one or several tranches of this increase and may or may not set forth a priority subscription period for the shareholders. When the issue is made on public markets without preemptive subscription rights, the issue price must be set in compliance with Article L.225- 136 of the Code de Commerce.

In addition, if the general meeting of shareholders decides to increase the capital, it may limit this to named persons or to categories of persons that meet certain criteria pursuant to Article L. 225-138 of the Code de Commerce.

The general meeting of shareholders may also limit this to shareholders of another company that is the target of a share exchange offer made by the Company pursuant to Article L.225-148 of the Code de Commerce or to certain persons in connection with contributions in kind pursuant to Article L.225- 147 of the Code de Commerce.

Right to share in the profits of the issuer

The shareholders of the Company are entitled to share in the profits under the conditions stated in Articles L. 232-10 et seq. of the Code de Commerce.

14 Right to share in any liquidation surplus

All shares, regardless of the category, carry entitlement to the ownership of the corporate assets and to the liquidation surplus, in a fraction equal to the fraction of share capital held, taking account of the amortised and non-amortised capital, paid-up or not paid-up.

Subject to the legal provisions relating to the voting rights at shareholders’ meetings and the right of notification bestowed on the shareholders, the shares are indivisible with respect to the Company by one of them or a single representative, appointed by law in the event of disagreement.

Buy-back Clauses – conversion clause

The articles of association do not include a clause concerning the repurchase or conversion of the shares, except for the preference share which may be converted to an ordinary share, at any time, on the simple decision of the shareholder owning the preference share.

Other The Company is authorised to make use of all legal dispositions provided for the identification of shareholders.

4.6 Authorisations

4.6.1 General Meeting authorising the issue

The issue of new shares with no preferential subscription rights was authorised in the tenth resolution of the combined extraordinary and ordinary general meeting of shareholders of the Company on April 19, 2006.

Tenth resolution - Delegation of powers to decide the issue of shares, bonds or other transferable securities, with no preferential subscription rights for shareholders.

The general meeting, sitting under conditions of quorum and majority required for extraordinary general meetings and having taken note of the report of the board of directors and the special report from the auditors, in the light of Articles L. 225-127, L. 225-129, L. 225-129-2, L. 225-135, L. 225-136, L. 228-92 and following of the French Commercial Code resolves as follows:

1°) to delegate to the board of directors for a period of twenty-six (26) months counting from the present meeting the power to decide on the board’s sole responsibility and on one or more occasions and in the proportions and at the periods that the board shall judge fit, to issue, in euros or foreign currency or in units of account fixed by reference to several currencies, such as shares, bonds or transferable securities including share or equity warrants issued independently against payment both in France and abroad giving access or potentially giving access to the equity or giving rights to the attribution of debt instruments as the board may judge fit, the subscription to which may be in cash, or by compensation of claims, and such delegation of powers shall allow one or more issues of such instruments in application of Article L. 228-93 of the French Commercial Code;

2°) to decide to waive the preferential subscription rights of the shareholders on such shares, bonds or other transferable securities;

3°) to decide that the nominal increase in capital immediately or in the future resulting from all issues performed as a result of the powers delegated by the present resolution shall not exceed €75 million or its equivalent value in any other authorised currency, it being specified that (i) this amount is fixed without regard to the consequences on the total amount of capital of any adjustments that may be carried out, in accordance with the legislation and regulations concerning the issue of shares, bonds or transferable securities giving access to the capital and that (ii) this amount shall be set against the overall amount of €185 million fixed by the fifteenth resolution;

4°) in accordance with the law, the general meeting delegates to the board of directors the capacity to appreciate whether there is need to provide for a reducible or an irreducible period of priority

15 subscription for existing shareholders, the minimum duration of which is fixed by decree, and also to fix such a period and its terms and conditions, in accordance with the provisions of Article L. 225-135 of the French Commercial Code; If subscriptions do not meet the entire volume of the issue, the board of directors may use one or other of the following powers, or several of them, in whatever order is judged appropriate:

- To limit the amount of the operation to the amount of subscriptions received, in accordance with the conditions provided by law, under the condition that this has reached at least three- fourths of the issue originally decided; - to share out freely all or part of the shares or securities not subscribed; - to offer them in whole or part to the public.

5°) to recognise that the issue of transferable securities giving access to the equity capital implies the renunciation by the shareholders of their preferential subscription rights to the equity shares to which the issued securities could give access;

6°) to decide that the sum received or to be received by the company for each share issued or to be issued under the delegated powers set out above after taking account of the issue price of any independently issued share warrants, shall be at least equal to the minimum price provided for by the legal and/or regulatory provisions in force on the day of issue, whether or not the securities to be issued immediately or at term are assimilable to equity shares already issued.

The transferable securities thus issued may consist of debt instruments, in particular bonds, or they may be associated with the issue of such securities, or yet again they may as intermediary securities allow the issue thereof. They may in particular take the form of subordinated securities of specified duration or not, and may be issued in euros, foreign currencies or other monetary units established by reference to a number of currencies. The maximum nominal amount of such debt instruments may not exceed €75 million or the equivalent value at the date the issue is decided, it being stipulated that the said amount shall include all debt instruments whose issue is delegated to the board of directors in accordance with the present document.

In the event of issue of debt instruments, the board of directors shall have all powers including power of sub-delegation under the conditions provided by the law and the Company’s bylaws, in particular to decide whether the said instruments are subordinate or not, to fix their rates of interest, duration, fixed or variable repayment price, with or without premium, the terms of repayment and the conditions under which the said securities shall give right to shares in the Company.

The board of directors shall have all powers including power of sub-delegation under the conditions provided by the law and the Company’s bylaws, to implement the present delegation and proceed with the issues, fix their conditions, verify the execution of the capital increases resulting therefrom and to proceed with the relevant modification of the Company bylaws and establish the dates, conditions and form of any issue and the form and characteristics of the securities or shares to be created, to enter into all agreements and in general take all necessary steps to successfully conclude the issues proposed and their listing. In particular the board shall fix the amounts to be issued, the issue prices and subscriptions to securities or shares, with or without premium, accrual dates, retroactive or not, the terms of payment, and where relevant the duration and exercise price of warrants, the terms of exchange, conversion, repayment or attribution in any other way of equity shares or other securities giving access to the equity capital.

The general meeting stipulated that the board of directors having power to sub-delegate under the conditions provided for by law and the Company bylaws:

- shall decide under legal conditions the terms of adjustment of the conditions of access to equity capital by bonds or transferable securities including warrants; - may make any and all provisions for issue contracts; - may make use of the power to suspend the exercise of rights attached to the said securities for a period not to exceed the maximum allowed by the legal and regulatory provisions currently in force; - may determine the terms of exchange or purchase on the Bourse of securities issued or to be issued, at any time or at specified periods;

16 - may charge against premiums in for costs incurred in realising the issues; - shall have all powers to ensure the preservation of the rights of owners of shares or transferable securities giving access at maturity to the Company’s equity, in accordance with legal and regulatory requirements.

Authorisation for the Over-Allocation Option

The increase in the issue of new shares with no preferential subscription rights is made explicit in the eleventh resolution of the Company’s combined extraordinary and ordinary general meeting of shareholders held on April 19, 2006.

Eleventh resolution – Increase in the number of shares, bonds or transferable securities to be issued in the event of an increase in capital with or without preferential subscription rights for shareholders

The general meeting, sitting under the conditions of quorum and majority required for extraordinary general meetings in accordance with the provisions of Article L. 225-135 1 of the French Commercial Code and having taken note of the report of the board of directors and the special report from the auditors, authorises the board of directors, on its sole responsibility and within the limit of the global ceiling fixed by the fifteenth resolution, for a period of twenty-six (26) months counting from the present meeting, and within thirty (30) days of the closing of subscriptions, to increase the number of shares, bonds or transferable securities to be issued in the event of an increase in the Company’s capital, with or without preferential subscription rights of existing shareholders if the board observes an excess demand under the conditions of Article L.225-135-1 and within the limit of 15% of the amount of the initial issue and at the same price as the initial issue.

The general meeting noted that the limit established by paragraph 1, I of Article L. 225-134 of the French Commercial Code, will be increased in the same proportions.

4.6.2 Decisions of the board of directors and the Chairman of the board and Managing Director of the Company

At its meeting on April 19, 2006, the board of directors of the Company decided, by virtue of the delegation of powers by the general meeting of shareholders outlined above, that an increase in capital should be undertaken through the issue of a maximum 745,342 of new shares of a nominal value of €0.50, through a public offering, with no preferential subscription rights for existing shareholders priority subscription period, which could be raised to 857,143 new shares in the event of using the Extension Facility and to 985,714 new shares in the event of the total exercise of the Over- Allocation Option, and sub-delegated to the Chairman of the board the power to decide on the final terms for the increase in capital.

In application of these delegated powers, the Chairman, in his office of Chief Executive Officer, decided to proceed with a cash increase in capital by public offering with neither preferential subscription rights nor priority period, by the issue of 618,467 new shares, which can be increased to a maximum of 817,922 shares in the event of the total exercise of the Extension Facility affecting 92,770 shares, and the Over-Allocation Option affecting 106,685 shares, and will fix the subscription price of new shares on the completion of order books, that is at the latest by May 15, 2006, the said price to be at least equal to the weighted average of Archos share prices on the Euronext TM Eurolist market during the last three stock market sessions preceding the opening of the order books less a 5% discount, and cannot in any case be less than €35.

4.7 Date scheduled for the issue of new shares

The date scheduled for the issue of new shares is May 19, 2006.

The date scheduled for the settlement - delivery of new shares is May 19, 2006.

4.8 Restrictions on free trading in new shares

No clause in the Company Articles limits free trading in shares in the Company's capital.

17 4.9 French regulations covering public offers

ARCHOS is subject to the rules covering obligatory public bids and obligatory public repurchase offers.

4.9.1 Obligatory offer to purchase

Article L.433-3 of the French Monetary and Financial Code and Articles 234-1 and following of the General Regulations of the AMF establish the conditions under which a public offering for the entire capital of the Company must be made.

4.9.2 Price guarantee

Article L.433-3 of the French Monetary and Financial Code and Articles 235-1 and following of the General Regulations of the AMF establish the conditions under which a price guarantee covering the entire capital of the Company must be lodged.

4.9.3 Public buy-back offer and obligatory repurchase

Article L.433-4 of the French Monetary and Financial Code and Articles 236-1 and following and 237-1 and following of the General Regulations of the AMF establish the conditions for lodging a public share buy-back offer in conjunction where necessary with a squeeze-out of the minority shareholders in the Company.

4.9.4 Squeeze-out

There has been no obligatory share buy-back (squeeze-out) applicable to new shares covered by the present prospectus.

4.10 Takeover bids launched by third parties on the equity of the issuer during the last financial year or the current one

No public offering from any third party has been launched on the equity of the Company during the last financial year or the current one.

4.11 Tax status of the shares

The tax status of the new shares of the Company under current French legislation is described below. Investors should note that this information is only a summary and that they should examine the financial position in particular to them with their normal tax advisor.

Persons who do not have tax residence in France should in addition comply with the tax legislation in force in their country of residence and to the provisions of any international tax agreement between France and this country.

Investors should also note that the tax rules described below are those in effect on this date. Those rules could be modified by impending changes in legislation or regulations, which investors should review with their normal tax advisor.

18 4.11.1 French tax residents a) Natural persons who own securities as part of their personal assets and who do not carry out stock exchange transactions on a regular basis

(i) Dividends

Dividends received after January 1, 2005 are no longer entitled to a tax credit (avoir fiscal). Dividends distributed by the Company to French residents are not subject to any form of withholding tax in France.

60% of the amount of dividends received on or after January 1, 2006 is used to calculate the income tax due in respect of the year of their receipt.

These dividends also receive a total annual allowance of €3,050 beginning with income tax for 2006 for couples who are subject to joint taxation (married couples and civil partnerships as defined under Article 515 -1 of the French Civil Code who are subject to joint taxation) and of €1,525 for single, widowed or divorced persons and married couples subject to separate taxation.

The amount thus obtained is subject to the progressive scheme for income tax with deduction of a tax credit of 50% of the amount of the dividends received before the allowance subject to a maximum of 230 euros for couples taxed jointly and 115 euros for unmarried people, widowed or divorced persons or married couples taxed separately. Any surplus tax credit not taxed is refunded if it amounts to at least 8 euros.

Lastly, the amount of dividends actually received before any allowance is also subject to:

- the contribution sociale généralisée ("CSG") at a rate of 8.2%, of which 5.8% is deductible from the income liable to income tax in respect of the year of the payment of the CSG; - the contribution pour le remboursement de la dette sociale ("CRDS") at a rate of 0.5%; - the social deduction of 2%; and - the surtax on the social deduction of 2% at a rate of 0.3%.

(ii) Capital gains

Pursuant to Article 150-0 A of the Code général des impôts ("CGI"), capital gains realised by natural persons are liable from the first euro to income tax at a proportionate rate of 16% if the total sales of securities and other rights or stocks as defined in Article 150-0 A of the CGI (excluding sales of securities held as part of a personal equity plan) exceed the current threshold of 15,000 euros per taxable household during the calendar year. However, under certain conditions, the amount of the taxable gain is decreased by one-third per year that the securities are held beyond the fifth year. The period for which the securities are held is calculated beginning on 1 January of the year in which they are purchased. However, for shareholders who purchased their securities prior to January 1, 2006, the holding period is calculated starting with that date.

Subject to the same condition relating to the annual amount of disposals of securities, the capital gain actually realised (in other words, prior to any reduction) is also subject to the following social deductions which are not allowable against the income subject to income tax:

- CSG at a rate of 8.2%; - CRDS at a rate of 0.5%; - social deduction of 2% ; - additional contribution to the social deduction of 2% at a rate of 0.3%.

Any capital losses, after any applicable application of the reduction based on the period for which the securities are held, as described above, are off-settable against the gains of the same type realised during the year of disposal or the following 10 years provided the disposal threshold stated above was exceeded in the year of realisation of the capital loss.

19 (iii) Special status of Personal Equity Plans (PEPs)

The shares of the Company may be acquired as part of a personal equity plan (PEP) as introduced under Act number 92-666 of July 16, 1992.

Under certain conditions, PEPs are (i) for the duration of the PEP, exempt from tax on the revenue and social deductions in the amount of the income and capital gains generated by the investments in a PEP, and (ii) when the PEP is closed (if this occurs more than five years after the date the PEP is opened) or in the event of a partial withdrawal (if this occurs more than eight years after the date PEP is opened), to tax exemption on the income in an amount equal to the net gain recorded or realised on this occasion. Nevertheless this gain remains subject to various social contributions, the nature and total rate of which vary depending on the period in respect of which the gain was acquired).

Capital losses incurred in connection with the PEP are only liable to tax in respect of the capital gains realised in the same context. Any losses made as a result of the early closure of the PEP before the expiry of the fifth year shall be liable to tax on the gains of the same nature realised during the same year or the following 10 years provided the annual threshold for the disposal of securities (and rights and other equivalent securities) applicable in respect of the year of the realisation of the capital loss is exceeded in respect of the year under consideration. The 2004 Budget Act provided for a similar measure for the closure of PEPs of more than five years occurring from January 1, 2005 provided, notably, that all the securities contained in the plan are disposed of at the closure date of the plan (securities may not just be transferred to an ordinary security account).

It should be noted finally that the revenues received from the PEP are also entitled to a 50% tax credit subject to a maximum of 115 or 230 euros as mentioned above. Unlike the avoir fiscal tax credit system, this form of tax credit is not paid into the plan but it is allowable against income tax and any surplus is refundable.

(iv) Impôt de solidarité sur la fortune [Wealth Tax]

Shares held by natural persons are included in their taxable assets and subject, where applicable, to Wealth Tax.

(v) Inheritance and gift taxes

Shares acquired in the form of an inheritance or gift shall be subject to inheritance or gift duties in France. b) Legal persons subject to corporate income tax

(i) Dividends

Dividends distributed by the Company to French residents are not subject to any form of withholding tax in France.

Since January 1, 2005, legal entities subject to corporate income tax can no longer charge the tax credit against the corporate income tax for which they are liable.

Legal entities not classified as the parent company

Any dividends received are taxable under ordinary law, that is in principle at the normal corporate income tax rate, which is currently 33 1/3%, plus, where applicable, the social contribution of 3.3%, which applies to the amount of corporate income tax exceeding 763,000 euros per twelve-month period.

However for companies whose turnover excluding tax during the financial year, where applicable, converted to an annual figure, is less than 7,630,000 euros and whose fully paid-up share capital is held on a continuous basis during the financial year in question in amount of at least 75% by natural persons or by companies which themselves satisfy all these conditions (SMEs), the rate of corporate

20 income tax is set, subject to a limit of 38,120 euros of the taxable profit per 12-month period, to 15%. These companies are also exempt from the social contribution of 3.3% mentioned above.

Legal entities classified as the parent company

In accordance with the provisions of Articles 145 and 216 of the CGI, legal persons which hold a stake equal to at least 5% of the capital of the Company with voting rights, may benefit from the provisions applicable to parent companies, by virtue of which the dividends received by the parent company are not subject to corporate income tax except for the proportion that represents the fees and charges incurred by that company. This proportion is equal to 5% of the amount of said dividends but may not, however, for each taxation period, exceed the total amount of any type of fees and charges incurred by the parent company during the financial year in question. In order to qualify for this exemption, the securities must be or have been held for a period of two years. If they have not been held for this period, the parent company is required to pay the Treasury, within three months of the sale, an amount equal to the amount of the tax from which it was unduly exempted, plus penalty.

(ii) Capital gains

Position under ordinary law

The capital gains or losses realised on the disposal of the securities portfolio are included in the result which is subject to corporate income tax under ordinary law, that is in principle at the current corporate income tax rate of 33 1/3%, plus, where applicable, the social contribution of 3.3% under the conditions mentioned above.

SMEs may, under the conditions mentioned above, qualify for a reduction of the corporate income tax to 15% and an exemption from the social contribution of 3.3%.

Position applicable to equities

In accordance with the provisions of Article 219-I-a ter of the CGI, the net gains realised on the disposal of equities held for over two years are eligible for tax treatment as long-term capital gains.

Equities include, among others, shares characterised as such in the accounting plan and, barring their treatment in the accounts as equities or in a special sub-account, the shares acquired as a result of a public purchase offering or a public exchange offering by the company that initiates it, the shares carry the right to the system applicable to parent companies, as provided for under Articles 145 and 216 of the CGI or, if their cost price is at least equal to €22.8 million, which fulfil the conditions carrying the right to this treatment other than the ownership of at least 5% of the capital of the issuing company.

Capital gains on equities are subject to corporate income tax at a reduced rate of 15%, plus, where applicable, the aforementioned special contribution of 3.3%.

Capital losses under the long-term arrangements are taxable in respect of the capital gains of the same nature in the financial year they are recorded or the next 10 financial years. These capital losses are not in principle deductible from the taxable profits at the normal rate of corporate income tax. The Final Budget Act for 2004 did, however, provide for specific methods for carrying forward the balance of the long-term capital losses in existence at the beginning of the first of the financial years commencing January 1, 2006.

Specific provisions applicable to financial years commencing from January 1, 2006

The Final Budget Act for 2004 provides for a gradual introduction of an exemption for long-term capital gains arising from equities under the conditions described below.

For financial years commencing January 1, 2006, the net amount of long-term capital gains on equities will be taxed separately at a rate of 8%, plus, where applicable, the aforementioned 3.3% social contribution. For financial years commencing January 1, 2007, they will be exempt except for a portion of fees and charges equal to 5% of the net profit on capital gains on disposals.

21 The securities of predominantly property-sector companies, the definition of which must be set by a decree that has not yet been published, and securities costing at least €22.8 million and which fulfil the conditions that carry entitlement to the arrangements for parent companies, other than a holding of at least 5% of the capital of the issuing company, shall, however, be excluded from the scope of the aforementioned provisions applicable to the financial years commencing with effect from January 1, 2006. These securities may, however, continue to benefit from the reduced rate of corporate income tax of 15% under the same conditions as for the financial years commencing prior to January 1, 2006.

The Final Budget Act for 2004 also provides for specific methods for the taxation of long-term capital losses.

Potential investors are advised to consult their normal advisors in order to assess the consequences of these new taxation methods.

4.11.2 Non-resident tax status a) Dividends

By virtue of domestic French law, dividends distributed by a company whose registered office is located in France to shareholders, whose tax residence or whose registered office is located outside France, are in principle subject to a deduction at source of 25%.

Under certain conditions said deduction at source may be reduced or even cancelled as a result of international taxation agreements that so provide, or as a result of Article 119 ter of the CGI which provides, under certain conditions, for an exemption to a deduction at source on the dividend distributions paid to parent companies with residence in a Member State of the European Community.

Non-resident shareholders who are natural persons and who are permitted to take advantage of the provisions of any taxation agreement carrying the right to transfer the avoir fiscal, may, after the deduction at source at the rate provided for under the applicable taxation agreement, receive a refund of the new tax credit introduced for natural persons who are French tax residents on distributions made with effect from January 1, 2005. The tax authorities have stated that the practical methods for refunding this tax credit will be set at a future point.

It is recommended that investors who are not residents should consult their advisors concerning the conditions and methods for applying the deduction at source at the specified reduced rate, where applicable, through the relevant taxation agreements and the transfer of the new tax credit with respect to the stipulations to be given at a future point by the taxation authorities. b) Capital gains

Any capital gains realised on the disposal of securities for due consideration by persons who do not have tax residency in France within the meaning of Article 4B of the CGI or whose registered office is located outside France and who do not have a permanent establishment or a base in France fixed to the assets with which the securities sold are registered, are exempt from tax in France unless the rights held directly or indirectly by the seller, alone or with a family group, in the profits of the company whose shares are sold exceeds 25% at any time over the five years preceding the sale. Any capital gains realised on the disposal of any equities exceeding or having exceeded the threshold of 25% during the aforementioned period are subject to taxation in France at the proportionate rate of 16% unless the provisions of an international taxation agreement limit the right of taxation to the country of residence. Taxable capital gains may, under certain conditions, be reduced by one-third per year that the securities are held beyond the fifth year. The period for which the securities are held is calculated beginning on 1 January of the year in which they are purchased. However, for shareholders who purchased their securities prior to January 1, 2006, the holding period is calculated starting with that date. c) Impôt de solidarité sur la fortune [Wealth Tax]

In principle, impôt de solidarité sur la fortune [Wealth Tax] does not apply to natural persons who are resident outside France within the meaning of Article 4-B of the CGI in the amount of their holding in

22 the Company, if they directly or indirectly own less than 10% of the capital of the Company, provided, however, that the shares do not allow them to exercise an influence on the Company. d) Inheritance and gift taxes

In France, the securities of French companies acquired in the form of an inheritance or gift by a non- resident of France are subject to inheritance and gift taxes. France has entered into agreements with a certain number of countries in order to avoid double taxation in respect of inheritance or gifts under the terms of which the residents of the countries with which such agreements have been made may be exempt from inheritance and gift taxes in France or may obtain a tax credit in their country of residence.

It is advised that potential investors consult their normal advisors concerning their liability to inheritance and gift taxes.

5. TERMS AND CONDITIONS OF THE OFFERING

5.1 Offering terms and conditions, statistics, estimated timetable and subscription application procedures

5.1.1 Terms and conditions of the offering

Shares will be issued without pre-emptive rights or a priority period to the Company's existing shareholders. The pre-emptive right was eliminated by the Company's Ordinary and Extraordinary Shareholders' Meeting of April 19, 2006 in its tenth resolution.

The new shares are to be offered in (i) a private placement with institutional investors in France and outside France, except for certain countries such as the United States of America, Canada and Japan, pursuant to the rules applied in each country where the placement is made and (ii) a public offering in France with individual or corporate investors.

5.1.2 Amount of the issue

Based on a minimum target price of €42.18 for each new share, the gross income from the issue of new shares, not including the exercise of the Extension Facility or the over-allocation option, would amount to €26,086,938.06, including the share premium. Depending on the case, this amount may be raised to €34,499,949.96 should the Extension Facility and the over-allocation option be exercised in full.

The estimated net income from the issue, not including the exercise of the Extension Facility or the over-allocation option, would total around €24,585,000. Depending on the case, this amount may be raised to around €32,600,000 should the Extension Facility and the over-allocation option be exercised in full.

5.1.3 Subscription period and procedure

There is no specific tranche designed for a particular market or only available to employees. BNP Paribas, Lead Underwriter and Book Runner, will work with the Company to decide on the share allocations to be made. Public subscription orders will be processed in such a way as to avoid any obvious imbalance, at the expense of individual investors, between processing the applications made by them and processing the applications by individual investors. The public processing rate will be noted in the advice of admission for listing of the shares published by Euronext Paris S.A. on May 17, 2006 and in a statement by the Company.

The public subscription period will be open from May 11, 2006 through May 15, 2006 by 5:00 p.m. (Paris time). Placement with institutional investors will be open on May 11, 2006 and will be closed by 5:00 p.m Paris time on May 15, 2006. The placement with individual investors may be closed early without notice.

23 The closing date may be postponed under the conditions set forth in subsection 5.3.1 of this prospectus.

Corporate and/or individual investors shall transmit their orders to their financial intermediaries by 5:00 p.m. Paris time on May 15, 2006; the intermediaries shall forward the public subscriptions to BNP Paribas no later than May 16, 2006 at 10 a.m. Paris time. For institutional investors, subscription orders will be cleared by BNP Paribas, Lead Underwriter and Book Runner.

If the subscriptions do not cover the entire issue, then the board of directors may, in the order to be determined by it, use one or more of the options below: - Either limiting, in accordance with and under the conditions set forth by law, the amount of the operation to the amount of the subscriptions received, provided that the amount comes to at least three quarters of the issue approved; - Distributing freely all or part of any shares not subscribed for; - Or offering all or part of them to the public.

5.1.4 Forecast timetable

April 19, 2006 Board of directors’ decision on the principle to issue the new shares.

May 10, 2006 AMF visa for the prospectus including a price range.

May 11, 2006 before market opens Press release stating the principal features of the issue.

May 11, 2006 Beginning of the subscription period for the public and the order book for institutional investors.

From May 11, 2006 until May 15, 2006 End of the order book for institutional investors. at 5:00 pm at the latest Potential exercise of the Extension Facility.

Decision of the Chairman of the board of directors in his capacity as Chief Executive Officer of the Company establishing the final subscription price.

Signature of the underwriting agreement.

Press release announcing the final subscription price.

May 12, 2006 Publication in the press of the summary prospectus and subscription price (if the latter has been established)

May 15, 2006 Publication of the BALO notice relating to the capital increase.

May 15, 2006, at 5:00 pm End of the subscription period for the public.

May 17, 2006 Publication of the certificate from Euronext Paris S.A. regarding listing of the new shares stating the subscription price and the final amount of the capital increase.

May 19, 2006 Issue of the new shares (excluding exercise of the Over- Allocation Option).

Settlement-delivery of the new shares issued.

Admission for trading of the new shares.

24 June 14, 2006 Final deadline for exercise of the Over-Allocation Option.

5.1.5 Revocation/Suspension of the offering

Impossibility of setting the subscription price

If after the order book has been created, the subscription price were below 35 euros, or it were not possible to set the subscription price at a level at least equal to the weighted average of the ARCHOS share price on the Eurolist by Euronext TM market of the last three trading sessions preceding the creation of the order book, less a 5% discount, the offering would be terminated. The new shares would not be issued and any share subscriptions received under the offering would be cancelled. A statement would then be published without delay and reprinted in at least one national daily financial paper to so inform the public.

However, the subscription period and the period for creating the order book may be extended if the market conditions are such that the subscription price cannot be set under the conditions spelled out above. In such case, the new period would be announced in a notice published by Euronext Paris S.A. and in a press release, which shall be reprinted effectively in two national daily financial papers, no later than the day before the initial closing date of the public subscription.

Termination of the underwriting contract

This issue shall be subject to an investment guarantee by BNP Paribas, applied to all the new shares issued under the offering. This guarantee is not a performance guarantee as described under article L. 225-145 of the Commercial Code. Thus the contract relating to this guarantee will include a customary termination clause for this kind of contract, and may be terminated by BNP Paribas until the actual settlement/delivery of the capital increase, in the event of certain occurrences (see subsection 5.4.3).

Should the underwriting contract be terminated by BNP Paribas after the occurrence of any event referred to above, then this issue would be cancelled.

In the event the underwriting contract is cancelled, the Company should inform Euronext Paris S.A. without delay, which shall publish a notice. A press release would then be issued without delay to so inform the public.

5.1.6 Reducing subscriptions

See subsection 5.1.3 of this prospectus for a description of the order reduction issued under this offering.

5.1.7 Subscription minimum and/or maximum

There is no subscription minimum or maximum.

5.1.8 Revoking subscription orders

Not applicable

5.1.9 Payment of funds and terms for issuing the shares

Orders and funds paid for subscriptions shall be cleared by BNP Paribas, which shall issue the deposit certificate for the funds as required under article L. 225-146 of the Commercial Code.

Every subscription will be accompanied by payment in cast for the entire subscription price.

The new shares may be in registered or bearer form, at the discretion of the subscribers They shall be registered in an account (not including the over-allocation option) from the settlement/delivery date, i.e. from May 19, 2006.

25 5.1.10 Terms and publication of the results of the offering

After the close of the subscription period referred to in subsection 5.1.3 above, the subscription price and the final number of shares issued will be announced to the public via a press release and publication of a notice by Euronext Paris S.A. regarding the admission of the new shares.

5.1.11 Exercise procedure and negotiability of subscription rights

The shares will be issued without pre-emptive rights. In its sixth resolution, the Company's Ordinary and Extraordinary Shareholders' Meeting of April 19, 2006 eliminated the shareholders' pre-emptive right.

5.2 Securities distribution and allocation scheme

5.2.1 Categories of potential investors – Countries in which the offering will be open – Restrictions applicable to the offering

Classes of potential investors

The new shares are to be offered in (i) a private placement with institutional investors in France and outside France, except for certain countries such as the United States of America, Canada and Japan, pursuant to the rules applied in each country where the placement is made and (ii) a public offering in France with individual or corporate investors.

Countries in which the offering will be open

The offering will be open to the public in France.

Restrictions applicable to the Offering

General restrictions

The distribution of the prospectus, the offer or sale of new shares may be subject to specific regulations in certain countries. Individuals in possession of the present prospectus should find out any possible local restrictions and comply with the same.

This prospectus is neither an offer of sale nor a request for a securities subscription offer in any country in which such an offer or request is unlawful. The offering has not been registered or approved outside of France.

Any person receiving the present prospectus may not distribute it, or forward it to such jurisdictions, in violation of applicable laws and regulations.

Any person who, for whatever reason, transmits or allows the transmission of the prospectus into such jurisdictions must draw the attention of the recipient to the restrictions that apply to the offering.

Generally, all persons wishing to subscribe to shares outside France must ensure that this subscription will not be in violation of applicable law. The prospectus and every other document relating to the increase in capital should only be distributed outside France in accordance with the relevant laws and regulations and may not constitute an offer for a subscription in the countries where such a bid would infringe the pertinent legislation.

Restrictions on investment in the States of the European Economic Space (other than France)

The new shares have not been and will not be offered or sold to the public of the different Member States of the European Economic Space that have transposed Directive 2003/73/CE, the so-called "Prospectus Directive", prior to the admission of the said shares to Eurolist by Euronext TM, with the exception of offerings made in such Member States (a) to legal entities authorised or certified to operate in the financial markets or, if not, if their corporate purpose consists exclusively of investing in

26 securities; (b) to legal entities meeting at least two of the following conditions: (1) an average workforce of at least 250 workers in the latest financial year; (2) a balance sheet of more than € 43,000,000 and (3) annual revenues of more than € 50,000,000 euros as indicated in the latest annual parent company or consolidated financial statements, or (c) in any other cases where publication of a prospectus is not required under the provisions of article 3 of the Prospectus Directive.

For the purposes of this restriction, the expression "public offering" of shares in the different Member States of the European Economic Space that have transposed Directive 2003/73/CE means any communication addressed to persons containing sufficient information on the terms of the offering and the stock offered in any form and by any means whatsoever such that an investor can decide to buy or to subscribe for the stock, as this expression has been modified in each Member State considered. The notion of "public offering" of stock also covers, for the purposes of this restriction, any transposition of this notion to national law by any Member State of the European Economic Space.

Restrictions on investment in United States of America

The new shares have not and will not be registered for the purposes of the law on marketable securities in United States, as amended (U.S. Securities Act of 1933, the “U.S. Securities Act”). The new shares may and will not be offered, sold or delivered within the United States of America and this country cannot be subject to any directed selling effort, as defined by Regulation S of the U.S. Securities Act.

Additionally, for up to 40 days from the date of endorsement by the AMF of the prospectus, offer for sale or sale of new shares in the United States by a financial agent (whether participating in the present offer or not) could violate the duty of registration under the U.S. Securities Act, if this offer of sale or sale were made other than in accordance with the above.

No envelope containing subscription orders should be posted from the United States or sent by other means from the United States.

Every subscriber of new shares will be deemed to have declared, guaranteed or recognised, with the return of the present prospectus and delivery of new shares that he is subscribing to the new shares in an “offshore transaction”, as such is defined by Regulation S of the U.S. Securities Act.

The qualified agents should not accept subscriptions for new shares made by clients who have an address in the United States of America and such requests will be considered as null and void.

Restrictions on investment in United Kingdom

This prospectus neither contains nor constitutes an invitation or an incentive to invest. This prospectus is designed solely for persons who (1) are not located in the United Kingdom, (2) who have professional investment experience, (3) who qualify under article 49(2)(a) to (d) (" high net worth companies, unincorporated associations etc.") of the 2000 Financial Services and Markets Act (Financial Promotion) Order 2005 (as amended), to whom this prospectus can be sent legally (referred to together hereunder as "Qualified Persons"). Any invitation, offer or subscription, purchase or other agreement for the acquisition of the new shares may be offered or concluded only with Qualified Persons. The new shares referred to in this prospectus may not be offered or issued to any persons located in the United Kingdom other than Qualified Persons. No one other than a Qualified Person may act on or use as reference this prospectus or any of the provisions herein.

Restrictions on investment in Italy

Pursuant to Italian market law, no prospectus relating to the new share offering has been or will be distributed in Italy, and the said offering is not registered with the Italian market authority (Commizione Nazionale per le Società e la Borsa, the "CONSOB"). Therefore, the new shares are not and will not be offered, sold or remitted and no copy of this prospectus or of any other document relating to the new shares will be nor may it be distributed in Italy (i) to any persons other than professional investors (operatori qualificati) as defined in Article 31, subsection 2, of CONSOB Regulation No. 11522 of 1st July 1998, as amended ("Regulation No. 11522”) or (ii) pursuant to any other exemption to the rules applicable to financial canvassing under Article 100 of Legislative Decree No. 58 of 24 February (the

27 "Italian Finance Act") and Article 33, subsection 1, of CONSOB Regulation No. 11971 of May 14, 1999, as amended ("Regulation No. 11971”).

Such offers, sales or remittances of new shares or the distribution of copies of this prospectus or of any other document relating to the new shares in Italy shall and must be made in accordance with Italian market, tax and other regulations, and in particular must be made:

• By investment companies, banks or financial intermediaries authorised to carry out such activities in Italy in accordance with the provisions of the Italian Finance Act, Legislative Decree No. 385 of 1st September 1993, as amended (the "Italian Banking Act"), of Regulation No. 11522 and of any other applicable law or regulation; • In accordance with Article 129 of the Italian Banking Act and the other application principles of the Bank of Italy; and • In accordance with the other applicable notification conditions or restrictions that can be imposed by the CONSOB or the Bank of Italy.

Any investor acquiring new shares in the offering is solely responsible for seeing to it that the offering or the resale of any new shares acquired by it is done in keeping with the applicable regulatory and legal constraints.

This prospectus and the information contained herein may be used only by the recipients thereof, and subject to some exemptions to the rules applicable to financial canvassing under Article 100 of the Italian Finance Act and Article 33, subsection 1 of Regulation No. 11971, must not be distributed to any third parties residing in or located in Italy for any reason whatsoever. Aside from the recipients of this prospectus, no person residing in or located in Italy shall use as reference this prospectus or the contents herein.

Only some of the provisions of the Prospectus Directive have been transposed in Italy; the provisions referred to in subsection (a) above "Restrictions concerning the States of the European Economic Space in which Directive 2003/71/CE of November 4, 2003 ('Prospectus Directive') have been transposed" will apply solely to Italy in that the provisions of the Prospectus Directive referred to have already been transposed in Italy.

Restrictions on investment in Canada and Japan

No action has been taken to register, or to permit a public offering of new shares to persons located in Canada or Japan. As a consequence, this prospectus and any other document relating to the offering may not be distributed or transmitted in these countries. No subscription for new shares may be undertaken by any person situated in Canada or Japan.

5.2.2 Intent to subscribe by the Company's principal shareholders or by the members of its administrative, management or supervisory bodies

Henri Crohas and EchoStar will not subscribe to this issue. Moreover, the Company is not aware of any intent to subscribe by the Company's principal shareholders or by the members of its administrative, management or supervisory bodies or by anyone planning to take a subscription of more than 5%.

5.2.3 Preliminary allocation Information

Not applicable

5.2.4 Notice to subscribers

Individual and/or corporate investors what have placed subscription orders in the public offering under the conditions set in subsection 5.1.3 above shall be informed of their allocations by their financial intermediary.

28 Institutional investors that have placed private placement subscription orders under the terms and conditions set in subsection 5.1.3 above shall be informed of their allocation by BNP Paribas as the sole book runner.

5.2.5 Extension Facility and over-allocation option

Depending on the amount of the application, the Company may decide to increase the number of shares initially issued to 92,770 shares (the "Extension Facility"), or around 15% of the initial number. This decision will be taken no later than May 15, 2006.

Furthermore, for the purpose of covering any over-allocations, the Company will grant to BNP Paribas, under the eleventh resolution of the Ordinary and Extraordinary Shareholders' Meeting of April 19, 2006, an over-allocation option which, if fully exercised, would require the Company to increase the total nominal amount of the capital increase by nearly 15%, thus raising the capital increase to a maximum nominal amount of €408,961, representing 817,922 new shares. This option may be exercised, in full or in part, on one occasion only, no later than June 14, 2006.

5.3 Setting the subscription price

5.3.1 Method used for setting the price

The subscription price of the new shares to be issued will be based on a comparison between the supply of securities and the subscriptions applications issued by investors, based on the so-called "book building" technique as developed by professional practice.

BNP Paribas, the Lead Underwriter and Book runner, will make the comparison between the shares offered and the applications for shares, based on the following market criteria:

- ability of the investors selected to ensure the orderly development of the secondary market; - number of shares applied for; and - price sensitivity of the applications made by investors.

The subscription price, which would not be less than [mistake in source] €35, will be set by the Chairman of the board of directors in his capacity as Managing Director of the Company under the delegation [of authority] granted by the board of directors on April 19, 2006, acting on authority from the April 19, 2006 annual shareholders' meeting in its tenth resolution. The decision will be made between May 11, 2006 and May 15, 2006 after the order book is created.

Pursuant to article L. 225-136 of the Commercial Code and article 155-5 of decree No. 67-236 of March 23, 1967, the subscription price will be at least equal to the weighted average of the ARCHOS share price on the Eurolist by Euronext TM market in the last three trading sessions preceding the opening of the order book, less a 5% discount, or €42.18, not to exceed a maximum equal to €48.50. In any case, the subscription price cannot be less than €42.18 and more than €48.50.

This indication shall not adversely affect the final subscription price to be set by the Chairman of the board of directors in his capacity as Managing Director of the Company after the order book is created.

If the subscription price were less than €35, or if it proved impossible to set the price at a level at least equal to the weighted average of the ARCHOS share price on the Eurolist by Euronext TM market in the last three sessions preceding the opening of the order book, less a 5% discount, then the offering would be terminated. The new shares would not be issued, and any subscriptions for new shares received at that point would be cancelled. A statement would then be published without delay in at least one national daily financial paper to so inform the public.

However, the subscription and order book creation period could be extended if market conditions were such that the subscription prices could not be set under the foregoing conditions. In such case, the new period would be announced in a notice published by Euronext Paris S.A. and in a press release, which shall be reprinted in two national financial dailies no later than the day before the initial closing date of the public subscription.

29 5.3.2 Price publication procedure

The subscription price of the new shares will be announced by the Company in a press release to be published the day after the price is set, if market conditions allow.

5.3.3 Restriction on or elimination of the pre-emptive right

The issue will be made without pre-emptive rights or priority period to the Company's existing shareholders.

5.3.4 Price disparity

Not applicable.

5.4 Placement and guarantee

5.4.1 Coordinates of the Lead Underwriter and Book runner

BNP Paribas, 16 boulevard des Italiens, 75009 Paris.

5.4.2 Coordinates of the intermediaries in charge of financial services and depositaries in each country concerned

Security services and financial services for the ARCHOS shares are handled by BNP Paribas Securities Services, 25 quai Panhard et Levassor, 75013 Paris.

5.4.3 Guarantee

Subscription to all the new shares in the offering will be guaranteed by BNP Paribas under the conditions set by an underwriting contract, which will not constitute a performance guarantee as defined under article L. 225-145 of the Commercial Code.

The underwriting contract may be terminated by BNP Paribas until the actual settlement/delivery of the new shares, particularly should any of the following events occur:

(a) should any of the following events occur in France or abroad: (i) any change or circumstance with a Significant Unfavourable Effect, or (ii) any significant interruption, suspension or limitation on securities negotiations in general, or (iii) any change in market conditions, or any change in the listing conditions of any financial instrument issued by the Company, or (iv) any event of any kind, including, any political, financial, stock market-related or economic event (including any armed conflict, military action, act of war or terrorism); insofar as the event or circumstance considered has an effect which, in the opinion of BNP Paribas after information from the Company, would be so important that it would render impossible or seriously compromise the settlement or delivery of the new shares, or more generally the completion of the operation in the manner described in this prospectus.

(b) violation by the Company at any time before the settlement-delivery date or on that date of any of its commitments or of any of the representations and warranties or failure to meet the conditions precedent stipulated in the underwriting contract.

Should the underwriting contract be terminated by BNP Paribas following the occurrence of any event specified above, this issue would be cancelled.

30 The Company shall agree, both for itself and for its subsidiaries, during a period of 120 calendar days from the date the underwriting contract is signed, not to proceed with any issue, offering or sale of shares or securities giving access, either directly or indirectly, to ARCHOS shares, subject to some customary exceptions. The following shall also be excluded from the scope of this agreement:

- any new shares issued in the operation; - any equity securities that may be issued or remitted by the Company in operations reserved for the employees and corporate officers of the Company; - any shares issued or remitted by the Company with the exercise of stock options or warrants; - any shares issued by the Company in connection with the conversion by EchoStar of convertible bonds already issued; - any shares issued by the Company for capital increases by capitalisation of reserves, income or premiums; and - any shares issued by the Company for capital increases designed to pay for contributions or issued at the time of merger operations, insofar as the beneficiary or beneficiaries of the capital increase agree to retain the shares thus issued as payment for contributions or merger operations until the end of a period expiring 120 calendar days after the date the underwriting contract is signed.

In addition, Henri Crohas and EchoStar shall agree, with respect to BNP Paribas, and subject to some customary exceptions, not to offer, dispose of, sell or transfer the Company's stock or any securities held by them that give access to the Company's capital for a period of 120 calendar days from the date the underwriting contract is signed, with the exception of disposals (i) for which prior written agreement by BNP Paribas is received or (ii) made over-the-counter to one or more investors who agree with BNP Paribas to retain any securities thus acquired during the period remaining under the agreement to retain the securities.

5.4.4 Effective date of the underwriting contract

The underwriting contract will be signed on the day the subscription price is set, between May 11, 2006 and May 15, 2006, if market conditions allow the subscription price to be set.

6. ADMISSION FOR TRADING AND TRADING PROCEDURES

6.1 Admission for trading

Regarding the new shares from the capital increase, application must be made to admit them for trading on the Eurolist by EuronextTM market. They will be admitted on the same listing line as the outstanding shares, with the ISIN code FR0000182479 and will be fully combined with them once they are admitted for trading. Admission for trading on the Eurolist by EuronextTM market is planned for May 19, 2006.

6.2 Listing markets

ARCHOS shares are listed for trading on the Eurolist by EuronextTM market (compartment C).

6.3 Simultaneous issue of ARCHOS shares

Share issue following the exercise of subscription options

ARCHOS has put in place six stock subscription and purchase options explained in detail in Chapter 17 of the Company's reference document registered by the AMF on April 28, 2006.

During the subscription period for the issue covered by this prospectus, 71,510 ARCHOS stock options may be exercised. As each of these options entitles the holder to subscribe to one share of ARCHOS stock, a maximum of 71,510 new shares may be issued if these options are exercised.

31 Share issue following the exercise of bonds convertible to shares

The Company decided during the Extraordinary Shareholders' Meeting of March 29, 2005 to proceed with the issue of 2,212,158 bonds convertible to shares for EchoStar, 1,659,118 of which have already been converted.

During the subscription period for the issue covered by this prospectus, 553,040 convertible bonds may be converted to 553,040 shares at the request of EchoStar.

6.4 Liquidity contract

None

6.5 Stabilisation

During a period starting on the publication date of the press release related to the price of the new shares and ending no later than June 14, 2006 or, if it occurs first, on the exercise date of the over- allocation option, the Lead Underwriter and Book Runner acting as stabilisation agent, may (but is in no case required to), under the terms of the underwriting contract cited in subsection 5.4.3 and pursuant to the provisions of the applicable laws and regulations, particularly those of Regulation No. 2273/2003 of the European Commission dated December 22, 2003, setting forth the terms for applying Directive 2003/06/CE of the European Parliament and Council dated January 28, 2003 on insider trading and market manipulation, carry out stabilisation operations to stabilise or support the price of the Company's shares on the Paris Eurolist by Euronext market. Pursuant to article 10-1 of Regulation 2273/2003, stabilisation operations shall not be carried out at a price higher than the price of the offering. Such operations are liable to affect the price of the shares and may result in setting a market price higher than the offering price. Even if stabilisation operations were carried out, the Lead Underwriter and Book Runner could decide at any time to halt such operations. Under article 9 of the foregoing Regulation, the competent market authorities and the public will be kept duly informed. The Lead Underwriter and Book Runner may make over-allocations in connection with the offering, in the amount of the number of shares covered by the over-allocation option, plus 5% of the offering amount, as the case may be.

7. HOLDERS OF SECURITIES WISHING TO SELL THEM AND DISPOSAL RESTRICTION AGREEMENTS

7.1 Persons or entities intending to sell the Company's equity shares

Not applicable.

7.2 Agreement on issue and disposal restrictions

Under the underwriting contract cited in subsection 5.4.3 above, the Company shall agree with respect to BNP Paribas, both for itself and for its subsidiaries, during a period of 120 calendar days from the date the underwriting contract is signed, not to proceed with any issue, offering or sale of shares or securities giving access, either directly or indirectly, to ARCHOS shares, subject to some customary exceptions. The following shall also be excluded from the scope of this agreement:

- any new shares issued in the operation; - any equity securities that may be issued or remitted by the Company in operations reserved for the employees and corporate officers of the Company; - any shares issued or remitted by the Company with the exercise of stock options or warrants; - any shares issued by the Company in connection with the conversion by EchoStar of convertible bonds already issued; - any shares issued by the Company for capital increases by capitalisation of reserves, income or premiums; and - any shares issued by the Company for capital increases designed to pay for contributions or issued at the time of merger operations, insofar as the beneficiary or beneficiaries of the capital increase agree to retain the shares thus issued as payment for contributions or merger

32 operations until the end of a period expiring 120 calendar days after the date the underwriting contract is signed.

Henri Crohas and EchoStar shall agree, with respect to BNP Paribas, and subject to some customary exceptions, not to offer, dispose of, sell or transfer the Company's stock or any securities held by them that give access to the Company's capital for a period of 120 calendar days from the date the underwriting contract is signed, with the exception of disposals (i) for which prior written agreement by BNP Paribas is received or (ii) made over-the-counter to one or more investors who agree with BNP Paribas to retain any securities thus acquired during the period remaining under the agreement to retain the securities.

8. EXPENSES RELATED TO THE OFFERING

Based on a minimum indicative target price of €42.18 per share, gross income from the operation would be around €26,086,938.06 not including the exercise of the Extension Facility and the over- allocation option. This amount may be raised to €34,499,949.96, as the case may be, should the Extension Facility and the over-allocation option be exercised in full.

The estimated net income from the operation would be around €24,585,000 not including the exercise of the Extension Facility and the over-allocation option and around €32,600,000 should the Extension Facility and the over-allocation option be exercised in full.

9. DILUTION

9.1 Dilution amount and percentage immediately resulting from the offering

The effect of this issue on the Group share of shareholders' equity for one shareholder owning one share prior to the issue, not subscribing to this issue, calculated based on the Group share of consolidated shareholders' equity at December 31, 2005 of €18,347,000 and a number of shares comprising the share capital on that date of 6,758,169 shares:

Percentage of shareholders' equity of one In euros share Basis after Diluted Undiluted basis conversion (1) basis(2) Before issue of the new shares 2.71 2.65 2.64 After issue of 618,467 new shares 5.82 5.36 5.16 After issue of 618,467 new shares and after exercise of the Extension Facility 6.25 5.74 5.52 After issue of 618,467 new shares and after exercise of the Extension Facility and the over-allocation option 6.72 6.16 5.91 (1) After recognition of the capital raised and the shares issued following conversion of 50% of the convertible bonds to shares on April 14, 2006 (2) After conversion of the last 25% of the convertible bonds to shares and after exercise of the stock-options

33 9.2 Effect of the issue on the position of the shareholder base

The effect of this issue on the holdings of one shareholder owning 1% of the capital in ARCHOS prior to the issue and not subscribing to this issue, calculated based on the number of shares comprising the capital on the date of this prospectus:

Capital held Basis after Diluted basis Undiluted basis conversion (1) (2) Prior to issue of new shares 1.00% 0.86% 0.80% After issue of 618,467 new shares 0.92% 0.80% 0.74% After issue of 618,467 new shares and after exercise of the Extension Facility 0.90% 0.79% 0.73% After issue of 618,467 new shares and after exercise of the Extension Facility and the over-allocation option 0.89% 0.78% 0.73% (1) After taking account capital raised and the shares issued following the conversion of 50% of the convertible bonds to shares on April 14, 2006 (2) After conversion of the remaining 25% of the convertible bonds into stock and after exercise of the stock- options

The table below shows the changes in distribution of the share capital and voting rights (as a percentage) before and after the issue:

In the event stock options and convertible After issue bonds are and after After issue fully exercise of and after exercised the exercise of and after Shareholders Before issue After issue Extension the issue and Facility and Extension after exercise the over- Facility of the allocation Extension option Facility and the over- allocation option Henri Crohas* 40.59 37.63 37.22 36.76 34.30

EchoStar 21.10 19.56 19.35 19.11 23.77

Remote Reward 4.95 4.59 4.54 4.48 4.18

Jean-Marc Wormser* 1.23 1.14 1.13 1.12 1.04

Guiseppe Agnello* 0.08 0.07 0.07 0.07 0.07

Jean Rizet* 0.03 0.03 0.03 0.03 0.02

Isabelle Crohas* 0.03 0.02 0.02 0.02 0.02

Other shareholders 31.99 36.96 37.64 38.41 36.60

TOTAL 100.00% 100.00% 100.00% 100.00% 100.00% * Corporate officers

34 10. OTHER INFORMATION

10.1 Adviser with a link to the offering

Not applicable.

10.2 Persons responsible for auditing the accounts

10.2.1 Statutory auditors

- The Company Price Waterhouse Coopers Audit 63 rue de Villiers - 92208 Neuilly sur Seine cedex Represented by Mr. Vincent Gaide

Renewed at the annual meeting of July 31, 2003 for a period expiring after the annual meeting called to approve the accounts for the year ending December 31, 2008 A member of the Paris Regional Auditors' Society

- Mr. Frédéric Bitbol 62 boulevard Diderot - 75012 Paris Appointed on May 15, 2001 for a period expiring after the annual meeting called to approve the accounts for the year ending December 31, 2006 A member of the Paris Regional Auditors' Society

10.2.2 Alternate auditors

- Mr. Yves Nicolas 63 rue de Villiers - 92208 Neuilly sur Seine cedex Renewed at the annual meeting of July 31, 2003 for a period expiring after the annual meeting called to approve the accounts for the year ending December 31, 2008 A member of the Versailles Regional Auditors' Society

- Mr. Charles Zenaty 125, rue de Montreuil - 75011 Paris Appointed on May 15, 2001 for a period expiring after the annual meeting called to approve the accounts for the year ending December 31, 2006 A member of the Chambéry Regional Auditors' Society

The conclusion of the report by the Company's auditors dated March 17, 2006 on the issue of new shares with elimination of the pre-emptive right is quoted below:

"In that the amount of the price for the equity securities to be issue is not set, we are not expressing an opinion on the final terms and conditions under which the issues will be made and therefore on the 10th resolution made to you on the proposal to eliminate the pre-emptive, the principle of which, however is line with the operation submitted for your approval.

Pursuant to article 155-2 of the decree of March 23, 1967, we will prepare an additional report when the issue is completed by your board of directors."

10.3 Expert's report

Not applicable.

10.4 Information contained in the prospectus coming from a third party

Not applicable.

35 10.5 Updating of information concerning the Company

Data in addition to the information appearing in the Company's Reference Document registered by the AMF (Autorité des marchés financiers) on April 28, 2006, under number R.06-0044.

10.5.1 Free translation of Auditors' report on the estimated items appearing in Chapter 13 of the Company's Reference Document registered with the AMF (Autorité des marchés financiers) on April 28, 2006, under number R.06-0044

Frédéric Bitbol 62 boulevard Diderot 75012 Paris Price WaterhouseCoopers Audit 63, rue de Villiers 92208 Neuilly-sur-Seine Cedex

Report on the forward-looking data included in the reference document

ARCHOS Société Anonyme with capital of 3,379,085 euros 12 rue Ampère 91430 IGNY

To the chairman of the board of directors of Archos,

In our capacity as statutory auditors and in application of EC regulation no. 809/2004, we have prepared this report on the forecasts of Archos included in part 13 of its Reference Document dated April 28, 2006.

These forecasts and material assumptions underlying them were established under your responsibility pursuant to the provision of EC regulation no. 809/2004 and the recommendations of the CESR relating to forecasts.

It is our responsibility, based on our work, to express an opinion in the terms required by Appendix I, point 13.2 of EC regulation no. 809/2004, on the adequacy of the preparation of such forecasts.

We have conducted our work in accordance with professional standards applicable in France. This work included an assessment of the procedures followed by management to prepare the forecasts and the application of controls to ensure that the accounting policies adopted are consistent with those applied for the preparation of historic financial information of Archos. The work also involved obtaining information and explanations that we considered necessary to provide reasonable assurance that the forecasts are adequately prepared on the basis of assumptions that have been stated.

We recall that, since forecasts are by nature uncertain, actual results will on occasions materially differ from the forecasts presented, and we accordingly make no opinion on the probability that such forecasts will actually occur.

In our opinion,

§ The forecasts have been adequately prepared on the stated basis § The accounting policies adopted for purposes of this forecast are consistent with the accounting policies followed by Archos

36 Signed in Paris and Neuilly-sur-Seine on April 28, 2006

The Statutory auditors Members of the Compagnies Régionales de Paris et de Versailles (Paris and Versailles auditors associations)

Frédéric Bitbol Price WaterhouseCoopers Audit Vincent Gaide

10.5.2 Conversion of 50% of the convertible bonds held by EchoStar completed on April 14, 2006

The forced conversion of the second tranche of the convertible bonds was requested by the Company of EchoStar and completed on April 14, 2006 by confirmation form from EchoStar.

In a letter dated March 3, 2006, EchoStar informed the Company of its intent to convert, in addition to this forced conversion, another 25% tranche of the convertible bonds. To that end, the Company waived its right regarding the forced conversion of the third tranche. This conversion was therefore completed on April 14, 2006 by confirmation form from EchoStar.

As of the date of this document, three 25% tranches of the bonds have been converted. The amount remaining booked as liabilities after conversion of 75% of the bonds is €1,253,000.

The fourth tranche is convertible solely at the initiative of EchoStar. EchoStar may at any time convert the 553,040 bonds remaining until the maturity date of the bonds.

The Company's share capital now amounts to €3,932,124, comprising 7,864,247 shares of common stock with a par value of €0.50 and one preferred share with a par value of €0.50.

The bond loan remaining as of this date was booked in accordance with standards IAS 32 and IAS 39 according to the following principle (Note 2.13 Long-term liabilities from the notes to the consolidated financial statements at December 31, 2005): "The non-derivative long-term liabilities are initially booked at their fair market value, after issue costs are deducted, and are subsequently revalued at the redemption cost. Any difference between the amount initially received (after deduction of issue costs) and the amount ultimately redeemed is booked as income over the life of the loan in accordance with the effective interest rate method. This effective interest rate is determined for each transaction."

The effective interest rate is 10%.

37 Effects of conversion

At In € thousands 31-Dec-04 07-Apr-05 12-Oct-05 31-Dec-05 14-Apr-06 maturity (1) (2) (3) (4) (5) IFRS IFRS IFRS IFRS IFRS IFRS Share capital 3,103 3,103 3,379 3,379 3,932 4,208 Premiums related to capital 16,761 18,342 19,299 20,385 22,338 23,742 Bonds issued booked as long- 0 4,870 3,701 3,760 1 253 0 term financial liabilities Interest booked as income 0 0 240 299 130 427 relating to the bond loan (1) EchoStar bond loan issued for €7 million (2) Conversion of 25% of the convertible bonds (3) At closing, reclassification as Premiums related to reserve capital for €1,086,000, with no connection to the loan (4) Conversion of 50% of the convertible bonds (5) In the event of conversion of the fourth tranche at maturity – The interest carried corresponds to the amount of interest carried as income until maturity, or ten years.

38