EXHIBIT 10.5
VALUE PARTICIPATION AGREEMENT
THIS VALUE PARTICIPATION AGREEMENT (this "Agreement") is (dated as of
March 27, 2000, by and between AMERIGON INCORPORATED, a California corporation
(the "Company"), and FORD MOTOR COMPANY, a Delaware corporation ("Ford").
Statement of Purpose
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The Company and Ford entered into a Memorandum of Understanding effective
as of January 24, 2000, as amended, pursuant to which the parties set forth
certain understandings with respect to a directed sourcing arrangement pursuant
to which Ford would direct its Tier 1 Suppliers to purchase from the Company,
and the Company world manufacture and supply, climate control seating units for
installation in Ford, Lincoln and Mecury badged vehicles produced and sold in
the North America; and
As consideration for Ford entering into such arrangement with the Company,
the Company proposes to issue to Ford warrants to purchase common stock of the
Company equal to 13% of the Fully Diluted Common Stock of the Company as of
Closing Date;
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
followed:
ARTICLE I
DEFINITIONS
1.1. Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated;
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person; provided, that in no event shall Ford (or any
Affiliate of Ford) be deemed to be an Affiliate of the Company. Without limiting
the foregoIng, a Person shall be deemed to control another Person if such Person
possesses, directly or Indirectly, the power (a) to vote 10% or more of the
securities having ordinary voting power for the election of directors or other
managers of such other Person or (b) to direct or cause the direction of the
management and policies of such other Person, whether through the ownership of
votIng securities, by contract or otherwise.
"Aggregate Number" means the number of shares of Common Stock that
would constitute 13% of the Fully Diluted Common Stock. The Aggregate Number
shall be adjusted from time to time as provided in Section 4.10 hereof. As of
the Closing Date the Aggregate Number is 1,068,560.
"Agreement" means this Value Participation Agreement, as amended or
supplemented from time to time.
"AntiDilution Increase" has the meaning assigned thereto in Section
4.10(a)(iv).
"Articles of Incorporation" means the Amended and Restated Articles
of Incorporation of the Company, as further amended or supplemented from time to
time in accordance with this Agreement.
"Base Volume Levels" has the meaning assigned thereto in Section
4.2.
"Bonus Volume Levels" has the meaning assigned thereto in Section
4.2. "Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in Detroit, Michigan are authorized or required by law or
executive order to close.
"Buyer" has the meaning assigned thereto in Section 4.14.
"CCS Units" means climate controlled seating units manufactured by
the Company that provide heating and cooling or heating and ventilation.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations, rights in or other equivalents (however
designated) of such Person's capital stock, partnership interests, membership
interests or other equivalent equity interests and any rights (other than debt
securities convertible into or exchangeable for capital stock), warrants or
options exchangeable for or convertible into such capital stock or other equity
interests.
"Cashless Exercise" has the meaning assigned thereto in Section
4.4(b).
"Change of Control" means (a) a sale of all or substantially all of
the assets of the Company, or any consolidation of the Company with, or merger
of the Company into, any other Person not wholly owned by the Company, or any
merger of another Person Into the Company (other than a consolidation or merger
which does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Capital Stock of the Company or a merger
or consolidation with any Person immediately after which the Control Group
maintains Control of the surviving or resulting entity and the resulting or
surviving entity owns the technology with respect to the heating and cooling or
heating and ventilating units which are incorporated into the CCS Units); or (b)
the Control Group ceases to maintain Control of the Company.
"Class A Warrants" means the certain Class A Warrants for 1,418,780
shares of Common Stock at an exercise price of $25.00 per share, as may be
adjusted from time to time, expiring on the Class A Warrant Expiration Date, and
the certain Contingent Common Stock Purchase Warrants for 1,047,060 shares of
Common Stock for which
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exercise is contingent upon the Class A Warrants being exercised, at an exercise
price equal to that of the Class A Warrants, as may be adjusted from time to
time, expiring on the Class A Warrant Expiration Date.
"Class A Warrant Expiration Date" means February 12,2002.
"Class A Warrant Shares" means the shares of Common Stock issued by
Company as a result of the exercise of any Class A Warrants.
"Closing" has the meaning assigned thereto in Article VI.
"Closing Date" has the meaning assigned thereto in Article VI.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute thereto, and the regulations thereunder.
"Commission" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.
"Commission" means (a) the Class A common stock of the Company,
without par value, as described in the Articles of Incorporation, (b) any other
class of Capital Stock of the Company hereafter authorized having the right to
share in distributions either of earnings or assets without limit as to amount
or percentage or (c) any other Capital Stock into which such Common Stock is
reclassified or reconstituted,
"Contractual Obligation" means, as to any Person, any provision of
any securities issued by such Person or of any Indenture or credit agreement or
any agreement, instrument or other undertaking to which such Person is a party
or by which it or any, of its property is bound or to which it may be subject.
"Control" of any Person means (i) ownership or control of at least
thirty five percent (35%) of the combined voting power of the then outstanding
voting securities entitled to vote generally, and (ii) representatives or
designees comprise a majority of the board of directors (or other governing
body) of such Person.
"Control Group" means TMW Enterprises, Inc. and its Affiliates,
Westar Capital II LLC and its Affiliates, and the executive officers of the
Company.
"Convertible Securities" means evidences of indebtedness, shares of
stock or other securities which are directly or indirectly convertible or
exchangeable, with or without payment of additional consideration in cash or
property, for shares of Common Stock, either immediately or upon the onset of a
specified date or the happening of a specified event, including without
limitation the Series A Preferred Stock, without par value.
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"Cumulative Total" means the cumulative total of CCS Units purchased
by Tier 1 Suppliers for Installation Into components designated for installation
In Designated Vehicles and Other Ford Vehicles from January 1, 2001 through the
date of determination, as determined pursuant to Schedule 4.2(a).
"Designated Vehicles" means such Ford, Lincoln and Mercury badged
vehicles produced and sold in North America as may be designated by Ford from
time to time during the Exclusive Period, but shall not include Ford badged
vehicles produced by Auto Alliance, Inc. for Ford in the United States.
"Directed Sourcing Arrangement" has the meaning assigned thereto in
Section 2.1.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of the
Company or any ERISA Affiliate or (b) has at any time within the preceding six
years been maintained for the employees of the Company or any current or former
ERISA Affiliate.
"Environmental Laws" means any and all federal, state and local
laws, statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to
the protection of human health or the environment, including, but net limited
to, requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of Hazardous Materials. Environmental
Laws include, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. ss. 9601 et. seq.), the Hazardous
Material Transportation Act (49 U.S.C. ss. 331 et. seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et. seq.), the Federal Water
Pollution Control Act (33 U.S.C. ss. 1251 et. seq.), the Clean Air Act (42
U.S.C. ss. 7401 et. seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601
et. seq.), the Safe Drinking Water Act (42 U.S.C. ss. 300, et. seq.), the
Environmental Protection Agency's regulations relating to underground storage
tanks (40 C.F.R. Parts 280 and 281), and the rules and regulations promulgated
under each of these statutes, each as amended or supplemented.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, or any successor statute thereto, and the regulations thereunder.
"ERISA Affiliate" means any Person who together with the Company is
treated as a single employer within the meaning of Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b) of ERISA.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Exclusive Period" has the meaning assigned thereto in Section 2.1.
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"Exercise Price" has the meaning assigned thereto in Section 4.3.
"Fully Diluted" means, with respect to the Common Stock, as of a
particular time the total outstanding shares of Common Stock as of such time,
determined by treating all outstanding options, warrants and other rights for
the purchase or other acquisition of Common Stock (other than (i) the Warrants,
(ii) the Class A Warrants to the extent provided in Section 4.10(a)(i) hereof,
(iii) the Non-Plan Options for 37,334 shares of Common Stock at an exercise
price of $16.875 per share, (iv) the various Common Stock Purchase Warrants and
the Contingent Common Stock Purchase Warrants for 99,066 shares of Common Stock
at various exercise prices, and (v) the Unit Purchase Option for 330,848 shares
of Common Stock at $25 per share) as having been exercised and the shares issued
pursuant thereto, and by treating all outstanding Convertible Securities of the
Company as having been so converted, and by treating shares of Common Stock
Issuable under grants of stock options or other awards as of the Closing Date
under the Company's 1993 Stock Option Plan and 1997 Stock Incentive Plan as
having been issued.
"GAAP" means generally accepted United States accounting principles
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that are applicable
to the circumstances as of the date of determination.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Hazardous Materials" means any substances or materials (a) which
are or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any Environmental Law, (b) which are
toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise harmful to human health or the environment and are or
become regulated by any Governmental Authority, (c) the presence of which
require investigation or remediation under any Environmental Law or common law,
(d) the discharge or emission or release of which requires a permit or license
under any Environmental Law or other governmental approval, (e) which are deemed
to pose a health or safety hazard to persons or neighboring properties, (f)
which are materials consisting of underground or aboveground storage tanks,
whether empty, filled or partially filled with any substance, or (g) which
contain, without limitation, asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas.
"Holder" means Ford and any other holder of any of the Warrants or
any shares of Common Stock issued upon exercise of the Warrants.
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"Incremental Equity Financing" has the meaning assigned thereto in
Section 4.10(a)(iv).
"Incremental Equity Financing Period" has the meaning assigned
thereto in Section 4.10(a)(iv).
"Indemnified Party" has the meaning assigned thereto in Section
12.1.
"Intellectual Property" means all patents, patent rights, patent
applications, licenses, inventions, trade secrets, know-how, proprietary
techniques (Including process and substances), trademarks, service marks, trade
names, copyrights and other intangible proprietary rights.
"Liabilities" has the meaning assigned thereto in Section 12.1.
"Lien" means any lien, mortgage, pledge, security interest, charge
or encumbrance of any kind.
"Market Value Per Share" means if shares of Common Stock are then
listed or admitted for trading on any national securities exchange or traded on
any national market system, the average of the daily closing prices for the ten
(10) trading days before such date, excluding any trades which are not bona
fide, arm's length transactions. The closing price for each day shall be the
last sale price on such date or, if no such sale takes place on such date, the
average of the closing bid and asked prices on such date, in each case as
officially reported on the principal national securities exchange or national
market system on which such shares are then listed, admitted for trading or
traded.
"Material Adverse Effect" means a material adverse effect upon (a)
the business, assets or condition (financial or otherwise) of the Company, taken
as a whole including without limitation the inability of the Company to produce
or supply CCS Units, (b) the ability of the Company to perform its material
obligations hereunder or under any Warrants.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Company or any ERISA Affiliate is
making, or is accruing an obligation to make, or has made or accrued an
obligation to make, contributions within the preceding six years.
"Nonmarket Transaction" has the meaning assigned thereto in Section
4.14.
"Other Ford Vehicles" means all vehicles produced by or for Ford
and/or Its Affiliates other than Designated Vehicles.
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"PBGC" means the Pension Benefit Guaranty Corporation or any
successor agency.
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or
Section 412 of the Code and which (a) is maintained for employees of the Company
or any ERISA Affiliates or (b) has at any time within the preceding six years
bean maintained for the employees of the Company or any of its current or former
ERISA Affiliates.
"Percentage Interest" means, with respect to any Holder, the
quotient, expressed as a percentage, of (a) the number of Warrant Shares for
which such Holder's Warrants may be exercised divided by (b) the Aggregate
Number.
"Permitted Transferee" means any Affiliate of Ford, any Pension Plan
which is sponsored by Ford or any of its Affiliates, or any donee of Ford or any
of its Affiliates which qualifies as a tax-exempt organization under Section
501(c)(3) of the Internal Revenue Code.
"Person" means any individual, firm, corporation, partnership,
trust, limited liability company, incorporated or unincorporated association,
joint venture, joint stock company, Governmental Authority or other entity of
any kind, and shall include any successor (by merger or otherwise) of such
entity.
"Principal Office" means the Company's principal office as set forth
in Section 13.2 hereof or such other principal office of the Company in the
United States of America the address of which first shall have been set forth in
a notice to the Holders.
"Public Offering" means any public offering of securities of the
Company registered under the Securities Act.
"Register", "registered", and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such
registration statement
"Registrable Securities" means the Warrant Shares, but shall not
include any Warrant Shares that have been issued and previously sold to the
public.
"Requirements of Law" means, with respect to a Person, the
certificate or articles of incorporation and bylaws or other organizational or
governing documents of such Person, and any law, treaty, rule, regulation,
right, privilege, qualification, license or franchise or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of Its property or to which such Person
or any of its property is subject or pertaining to any or all of the
transactions contemplated or referred to herein.
"Regulatory Requirement" has the meaning assigned thereto in Section
4.9(c).
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"Sale Notice" has the meaning assigned thereto in Section 4.14.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder.
"Standard Terms and Conditions" means Ford's Standard Purchase Order
Terms and Conditions as in effect from time to time.
"Stock Combination" has the meaning assigned thereto in Section
4.1(a)(ii)(C).
"Stock Dividend" has the meaning assigned thereto in section
4.1(a)(ii)(A).
"Stock Subdivision" has the meaning assigned thereto in Section
4.1(a)(ii)(B).
"Termination Event" means; (a) a Reportable Event" described in
Section 4043 of ERISA (other than a reportable event not subject to the
provision for 3O-day notice to the PBGC under Regulations promulgated under such
section), (b) the withdrawal of the Company or any ERISA Affiliate from a
Pension Plan during a plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA, (c) the termination of a Pension Plan,
the filing of a notice of intent to terminate a Pension Plan or the treatment of
a Pension Plan amendment as a termination under Section 4041 of ERISA, (d) the
institution of proceedings to terminate, or the appointment of a trustee with
respect to, any Pension Plan by the PBGC, (e) any other event or condition which
would constitute grounds under Section 4042(a) of ERISA for the termination of,
or the appointment of a trustee to administer, any Pension Plan, (f) the partial
or complete withdrawal of the Company or any ERISA Affiliate from a
Multiemployer Plan, (g) the imposition of a lien pursuant to Section 412 of the
Code or Section 302 of ERISA, (h) any event or condition which results in the
reorganization or insolvency of a Multiemployer Plan under Sections 4241 or 4245
of ERISA, or (l) any event or condition which results in the termination of a
Multiemployer Plan under Section 4041A of ERISA or the institution by PBGC of
proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA.
"Tier 1 Suppliers" means Tier 1 automotive suppliers who manufacture
components for installation into Designated Vehicles and other Ford Vehicles,
including without limitation Xxxxxxx Controls, Inc., Xxxx, Visteon and Motorola.
"Transaction" has the meaning assigned thereto in Section 4.10(b).
"Unvested Clawback Base Warrants" means Warrants which could have
Vested upon achievement of the Base Volume Level in the year immediately
preceding a Change of Control but did not Vest because such Base Volume Level
was not achieved.
"Unvested Clawback Bonus Warrants" means Warrants which could have
Vested upon achievement of the Bonus Volume Level in the year immediately
preceding a
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Change of Control but did not Vest because such Bonus Volume Level was not
achieved.
"Vested" has the meaning assigned thereto in Section 4.2.
"Volume Report" has the meaning assigned thereto in Section 3.4.
"Warrants" means the common stock purchase warrants issued by the
Company to Ford pursuant to this Agreement, as amended or supplemented from time
to time.
"Warrant Expiration Date" means, (a) with respect to any Vested
Warrants, the date which is the later of (i) seven years after the Closing Date
and (ii) five years from the date such portion first could have become Vested,
provided, that no Warrant Expiration Date shall be later than March 27, 2010,
and (b) with respect to any Warrants which do not Vest in the year they were
first eligible to Vest as provided in Section 4.2 (other than Warrants which are
first eligible to Vest in 2004), the date of the final year end Volume Report
for the year next succeeding the year in which such Warrants were first eligible
to Vest, and (c) with respect to any Warrants which are first eligible to Vest
in 2004 but do not Vest, either (i) if the Exclusive Period is not extended by
Ford through December 31, 2005 as provided in Section 2.1, the date of the final
year-end Volume Report for the year 2004, or (ii) if the Exclusive Period is
extended by Ford through December 31, 2005, the date of the final year-end
Volume Report for the year 2005.
"Warrant Shares" means (a) the shares of Common Stock issued or
issuable upon exercise of this Warrant in accordance with its terms and (b) all
other shares of the Company's capital stock issued with respect to such shares
by way of stock dividend, stock split or other reclassification or in connection
with any merger, consolidation, recapitalization or other reorganization
affecting the Company's capital stock.
ARTICLE II
OBLIGATIONS OF FORD
2.1. Exclusive Commitment. Ford hereby grants to the Company the exclusive
right, for the period from the Closing Date to December 31, 2004 (the "Exclusive
Period") to manufacture and supply CCS Units to Ford's Tier 1 Suppliers for
installation in Designated Vehicles as an optional or standard feature, as
determined by Ford in its discretion (the "Directed Sourcing Arrangement").
Volumes of CCS Units to be incorporated into Ford vehicles in any given year
will be based on Ford requirements as determined by pricing and retail customer
demand for the feature. Ford shall have the option, exercisable in its sole
discretion, to extend the Exclusive Period for one year to December 31, 2005 by
giving written notice to the Company no later than June 30, 2004 of its election
to so extend the Exclusive Period. At the quarterly review meeting for the
second quarter of 2004, the parties agree to discuss an extension of the
Exclusive Period.
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2.2. Technical Assistance. Ford shall provide the Company, at no cost to
the Company, technical assistance through Ford's Supplier Technical Assistance
Program on the same basis as Ford generally offers to its Tier 1 Suppliers.
2.3. Additional Agreements. Ford further agrees, during the Exclusive
Period, to do the following:
(a) Ford will, at its sole discretion, assist the Company in
purchasing components to the extent that there are similar components purchased
by the Company and Ford. Ford agrees to work with the Company to identify
suppliers within the Ford (excluding Visteon) supply base, that could supply
components to the Company at more competitive prices than the Company can obtain
from its own suppliers. Such prices may or may not be the same price that Ford
pays for similar components.
(b) Make a public announcement, in form and substance satisfactory
to Ford in its discretion, through the issuance of one or more press releases
(in addition to a release at the time of the execution of this Agreement) that
disclose both the use of CCS Units in the 2000 Navigator and Ford's arrangement
to specify the Company's products in its vehicles.
(c) Make available from time to time, at the discretion of Ford,
executive and technical personnel chosen by Ford to speak about Ford's use of
the Company's products at trade shows, conventions or market symposiums selected
by the Company and agreed to by Ford.
(d) Provide an incentive system that would have the effect of
encouraging program managers to incorporate the CCS Units into their programs.
(e) Provide high level purchasing management support to the Company
by:
(i) Arranging and attending meetings between Company employees
designated by the Company and key vehicle line executives and program managers
for the purpose of promoting the CCS feature on such line executives' and
program managers' vehicle lines and programs; and
(ii) Arranging meetings between Company employees designated
by the Company and vehicle line executives at Mazda, Jaguar, Ford of Europe and
Volvo to help promote the CCS feature on such line executives' vehicle lines.
(f) Notify each of its relevant Tier 1. Suppliers that the Company
is Ford's exclusive supplier of heating and cooling units for heated and cooled
or heated and ventilated seats. As reasonably requested by the Company, Ford
agrees to meet with the Company and Ford's Tier 1 Suppliers.
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(g) Hold quarterly review meetings with the Company where the status
of the purchases of CCS Units and incorporation of CCS Units into Designated
Vehicles and Other Ford Vehicles is reported and progress measured against goals
for both parties established at the immediately preceding quarterly review
meeting required under this clause (g). The Company will be represented at the
meeting by its CEO and Vice President of Sales and Marketing, and Ford will be
represented by its Business Development Manager and such other Ford employees
and executives as Ford deems appropriate.
ARTICLE III
OBLIGATIONS OF THE COMPANY
3.1. Company Undertakings. In consideration of the exclusive rights
granted to the Company by Ford hereunder, the Company agrees to continue to
provide CCS Units for installation in Designated Vehicles that are
technologically equal to or better than any competitive product that can be
substituted for the CCS Unit.
3.2. Pricing. Initial pricing for CCS Units shall be agreed to by the
Company and Ford, with mutually agreed price reductions to be determined during
the Exclusive Period. The Company's prices for CCS Units shall, during the
Exclusive Period, be competitive with any products offered by other suppliers
offering similar features.
3.3. Quality Assurance. The Company will, at all times during the
Exclusive Period, meet all of Ford's quality standards. The Company agrees to
achieve QS-9000 status by a date to be agreed upon by Ford and the Company.
Ford may, at its sole discretion and without breaching this Agreement,
periodically market test heated and cooled seats to ensure that technology,
price and quality remain competitive. Failure of the Company to comply with
Sections 3.1, 3.2 and 3.3 hereof and remain competitive in price, quality,
delivery or technology will give rise solely to the termination rights set forth
in Section 11.2 hereof, provided, that termination of the Directed Sourcing
Arrangement does not negate, vitiate or otherwise affect the Company's
obligations with respect to CCS Units previously delivered, including without
limitation all warranty obligations.
3.4. Volume Reports. The Company will maintain complete and accurate
records of the number of CCS Units said to Tier 1 Suppliers for installation in
components designated for installation onto Designated Vehicles and Other Ford
Vehicles. The Company will deliver to Ford, within thirty (30) days after the
end of each quarter, a detailed report (the "Volume Report") specifying the
number of CCS Units sold to each Tier 1 Supplier for installation in components
designated for installation into Designated Vehicles and Other Ford Vehicles
during such quarter, the total number of CCS Units sold to all Tier 1 Suppliers
for installation in components designated for installation into Designated
Vehicles and Other Ford Vehicles during the current calendar year and the
Cumulative Total sold by the Company to the Tier 1 Suppliers for installation in
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components designated for installation into Designated Vehicles and Other Ford
Vehicles during the Exclusive Period.
3.5. Standard Terms and Conditions. The Company agrees that all sales to
Tier 1 Suppliers of CCS Units shall be pursuant to, and the Company agrees to be
bound by, the Standard Terms and Conditions. Nothing in this Agreement shall be
deemed to modify, amend or supersede the Standard Terms and Conditions.
ARTICLE IV
ISSUANCE OR WARRANTS
4.1. The Warrants. (a) The Company agrees to issue to Ford Warrants in
substantially the form attached to this Agreement as Annex A and incorporated In
this Agreement by reference, to purchase the Aggregate Number of shares of fully
paid and non-assessable Common Stock, subject to vesting in accordance with
Section 4.2 hereof and adjustment in accordance with Section 4.10 hereof. On the
Closing Date, the Company shall issue to Ford Warrants to purchase 82,197 shares
of fully paid and non-assessable Common Stock (such number representing one
percent (1%) of the outstanding Common Stock on a Fully Diluted basis as of the
Closing Date, or 7.6923% of the Aggregate Number as of the Closing Date), fully
Vested and subject to adjustment in accordance with Section 4.10 hereof. On the
day after the Class A Warrant Expiration Date, the Company shall issue to Ford
Warrants to purchase that number of shares of fully paid and nonassessable
Common Stock equal to the Aggregate Number as of the Class A Warrant Expiration
Date minus the number of shares of Common Stock with respect to which Warrants
had previously been issued to Ford hereunder, and such Warrants shall be subject
to vesting in accordance with Section 4.2 and subject to adjustment in
accordance with Section 4.10 hereof, provided, that (a) in the event Ford
achieves the Base Volume Levels for calendar year 2001 during any of the first
three calendar quarters of 2001, the Company shall issue to Ford on the date
which is five (5) Business Days after delivery of the Volume Report indicating
achievement of such Base Volume Levels for 2001 additional Warrants for that
number of shares of fully paid and nonassessable shares of Common Stock equal
to 7.6923% of the Aggregate Number as of such date (it being understood and
agreed that if Ford achieves the 2001 Base Volume Levels during the fourth
quarter of 2001, such Warrants will be issued on the Class A Warrant Expiration
Oats), and (b) in the event of a Change in Control prior to the Class A Warrant
Expiration Date which results in all of the Warrants becoming fully Vested, the
Company will issue to Ford Warrants to purchase that number of shares of Common
Stock equal to the Aggregate Number less that number of shares of Common Stock
for which Warrants have previously been issued to Ford immediately prior to the
effective date of the Change of Control.
(b) Within five (5) Business Days after the Class A Warrant Expiration
Date, the Company shall issue to Ford Warrants to purchase that number of shares
of fully paid and non-assessable Common Stock equal to (1) that number of shares
of Common
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Stock issued by the Company during such calendar quarter as a result of the
exercise of any Class A Warrants multiplied by (ii) one percent (1%), or, If
Ford has achieved the Base Volume Levels for 2001 and additional Warrants have
been issued to Ford pursuant to Section 4.1 prior to the Class A Warrant
Expiration Date, two percent (2%). Such Warrants will be fully Vested upon
issuance.
(c) Within five (5) Business Days after the Class A Warrant Expiration
Date, the Company shall issue to Ford Warrants to purchase that number of shares
of fully paid and non-assessable Common Stock equal to (i) that number of shares
of Common Stock issued by the Company in all Incremental Equity Financings
multiplied by (ii) one percent (1%) or, if Ford has achieved the Base Volume
Levels for 2001, additional Warrants have been issued to Ford pursuant to
Section 4.1 prior to the Class A Warrant Expiration Date, and the shares issued
in such Incremental Equity Financings were not included in the Aggregate Number
prior to issuance of such Warrants, two percent (2%). Such Warrants will be
fully Vested upon issuance.
(d) The Company will deliver to Ford one or more certificates representing
the Warrants issued to Ford in such denominations as Ford requests. Such
certificates will be issued in Ford's name or in the name or names of its
designee or designees, as the case may be, so long as such designees are
Permitted Transferees. The Warrants shall expire on the Warrant Expiration Date.
4.2. Vesting Schedule. (a) The Warrants shall become exercisable
("Vested") during the Exclusive Period as set forth in subparagraph (b) of this
Section 4.2, based on achievement of certain minimum purchases by Tier 1
Suppliers of CCS Units ("Base Volume Levels") and additional purchases by Tier 1
Suppliers of CCS Units ("Bonus Volume Levels") at the levels set forth in
Schedule 4.2(a) attached hereto and made a part hereof and determined as
provided on such Schedule 4.2(a).
(b) The Warrants will Vest as follows:
(i) Initial Vesting: Warrants for the right to purchase 82,197
shares of fully paid and nonassessable Common Stock shall be Vested on the
Closing Date, without regard to volume levels.
(ii) Calendar year 2001: Five Business Days after the date of a
Volume Report for a calendar quarter in the year 2001 indicating purchases of
CCS Units equal to the Base Volume Level for 2001, Warrants for the right to
purchase that number of shares of fully paid and nonassessable shares of Common
Stock equal to 7.6923% of the Aggregate Number shall become Vested.
(ill) Calendar year 2002: Five Business Days after the date of a
Volume Report for a calendar quarter in the year 2002 indicating purchases of
CCS Units equal to the Base Volume Level for 2002, Warrants for the right to
purchase that number of shares of fully paid and nonassessable shares of Common
Stock equal to 15.3846% of the Aggregate Number shall become Vested. In
addition, five Business Days after the date of a Volume Report for a quarter in
the year 2002 indicating
13
purchases of a Cumulative Total of CCS Units equal to the Bonus Volume Level,
Warrants for the right to purchase that number of shares of fully paid and
nonassessable shares of Common Stock equal to 7.6923% of the Aggregate Number
shall become Vested.
(iv) Calendar year 2003: Five Business Days after the date of a
Volume Report for a calendar quarter in the year 2003 indicating purchases of
CCS Units equal to the Base Volume Level for 2003, Warrants for the right to
purchase that number of shares of fully paid and non-assessable shares of Common
Stock equal to 15.3846% of the Aggregate Number shall become Vested. In
addition, five Business Days after the date of a Volume Report for a quarter in
the year 2003 indicating purchases of a Cumulative Total of CCS Units equal to
the Bonus Volume Level, Warrants for the right to purchase that number of shares
of fully paid and nonassessable shares of Common Stock equal to 15.3846% of the
Aggregate Number shall become Vested.
(v) Calendar year 2004: Five Business Days after the date of a
Volume Report for a calendar quarter in the year 2004 indicating purchases of
CCS Units equal to the Base Volume Level for 2004, Warrants for the right to
purchase that number of shares of fully paid and non-assessable shares of Common
Stock equal to 15.3846% of the Aggregate Number shall become Vested. In
addition, five Business Days after the date of a Volume Report for a quarter In
the year 2004 indicating purchases of a Cumulative Total of CCS Units equal to
the Bonus Volume Level, Warrants for the right to purchase that number of shares
of fully paid and non-assessable shares of Common Stock equal to 15.3846% of the
Aggregate Number shall become Vested;
Provided, that, (A) the Vesting of any Warrants which do not Vest in any given
calendar year because the Base Volume Levels or the Bonus Volume Levels for such
year, as applicable, are not achieved shall be carried over to the next
succeeding calendar year, provided, that the Vesting of any Warrants which do
not Vest in 2004 shall only be carried forward if Ford has elected to extend the
Exclusive Period through December 31,2006 as provided in Section 2.1. If, during
the next succeeding calendar year, Ford achieves the Base Volume Levels for such
year, then any purchases of CCS Units which exceed that years Base Volume Levels
may be applied by Ford to achievement of the Base Volume Levels or Bonus Volume
Levels, as applicable, for the immediately preceding calendar year, and upon
achievement of such levels, the Warrants which were eligible to become Vested In
the preceding year shall become Vested, (B) notwithstanding anything herein to
the contrary, in the event the Cumulative Total of CCS Units equals or exceeds
the Bonus Volume Levels in any year which is earlier than the years set forth
above, those Warrants which would become Vested as a result of achievement of
such Bonus Volume Levels shall become Vested at the time of such achievement.
(c) The Warrants may also become Vested as provided in Section 4.15.
14
(d) Notwithstanding that the Warrants may be Vested, Ford covenants and
agrees that, without the consent of the Company, it will not exercise the
Warrants, in whole or in part, at any time if, as a result of such exercise,
Ford's ownership of Common Stock acquired through exercise of the Warrants would
exceed 9.9% of the outstanding Common Stock, as reported in the Company's most
recent Form 10-Q or Form 10-K.
4.3. Exercise Price.
The exercise price per share of Common Stock issued under each
Warrant will be based upon the year in which Ford achieves the Base Volume
Levels or Bonus Volume Levels, as applicable, resulting In such Warrant becoming
Vested (notwithstanding when the Volume Report indicating achievement of such
levels is delivered), as set forth in the table below, as adjusted in accordance
with Section 4.10 (the "Exercise Price"):
----------------------------------------------------------------
Year 2000 2001 2002 2003 2004 2005
Vested
----------------------------------------------------------------
Exercise $2.75 $3.75 $4.75 $5.75 $6.75 $7.75
Price
----------------------------------------------------------------
4.4. Exercise
(a) Subject to the limitation in Section 4.2(c), the Warrants may be
exercised in whole or in part at any time or from time to time on or after the
date such Warrant becomes Vested on any day that is a Business Day, for all or
any part of the number of Warrant Shares purchasable upon its exercise, in order
to exercise any Warrant, in whole or in part, a Holder will deliver to the
Company at the address designated by the Company pursuant to Section 12.4, (i) a
written notice of such Holder's election to exercise its Warrants, which notice
will specify the number of Warrant Shares to be purchased pursuant to such
exercise, (ii) the Exercise Price, in an amount equal to the aggregate purchase
price, for all Warrant Shares to be purchased pursuant to such exercise, in cash
or other immediately available funds, and (iii) its Warrant(s). Such notice will
be substantially in the form of the subscription form attached to the Warrants.
In the case of payment of all or a portion of the Exercise Price pursuant to
Section 4.4(b), the direction by the exercising Holder to make a Cashless
Exercise (as defined below) shall serve as accompanying payment for that portion
of the Exercise Price. Upon receipt of such subscription form, the Company will,
as promptly as practicable, and in any event within three (3) Business Days,
execute, or cause to be executed, and deliver to such Holder a certificate or
certificates representing the aggregate number of Warrant Shares, as provided In
this Agreement. The stock certificate or certificates so delivered will be in
such denominations as may be specified in such notice and will be registered in
the name of such Holder, or such other name of a Permitted Transferee as
designated in such notice. A Warrant will be deemed to have been exercised, such
certificate or certificates will be deemed to have been issued, and such Holder
or any other Person so designated or named in such notice will be deemed to
have become a holder of record of such shares for all
15
purposes, as of the date that such notice, together with payment of the Exercise
Price and the Warrant(s), is received by the Company. If a Warrant has been
exercised in part, the Company will, at the time of delivery of such certificate
or certificates, deliver to such Holder a new Warrant evidencing the rights of
such Holder to purchase a number of Warrant Shares with respect to which the
Warrant has not been exercised, which new Warrant will, In all other respects,
be identical with the Warrants, or, at the request of such Holder, appropriate
notation may be made on the Warrant and the Warrant shall be returned to such
Holder.
(b) Each exercising Holder shall have the right to pay all or a
portion of the Exercise Price by making a "Cashless Exercise" pursuant to this
Section 4.4(b), in which case the portion of the Exercise Price to be so paid
shall be paid by reducing the number of Warrant Shares otherwise issuable
pursuant to the exercise by an amount equal to (A) the aggregate Exercise Price
to be so paid divided by (B) the Market Value Per Share. The number of shares of
Common Stock to be issued to the exercising Holder as a result of a Cashless
Exercise will therefore be as follows:
(Market Value Per Share-Exercise Price per share) x Cashless Exercise Amount*
Market Value Per Share
The cashless Exercise Amount in the above formula is that portion of the
Exercise Amount (expressed as a number of shares of Common Stock) with
respect to which the Exercise Price is being paid by Cashless Exercise
pursuant to this Section 4.4(b).
4.5. Warrant Register. The Company will, at all times while any of the
Warrants remain outstanding and exercisable, keep and maintain at its Principal
Office a register in which the registration, transfer, and exchange of the
Warrants will be recorded (the "Warrant Register"). The Company will not at any
time, except upon the dissolution, liquidation, or winding up of the Company,
close such register so as to result in preventing or delaying the exercise or
transfer of any Warrant.
4.6. Legend. The Warrants and the Warrant Shares have not been registered
under the Securities Act or qualified under applicable state securities laws.
Accordingly, unless there is an effective registration statement and
qualification respecting the Warrants and the Warrant Shares under the
Securities Act or under applicable state securities laws at the time of exercise
of a Warrant, any stock certificate issued pursuant to the exercise of a Warrant
will bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, OFFERED FOR SALE,
TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER
OR EXEMPTION FROM SUCH ACT AND ALL APPLICABLE STATE SECURITIES LAWS. THE
COMPANY MAY REQUIRE AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT THAT
A
16
PROPOSED TRANSFER OR SALE IS IN COMPLIANCE WITH THE ACT, EXCEPT THAT NO
SUCH OPINION SHALL BE REQUIRED FOR TRANSFERS OR SALES PURSUANT TO
REGISTRATION UNDER THE ACT."
4.7. Payment of Taxes. The Company shall pay all stamp taxes attributable
to the initial issuance of shares or other securities issuable upon the exercise
of each Warrant or issuable pursuant to Section 4.10 hereof, excluding any tax
or taxes which may be payable because of the transfer involved In the issuance
or delivery of any certificates for shares or other securities in a name other
than that of the exercising Holder in respect of which such shares or securities
are issued.
4.8. Replacement Warrant. if any Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue and deliver in exchange and substitution for
and upon cancellation of the mutilated Warrant, or in lieu of and in
substitution for the Warrant lost, stolen or destroyed, a new Warrant of like
tenor and representing an equivalent right or interest, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction of such Warrant and upon receipt of indemnity reasonably
satisfactory to the Company; provided, that if the Holder is Ford, an Affiliate
of Ford, a financial institution or other institutional investor, its own
unsecured indemnity agreement shall be satisfactory.
4.9. Reservation of Common Stock and Other Covenants.
(a) The Company shall at all times reserve and keep available out of
the aggregate of its authorized but unissued shares, free of preemptive rights,
such number of its duly authorized shares of Common Stock, or other stock or
securities deliverable pursuant to Section 4.10 hereof, as shall be sufficient
to enable the Company at any time to fulfill all of its obligations under this
Agreement and the Warrants.
(b) If any shares of Common Stock reserved or to be reserved for the
purpose of exercise of the Warrants, or any shares or other securities reserved
or to be reserved for the purpose of Issuance pursuant to Section 4.10 hereof,
require registration with or approval of any governmental authority under any
federal or state law before such shares or other securities may be validly
delivered upon exercise of any Warrant, then the Company covenants that it will,
at its sole expense, secure such registration or approval, as the case may be
(including but not limited to approvals or expirations of waiting periods
required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act).
(c) In the event of any reasonable determination by any Holder that,
by reason of any existing or future federal or state law, statute, rule,
regulation, guideline, order, court or administrative ruling, request or
directive (whether or not having the force of law and whether or not failure to
comply therewith would be unlawful) (any such item, a "Regulatory Requirement"),
such Holder is effectively restricted or prohibited from holding its Warrants or
the related Warrant Shares (including any shares of capital stock or other
securities distributable to such Holder in any merger, reorganization,
17
readjustment or other reclassification), or otherwise realize upon or receive
the benefits intended under its Warrants, the Company shall, and shall use its
best efforts to have its shareholders, take such ,action as such Holder may deem
reasonably necessary to permit such Holder to comply with such Regulatory
Requirement. The reasonable costs of taking such action, whether by the Company,
the affected Holder or otherwise, shall be borne by the Company. Such action to
be taken may include without limitation the Company's authorization of one or
more new classes of capital stock for which such Warrants may be exercised or to
make such modifications and amendments to the Articles of Incorporation, this
Agreement, the related Warrants or any other documents and instruments related
to or executed in connection herewith or with the Warrants as may be deemed
reasonably necessary by such Holder. Such Holder shall give written notice to
the Company of any such determination and the action or actions necessary to
comply with such Regulatory Requirement, which notice and determination shall be
conclusive absent manifest error, and the Company shall take all steps necessary
to comply with such determination as expeditiously as possible.
(d) The Company covenants that all shares of Common Stock that may
be delivered upon exercise of each Warrant shall upon delivery by the Company be
duly authorized and validly issued, fully paid and nonassessable, free from all
taxes, liens and charges with respect to the issue or delivery thereof and
otherwise free of all other Liens.
4.10. Adjustments to Aggregate Number.
(a) The Aggregate Number shall be subject to adjustment from time to
time as follows and, thereafter, as adjusted, shall be deemed to be the
Aggregate Number hereunder.
(i) On the Closing Date, the Company shall exclude all of the
Class A Warrants when determining the total number of outstanding shares of
Common Stock on a Fully Diluted basis. The Aggregate Number shall be adjusted as
of the Class A Warrant Expiration Date by adding to the then Aggregate Number a
number equal to 13% multiplied by the number of Class A Warrant Shares issued
during the period from the Closing Date through the Class A Warrant Expiration
Date.
(ii) in case at any time or from time to time the Company
shall:
(A) take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend payable in, or
other distribution of, Common Stock (a "Stock Dividend"),
(B) subdivide Its outstanding shares of Common Stock
into a larger number of shares of Common Stock, including without
limitation by means of a stock split (a "Stock Subdivision"), or
(C) combine Its outstanding shares of Common Stock into
a smaller number of shares of Common Stock (a "Stock Combination"),
18
then the Aggregate Number In effect immediately prior thereto shall be (1)
proportionately increased in the case of a Stock Dividend or a Stock Subdivision
and (2) proportionately decreased in the case of a Stock Combination. In the
event the Company shall declare or pay, without consideration, any dividend on
the Common Stock payable in any right to acquire Common Stock for no
consideration, then the Company shall be deemed to have made a Stock Dividend in
an amount of shares equal to the maximum number of shares issuable upon exercise
of such rights to acquire Common Stock.
(iii) In case at any time or from time to time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive any dividend or other distribution with no
consideration therefor (collectively, a "Distribution") of:
(A) cash,
(B) any evidences of its indebtedness (other than
Convertible Securities), any shares of its capital stock (other than
additional shares of Common Stock or Convertible Securities) or any other
securities or property of any nature whatsoever (other than cash) or
(C) any options, warrants or other rights to subscribe
for or purchase any of the following: any evidences of indebtedness (other
than Convertible Securities), any shares of its capital stock (other than
additional shares of Common Stock or Convertible Securities) or any other
securities or property of any nature whatsoever,
then each Holder shall be entitled to elect by written notice to the Company to
receive (A) immediately and without further payment the cash, evidences of
indebtedness, stock, securities, other property, options, warrants and/or other
rights (or any portion thereof) to which such Holder would have been entitled by
way of such Distribution as if such Holder had exercised its Warrant(s)
immediately prior to such Distribution or (B) upon the exercise of its
Warrant(s) at any time on or after the taking of such record, the number of
Warrant Shares to be received upon exercise of such Warrant(s) determined or
stated herein and, in addition and without further payment, the cash, evidences
of indebtedness, stock, securities, other property, options, warrants and/or
other rights (or any portion thereof) to which such Holder would have been
entitled by way of such Distribution end subsequent dividends and distributions
through the date of exercise as if such Holder (1) had exercised its Warrant(s)
immediately prior to such Distribution and (2) had retained the Distribution in
respect of the Common Stock and all subsequent dividends and distributions of
any nature whatsoever in respect of any stock or securities paid as dividends
and distributions and originating directly or indirectly from such Common Stock.
19
A reclassification of the Common Stock into shares of Common Stock and
shares of any other class of stock shall be deemed a Distribution by the Company
to the holders of its Common Stock of such shares of such other class of stock
and, if the outstanding shares of Common Stock shall be changed into a larger or
smaller number of shares of Common Stock as a part of such reclassification,
such event shall be deemed a Stock Subdivision or Stock Combination, as the case
may be, of the outstanding shares of Common Stock within the meaning of Section
4.10(a) hereof.
(iv) During the period (the "Incremental Equity Financing Period")
from the Closing Date to September 1, 2000, in the event the Company issues any
Capital Stock or warrants (other than the Warrants), options or other
Convertible Securities (each, an "Incremental Equity Financing"), then upon the
consummation of each such Incremental Equity Financing, the Aggregate Number
will, as an anti-dilution adjustment, be increased by a number of shares of
Common Stock (such additional number of shares of Common Stock, in each case, an
"Anti-Dilution Increase"), equal to thirteen percent (13%) of the shares of
Common Stock issued in such Incremental Equity Financing, or issuable upon full
exercise or conversion of the Capital Stock or convertible Securities issued in
such Incremental Financing. Notwithstanding the foregoing, no Anti-Dilution
Increase shall be made for any of the following issuances of Capital Stock (and
only for such issuances): (A) the issuance of Common Stock upon exercise of any
warrants, options or other Convertible Securities convertible into any Capital
Stock of the Company that were issued prior to the Closing Date and are listed
on Schedule 4.10 attached hereto, (B) the issuance of additional stock options
or the issuance of Common Stock upon the exercise of such additional stock
options, pursuant to the Company's 1993 Stock Option Plan and 1997 Stock
Incentive Plan, and (C) issuances of Capital Stock for cash in connection with
Incremental Equity Financings completed during the Incremental Equity Financing
Period after the aggregate net proceeds of all such financings exceed
$15,000,000. The Company shall give prompt written notice of all equity
issuances, including copies of all related documents, promptly to the Holders of
the Warrants upon consummation thereof, whether or not such issuance is subject
to the Anti-Dilution Increase.
(v) The following provisions shall be applicable to the making of
adjustments of the Aggregate Number provided above in this Section 4.10(a):
(A) The adjustments required by the preceding paragraphs
of this Section 4.10 shall be made whenever and as often as any specified
event requiring an adjustment shall occur, except that no adjustment of
the Aggregate Number that would otherwise be required shall be made
(except in the case of a Stock Subdivision or Stock Combination, as
provided for in Section 4.10(a)(ii) hereof) unless and until such
adjustment either by itself or with other adjustments not previously made
adds or subtracts at least one (1) share to or from the Aggregate Number
immediately prior to the making of such adjustment. Any adjustment
representing a change of less than such minimum amount (except as
aforesaid) shall be carried forward and made as soon as such adjustment,
together with other adjustments required by this Section 4.10 and not
previously
20
made, would result in a minimum adjustment. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.
(B) In computing adjustments under this Section 4.10(a),
fractional in Common Stock shall be taken into account to the nearest
one-hundredth (0.01) of a share.
(C) If the Company shall take a record of the holders of
its Common Stock for the purpose of entitling them to receive a dividend
or distribution or subscription or purchase rights and shall, thereafter
and before the distribution to shareholders thereof, legally abandon its
plan to pay or deliver such dividend, distribution, subscription or
purchase rights, then no adjustment shall be required by reason of the
taking of such record and any such adjustment previously made in respect
thereof shall be rescinded and annulled.
(b) In case at any time the Company shall initiate any transaction or be a
party to any transaction (including, without limitation, a merger, consolidation
share exchange, sale, lease or other disposition of all or substantially all of
the Company's assets, liquidation, recapitalization or reclassification of the
Common Stock) in connection with which the Common Stock shall be changed into or
exchanged for different securities of the Company or capital stock or other
securities of another corporation or interests in a non-corporate entity or
other property (including cash) or any combination of the foregoing (each such
transaction, a "Transaction"), then, as a Condition of the consummation of the
Transaction, lawful, enforceable and adequate provision shall be made so that
each Holder shall be entitled to elect by written notice to the Company to
receive (i) a new warrant in form and substance similar to, and in exchange for,
its Warrant(s) to purchase all or a portion of such securities or other property
or (ii) upon exercise of its Warrant(s) at any time on or after the consummation
of the Transaction, in lieu of the Warrant Shares issuable upon such exercise
prior to such consummation, the securities or other property (including cash) to
which such Holder would have been entitled upon consummation of the Transaction
if such Holder had exercised its Warrant(s) immediately prior thereto (subject
to adjustments from and after the consummation date as nearly equivalent as
possible to the adjustments provided in this Section 4.10). The Company will not
effect any Transaction unless prior to the consummation thereof each corporation
or other entity (other than the Company) which may be required to deliver any
new warrant, securities or other property as provided herein shall assume, by
written instrument delivered to such Holder, the obligation to deliver to such
Holder such new warrant, securities or other property as in accordance with the
foregoing provisions such Holder may be entitled to receive and such corporation
or entity shall have delivered representations and warranties to such Holder
stating that all of the terms of the new warrant or the original Warrant shall
be enforceable against the Company and such corporation or entity in accordance
with the terms hereof and thereof. The foregoing provisions of this Section
4.10(b) shall similarly apply to successive Transactions.
21
(c) In case at any time or from time to time the Company shall take any
action of the type contemplated in Section 4.10(a) or (b) hereof but not
expressly provided for by such provisions (including, without limitation, the
granting of stock appreciation rights, phantom stock rights or other rights with
equity features), then, unless in the opinion of the board of directors such
action will not have a material adverse effect upon the rights of any Holder
(taking into consideration, if necessary, any prior actions which the board of
directors deemed not to materially adversely affect the rights of any Holder),
the Aggregate Number shall be adjusted in such manner and at such time as the
board of directors of the Company may in good faith determine to be equitable in
the circumstances.
(d) Whenever the Aggregate Number is to be adjusted pursuant to this
Section 4.10, (other than pursuant to Section 4.1O(a)(i) or Section
4.10(a)(iv)), the exercise Price shall be simultaneously adjusted to a price
determined by multiplying the Exercise Price in effect immediately prior to such
adjustment by a fraction, the numerator of which is the pre-adjustment Aggregate
Number and the denominator of which is the post-adjustment Aggregate Number.
(e) Whenever the Aggregate Number is to be adjusted pursuant to this
Section 4.10 the Company shall forthwith obtain a certificate signed by a firm
of independent accountants of recognized national standing selected by the board
of directors of the Company, setting forth, in reasonable detail, the event
requiring the adjustment and the method by which such adjustment is to be
calculated. The certificate shall set forth, the new Aggregate Number, the new
Exercise Price, and, if applicable, any new securities or property to which each
respective Holder is entitled. The Company shall promptly cause a copy of such
certificate, signed by the chief financial officer of the Company, to be
delivered to each Holder. The Company shall keep at its Principal Office copies
of all such certificates and cause the same to be available for inspection at
said office during normal business hours by any Holder or any prospective
purchaser of a Warrant (in whole or in part) if so designated by a Holder.
4.11. No Impairment. The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, share exchange, dissolution or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Agreement or the Warrants, including without limitation the
adjustments required under Section 4.10 hereof, and will at all times in good
faith assist in the carrying out of all such terms and in taking of all such
action as may be necessary or appropriate to protect the rights and benefits of
the Holder pursuant to this Agreement and the Warrants. Without limiting the
generality of the foregoing and notwithstanding any other provision of the
Warrants to the contrary (including by way of implication), the Company (a) will
not increase the par value of any shares of Common Stock receivable on the
exercise of the Warrants above the Exercise Price and (b) will take all such
action as may be necessary or appropriate so that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock on the
exercise of the Warrants.
4.12. Transfers of the Warrants.
22
(a) The Warrants may not be transferred, sold or otherwise disposed
of by the Holders other than to Permitted Transferees, and subject to the
provisions of this Section 4.12. The Warrants and the Warrant Shares are issued
or issuable subject to the provisions and conditions contained herein, and every
Holder hereof by accepting the same agrees with the Company to such provisions
and conditions, and represents to the Company that the Warrants have been
acquired and the Warrant Shares will be acquired for the account of the Holders
for investment and not with a view to or for sale in connection with any
distribution thereof.
(b) The Holders agree that the Warrants and the Warrant Shares may
not be sold, transferred or otherwise disposed of to any Permitted Transferee
except pursuant to an effective registration statement under the Securities Act
and applicable state securities laws or pursuant to an applicable exemption from
the registration requirements of the Securities Act and such state securities
laws. In the event that any Holder transfers the Warrants or the Warrant Shares
pursuant to an applicable exemption from registration, the Company may request,
at its expense, an opinion of counsel that the proposed transfer does not
violate the Securities Act and applicable state securities laws.
4.13. Rights of Transferees. The rights granted to the Holders hereunder
and under each Warrant shall pass to and inure to the benefit of all Permitted
Transferees of all or any portion of a Warrant (provided that each Holder and
any transferee shall hold such rights in proportion to their respective
ownership of the Warrants and Warrant Shares) until extinguished pursuant to the
terms hereof.
4.14. Right of First Refusal. (a) Subject to the provisions of applicable
law, Ford shall have the right to sell or otherwise dispose of any shares of
Common Stock acquired by Ford through exercise of the Warrant in any open market
transaction or any brokerage transaction. If Ford desires to sell or dispose of
any such shares of Common Stock in a transaction other than an open market
transaction or brokerage transaction (a "Nonmarket Transfer"), Ford will deliver
a written notice (the "Sale Notice") to the Company, disclosing in reasonable
detail the identity of the prospective transferee (the "Buyer"), the shares of
Common Stock proposed to be transferred (the "Offered Common Shares") and the
terms and conditions of the proposed Nonmarket Transaction. Ford will not
consummate any such Nonmarket Transaction except in accordance with this
Section. The Company, or at the option of the Company, one or more of its
shareholders, may elect to purchase all, but not less than all, of the Offered
Common Shares upon the same terms and conditions as those set forth in the Sale
Notice by delivering a written notice of such election to Ford within ten (10)
Business Days after the receipt of the Sale Notice by the Company.
(b) If the Company has not elected to purchase all of the Offered
Common Shares in cash within ten (10) Business Days of the delivery of the Sale
Notice, Ford may, during the 30-day period immediately following such ten (10)
Business Day period, (i) transfer all of the Offered Common Shares to the third
party Buyer at a price and on terms no more favorable to the transferee than
those specified in the Sale Notice, or (ii) make no Transfer. Any of the Offered
Common Shares not transferred within such 30-
23
day period will be subject to the provisions of this Section 4.14 in the event
of a subsequent Nonmarket Transaction.
4.15. Change of Control. (a) Upon the occurrence of a Change of Control, all
Warrants (including Unvested Clawback Base Warrants) other than (i) Warrants
which expired prior to such Change of Control, and (ii) Unvested Clawback Bonus
Warrants, shall become Vested (or, if prior to the Class A Warrant Expiration
Date, all Warrants not previously issued to Ford will be issued and be Vested
and immediately exercisable upon issuance) immediately prior to the effective
date of the Change of Control, without regard to Base Volume Levels or Bonus
Volume Levels. Unvested Clawback Bonus Warrants will be treated as described in
subparagraphs (b) and (c) below.
(b) Upon the occurrence of a Change of Control defined in
subparagraph (a) of the definition of "Change of Control", the Unvested Clawback
Bonus Warrants will remain outstanding and the Company will cause the
consideration (including cash, securities or other property) to which the Holder
of the Unvested Clawback Bonus Warrants would have been entitled upon
consummation of the Change of Control transaction if such Unvested Clawback
Bonus Warrants had been Vested and exercised by the Holder immediately prior
thereto to be deposited in an interest bearing escrow account (to the extent the
escrow account includes cash) with an escrow agent acceptable to Ford. Upon
receipt of the final year-end Volume Report for the year in which the Change of
Control occurred, (a) if Ford has achieved the Bonus Volume Level for such year,
the Unvested Clawback Bonus Warrants shall be exchanged by the Holder thereof
for the cash, securities and/or other property in the escrow account, and the
escrow agent shall deliver to such Holder such cash, securities and/or other
property in the escrow account, or (b) if Ford has not achieved the Bonus Volume
Level for such year, the Unvested Clawback Bonus Warrants shall be canceled and
the escrow agent shall deliver the balance of the escrow account to [the Control
Group]. The Company will not affect any Change of Control transaction as
described in this subsection unless prior to the consummation thereof each
corporation or entity a party thereto assumes and agrees to be bound by the
provisions of this Section 4.15(b).
(c) Upon the occurrence of a Change of Control defined in
subparagraph (b) of the definition of Change of Control, the Unvested Clawback
Bonus Warrants will remain outstanding until the Company delivers the final
year-end Volume Report for the year in which the Change of Control occurred.
Upon receipt of the final year-end Volume Report for the year in which the
Change of Control occurred, (i) if Ford has achieved the Bonus Volume Level for
such year, the Unvested Clawback Bonus Warrants shall Vest and be exercisable as
provided in this Agreement, or (ii) if Ford has not achieved the Bonus Volume
Lever for such year, the Unvested Clawback Bonus Warrants shall be canceled.
(d) Notwithstanding anything herein to the contrary, upon the
occurrence of a Change of Control defined in subparagraph (a) of the definition
of "Change of Control" in which the consideration to the Company's shareholders
in
24
exchange for their shares of Capital Stock of the Company includes forms of
consideration other than cash, Ford may elect to waive the accelerated Vesting
of the Warrants, in which case the Warrants which have not previously expired
will remain outstanding after such Change of Control, subject to the provisions
of Section 4.10(b) hereof, and continue to Vest as provided in this Agreement.
Such election to waive accelerated Vesting shall be exercised by Ford in its
sole discretion after consultation with the Company prior to the effective date
of such Change of Control.
(e) The provisions of this Section 4.15 shall not apply to any
Change of Control which occurs after December 31, 2004.
ARTICLE V
REGISTRATION RIGHTS
5.1. Demand Registration. At any time after Ford has purchased at least
200,000 shares of Common Stock pursuant to the exercise of the Warrant, Ford
may, upon not more than one (1) occasion, make a written request to the Company
requesting that the Company effect the registration of all or any requested
portion of the Registrable Securities. After receipt of such a request, the
Company will, as soon as practicable, notify all Holders of such request and use
its best efforts to effect the registration of all Registrable Securities that
the Company has been so requested to register by any Holder for resale, all to
the extent required to permit the disposition (in accordance with the intended
method or methods thereof) of the Registrable Securities so registered.
5.2. Piggyback Registration. If the Company at any time proposes to file
on its behalf or on behalf of any of its security holders a registration
statement under the Securities Act on any form (other than a registration
statement filed pursuant to a demand under the Unit Purchase Option dated
February 18, 1997 as in effect on the Closing Date and without giving effect to
any subsequent amendment of such Unit Purchase Option) and other than pursuant
to Section 5.1 and other than a registration statement on Form S-4 or S-8 or any
successor form unless such forms are being used in lieu of or as the functional
equivalent of, registration rights) for any class that is the same or similar to
Registrable Securities, it will give written notice setting forth the terms of
the proposed offering and such other information as the Holders may reasonably
request to all holders of Registrable Securities at least thirty (30) days
before the initial filing with the Commission of such registration statement,
and offer to include in such filing such Registrable Securities as any Holder
may request. Each Holder of any such Registrable Securities desiring to have
Registrable Securities registered under this Section 5.2 will advise the Company
in writing within fourteen (14) days after the date of receipt of such notice
from the Company, setting forth the amount of such Registrable Securities for
which registration is requested. Failure to give such notice shall be deemed a
waiver of the rights of the Holders under this Section 5.2 with respect to such
proposed registration, but not with respect to any subsequent registration. The
Company will thereupon include in such filing the number of Registrable
Securities for which registration is so requested, and will
25
use its best efforts to effect registration under the Securities Act of such
Registrable Securities.
Notwithstanding the foregoing, if the managing underwriter or
underwriters, if any, of such offering determines that inclusion of all of the
Registrable Securities requested to be included exceeds the number which can be
sold in such offering without materially and adversely affecting the
marketability of the offering, then the amount of securities to be offered for
the accounts of Holders will be reduced pro rata (according to the Registrable
Securities proposed to be registered) to the extent necessary to reduce the
total amount of securities to be included in such offering to the amount
recommended by such managing underwriter or underwriters; provided, however,
that if securities are being offered for the account of other Persons as well as
the Company, then with respect to the Registrable Securities intended to be
offered by Holders, Registrable Securities shall be allocated among such other
Persons and Holders pro rata based on the number of shares for which
registration was requested.
5.3. Form S-3 Registrations. In addition to the registration rights
provided in Sections 5.1 and 5.2 above, if at any time the Company is eligible
to use Form S-3 (or any successor form) for registration of secondary sales of
Registrable Securities, any Holder of Registrable Securities may request in
writing that the Company register shares of Registrable Securities on such form
but no such request may be made with respect to less than twenty-five percent
(25%) of the outstanding Registrable Securities. Upon receipt of such request,
the Company will promptly notify all holders of Registrable Securities in
writing of the receipt of such request and each such Holder may elect (by
written notice spit to the Company within thirty (30) days of receipt of the
Company's notice) to have its Registrable Securities included in such
registration pursuant to this Section 5.3. Thereupon, the Company will, as soon
as practicable, use its best efforts to effect the Registration on Form S-3 of
all Registrable Securities that the Company has so been requested to register by
such Holder for sale. The Company will use its best efforts to qualify and
maintain its qualification for eligibility to use Form S-3 for such purposes.
5.4. Rule 144 and Rule 144A Exemptions.
Notwithstanding the foregoing, the Company will not be obligated to
register any Registrable Securities as to which counsel acceptable to the
Holders (which may be counsel to the Company) renders an opinion in form and
substance satisfactory to the Holders to the effect that such Registrable
Securities are freely salable without limitation as to volume, manner of sale,
or otherwise under Rule 144 or 144A under the Securities Act
5.6. Registration Procedures.
In connection with any registration of Registrable Securities under
this Article V, the Company shall, as soon as reasonably practicable:
26
(a) prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become and remain effective until the
earlier of such time as all Registrable Securities subject to such registration
statement have been disposed of or the expiration of two hundred seventy (270)
days;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act with respect
to the sale or other disposition of all Registrable Securities covered by such
registration statement until the earlier of such time as all of such Registrable
Securities have been disposed of or the expiration of two hundred seventy (270)
days (except with respect to registrations effected on Form S-3 or any successor
form, as to which no such period shall apply); provided, however, that the
Company shall not be required to file, cause to become effective or maintain the
effectiveness of any registration statement that contemplates a distribution of
securities on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act;
(c) furnish to each Holder such number of copies of the
registration statement and prospectus (including, without limitation, a
preliminary prospectus) in conformity with the requirements of the Securities
Act (in each case including all exhibits) and each amendment or supplement
thereto, together with such other documents as any Holder may reasonably
request;
(d) use its best efforts to register or qualify the
Registrable Securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions within the United States and
its territories and possessions as each Holder reasonably requests, and do such
other acts and things as may be reasonably required of it to enable such holder
to consummate the disposition in such jurisdiction of the securities covered by
such registration statement;
(e) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
securities holders, as soon as practicable, an earnings statement covering the
period of at least twelve months beginning with the first month after the
effective date of such registration statement, which earnings statement will
satisfy the provisions of Section 11(a) of the Securities Act;
(f) provide and cause to be maintained a transfer agent and
registrar for Registrable Securities covered by such registration statement from
and after a date not later than the effective date of such registration
statement;
(g) if requested by the underwriters for any underwritten
offering or Registrable Securities on behalf of a Holder of Registrable
Securities pursuant to a registration requested under Section 5.1 or Section
5.2, the Company will enter into an
27
underwriting agreement with such underwriters for such offering, such agreement
to contain such representations and warranties by the Company and such other
terms and provisions as are customarily contained in underwriting agreements
with respect to secondary distributions, including, without limitation,
provisions with respect to indemnities and contribution as are reasonably
satisfactory to such underwriters and the Holders; the Holders on whose behalf
Registrable Securities are to be distributed by such underwriters will be
parties to any such underwriting agreement and the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters, will also be made to and for the benefit of
such Holders of Registrable Securities; and no Holder of Registrable Securities
will be required by the Company to make any representations or warranties to or
agreements with the Company or the underwriters other than reasonable and
customary representations, warranties, or agreements regarding such Holder, such
Holders Registrable Securities, such Holder's intended method or methods of
disposition, and any other representation required by law;
(h) use its best efforts to furnish, at the written request of
any Holder, on the date that such Registrable Securities are delivered to the
underwriters for sale pursuant to such registration, or, if such Registrable
Securities are not being sold through underwriters, on the date that the
registration statement with respect to such Registrable Securities becomes
effective, (i) an opinion in form and substance reasonably satisfactory to such
Holders, and addressing matters customarily addressed in underwritten public
offerings, of the counsel representing the Company for the purposes of such
registration (who will not be an employee of the Company and who will be
reasonably satisfactory to such Holders), addressed to the underwriters, if any,
and to the selling Holders; and (ii) a letter (the "comfort letter") in form and
substance reasonably satisfactory to such Holders, from the independent
certified public accountants of the Company, addressed to the underwriters, if
any, and to the selling Holders making such request (and, if such accountants
refuse to deliver the comfort letter to such Holders, then the comfort letter
will be addressed to the Company and accompanied by a letter from such
accountants addressed to such Holders stating that they may rely on the comfort
letter addressed to the Company); and
(i) during the period when the registration statement is
required to be effective, notify each selling Holder of the happening of any
event as a result of which the prospectus included in the registration statement
contains an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and prepare a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading.
It will be a condition precedent to the obligation of the Company to
take any action pursuant to this Article V in respect of the Registrable
Securities that are to be registered at the request of any Holder of Registrable
Securities that such Holder
28
furnish to the Company such information regarding the Registrable Securities
held by such Holder and the intended method of disposition thereof as is
reasonably requested in connection with the action taken by the Company. The
managing underwriter or underwriters, if any, for any offering of Registrable
Securities to be registered pursuant to Section 5.1 or Section 5.3 will be
selected by the Holders. The managing underwriter or underwriters for any
offering pursuant to Section 5.2 will be selected by the Company and approved by
the Holders, which approval shall not be unreasonably withheld or delayed.
5.6. Allocation of Expenses.
Except as provided in the following sentence, the Company will bear
all expenses arising or incurred in connection with any of the transactions
contemplated by this Article V, including, without limitation, (a) all expenses,
incident to filing with the Commission or any securities exchange or the
National Association of Securities Dealers, Inc.; (b) registration fees; (c)
printing expenses; (d) accounting and legal fees and expenses; (e) expenses of
any special audits or comfort letters incident to or required by any such
registration or qualification; and (f) expenses of complying with the securities
or blue sky laws of any jurisdictions in connection with such regIstration or
qualification. Each Holder will severally bear its pro rata share of the
discounts and commissions relating to its sale of its Registrable Securities,
and its pro rata share of the fees of underwriters, selling brokers, dealers,
managers or similar security industry professionals relating to the distribution
of its Registrable Securities.
5.7. Listing on Securities Exchange. If the Company lists any shares of
Capital Stock on any securities exchange or on the National Association of
Securities Dealers, Inc. Automated Quotation System or similar system, it will,
at its expense, list thereon, maintain and, when necessary, increase such
listing of all Registrable Securities.
5.8. Holdback Agreement. If any registration pursuant to Section 5.2 is in
connection with a Public Offering, each Holder of Registrable Securities agrees,
if so required by the managing underwriter, not to effect any public sale or
distribution of Registrable Securities (other than as part of such Public
Offering) during the period beginning seven (7) days prior to the effective date
such registration statement and ending on the one hundred twentieth (120th) day
after the effective date of such registration statement; provided however, that
each Person that is an officer, director, or beneficial owner of one percent
(1%) or more of the outstanding shares of any class of Capital Stock enters into
such an agreement.
1.9. Rule 144 and Rule 144A Availability. So long as any Holder holds any
Registrable Securities, the Company will take such action as such Holder may
reasonably request, all to the extent required from time to time to enable such
Holder to sell shares of Registrabie Securities without registration pursuant to
and in accordance with (a) Rule 144 or Rule 144A under the Securities Act, as
such Rule may be amended from time to time, or (b) any similar rule or
regulation adopted by the Commission. Upon the request of any such Holder of
Registrable Securities, the Company will deliver to Such Holder a written
statement as to whether it has complied with such requirements.
29
ARTiCLE VI
CONDITIONS TO THE OBLIGATION
OF FORD TO CLOSE
The execution of this Agreement and the issuance of the Warrants
shall take place at the closing (the "Closing") to be held on March 27, 2000, or
at such other time as Ford and the Company may agree (the "Closing Date"). The
obligation of the Ford to enter into this Agreement and to perform any
obligations hereunder shall be subject to the satisfaction as determined by Ford
of the following conditions on or before the Closing Date;
6.1. Representations and Warranties. The representations and warranties
contained in Article VIII hereof shall be true and correct on and as of the
Closing Date as if made on and as of such date.
6.2. Compliance with this Agreement. The Company shall have performed and
complied in all material respects with all of the agreements and conditions set
forth or contemplated herein that are required to be performed or complied with
by the Company on or before the Closing Date.
6.3. Officer's Certificate. Ford shall have received a certificate dated
as of the Closing Date from the chief executive officer and chief financial
officer of the Company, in form and substance satisfactory to Ford, to the
effect that (a) all representations and warranties of the Company contained in
this Agreement are true, correct and complete, (b) the Company is not in
violation in any material respect of any of the covenants contained in this
Agreement and (c) all conditions precedent to the Closing of this Agreement to
be performed by the Company have been duly performed in all material respects.
6.4. Secretary's Certificates. Ford shall have received a certificate from
the Company dated the Closing Date and signed by the Secretary or an Assistant
Secretary of the Company certifying (a) that the attached copies of the
organizational documents of the Company and resolutions of the Board of
Directors of the Company approving this Agreement and the transactions
contemplated hereby, are all true, complete and correct and remain unamended and
in full force and effect, (b) as to the incumbency and specimen signature of
each officer of the Company executing this Agreement and any other document
delivered in connection herewith on behalf of the Company and (c) as to the good
standing of the Company in the jurisdiction of its incorporation and in each
other state in which the Company is transacting business, except where the
failure to be in good standing could not reasonably be expected to have a
Material Adverse Effect.
6.5. Issuance Permitted by Requirements of Laws. The issuance of the
Warrants to Ford hereunder and the consummatIon of the transactions contemplated
hereby (a) shall not be prohibited by any Requirement of Law and (b) shall not
subject
30
Ford to any penalty or, in its reasonable judgment, other onerous condition
under or pursuant to any Requirement of Law.
6.6. Consents and Approvals. All consents, exemptions, authorizations or
other actions by, or notices to, or filings with, Governmental Authorities and
other Persons in respect of all Requirements of Law and with respect to
Contractual Obligations of the Company required in connection with the
execution, delivery or performance by the Company or enforcement against the
Company of this Agreement shall have been obtained and be in full force and
effect, except to the extent that failure to obtain such consents would not have
a Material Adverse Effect, and Ford shall have been furnished with appropriate
evidence thereof, and all waiting periods shall have lapsed without extension or
the imposition of any conditions or restrictions.
6.7. No Material Adverse Change. Since December 31, 1999, no event shall
have occurred which has had or could reasonably be expected to have a Material
Adverse Effect.
6.8. Opinion of Counsel. Ford shall have received the opinion of O'Melveny
& Xxxxx, LLP, counsel to the Company, dated the Closing Date and in form and
substance acceptable to Ford.
6.9. Due Diligence and other Documents. The Company shall have delivered
to Ford such other documents, certificates and opinions as Ford may reasonably
request. and Ford shall be satisfied in its sole discretion with its due
diligence investigation of the Company.
ARTICLE VII
CONDITIONS TO THE OBLIGATION
OF THE COMPANY TO CLOSE
The obligations of the Company to issue the Warrants, and the
obligations of the Company to perform its other obligations hereunder shall be
subject to the satisfaction as determined by the Company of the following
conditions on or before the Closing Date:
7.1. Representations and Warranties. The representations and warranties of
Ford contained in Article IX hereof shall be true and correct on and as of the
Closing Date as if made on and as of such date.
7.2. Compliance with this Agreement. Ford shall have performed and
complied in all material respects with all of its agreements and conditions set
forth or contemplated herein that are required to be performed or complied with
by Ford on or before the Closing Date.
7.3. Closing Certificate. The Company shall have received a certificate
dated as of the Closing Date from an authorized representative of Ford, in form
and substance
31
satisfactory to the Company, to the effect that (a) all representations and
warranties of Ford contained in this Agreement are true, correct and complete,
(b) Ford is in violation in any material respect of any of the covenants
contained in this Agreement and (c) all conditions precedent to the Closing of
this Agreement to be performed by Ford have been duly performed in all material
respects.
7.4. Issuance Permitted by Requirements of Laws. The Issuance of the
Warrants by the Company and the consummation of the transactions contemplated
hereby (a) shall not be prohibited by any Requirement of Law and (b) shall not
subject the company to any penalty or, in its reasonable judgment, other onerous
condition under or pursuant to any Requirement of Law.
7.5. Consents and Approvals. All consents, exemptions, authorizations or
other actions by, or notices to, or filings with, Governmental Authorities and
other Persons in respect of all Requirements of Law and Contractual Obligations
of Ford required in connection with the execution, delivery or performance by
Ford or enforcement against Ford of this Agreement shall have been obtained and
be in full force and effect, and Ford shall have been furnished with appropriate
evidence thereof, and all waiting periods shall have lapsed without extension or
the imposition of any conditions or restrictions.
ARTICLE VIII
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Ford, before and after
giving effect to the transactions contemplated by this Agreement, as follows:
8.1. Corporate Existence and Power. The Company (a) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, (b) has all requisite corporate power and authority to own and
operate its property, to lease the property it operates as lessee and to conduct
the business in which it is currently, or is currently proposed to be, engaged
and (c) has the corporate power and authority to execute, deliver and perform
its obligations under this Agreement.
8.2. Corporate Authorization; No Contravention. The execution, delivery
and performance by the Company of this Agreement and the transactions
contemplated hereby, including without limitation the issuance by the Company of
the Warrants, (a) have been duly authorized by all necessary corporate, and if
required, stockholder action, (b) do not contravene the terms of the
organizational documents of the Company and (c) will not violate, conflict with
or result in any breach or contravention of or the creation of any Lien under,
any Contractual Obligation of the Company, or any Requirement of Law applicable
to the Company.
32
8.3. Governmental Authorizations; Third Party Consents. Except to the
extent previously and duly obtained or made and in full force and effect, no
approval consent, compliance, exemption, authorization or other action by, or
notice to, or filing with, any Governmental Authority or any other Person in
respect of any Requirement of Law or Contractual Obligation, and no lapse of a
waiting period under any Requirement of Law or Contractual Obligation, is
necessary or required in connection with the execution, delivery or performance
by the Company or enforcement against the Company of this Agreement or the
transactions contemplated hereby.
8.4. Binding Effect. This Agreement, upon the due execution and delivery
hereof by the Company, and the Warrants, when duly issued and delivered by the
Company, will constitute the legal, valid and binding obligations of the Company
enforceable against the Company in accordance with its respective terms except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity relating to
enforceability.
8.5. Litigation. There are no legal actions, suits, proceedings, claims or
disputes pending, or to the knowledge of the Company, threatened, at law, in
equity, in arbitration or before any Governmental Authority against or affecting
the Company (a) which affects the legality, validity or enforceability of this
Agreement or which seeks to obtain damages or obtain relief as a result of, the
transactions contemplated by this Agreement or (b) which could reasonably be
expected to have a Material Adverse Effect. No injunction, writ, temporary
restraining order, decree or any order of any nature has been issued by any
court or other Governmental Authority purporting to enjoin or restrain the
execution, delivery or performance of this Agreement.
8.6. No Default or Breach. The Company is not in default under or with
respect to any Contractual Obligation in any respect, which, individually or
together with all such defaults, could reasonably be expected to have a Material
Adverse Effect.
8.7. ERISA. The execution and delivery of this Agreement, the issuance of
the Warrants hereunder and the consummation of the transactions contemplated
hereby and thereby will not result in any prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Code or any other
violations of ERISA or any other Requirement of Law related thereto.
8.8. Disclosure. The representations and warranties in this Agreement and
the documents and certificates furnished to Ford by the Company on the Closing
Date do not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which they were made, not
misleading. There is no fact known to the Company which the Company has not
disclosed to Ford in writing which has had or could reasonably be expected to
have a Material Adverse Effect.
8.9. Investment Company/Government Regulations. The Company is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as
33
amended. Neither the Company nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, as amended, or
any federal or state statute or regulation limiting its ability to incur
indebtedness. Neither the Company nor any of its Subsidiaries is engaged
principally or as one of Its activities in the business of extending credit for
the purpose of "purchasing" or "carrying" any "margin stock" (as each such term
is defined or used in Regulation U of the Board of Governors of the Federal
Reserve System). No part of the proceeds of the Warrants will be used for
Purchasing or carrying margin stock or for any purpose which violates, or which
would be inconsistent with, the provisions of Regulations T, U or X of such
Board of Governors.
8.10. Capitalization. The authorized Capital Stock of the Company and the
issued and outstanding shares thereof are as described on Schedule 8.10. All
outstanding shares of Capital Stock of the Company are duly authorized and
validly issued, fully paid, nonassessable and free and clear of any Lien. Except
as described in Schedule 8.10, (a) no other Capital Stock of the Company is
authorized or outstanding, (b) the Company does not have outstanding any rights
(either preemptive or other) or options to subscribe for or purchase from the
Company any warrants or other agreements providing for or requiring the issuance
by the Company of, any Capital Stock, (c) the Company does not have any
agreement, arrangement, commitment or plan to issue any other Capital Stock, and
(d) none of the Company or any of its shareholders is a party to any agreement
with respect to the voting or transfer of the Capital Stock of the Company.
8.11. Private Offering. No form of general solicitation or general
advertising was used by the Company or its representatives in connection with
the offer or sale of the Warrants. Assuming the truth of the representations
made in Article IX, no registration of the Warrants pursuant to the provisions
of the Securities Act or any state securities or "blue sky" laws will be
required by the offer, sale or issuance of the Warrants or the shares of Common
Stock issuable upon exercise of the Warrants.
8.12. Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable in connection
with the transactions contemplated hereby, based on any agreement, arrangement
or understanding with the Company or any action taken by the Company.
8.13. Contractual Obligations, etc. To the best knowledge of the Company
after due inquiry, each material Contractual Obligation is, and after giving
effect to the consummation of the transactions contemplated hereby will be, in
full force and effect in accordance with the terms thereof and there are no
material defaults by the Company or by any other party under any such
Contractual Obligation.
8.14. Solvency. After giving effect to the consummation of the
transactions contemplated by this Agreement, (a) the fair saleable value of the
assets of the Company will be greater than its indebtedness (including
contingent debts), (b) the Company will be able to pay all of its indebtedness
as it matures and (c) the Company will not have unreasonably small capital with
which to carry on its business. In computing the amount of contingent or
unliquidated liabilities at any time, such liabilities will be computed at the
34
amount which, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
8.15. Rights in Properties; Liens; Intellectual Property.
(a) The Company has good and indefeasible title to all
properties and assets reflected on its balance sheets, and none of such
properties or assets is subject to any Liens, except as set forth on Schedule
8.15(a) attached hereto. The Company enjoys peaceful and undisturbed possession
under all leases necessary for the operation of its other properties, assets,
and businesses and all such leases are valid and subsisting and are in full
force and effect. There exists no default under any provision of any lease which
would permit the lessor thereunder to terminate any such lease or to exercise
any rights under such lease which, individually or together with all other such
defaults, could have a Material Adverse Effect.
(b) The Company has the right to use all of the Intellectual
Property necessary to its business as presently conducted, and, to the knowledge
of the Company, the Company's use of the Intellectual Property does not infringe
on the rights of any other Person. To the best of the Company's knowledge, no
other Person is infringing the rights of the Company in any of the Intellectual
Property. Except as set forth on Schedule 8.15(b) attached hereto, the Company
does not owe any royalties, honoraria or fees to any Person by reason of its use
of the Intellectual Property.
8.16. Taxes. The Company has filed all tax returns (federal, state, and
local) required to be filed, including, without limitation, all income,
franchise, employment, property, and sales taxes, and has paid all of its tax
liabilities, other than immaterial amounts and taxes that are being contested by
the Company in good faith by appropriate actions or proceedings diligently
pursued, and for which adequate reserves in conformity with GAAP with respect
thereto have been established to the reasonable satisfaction of Purchaser. The
Company knows of no pending investigation of the Company by any taxing authority
or pending but unassessed tax liability of the Company that could reasonably be
expected to have a Material Adverse Effect.
8.17. No Labor Disputes. The Company is not involved in any labor dispute.
There are no strikes or walkouts or union organization of any of the Company's
employees threatened or in existence and no labor contract is scheduled to
expire during the term of this Agreement.
8.18. Insurance. The amount and types of insurance carried by the Company,
and the terms and conditions thereof, are substantially similar to the coverage
maintained by companies in the same or similar business as the Company and
similarly situated.
8.19. Conduct of Business. On the Closing Date, the Company is engaged
only in the business of the developing and manufacturing vehicle components for
automotive original equipment manufacturers.
35
8.20. Officers, Directors, Etc. None of the Company's officers, directors,
or executive employees has been convicted of a felony or been the subject of a
criminal, regulatory or governmental investigation or proceeding.
8.21. Y2K Matters. All software (including microcode, firmware,
application programs, files, and databases) used, developed or designed by the
Company, when operated on the computer hardware now used for that purpose or for
which such software was designed or developed: (i) operated before and during,
and will continue to operate after the calendar year 2000 A.D. without any
errors relating to date data that represents or references different centuries
or more than one century; (ii) did not and will not abnormally end or provide
incorrect results as a result of date data that represents or references
different centuries or more than one century; (iii) recognized and will continue
to recognize the century in date data and performs and will continue to perform
all date calculations in a manner that accommodates multi-century formulas and
date values; (iv) includes an indication of century in all date-related user
interfaces and data interfaces; (v) recognizes and correctly processes dates and
date data involving leap years; (vi) displays and prints all date data in
four-digit format; and (vii) performs all sorting operations that include a year
category on the basis of four-digit dates.
ARTICLE IX
REPRESENTATIONS AND
WARRANTIES OF XXXX
Xxxx hereby represents and warrants as follows:
9.1. Corporate Authorization; No Contravention. The execution, delivery
and performance by Ford of this Agreement (a) is within Ford's power and
authority and has been duly authorized by all necessary action, (b) does not
contravention the terms of Ford's organizational documents and (c) will not
violate, conflict with or result in any breach or contravention of any
Contractual Obligation of Ford or any Requirement of Law directly relating to
Ford.
9.2. Binding Effect. This Agreement has been duly executed and delivered
by Ford, and this Agreement constitutes the legal, valid and binding obligation
of Ford enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws affecting the enforcement of
creditors' rights generally or by general equitable principles relating to
enforceability.
9.3. Accredited Investor; Purchase for Own Account. Ford is an accredited
Investor within the meaning of Regulation D under the Securities Act. The
Warrants are being or wIll be acquired for its own account and with no intention
of distributing or reselling such securities or any part thereof in any
transaction that would be in violation of
36
the Securities Act or the securities laws of any state, without prejudice,
however, to the rights of Ford at all times to sell or otherwise dispose of all
or any part of the Warrants or the shares of Common Stock issued upon exercise
of any Warrants under an effective registration statement under the Securities
Act, or under an exemption from such registration available under the Securities
Act or otherwise in accordance with the terms of this Agreement. If Ford should
in the future decide to dispose of the Warrants or the shares of Common Stock
issued upon exercise of the Warrants, Ford understands and agrees that it may do
so only in compliance with the Securities Act and applicable state securities
laws, as then in effect.
9.4. Brokers, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable in connection
with the transactions contemplated hereby based on any agreement, arrangement or
understanding with Ford or any action taken by Ford.
9.5. Governmental Authorization; Third Party Consent. No approval,
consent, compliance, exemption, authorization or other action by, or notice to,
or filing with, any Governmental Authority or any other Person in respect of any
Requirement of Law or Contractual Obligation, and no lapse of a waiting period
under any Requirement of Law or Contractual Obligation, is necessary or required
in connection with the execution, delivery or performance by Ford or enforcement
against Ford of this Agreement or the transactions contemplated hereby.
ARTICLE X
ADDITIONAL COVENANTS OF THE COMPANY
During the term of this Agreement, the Company hereby covenants and
agrees as follows:
10.1. Preservation of Corporate Existence and Related Matters. The Company
shall preserve and maintain its separate corporate existence and all rights,
franchises, licenses and privileges necessary to the conduct of its business;
and qualify and remain qualified as a foreign corporation and authorized to do
business in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification or authorization, and where
failure to qualify would have a Material Adverse Effect.
10.2. Maintenance of Insurance, The Company shall maintain insurance with
responsible insurance companies against such risks and in such amounts as are
customarily maintained by similar businesses or as may be required by any
Requirement of Law, and on the Closing Date and from time to time thereafter
deliver to Ford upon its request a detailed list of the Insurance then in
effect, stating the names of the Insurance companies, the amounts and rates of
the insurance, the dates of the expiration thereof and the properties and risks
covered thereby.
37
10.3. Payment and Performance of Obligations. The Company thereof shall
(a) pay and perform all its obligations under this Agreement, (b) pay or perform
all material taxes, assessments and other governmental charges that may be
levied or assessed upon it or any of its property (including, without
limitation, withholding, social security, payroll and similar employment related
taxes on the dates such taxes are due), (c) pay or perform all other material
indebtedness, obligations and liabilities in accordance with customary trade
practices and (d) comply in all material respects with each Contractual
Obligation entered into in the conduct of its business; provided, that the
Company may contest any item described in clauses (b), (c) and (d) hereof in
good faith so long as adequate reserves are maintained with respect thereto in
accordance with GAAP.
10.4. Accounting Methods and Financial Records. The Company thereof shall
maintain a system of accounting, and keep such books, records and accounts
(which shall be true and complete in all material respects) as may be required
or as may be necessary to permit the preparation of financial statements in
accordance with GAAP consistently applied and in compliance with the regulations
of any Governmental Authority having jurisdiction over it or any of its
properties.
10.5. Compliance With Laws and Obligations. The Company shall observe and
remain in compliance with all Requirements of Law and Contractual Obligations,
in each case applicable or necessary to the conduct of its business.
10.6. Environmental Management. In addition to and without limiting the
generality of Section 10.6, the Company shall maintain its business premises
(whether leased or owned in fee) free of any Hazardous Materials other than in
compliance with all Environmental Laws; and adopt and maintain Hazardous
Materials management practices including generation, storage, disposal and
remediation as may be required by Environmental Laws for all other Hazardous
Materials located on its business premises.
10.7. Compliance with ERISA. In addition to and without limiting the
generality of Section 10.6, the Company shall make timely payment of
contributions required to meet the minimum funding standards set forth in ERISA
with respect to any Employee Benefit Plan; not take any action or fail to take
action the result of which could be a material liability to the PBGC or to a
Multiemployer Plan; not participate in any prohibited transaction that could
result in any material civil penalty under ERISA or material tax under the Code;
furnish to any Holder upon such Holder's request such additional information
about any Employee Benefit Plan as may be reasonably requested by such Holder;
and operate each Employee Benefit Plan in such a manner that will not incur any
material tax liability under Section 4980B of the Code or any material liability
to any qualified beneficiary as defined In Section 4980B of the Code.
10.8. Visits and Inspections. Upon reasonable advance notice, the Company
shall permit representatives of Ford, from time to time, but only during normal
business hours, to visit and inspect its properties; and inspect, audit and make
extracts from its books, records and files relating sales of CCS Units to Tier 1
Suppliers.
38
ARTICLE XI
TERM; TERMINATION
11.1. Term. Unless sooner terminated as provided herein, the Directed
Sourcing Arrangement shall continue in force during the Exclusive Period and
shall automatically expire at the end of the Exclusive Period without any action
by the parties hereto.
11.2. Termination for Competitiveness Reasons. If during the Exclusive
Period, (a) the quality of the CCS Units deteriorates, (b) the Company does not
remain competitive in price, quality or delivery with other responsible
suppliers or potential suppliers of a product comparable to the CCS Unit, or (c)
Ford can substitute for the CCS Unit a product of significantly advanced design
or processing, Ford may terminate the Directed Sourcing Arrangement in whole or
in part without further liability. Ford shall provide written notice to the
Company which outlines its causes for termination and specifies a termination
date at least three months after the date of the notice. If the Company
demonstrates to Ford, at least one month prior to the specified date of
termination, that the Company will correct the causes by the termination date or
a subsequent date acceptable to Ford, termination will be suspended and the
Directed Sourcing Arrangement will continue in accordance with the terms hereof.
11.3. Termination for Other Causes. Ford shall have the right to terminate
the Directed Sourcing Arrangement on three months' notice to the Company (a)
upon breach by the Company of any of the terms of this Agreement, which breach
is not cured within ninety (90) days after notice thereof from Ford, or (b) in
the event of any infringement claim or other challenge to the validity of the
patents or related intellectual Property used in connection with the manufacture
of the CCS Units which Ford deems to be material or which otherwise adversely
impacts, as determined by Ford in its discretion, the Company's ability to
produce the CCS Units and satisfy its sourcing obligations hereunder
11.4. Survival of Warrants. Notwithstanding anything herein to the
contrary, termination by Ford of the Directed Sourcing Arrangement as provided
herein shall not terminate the Vested Warrants, Ford's (or any other Permitted
Transferee's) ability to exercise the Vested Warrants, or the Company's
obligations hereunder with respect to the Vested Warrants or the Warrant Shares.
Any Warrants which are not Vested as of the date of such termination by Ford
shall be canceled.
ARTICLE XII
INDEMNiFICATION
12.1. Indemnification. The Company shall indemnify and hold harmless each
Holder and it Affiliates and its officers, directors, agents, employees,
subsidiaries, partners and controlling persons (each, an "Indemnified Party") to
the fullest extent
39
permitted by law, from and against any and all losses, claims, damages, expenses
(including reasonable fees, disbursements and other charges of counsel) or other
liabilities (collectively, "Liabilities") resulting from or arising out of (a)
any legal, administrative or other actions (including actions brought by any
Holder or the Company or any equity holders of the Company or derivative actions
brought by any Person claiming through or in the Company's name), proceedings or
investigations (whether formal or informal), based upon, relating to or arising
out of this Agreement or the transactions contemplated hereby and thereby, or
any Indemnified Party's role therein or in the transactions contemplated
thereby, other than claims arising from breach of this Agreement which are
subject to the alternative dispute resolution provisions set forth in Section
13.16 hereof, or (b) any infringement claim or other challenge to the validity
of the Intellectual Property used or utilized in the CCS Units, or (C) any
claims arising from or related in any way to the CCS Units, including breach of
warranty or product liability claims, or (d) any registration of the Registrable
Securities including liabilities arising from any untrue or alleged untrue
statement of a material fact contained in any registration statement, prospectus
or preliminary prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are caused by or contained in any information furnished in writing to the
Company by Ford or a Holder expressly for use therein or by Ford's or a Holders
failure to deliver a copy of the registration statement or prospectus or any
amendments or supplements thereto after the Company has furnished Ford or a
Holder with a sufficient number of copies of the same; provided that the Company
shall not be liable under this Section 12.1 to an Indemnified Party: (i) for
any amount paid in settlement of claims without the prior written consent of the
Company, (ii) to the extent that it is judicially determined that such
Liabilities resulted primarily from the willful misconduct or gross negligence
of such Indemnified Party, or (iii) to the extent that it is determined that
such Liabilities resulted primarily from the material breach by such Indemnified
Party of any representation, warranty, covenant or other agreement of such
Indemnified Party contained herein or in any Warrant; and provided, further,
that if and to the extent that such Indemnification is unenforceable for any
reason, the Company shall make the maximum contribution to the payment and
satisfaction of such Liabilities which shall be permissible under applicable
laws. In connection with the obligation of the Company to indemnify for expenses
as set forth above, the Company further agrees, upon presentation of appropriate
invoices containing reasonable detail, to reimburse each Indemnified Party for
all such expenses (including reasonable fees, disbursements and other charges of
counsel) as they are incurred by such Indemnified Party; provided that if an
Indemnified Party is reimbursed hereunder for any expenses, such reimbursement
of expenses shall be refunded to the extent it is judicially determined that the
Liabilities in question resulted primarily from (A) the willful misconduct or
gross negligence of such Indemnified Party or (B) the material breach by such
Indemnified Party of any representation, warranty, covenant or other agreement
of such Indemnified Party contained in this Agreement or any Warrant.
12.2. Notification. Each Indemnified Party under this Article XII will,
promptly after the receipt of notice of the commencement of any action,
investigation, claim or other proceeding against such Indemnified Party in
respect of which indemnity may be sought from the Company under this Article
XII, notify the Company in writing of the
40
commencement thereof. The omission of any Indemnified Party so to notify the
Company of any such action shall not relieve the Company from any liability
which it may have to such Indemnified Party (a) other than pursuant to this
Article XII or (b) under this Article XII unless, and only to the extent that,
such omission results in the forfeiture by the Company of substantive rights or
defenses or the Company is otherwise irrevocably prejudiced in defending such
proceeding. In case any such action, claim or other proceeding shall be brought
against any Indemnified Party and it shall notify the Company of the
commencement thereof, the Company shall be entitled to assume the defense
thereof at their own expense, with counsel reasonably satisfactory to such
Indemnified Party; provided, that such Indemnified Party may, at its own
expense, retain separate counsel to participate in such defense. Notwithstanding
the foregoing, in any action, claim or proceeding in which both the Company, on
the one hand, and an Indemnified Party, on the other hand, is, or is reasonably
likely to become, a party, such Indemnified Party shall have the right to employ
separate counsel at the expense of the Company and to control its own defense of
such action, claim or proceeding if, in the reasonable opinion of counsel to
such Indemnified Party, a conflict or potential conflict exists between the
Company, on the one hand, and such Indemnified Party, on the other hand, that
would make such separate representation advisable. The Company agree that it
will not, without the prior written consent of the Holders, settle, compromise
or consent to the entry of any judgment in any pending or threatened claim,
action or proceeding relating to the matters contemplated hereby (if any
Indemnified Party is a party thereto or has been actually threatened to be made
a party thereto) unless such settlement, compromise or consent includes an
unconditional release of each Holder and each other Indemnified Party from all
liability arising or that may arise out of such claim, action or proceeding. The
Company shall not be liable for any settlement of any claim, action or
proceeding effected against an Indemnified Party without the prior written
consent of the Company. The rights accorded to Indemnified Parties hereunder
shall be in addition to any rights that any Indemnified Party may have at common
law, by separate agreement or otherwise.
ARTICLE XIII
MISCELLANEOUS
13.1. Survival of Representations and Warranties. All of the
representations and warranties made herein shall survive the execution and
delivery of this Agreement, any investigation by or on behalf of Ford,
acceptance of the Warrants, or termination of this Agreement.
13.2. Notices. Except as otherwise provided herein, all notices, requests
and demands to or upon a party hereto, to be effective, shall be in writing and
shall be sent by certified or registered mail, return receipt requested, by
personal delivery against receipt, by overnight courier or by facsimile and,
unless otherwise expressly provided herein, shall be deemed to have been validly
served, given or delivered immediately when delivered against receipt, one
Business Day after deposit in the mail, postage prepaid, or with an overnight
courier or, in the case of facsimile notice, when sent, addressed as follows:
41
If to the Company:
Amerigon Incorporated
0000 Xxxxxxxxx Xxx.
Xxxxxxxxx, XX 00000
Attn: President
Telecopy: (000) 000-0000
with a copy:
O'Melveny & Xxxxx LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxx Xxxx
Telecopy: (000) 000-0000
and
if to Ford:
Ford Motor Company
Xxxxx Xxxx II World Center
The American Road, Suite 909
Mail Drop 910
Xxxxxxx, XX 00000
Attn: Xx. Xxxx X. Xxxx
Telecopy: (000) 000-0000
with a copy:
Xxxxxxxxx Xxxxxx PLLC
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx
Telecopy: (000) 000-0000
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial overnight courier service; five Business
Days after being deposited in the mail, postage prepaid, if mailed; and when
receipt is acknowledged, if telecopied.
42
13.3. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, that the Company shall have no right to assign its rights, or
delegate its obligations, hereunder without the prior written consent of Ford.
13.4. Amendments, Requests or Consents. Any amendment, supplement or
modification of or to any provision of this Agreement, any waiver of any
provision of this Agreement, and any consent to any departure by the Company
from the terms of any provision of this Agreement, shall be effective (a) only
if it is made or given in writing and signed by the Company and Ford and (b)
only in the specific instance and for the specific purpose for which made or
given.
13.5. Remedies Cumulative. No failure or delay on the part of the Company
or Ford in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy provided any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Company or Ford at law, in equity or otherwise. The obligations of the Company
to issue the Warrants hereunder, and the other provisions of this Agreement
respecting the Warrants, shall be enforceable in a court of equity by a decree
of specific performance.
13.6. Couterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
13.7. Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
13.8. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE.
13.9. Jurisdiction. Each party to this Agreement hereby irrevocably agrees
that any legal action or proceeding arising out of or relating to this Agreement
or any agreements or transactions contemplated hereby may be brought in the
courts of the State of Michigan or of the United States of America located in
Xxxxx County, Michigan and hereby expressly submits to the personal jurisdiction
and venue of such courts for the purposes thereof and expressly waives any claim
of improper venue and any claim that such courts are an inconvenient forum. Each
party hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such suit, action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the address
set forth in Section 13.2 such service to become effective 10 days after such
mailing.
43
13.10. Waiver Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, FORD
AND THE COMPANY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH
RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
13.11. Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
13.12. Rules of Construction. Unless the context otherwise requires, "or"
is not exclusive, and references to sections or subsections refer to sections or
subsections of this Agreement. All pronouns and any variations thereof refer to
the masculine, feminine or neuter, singular or plural, as the context may
require.
13.13. Entire Agreement. This Agreement, together with the exhibits and
schedules hereto, is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein and therein, including the Memorandum of Understanding
effective as of January 24, 2000, as amended. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein or therein. This Agreement, together with the exhibits hereto, supersedes
all prior agreements and understandings between the parties with respect to such
subject matter.
13.14. Confidentiality and Publicity. No party shall make or consent to
any press release or other public disclosure relating to this Agreement or any
of the transactions contemplated hereunder without the prior consent of the
other party except to the extent, in the judgment of the disclosing party
(concurred in by such party's securities counsel), a particular disclosure as
required by applicable securities law or stock market listing requirements. In
all events, reasonably timely notice of the disclosure shall be given to the
other party; "timely notice" shall mean prior notice in the case of a written
disclosure. Ford and the Company shall consult with one another as to the
content of any disclosure to their respective shareholders, or to any
Governmental Authority, relating to this Agreement or any of the transactions
contemplated hereunder. Notwithstanding any other provision of this Agreement,
in furtherance of any decision by Ford to exercise any or all of the Warrants or
to offer for sale, sell or solicit offers to purchase any or all of the Warrants
or any or all of the Warrant Shares, following reasonable prior notice to the
Company, but without the Company's consent, Ford may publicly disclose any and
all such nonpublic Company information as it may then possess.
13.15. Further Assurances. Each of the parties shall execute such
documents and perform such further acts (including, without limitation,
obtaining any consents,
44
exemptions, authorizations, or other actions by, or giving any notices to, or
making any filings with, any Governmental Authority or any other Person) as may
be reasonably required or desirable to carry out or to perform the provisions of
this Agreement.
13.16. Dispute Resolution. If a dispute arises between the parties
relating to this Agreement or the Warrants, including any claims of breach of
any representation or warranty, covenant or agreement contained herein or in the
Warrants, the following procedure shall be implemented before either party
pursues other available remedies, except that either party may seek injunctive
relief from a court where appropriate in order to maintain the status quo while
this procedure is being followed:
(a) Any party having a dispute or claim shall give the other
party written notice stating the nature of the dispute in reasonable detail.
Within (5) five Business Days after delivery of the notice, the receiving party
shall submit to the other a written response also in reasonable detail. Within
(5) five Business Days after delivery of the written response, decision makers
from both parties shall meet (in person or by telephone) at a mutually
acceptable time and place (including telephonic conference), and thereafter as
often as they reasonably deem necessary, to attempt to resolve the dispute. All
reasonable requests for information made by one party to the other shall be
honored.
(b) If the matter has not been resolved by the persons
referred to above within ten (10) days of the first meeting of such persons,
the dispute shall be referred to more senior executives of each party who have
authority to settle the dispute and who shall likewise meet (in person or by
telephone) to attempt to resolve the dispute. Within five (5) Business Days
after the referral of the dispute to more senior executives of each party, the
senior executives of both parties shall meet at a mutually acceptable time and
place (including telephonic conference), and thereafter as often as they
reasonably deem necessary, to attempt to resolve the dispute.
(c) If the matter has not been resolved within ten (10) days
from the referral of the dispute to such senior executives, then either party
may pursue litigation, provided however, that if either party Initiates
litigation based on or relating to this Agreement or the transactions
contemplated hereby, the other party shall have the right to initiate binding
arbitration in accordance with, the CPR Rules for Non-Administered Arbitration
of Business Disputes ("CPR"). Each party will bear equally the costs of the
mediation and arbitration.
(i) The parties will jointly appoint a mutually acceptable
arbitrator, seeking assistance in such regard from CPR, if they have been unable
to agree upon such appointment within twenty (20) days.
(ii) Unless otherwise agreed by the parties in writing,
arbitration shall take place in the City of Dearborn, Michigan and this clause
is subject to the Federal Arbitration Act, 9 U.S.C.A. ss. 1 et seq. Judgment
upon the award rendered by the arbitrator, if any, may be entered by any U.S.
court having jurisdiction thereof.
45
Equitable remedies shall be available in any arbitration. Punitive
and exemplary damages shall not be awarded.
(d) The provisions of this Section 13.16 shall not apply to
claims or disputes between the parties relating to patent infringement, product
liability or warranty claims with respect to CCS Units, securities laws
violations claims, other third party actions against the Company in which Ford
is named, and any other claims or Liabilities covered by the indemnification
provisions of Section 12.1 hereof.
46
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their respective officers hereunto duly authorized
as of the date first above written.
AMERIGON INCORPORATED
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
-----------------------------------
Title: President & CEO
----------------------------------
FORD MOTOR COMPANY
By: /s/ Xxxx Xxxxx
-------------------------------------
Name: Xxxx Xxxxx
-----------------------------------
Title: Executive Director, VPO
----------------------------------
47
