EXHIBIT 3
CONTRACTUAL ARRANGEMENTS OF THE FOURTH ALLIANCE TRANSACTION
WITH RESPECT TO MATTERS DISCLOSED IN ITEM 4 AND 6
OF AMENDMENT NO. 3 TO SCHEDULE 13D
PART 1
DEFINITIONS
DEFINITIONS
1.1 In this Exhibit, except as otherwise expressly provided or unless the
context otherwise requires,
ACQUISITION AGREEMENT means the Acquisition Agreement
dated June 23, 2005, among DCX, Ford, Xxxxxxx and Xxxxxxx Power
Corporation,
AFFILIATE of, or a Person AFFILIATED with, a particular Person
means a Person that, directly or indirectly, controls, is under common
control with or is controlled by the specified Person,
AGGREGATE CAP, in respect of an Equity Financing, means the
number of Equity Securities equal to the amount by which
(i) the Aggregate Maximum Percentage of the total number
of outstanding Xxxxxxx Common Shares, calculated on a Fully
Issued basis,
exceeds
(ii) the total number of outstanding Xxxxxxx Common Shares
owned by the members of the DCX and Ford Groups immediately
before the completion of such Equity Financing,
AGGREGATE MAXIMUM PERCENTAGE means 42.5%,
ALLIANCE means the collaboration among Xxxxxxx, DCX and Ford
provided for in the Fourth Alliance Agreement,
Xxxxxxx means, at any particular time, Xxxxxxx Power Systems
Inc. and its successors,
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XXXXXXX BASE SHAREHOLDER means, at any particular time, DCX,
as long as one or more members of the DCX Group owns all of the Base
DCX Xxxxxxx Shares, and Ford, as long as one or more members of the
Ford Group owns all of the Base Ford BPS Shares, at such time,
XXXXXXX COMMON SHARES means at any particular time Common
shares in the capital of Xxxxxxx at such time,
XXXXXXX GROUP means, at any particular time, Xxxxxxx and each
Person that is a Subsidiary of Xxxxxxx at such time,
XXXXXXX STRATEGIC PLAN means Xxxxxxx'x Five Year Strategic
Plan, 2003 - 2007, as approved by Xxxxxxx'x board of directors on
December 6, 2002, and any amendment thereto or replacement thereof
which has been approved pursuant to Section 7.21, Section 7.22, Section
7.24, Section 7.25, Section 7.26 or Section 7.27, as applicable,
BASE XXXXXXX SHARES means, (i) with respect to DCX, the Base
DCX Xxxxxxx Shares, and (ii) with respect to Ford, the Base Ford BPS
Shares,
BASE DCX XXXXXXX SHARES means, collectively,
(i) all Xxxxxxx Common Shares owned by the members of the
DCX Group on the Closing Date, after giving effect to the
transfer of Xxxxxxx Common Shares contemplated by the
Acquisition Agreement to occur on the Closing Date, other than
3,977,650 Xxxxxxx Common Shares owned by members of the DCX
Group, and
(ii) all Base Ford BPS Shares purchased by a member of the
DCX Group from a member of the Ford Group,
and includes all additional Xxxxxxx Common Shares derived from such
shares as a result of a reclassification, reorganization or subdivision
of Xxxxxxx Common Shares or from an issuance of any stock dividend in
respect of such shares,
BASE FORD BPS SHARES means, collectively,
(i) all Xxxxxxx Common Shares owned by the members of the
Ford Group on the Closing Date, after giving effect to the
transfer of Xxxxxxx Common Shares contemplated by the
Acquisition Agreement to occur on the Closing Date, other than
2,954,781 Xxxxxxx Common Shares owned by members of the Ford
Group, and
(ii) all Base DCX Xxxxxxx Shares purchased by a member of
the Ford Group from a member of the DCX Group,
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and includes all additional Xxxxxxx Common Shares derived from such
shares as a result of a reclassification, reorganization or subdivision
of Xxxxxxx Common Shares or from an issuance of any stock dividend in
respect of such shares,
BREACHING PARTY has the meaning ascribed to that term in
Section 15.5 of the Fourth Alliance Agreement.
BUSINESS DAY means a day that is not a Saturday or a Sunday or
a Canadian federal, British Columbia provincial, German federal,
Baden-Wurttemberg state, United States of America federal or Michigan
state holiday or a day that is not within the period from December 24
of one year through January 1 of the next year,
CALL AGREEMENT means the Call Agreement dated December 31,
2003 among Xxxxxxx, DCX, Ford and DBF Holdings,
CANADA BUSINESS CORPORATIONS ACT means the CANADA BUSINESS
CORPORATIONS ACT, R.S.C. 1985, c. C-44, as amended,
CANADIAN DOLLAR or CDN.$ means a Canadian dollar or the basic
unit of Canadian legal tender commonly used in Canada,
CIRCULAR BID means an offer made and delivered to all holders
of Xxxxxxx Common Shares by way of a bid circular prepared in the form
provided for under applicable securities laws,
CLASS A ROUND-UP NUMBER means 1.30, provided that
(iii) if
(A) the members of the DCX Group acquire any
Xxxxxxx Common Shares, or
(B) the total number of outstanding Xxxxxxx
Common Shares is reduced,
on the date of every such acquisition or reduction,
the Class A Round-up Number shall be increased (but
not decreased) to the minimum number required to
allow DBF Holdings, as the holder of the Class A
Share, to elect 2 directors of Xxxxxxx, assuming that
the total number of directors of Xxxxxxx immediately
after the election of directors by DBF Holdings is
12,
(iv) if Xxxxxxx has issued Xxxxxxx Common Shares (or
securities convertible into or exchangeable for Xxxxxxx Common
Shares, other then stock options granted under Xxxxxxx'x
employee stock option plans) after June 21, 2005 and prior to
the Closing Date, the then existing Round-up Number shall be
multiplied by a fraction,
(A) the numerator of which is the number of
Xxxxxxx Common Shares outstanding prior to such
issue, and
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(B) the denominator of which is the aggregate of
the number of Xxxxxxx Common Shares outstanding prior
to such issue and the number (or equivalent number)
of Xxxxxxx Common Shares issued on such issue, and
(v) the Class A Round-Up Number shall not exceed 1.51,
CLASS B ROUND-UP NUMBER means 1.30, provided that
(i) if
(A) the members of the Ford Group acquire any
Xxxxxxx Common Shares, or
(B) the total number of outstanding Xxxxxxx
Common Shares is reduced,
on the date of every such acquisition or reduction,
the Class B Round-up Number shall be increased (but
not decreased) to the minimum number required to
allow DBF Holdings, as the holder of the Class B
Share, to elect 2 directors of Xxxxxxx, assuming that
the total number of directors of Xxxxxxx immediately
after the election of directors by DBF Holdings is
12,
(ii) if Xxxxxxx has issued Xxxxxxx Common Shares (or
securities convertible into or exchangeable for Xxxxxxx Common
Shares, other then stock options granted under Xxxxxxx'x
employee stock option plans) after June 21, 2005 and prior to
the Closing Date, the then existing Round-up Number shall be
multiplied by a fraction,
(A) the numerator of which is the number of
Xxxxxxx Common Shares outstanding prior to such
issue, and
(B) the denominator of which is the aggregate of
the number of Xxxxxxx Common Shares outstanding prior
to such issue and the number (or equivalent number)
of Xxxxxxx Common Shares issued on such issue, and
(iii) the Class B Round-Up Number shall not exceed 1.51,
CLASS A SHARE means the Class A share in the capital of
Xxxxxxx held by DBF Holdings,
CLASS B SHARE means the Class B share in the capital of
Xxxxxxx held by DBF Holdings,
CLOSING means the completion of the transactions contemplated
by the Acquisition Agreement,
CLOSING DATE means August 31, 2005,
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COMPLETION DATE has the meaning ascribed to that term in
Section 4.14,
CONTROL of a corporation, limited liability company, other
body corporate or other entity by a Person only occurs, for the
purposes of this Agreement, if
(i) securities of the corporation, limited liability
company, other body corporate or other entity to which are
attached more than 50% of the votes that may be cast to elect
directors of the corporation, limited liability company, other
body corporate or other entity (or other members of the
governing body of the corporation, limited liability company,
other body corporate or other entity, if it has no board of
directors) or other rights to elect a majority of directors or
such other members are held, other than by way of security or
pledge only, by or for the benefit of that Person, and
(ii) the votes attached to those securities are
sufficient, or such rights are sufficient, if exercised, to
elect a majority of the directors (or other members of the
governing body of the corporation, limited liability company,
other body corporate or other entity, if it has no board of
directors) of the corporation, limited liability company,
other body corporate or other entity,
DBF HOLDINGS means, at any particular time, DBF PREF Share
Holdings Inc. and its successors,
DBF CLASS A COMMON SHARES means the Class A Common shares in
the capital of DBF Holdings,
DBF CLASS B COMMON SHARES means the Class B Common shares in
the capital of DBF Holdings,
DBF CLASS C COMMON SHARES means the Class C Common shares in
the capital of DBF Holdings,
DBF SHARES means, collectively, the DBF Class A Common Shares,
DBF Class B Common Shares and DBF Class C Common Shares,
DCX means, at any particular time, DaimlerChrysler AG and its
successors,
DCX GROUP means, at any particular time, DCX and each Person
that, at such time, is either
(i) a Subsidiary of DCX,
(ii) XCELLSIS, for so long as DCX, Ford or a Subsidiary of
either of them collectively hold more than 50% of the
outstanding securities of XCELLSIS entitling the holder
thereof to cast votes for the election of directors of
XCELLSIS (or members of its governing body if XCELLSIS has no
board of directors) and XCELLSIS is not a Subsidiary of Ford,
or
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(iii) any other Person determined to be a member of the DCX
Group under subsection 1.1(a)(iii) of the Fourth Alliance
Agreement,
DCX GROUP CAP, in respect of an Equity Financing, means the
number of Equity Securities by which
(i) the lesser of
(A) the Aggregate Cap for such Equity Financing,
and
(B) the total number of Equity Securities
offered for sale in such Equity Financing
exceeds
(ii) the lesser of
(A) the maximum number of Equity Securities
specified in Ford's Participation Notice for such
Equity Financing, and
(B) the number of Xxxxxxx Common Shares equal to
the product obtained when (I) the lesser of 1. the
Aggregate Cap for such Equity Financing, and 2. the
total number of Equity Securities offered for sale in
such Equity Financing
is multiplied by
(II) the quotient obtained when
1. the Ford Proportion,
is divided by
2. the aggregate of the DCX
Proportion and the Ford
Proportion.
The DCX Group Cap is calculated as follows:
(lesser of A & B) - (xxxxxx of C & [(lesser of A & B ) * (D /
E)]),
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where:
A= Aggregate Cap for such Equity Financing,
B= Total number of Equity Securities offered for sale in such
Equity Financing,
C= The maximum number of Equity Securities specified in Ford's
Participation Notice for such Equity Financing,
D= The Ford Proportion, and
E= The aggregate of the DCX Proportion and the Ford
Proportion,
DCX PROPORTION means 19.16%, subject to adjustment pursuant to
Section 2.3,
EQUITY FINANCING means a financing undertaken by Xxxxxxx on or
after the Closing Date, by way of the issuance and sale of Equity
Securities for cash or cash equivalent consideration, but does not
include the issuance of
(i) Equity Securities to one or more members of the DCX
Group pursuant to a private placement under Section 2.11,
(ii) Equity Securities to one or more members of the Ford
Group pursuant to a private placement under Section 2.12,
(iii) Equity Securities under the share option and
incentive plans of Xxxxxxx for its directors, officers,
employees and consultants, or
(iv) Equity Securities for property that is acquired by
one or more members of the Xxxxxxx Group,
EQUITY SECURITY means any security of Xxxxxxx that carries a
right to vote at meetings of holders of Xxxxxxx Common Shares or a
residual right to participate in the earnings of Xxxxxxx and, upon the
liquidation or winding-up of Xxxxxxx, its assets, and includes any
security that is convertible into or exchangeable for such a security,
FORD means, at any particular time, Ford Motor Company and
its successors,
FORD GROUP means, at any particular time, Ford and each Person
that, at such time, is either
(i) a Subsidiary of Ford,
(ii) XCELLSIS, for as long as DCX, Ford or a Subsidiary of
either of them collectively hold more than 50% of the
outstanding securities of XCELLSIS entitling the holder
thereof to cast votes for the election of directors of
XCELLSIS (or members of its governing body if XCELLSIS has no
board of directors) and XCELLSIS is not a Subsidiary of DCX,
or
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(iii) any other Person determined to be a member of the
Ford Group under subsection 1.1(bv)(iii) of the Fourth
Alliance Agreement,
FORD GROUP CAP, in respect of an Equity Financing, means the
number of Equity Securities by which
(i) the lesser of
(A) the Aggregate Cap for such Equity Financing,
and
(B) the total number of Equity Securities
offered for sale in such Equity Financing
exceeds
(ii) the lesser of
(A) the maximum number of Equity Securities
specified in DCX's Participation Notice for such
Equity Financing, and
(B) the number of Xxxxxxx Common Shares equal to
the product obtained when
(I) the lesser of
1. the Aggregate Cap for such
Equity Financing, and
2. the total number of Equity
Securities offered for sale
in such Equity Financing
is multiplied by
(II) the quotient obtained when
1. the DCX Proportion,
is divided by
2. the aggregate of the DCX
Proportion and the Ford Proportion.
The Ford Group Cap is calculated as follows:
(lesser of A & B) - (xxxxxx of C & [(lesser of A & B ) * (D /
E)]),
where:
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A= Aggregate Cap for such Equity Financing,
B= Total number of Equity Securities offered for sale in such
Equity Financing,
C= The maximum number of Equity Securities specified in DCX's
Participation Notice for such Equity Financing,
D= The DCX Proportion,
E= The aggregate of the DCX Proportion and the Ford
Proportion,
FORD PROPORTION means 11.52%, subject to adjustment pursuant
to Section 2.4,
FOURTH ALLIANCE AGREEMENT means that certain agreement
dated August 31, 2005 among Xxxxxxx, DCX, Ford and DBF,
FOURTH SETTLEMENT AGREEMENT means the settlement agreement
entered into on the Closing Date among Xxxxxxx, DCX, DaimlerChrysler
North America Holding Corporation, Xxxx, Xxxx Global Technologies, LLC
and DBF Holdings,
FULLY DILUTED in respect of a number of outstanding Xxxxxxx
Common Shares means the number of outstanding Xxxxxxx Common Shares
calculated as if every security that is convertible or exchangeable
into, or otherwise carries the right to acquire Xxxxxxx Common Shares
had been converted, exchanged or exercised, as the case may be,
FULLY ISSUED in respect of an Equity Financing or issuance of
Equity Securities pursuant to Section 2.11 or Section 2.12 means the
number of Xxxxxxx Common Shares outstanding immediately after such
Equity Financing or issuance of Equity Securities calculated as if
(i) every Equity Security offered for sale under such
Equity Financing or to be issued pursuant to Section 2.11 or
Section 2.12 is issued, and
(ii) every Equity Security issued pursuant to the Equity
Financing or pursuant to Section 2.11 or Section 2.12 that is
convertible or exchangeable into, or otherwise carries the
right to acquire Xxxxxxx Common Shares had been converted,
exchanged or exercised, as the case may be,
FUNDAMENTAL BREACH has the meaning ascribed to that term in
Section 15.5 of the Fourth Alliance Agreement,
GOVERNMENTAL AUTHORITY means the government of Canada, the
government of a Canadian province or territory, the government of
Germany, the government of a German state, the government of the United
States of America, the government of an American state or territory and
the government of any other applicable country or state, and each
ministry, department, commission, board, bureau or other agency of, or
municipality, regional district or other local governing body
established by, any such government, or other political subdivision
thereof, and includes any Person exercising executive, legislative,
judicial, regulatory or administrative functions of, or pertaining to,
any such government, including the European Commission,
GROUP means one of the DCX Group or the Ford Group, as the
context requires,
INVOLUNTARY DISPOSTIONS has the meaning ascribed to that term
in Section 5.6,
NON-BREACHING PARTY has the meaning ascribed to that term in
Section 15.5 of the Fourth Alliance Agreement,
NOTICE OF EJECTION has the meaning ascribed to that term in
Section 15.10,
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NOTICE OF INTENTION has the meaning ascribed to that term in
Section 2.5,
NOTICE OF PRICING has the meaning ascribed to that term in
Section 2.5,
NOTICE OF TERMINATION has the meaning ascribed to that term in
Section 15.10,
OEMS means, collectively DCX and Ford,
OFFER has the meaning ascribed to that term in Section 4.10,
OFFERED SHARES has the meaning ascribed to that term in
Section 4.10,
OFFEREE has the meaning ascribed to that term in Section 4.10,
OFFEROR has the meaning ascribed to that term in Section 4.10,
PARTICIPATION NOTICE has the meaning ascribed to it in Section
2.6,
PERSON means an individual, corporation, body corporate, firm,
limited liability company, partnership, syndicate, joint venture,
society, association, trust or unincorporated organization or
governmental authority or trustee, executor, administrator or other
legal representative,
PRIVATE PLACEMENT SUBSCRIPTION means the irrevocable written
subscription delivered to Xxxxxxx by DCX pursuant to Section 2.7 or by
Ford pursuant to Section 2.8 to purchase Equity Securities,
SUBSIDIARY of a Party means a corporation, limited liability
company, other body corporate or other entity which that Party,
directly or indirectly, controls and in the case of Ford, includes
Mazda Motor Corporation for so long as Ford
(i) owns at least 33.4% of the outstanding voting,
participating equity shares in the capital of Mazda Motor
Corporation, and
(ii) retains all of its existing abilities and rights to
effect the appointment of certain of the senior management,
including the President, of Mazda Motor Corporation,
TAKEOVER BID means an offer made to any Person to acquire
Xxxxxxx Common Shares or other securities convertible into or
exchangeable for Xxxxxxx Common Shares where the Xxxxxxx Common Shares
and any such other securities subject to such offer, together with the
offeror's Xxxxxxx Common Shares and other securities convertible into
or exchangeable for Xxxxxxx Common Shares, which for the purposes of
calculation are deemed to have been so converted or exchanged,
constitute in the aggregate 20% or more of the Xxxxxxx Common Shares
outstanding at the date of such offer,
TERMINATION NOTICE has the meaning ascribed to that term in
Section 15.3,
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THIRD PARTY in relation to a Party means a Person with which
that Party deals at arm's length and that is not an Affiliate of that
Party,
THRESHOLD PERCENTAGE means 25%, subject to increase to 33 1/3%
in the circumstances set forth in subsection 1.1.(ea) of the Fourth
Alliance Agreement,
UNITED STATES DOLLAR, USD or US$ means a United States of
America dollar or the basic unit of legal tender commonly used in the
United States of America, and
XCELLSIS means Xxxxxxx Power Systems GmbH and its subsidiary,
Fuel Cell Systems GmbH, (formerly Xxxxxxx Power Systems AG and, prior
to that, XCELLSIS AG and prior to that, XCELLSIS GmbH dbb Fuel Cell
Engines GmbH, and prior to that Daimler Benz Fuel Cell Systems GmbH), a
corporation existing under the laws of Germany and any successor
entity.
PART 2
XXXXXXX FINANCING
NO FINANCING OBLIGATIONS
2.1 No member of the DCX Group or the Ford Group will have any obligation
to provide financing or to render guarantees or other security for loans to any
member of the Xxxxxxx Group.
ADJUSTMENT TO THE DCX PROPORTION
2.3 The DCX Proportion will be adjusted immediately after
(a) an acquisition by a member of the DCX Group of Xxxxxxx Common
Shares by adding to the DCX Proportion immediately before such
acquisition the amount, if any, by which
(i) the proportion of the outstanding Xxxxxxx Common
Shares owned by the members of the DCX Group immediately after
such acquisition
exceeds
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(ii) the greater of
(A) the DCX Proportion immediately before such
acquisition, and
(B) the proportion of the outstanding Xxxxxxx
Common Shares owned by the members of the DCX Group
immediately before such acquisition,
(b) an acquisition by a member of the Ford Group of Xxxxxxx Common
Shares, by subtracting the amount, if any, by which the Ford Proportion
has been increased pursuant to Section 2.4, and
(c) an issuance of Xxxxxxx Common Shares as consideration for an
acquisition of property from a Person other than a member of the DCX
Group or the Ford Group that was required to be approved, and was
approved under Section 7.21, Section 7.22, Section 7.24, Section 7.25,
Section 7.26 or Section 7.27, by subtracting the amount by which the
proportion of the outstanding Xxxxxxx Common Shares owned by the
members of the DCX Group decreased as a result of the issuance of such
Xxxxxxx Shares.
ADJUSTMENT TO THE FORD PROPORTION
2.4 The Ford Proportion will be adjusted immediately after
(a) an acquisition by a member of the Ford Group of Xxxxxxx Common
Shares by adding to the Ford Proportion immediately before such
acquisition the amount, if any, by which
(i) the proportion of the outstanding Xxxxxxx Common
Shares owned by the members of the Ford Group immediately
after such acquisition
exceeds
(ii) the greater of
(A) the Ford Proportion immediately before such
acquisition, and
(B) the proportion of the outstanding Xxxxxxx
Common Shares owned by the members of the Ford Group
immediately before such acquisition,
(b) an acquisition by a member of the DCX Group of Xxxxxxx Common
Shares, by subtracting the amount, if any, by which the DCX Proportion
has been increased pursuant to Section 2.3, and
(c) an issuance of Xxxxxxx Common Shares as consideration for an
acquisition of property from a Person other than a member of the DCX
Group or the Ford Group that was required to be approved, and was
approved under Section 7.21, Section 7.22, Section 7.24, Section 7.25,
Section 7.26 or Section 7.27, by subtracting the amount by which the
proportion of the outstanding Xxxxxxx Common Shares owned by the
members of the Ford Group decreased as a result of the issuance of such
Xxxxxxx Shares.
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PARTICIPATION IN EQUITY FINANCINGS
2.5 If and when Xxxxxxx intends to undertake an Equity Financing at a time
when the members of the DCX Group and the Ford Group, if members of both Groups
own Xxxxxxx Common Shares at such time or, if no member of one such Group owns
Xxxxxxx Common Shares at such time, the members of the other such Group, own or
would own, in the aggregate, as the result of the completion of such Equity
Financing, assuming that no member of either the DCX Group or the Ford Group
participates in such Equity Financing, less than the Aggregate Maximum
Percentage of the outstanding Xxxxxxx Common Shares, calculated on a Fully
Issued basis, Xxxxxxx will give to each Xxxxxxx Base Shareholder written notice
of its intention (a "NOTICE OF INTENTION") to undertake such Equity Financing,
such notice to include the anticipated approximate size of such Equity Financing
(expressed in Canadian Dollars or United States Dollars), the type of such
Equity Financing, the form of Equity Securities to be offered, the proposed
timing of such Equity Financing, the price range (within +/- 5%) at which such
Equity Financing is anticipated to be offered (expressed in Canadian Dollars or
United States Dollars) and any other information which is material to such
Equity Financing and is known by Xxxxxxx at the time of giving such Notice of
Intention, and Xxxxxxx will, forthwith after setting the final price of the
Equity Securities to be sold under such Equity Financing and the other terms of
such Equity Financing, give notice (a "NOTICE OF PRICING") of such final price
and other terms to each Xxxxxxx Base Shareholder.
PARTICIPATION NOTICE
2.6 Each Xxxxxxx Base Shareholder will, if any member of its Group wishes
to participate in an Equity Financing, give Xxxxxxx written notice (a
"PARTICIPATION NOTICE") of such member's irrevocable agreement to so participate
before the close of business in Vancouver, Canada, on the third Business Day
after the delivery to the Xxxxxxx Base Shareholder of the Notice of Pricing for
such Equity Financing, or such lesser time as is specified in the Notice of
Pricing.
ISSUANCE OF EQUITY SECURITIES TO DCX
2.7 If DCX delivers a Participation Notice to Xxxxxxx in the manner and
within the time prescribed by Section 2.6 and is a Xxxxxxx Base Shareholder at
the time that Equity Securities are to be issued pursuant to this Section 2.7,
Xxxxxxx will issue to the members of the DCX Group specified in such notice, and
such members of the DCX Group will subscribe for, take up, purchase and pay for
an aggregate number of Equity Securities equal to the lesser of
(a) the maximum number of Equity Securities specified in the
Participation Notice delivered by DCX, and
(b) the DCX Group Cap.
ISSUANCE OF EQUITY SECURITIES TO FORD
2.8 If Ford delivers a Participation Notice to Xxxxxxx in the manner and
within the time prescribed by Section 2.6 and is a Xxxxxxx Base Shareholder at
the time that Equity Securities are to be issued pursuant to this Section 2.8,
Xxxxxxx will issue to the members of the Ford Group specified in
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such notice, and such members of the Ford Group will subscribe for, take up,
purchase and pay for an aggregate number of Equity Securities equal to the
lesser of
(a) the maximum number of Equity Securities specified in the
Participation Notice delivered by Ford, and
(b) the Ford Group Cap.
PRIVATE PLACEMENT TO DCX
2.9 If Xxxxxxx irrevocably commits to do an Equity Financing within 30 days
after delivery to DCX of the Notice of Intention for such Equity Financing,
either
(a) at a price outside the range of pricing specified in the
Notice of Intention for such Equity Financing, or
(b) at a price that exceeds the final price specified in the
Notice of Pricing for such Equity Financing,
and the members of the DCX Group and the Ford Group, if both Groups own Xxxxxxx
Common Shares at the time of such commitment, or, if no member of the Ford Group
owns Xxxxxxx Common Shares at such time, the members of the DCX Group own, in
the aggregate, immediately after such Equity Financing, less than the Aggregate
Maximum Percentage of the outstanding Xxxxxxx Common Shares, calculated on a
Fully Issued basis, DCX may deliver to Xxxxxxx and Ford (if Ford is a Xxxxxxx
Base Shareholder at the time of delivery of such notice), within 60 days after
the completion of such Equity Financing, its irrevocable written subscription
for a number of the same type of Equity Securities as offered under such Equity
Financing not exceeding the maximum number permitted pursuant to Section 2.11
and Section 2.13, unless
(c) it has exercised its right pursuant to Section 2.7 to
participate in such Equity Financing, or
(d) the members of the DCX Group have not, in respect of any two
consecutive previous Equity Financings by Xxxxxxx completed after the
Closing Date, purchased at least
(i) the number of Equity Securities pursuant to Section
2.7 equal to the lesser of
(A) the product obtained when
(I) the number of Equity Securities
offered in each such Equity Financing
is multiplied by
(II) the quotient obtained when
1. the DCX Proportion
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is divided by
2. the aggregate of the DCX
Proportion and the Ford
Proportion, and
(B) the number of Equity Securities so that,
immediately after such purchase, the members of the
DCX Group would own, in the aggregate, at least the
number of Xxxxxxx Common Shares, calculated on a
Fully Issued basis, equal to the product obtained
when
(I) the DCX Proportion,
is multiplied by
(II) the total number of Xxxxxxx Common
Shares, calculated on a Fully Issued basis,
outstanding immediately after such purchase,
or
(ii) the number of Equity Securities pursuant to Section
2.11 that when issued to members of the DCX Group would result
in the members of the DCX Group owning the same proportion of
the outstanding Xxxxxxx Common Shares, calculated on a Fully
Issued basis, as they would have owned on the date that is 90
days after the date that each such Equity Financing was
completed, or such earlier date that Xxxxxxx issued Equity
Securities to DCX under Section 2.11 with respect to each such
Equity Financing, if the members of the DCX Group had
purchased the number of Equity Securities equal to the lesser
of the number of Equity Securities calculated under Section
2.9(d)(i)(A) with respect to each such Equity Financing and
the number of Equity Securities calculated under Section
2.9(d)(i)(B) with respect to each such Equity Financing.
PRIVATE PLACEMENT TO FORD
2.10 If Xxxxxxx irrevocably commits to do an Equity Financing within 30 days
after delivery to Ford of the Notice of Intention for such Equity Financing,
either
(a) at a price outside the range of pricing specified in the
Notice of Intention for such Equity Financing, or
(b) at a price that exceeds the final price specified in the
Notice of Pricing for such Equity Financing,
and the members of the DCX Group and the Ford Group, if both Groups own Xxxxxxx
Common Shares at the time of such commitment or, if no member of the DCX Group
owns Xxxxxxx Common Shares at such time, the members of the Ford Group, own, in
the aggregate, immediately after such Equity Financing, less than the Aggregate
Maximum Percentage of the outstanding Xxxxxxx Common Shares, calculated on a
Fully Issued basis, Ford may deliver to Xxxxxxx and DCX (if DCX is a Xxxxxxx
Base Shareholder at the time of delivery of such notice), within 60 days after
the completion of such Equity Financing, its irrevocable written subscription
-16-
for a number of the same type of Equity Securities as offered under such Equity
Financing not exceeding the maximum number permitted pursuant to Section 2.12
and Section 2.13, unless
(c) it has exercised its right pursuant to Section 2.8 to
participate in such Equity Financing, or
(d) the members of the Ford Group have not, in respect of any two
consecutive previous Equity Financings by Xxxxxxx completed after the
Closing Date, purchased at least
(i) the number of Equity Securities pursuant to Section
2.8 equal to the lesser of
(A) the product obtained when
(I) the number of Equity Securities
offered in each such Equity Financing
is multiplied by
(II) the quotient obtained when
1. the Ford Proportion
is divided by
2. the aggregate of the DCX
Proportion and the Ford
Proportion, and
(B) the number of Equity Securities so that,
immediately after such purchase, the members of the
Ford Group would own, in the aggregate, at least the
number of Xxxxxxx Common Shares, calculated on a
Fully Issued basis, equal to the product obtained
when
(I) the Ford Proportion,
is multiplied by
(II) the total number of Xxxxxxx Common
Shares, calculated on a Fully Issued basis,
outstanding immediately after such purchase,
or
(ii) the number of Equity Securities pursuant to Section
2.12 that when issued to members of the Ford Group would
result in the members of the Ford Group owning the same
proportion of the outstanding Xxxxxxx Common Shares,
calculated on a Fully Issued basis, as they would have owned
on the date that is 90 days after the date that each such
Equity Financing was completed, or such earlier date that
Xxxxxxx issued Equity Securities to Ford under Section 2.12
with respect to each such Equity Financing, if the members of
the Ford Group had purchased
-17-
the number of Equity Securities equal to the lesser of the
number of Equity Securities calculated under Section
2.10(d)(i)(A) with respect to each such Equity Financing and
the number of Equity Securities calculated under Section
2.10(d)(i)(B) with respect to each such Equity Financing.
NUMBER OF EQUITY SECURITIES IN PRIVATE PLACEMENT TO DCX
2.11 Subject to Section 2.13, within 30 days after receipt of a Private
Placement Subscription under Section 2.9, Xxxxxxx will, subject to receipt of
all necessary approvals of Governmental Authorities and stock exchanges and to
DCX being a Xxxxxxx Base Shareholder at the time that Equity Securities are
issued pursuant to this Section 2.11, issue to the members of the DCX Group
specified in such Private Placement Subscription, and DCX will cause such
members of its Group to purchase from Xxxxxxx and pay the subscription price
for, an aggregate number of Equity Securities equal to the lesser of
(a) the maximum number of Equity Securities specified in such
Private Placement Subscription, and
(b) the number of Equity Securities that when issued to members of
the DCX Group would result in the members of the DCX Group owning the
same proportion of the outstanding Xxxxxxx Common Shares calculated on
a Fully Issued basis, as they would have owned on the date of issuance
of Equity Securities under this Section 2.11 if the members of the DCX
Group had purchased the DCX Group Cap (calculated as if Ford delivered
a Participation Notice for the number of Equity Securities equal to the
Aggregate Cap) for the Equity Financing pursuant to Section 2.7.
Subject to Section 2.13, if Ford has purchased Equity Securities
pursuant to Section 2.8, such number of Equity Securities in this
Section 2.11(b) is calculated as follows:
(B* C) - A
----------
1 - B
where:
A = The number of Xxxxxxx Common Shares owned by the members of
the DCX Group immediately before the issuance of Equity
Securities under this Section 2.11,
B = The proportion held by the DCX Group of the outstanding
Xxxxxxx Common Shares, calculated on a Fully Issued basis, as
it would have been if the DCX Group had purchased the DCX
Group Cap (calculated as if Ford delivered a Participation
Notice for the number of Equity Securities equal to the
Aggregate Cap) for the Equity Financing pursuant to Section 2.7,
and
C = The number of Xxxxxxx Common Shares outstanding immediately
before the issuance of Equity Securities under this Section 2.11,
calculated as if every Equity Security issued pursuant to the
Equity Financing that is convertible or exchangeable into or
otherwise carries the right to acquire Xxxxxxx Common Shares
had been converted, exchanged or exercised as the case may be,
-18-
otherwise, such number of Equity Securities in this Section 2.11(b) is
calculated, subject to Section 2.13, as follows:
((B* D) - E)
C*(----------) + (C* D) - A
( 1 - B )
where:
A = The number of Xxxxxxx Common Shares owned by the members of
the DCX Group immediately before the issuance of Equity
Securities under this Section 2.11,
B = The Aggregate Maximum Percentage,
C = The proportion held by the DCX Group of the outstanding
Xxxxxxx Common Shares, calculated on a Fully Issued basis, as
it would have been if the DCX Group had purchased the DCX
Group Cap (calculated as if Ford delivered a Participation
Notice for the number of Equity Securities equal to the
Aggregate Cap) for the Equity Financing pursuant to Section 2.7,
D = The number of Xxxxxxx Common Shares outstanding immediately
before the issuance of Equity Securities under this Section 2.11,
calculated as if every Equity Security issued pursuant to the
Equity Financing that is convertible or exchangeable into, or
otherwise carries the right to acquire Xxxxxxx Common Shares
had been converted, exchanged or exercised as the case may be,
E = The total number of Xxxxxxx Common Shares owned by the
members of the DCX Group and the Ford Group immediately before
the issuance of Equity Securities under this Section 2.11 or
Section 2.12.
NUMBER OF EQUITY SECURITIES IN PRIVATE PLACEMENT TO FORD
2.12 Subject to Section 2.13, within 30 days after receipt of a Private
Placement Subscription under Section 2.10, Xxxxxxx will, subject to receipt of
all necessary approvals of Governmental Authorities and stock exchanges and to
Ford being a Xxxxxxx Base Shareholder at the time that Equity Securities are
issued pursuant to this Section 2.12, issue to the members of the Ford Group
specified in such Private Placement Subscription, and Ford will cause such
members of its Group to purchase from Xxxxxxx and pay the subscription price
for, an aggregate number of Equity Securities equal to the lesser of
(a) the maximum number of Equity Securities specified in such
Private Placement Subscription, and
(b) the number of Equity Securities that when issued to members of
the Ford Group would result in the members of the Ford Group owning the
same proportion of the outstanding Xxxxxxx Common Shares, calculated on
a Fully Issued basis, as they would have owned on the date of issuance
of Equity Securities under this Section 2.12 if the members of the Ford
Group had purchased the Ford Group Cap (calculated as if DCX delivered
a Participation Notice for the number of Equity Securities equal to the
Aggregate Cap) for the Equity Financing pursuant to Section 2.8.
-19-
Subject to Section 2.13, if DCX has purchased Equity Securities
pursuant to Section 2.7, such number of Equity Securities in this
Section 2.12(b) is calculated as follows:
(B* C) - A
----------
1 - B
where:
A = The number of Xxxxxxx Common Shares owned by the members of
the Ford Group immediately before the issuance of Equity
Securities under this Section 2.12,
B = The proportion held by the Ford Group of the outstanding
Xxxxxxx Common Shares, calculated on a Fully Issued basis, as
it would have been if the Ford Group had purchased the Ford
Group Cap (calculated as if DCX delivered a Participation
Notice for the number of Equity Securities equal to the
Aggregate Cap) for the Equity Financing pursuant to Section 2.8,
and
C = The number of Xxxxxxx Common Shares outstanding immediately
before the issuance of Equity Securities under this Section 2.12,
calculated as if every Equity Security issued pursuant to the
Equity Financing that is convertible or exchangeable into, or
otherwise carries the right to acquire Xxxxxxx Common Shares
had been converted, exchanged or exercised as the case may be,
otherwise, such number of Equity Securities in this Section 2.12(b) is
calculated, subject to Section 2.13, as follows:
((B* D) - E)
C*(----------) + (C* D) - A
( 1 - B )
where:
A = The number of Xxxxxxx Common Shares owned by the members of
the Ford Group immediately before the issuance of Equity
Securities under this Section 2.12.
B = The Aggregate Maximum Percentage,
C = The proportion held by the Ford Group of the outstanding
Xxxxxxx Common Shares, calculated on a Fully Issued basis, as
it would have been if the Ford Group had purchased the Ford
Group Cap (calculated as if DCX delivered a Participation
Notice for the number of Equity Securities equal to the
Aggregate Cap) for the Equity Financing pursuant to Section 2.8,
D = The number of Xxxxxxx Common Shares outstanding immediately
before the issuance of Equity Securities under this Section 2.12,
calculated as if every Equity Security issued pursuant to the
Equity Financing that is convertible or exchangeable into, or
otherwise carries the right to acquire Xxxxxxx Common Shares
had been converted, exchanged or exercised as the case may be,
E = The total number of Xxxxxxx Common Shares owned by the
members of the DCX Group and the Ford Group immediately before
the issuance of Equity Securities under Section 2.11 or this
Section 2.12.
-20-
MAXIMUM FOR PRIVATE PLACEMENT
2.13 The number of Equity Securities issued pursuant to Section 2.11 or
Section 2.12 will not exceed the number of Equity Securities that would result
in the members of the DCX Group and the Ford Group owning immediately after such
issuance, in the aggregate, the Aggregate Maximum Percentage of the outstanding
Xxxxxxx Common Shares, calculated on a Fully Issued basis.
Such maximum number of Equity Securities is calculated as follows:
(B* C) - A
----------
1 - B
where:
A = The total number of Xxxxxxx Common Shares owned by members
of the DCX Group and the Ford Group immediately before the
issuance of Equity Securities under Section 2.11 or Section 2.12,
calculated as if every Equity Security issued to a member of
either such Group pursuant to the applicable Equity Financing
that is convertible or exchangeable into, or otherwise carries
the right to acquire Xxxxxxx Common Shares had been converted,
exchanged or exercised as the case may be,
B = The Aggregate Maximum Percentage, and
C = The number of Xxxxxxx Common Shares outstanding immediately
before the issuance of Equity Securities under Section 2.11 or
Section 2.12, calculated as if every Equity Security issued
pursuant to the applicable Equity Financing that is
convertible or exchangeable into, or otherwise carries the
right to acquire Xxxxxxx Common Shares had been converted,
exchanged or exercised as the case may be.
PRICE FOR PRIVATE PLACEMENT SECURITIES
2.14 The price for Equity Securities to be issued pursuant to Section 2.11
or Section 2.12 will be the greater of
(a) the issue price of the Equity Securities issued pursuant to
the applicable Equity Financing, and
(b) the lowest price at which such securities may be issued by
Xxxxxxx pursuant to the written policies of The Toronto Stock Exchange
applicable to private placements, if Xxxxxxx'x securities are then
listed on The Toronto Stock Exchange and, if not so listed, pursuant to
the written policies on private placements of all then applicable
securities regulators and stock exchanges.
REGULATORY APPROVALS
2.15 Xxxxxxx will use all reasonable efforts to obtain all approvals of
stock exchanges and, to the extent appropriate, Governmental Authorities and the
relevant Xxxxxxx Base Shareholder, to the extent appropriate, will use all
reasonable efforts to obtain all approvals of Governmental Authorities,
necessary for the issuance of Equity Securities subscribed for pursuant to
Section 2.7, Section 2.8,
-21-
Section 2.11 or Section 2.12, but if any such stock exchange or Governmental
Authority notifies Xxxxxxx or the relevant Xxxxxxx Base Shareholder that it will
not grant such an approval in the circumstances
(a) the relevant Xxxxxxx Base Shareholder and each member of its
Group will be released from its obligation to purchase such Equity
Securities and will not be considered to have failed to purchase the
maximum number of Equity Securities in respect of the Equity Financing
to which they relate, and
(b) Xxxxxxx will be released from its obligation to issue the
Equity Securities referred to in Section 2.15(a) to that Xxxxxxx Base
Shareholder and the members of its Group.
NO OBLIGATION OF XXXXXXX TO QUALIFY EQUITY SECURITIES
2.16 Each of DCX and Ford acknowledges that any Equity Securities acquired
by members of its Group pursuant to Section 2.11 or Section 2.12, respectively,
will be subject, in accordance with applicable securities laws and the rules and
policies of applicable stock exchanges, to restrictions on resale and that
Xxxxxxx will have no obligation to qualify any Equity Securities so issued by
issuance under applicable securities laws of a prospectus, registration
statement or similar document, provided however, for greater certainty, the
Parties acknowledge that the Xxxxxxx Common Shares issued pursuant to the Call
Agreement are not being issued pursuant to Section 2.11 or Section 2.12 and that
this Section 2.16 shall in no way affect Xxxxxxx'x obligations under or pursuant
to the registration rights agreement among the Parties in respect of the Xxxxxxx
Common Shares issued pursuant to the Call Agreement.
NO DISPOSITION OF XXXXXXX COMMON SHARES DURING PARTICIPATION
2.17 Notwithstanding any other rights granted under this Agreement, once a
Xxxxxxx Base Shareholder gives a Participation Notice or a Private Placement
Subscription to Xxxxxxx, it will ensure that no member of its Group will sell,
transfer or otherwise dispose of any Xxxxxxx Common Shares, except to one or
more other members of its Group, until the earlier of the completion of the
issuance of Equity Securities pursuant to such Participation Notice or Private
Placement Subscription and the 60th day after delivery of the Participation
Notice or Private Placement Subscription, as the case may be.
PART 3
XXXXXXX SHARES
RESTRICTIONS ON FURTHER ACQUISITION OF EQUITY SECURITIES
3.1 Neither of DCX nor Ford will, nor will either of them permit any member
of its Group to, effect the direct or indirect acquisition of any Equity
Security if such acquisition would result in the members of the DCX Group and
the Ford Group owning, in the aggregate, more than the Aggregate Maximum
Percentage of the outstanding Xxxxxxx Common Shares, except
(a) by way of a Circular Bid made on or before November 30, 2005,
the effect of which would be, if such Circular Bid was fully accepted,
that all of the outstanding
-22-
Xxxxxxx Common Shares would be owned by members of the DCX Group and
the Ford Group if members of both Groups own Xxxxxxx Common Shares or,
if no member of one such Group owns Xxxxxxx Common Shares, all of the
outstanding Xxxxxxx Common Shares would be owned by the members of the
other such Group,
(b) by way of a Circular Bid made after November 30, 2005 and on
or before November 30, 2007, the effect of which would be, if such
Circular Bid was fully accepted, that members of the DCX Group and the
Ford Group would own in the aggregate, at least two-thirds, calculated
on a Fully Diluted basis, of all outstanding Xxxxxxx Common Shares if
members of both Groups own Xxxxxxx Common Shares or, if no member of
one such Group owns Xxxxxxx Common Shares, at least two-thirds,
calculated on a Fully Diluted basis, of all outstanding Xxxxxxx Common
Shares would be owned by the members of the other such Group,
(c) by way of a Circular Bid made after November 30, 2007,
pursuant to which
(i) the members of the DCX Group and the Ford Group
making the acquisition acquire not less than the greater of
(A) 20%, calculated on a Fully Diluted basis, of
all outstanding Xxxxxxx Common Shares, and
(B) the number of Xxxxxxx Common Shares so that
the members of the DCX Group and the Ford Group will,
immediately after such acquisition, own more than
50%, calculated on a Fully Diluted basis, of all
outstanding Xxxxxxx Common Shares if members of both
Groups own Xxxxxxx Common Shares or, if no member of
one such Group owns Xxxxxxx Common Shares, more than
50%, calculated on a Fully Diluted basis, of all
outstanding Xxxxxxx Common Shares is owned by the
members of the other such Group,
(ii) if only one of DCX or Ford remains a shareholder of
Xxxxxxx and is a Xxxxxxx Base Shareholder, and one or more
members of its Group makes such an acquisition, the members of
such Group acquire, in the aggregate, more than 10%,
calculated on a Fully Diluted basis, of all outstanding
Xxxxxxx Common Shares, and
(iii) if both DCX and Ford are shareholders of Xxxxxxx but
the directors of Xxxxxxx elected by DBF Holdings at the
direction of DCX and Ford are no longer entitled to exercise
the rights pursuant to Section 7.21, Section 7.24 or Section
7.26, as applicable, and one of DCX or Ford is a Base Xxxxxxx
Shareholder, the members of such Xxxxxxx Base Shareholder's
Group that makes the acquisition acquire, in the aggregate,
more than 10%, calculated on a Fully Diluted basis, of all
outstanding Xxxxxxx Common Shares,
(d) by way of a stock dividend, subdivision or other stock
distribution that is made or is available to all holders of Xxxxxxx
Common Shares, or
-23-
(e) by transfer from
(i) a member of the Group of the other of them, or
(ii) a member of the same Group.
FURTHER RESTRICTIONS
3.2 Neither of DCX nor Ford will, nor will either of them permit any member
of its Group to,
(a) deposit any Equity Security in a voting trust or subject any
Xxxxxxx Common Share to any contract with respect to the voting of such
Xxxxxxx Common Share, except a voting trust or contract to which only
members of the DCX Group and the Ford Group are members and except as
expressly contemplated in the Fourth Alliance Agreement,
(b) join a partnership, limited partnership, syndicate or other
entity, or otherwise contract to act in concert with any Person, other
than one or more other members of the DCX Group and the Ford Group, for
the purpose of acquiring, holding or voting any Xxxxxxx Common Share,
(c) subject to Section 3.2(d), exercise its right to requisition a
meeting pursuant to the CANADA BUSINESS CORPORATIONS ACT,
(d) actively solicit proxies, under any circumstance, with respect
to any Xxxxxxx Common Share, except
(i) if a Third Party has requisitioned a meeting as
permitted by the CANADA BUSINESS CORPORATIONS ACT in respect
of a proposed amalgamation, arrangement, reorganization,
recapitalization or other transaction involving Xxxxxxx and
requiring the approval of the holders of Xxxxxxx Common
Shares, which transaction, if it had been initiated by way of
a Takeover Bid, would have entitled DCX or Ford to effect a
competing Takeover Bid in accordance with Section 5.1(b), a
member of the DCX Group or the Ford Group may
(A) solicit proxies in respect of such meeting,
and
(B) requisition a meeting as permitted by the
CANADA BUSINESS CORPORATIONS ACT for a similar
transaction that if successful would result in the
members of the DCX Group and the Ford Group owning at
least the number of shares as required by Section
5.1(b), and solicit proxies in respect of such
meeting, and
(ii) a member of the DCX Group or the Ford Group will not
be deemed to be soliciting proxies by reason of its granting a
proxy to management of Xxxxxxx, or
-24-
(e) effect the direct or indirect acquisition of any Equity
Security unless at least 14 Business Days notice of such intended
acquisition is given to the other of them, and to Xxxxxxx, such notice
to include the number of Equity Securities it intends to acquire.
NO OBLIGATION TO DISPOSE OF XXXXXXX COMMON SHARES
3.3 Notwithstanding Section 3.1, no member of the DCX Group or the Ford
Group will be obligated to dispose of any Xxxxxxx Common Shares if its
percentage ownership of outstanding Xxxxxxx Common Shares is increased as a
result of a recapitalization of Xxxxxxx or a repurchase, redemption or
acquisition of securities by Xxxxxxx or any other action taken by Xxxxxxx.
SHARE CERTIFICATE LEGENDS
3.4 At Closing,
(a) Each of DCX and Ford will surrender all share certificates
issued to members of its group representing the equity securities
registered in the name of any member of the DCX Group or any member of
the Ford Group and Xxxxxxx will issue replacement certificates with the
following legends, as applicable, which will remain thereon as long as
the DCX Group or the Ford Group, as applicable, is subject to the
restrictions on transfer of such securities:
(i) "The transfer of the securities represented by this
certificate is subject to the provisions of a Fourth Alliance
Agreement made August 31, 2005 among Xxxxxxx Power Systems
Inc., DaimlerChrysler AG, Ford Motor Company and DBF PREF
Share Holdings Inc. a copy of the Fourth Alliance Agreement is
on file at the Office of the Corporate Secretary of Xxxxxxx
Power Systems Inc."; and
(ii) "The securities represented by this certificate are
subject to a four-month hold period and may not be traded in
British Columbia until four months after the date of issue
except as permitted by the Securities Act (British Columbia)
and the securities rules thereunder. in addition, the
Securities Act (British Columbia) imposes further restrictions
on trades made by a person who is a control person (as defined
in such Act) in relation to the issuer of this security.",
(b) In addition to the legends referred to in Section 3.4(A),
Xxxxxxx will place on all share certificates representing the equity
securities registered in the name of any member of the DCX Group or any
member of the Ford Group the following legend, which will remain
thereon until such time as it is no longer required under the U.S.
Securities Act:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT
BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "U.S. SECURITIES ACT") OR THE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES AND HAVE BEEN ISSUED TO AN
AFFILIATE, AS THAT TERM IS DEFINED IN RULE 144(A) UNDER THE
-25-
U.S. SECURITIES ACT, OF THE CORPORATION. THE HOLDER HEREOF, BY
PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF XXXXXXX
POWER SYSTEMS INC. (THE "CORPORATION") THAT SUCH SECURITIES
MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
(A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN
ACCORDANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT,
IF APPLICABLE , OR (C) INSIDE THE UNITED STATES (I) PURSUANT
TO THE EXEMPTION FROM REGISTRATION REQUIREMENTS UNDER THE U.S.
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE,
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR
(II) PURSUANT TO ANOTHER APPLICABLE EXEMPTION UNDER THE U.S.
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS
GOVERNING THE OFFER AND SALE OF SUCH SECURITIES, PROVIDED THAT
THE HOLDER PROVIDES TO THE CORPORATION AND THE TRANSFER AGENT
SUFFICIENTLY IN ADVANCE OF ANY SUCH OFFER, SALE, PLEDGE OR
OTHER TRANSFER PURSUANT TO CLAUSE (B), OR (C)(I), AN OPINION
OF COUNSEL OF RECOGNIZED STANDING IN FORM REASONABLY
ACCEPTABLE TO THE CORPORATION AND THE TRANSFER AGENT,
CERTIFICATES AND OTHER INFORMATION THEY MAY REASONABLY REQUIRE
TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE
"GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK
EXCHANGES IN CANADA."
REPLACEMENT OF LEGENDED SHARE CERTIFICATES ISSUED TO DCX GROUP
3.5 Xxxxxxx will, on request by DCX and surrender of
(a) any certificate issued to a member of the DCX Group on which
the legend set forth in Section 3.4(a)(i) has been placed, at any time
after November 30, 2007, issue a replacement certificate without such
legend, and
(b) any certificate issued to a member of the DCX Group on which
the legend set forth in Section 3.4(a)(ii) has been placed, at any time
after the expiry of the hold period referred to in Section 3.4(a)(ii),
issue a replacement certificate without such legend,
and this provision will survive the effective date of termination of this
Agreement and will continue in full force and effect.
REPLACEMENT OF LEGENDED SHARE CERTIFICATES ISSUED TO FORD GROUP
3.6 At any time after
-26-
(a) November 30, 2007, Xxxxxxx will, on request by Ford and
surrender of any certificate issued to a member of the Ford Group on
which the legend set forth in Section 3.4(a)(i) has been placed, issue
a replacement certificate without such legend,
(b) November 30, 2007, if Ford delivers to Xxxxxxx an opinion of
counsel in form and substance reasonably satisfactory to Xxxxxxx to the
effect that the offer and sale of the shares referred to in Section
3.4(b) are in compliance with all applicable U.S. Federal and State
securities laws and that the legends on such share certificates are no
longer required, Xxxxxxx will, upon delivery by Xxxx of any certificate
issued to a member of the Ford Group on which the legend set forth in
Section 3.4(b) has been placed, issue a replacement certificate without
such legend, and
(c) the expiry of the hold period referred to in Section
3.4(a)(ii), Xxxxxxx will, on request by Xxxx and surrender of any
certificate issued to a member of the Ford Group on which the legend
set forth in Section 3.4(a)(ii) has been placed, issue a replacement
certificate without such legend,
and this provision will survive the effective date of termination of the Fourth
Alliance Agreement and will continue in full force and effect.
PART 4
DISPOSITION OF XXXXXXX SHARES
RESTRICTIONS ON TRANSFERS OF XXXXXXX SHARES BY DCX AND XXXX
4.1 Except as expressly permitted by the Fourth Alliance Agreement, until
November 30, 2007,
(a) DCX will not, and will not permit any member of the DCX Group
to, sell, assign, transfer or otherwise dispose of, other than by a
sale or transfer to a member of the Ford Group,
(i) any Base DCX Xxxxxxx Shares, or
(ii) any Xxxxxxx Common Shares, other than the Base DCX
Xxxxxxx Shares, without the prior consent of Xxxxxxx, which
consent will not be unreasonably withheld, and
(b) Ford will not, and will not permit any member of the Ford
Group to, sell, assign, transfer or otherwise dispose of, other than by
a sale or transfer to a member of the DCX Group,
(i) any Base Ford BPS Shares, or
-27-
(ii) any Xxxxxxx Common Shares, other than the Base Ford
BPS Shares, without the prior consent of Xxxxxxx, which
consent will not be unreasonably withheld.
TRANSFER OF SHARES WITHIN GROUP
4.2 Each Party may, and may cause members of its Group to, sell, assign or
transfer any Equity Securities owned by one or more of them to one or more other
members of its Group, provided that
(a) the Party remains bound by the terms of this Agreement and all
agreements and instruments referred to in, and entered into by the
Party pursuant to, the Acquisition Agreement, and causes each such
member of its Group to act in accordance with the Fourth Alliance
Agreement and all agreements and instruments referred to in, or entered
into by the Party pursuant to, the Fourth Alliance Agreement,
(b) the Party causes any such member of its Group to transfer such
shares to the Party or another member of the Party's Group before the
member ceases to be a member of the Group, and
(c) the Party causes any such member of its Group to be bound by
the provisions of the Fourth Settlement Agreement and, in order to
evidence the same, causes such member of the Group to execute and
deliver to each party to the Fourth Settlement Agreement that is bound
by such agreement at that time an addendum to the Fourth Settlement
Agreement which states that such member of the Group is bound by the
provisions of the Fourth Settlement Agreement.
TRANSFER OF SHARES BETWEEN GROUPS
4.3 Each of DCX and Ford may, and may cause members of its Group to, sell,
assign or transfer any Equity Securities owned by one or more of them to one or
more members of the other's Group, provided that
(a) DCX and Ford provide prior notice of such transfer to Xxxxxxx,
and
(b) the transferee agrees to be bound by the provisions of the
Fourth Settlement Agreement and, in order to evidence the same,
executes and delivers, prior to the transfer of such shares, to each
Party to the Fourth Settlement Agreement that is bound by such
agreement at that time, an addendum to the Fourth Settlement Agreement
which states that the transferee will be bound by the provisions of the
Fourth Settlement Agreement.
EQUITY SECURITIES TO BE HELD DIRECTLY
4.4 Each of DCX and Ford will ensure that any member of its Group that owns
any Equity Securities will at all times hold such securities directly, in its
own name, as the registered holder thereof and each of DCX and Ford will from
time to time, on request by Xxxxxxx, provide to Xxxxxxx a list of all members of
its Group that hold Equity Securities and the number of Equity Securities held
by each of them.
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DISPOSITION OF XXXXXXX COMMON SHARES
4.5 If any member of
(a) the DCX Group sells or transfers any Xxxxxxx Common Shares,
other than to another member of the DCX Group, the Xxxxxxx Common
Shares sold or transferred will be deemed to have been Xxxxxxx Common
Shares other than the Base DCX Xxxxxxx Shares until such time as the
number of Xxxxxxx Common Shares owned by the DCX Group is equal to the
number of Base DCX Xxxxxxx Shares, and
(b) the Ford Group sells or transfers any Xxxxxxx Common Shares,
other than to another member of the Ford Group, the Xxxxxxx Common
Shares sold or transferred will be deemed to have been Xxxxxxx Common
Shares other than the Base Ford BPS Shares until such time as the
number of Xxxxxxx Common Shares owned by the Ford Group is equal to the
number of Base Ford BPS Shares.
CEASING TO BE A MEMBER OF A GROUP DEEMED TO HAVE DISPOSED
4.6 If, at any time, a member of the DCX Group or the Ford Group ceases to
be a member of such Group, it will be deemed to have disposed of all Xxxxxxx
Common Shares owned by it at such time unless it again becomes a member of the
same Group, or another member of that Group acquires such shares, within 30 days
of it ceasing to be such a member.
TRANSFER OF XXXXXXX COMMON SHARES
4.7 Subject to Section 4.1, Section 4.10, Section 5.2, Section 5.3, Section
5.4 and Section 5.5, if applicable, members of the DCX Group and the Ford Group
may sell, assign or transfer any Xxxxxxx Common Shares if DCX, in connection
with an intended sale, assignment or transfer of Xxxxxxx Common Shares by any
member of the DCX Group to a Person other than a member of the Ford Group, or
Ford, in connection with an intended sale, assignment or transfer of Xxxxxxx
Common Shares by any member of the Ford Group to a Person other than a member of
the DCX Group, gives notice to Xxxxxxx, following the expiration of the 60-day
period referred to in Section 4.10 and prior to the expiration of 180 days after
such 60-day period, of the intention to sell, transfer or assign such Xxxxxxx
Common Shares at least 30 days before such sale, transfer or assignment and
will, before effecting such sale, assignment or transfer, consult with Xxxxxxx
in respect of such sale, transfer or assignment.
XXXXXXX TO SUPPORT DCX AND XXXX IN SALE OF XXXXXXX COMMON SHARES
4.8 Xxxxxxx will, at the request of DCX or Ford, as applicable, support the
member of its Group in the selling of any Xxxxxxx Common Shares owned by such
member at the most favourable price available under the circumstances at the
time.
MORTGAGE OF XXXXXXX SHARES
4.9 The granting of one or more mortgages, pledges, hypothecations or other
security interests on any or all of the Xxxxxxx Common Shares owned by any
member of the DCX Group or the Ford Group will not constitute a disposition of
such shares pursuant to the Fourth Alliance Agreement
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until such a mortgage, pledge, hypothecation or security interest is enforced,
and the restrictions on transfer of such shares set out in this Agreement will
apply to any transfer to or at the direction of the holder of such a mortgage,
pledge, hypothecation or security interest.
RIGHTS OF FIRST OFFER ON SALE OF SHARES
4.10 Subject to Section 4.2, Section 4.3, Section 5.2, Section 5.3, Section
5.4 and Section 5.5, neither DCX nor Ford will, nor will it permit any member of
its Group to, sell, transfer or otherwise dispose of any of its Base Xxxxxxx
Shares, other than a sale, transfer or disposition to one or more members of the
other's Group but including a sale, transfer or disposition to a member of the
Xxxxxxx Group, unless it first delivers an offer (the "OFFER") to the other of
them, with a copy to Xxxxxxx, which Offer will constitute an offer to sell the
number of Base Xxxxxxx Shares set forth in the Offer (the "OFFERED SHARES")
owned by the offeror and members of its Group (collectively, the "OFFEROR") to
such other Party (the "OFFEREE") and will specify
(a) that the Offer is being made pursuant to the provisions of
this Section 4.10,
(b) the sale price for the Offered Shares expressed in Canadian
Dollars,
(c) the terms and conditions of sale,
(d) the date that the Offer is delivered to the Offeree,
(e) that the Offer will be open for acceptance by the Offeree for
a period of 60 days, unless a Takeover Bid by a Third Party referred to
in Section 5.1 has been made, in which case the Offer will be open for
acceptance for a minimum period of 5 Business Days ending on a Business
Day that is at least 5 Business Days before the date set for the
tendering of shares under such Takeover Bid (ignoring any extensions of
such date), and
(f) that the Offer must be fully accepted by the Offeree in order
for a binding contract of purchase and sale to be formed under Section
4.12.
ACCEPTANCE OF OFFER
4.11 The Offeree may, by written notice delivered to the Offeror within the
time period referred to in Section 4.10(e), accept the Offer.
FORMATION OF CONTRACT
4.12 If, within the time period referred to in Section 4.10(e), the Offeree
has accepted the Offer in respect of all of the Offered Shares, a binding
contract of purchase and sale among the Offeror or the members of the Offeror's
Group holding the Offered Shares and the Offeree will come into effect.
OFFER TO THIRD PARTIES
4.13 If within the time period referred to in Section 4.10(e), the Offer is
not accepted by the Offeree with respect to all of the Offered Shares, the
Offeror may, on or before the 210th day
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after the expiry date of the Offer, sell, transfer, assign or otherwise dispose
of all of the Offered Shares to any Person (a) for a price not less than the
price specified in the Offer, and (b) on terms and conditions no more favourable
to such Person than the terms and conditions specified in the Offer.
PROVISIONS OF SALE CONTRACT
4.14 In addition to the terms and conditions specified in the Offer, the
following provisions will apply to any contract of purchase and sale made
pursuant to Section 4.12 between the Offeror and the Offeree
(a) the completion date (the "COMPLETION DATE") will be
(i) the first Business Day that is at least 30 days after
the later of
(A) the date on which the Offer is accepted by
the Offeree, and
(B) the date on which all required approvals of
the applicable Governmental Authorities for the sale
of the Offered Shares are received by the Offeror and
the Offeree,
but in any event no later than six months after the date
referred to in Section 4.14(a)(i)(A), or such other time, day
or place as the Offeror and the Offeree may agree, at which
time the Offeror and the Offeree will execute and deliver such
transfer documents and do such further acts and things as may
be reasonably required to effect and complete the sale of the
Offered Shares, or
(ii) if a Takeover Bid by a Third Party referred to in
Section 5.1 has been made, on the first Business Day that is
at least 2 Business Days after the date on which the Offer is
accepted by the Offeree,
(b) the Offeror will execute and deliver all assignments,
instruments of transfer and other documents as may be necessary to
transfer the Offered Shares on the Completion Date to or as directed by
the Offeree,
(c) unless otherwise specified in the Offer, the full purchase
price payable for the Offered Shares will be paid on the Completion
Date,
(d) time will be of the essence,
(e) the contract will be binding on the parties thereto and on
their respective successors and assigns, and
(f) if the required approvals referred to in Section 4.14(a)(i)(B)
are not received within the six-month period referred to in Section
4.14(a) or the relevant Governmental Authority has
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notified the relevant Parties that the same will not be granted, and
all other conditions of the sale have been met, the Offeror and the
Offeree will, exercising diligence and acting reasonably and in good
faith, make all commercially reasonable efforts to effect a transaction
in substitution for the purchases and sales contemplated herein which
achieves to the greatest extent possible the same economic, legal and
commercial objectives and, failing the agreement of the relevant
Parties on the terms of such a transaction within 30 days after the
expiry of such six-month period or receipt of such notification of the
Governmental Authority, any such Party may refer the matter for dispute
resolution under Part 17 of the Fourth Alliance Agreement.
TIME FOR SALE OF OFFERED SHARES
4.15 If the Offered Shares are not sold, transferred, assigned or otherwise
disposed of pursuant to Section 4.13 within 210 days after the expiry date of
the Offer, then the provisions set forth in Section 4.10 to this Section 4.15,
inclusive, will again become applicable to the sale, transfer, assignment or
other disposition of all the Offered Shares.
EFFECT OF OFFER FROM DCX AND FORD
4.16 If a Takeover Bid by a Third Party referred to in Section 5.1 has been
made and both DCX and Ford deliver an Offer pursuant to Section 4.10, the Offers
and any obligation to purchase or sell the Offered Shares will terminate and any
member of the DCX Group or the Ford Group may tender all or any portion of the
Xxxxxxx Common Shares owned by it into such Takeover Bid.
PART 5
TAKEOVER BIDS
DCX'S AND XXXX'S RIGHTS IN THE EVENT OF A TAKEOVER BID BY A THIRD PARTY
5.1 If a Third Party makes a bona fide Takeover Bid that would result, if
fully accepted, in the Third Party owning more than 50% of the outstanding
Xxxxxxx Common Shares, each of DCX and Ford will have the following options:
(a) accept the Third Party as the new majority shareholder of
Xxxxxxx while keeping its own shareholding in Xxxxxxx;
(b) effect a competing Takeover Bid by way of a Circular Bid made
in accordance with Section 3.1, provided that if such Circular Bid is
made on or before November 30, 2005, then the effect of the Circular
Bid must be that members of the DCX Group and the Ford Group that make
the Circular Bid would acquire a number of Xxxxxxx Common Shares which
is the lesser of
(i) the number of Xxxxxxx Common Shares to be acquired
under Section 3.1(a), and
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(ii) the maximum number of Xxxxxxx Common Shares such
Third Party has offered to purchase under the Takeover Bid
made by it; and
(c) subject to Section 4.10 and Section 4.16, tender into the
Takeover Bid.
DCX'S RIGHTS ON SUCCESSFUL TAKEOVER BID BY THIRD PARTY
5.2 If a Third Party makes a bona fide Takeover Bid that would result, if
fully accepted, in the Third Party owning more than two-thirds of the
outstanding Xxxxxxx Common Shares, and after such Takeover Bid is completed the
Third Party owns more than 50% of the outstanding Xxxxxxx Common Shares,
including all Xxxxxxx Common Shares acquired under the Takeover Bid and the
members of the DCX Group that hold Xxxxxxx Common Shares have tendered all of
such Xxxxxxx Common Shares into such Takeover Bid and have sold to such Third
Party at least the proportion of the total number of Xxxxxxx Common Shares owned
by the members of the DCX Group equal to the proportion of the total number of
issued Xxxxxxx Common Shares purchased by the Third Party, then
(a) Xxxxxxx will, on request by DCX, grant to one or more members
of the DCX Group the license referred to in Section 14.1 of the Fourth
Alliance Agreement as if the time period for the granting of such
license had expired and the conditions precedent for the grant of the
license had been satisfied and the license granted pursuant to Section
14.1 of the Fourth Alliance Agreement will be expanded to permit the
production and manufacture of Vehicular Fuel Cells for sale to any
customer,
(b) Xxxxxxx will, on request by DCX, grant to one or more members
of the DCX Group a license for the systems and components described in
Section 14.4(a) of the Fourth Alliance Agreement that the members of
the DCX Group have elected and agreed, before DCX acquired actual
knowledge of, or there was a press release or public announcement of
the intention to make such Takeover Bid, to exclusively purchase from
Xxxxxxx and have purchased from Xxxxxxx, on an exclusive basis, before
the request for such license is made as if the time period for the
granting of such license had expired and the conditions precedent for
the grant of the license had been satisfied,
(c) Section 3.1, Section 3.2, Section 4.1, Section 4.7 and Section
13.2 of the Fourth Alliance Agreement will cease to apply to DCX, and
(d) Section 6.12(a) of the Fourth Alliance Agreement will cease
to apply to Xxxxxxx and DCX except that DCX may, by notice given to
Xxxxxxx before the Xxxxxxx Common Shares owned by the members of the
DCX Group are tendered into such Takeover Bid, extend the application
of Section 6.12(a) of the Fourth Alliance Agreement for one year after
the date on which the Third Party completes such Takeover Bid,
notwithstanding that Section 13.2 of the Fourth Alliance Agreement will
not be applicable during such one year period.
XXXX'S RIGHTS ON SUCCESSFUL TAKEOVER BID BY THIRD PARTY
5.3 If a Third Party makes a bona fide Takeover Bid that would result, if
fully accepted, in the Third Party owning more than two-thirds of the
outstanding Xxxxxxx Common Shares, and after such Takeover Bid is completed the
Third Party owns more than 50% of the outstanding Xxxxxxx Common Shares,
including all Xxxxxxx Common Shares acquired under the Takeover Bid and the
members of the Ford Group that hold Xxxxxxx Common Shares have tendered all of
such Xxxxxxx Common Shares into such Takeover Bid and have sold to such Third
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Party at least the proportion of the total number of Xxxxxxx Common Shares owned
by the members of the Ford Group equal to the proportion of the total number of
issued Xxxxxxx Common Shares purchased by the Third Party, then
(a) Xxxxxxx will, on request by Xxxx, xxxxx to one or more members
of the Ford Group the license referred to in Section 14.3 of the Fourth
Alliance Agreement as if the time period for the granting of such
license had expired and the conditions precedent for the grant of the
license had been satisfied,
(b) Section 3.1, Section 3.2, Section 4.1, Section 4.7, and
Section 13.1 of the Fourth Alliance Agreement will cease to apply
to Ford, and
(c) Section 6.12(b) of the Fourth Alliance Agreement will cease
to apply to Xxxxxxx and Ford except that Ford may, by notice given to
Xxxxxxx before the Xxxxxxx Common Shares owned by the members of the
Ford Group are tendered into such Takeover Bid, extend the application
of Section 6.12(a) of the Fourth Alliance Agreement for one year after
the date on which the Third Party completes such Takeover Bid,
notwithstanding that Section 13.1 of the Fourth Alliance Agreement will
not be applicable during such one year period.
RIGHTS ON SUCCESSFUL TAKEOVER BID BY XXXX
5.4 If Ford completes a bona fide Takeover Bid that results in it owning
more than 50% of the outstanding Xxxxxxx Common Shares, including all Xxxxxxx
Common Shares acquired under such Takeover Bid, other than Xxxxxxx Common Shares
tendered by members of the DCX Group,
(a) Xxxxxxx will, on request by DCX, grant to one or more members
of the DCX Group the license under Section 14.1 of the Fourth Alliance
Agreement as if the time period for the granting of such license had
expired and the conditions precedent for the grant of the license had
been satisfied,
(b) Xxxxxxx will, on request by DCX, grant to one or more members
of the DCX Group a license for a system or component described in
s Section 14.4(a) of the Fourth Alliance Agreement that the members of
the DCX Group have elected and agreed, before DCX acquired actual
knowledge of or there was a press release or public announcement of the
intention to make such Takeover Bid, to exclusively purchase from
Xxxxxxx and have purchased from Xxxxxxx, on an exclusive basis, before
the request for such license is made as if the time period for the
granting of such license had expired and the conditions precedent for
the grant of the license had been satisfied,
(c) Section 4.7 and Section 4.10 will cease to apply to DCX, and
(d) Section 4.10 will cease to apply to Ford.
RIGHTS ON SUCCESSFUL TAKEOVER BID BY DCX
5.5 If DCX completes a bona fide Takeover Bid that results in it owning
(a) more than 50% of the outstanding Xxxxxxx Common Shares
including all Xxxxxxx Common Shares acquired under such Takeover Bid,
other than Xxxxxxx Common Shares tendered by members of the Ford Group,
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(i) Xxxxxxx will, on request by Xxxx, xxxxx to one or
more members of the Ford Group the license under Section 14.3
of the Fourth Alliance Agreement as if the time period for the
granting of such license had expired and the conditions
precedent for the grant of such license had been satisfied,
(ii) Section 4.7 and Section 4.10 will cease to apply to
Ford, and
(iii) Section 4.10 will cease to apply to DCX, or
(b) at least 90% of the outstanding Xxxxxxx Common Shares other
than the Xxxxxxx Common Shares owned by members of the Ford Group, or
sufficient shares pursuant to such Takeover Bid to give DCX the right,
pursuant to the CANADA BUSINESS CORPORATIONS ACT, to acquire, and it or
members of its Group have so acquired, the remainder of the outstanding
Xxxxxxx Common Shares,
(i) Xxxxxxx will, on request by Xxxx, xxxxx to one or
more members of the Ford Group the licenses under Section
14.2 of the Fourth Alliance Agreement and Section 14.3 of the
Fourth Alliance Agreement, as if the time period for the
granting of such licenses had expired and the conditions
precedent for the grant of such licenses had been satisfied,
(ii) Section 4.7 and Section 4.10 will cease to apply to
Ford, and
(iii) Section 4.10 will cease to apply to DCX.
RIGHTS ARISING ON INVOLUNTARY DISPOSITION
5.6 If all of the Xxxxxxx Common Shares owned by the members of either the
DCX Group or the Ford Group are acquired by a Third Party, without the consent
of holders of such shares, by way of a compulsory acquisition, going private
transaction or other transaction to which such holder has not consented (an
"INVOLUNTARY DISPOSITION"),
(a) in the case of DCX,
(i) Xxxxxxx will, on request by DCX, grant to one or more
members of the DCX Group the license referred to in Section
14.1 of the Fourth Alliance Agreement as if the time period
for the granting of such license had expired and the
conditions precedent for the grant of the license had been
satisfied, and the license granted pursuant to Section 14.1 of
the Fourth Alliance Agreement will be expanded to permit the
production and manufacture of Vehicular Fuel Cells for sale to
any customer,
(ii) Xxxxxxx will, on request by DCX, grant to one or more
members of the DCX Group a license for the systems and
components described in Section 14.4(a) of the Fourth Alliance
Agreement that the members of the DCX Group have elected and
agreed, before DCX acquired actual knowledge of, or there was
a press release or public announcement of the intention to
implement the Involuntary Disposition, to exclusively purchase
from Xxxxxxx and have purchased from Xxxxxxx, on an exclusive
basis, before the request for such license is made as if the
time period for the granting of such
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license had expired and the conditions precedent for the grant
of the license had been satisfied,
(iii) Section 3.1, Section 3.2, Section 4.1, Section 4.7,
and Section 13.2 of the Fourth Alliance Agreement will cease
to apply to DCX,
(iv) Section 6.12(a) of the Fourth Alliance Agreement will
cease to apply to Xxxxxxx and DCX except that DCX may, by
notice given to Xxxxxxx before an Involuntary Disposition is
implemented, extend the application of Section 6.12(a) of the
Fourth Alliance Agreement for one year after the date on which
the Involuntary Disposition is implemented, notwithstanding
that Section 13.2 of the Fourth Alliance Agreement will not be
applicable during such one year period, and
(b) in the case of Ford,
(i) Xxxxxxx will, on request by Xxxx, xxxxx to one or
more members of the Ford Group the license referred to in
Section 14.3 of the Fourth Alliance Agreement as if the time
period for the granting of such license had expired and the
conditions precedent for the grant of the license had been
satisfied,
(ii) Section 3.1, Section 3.2, Section 4.1, Section 4.7,
and Section 13.1 of the Fourth Alliance Agreement will cease
to apply to Ford, and
(iii) Section 6.12(b) of the Fourth Alliance Agreement will
cease to apply to Xxxxxxx and Ford except that Ford may, by
notice given to Xxxxxxx, before an Involuntary Disposition is
implemented, extend the application of Section 6.12(b) of the
Fourth Alliance Agreement for one year after the date on which
the Involuntary Disposition is implemented, notwithstanding
that Section 13.1 of the Fourth Alliance Agreement will not be
applicable during such one year period.
PART 7
CORPORATE GOVERNANCE OF XXXXXXX
BOARD OF DIRECTORS
7.1 Immediately after the Closing, the board of directors of Xxxxxxx will
consist of 12 members, eight of whom have been elected by the holders of Xxxxxxx
Common Shares.
ELECTION OF DIRECTORS BY HOLDER OF CLASS A SHARE
7.2 The Parties acknowledge that, in accordance with the rights and
restrictions attached to the Class A Share, DBF Holdings, as the only holder of
an issued Class A Share, has the exclusive right to elect, in the 30-day period
immediately following the issuance of such share and in the seven-day period
immediately following the close of each meeting of holders of Xxxxxxx Common
Shares at which one or more directors are elected (other than to fill a vacancy)
or removed or at which the number of directors permitted to be elected to the
board of directors of Xxxxxxx is changed, a number of directors of Xxxxxxx that
is equal to
(a) the product (rounded up to the closest whole number if, and
only if, such product is not more than 0.49 less than such closest
whole number, and otherwise, rounded down
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to the next lower whole number, provided that where that product is
between the Class A Round-up Number and 1.51 such product shall be
rounded to 2) obtained when
(i) the greater of
(A) six, and
(B) the total number of directors of Xxxxxxx
immediately after the election of directors by DBF
Holdings
is multiplied by
(ii) the quotient obtained when
(A) the aggregate number of Xxxxxxx Common
Shares owned at the time of such meeting by the
members of the DCX Group
is divided by
(B) the total number of Xxxxxxx Common Shares
outstanding at the time of such meeting, or
(b) if the members of the DCX Group own, in the aggregate, more
than 50% of the outstanding Xxxxxxx Common Shares at the time of such
meeting, the greater of
(i) the lowest number of directors that constitutes a
majority of the directors of Xxxxxxx immediately after the
election of directors by DBF Holdings, and
(ii) the product determined pursuant to Section 7.2(a).
ELECTION OF DIRECTORS BY HOLDER OF CLASS B SHARE
7.3 The Parties acknowledge that in accordance with the rights and
restrictions attached to the Class B Share, DBF Holdings, as the only holder of
an issued Class B Share, has the exclusive right to elect, in the 30-day period
immediately following the issuance of such share and in the seven-day period
immediately following the close of each meeting of holders of Xxxxxxx Common
Shares at which one or more directors are elected (other than to fill a vacancy)
or removed or at which the number of directors permitted to be elected to the
board of directors of Xxxxxxx is changed, a number of directors of Xxxxxxx that
is equal to
(a) the product (rounded up to the closest whole number if, and
only if, such product is not more than 0.49 less than such closest
whole number, and otherwise, rounded down to the next lower whole
number, provided that where that product is between the Class B
Round-up Number and 1.51 such product shall be rounded to 2) obtained
when
(i) the greater of
(A) six, and
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(B) the total number of directors of Xxxxxxx
immediately after the election of directors by DBF
Holdings
is multiplied by
(ii) the quotient obtained when
(A) the aggregate number of Xxxxxxx Common
Shares owned at the time of such meeting by the
members of the Ford Group
is divided by
(B) the total number of outstanding Xxxxxxx
Common Shares at the time of such meeting, or
(b) if the members of the Ford Group own, in the aggregate, more
than 50% of the outstanding Xxxxxxx Common Shares at the time of such
meeting, the greater of
(i) the lowest number of directors that constitutes a
majority of the directors of Xxxxxxx immediately after the
election of directors by DBF Holdings, and
(ii) the product determined pursuant to Section 7.3(a).
TERM OF DIRECTORS ELECTED BY DBF HOLDINGS
7.4 Each director elected by DBF Holdings pursuant to Section 7.2 or
Section 7.3 will be elected for a term ending at the close of the next meeting
of holders of Xxxxxxx Common Shares at which one or more directors are elected
(other than to fill a vacancy) or removed or at which the number of directors
permitted to be elected to the board of directors of Xxxxxxx is changed.
XXXXXXX POOLING AGREEMENT
7.5 The Parties intend the provisions in this Section 7.5 through Section
7.12, inclusive, to be a pooling agreement as contemplated by section 146(1) of
the CANADA BUSINESS CORPORATIONS ACT with respect to the exercise of voting
rights attached to the shares in the capital of Xxxxxxx owned by each of DCX,
Ford and DBF Holdings.
VOTING BY DBF HOLDINGS
7.6 The directors of DBF Holdings will appoint one of the directors or
officers of DBF Holdings to, on behalf of DBF Holdings,
(a) vote the Class A Share owned by DBF Holdings to approve any
matter other than those referred to in Section 7.34(b) that requires
approval by separate class resolution of the Class A Share,
(b) vote the Class B Share owned by DBF Holdings to approve any
matter other than those referred to in Section 7.35(b) that requires
approval by separate class resolution of the Class B Share,
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(c) abstain from voting the Class A Share owned by DBF Holdings on
any matter on which a holder of a Class A Share is entitled to vote
with the holders of Xxxxxxx Common Shares, and
(d) abstain from voting the Class B Share owned by DBF Holdings on
any matter on which a holder of a Class B Share is entitled to vote
with the holders of Xxxxxxx Common Shares.
REMOVAL OF DIRECTORS
7.7 If at any time a director of Xxxxxxx elected by DBF Holdings votes or
otherwise acts in a manner inconsistent with the terms and intent of this
Agreement, DBF Holdings will forthwith cause such director to be removed as a
director of Xxxxxxx and replaced with another individual elected by DBF
Holdings.
TRANSFER OF CLASS A SHARE
7.8 DBF Holdings will not transfer the Class A Share owned by it to any
Person without the prior consent of Xxxxxxx, Ford and DCX.
TRANSFER OF CLASS B SHARE
7.9 DBF Holdings will not transfer the Class B Share owned by it to any
Person without the prior consent of Xxxxxxx, DCX and Ford.
VOTING BY DCX OF XXXXXXX COMMON SHARES
7.10 Subject to the exceptions contained in Section 7.16, as long as the
Class A Share is outstanding, DCX will not, and will ensure that no member of
the DCX Group will, vote, or grant to any other Person the right to vote, any
Xxxxxxx Common Share on a vote to elect or remove a director to or from the
board of directors of Xxxxxxx or a resolution the effect of which is to change
the rights and restrictions attached to the Class A Share or the Class B Share.
VOTING BY FORD OF XXXXXXX COMMON SHARES
7.11 Subject to the exceptions contained in Section 7.17, as long as the
Class B Share is outstanding, Ford will not, and will ensure that no member of
the Ford Group will, vote, or grant to any other Person the right to vote, any
Xxxxxxx Common Share on a vote to elect or remove a director to or from the
board of directors of Xxxxxxx or a resolution the effect of which is to change
the rights and restrictions attached to the Class A Share or the Class B Share.
TERMINATION OF POOLING AGREEMENT
7.12 The provisions of Section 7.5 to Section 7.11, inclusive, will cease
and terminate if
(a) the Class A Share and the Class B Share are not outstanding,
or
(b) Ford, DCX and Xxxxxxx agree to terminate such provisions.
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REDEMPTION AND CONVERSION OF CLASS A SHARE
7.13 The Parties acknowledge that Xxxxxxx
(a) has the right to redeem or convert the Class A Share in
accordance with the rights, privileges, restrictions and conditions
attached to such share, if
(i) any Person, other than another member of the DCX
Group, acquires or owns any interest in any share in the
capital of DBF Holdings issued to a member of the DCX Group,
except that the granting of one or more mortgages, pledges,
hypothecations or other security interests on any such share
will not constitute a disposition of such share pursuant to
this Agreement until such a mortgage, pledge, hypothecation or
other security interest is enforced, or
(ii) any member of the DCX Group sells or is deemed,
pursuant to this Agreement, to sell any Base DCX Xxxxxxx
Shares, except
(A) to another member of the DCX Group or to one
or more members of the Ford Group, or
(B) if a member of the DCX Group acquires such
Base DCX Xxxxxxx Shares within 30 days after such
sale, and
(b) will redeem or convert the Class A Share on request by DBF
Holdings pursuant to Section 7.34(d) if, at the time of such request,
the members of the DCX Group
(i) own, in the aggregate, at least 75% of the
outstanding Xxxxxxx Common Shares, or
(ii) own or have rights to purchase less than the number
of Xxxxxxx Common Shares that would entitle DBF Holdings, as
the holder of the Class A Share, to elect at least one
director of Xxxxxxx, assuming that all members of the DCX
Group have exercised all rights of conversion, exercise and
exchange attached to securities owned by them that are
convertible into or exchangeable or exercisable for Xxxxxxx
Common Shares,
and for greater certainty, after such redemption or conversion, the
members of the DCX Group will no longer be restricted by any covenant
regarding the voting of Xxxxxxx Common Shares.
REDEMPTION AND CONVERSION OF CLASS B SHARE
7.14 The Parties acknowledge that Xxxxxxx
(a) has the right to redeem or convert the Class B Share in
accordance with the rights, privileges, restrictions and conditions
attached to such share, if
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(i) any Person, other than another member of the Ford
Group, acquires or owns any interest in any share in the
capital of DBF Holdings issued to a member of the Ford Group,
except that the granting of one or more mortgages, pledges,
hypothecations or other security interests on any such share
will not constitute a disposition of such share pursuant to
this Agreement until such a mortgage, pledge, hypothecation or
other security interest is enforced, or
(ii) any member of the Ford Group sells or is deemed,
pursuant to this Agreement, to sell any Base Ford BPS Shares,
except
(A) to another member of the Ford Group or to
one or more members of the DCX Group, or
(B) if a member of the Ford Group acquires such
Base Ford BPS Shares within 30 days after such sale,
and
(b) will redeem or convert the Class B Share on request by DBF
Holdings pursuant to Section 7.35(d) if, at the time of such request,
the members of the Ford Group
(i) own, in the aggregate, at least 75% of the
outstanding Xxxxxxx Common Shares, or
(ii) own or have rights to purchase less than the number
of Xxxxxxx Common Shares that would entitle DBF Holdings, as
the holder of the Class B Share, to elect at least one
director of Xxxxxxx, assuming that all members of the Ford
Group have exercised all rights of conversion, exercise and
exchange attached to securities owned by them that are
convertible into or exchangeable or exercisable for Xxxxxxx
Common Shares,
and for greater certainty, after such redemption or conversion, the
members of the Ford Group will no longer be restricted by any covenant
regarding the voting of Xxxxxxx Common Shares.
RESTRICTION ON ISSUANCE OF CLASS A SHARE AND CLASS B SHARE
7.15 Xxxxxxx will not issue any Class A Share or any Class B Share to any
Person except DBF Holdings.
LIMITATION ON DCX NOMINEES
7.16 As long as the Class A Share is outstanding, DCX will not, directly or
indirectly, nominate directors or participate in the solicitation of proxies for
the election of directors other than
(a) those included in the slate of nominees proposed to the
shareholders of Xxxxxxx by management of Xxxxxxx, and
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(b) those DBF Holdings may elect pursuant to the rights and
restrictions attached to the Class A Share.
LIMITATION ON FORD NOMINEES
7.17 As long as the Class B Share is outstanding, Ford will not, directly or
indirectly, nominate directors or participate in the solicitation of proxies for
the election of directors other than
(a) those included in the slate of nominees proposed to the
shareholders of Xxxxxxx by management of Xxxxxxx, and
(b) those DBF Holdings may elect pursuant to the rights and
restrictions attached to the Class B Share.
FILLING OF CASUAL VACANCIES
7.18 If at any time a director of Xxxxxxx elected by DBF Holdings as holder
of the Class A Share or the Class B Share ceases to be a director of Xxxxxxx for
any reason before the expiry of such director's term, the resulting vacancy may
only be filled
(a) by a new director elected by a separate class vote of DBF
Holdings as the holder of such share, and
(b) if, after such election, the number of directors elected by
DBF Holdings as holder of such share would not exceed the number of
such directors DBF Holdings would be entitled to elect if a meeting of
the holders of Xxxxxxx Common Shares at which directors had been
elected (other than to fill a vacancy) or removed or at which the
number of directors permitted to be elected to the board of directors
of Xxxxxxx is changed had been held immediately before such election.
OFFICER NOMINATION RIGHTS
7.19 Each of the Xxxxxxx Base Shareholders will have the non-exclusive right
to nominate for consideration by the board of directors of Xxxxxxx an individual
for each of the following five offices: the Chief Executive Officer; the Chief
Financial Officer; the officer to whom the persons responsible for research and
development at Xxxxxxx report (currently the Chief Technology Officer); the
officer to whom the persons responsible for Vehicular Fuel Cell programs at
Xxxxxxx report (currently the Chief Technology Officer); and the officer to whom
the persons responsible for intellectual property at Xxxxxxx report (currently
the Vice-President, Research and Development).
OFFICER REPLACEMENT RIGHTS
7.20 The Xxxxxxx Base Shareholders, acting jointly and on reasonable notice
given to the Chief Executive Officer of Xxxxxxx, will have the right to require
the replacement of the individual holding each of the following three offices:
the officer to whom the persons responsible for research and development at
Xxxxxxx report (currently the Chief Technology Officer); the officer
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to whom the persons responsible for Vehicular Fuel Cell programs at Xxxxxxx
report (currently the Chief Technology Officer); and the officer to whom the
persons responsible for intellectual property at Xxxxxxx report (currently the
Vice-President, Research and Development).
SPECIAL APPROVAL RIGHTS FOR DCX/FORD NOMINEES
7.21 Subject to Section 7.22,
(a) as long as the members of the DCX Group and the Ford Group own
at least
(i) an aggregate percentage of all of the outstanding
Xxxxxxx Common Shares equal to the Threshold Percentage, not
including any Xxxxxxx Common Shares issued in consideration of
a material investment in, or acquisition of, a Person other
than a wholly-owned Subsidiary of Xxxxxxx that was required to
be approved, and was approved under this Section 7.21, Section
7.24 orSection 7.26, and
(ii) an aggregate of at least 20% of all of the
outstanding Xxxxxxx Common Shares, and
(b) as long as
(i) the members of the DCX Group own all of the Base DCX
Xxxxxxx Shares, other than Base DCX Xxxxxxx Shares transferred
to a member of the Ford Group,
(ii) the members of the Ford Group own all of the Base
Ford BPS Shares, other than the Base Ford BPS Shares
transferred to a member of the DCX Group,
(iii) the members of the DCX Group own a sufficient number
of Xxxxxxx Common Shares to entitle DCX to direct DBF Holdings
to elect at least one director of Xxxxxxx,
(iv) the members of the Ford Group own a sufficient number
of Xxxxxxx Common Shares to entitle Ford to direct DBF
Holdings to elect at least one director of Xxxxxxx, and
(v) each of DCX and Ford directed DBF Holdings to elect
at least one director of Xxxxxxx at the most recent time when
entitled to do so,
the following decisions may not be made or actions taken unless approved by a
number of directors of Xxxxxxx equal to one director more than a majority of the
directors of Xxxxxxx who are entitled to vote and who do vote on such decision,
including at least one director elected by DBF Holdings at the direction of
either DCX or Ford,
(c) a reduction in size of the board of directors of Xxxxxxx below
12 directors,
(d) the sale of all or substantially all of the Xxxxxxx Business
or the assets, property or intellectual property of all members of the
Xxxxxxx Group,
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(e) any mortgage, grant of security interest, pledge or
encumbrance on all or substantially all of the assets, property or
intellectual property of all members of the Xxxxxxx Group,
(f) any amalgamation, arrangement or statutory reorganization of
Xxxxxxx with another entity other than a Subsidiary of Xxxxxxx,
(g) any amendment or restatement of
(i) the Xxxxxxx articles of incorporation, or
(ii) the By-laws of Xxxxxxx that is inconsistent with the
terms of this Agreement,
(h) the voluntary commencement of bankruptcy or similar
proceedings of any member of the Xxxxxxx Group,
(i) a reduction in the stated capital of Xxxxxxx,
(j) any change of the name of Xxxxxxx,
(k) a consolidation (reverse split) of Xxxxxxx Common Shares,
(l) the approval of the annual business plan or budget prepared
pursuant to Section 6.3 or any changes thereto, the approval of or any
material change to the Xxxxxxx Strategic Plan,
(m) capital investment (or sale) by Xxxxxxx or a wholly-owned
Subsidiary of Xxxxxxx, that is not included in a budget approved under
Section (l) if the amount of such investment (or sale), together with
all other such unbudgeted investments (or sales) made in the same
calendar year would exceed the greater of
(i) $15 million, increasing to $30 million after December
31, 2007, and
(ii) the lesser of
(A) 25% of the total capital budget of Xxxxxxx
and its wholly-owned Subsidiaries for such calendar
year, and
(B) $100 million,
(n) investment, by way of cash, property or securities, (or sale
of an investment) by Xxxxxxx or a wholly-owned Subsidiary of Xxxxxxx in
a Person other than a wholly-owned Subsidiary of Xxxxxxx, or a sale of
a wholly-owned Subsidiary, other than investments (or sales) provided
for in a budget approved under sub-section (l), that exceeds the
greater of
(i) $25 million, and
(ii) the lesser of
-44-
(A) 25% of the total budget for investments in
Persons other than wholly-owned Subsidiaries of
Xxxxxxx for such calendar year, and
(B) $100 million, and
(o) other than as provided in a business plan or in a budget
approved under sub-section (l) and subject to the requirements in
Section (m) and sub-section (m), to authorize any member of the Xxxxxxx
Group to
(i) borrow money, grant security, guaranty liabilities
and obligations of another Person, other than liabilities or
obligations of wholly-owned Subsidiaries, in excess of $50
million in any calendar year, and
(ii) incur liabilities and other obligations, other than
in the ordinary course of business, in excess of $25 million
in any calendar year.
MAJORITY VOTE OF DIRECTORS
7.22 If, while Section 7.21 is applicable, one or more directors of Xxxxxxx
elected by DBF Holdings at the direction of either DCX or Ford,
(a) is prohibited under the CANADA BUSINESS CORPORATIONS ACT from
voting on a matter specified in any of Section 7.21(c) to Section
7.21(o), inclusive,
(b) abstains from voting on a matter specified in any of Section
7.21(c) to Section 7.21(o), inclusive, other than an abstention for the
reason referred to in Section 7.22(a), or
(c) does not participate, in person or by way of telephone, in a
meeting of the board of directors of Xxxxxxx at which a matter
specified in any of Section 7.21(c) to Section 7.21(o), inclusive, is
considered, other than solely as a result of the occurrence of
circumstances preventing such participation that are entirely beyond
the control or remedy of such director (including, but not limited to,
a medical emergency or accident of such director or an immediate family
member of such director),
such matter will not be subject to Section 7.21, and may be approved by a
majority of the votes cast at a meeting of the board of directors of Xxxxxxx.
RETENTION OF SPECIAL APPROVAL RIGHTS
7.23 If the aggregate percentage of all of the outstanding Xxxxxxx Common
Shares held by members of the DCX Group and the Ford Group at any time falls
below the Threshold Percentage, notwithstanding Section 7.21(a)(i), the rights
set out in Section 7.21 will remain in effect for a period of 60 days
thereafter. If during that 60 day period members of the DCX Group and the Ford
Group:
(a) acquire sufficient Xxxxxxx Common Shares so that the aggregate
proportion of all of the outstanding Xxxxxxx Common Shares held by
members of the DCX Group and the Ford Group meets or exceeds the
Threshold Percentage, their rights set out in Section 7.21 will
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remain in effect following expiry of the 60 day period until such time
as the aggregate percentage of all of the outstanding Xxxxxxx Common
Shares held by members of the DCX Group and the Ford Group again falls
below the Threshold Percentage, at which time this Section 7.23 will
again be applicable; or
(b) do not acquire sufficient Xxxxxxx Common Shares so that the
aggregate proportion of all of the outstanding Xxxxxxx Common Shares
held by members of the DCX Group and the Ford Group meets or exceeds
the Threshold Percentage, their rights set out in Section 7.21 will
lapse following expiry of the 60 day period. However, their rights set
out in Section 7.21 will thereafter come into effect if, within 18
months following the expiry of such 60 day period, members of the DCX
Group and the Ford Group acquire sufficient Xxxxxxx Common Shares so
that the aggregate proportion of all of the outstanding Xxxxxxx Common
Shares held by members of the DCX Group and the Ford Group meets or
exceeds the Threshold Percentage, at which time this Section 7.23 will
again be applicable.
For the purpose of determining whether the members of the DCX Group and the Ford
Group hold a number of Xxxxxxx Common Shares equal to the Threshold Percentage,
the number of Xxxxxxx Common Shares issued in consideration of a material
investment in, or acquisition of, a Person other than a wholly-owned Subsidiary
of Xxxxxxx that was required to be approved, and was approved, under Section
7.21, Section 7.24 or Section 7.26 shall be excluded from such calculation.
INDIVIDUAL SPECIAL APPROVAL RIGHTS FOR DCX NOMINEES
7.24 Subject to Section 7.25, if Section 7.21(a) or Section 7.21(b) no
longer applies, and the members of the DCX Group own at any subsequent time
(a) at least 33.75% of the outstanding Xxxxxxx Common Shares, or
(b) all of the Base DCX Xxxxxxx Shares and all of the Xxxxxxx
Common Shares that were Base Ford BPS Shares when a member of the Ford
Group owned them,
then after such time and as long as,
(c) the members of the DCX Group own at least
(i) an aggregate percentage of all of the outstanding
Xxxxxxx Common Shares equal to the Threshold Percentage, not
including any Xxxxxxx Common Shares issued in consideration of
a material investment in, or acquisition of, a Person other
than a wholly-owned Subsidiary of Xxxxxxx that was required to
be approved, and was approved under Section 7.21 or this
Section 7.24, and
(ii) an aggregate of at least 20% of all of the
outstanding Xxxxxxx Common Shares, and
(d) the members of the DCX Group own all of the Base DCX Xxxxxxx
Shares
and Section 13.2 is applicable, the decisions in Section 7.21 to Section
7.21(o), inclusive, will require the approval of a number of directors of
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Xxxxxxx equal to one director more than a majority of the directors of Xxxxxxx
who are entitled to vote and who do vote on such decision, including at least
one of the directors elected by DBF Holdings at the direction of DCX.
MAJORITY VOTE OF DIRECTORS
7.25 If, while Section 7.24 is applicable, one or more directors of Xxxxxxx
elected by DBF Holdings at the direction of DCX,
(a) is prohibited under the CANADA BUSINESS CORPORATIONS ACT from
voting on a matter specified in any of Section 7.21(c) to Section
7.21(o), inclusive,
(b) abstains from voting on a matter specified in any of Section
7.21(c) to Section 7.21(o), inclusive, other than an abstention for any
reason referred to in Section 7.25(a), or
(c) does not participate, in person or by way of telephone, in a
meeting of the board of directors of Xxxxxxx at which a matter
specified in any of Section 7.21(c) to Section 7.21(o), inclusive, is
considered, other than solely as a result of the occurrence of
circumstances preventing such participation that are entirely beyond
the control or remedy of such director (including, but not limited to,
a medical emergency or accident of such director or an immediate family
member of such director),
such matter will not be subject to Section 7.24, and may be approved by a
majority of the votes cast at a meeting of the board of directors of Xxxxxxx.
INDIVIDUAL SPECIAL APPROVAL RIGHTS FOR FORD NOMINEES
7.26 Subject to Section 7.27, if Section 7.21(a) or Section 7.21(b) no
longer applies, and the members of the Ford Group own at any subsequent time
(a) at least 33.75% of the outstanding Xxxxxxx Common Shares, or
(b) all of the Base Ford BPS Shares and all of the Xxxxxxx Common
Shares that were Base DCX Xxxxxxx Shares when a member of the DCX Group
owned them,
then after such time and as long as,
(c) the members of the Ford Group own at least
(i) an aggregate percentage of all of the outstanding
Xxxxxxx Common Shares equal to the Threshold Percentage, not
including any Xxxxxxx Common Shares issued in consideration of
a material investment in, or acquisition of a Person other
than a wholly-owned Subsidiary of Xxxxxxx that was required to
be approved, and was approved under Section 7.21 or this
Section 7.26, and
(ii) an aggregate of at least 20% of all of the
outstanding Xxxxxxx Common Shares, and
(d) the members of the Ford Group own all of the Base Ford BPS
Shares
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and Section 13.1 is applicable, the decisions in Section 7.21(c) to Section
Section 7.21(o), inclusive, will require the approval of a number of directors
of Xxxxxxx equal to one director more than a majority of the directors of
Xxxxxxx who are entitled to vote and who do vote on such decision, including at
least one of the directors elected by DBF Holdings at the direction of Ford.
MAJORITY VOTE OF DIRECTORS
7.27 If, while Section 7.26 is applicable, one or more directors of Xxxxxxx
elected by DBF Holdings at the direction of Ford,
(a) is prohibited under the CANADA BUSINESS CORPORATIONS ACT from
voting on a matter specified in any of Section 7.21(c) to Section
7.21(o), inclusive,
(b) abstains from voting on a matter specified in any of Section
7.21(c) to Section 7.21(o), inclusive, other than an abstention for the
reason referred to in Section 7.27(a), or
(c) does not participate, in person or by way of telephone, in a
meeting of the board of directors of Xxxxxxx at which a matter
specified in any of Section 7.21(c) to Section 7.21(o), inclusive, is
considered, other than solely as a result of the occurrence of
circumstances preventing such participation that are entirely beyond
the control or remedy of such director (including, but not limited to,
a medical emergency or accident of such director or an immediate family
member of such director),
such matter will not be subject to Section 7.26, and may be approved by a
majority of the votes cast at a meeting of the board of directors of Xxxxxxx.
DBF HOLDINGS UNANIMOUS SHAREHOLDER AGREEMENT
7.28 The Parties intend the provisions in Section 7.28 through Section 7.41,
inclusive, to be
(a) a unanimous shareholder agreement as defined in section 2(1)
of the CANADA BUSINESS CORPORATIONS ACT with respect to DBF Holdings,
its business and affairs and the power and authority of the directors
and shareholders of DBF Holdings, and
(b) a pooling agreement as contemplated by section 146(1) of the
CANADA BUSINESS CORPORATIONS ACT with respect to the exercise of voting
rights attached to the DBF Shares.
OWNERSHIP OF DBF SHARES
7.29 The Parties acknowledge that each of DCX, Xxxxxxx and Xxxx own the
following DBF Shares:
DCX 50 Class A Common shares
Xxxxxxx 100 Class B Common shares
Ford 50 Class C Common shares
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and no other Person has any interest in or right, present or future, contingent
or absolute, to purchase or otherwise acquire any DBF Shares or any interest in
any DBF Shares.
BUSINESS OF DBF HOLDINGS
7.30 The business and activities of DBF Holdings will be restricted to
(a) the subscription for, and purchase and ownership of, the Class
A Share and the Class B Share,
(b) the entering into of this Agreement, and
(c) the exercise of the rights and privileges attached to the
Class A Share and the Class B Share subject to the restrictions and
conditions attached to such shares and the restrictions pursuant to
this Part 7.
DBF BOARD OF DIRECTORS
7.31 The number of directors of DBF Holdings will be a minimum of three and
a maximum of five and
(a) the DCX Group, as the sole holder of DBF Class A Common
Shares, will have the exclusive right to elect one director of DBF
Holdings,
(b) the Ford Group, as the sole holder of DBF Class C Common
Shares, will have the exclusive right to elect one director of DBF
Holdings, and
(c) the Xxxxxxx Group, as the sole holder of DBF Class B Common
Shares, will have the exclusive right to
(i) determine the number, within the limits contained in
the Articles of DBF Holdings, of directors of DBF Holdings,
and
(ii) appoint two less than the number so determined of the
directors of DBF Holdings.
POWER AND AUTHORITY OF DBF DIRECTORS
7.32 The power and authority of the directors and officers of DBF Holdings
to manage the business and affairs of DBF Holdings is restricted to
(a) the matters set out in Section 7.6 and Section 7.7,
(b) taking the necessary steps to maintain the corporate existence
and good standing of DBF Holdings, and
(c) appointing corporate representatives or officers to
(i) vote the Class A Share and the Class B Share pursuant
to Section 7.32(a), and
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(ii) take the steps referred to in Section 7.32(b).
REMOVAL AND REPLACEMENT OF DBF DIRECTORS
7.33 If at any time a director of DBF Holdings votes or otherwise acts in a
manner inconsistent with this Agreement, the shareholder that elected such
director will forthwith cause such director to be removed as a director of DBF
Holdings and fill the vacancy created by such removal.
APPOINTMENT OF DCX AS CORPORATE REPRESENTATIVE
7.34 DCX is irrevocably entitled to act as the sole corporate representative
of DBF Holdings to
(a) exercise the exclusive rights of DBF Holdings, as described
under Section 7.2, to elect, remove and fill vacancies of directors on
the board of directors of Xxxxxxx elected in accordance with the rights
attaching to the Class A Share; provided that DBF Holdings will not
exercise its right to round up the number of directors of Xxxxxxx it is
entitled to elect in accordance with the rights attaching to the Class
A Share if,
(i) the members of the DCX Group have not, in respect of
any two consecutive previous Equity Financings completed after
the Closing Date by Xxxxxxx, purchased at least
(A) the number of Equity Securities pursuant to
Section 2.7 equal to the lesser of
(I) the product obtained when
a. the number of Equity Securities
offered in each such Equity
Financing
is multiplied by
b. the quotient obtained when
(1) the DCX Proportion
is divided by
(2) the aggregate of the
DCX Proportion and the Ford
Proportion, and
(II) the number of Equity Securities so
that, immediately after such purchase, the
members of the DCX Group would own, in the
aggregate, at least the number of Xxxxxxx
Common Shares, calculated on a Fully Issued
basis, equal to the product obtained when
a. the DCX Proportion,
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is multiplied by
b. the total number of Xxxxxxx
Common Shares, calculated on a Fully
Issued basis, outstanding
immediately after such purchase, or
(B) the number of Equity Securities pursuant to
Section 2.11 that when issued to members of the DCX
Group would result in the members of the DCX Group
owning the same percentage of the outstanding Xxxxxxx
Common Shares, calculated on a Fully Issued basis, as
they would have owned on the date that is 90 days
after the date that the Equity Financing was
completed, or such earlier date that Xxxxxxx issued
Equity Securities to DCX under Section 2.11 with
respect to each such Equity Financing, if the members
of the DCX Group had purchased the number of Equity
Securities equal to the least of the number of Equity
Securities calculated
(I) under Section 7.34(a)(i)(A) with
respect to each such Equity Financing,
(II) under Section 2.11(b) with respect
to each such Equity Financing, or
(III) under 2.13 with respect to each such
Equity Financing,
unless at any time after the completion of the later of such
Equity Financings, the members of the DCX Group have again
owned at least the DCX Proportion of the outstanding Xxxxxxx
Common Shares, or
(ii) any member of the DCX Group has sold any Xxxxxxx
Common Shares, other than Xxxxxxx Common Shares acquired after
the Closing Date as consideration for the transfer to Xxxxxxx
of certain technology developed by a member of the DCX Group,
to any Person other than another member of the DCX Group or a
member of the Ford Group,
(b) vote the Class A Shares for or against, in its discretion, any
separate class resolution to approve any amendment to the Xxxxxxx
articles of incorporation
(i) to change the number of Class A Shares in the
authorized capital of Xxxxxxx,
(ii) to alter or change any of the rights, privileges,
restrictions or conditions attached to the Class A Share, or
(iii) that would prejudice or interfere with the rights of
DCX and DBF Holdings as holder of the Class A Share to elect
and remove directors of Xxxxxxx and to fill vacancies
resulting from the removal, resignation, death or
disqualification of directors elected by DBF Holdings as
holder of the Class A Share, and
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(c) to, as long as Section 7.24 is applicable, take actions to
enforce any right, or obtain and enforce any order or other remedy that
DBF Holdings may have as a holder of the Class A Share, in respect of
any decision or action listed in the rights, privileges, restrictions
and conditions of such shares in the Xxxxxxx articles of incorporation,
if Xxxxxxx makes such decision, or takes such action, without the
approval required pursuant to such rights, privileges, restrictions and
conditions, at a time when the making of such decision or the taking of
such action is restricted pursuant to such rights, privileges,
restrictions and conditions, and
(d) request the redemption or conversion of the Class A Share in
accordance with Section 7.13(b).
APPOINTMENT OF FORD AS CORPORATE REPRESENTATIVE
7.35 Ford is irrevocably entitled to act as the sole corporate
representative of DBF Holdings to
(a) exercise the exclusive rights of DBF Holdings, as described
under Section 7.3, to elect, remove and fill vacancies of directors on
the board of directors of Xxxxxxx elected in accordance with the rights
attaching to the Class B Share; provided that DBF Holdings will not
exercise its right to round up the number of directors of Xxxxxxx it is
entitled to elect in accordance with the rights attaching to the Class
B Share if,
(i) the members of the Ford Group have not, in respect of
any two consecutive previous Equity Financings completed after
the Closing Date by Xxxxxxx, purchased at least
(A) the number of Equity Securities pursuant to
Section 2.8 equal to the lesser of
(I) the product obtained when
a. the number of Equity Securities
offered in each such Equity
Financing
is multiplied by
b. the quotient obtained when
(1) the Ford Proportion
is divided by
(2) the aggregate of the
DCX Proportion and the Ford
Proportion, and
(II) the number of Equity Securities so
that, immediately after such purchase, the
members of the Ford Group would own, in the
aggregate, at least the number of Xxxxxxx
Common Shares,
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calculated on a Fully Issued basis, equal to
the product obtained when
a. the Ford Proportion,
is multiplied by
b. the total number of Xxxxxxx
Common Shares, calculated on a Fully
Issued basis, outstanding
immediately after such purchase, or
(B) the number of Equity Securities pursuant to
Section 2.12 that when issued to members of the Ford
Group would result in the members of the Ford Group
owning the same percentage of the outstanding Xxxxxxx
Common Shares, calculated on a Fully Issued basis, as
they would have owned on the date that is 90 days
after the date that the Equity Financing was
completed, or such earlier date that Xxxxxxx issued
Equity Securities to Ford under Section 2.12 with
respect to each such Equity Financing, if the members
of the Ford Group had purchased the number of Equity
Securities equal to the least of the number of Equity
Securities calculated
(I) under Section 7.35(a)(i)(A) with
respect to each such Equity Financing,
(II) under Section 2.12(b) with respect
to each such Equity Financing, or
(III) under Section 2.13 with respect to
such Equity Financing,
unless at any time after the completion of the later of such
Equity Financings, the members of the Ford Group have again
owned at least the Ford Proportion of the outstanding Xxxxxxx
Common Shares, or
(ii) any member of the Ford Group has sold any Xxxxxxx
Common Shares to any Person other than another member of the
Ford Group or a member of the DCX Group,
(b) vote the Class B Shares for or against, in its discretion, any
separate class resolution to approve any amendment to the Xxxxxxx
articles of incorporation
(i) to change the number of Class B Shares in the
authorized capital of Xxxxxxx,
(ii) to alter or change any of the rights, privileges,
restrictions or conditions attached to the Class B Share, or
(iii) that would prejudice or interfere with the rights of
Ford and DBF Holdings as holder of the Class B Share to elect
and remove directors of Xxxxxxx and to fill
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vacancies resulting from the removal, resignation, death or
disqualification of directors elected by DBF Holdings as
holder of the Class B Share, and
(c) to, as long as Section 7.26 is applicable, take actions to
enforce any right, or obtain and enforce any order or other remedy that
DBF Holdings may have as a holder of the Class B Share, in respect of
any decision or action listed in the rights, privileges, restrictions
and conditions for such shares in the Xxxxxxx articles of
incorporation, if Xxxxxxx makes such decision, or takes such action,
without the approval required pursuant to such rights, privileges,
restrictions and conditions, at a time when the making of such decision
or the taking of such action is restricted pursuant to such rights,
privileges, restrictions and conditions, and
(d) request the redemption or conversion of the Class B Share in
accordance with Section 7.14(b).
APPOINTMENT OF DCX AND FORD AS CORPORATE REPRESENTATIVES
7.36 DCX and Ford will be entitled to act jointly as the corporate
representatives of DBF Holdings to take actions to enforce any right, or obtain
and enforce any order or other remedy that DBF Holdings may have as a holder of
the Class A Share and the Class B Share, in respect of any decision or action
listed in the rights, privileges, restrictions, and conditions for such shares
in the Xxxxxxx articles of incorporation if Xxxxxxx makes such decision, or
takes such action, without the approval required pursuant to such rights,
privileges, restrictions and conditions, at a time when the making of such
decision or the taking of such action is restricted pursuant to such rights,
privileges, restrictions and conditions.
DISPOSITION OF SHARES
7.37 Except with the prior written consent of each other of DCX, Ford and
Xxxxxxx, provided they own DBF Shares, none of DCX, Ford or Xxxxxxx will sell,
assign, transfer or otherwise dispose of any DBF Shares to any Person; provided
that the granting of one or more mortgages, pledges, hypothecations or other
security interests of or in DBF Shares will not constitute a disposition of such
shares until such mortgage, pledge, hypothecation or security interest is
enforced and the restrictions on transfer of DBF Shares set out in this
Agreement will apply to any transfer to or at the direction of the holder of any
such mortgage, pledge, hypothecation or security interest.
THIRD PARTY INTERESTS
7.38 Except as expressly authorized in Section 7.31 through Section 7.37,
inclusive, DBF Holdings will not, without the unanimous consent of the
shareholders of DBF Holdings, take or purport to take any action, including
(a) any action that could result in any Person, other than DBF
Holdings, acquiring any interest in the Class A Share or the Class B
Share, or
(b) any action to issue any share or other security in the capital
of DBF Holdings.
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REDEMPTION OF DBF SHARES
7.39 DBF Holdings may redeem, in accordance with the Articles of DBF
Holdings, all of the DBF Shares owned
(a) by DCX if at any time the Class A Share is redeemed or
converted pursuant to Section 7.13, and
(b) by Ford if at any time the Class B Share is redeemed or
converted pursuant to Section 7.14.
DBF SHARE CERTIFICATES
7.40 Any share certificate issued or to be issued by DBF Holdings will have
placed on such certificate the following legend:
"The transfer of the securities represented by this certificate is
subject to the provisions of a Fourth Alliance Agreement made August
31, 2005 among Xxxxxxx Power Systems Inc., DaimlerChrysler AG, Ford
Motor Company and DBF Pref Share Holdings Inc. Copies of the Fourth
Alliance Agreement are on file at the office of the Corporate Secretary
of DBF Pref Share Holdings Inc."
TERMINATION OF DBF HOLDINGS UNANIMOUS SHAREHOLDER AGREEMENT
7.41 The provisions of Section 7.28 through Section 7.39, inclusive, will
cease and terminate if
(a) the Class A Share and the Class B Share are not outstanding,
or
(b) Ford, DCX and Xxxxxxx agree to terminate such provisions.
PART 15
TERMINATION
15.3 In the circumstances set forth in the Fourth Alliance Agreement, the
OEMs will be entitled to give a notice (a "TERMINATION NOTICE") withdrawing from
the Alliance if all of the steps in the process set forth therein are completed,
in which event the Alliance will be terminated and, in addition to the
consequences set forth in Section 15.3 of the Fourth Alliance Agreement, DCX and
Ford will no longer have any rights under Section 7.19, Section 7.20, Section
7.21, Section 7.22, Section 7.23, Section 7.24, Section 7.25, Section 7.26 or
Section 7.27.
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TERMINATION ON FAILURE TO CURE FUNDAMENTAL BREACH
15.10 If a Breaching Party does not cure a Fundamental Breach for which it
has received a Notice of Fundamental Breach, within the periods of time
prescribed in the Fourth Alliance Agreement, and the Fundamental Breach is not
waived in accordance therewith, and
(a) the Breaching Party is either DCX or Ford, the Party or
Parties that gave notice of such Fundamental Breach under Section 15.7
of the Fourth Alliance Agreement may, by notice (the "NOTICE OF
EJECTION"), within the periods of time prescribed Section 15.10 of the
Fourth Alliance Agreement, terminate all the rights of the Breaching
Party pursuant to this Agreement and all other agreements contemplated
in this Agreement, and
(i) if a Notice of Ejection is given by DCX to Ford, DCX
may give notice to Ford that a member of the DCX Group will
purchase a number of Xxxxxxx Common Shares equal to the lesser
of
(A) all Xxxxxxx Common Shares owned by the Ford
Group, and
(B) a number of Xxxxxxx Common Shares owned by
the Ford Group equal to the number of Xxxxxxx Common
Shares that would result in the DCX Group owning, in
the aggregate, 33.75% of the outstanding Xxxxxxx
Common Shares
and Ford will sell, and will ensure each member of its Group
sells, to DCX within seven days of the receipt of the Notice
of Ejection such number of Xxxxxxx Common Shares owned by it,
or
(ii) if a Notice of Ejection is given by Ford to DCX, Ford
may give notice to DCX that a member of the Ford Group will
purchase a number of Xxxxxxx Common Shares equal to the lesser
of
(A) all Xxxxxxx Common Shares owned by the DCX
Group, and
(B) a number of Xxxxxxx Common Shares owned by
the DCX Group equal to the number of Xxxxxxx Common
Shares that would result in the Ford Group owning, in
the aggregate, 33.75% of the outstanding Xxxxxxx
Common Shares
and DCX will sell, and will ensure each member of its Group
sells, to Ford within seven days of the receipt of the Notice
of Ejection such number of Xxxxxxx Common Shares owned by it
and Xxxxxxx agrees to consent to such sale, and
the price for the Xxxxxxx Common Shares to be sold pursuant to this
Section 15.10(a) will be 50% of the amount equal to the simple average
of the closing price of the Xxxxxxx Common Shares for each of the
Business Days on which there was a closing price for such shares
falling not more than 20 Business Days before the date of the Notice of
Ejection, and the
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purchaser of such shares will obtain all necessary approvals, if any,
of Governmental Authorities or stock exchanges for the purchase of such
shares, or
(b) the Breaching Party is Xxxxxxx, any Non-Breaching Party may, by
notice (the "NOTICE OF TERMINATION") to Xxxxxxx, terminate the Fourth
Alliance Agreement for cause effective the date of the Notice of
Termination. Unless so terminated, the Fourth Alliance Agreement will
continue in full force and effect except as otherwise expressly
provided herein.
