SHAREHOLDERS AGREEMENT
BETWEEN
MITSUI & CO., LTD.
MITSUI & CO. (U.S.A.), INC.
AND
H POWER CORP.
DATED AUGUST 6TH, 2001
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (hereinafter called the "Agreement") made and
entered into this 6th day of August, 2001 (hereinafter called the "Effective
Date"), by and between MITSUI & CO., LTD., a company organized and existing
under the laws of Japan, having its principal place of business at 0-0,
Xxxxxxxxx 0-xxxxx, Xxxxxxx-xx, Xxxxx, Xxxxx (hereinafter called "Mitsui Japan"),
MITSUI & CO. (U.S.A.), INC., a company organized and existing under the laws of
State of New York, having its principal office at Met Life Building, 000 Xxxx
Xxxxxx, Xxx Xxxx, XX, 00000-0000 (hereinafter called "Mitsui USA", Mitsui Japan
and Mitsui USA shall be hereinafter collectively called "Mitsui") and H Power
Corp. (hereinafter called "HP"), a company organized and existing under the laws
of State of Delaware, having its principal office at 0000 Xxxxx Xxxxxx, Xxxxxxx,
XX 00000.
WITNESSETH:
WHEREAS, HP is engaged in the manufacture and sale of proton exchange
membrance fuel cell products and integrated systems, as more fully described in
Exhibit A attached hereto (hereinafter called "Products");
WHEREAS, Mitsui has promoted and distributed the Products manufactured by
HP to customers in Japan, in accordance with the distribution agreement made and
entered into between HP and Mitsui on May 12, 2000 with respect to the sale and
distribution of the Products in Japan; and
WHEREAS, HP and Mitsui (hereinafter individually called a "Party" and,
collectively, the "Parties") desire to incorporate a new company in Japan the
purpose of which wil be to conduct a feasibility study for selling and
distributing the Products in Japan and, if both parties are in agreement, in
countries other than Japan;
NOW, THEREFORE, in consideration of the undertakings of the Parties herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be bound
hereby, agrees as follows:
ARTICLE 1 INCORPORATION OF THE COMPANY
1.01 The Parties shall, as soon as practicable after the execution of this
Agreement, incorporate, or cause to be incorporated, in Japan a
private company limited by share (Kabushiki Kaisha) to be named H
Power Japan (hereinafter called the "Company") under the laws of
Japan.
1.02 The registered office of the Company shall be located at 0-0
Xxxxxxxxx, 0-xxxxx, Xxxxxxx-xx, Xxxxx, Xxxxx, within the building of
Mitsui's headquarters.
1.03 The initial purpose of the Company shall be to conduct a feasibility
study (hereinafter called the "F/S") for the sale and distribution of
the Products by the Company in Japan and any other countries as
mutually agreed upon between the Parties (hereinafter called the
"Territory")
1.04 Mitsui will provide general overhead and administrative services to
the extent practical. Any outside services or out of pocket expenses
will be paid by the Company. The costs for such outside services
shall be pre-approved by both HP and Mitsui prior to contracting for
such services.
1.05 Mitsui agrees to provide a detailed operating budget for the Company
to be reviewed and approved by HP and Mitsui prior to the expenditure
of any funds by the Company. Any costs and expenses over and above
the approved budgeted items must be reviewed and approved in advance
by HP and Mitsui.
1.06 The Company shall keep accurate, full and complete accounts showing
its assets and liabilities, operations, transactions and financial
condition.
ARTICLE 2 F/S
2.01 The Parties shall cause the Company to conduct the F/S for a period
of nine (9) months immediately following the legal formation and
establishment of the Company, subject to earlier termination or later
extension as mutually agreed by the Parties (hereinafter called the
"F/S Period").
2.02 During the F/S Period, the Parties shall cause the Company to perform
the following work in furtherance, and as a part of, the F/S:
(i) studying marketing strategy for the sale and distribution of
the Products;
(ii) studying the business plans, including, but not limited to,
potential market volume of the Products in the Territory,
marketing time schedule, sales volume of the Products, etc,
and necessary customizing items of the Products for the sale
and distribution of the Products;
(iii) developing an operating plan for the sale and distribution of
the Products;
(iv) reporting to the Parties the results of work performed by the
Company during the F/S Period;
(v) discussing with the related Japanese governmental sectors and
collecting information on deregulation and various rules and
regulations which may affect the marketing of the Products in
the Territory;
(vi) studying branding opportunities, including the use of the HP
brand in the Territory; and
(vii) performing such other studies and work as mutually agreed to
by the Parties from time to time.
2.03 The Parties shall cause the Company to report the results of the F/S
(hereinafter called the "Final Report") to the Parties at the end of
the F/S Period, or such earlier date as selected by the Board of
Directors of the Company (hereinafter called the "Board").
2.04 In no event shall the intellectual property, or any other
confidential information of the Company be shared with, or
transferred to, any other party without the prior written consent of
the other Party. In addition thereto, Mitsui shall not disclose,
share or transfer any such intellectual property or any other
confidential information of the
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Company to any other division of Mitsui that competes with, or is
known to be planning to compete with, HP's fuel cell business.
ARTICLE 3 COMMENCEMENT OF DISTRIBUTION
3.01 Within ninety (90) days after the receipt of the Final Report, each
Party shall advise the other Party and the Company, in writing, of
its decision (which each Party shall be entitled to make in its sole
and absolute discretion) with respect to the issue of whether the
Company should or should not commence to sell and distribute the
Products following the F/S Period (hereinafter called the
"Commencement Notice").
3.02 If both Parties agree that the Company should commence to sell and
distribute the Products following the F/S Period, the Parties shall,
within a period of sixty (60) days (unless mutually extended)
immediately following the date of the second Party's Commencement
Notice, negotiate, reasonably and in good faith, the terms and
conditions of and enter into a new shareholders agreement which will
supercede this Agreement and will govern in all respects the
capitalization, rights and preferences of stock, including but not
limited to voting, dividend, liquidation and registration, capital
contributions, corporate governance and operations and management of
the Company and the relationship of the Parties after the
commencement of sale and distribution of the Products (hereinafter
called the "New Shareholders Agreement"); provided, however, that
neither Party shall have any obligation to enter into such New
Shareholders Agreement or any other agreement(s) with respect to such
matters.
3.03 If neither Party wants to proceed with the Company's commencement of
the sale and distribution of the Products following the F/S Period,
or if the Parties fail to enter into the New Shareholders Agreement
within sixty (60) days (unless mutually extended) pursuant to Article
3.02 hereof, then the Parties shall immediately take all necessary
actions to cause the prompt dissolution and winding up of the
Company. For the purpose of Article 3, a Party shall be deemed not to
want to proceed with the Company's commencement of the sale and
distribution of the Products if such Party fails to send the
Commencement Notice in accordance with the provisions of Article
3.01.
3.04 If one Party wants to proceed with the commencement of the sale and
distribution of the Products (hereinafter called the "In Favor
Party") and the other Party does not want to proceed with such
commencement of the sale and distribution of the Products
(hereinafter called the "Opposing Party"), the Opposing Party shall
sell to the In Favor Party, and the In Favor Party shall purchase,
all (but not less than all) of the Shares owned by the Opposing Party
at the FMV (as defined below) per share determined as of the last day
of the F/S Period (but, in no event, less than one Japanese Yen). If
the In Favor Party is Mitsui, Mitsui shall not use "H Power" or any
name substantially similar to it as part of the Company's name after
its purchase of the Shares owned by HP pursuant to this Article 3.04.
"FMV" means the fair market value of the Shares per share as
determined initially by mutual agreement of the Parties. If the
Parties are unable to determine such FMV within sixty (60) days after
the date of the second Party's Commencement Notice or the expiration
of the term as provided in Article 3.01
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if one Party fails to send the Commencement Notice, the Parties shall
cause the Company to be dissolved and wound up.
3.05 Upon any dissolution and winding up of the Company, the Parties agree
that HP shall own the name H Power Japan. The F/S, including market
data information, and operating plan, shall be jointly owned by both
Parties. In the event of such winding up, all such jointly owned
intellectual property shall not be disclosed, shared or transferred
to any other party or used for any other purpose, without the prior
written consent of both Parties. After such winding up, Mitsui shall
not disclose, share or transfer any such jointly owned intellectual
property to any other division of Mitsui that competes with, or is
known to be planning to compete with, HP's fuel cell business. Both
HP and Communication Systems & Cables Division of Mitsui Japan and
Communications, Transportation & Industrial Project Department of
Mitsui USA agree not to handle any competitive product with the
Product in the Territory for a period of one year after the winding
up of the Company. All intellectual property developed by HP or
within the Company relating to the Product shall solely belong to HP,
unless otherwise mutually agreed to in writing by both Parties.
ARTICLE 4 CAPITAL OF THE COMPANY
The issued capital at the time of incorporation of the Company shall be Twenty
Million Japanese Yen ((Yen)20,000,000) represented by four hundred (400) shares
of common stock with par value per share of fifty thousand Japanese Yen
((Yen)50,000) (hereinafter each called a "Share" and collectively called the
"Shares").
ARTICLE 5 SUBSCRIPTION FOR SHARES; PAYMENT FOR SHARES
5.01 The Parties shall subscribe for Shares, at par per share, to be
issued at the time of incorporation of the Company as follows:
(i) HP 200 Shares
(ii) Mitsui 200 Shares
-----------------------------
Total 400 Shares
5.02 The Parties shall, upon allotment, pay for all Shares subscribed for
in cash in full at the time of subscription pursuant to Article 5.01
hereof.
5.03 Any additional capital shall be contributed and Shares subscribed for
as mutually agreed between the Parties so long as the percentage of
Shares owned by each Party remains equal.
ARTICLE 6 ARTICLES OF INCORPORATION
The Company shall be managed under the provisions of this Agreement, the
Articles of Incorporation (Teikan) and the applicable laws and regulations of
Japan.
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ARTICLE 7 BOARD OF DIRECTORS; BOARD MEETINGS; OFFICERS
7.01 The Board shall be composed of four (4) directors (hereinafter called
the "Directors"), of which two (2) shall be designated by HP, and two
(2) shall be designated by Mitsui. Each Party shall notify the other
Party of the name(s), address(es) and personal history(ies) of the
persons designated by each Party to serve as Director within ten (10)
days of the date of this Agreement and not less than thirty (30) days
prior to the date of the general shareholders' meeting at which the
election of Directors shall be acted upon. If any Directors
designated by the Parties ceases to serve as a Director for any
reason, such designator shall have the right to immediately designate
a replacement for such Director. In addition, the designator may
remove its designated Director and appoint a replacement Director at
any time and from time to time, in its sole discretion and the other
Party shall cast its votes for such appointment at the general
shareholders' meeting of the Company. Each Party shall cause the
Directors designated by it hereunder to vote and otherwise act
pursuant to the provisions set forth herein.
7.02 The quorum necessary for the transaction of the business of the Board
at a duly convened meeting of the Board (hereinafter called the
"Board Meeting") shall at all times be four (4) Directors.
7.03 Any action taken by the Board at a duly convened Board Meeting shall
require approval of all the Directors present in person or by any
other means permissible under the Japanese law at such Board Meeting.
7.04 Mitsui shall be entitled to designate one of its two (2) Directors as
the Company's representative director (hereinafter called the
"Representative Director"). The Representative Director shall be the
President of the Company and shall serve as chairman of the general
shareholders' meeting of the Company. One of the Directors designated
by HP shall serve as chairman of the Board Meeting. At least one of
the HP Directors will be responsible for the review of the financial
operations of the Company.
7.05 A regular Board Meeting shall be held quarterly upon proper advance
notice to the Directors. The initial Board Meeting shall take place
within two (2) months of the Effective Date hereof. Extraordinary
Board Meetings shall be convened by the Chairman upon ten (10) days
advance written notice from a Director appointed by any Party.
Notwithstanding the above, in case of emergency, such period for such
notice shall be shortened with the consent of all Directors. The
meeting place of the Board of Directors shall rotate between Japan
and the United States.
7.06 Officers of the Company shall be elected by the Board to serve at the
pleasure of the Board.
ARTICLE 8 STATUTORY AUDITOR
The Company shall have one (1) statutory auditor, who shall be designated in
writing by the mutual agreement of the Parties.
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ARTICLE 9 PRIOR APPROVAL OF PARTIES
The Company shall not be allowed to engage in any business other than the F/S
unless otherwise specifically agreed to in writing by the Parties. The following
matters shall require the prior written consent of both Parties:
(i) any amendment to the Articles of Incorporation of the Company;
(ii) any increase in or reduction of the authorized, issued or
paid-up capital of the Company;
(iii) making any loan by the Company, incurring any indebtedness by
the Company or guaranteeing payment of any loan to any third
party by the Company;
(iv) approving any profit and loss statement or balance sheet of the
Company and declaring and distributing any dividend by the
Company;
(v) the sale, lease, assignment, transfer or other conveyance of all
or substantially all the assets of the Company or the
consolidation or merger involving the Company or the acquisition
of any assets or equity interests of any third party;
(vi) the liquidation, dissolution or winding-up of the Company except
as provided in Article 3;
(vii) the appointment or termination of the Company's auditor;
(viii) the increase in the authorized number of members of the
Company's Board;
(ix) approving the annual budget, capital expenditure budget,
strategic plan and any amendments thereto, or expending any
amounts not set forth in the budgets approved in accordance with
the preceding clause;
(x) a material change in the purpose or business of the Company;
(xi) transactions with any officer, director or shareholder;
(xii) any transaction not in the ordinary course of business; and
(xiii) any other matter not specified hereinabove that materially
affects or could materially affect the Company or any Party's
interest in the Company.
ARTICLE 10 UNDERTAKINGS OF THE PARTIES:
10.01 For the implementation of the F/S, Mitsui shall provide the following
support services to the Company:
(i) general overhead and administrative services to the extent
practical;
(ii) providing the Company with non-confidential information and
advice regarding the Japanese governmental rules and
regulations, expected deregulation schedule of the same, and
similar industry in Japan;
(iii) collecting various data of the potential market of the Products,
such as the number of potential customers,
(iv) assistance to the Company in establishing relationships with
Japanese potential customers and suppliers relating to the
Products in which Mitsui already has good business relations;
(v) providing cost references of various services and facilities in
Japan so that the Company can conduct the F/S; and
(vi) assistance to HP in understanding Japanese business customs and
practices.
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10.02 For the implementation of the F/S, HP shall provide the following
support services to the Company:
(i) providing technical and operational advice which shall be
subject to confidentiality agreements.
(ii) providing pricing issue of the Products including future pricing
targets with reasonable research and investigation; and
(iii) providing the Company with information and advice regarding the
Products, and similar industry matters in the United States,
which shall all be subject to confidentiality agreements.
10.03 All the costs and expenses incurred by each Party for providing the
above support services to the Company shall be borne and paid by each
Party.
ARTICLE 11 NO LOANS
All costs, expenses, fees and other charges incurred by the Company, except as
stated herein contained, shall be disbursed from the Company's paid in capital.
In no event shall the Company borrow any funds or accept any debt financing for
the conduct of its business without the mutual consent of the Parties. If the
Company expends all of its funds before completing the F/S, the Parties (unless
they otherwise agree) shall immediately cause the Company to cease operations
and promptly prepare the Final Report.
ARTICLE 12 RESTRICTIONS ON TRANSFER OF SHARES
Notwithstanding anything herein to the contrary, neither Party shall sell,
exchange, assign or otherwise transfer or dispose of, directly or indirectly,
any or all its Shares or any interest therein to any third party or related
parties without the prior written consent of the other Party. Notwithstanding
the foregoing for tax, or other reorganizational reasons, HP may assign and
transfer all, but not less than all, of its Shares to any of HP's affiliates
under HP's responsibilities together with this Agreement pursuant to Article
15.07 of this Agreement, provided that HP shall remain, together with such
affiliate, jointly and severally liable for any and all the obligations under
this Agreement.
ARTICLE 13 TERM
This Agreement shall become effective on the Effective Date hereof and continue
in full force and effect until the earliest of:
(i) the execution of the New Shareholders Agreement by the Parties,
(ii) the completion of the Share transfer to the other Party in
accordance with Article 3.04 hereof or to a third party in
accordance with Article 12 hereof, or
(iii) the dissolution and winding up of the Company in accordance with
Article 3 or Article 9 of this Agreement.
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ARTICLE 14 EVENT OF DEFAULT
14.01 In the event that:
(i) a Party fails to perform its material obligations hereunder,
or breaches any of its material obligations contained herein
and fails to cure such breach within thirty (30) days
following delivery to such a Party of a written notice of the
failure or breach; or
(ii) a Party becomes insolvent or bankrupt, or makes an assignment
for the benefit of creditors, or if a receiver is appointed,
or if either Party commits any other act indicating insolvency
(the events described in (i) and (ii) are called herein a
"Breach(es)," the Party described in (i) above or this (ii) is
called the "Breaching Party" and the other Party not described
in (i) above or this (ii) is called the "Non-Breaching
Party"),
then the Non-Breaching Party may, without prejudice to any other rights
and remedies available or given at law or hereunder, (i) acquire from
the Breaching Party all or any part of the Shares of such Breaching
Party or (ii) sell to the Breaching Party all or any part of the Shares
held by the Non-Breaching Party, at a price calculated based on the net
asset value of the Company (the amount by which the aggregate of assets
of the Company exceeds the aggregate of the liabilities) on the most
recent balance sheet of the Company, provided the price of the Shares
shall be no less than one Japanese Yen. However in no event shall any
intellectual property rights, including those set forth in Article
3.05, with respect to the Products be transferred to Mitsui.
14.02 The Parties agree to take all necessary actions to cause the prompt
dissolution and winding-up of the Company if the Breaching Party fails
to sell to or purchase from the Non-Breaching Party the Shares within a
reasonable period pursuant thereto.
14.03 Each of Mitsui Japan and Mitsui USA shall be jointly and severally
responsible for any and all obligations of Mitsui set forth hereunder.
ARTICLE 15 GENERAL
15.01 The failure of one Party at any time to require performance by the
other Party of any provision hereof, shall in no way affect such
Party's right to require full performance thereof at any time
thereafter, nor shall the waiver by one Party of a breach of any
provision hereof, be taken or held to be a waiver by such Party of any
succeeding breach of such provision or as a waiver of the provision
itself.
15.02 be in writing and delivered personally, or sent by prepaid registered
post or sent fax (with electronic confirmation of delivery), by an
internationally recognized courier or overnight delivery service to the
Party concerned or the Company at its address or fax number set forth
below, or such other address or fax number as any Party concerned and
the Company shall have provided to the Company and all of the other
Parties (as the case may be) in the manner described in this Article
15.02. The initial addresses and facsimile numbers of the Parties and
the Company are set forth below:
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Mitsui Japan: Fax: x00-0-0000-0000
Airmail: Mitsui & Co., Ltd.
TKMLD section
0-0-0, Xxxxxxxx, Xxxxxxx-xx
Xxxxx 000-0000
Mitsui USA: Fax: 000-000-0000
Airmail: Mitsui & Co. (U.S.A.), Inc.
NYCMN section
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
HP: Fax: 000-000-0000
Airmail: H Power Corp.
0000 Xxxxx Xx.
Xxxxxxx, XX 00000
Attn: H. Xxxxx Xxxxxxx, CEO
Each Party hereto may, at any time, change its address, by
giving notice in manner hereinabove provided.
15.03 This Agreement shall be governed by and construed in accordance with
the laws of Japan.
15.04 Each Party agrees to act reasonably and in good faith to avoid disputes
hereunder. In the event of an occurrence of a dispute, controversy or
difference hereunder or alleged breach by a Party of its obligations
hereunder (hereinafter called the "Dispute"), the Parties shall submit
their Dispute for binding resolution by arbitration in accordance with
the rules of conciliation and arbitration of the International Chamber
of Commerce. The arbitration shall be held in Hawaii. The award of the
arbitrator(s) shall be final, binding on and nonappealable by Parties,
and judgment on such award may be entered in any court or tribunal
having jurisdiction thereof.
15.05 This Agreement constitutes the entire agreement between the Parties
with respect to the subject matter hereof and supersedes all prior
communications, understandings and agreements relating thereto except
as otherwise provided herein. For the avoidance of doubt, the execution
of this Agreement shall not affect any terms and conditions of the
Distribution Agreement.
15.06 No amendment to, modification or change of this Agreement shall become
effective unless such amendment, modification or change is confirmed in
writing and executed by both Parties.
15.07 This Agreement shall bind and inure to the benefit of each Party and
its respective successors and assigns. This Agreement may not be
assigned by either Party without the prior written consent of the other
Party. Notwithstanding the foregoing for tax, other reorganizational
reasons, HP may assign this Agreement at any time to any of its
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affiliates under HP's responsibilities upon written notice to Mitsui,
provided that HP shall remain, together with such affiliate, jointly
and severally liable for any and all the obligations under this
Agreement
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the
Effective Dates.
MITSUI & CO, LTD.
By: /s/ Xxxxxxxxx Xxxxxxxx
---------------------------------
Name: Xxxxxxxxx Xxxxxxxx
Title: General Manager
Communication Systems
& Cables Division
MITSUI & CO.(U.S.A.), Inc.
By: /s/ Xxxxx Xxxxx
---------------------------------
Name: Xxxxx Xxxxx
Title: General Manager
Communications,
Transportation &
Industrial Project
Dept.
H Power Corp.
By: /s/ H. Xxxxx Xxxxxxx
----------------------------------
Name: H. Xxxxx Xxxxxxx
Title: Chief Executive
Officer
Exhibit A
---------
- Products -
EduKit-------------------------------A teaching tool
PowerPem D35-------------------------Demonstration System
PowerPem SSG50-----------------------General Purpose System
PowerPem VMS50-----------------------Remote Power System
PowerPem PS250-----------------------Portable Power System
PowerPem PS500-----------------------Portable Power System
HCSP-250-----------------------------Hydride Charging Station
EPAC250 -----------------------------Stationary Backup Power System
EPAC500 -----------------------------Stationary Backup Power System
HPAC---------------------------------Multi-Kilowatt System
HPower Stack-------------------------Stack manufactured by HPower
High Pressure Reg--------------------High Pressure Regulator Kit
