<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 7, 2000.
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
H POWER CORP.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3629 22-3010742
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
--------------------------
1373 BROAD STREET
CLIFTON, NEW JERSEY 07013
(973) 450-4400
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------
DR. H. FRANK GIBBARD
CHIEF EXECUTIVE OFFICER
H POWER CORP.
1373 BROAD STREET
CLIFTON, NEW JERSEY 07013
(973) 450-4400
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
MERRILL M. KRAINES, ESQ. STEPHEN A. WEISS, ESQ.
FULBRIGHT & JAWORSKI L.L.P. CLIFFORD E. NEIMETH, ESQ.
666 FIFTH AVENUE GREENBERG TRAURIG, LLP
NEW YORK, NEW YORK 10103 THE METLIFE BUILDING
(212) 318-3000 200 PARK AVENUE
NEW YORK, NEW YORK 10166
(212) 801-9200
</TABLE>
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / ______
If this Form is a post-effective amendment filed pursuant to 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ______
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH CLASS PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE (1) REGISTRATION FEE
<S> <C> <C>
Common stock, $.001 par value per share..................... $100,000,000 $26,400
</TABLE>
(1) Estimated solely for purpose of calculating the registration fee pursuant to
Rule 457(o) under the Securities Act of 1933, as amended.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8a OF THE
SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8a, MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED APRIL 7, 2000
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
PROSPECTUS
SHARES
[H POWER LOGO]
H POWER CORP.
COMMON STOCK
- --------------------------------------------------------------------------------
This is our initial public offering of shares of common stock. We are offering
shares of our common stock. No public market currently exists for our
common stock.
We currently anticipate the initial public offering price to be between $
and $ per share. We have applied to have our common stock listed for
quotation on the Nasdaq National Market under the symbol "HPOW."
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE 5.
<TABLE>
<CAPTION>
PER SHARE TOTAL
------------------------ ------------------------
<S> <C> <C>
Initial Public Offering Price............... $ $
Underwriting Discount....................... $ $
Proceeds to H Power......................... $ $
</TABLE>
We have granted the underwriters the right to purchase up to additional
shares within 30 days to cover over-allotments.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
Lehman Brothers, on behalf of the underwriters, expects to deliver the shares to
purchasers on or about , 2000.
- --------------------------------------------------------------------------------
LEHMAN BROTHERS
CIBC WORLD MARKETS
DEUTSCHE BANC ALEX. BROWN
JOSEPHTHAL & CO. INC.
FIDELITY CAPITAL MARKETS
A DIVISION OF NATIONAL
FINANCIAL SERVICES CORPORATION
, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Summary.......................................... 1
Risk Factors................................................ 5
Forward Looking Statements.................................. 12
Use of Proceeds............................................. 12
Dividend Policy............................................. 12
Capitalization.............................................. 13
Dilution.................................................... 14
Selected Financial Data..................................... 15
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 16
Business.................................................... 24
Management.................................................. 38
Certain Relationships and Related Transactions.............. 43
Principal Stockholders...................................... 47
Description of Capital Stock................................ 50
Shares Eligible for Future Sale............................. 53
United States Tax Consequences to Non-U.S. Holders.......... 55
Underwriting................................................ 58
Legal Matters............................................... 61
Experts..................................................... 61
Where You Can Find Additional Information................... 61
Index to Financial Statements............................... F-1
</TABLE>
------------------------
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information provided by this
prospectus is accurate as of any date other than the date on the front of this
prospectus.
Until , 2000, all dealers that buy, sell or trade the common
stock, whether or not participating in this offering, may be required to deliver
a prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
<PAGE>
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS CERTAIN INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS. THIS SUMMARY IS NOT COMPLETE AND DOES NOT CONTAIN ALL OF THE
INFORMATION YOU SHOULD CONSIDER BEFORE INVESTING IN OUR COMMON STOCK. YOU SHOULD
READ THIS ENTIRE PROSPECTUS CAREFULLY, ESPECIALLY THE RISKS OF INVESTING IN OUR
COMMON STOCK DISCUSSED UNDER "RISK FACTORS." OUR FISCAL YEAR ENDS MAY 31.
OUR COMPANY
We are a leader in developing, and believe that we were the first to
complete a commercial sale of, proton-exchange membrane, or PEM, fuel cell
systems. Our PEM fuel cells are designed to provide electricity for a wide range
of stationary, portable and mobile applications. We believe they can be more
cost-effective and efficient and are environmentally cleaner than existing power
generation sources. In August 1999, we entered into a ten-year agreement with
ECO Fuel Cells, LLC, a subsidiary of Energy Co-Opportunity, Inc., an association
of approximately 240 U.S. rural electric cooperatives, to market, sell, install
and service our stationary power fuel cell systems to more than 900 U.S. rural
cooperatives.
PEM fuel cells are devices that generate electricity efficiently and cleanly
from the electrochemical reaction of hydrogen and oxygen. Hydrogen is typically
derived from conventional fuels such as natural gas or propane, while the oxygen
is drawn from the air.
We seek to be among the first to mass market stationary and portable and
mobile fuel cell systems. We achieved commercial operation and sale of our low
power systems in 1998 and expect our high power systems to be commercially
available in 2001. Our stationary products in development include a residential
cogeneration system, designed to meet the electricity requirements of a typical
home, and a system which is designed as a backup power source during grid power
outages. Our portable and mobile fuel cell systems are designed as battery
substitutes and power sources for potential applications ranging from traffic
systems to golf carts to consumer devices. We believe that demand for portable
and mobile systems will be driven by consumer preference for smaller power
sources with longer operating lives and lighter weights.
FIRST TO COMMERCIALIZE FUEL CELLS
In June 1998, we began delivering 65 backup power units to the New Jersey
Department of Transportation for use with its variable message highway signs. As
of March 31, 2000, we had already delivered 47 of these units, all of which are
in operation. We believe that this sale represents the world's first commercial
order for a sizable number of competitively-bid, non-subsidized PEM fuel cell
systems offered with a warranty.
In March 2000, we completed our first installation of our prototype
stationary fuel cell system to an ECO cooperative. ECO has more than 900
cooperatives which currently service 83% of U.S. counties in 47 states and
supply power to approximately 14 million U.S. households, farms and small
businesses and have the right to market to an additional 37 million households.
We believe that ECO's rural customer base will be among the most likely early
adopters of fuel cell technology. ECO has agreed to purchase 12,300 of our
stationary fuel cell systems over several years for an aggregate purchase price
of approximately $81 million. We have begun to ship our initial test and
evaluation units to ECO in March 2000 and our goal is to commence shipping our
initial commercial units in the second half of calendar year 2001.
<PAGE>
ADVANTAGES OF PEM FUEL CELLS
PEM fuel cells combine and improve upon the best features of conventional
electric power generators and rechargeable batteries. Like generators, fuel
cells continue to produce power as long as their fuel supply is maintained. Fuel
cells, however, are more suitable than generators for residential and sparsely
populated environments. They provide a more efficient, more reliable and quieter
power source than comparable sized generators and are substantially
pollution-free. Like batteries, fuel cells efficiently convert chemical energy
into electrical energy. The chemical energy of a battery, however, becomes
depleted during use and a battery must be recharged periodically. Fuel cells,
unlike batteries, run continuously as long as fuel is provided. They also have
greater tolerance than batteries to high temperatures, which provides for longer
system life and higher reliability in harsh environments.
FAVORABLE INDUSTRY AND MARKET TRENDS
According to the U.S. Department of Energy, over the next ten years, demand
for electricity is expected to exceed existing planned capacity for regulated
utilities. In particular, we believe that demand for fuel cell products will
increase as the worldwide need for distributed, off-grid electric power grows.
We believe that a number of market trends favor significant penetration of fuel
cells into the distributed power generation market, including the:
- increasing requirements for continuous, reliable primary and backup
electric power;
- increasing trend toward decentralized communications systems requiring
more reliable power than is available on the current electric grid;
- continuing privatization and deregulation of utilities, which is likely to
open the market for alternative power;
- rising demand for electric power in rural areas, as well as in developing
countries with minimal infrastructure;
- increasing desire of utilities to avoid costly transmission, maintenance
and distribution expenditures; and
- increasing environmental regulation of conventional fossil fuel and
nuclear power generation and transmission.
OUR STRATEGY
Our strategy is to establish PEM fuel cells as a major alternative power
source and to become the leading commercial provider of PEM fuel cells and fuel
cell systems for applications below 25 kilowatts. We intend to implement our
strategy by:
- focusing on existing markets for stationary power products, such as rural
areas;
- strengthening our existing strategic relationships and aggressively
pursuing additional manufacturing, marketing and distribution
partnerships;
- penetrating markets for portable and mobile fuel cell products;
- developing low-cost, state-of-the-art manufacturing capabilities;
- capitalizing on our technological advantages over other fuel cell
developers and other potential alternative power sources; and
- developing and acquiring advanced, complementary technologies.
2
<PAGE>
OUR KEY BUSINESS RELATIONSHIPS
Since 1996, we have received an aggregate of approximately $46.5 million in
equity financing from strategic and financial investors, including:
- DQE Enterprises, Inc., formerly Duquesne Enterprises, Inc., a wholly-owned
subsidiary of DQE, Inc., a multi-utility delivery and services company;
- ECO Fuel Cells, LLC, a subsidiary of Energy Co-Opportunity, Inc., an
association of approximately 240 U.S. rural electric cooperatives;
- Hydro-Quebec CapiTech Inc., a division of Hydro-Quebec, a major Canadian
electric utility;
- Singapore Technologies Kinetics Ltd., a division of Singapore Technologies
Engineering Ltd., a large conglomerate; and
- Sofinov Societe Financiere D'Innovation Inc., a wholly-owned subsidiary of
the Caisse de Depot et Placement du Quebec, a large fund manager with more
than $70 billion in assets under management.
THE OFFERING
<TABLE>
<S> <C>
Common stock offered......................... [ ] shares
Common stock to be outstanding............... [ ] shares after the offering
Use of proceeds.............................. For general corporate purposes, including the
acquisition of new manufacturing facilities
and equipment, research and product
development, sales and marketing, potential
acquisitions and for working capital. See
"Use of Proceeds."
Proposed Nasdaq National Market Symbol....... "HPOW"
</TABLE>
Unless otherwise indicated, all information in this prospectus, including
the outstanding share information above, is based upon the number of shares
outstanding as of November 30, 1999 and gives effect to the following
transactions to be effected immediately prior to the consummation of this
offering:
- an 8-for-1 stock split of our common stock;
- the conversion of all of our shares of mandatorily redeemable convertible
preferred stock into a total of 9,600,000 shares of common stock; and
- the issuance of 2,666,664 shares of our common stock to outside investors
upon conversion of their 50% equity interest in our subsidiary, H Power
Enterprises of Canada.
The share information in the table above excludes:
- 4,810,000 shares of common stock issuable upon the exercise of outstanding
stock options at a weighted average exercise price of $1.533 per share;
- 800,000 shares of common stock issuable upon the exercise of outstanding
warrants at an exercise price of $3.125 per share;
- approximately 375,000 shares of common stock issuable to DQE Enterprises
immediately prior to this offering in payment of dividends to which they
are entitled; and
- [ ] shares of common stock issuable upon the exercise of the
underwriters' over-allotment option.
3
<PAGE>
SUMMARY FINANCIAL DATA
The following table sets forth our summary financial data. You should read
this information carefully together with our consolidated financial statements
and the notes to those statements beginning on page F-1 of this prospectus, and
the information under "Selected Financial Data," "Capitalization" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." Our pro forma information gives effect to the conversion of all of
our outstanding shares of mandatorily redeemable convertible preferred stock
into a total of 9,600,000 shares of our common stock and the issuance of
2,666,664 shares of our common stock to outside investors upon conversion of
their 50% equity interest in H Power Enterprises of Canada, all of which will be
effected immediately prior to the consummation of this offering. For purposes of
calculating the pro forma loss per share, the pro forma items described above
are assumed to have occurred on June 1, 1998. Our pro forma as adjusted results
also give effect to our sale of [ ] shares of common stock in this offering
at an assumed initial public offering price of $[ ] per share, after
deducting the underwriting discount and estimated offering expenses and the
application of the net proceeds of that sale.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEAR ENDED MAY 31, NOVEMBER 30,
---------------------------------------------------- -------------------
1995 1996 1997 1998 1999 1998 1999
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues...................... $ 3,961 $ 1,935 $ 421 $ 989 $ 1,018 $ 432 $ 1,909
Loss from operations.............. (2,246) (2,857) (4,542) (6,838) (6,413) (2,733) (3,828)
Net loss.......................... (2,433) (3,045) (4,571) (6,155) (6,253) (2,438) (3,721)
------- ------- -------- -------- ------- -------- -------
Net loss attributable to common
stockholders.................... (2,433) (3,045) (4,746) (6,365) (6,463) (2,543) (3,826)
======= ======= ======== ======== ======= ======== =======
Loss per share, basic and
diluted......................... $ (0.05) $ (0.07) $ (0.10) $ (0.14) $ (0.14) $ (0.05) $ (0.08)
======= ======= ======== ======== ======= ======== =======
Weighted average shares
outstanding, basic and
diluted......................... 44,304 46,144 46,302 46,418 46,424 46,424 50,669
Pro forma net loss per share,
basic and diluted............... $ (0.11) $ (0.06)
======= =======
Pro forma weighted average shares
outstanding, basic and
diluted......................... 58,691 62,935
</TABLE>
<TABLE>
<CAPTION>
AS OF NOVEMBER 30, 1999
------------------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -------------------------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................. $21,366 $21,366 $ [ ]
Working capital........................................... 19,724 19,724 [ ]
Total assets.............................................. 26,754 26,754 [ ]
Long-term debt............................................ 68 68 68
Minority interest......................................... 5,000 -- --
Mandatorily redeemable convertible preferred stock........ 15,327 -- --
Total stockholders' equity................................ 1,436 21,763 [ ]
</TABLE>
CORPORATE INFORMATION
We were incorporated in Delaware in June 1989. Our principal executive
offices are located at 1373 Broad Street, Clifton, New Jersey 07013 and our
telephone number is (973) 450-4400.
4
<PAGE>
RISK FACTORS
BEFORE YOU INVEST IN OUR COMMON STOCK, YOU SHOULD BE AWARE OF VARIOUS RISKS,
INCLUDING THOSE DESCRIBED BELOW. YOU SHOULD CAREFULLY CONSIDER THESE RISK
FACTORS, TOGETHER WITH ALL OF THE OTHER INFORMATION INCLUDED IN THIS PROSPECTUS,
BEFORE YOU DECIDE TO PURCHASE SHARES OF OUR COMMON STOCK.
WE HAVE A HISTORY OF LOSSES SINCE OUR INCEPTION, WE EXPECT FUTURE LOSSES AND
WE MAY NEVER ACHIEVE OR SUSTAIN PROFITABILITY. We have incurred net losses each
year since our inception in 1989 and had an accumulated deficit of approximately
$31.2 million as of November 30, 1999. We expect to continue to incur net losses
for the foreseeable future and these losses may be substantial. To implement our
business strategy, we will have to incur a high level of fixed operating
expenses and we will continue to incur considerable research and product
development expenditures. Accordingly, if we are unable to generate substantial
revenues and positive cash flows we will not achieve profitability. Even if we
do achieve profitability, we may not be able to sustain or increase our
profitability on a quarterly or annual basis.
Our ability to generate future revenues will depend on a number of factors,
many of which are beyond our control. These factors include the rate of market
acceptance of our products, regulatory developments and general economic trends.
Due to these factors, we cannot anticipate with any degree of certainty what our
revenues, if any, will be in future periods.
WE HAVE HAD ONLY ONE COMMERCIAL PRODUCT SALE. WE MAY NOT BE ABLE TO
MANUFACTURE OR COMMERCIALIZE OUR PRODUCTS IN A COST-EFFECTIVE MANNER. To date,
we have derived revenues principally from government research and development
contracts. For our fiscal year ended May 31, 1999, we only generated
approximately $500,000 from sales of our fuel cell systems. Our only commercial
order occurred in June 1998 and consisted of 65 backup power units to the New
Jersey Department of Transportation, 47 of which have been delivered as of
March 31, 2000. Our other product sales have been limited to demonstration and
prototype models. We have not made any commercial sales of units that include
fuel processing capabilities. We may not be able to produce or commercialize any
of our products in a cost-effective manner, and, if produced, we may not be able
to successfully market these products. We expect the production costs of the
initial commercial units to be delivered under the ECO contract to be higher
than their sales price and there can be no assurance that higher production
levels will occur or that sales prices will ever exceed production costs.
We do not have the manufacturing experience to handle large commercial
requirements. We may not be able to develop manufacturing technologies and
processes and expand our plant facilities to the point where they are capable of
satisfying large commercial orders, including the demand for stationary fuel
cell systems under the current ECO contract. Development and expansion of these
technologies and processes require extensive lead times and the commitment of
significant financial, engineering and human resources. We may not successfully
develop the required manufacturing technologies and processes.
WE MAY NOT BE ABLE TO DEVELOP THE NECESSARY TECHNOLOGY TO INTRODUCE AND
MARKET OUR PRODUCTS IN A TIMELY FASHION, IF AT ALL. Our product and technology
development efforts are subject to unanticipated and significant delays,
expenses and technical or other problems, as well as the possible lack of
funding to complete this development. Our success will depend upon our products
and technologies meeting acceptable cost and performance criteria, and upon
their timely introduction into the marketplace. None of our proposed products
and technologies may ever be successfully developed, and even if developed, they
may not actually perform as designed. Failure to develop or significant delays
in the development of our products and technology would have a material adverse
effect on our business, financial condition and ability to achieve
profitability.
OUR SUCCESS DEPENDS HEAVILY ON OUR RELATIONSHIP WITH ECO FUEL CELLS,
LLC. We believe that most of our revenues over the next two to three years will
be derived from sales of our residential cogeneration
5
<PAGE>
unit, or RCU, to ECO. ECO's financial ability to perform under the agreement and
to purchase the units from us is entirely dependent on its ability to resell the
units to its customer base. ECO's failure to successfully market our RCU, or a
decision by ECO to alter its commitment to our fuel cell technology in favor of
other energy product solutions, would substantially harm our business, financial
condition and ability to achieve profitability.
Under the terms of our agreement with ECO, ECO has agreed to purchase 12,300
units over several years for an aggregate purchase price of approximately
$81 million. We began to ship our initial test and evaluation units to ECO in
March 2000 and our goal is to commence shipping our initial commercial units in
the second half of calendar year 2001. ECO, however, has the right to review and
revise the delivery schedule for these units to meet the demand of its customer
base and may delay delivery until the later of December 30, 2003 or thirty
months from when the first commercial unit is shipped. We also have agreed to
sell our units to ECO at most preferred customer prices. To the extent that our
sales to third parties requires us to lower the price of the RCUs that ECO has
committed to purchase, the aggregate purchase price under our ECO agreement
would be correspondingly reduced. In addition, ECO will be permitted to purchase
fuel cell products that compete with our RCU and sell these competitive products
to its customer base if our RCU does not remain competitive in terms of quality,
price and performance.
We have not yet fully developed and produced the RCU product we have agreed
to sell to ECO. Economic and technical difficulties may prevent us from timely
completing development of the RCUs and delivering them on schedule to ECO. Any
material change in our relationship with ECO would substantially harm our
business, financial condition and ability to achieve profitability.
In addition, we have agreed to amend our by-laws to provide that ECO is
entitled to designate one member of our board of directors. The presence of a
representative of our major customer on our board could influence certain
decisions and present a conflict of interest.
MARKET ACCEPTANCE OF OUR FUEL CELL PRODUCTS MAY TAKE LONGER TO DEVELOP THAN
WE ANTICIPATE OR MAY NEVER DEVELOP. Our stationary PEM fuel cell products
represent a new technology and our success will depend on this technology
achieving market acceptance. Because we design our products to capitalize on
markets that presently utilize or are serviced by products from traditional and
well-established power generation sources, such as engine-generators, we may
face significant resistance from end-users to adopt a new and alternative power
source technology.
Fuel cell products for portable and mobile applications represent an
emerging market and we do not know whether our targeted distributors, resellers
or end-users will purchase our products. The development of a mass market for
our portable and mobile products may be impacted by many factors, some of which
are out of our control, including:
- cost competitiveness of portable and mobile products;
- consumer reluctance to try our products;
- consumer perception of our systems' safety; and
- emergence of newer, more competitive technologies and products.
If a mass market develops more slowly than we anticipate or fails to
develop, we may not be able to recover the expenses we incurred to develop these
products.
FAILURE OF OUR FIELD TESTS COULD NEGATIVELY IMPACT DEMAND FOR OUR
PRODUCTS. We are currently field testing a number of our products and we plan
to conduct additional field tests in the future. Field tests for the RCU to be
sold to ECO have only recently begun. We may encounter problems and delays
during these field tests for a number of reasons, including the failure of our
technology or the technology of third parties, as well as our failure to
maintain and service our prototypes properly. Many
6
<PAGE>
of these potential problems and delays are beyond our control. Any problem or
perceived problem with our field tests could materially harm our reputation and
impair market acceptance of, and demand for, our products which would
substantially harm our business, financial condition and ability to achieve
profitability.
WE MAY NOT BE ABLE TO SATISFY OUR CONTRACTUAL OBLIGATIONS TO OUR CUSTOMERS
IF WE ARE UNABLE TO RELOCATE TO NEW MANUFACTURING FACILITIES. We currently have
only limited production facilities that are not capable of mass producing fuel
cell systems. We will not be able to meet our obligations to ECO unless we
promptly identify, acquire and bring on-line new large-scale manufacturing
facilities. We have not yet identified suitable facilities and may not be able
to do so. If we encounter delays in identifying suitable manufacturing plant
facilities for purchase or lease, in obtaining the necessary equipment or in
hiring and training personnel to commence large-scale manufacturing, we will not
be able to fill customer orders, including prospective orders from ECO, or
profitably manufacture our various fuel cell systems.
WE MAY NOT BE ABLE TO SUCCESSFULLY MANAGE THE EXPANSION OF OUR
OPERATIONS. The location, equipping and establishing of manufacturing
operations at new facilities will place significant demands on our managerial,
technical, financial and other resources. We will be required to make
significant investments in our engineering and logistics systems, financial and
management information systems and to retain, motivate and effectively manage
our employees. There can be no assurance that our management skills and systems
currently in place will enable us to implement our strategy or enable us to
attract and retain skilled management and production personnel. Our failure to
manage our growth effectively or to implement our strategy would have a material
adverse effect on our business, financial condition and ability to achieve
profitability.
BECAUSE WE DEPEND ON THIRD-PARTY SUPPLIERS, WE MAY EXPERIENCE DELAYS IN
RECEIVING KEY MATERIALS AND COMPONENTS NECESSARY TO PRODUCE OUR FUEL CELL
SYSTEMS. We depend on third parties for the manufacture and assembly of
materials and components used to make our products. The failure or delay by our
suppliers to meet our anticipated material and component needs would adversely
affect our ability to develop and market our products. Some of these materials
and components, including our Nafthion-Registered Trademark- polymer electrolyte
membranes and bipolar plates, are purchased from a single or limited number of
supply sources. If any of these suppliers are unable or unwilling to provide us
with materials and components on commercially reasonable terms, or at all,
delays in identifying and contracting for alternative sources of supply could
have a material adverse effect on our business, financial condition and ability
to achieve profitability.
OUR FUEL CELL SYSTEMS MAY NOT BE COMPATIBLE WITH THE PRODUCTS OF THIRD-PARTY
MANUFACTURERS OR OUR POTENTIAL CUSTOMERS. Our success will depend upon our
ability to make our products compatible with the products of third-party
manufacturers. In addition, our mobile and portable products will be successful
only if our potential customers redesign or modify their existing products to
fully incorporate our products and technologies. Our failure to make our
products and technologies compatible with the products of third-party
manufacturers or the failure of potential customers to redesign or make
necessary modifications to their existing products to accommodate our products
would significantly impair or preclude our ability to sell our products.
THE FUELS ON WHICH OUR FUEL CELL PRODUCTS RELY MAY NOT BE READILY AVAILABLE
ON A COST-EFFECTIVE BASIS. Our fuel cell products require oxygen and hydrogen to
operate. While ambient air supplies the necessary oxygen, our fuel cells derive
hydrogen from fuels such as natural gas, propane, methanol and other petroleum
products. Even if these fuels are available to us, if their prices are such that
electricity produced by our systems would cost more than electricity provided
through the grid, potential users would have less of an economic incentive to
purchase our units.
WE MAY BE UNABLE TO COMPETE SUCCESSFULLY IN A HIGHLY COMPETITIVE
MARKET. The development and marketing of fuel cells and fuel cell systems is
extremely competitive. In many cases, we compete
7
<PAGE>
directly with alternative energy and entrenched power-generation and power
storage technologies. In addition, a number of firms throughout the world have
established PEM fuel cell development programs. Competitors range from
development stage companies to major domestic and international companies, many
of which have
- substantially greater financial, technical, marketing and human resource
capabilities;
- established relationships with original equipment manufacturers;
- name-brand recognition; and
- established positions in the markets that we have targeted for
penetration.
These or other companies may succeed in developing and bringing to market
products or technologies that are more cost-effective than those being developed
by us or that would render our products and technology obsolete or
non-competitive in the marketplace.
WE MAY BE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS AND WE MAY BE
LIABLE FOR INFRINGING THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS. Our ability
to compete effectively will depend, in part, on our ability to maintain the
exclusive ownership of our technology and manufacturing processes through a
combination of patent and trade secret protection, non-disclosure agreements and
other arrangements. Patents may not be issued under pending applications and any
issued patents that we hold may not provide adequate protection for our products
or processes. Moreover, patent applications filed in foreign countries are
subject to laws, rules and procedures that differ from those of the United
States and any resulting patents may be difficult to enforce.
There can be no assurance that our competitors will not either independently
develop proprietary information that is the same or similar to ours or obtain
access to our proprietary information. In addition, there can be no assurance
that we would prevail if challenges to our intellectual property rights are
asserted by third parties against us. We could incur substantial costs defending
patent infringement suits brought by others and prosecuting patent infringement
suits against third party infringers. Moreover, some foreign countries provide
significantly less patent protection than the United States. Competitors'
products may infringe upon our patents and the cost of protecting our rights may
be substantial, if not cost prohibitive, thereby undermining our ability to
protect our products effectively.
We rely on confidentiality agreements with our employees and third parties
to protect our unpatented proprietary information, know-how and trade secrets
but we have no effective means to enforce compliance with the terms of these
agreements.
GOVERNMENT REGULATION COULD IMPOSE BURDENSOME REQUIREMENTS AND RESTRICTIONS
THAT COULD IMPAIR DEMAND FOR OUR STATIONARY FUEL CELL PRODUCTS. Stationary
power systems, such as our RCUs, cannot be operated without permits in some of
the markets in which we will be marketing and selling our products. The
inability of our potential customers to obtain a permit, or the inconvenience
often associated with the permit process, could harm demand for our stationary
power products. Furthermore, any new government regulation of our stationary
power systems at the federal, state or local level could increase our costs.
OUR PRODUCTS USE FLAMMABLE FUELS WHICH ARE INHERENTLY DANGEROUS
SUBSTANCES. Our fuel cell products use hydrogen which is typically generated
from gaseous and liquid fuels, such as propane, natural gas or methanol in a
process known as reforming. While our fuel cell products do not use these fuels
in a combustion process, natural gas and propane are flammable fuels that could
leak into a residence or commercial location and combust if ignited by another
source. Since our products have not yet gained widespread market acceptance, any
accidents involving our systems or other fuel cell-based products
8
<PAGE>
could materially impede demand for our products. In addition, we may be held
responsible for damages beyond the scope of our insurance coverage.
WE COULD BE LIABLE FOR ENVIRONMENTAL DAMAGES RESULTING FROM OUR RESEARCH,
DEVELOPMENT AND MANUFACTURING OPERATIONS. Our business exposes us to the risk
of harmful substances escaping into the environment, resulting in personal
injury or loss of life, damage to or destruction of property, and natural
resource damage. Depending on the nature of the claim, our current insurance
policies may not adequately reimburse us for costs incurred in settling
environmental damage claims, and in some instances, we may not be reimbursed at
all. Our business is subject to numerous federal, state and local laws,
regulations and policies that govern environmental protection. These laws and
regulations have changed frequently in the past and it is reasonable to expect
additional changes in the future. Our operations may not comply with future laws
and regulations and we may be required to make significant unanticipated capital
and operating expenditures. If we fail to comply with applicable environmental
laws and regulations, governmental authorities may seek to impose fines and
penalties on us or to revoke or deny the issuance or renewal of operating
permits and private parties may seek damages from us. Under those circumstances,
we might be required to curtail or cease operations, conduct site remediation or
other corrective action, or pay substantial damage claims.
UTILITY COMPANIES COULD PLACE BARRIERS ON OUR ENTRY INTO THE MARKET FOR
RESIDENTIAL POWER WHICH WOULD REDUCE DEMAND FOR OUR PRODUCTS. Utility companies
often charge fees to industrial customers for using less electricity, using the
grid for backup purposes only or disconnecting from the grid altogether. Though
these fees are not currently charged to residential users, it is possible that
utility companies could charge similar fees to residential customers in the
future. These fees could increase the cost to residential customers of using our
stationary power products, making them less cost-effective and less attractive
to potential customers.
OUR SUCCESS DEPENDS ON ATTRACTING AND RETAINING KEY PERSONNEL. The
successful development, marketing and manufacturing of our products will depend
upon the skills and efforts of a small group of management and technical
personnel. The loss of any of our key personnel could adversely impact our
ability to execute our business plan. Furthermore, recruiting and retaining
qualified executive, technical, marketing, manufacturing and support personnel
in the future will be critical to our success and there can be no assurance that
we will be able to do so. We do not maintain "key-man" life insurance policies
on any of our key personnel.
OUR PRINCIPAL STOCKHOLDERS, EXECUTIVE OFFICERS AND DIRECTORS HAVE
SUBSTANTIAL CONTROL OVER OUR AFFAIRS AND YOU WILL NOT BE ABLE TO INFLUENCE THE
OUTCOME OF ANY IMPORTANT TRANSACTIONS INVOLVING H POWER. After consummation of
this offering, executive officers and directors and stockholders who
beneficially own more than 5% of our common stock will have the power to, in the
aggregate, direct the vote of approximately 27.8% of our voting securities.
Therefore, these persons may have the power to influence our business policies
and affairs and determine the outcome of any matter submitted to a vote of our
stockholders, including mergers, sales of substantially all of our assets and
changes in control.
WE MAY BECOME SUBJECT TO RISKS INHERENT IN INTERNATIONAL OPERATIONS
INCLUDING CURRENCY EXCHANGE RATE FLUCTUATIONS AND TARIFF REGULATIONS. If we
sell or license our products or technologies outside the United States, we will
be subject to the risks associated with fluctuations in currency exchange rates.
We do not intend to enter into any hedging or other similar agreements or
arrangements to protect us against any of these currency risks. We also may be
subject to tariff regulations and requirements for export licenses, particularly
with respect to the export of certain technologies, unexpected changes in
regulatory requirements, longer accounts receivable requirements and
collections, difficulties in managing international operations, potentially
adverse tax consequences, restrictions on repatriation of earnings and the
burdens of complying with a wide variety of foreign laws.
9
<PAGE>
WE WILL NEED SIGNIFICANT ADDITIONAL CAPITAL, WHICH WE MAY BE UNABLE TO
OBTAIN. Our capital requirements in connection with our development activities
and transition to commercial operations have been and will continue to be
significant. Historically, we have depended primarily upon sales of our equity
securities to private investors to fund our substantial operating expenses. We
will require substantial additional funds to continue the research, development
and testing of our technologies and products, to obtain patent protection
relating to our technologies when appropriate, and to manufacture and market our
products.
There is no assurance that any additional financing will be available on
commercially attractive terms, in a timely fashion, in sufficient amounts, or at
all.
If we raise additional funds through the issuance of equity or convertible
debt securities, the percentage ownership held by existing shareholders will be
reduced and those shareholders may experience significant dilution. In addition,
to attract investment capital, we may be required to issue securities that
contain rights, preferences or privileges that are senior to those of our common
stock.
OUR QUARTERLY OPERATING RESULTS ARE LIKELY TO BE VOLATILE IN THE
FUTURE. Our quarterly operating results are likely to vary significantly in the
future. Fluctuations in our quarterly financial performance may result from, for
example:
- unevenness in demand and orders for our products;
- significant short-term capital expenses as we develop our manufacturing
facilities;
- a shortage of the raw materials used in the production of our fuel cell
systems; and
- difficulties with our manufacturing operations.
Because of these anticipated fluctuations, our sales and operating results in
any fiscal quarter are likely to be inconsistent, may not be indicative of our
future performance and may be difficult for investors to properly evaluate.
OUR STOCK PRICE MAY BE VOLATILE. Prior to this offering there has been no
public market for our common stock. We cannot predict the extent to which, or
if, investor interest will lead to the development of an active and liquid
trading market. The initial public offering price for the shares of our common
stock will be determined by negotiations between us and the representatives of
the several underwriters and may not be indicative of the market price of the
common stock that will prevail in the trading market. The market price of the
common stock may decline below the initial public offering price and this
decline may be significant.
The value of your investment could decline due to the impact of any of the
following factors upon the market price of our common stock:
- variations in our actual and anticipated operating results;
- changes in our earnings estimates by research analysts;
- our failure to meet analysts' performance expectations; and
- lack of liquidity.
In addition, stock markets, particularly the Nasdaq National Market, have
experienced extreme price and volume fluctuations, and the market prices of
securities of technology companies have been highly volatile. These fluctuations
are often unrelated to operating performance and may adversely affect the market
price of our common stock. As a result, investors may not be able to resell
their shares at or above the initial public offering price.
10
<PAGE>
THERE MAY BE AN ADVERSE EFFECT ON THE MARKET PRICE OF OUR COMMON STOCK AS A
RESULT OF A SIGNIFICANT NUMBER OF SHARES BEING AVAILABLE FOR FUTURE SALE BY OUR
EXISTING STOCKHOLDERS. Future sales of a substantial amount of our common stock
in the public market, or the perception that these sales may occur, could
adversely affect the market price of our common stock from time to time. These
future sales or perceptions could also impair our ability to raise additional
capital through the sale of our equity securities after completion of the
offering.
Our officers, directors and substantially all of our principal stockholders
will be permitted to dispose of an aggregate of [ ] shares of common stock
commencing on the 181(st) day following the date of this prospectus. In
addition, the underwriters have agreed to allow certain principal stockholders
and their affiliates to sell up to an aggregate of [ ] shares commencing on
the 91(st) day following the date of this prospectus. A substantial number of
our common shares will become available for sale in the public market
simultaneously, including through private sales transactions, which could cause
the market price of our shares to decline.
After this offering, the holders of 48,568,664 shares of common stock will
have registration rights to have their shares included for sale in subsequent
registered public offerings of our common stock. Furthermore, the holders of
substantially all of the above shares of common stock will be able to require us
to conduct a registered public offering of the following number of shares at the
times indicated below:
- 32,568,664 shares of common stock at any time following the date that is
one year after the closing of this offering;
- 8,000,000 shares of common stock at any time after August 27, 2001; and
- 6,400,000 shares of common stock at any time after November 29, 2001.
The exercise of these registration rights would allow these stockholders to sell
these shares in the market simultaneously with any further public offerings by
us of our equity securities.
INVESTORS IN THIS OFFERING WILL EXPERIENCE AN IMMEDIATE AND SUBSTANTIAL
DILUTION IN THE BOOK VALUE OF THEIR INVESTMENT. The initial public offering
price will be substantially higher than the pro forma as adjusted tangible book
value per share of our outstanding common stock. If you purchase our common
stock in this offering, the shares you buy will experience an immediate and
substantial dilution in tangible book value per share. The shares of common
stock owned by our existing stockholders will receive a material increase in the
tangible book value per share. The dilution to investors in this offering will
be approximately $ [ ] per share if the underwriter's overallotment
is not exercised. We also have a significant number of outstanding options to
purchase our common stock with exercise prices significantly below the initial
public offering price of the common stock. To the extent these options are
exercised, there will be substantial further dilution to you as new investors in
our common stock.
WE DO NOT INTEND TO PAY ANY DIVIDENDS. We have not paid any dividends on
our common stock and we do not intend to declare and pay any dividends on our
common stock for the foreseeable future. Earnings, if any, are expected to be
retained by us to finance and expand our business.
WE MAY EXPERIENCE UNFORESEEN YEAR 2000 COMPLIANCE PROBLEMS. We may still
experience Year 2000 problems. Our research and product development and
manufacturing activities are dependent on computers. Any failure of our testing
or manufacturing equipment due to Year 2000 disruptions could delay our
commercialization efforts and have a material adverse effect on our business and
results of operations. In addition, such delays could occur due to the impact of
Year 2000 problems at major vendors or development partners.
11
<PAGE>
FORWARD LOOKING STATEMENTS
This prospectus, including the sections entitled "Prospectus Summary," "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business," contains forward-looking information. In
some cases, you can identify forward-looking statements by phrases such as "in
our view," "there can be no assurance," "although no assurance can be given" or
"there is no way to anticipate with certainty" as well as by terminology such as
"may," "will," "should," "expects," "intends," "plans," "objectives," "goals,"
"aims," "projects," "forecasts," "possible," "seeks," "could," "might,"
"likely," "enable," "anticipates," "believes," "estimates," "predicts,"
"potential" or "continue," or the negative of these terms or other comparable
terminology. These statements generally constitute statements of expectation,
intent and anticipation and may be inaccurate. Actual events or results may
differ materially. In evaluating these statements, you should specifically
consider various factors, including the risks outlined under "Risk Factors."
These factors may cause our actual results to differ materially from any
forward-looking statement. Although we believe that the expectations reflected
in the forward-looking statements are reasonable, we cannot guarantee future
results, levels of activity, performance or achievements.
USE OF PROCEEDS
We estimate that the net proceeds from our sale of the [ ] shares of
our common stock in this offering, at an assumed initial public offering price
of $[ ] per share, and after deducting underwriting discounts, commissions
and other estimated offering expenses, will be approximately $[ ]. If the
underwriters' over-allotment option is exercised in full, we estimate our net
proceeds will be approximately $[ ].
We expect to use the net proceeds from this offering for general corporate
purposes, including to locate and acquire a new manufacturing facility, obtain
equipment, fund our continued research and product development, expand our
marketing and sales efforts, and for working capital.
We may also use a portion of the net proceeds to acquire or to invest in
complementary businesses, technologies, products or services, but we have no
current commitments to do so. Our management will retain broad discretion in the
allocation of the net proceeds of the offering.
Pending such uses, we intend to invest the net proceeds in short-term,
investment grade securities, at prevailing market rates of interest.
DIVIDEND POLICY
We have never declared nor paid any cash dividends to the holders of our
common stock. We intend to retain any future earnings, if any, for the
development and operation of our business. Accordingly, we do not anticipate
paying cash dividends on our common stock in the foreseeable future.
12
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of November 30, 1999:
- on an actual basis;
- on a pro forma basis giving effect to the conversion of all of our
outstanding shares of mandatorily redeemable convertible preferred stock
into 9,600,000 shares of our common stock and the issuance of 2,666,664
shares of our common stock to outside investors upon conversion of their
50% equity interest in H Power Enterprises of Canada; and
- on a pro forma as adjusted basis to reflect the adjustments described
above as well as our sale of [ ] shares of common stock in this
offering at an assumed initial public offering price of $[ ] per
share, after deducting the underwriting discount, commissions and
estimated offering expenses and the application of the net proceeds of
that sale.
<TABLE>
<CAPTION>
AS OF NOVEMBER 30, 1999
-------------------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- --------------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents................................... $ 21,366 $ 21,366 $ [ ]
======== ======== ==========================
Long-term debt, including current portion................... 192 192 192
Minority interest........................................... 5,000 -- --
Series A, Series B, and Series C mandatorily redeemable
convertible preferred stock--$.001 par value; 10,000,000
shares authorized; 1,200,000 shares issued and
outstanding, actual; 0 shares, pro forma and pro forma as
adjusted.................................................. 15,327 -- --
Stockholder's equity:
Common Stock--$.001 par value; 150,000,000 shares
authorized; 60,944,312 shares issued and outstanding,
actual; 73,210,976 shares, pro forma; [ ] shares,
pro forma as adjusted................................... 61 73 [ ]
Additional paid-in capital................................ 32,929 53,244 [ ]
Accumulated deficit....................................... (31,205) (31,205) (31,205)
Accumulated other comprehensive loss...................... (349) (349) (349)
-------- -------- --------------------------
Total stockholders' equity................................ 1,436 21,763 [ ]
-------- -------- --------------------------
Total capitalization........................................ $ 21,955 $ 21,955 $ [ ]
======== ======== ==========================
</TABLE>
The number of shares of common stock to be outstanding after this offering
is based on the number of shares outstanding as of November 30, 1999. It does
not include:
- 4,810,000 shares of common stock issuable upon the exercise of outstanding
stock options at a weighted average exercise price of $1.533 per share;
- 800,000 shares of common stock issuable upon the exercise of outstanding
warrants at an exercise price of $3.125 per share;
- approximately 375,000 shares of common stock issuable to DQE Enterprises
immediately prior to this offering in payment of dividends to which they
are entitled; and
- [ ] shares of common stock issuable upon the exercise of the
underwriters' over-allotment option.
13
<PAGE>
DILUTION
Our pro forma net tangible book value as of November 30, 1999 was
approximately $21,341,000 or $0.29 per share of common stock after giving effect
to the conversion of all of our outstanding shares of mandatorily redeemable
convertible preferred stock into common stock and the issuance of 2,666,664
shares of our common stock to outside investors upon conversion of their 50%
equity interest in H Power Enterprises of Canada that we do not currently own,
all of which will be effected immediately prior to the consummation of this
offering. Pro forma net tangible book value per share is equal to our pro forma
tangible assets, less our total liabilities, divided by the pro forma number of
shares of common stock outstanding as of November 30, 1999. After giving effect
to the sale of [ ] shares of common stock at the assumed initial public
offering price of $[ ] per share, and after deducting the underwriting
discounts, commissions and estimated offering expenses, and the application of
the net proceeds of that sale, our pro forma as adjusted net tangible book value
at November 30, 1999 would have been approximately $[ ] million or
$[ ] per share of common stock. This amount represents an immediate
increase in the pro forma net tangible book value of $[ ] per share to
existing stockholders and an immediate dilution in the pro forma as adjusted net
tangible book value of $[ ] per share to the investors who purchase our
common stock in this offering. The following table illustrates this per share
dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $ []
Pro forma net tangible book value per share at November
30, 1999................................................ $ 0.29
Increase per share attributable to new investors.......... []
Pro forma net tangible book value per share after the
offering.................................................. []
---------------
Dilution per share to new investors......................... $ []
===============
</TABLE>
The following table summarizes, on a pro forma basis as of November 30,
1999, the total number of shares of common stock purchased from us, the total
amount paid to us, and the average price per share paid by our existing
stockholders and by new investors purchasing shares of common stock from us in
this offering, at an assumed initial public offering price of $[ ], before
deducting underwriting discounts, commissions and the estimated offering
expenses payable by us:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
-------------------------------------------- --------------------
NUMBER PERCENT AMOUNT
------------------- ---------------------- --------------------
<S> <C> <C> <C>
Existing stockholders.................... 73,210,976 [ %] $ 53,245,000
New investors............................ [] [ %] $ []
------------------- ---------------------- --------------------
Total.................................. [] 100% $ []
=================== ====================== ====================
<CAPTION>
TOTAL CONSIDERATION AVERAGE
---------------------- PRICE PER
PERCENT SHARE
---------------------- --------------
<S> <C> <C>
Existing stockholders.................... [ %] $ 0.73
New investors............................ [ %] $ []
----------------------
Total.................................. 100%
======================
</TABLE>
This tables excludes:
- 4,810,000 shares of common stock issuable upon the exercise of outstanding
stock options at a weighted average exercise price of $1.533 per share;
- 800,000 shares of common stock issuable upon the exercise of outstanding
warrants at an exercise price of $3.125 per share;
- approximately 375,000 shares of common stock issuable to DQE Enterprises
immediately prior to this offering in payment of dividends to which they
are entitled; and
- [ ] shares of common stock issuable upon the exercise of the
underwriters' over-allotment option.
To the extent these shares are issued, there will be further substantial
dilution to new investors.
14
<PAGE>
SELECTED FINANCIAL DATA
The selected financial data set forth below as of and for the years ended
May 31, 1995, 1996, 1997, 1998 and 1999 have been derived from financial
statements, including those set forth elsewhere in this prospectus, audited by
PricewaterhouseCoopers LLP, independent accountants. The selected financial data
as of November 30, 1999 and for the six months ended November 30, 1998 and 1999
have been derived from our unaudited financial statements which are included
elsewhere in this prospectus and which include, in our opinion, all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of our financial position and results of operations during those
periods. Operating results for the six months ended November 30, 1999 are not
necessarily indicative of the results that may be expected for the fiscal year
ending May 31, 2000. The following should be read in conjunction with the
consolidated financial statements and notes thereto and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" appearing
elsewhere in this prospectus:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEAR ENDED MAY 31, NOVEMBER 30,
---------------------------------------------------- -------------------
1995 1996 1997 1998 1999 1998 1999
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Products........................................ $ -- $ -- $ 54 $ 99 $ 501 $ 170 $ 329
Contracts....................................... 3,961 1,935 367 890 517 262 1,580
------- ------- ------- ------- ------- ------- -------
3,961 1,935 421 989 1,018 432 1,909
------- ------- ------- ------- ------- ------- -------
OPERATING EXPENSES:
Cost of revenues--products...................... 123 355 614 153 323
Cost of revenues--contracts..................... 3,321 1,036 239 1,031 362 162 1,604
Research and development........................ 966 1,622 2,039 2,454 2,849 1,431 1,645
Selling, general and administrative............. 1,920 2,134 2,562 3,987 3,606 1,419 2,165
------- ------- ------- ------- ------- ------- -------
Total operating expenses........................ 6,207 4,792 4,963 7,827 7,431 3,165 5,737
------- ------- ------- ------- ------- ------- -------
Loss from operations............................ (2,246) (2,857) (4,542) (6,838) (6,413) (2,733) (3,828)
Interest and other income, net.................. 3 2 145 724 182 296 184
Interest expense................................ (190) (190) (174) (41) (22) (1) (77)
------- ------- ------- ------- ------- ------- -------
Net loss........................................ $(2,433) $(3,045) $(4,571) $(6,155) $(6,253) $(2,438) $(3,721)
======= ======= ======= ======= ======= ======= =======
Net loss attributable to common shareholders.... $(2,433) $(3,045) $(4,746) $(6,365) $(6,463) $(2,543) $(3,826)
======= ======= ======= ======= ======= ======= =======
Loss per share, basic and diluted............... $ (0.05) $ (0.07) $ (0.10) $ (0.14) $ (0.14) $ (0.05) $ (0.08)
======= ======= ======= ======= ======= ======= =======
Weighted average shares outstanding, basic and
diluted....................................... 44,304 46,144 46,302 46,418 46,424 46,424 50,669
</TABLE>
<TABLE>
<CAPTION>
AS OF
AS OF MAY 31, NOVEMBER 30,
---------------------------------------------------- ------------
1995 1996 1997 1998 1999 1999
-------- -------- -------- -------- -------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........................ $ 1,112 $ 1,002 $ 13,146 $ 4,961 $ 242 $ 21,366
Working capital (deficit)........................ (746) (2,669) 11,190 4,213 (1,706) 19,724
Total assets..................................... 3,703 2,186 14,272 7,632 3,472 26,754
Long-term debt................................... 563 -- -- 4 69 68
Minority Interest................................ -- -- 5,000 5,000 5,000 5,000
Mandatorily redeemable convertible preferred
stock.......................................... -- 10,000 15,327 15,327 15,327 15,327
Total stockholders' equity (deficit)............. (1,326) (2,930) (15,076) (14,618) (20,214) 1,436
</TABLE>
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION SHOULD BE READ TOGETHER WITH OUR CONSOLIDATED
FINANCIAL STATEMENTS AND THE NOTES TO THOSE STATEMENTS AND OTHER FINANCIAL
INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS. OUR FISCAL YEAR ENDS
MAY 31.
OVERVIEW
We design, develop and manufacture proton-exchange membrane, or PEM, fuel
cells. Fuel cells are devices that produce electrical energy without combustion
and its associated environmental contaminants. The electric power generation
systems we make and market are designed to complement or replace conventional
power sources such as batteries and electric power generators. The use of
alternative electric power systems is desirable in situations where conventional
power sources cannot adequately, economically or technologically supply the
power required.
We were incorporated in June 1989 under the laws of the State of Delaware. A
substantial portion of our business activity, from our inception through our
fiscal year ended May 31, 1995, was based on a U.S. Department of Energy
program. Under that program, as prime contractor, we developed, fabricated and
delivered to the DOE three phosphoric acid fuel cell/battery power sources for
installation in buses. These buses were among the first to operate under a
hybrid fuel cell system. During this early period, we also continued developing
our PEM fuel cell technologies, principally for portable applications.
In subsequent years, while continuing our commitment to government programs,
we accelerated the development of our core technologies and began applying our
technologies to develop and fabricate different portable PEM fuel cell products.
Sales of these products have been modest and, until June 1998, were comprised
mainly of test and prototype units for evaluation by prospective users. In
June 1998, we made what we believe to be the world's first commercial sale of a
PEM fuel cell product used in the regular course of daily operations. This sale
to the New Jersey Department of Transportation of an initial order of 65 backup
power units for its variable message highway signs was competitively-bid,
non-government subsidized and came with a two-year product and maintenance
warranty. Delivery of most of these units has been made and we have made no
other commercial sales.
After an infusion of capital in 1996 and the establishment of our Canadian
subsidiary, H Power Enterprises of Canada, Inc., or HPEC, in 1997, we began to
use our technologies to develop higher power, stationary PEM fuel cell products
for use as primary and supplemental on-site electric power systems for
residential use. In March 2000, we began delivering initial test units of our
residential electric primary power system to ECO Fuel Cells, LLC, a subsidiary
of Energy Co-Opportunity, Inc., an association of approximately 240 U.S. rural
electric cooperatives.
We have a limited history of generating revenues and many of our products
have only been recently introduced or are in a formative stage of development.
We have incurred accumulated losses in excess of $31.2 million since our
inception in 1989 and we anticipate incurring significant losses in the future.
Most of our operating expenses will be fixed in the near term. Therefore, if we
are unable to generate significant revenues, our net losses in any given quarter
could be greater than expected. We intend to significantly increase our capital
expenditures and operating expenses to rapidly expand our manufacturing
capabilities and for general corporate purposes, including product development
activities, sales and marketing, administration and data processing systems. You
have limited historical financial data and operating results with which to
evaluate our business and our prospects. As a result, you should consider our
prospects in light of the early stage of our business in a new and rapidly
evolving market.
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REVENUES. We derive revenue from the sale of our products and from
contracts. We recognize revenue from sales of our products when the product has
been shipped and we have met our obligations under the sales contract. Our
contract work is performed both on a cost-sharing and cost-plus-fixed-fee basis.
Revenue is recognized on cost-reimbursable contracts as costs are incurred, and
under fixed-price contracts on the cost-to-cost method of the
percentage-completion basis. Revenue recognized on contracts in excess of
related billings is reflected as unbilled receivables. When a loss results from
the performance of a fixed-price contract, the entire amount of the estimated
ultimate loss is charged against income. Cost reimbursement government contracts
typically provide for the partial recovery of direct and indirect costs from
specified government agencies who require us to absorb a significant amount of
the contract costs incurred. These contracts were reimbursable at 50% to 100% of
costs upon achievement of certain milestones. All of the contracts have maximum
cost reimbursement limits. Contract costs, including indirect expenses, are
subject to audit and adjustment by the Defense Contract Audit Agency.
We believe our agreement to sell 12,300 units of our stationary fuel cell
systems to ECO could result in more than $81 million in revenue beginning in
fiscal 2002. We began to ship our initial test and evaluation units to ECO in
March 2000 and our goal is to commence shipping our initial commercial units in
the second half of calendar year 2001. We expect to continue to pursue new
contracts with government agencies and to further expand our product development
efforts with respect to stationary and portable fuel cell systems. In addition,
we expect to continue to find new customers and applications for our commercial
fuel cells.
COST OF REVENUES. Cost of revenue includes compensation related to
engineering and manufacturing staff, inventory and supplies used in the
manufacturing process and fees paid to subcontractors and consultants directly
related to the manufacture of our products.
We expect our cost of product revenue to continue to increase as a
percentage of product revenue over the next year, when we expect to deliver
initial prototype units under the ECO contract. In addition, we intend to
relocate and significantly expand our manufacturing facilities and capabilities.
Initially, we expect the costs of producing our first units to be higher than
their sales price until we achieve significantly higher production levels. We
expect that the cost of revenue as a percentage of product revenue will decrease
as we significantly increase our commercial sales. Cost of revenues for
contracts will vary as the amount of costs are predicated on whether or not the
contract is a cost sharing or cost plus arrangement.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development costs include
materials, salaries and wages, subcontracting and other costs related to further
developing our commercial products. We believe that research and development
expenditures are essential to establishing and maintaining our competitive
position in the PEM fuel cell markets and anticipate that these expenditures
will increase significantly in absolute dollars for the foreseeable future.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses include compensation related to general corporate functions, including
management, finance, sales and information systems and related expenses. These
expenses are expected to continue to increase significantly commensurate with
increased staffing and infrastructure costs over the next few years.
Furthermore, payments totaling $2.1 million to terminate our agreements with
Norman Rothstein, Frederick Entman and NBG Technologies, Inc. will be included
in selling, general and administrative expense for fiscal 2000.
On November 30, 1999 we had 96 employees as compared to 73 on November 30,
1998.
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<PAGE>
RESULTS OF OPERATIONS
SIX MONTHS ENDED NOVEMBER 30, 1999 COMPARED TO SIX MONTHS ENDED NOVEMBER 30,
1998
REVENUES. Revenues were $1,909,000 for the six months ended November 30,
1999 compared to $432,000 for the same period in 1998, an increase of
$1,477,000. Our revenues for the six months ended November 30, 1999 were derived
approximately 83% from contract revenues and 17% from products. The principal
product sales for the six months ended November 30, 1999 were backup power units
sold to the New Jersey Department of Transportation.
COST OF REVENUE. Cost of revenue was $1,927,000 for the six months ended
November 30, 1999 compared to $315,000 for the same period in 1998, an increase
of $1,612,000. The cost of revenue for the six months ended November 30, 1999
was derived approximately 83% from contracts and 17% from products. The increase
in the cost of revenue for contracts and products is proportionate to the
increase in revenue.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development costs were
$1,645,000 for the six months ended November 30, 1999 compared to $1,431,000 for
the same period in 1998, an increase of $214,000. The increase in research and
development costs is primarily related to the continuing development of our 1 to
10 kilowatt stationary power fuel cell systems in conjunction with the new
product supply contract that we entered into with ECO during the six months
ended November 30, 1999 and development of our portable and mobile products.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
costs were $2,165,000 for the six months ended November 30, 1999 compared to
$1,419,000 for the same period in 1998, an increase of $746,000. This was
primarily due to a significant increase in the number of employees, increased
legal and professional expenses, and increased selling expenses attributable to
the increased activity required to support the ECO contract and other efforts to
support commercialization of our products.
INTEREST AND OTHER INCOME, NET. Interest and other income was $184,000 for
the six months ended November 30, 1999 compared to $296,000 for the same period
in 1998, a decrease of $112,000. The decrease related primarily to minimal
foreign exchange effects on income during the six months ended November 30, 1999
compared to a gain of approximately $207,000 for the six months ended
November 30, 1998. These foreign exchange effects resulted from transactions
associated with the HPEC operations in Canada. This was partially offset by an
increase in interest income for the six months ended November 30, 1999 resulting
from the investment of the net proceeds of equity funding from ECO and
Hydro-Quebec CapiTech Inc.
INTEREST EXPENSE. Interest expense was $77,000 for the six months ended
November 30, 1999 compared to $1,000 for the same period in 1998, an increase of
$76,000. The increase is related to the additional borrowings during the six
months ended November 30, 1999. Borrowings are expected to decrease over the
next year due to the receipt of cash proceeds from this offering.
YEAR ENDED MAY 31, 1999 COMPARED TO YEAR ENDED MAY 31, 1998
REVENUES. Revenues were $1,018,000 for fiscal 1999 compared to $989,000 for
fiscal 1998, an increase of $29,000. Our revenues for fiscal 1999 were derived
approximately 51% from contracts and 49% from product sales. Product revenue for
1999 was $501,000, an increase of $402,000 from the prior comparable period.
Product sales were primarily to the New Jersey Department of Transportation for
both periods as we commenced shipments pursuant to their purchase order in the
second half of 1998. Contract revenues for fiscal 1999 were $517,000 as compared
to $890,000 for fiscal 1998. The decline in contract revenue is principally due
to reduced revenue recognized on work performed under a contract
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<PAGE>
with the U.S. Army for Communication Electronic Command which was substantially
completed during fiscal 1998.
COST OF REVENUE. Cost of revenue was $976,000 for fiscal 1999 compared to
$1,386,000 for fiscal 1998, a decrease of $410,000. The decline in cost of
revenue is principally due to the recognition of $894,000 of estimated losses on
uncompleted contracts in 1998. Of this amount, $343,000 was charged to cost of
revenue for contracts. This loss was accrued and recorded as a liability for
estimated losses on uncompleted contracts in 1998. There was no comparable
charge recorded in 1999. Cost of revenue for products was $614,000 for fiscal
1999 compared to $355,000 for fiscal 1998, an increase of $259,000. This is
principally due to increases in revenue from the New Jersey Department of
Transportation and an increasing number of prototype units sold to new
customers. Cost of revenue for contracts was $362,000 for fiscal 1999 as
compared to $1,031,000 for the same comparable period in 1998, or a decline of
$669,000. The decline was due to a decrease in contract revenue and a
modification of one of our contracts with the Sacramento Municipal Utility
District, or SMUD. This modification allowed either party to terminate the
agreement at any time upon 60 days prior written notice to the other party. Upon
notice of termination, we were required cease work under this agreement and take
all steps reasonably necessary to mitigate any costs or expenses for which SMUD
may be liable. Prior to its modification, the SMUD contract was accounted for
under the percentage-of-completion method of accounting and we recognized an
estimated loss on uncompleted contract of approximately $709,000 as of May 31,
1998, of which $236,000 was recorded as cost of revenue for contracts in fiscal
1998. The modification created a new research and development agreement whereby
we recorded all revenue and costs related to this contract as incurred and no
longer recognize revenue under the percentage-of-completion method of
accounting. The effect of the modification of contract terms resulted in a
reduction of the estimated loss on uncompleted contracts of $310,000 in fiscal
1999, of which $103,000 was recorded as a reduction of cost of revenue
contracts.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development costs were
$2,849,000 in fiscal 1999 compared to $2,454,000 in fiscal 1998, an increase of
$395,000. The increases were primarily due to activities related to the
development of our stationary power products from 1 to 10 kilowatts that will be
targeted towards the residential market. In addition, in 1999, we extended the
expiration dates of stock options for some employees resulting in a non-cash
stock compensation expense. The amount attributable to research and development
was $107,000. There was no comparable expense in fiscal 1998.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
costs were $3,606,000 in fiscal 1999 compared to $3,987,000 in fiscal 1998, a
decrease of $381,000. Several offsetting factors resulted in this decrease.
Fiscal 1998 selling, general and administrative costs include the recognition of
$551,000 associated with estimated losses on uncompleted contracts as discussed
above. There was no comparable expense for fiscal 1999 and the effect of the
modification of contract terms resulted in a reduction of selling, general and
administrative expense amounting to $207,000 in fiscal 1999. In fiscal 1999, we
recognized additional stock compensation expense of $693,000 in fiscal 1999 that
was discussed above. HPEC's selling, general and administrative expenses
increased by approximately $284,000 to approximately $482,000 in fiscal 1999
from approximately $198,000 in fiscal 1998. In an effort to conserve cash in
fiscal 1999, we made reductions in many discretionary expenses, including
$175,000 in professional and consulting fees.
INTEREST AND OTHER INCOME, NET. Interest and other income was $182,000 in
fiscal 1999 compared to $724,000 in fiscal 1998, a decrease of $542,000.
Interest income declined by $373,000 when comparing fiscal 1999 with 1998
primarily due to lower cash and cash equivalents. The gain on foreign exchange
in fiscal 1999 decreased by approximately $161,000 from fiscal 1998. These
foreign exchange effects resulted from transactions associated with the HPEC
operations in Canada. This decrease was due to a
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<PAGE>
lower Canadian dollar when compared to the U.S. dollar during fiscal 1999 when
compared to the same period in 1998.
INTEREST EXPENSE. Interest expense was $22,000 in fiscal 1999 compared to
$41,000 in fiscal 1998, a decrease of $19,000. The decrease was due to lower
average borrowings in fiscal 1999 when compared to fiscal 1998.
YEAR ENDED MAY 31, 1998 COMPARED TO YEAR ENDED MAY 31, 1997
REVENUES. Revenues were $989,000 in fiscal 1998 compared to $421,000 in
fiscal 1997, an increase of $568,000. In fiscal 1998, we derived approximately
90% of our revenues from government contracts and approximately 10% from product
sales. This increase was principally due to contract revenue increasing by
$523,000 to $890,000 in fiscal 1998 from $367,000 in fiscal 1997. These
increases are primarily a result of increased activity on existing contracts.
Product revenues increased by $45,000 from fiscal 1997 to fiscal 1998 due to the
sale of more prototypes and evaluation units.
COST OF REVENUE. Cost of revenue was $1,386,000 in fiscal 1998 compared to
$362,000 in fiscal 1997, an increase of $1,024,000. Cost of revenue from
contracts was $1,031,000 for fiscal year 1998 compared to $239,000 in fiscal
1997, an increase of $792,000. The increase in cost of revenue from contracts
was principally due to the recognition of $343,000 of estimated losses on
uncompleted contracts in 1998. During fiscal 1997, we did not believe that any
of our contracts would ultimately recognize a loss and, therefore, did not
record an estimated loss on uncompleted contracts, thus there was no comparable
expense recorded in fiscal 1997. The cost of revenue from products increased by
$232,000 in fiscal 1998 when compared to fiscal 1997, due principally to
increasing costs of prototype systems sold to customers. The costs of these fuel
cells in both fiscal 1997 and fiscal 1998 exceeded the sales value due to the
utilization of engineers in building these systems as opposed to production
workers and the high cost of materials that were purchased in low quantities.
RESEARCH AND DEVELOPMENT. Total research and development costs were
$2,454,000 in fiscal 1998 compared to $2,039,000 in fiscal 1997, an increase of
$415,000. The increase in expenses in fiscal 1998 as compared to 1997 was
largely due to the establishment of a research and development facility in
Canada in fiscal 1998 where we incurred $221,000 in expenses. In addition, we
incurred higher costs associated with development of our stationary power and
our portable and mobile products.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
costs were $3,987,000 in fiscal 1998 compared to $2,562,000 in fiscal 1997, an
increase of $1,425,000. In fiscal 1998 we recorded expenses of $551,000 in
selling, general and administrative related to losses on uncompleted contracts
that were recognized under the percentage-of-completion method of accounting for
long-term contracts. There were no estimated losses recorded in fiscal 1997. In
addition, in conjunction with the opening of our Canadian facility in May of
1997, we had approximately $198,000 of additional selling, general and
administrative expenses in fiscal 1998. Salaries and benefits in fiscal 1998
also increased as we increased the number of employees in sales and
administration from 9 to 17 consistent with our plans to begin limited
production in our New Jersey facility. Other cost increases in fiscal 1998 as
compared to fiscal 1997 were for the addition of a facility in New Jersey,
additional costs for insurance coverage including product liability and for
professional services.
INTEREST AND OTHER INCOME, NET. Interest and other income was $724,000 in
fiscal 1998 compared to $145,000 in fiscal 1997, an increase of $579,000.
Interest income increased to $455,000 in fiscal 1998 from approximately $145,000
in fiscal 1997. The increase was primarily due to the higher levels of invested
cash due to Sofinov's purchase of an equity interest in HPEC. Gain on foreign
exchange was approximately $261,000 for fiscal 1998 due to exchange gains
associated with transactions with HPEC. There were no comparable gains recorded
in fiscal 1997.
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INTEREST EXPENSE. Interest expense was $41,000 in fiscal 1998 compared to
$174,000 in fiscal 1997, a decrease of $133,000. At May 31, 1996, we had loans
outstanding to a company then affiliated with us, Teledata International, Inc.,
and certain investors, totaling approximately $2.3 million which were payable at
an interest rate of 10% per annum. During fiscal 1998, all of these loans were
repaid.
LIQUIDITY AND CAPITAL RESOURCES
Our capital requirements depend on numerous factors, including completion of
our product development activities and market acceptance of our systems. We
expect to devote substantial capital resources to expanding our manufacturing
capacity to meet near-term commercial production requirements, to fund working
capital requirements and to continue development work on our PEM fuel cell
systems. At November 30, 1999 we had working capital of approximately
$20.4 million which primarily consisted of cash and cash equivalents compared to
a working capital deficit of $1.7 million at May 31, 1999. This increase was
primarily the result of private equity transactions consummated during the first
six months of fiscal 2000 as described below. Cash flows used in operating
activities and investing activities totaled approximately $3.3 million and
$0.2 million, respectively, for the six months ended November 30, 1999.
Outstanding loans and note obligations as of November 30, 1999 totaled $192,000.
Substantially all of our capital has been raised through the issuance of our
common and preferred stock in private equity transactions. Since 1989,
approximately $53.2 million of equity has been invested in us. Of this amount,
our founders and other individual investors have contributed approximately
$6.7 million in common equity.
In July 1996, DQE Enterprises, Inc. invested $3.0 million for 200,000 shares
of Series A convertible preferred stock. The Series A convertible preferred
stock is entitled to cumulative dividends at a rate of 7.0% per annum. These
dividends are payable in the form of common stock, valued at a market price of
$1.875 per share in the absence of a public market price. DQE Enterprises has
agreed to convert all shares of its Series A convertible preferred stock into
1,600,000 shares of our common stock immediately prior to the closing of this
offering. At that time, we will also issue to DQE Enterprises approximately
375,000 shares of our common stock in payment of all cumulative dividends to
which they are entitled.
In July 1996, Singapore Technologies Kinetics Ltd. invested $5.0 million for
400,000 shares of Series B convertible preferred stock. The Series B convertible
preferred stock is entitled to dividends in the event that dividends or
distributions are paid on our common stock, in an amount per share equal to the
as-if-converted common stock equivalent of its Series B convertible preferred
shares. Singapore Technologies Kinetics has agreed to convert all shares of
Series B convertible preferred stock into 3,200,000 shares of our common stock
immediately prior to the closing of this offering.
In May 1997, Sofinov Societe Financiere D'Innovation Inc., or Sofinov,
invested $7.5 million for 500,000 shares of Series C convertible preferred
stock. The Series C convertible preferred stock is entitled to dividends in the
event that dividends or distributions are paid on our common stock, in an amount
per share equal to the as-if-converted common stock equivalent of the Series C
convertible preferred shares. On December 31, 1997, we issued an additional
100,000 shares of Series C convertible preferred stock to Sofinov for no
consideration as a result of our contractual obligation to do so upon DQE
Enterprises' failure to exercise warrants issued to them. Sofinov has agreed to
convert all shares of its Series C convertible preferred stock into 4,800,000
shares of our common stock immediately prior to the closing of this offering.
Simultaneously with the purchase of the Series C convertible preferred
stock, Sofinov, Societe Innovatech du Grand Montreal, or Innovatech, and
9042-0175 Quebec Inc., a Sofinov affiliate, invested $5.0 million in exchange
for a 50% interest in HPEC. HPEC is developing, among other things, our
electrical/thermal co-generation stationary power product and has the exclusive
rights to market this
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product in Canada. Immediately prior to the consummation of this offering, this
equity interest will be exchanged for 2,666,664 shares of our common stock and
HPEC will become our wholly-owned subsidiary. HPEC will have exclusive marketing
rights to our stationary power products throughout North, Central and South
America to the extent these rights do not infringe upon the license we granted
to ECO.
In August 1999, ECO invested $15.0 million for 8,000,000 shares of our
common stock. At the same time, we entered into an agreement with ECO pursuant
to which ECO paid us an initial territory licensing fee of $2.5 million and
agreed to purchase, market and service our stationary power fuel cell systems in
exchange for the exclusive marketing, distribution and servicing rights to those
areas in the United States that are being serviced by ECO's affiliated rural
electric cooperative members. The $2.5 million license fee has been deferred and
will be recognized over a ten-year period, commencing with the first commercial
sale.
In November 1999, we issued a total of 3,200,000 shares of our common stock
to Sofinov at a price of $1.5625 per share, or $5.0 million in total, pursuant
to the terms of a May 1999 letter agreement. Under this agreement, Sofinov
agreed to lend us up to $5.0 million in increments of at least $150,000, payable
on demand. Sofinov had the right to convert the outstanding balance of these
advances into shares of our common stock at a conversion price of $1.5625 per
share. In addition, if the outstanding balance of the advances at the time of
conversion was less than $5.0 million, Sofinov had the right to purchase
additional shares of our common stock at $1.5625 per share to bring its total
purchase up to $5.0 million. On November 30, 1999, the date Sofinov exercised
its conversion right, the outstanding balance of Sofinov's advances was
$2.1 million, and was converted into 1,344,000 shares of our common stock.
Furthermore, Sofinov exercised its purchase right in full and purchased an
additional 1,856,000 shares of our common stock.
On November 30, 1999, we issued 3,200,000 shares of our common stock, at a
price of $1.875 per share, or $6.0 million in total, to Hydro-Quebec CapiTech.
Our capital requirements will be affected by many factors, including the
success of current product offerings, the ability to enhance our current
products and our ability to develop and introduce new products that keep pace
with technological developments in the marketplace. We intend to use the
proceeds of this offering for general corporate purposes including continued
research and product development, expanded marketing and sales efforts, locating
and acquiring a new manufacturing facility and for working capital.
Additionally, we may also use a portion of the net proceeds to acquire or to
invest in complementary businesses, technologies, products or services.
We believe that cash from operations, together with the net proceeds of the
sale of common stock in this offering, will be adequate to fund our operations
for the next 12 months.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." The new standard
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. SFAS No. 133 is effective for all quarters of fiscal years
beginning after June 15, 2000. We do not expect SFAS No. 133 to have a material
effect on our financial condition or results of operations.
SECTION 382 OF THE INTERNAL REVENUE CODE
Section 382 of the Internal Revenue Code limits the ability of a corporation
that undergoes an "ownership change" to use its net operating losses to reduce
its tax liability. While this offering of our common stock will not trigger such
an ownership change, later transactions may do so. In that event,
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we would not be able to use our net operating losses from before our ownership
change in excess of the limitation imposed by Section 382. This limitation
generally would be calculated by multiplying the value of our stock immediately
before the ownership change by the long-term tax-exempt rate as provided in
Section 382(f) of the Internal Revenue Code.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our financial market risk includes risks associated with international
operations and related foreign currencies, as we have a significant operation in
Canada. Expenses in this operation are incurred in Canadian dollars and
therefore are subject to foreign currency exchange risk. Through November 30,
1999, we have not experienced any significant negative impact on our operations
as a result of fluctuations in foreign currency exchange rates. In addition our
international business is subject to the risks typical of an international
business including, but not limited to differing economic conditions, changes in
political climate, differing tax structures, other regulations and restrictions,
and foreign exchange rate volatility. Accordingly our future results could be
materially and adversely affected by changes in these and other factors.
The primary objective of our investment activities is to preserve principal
while at the same time maximizing yields without significantly increasing risk.
We maintain our portfolio of cash equivalents and investments in marketable
securities in a variety of securities, including both government and corporate
obligations and money market funds. We do not utilize any derivative financial
instruments, derivative commodity instruments or other market risk sensitive
instruments, positions or transactions in any material fashion. We believe that
the investment-grade securities we hold are not subject to any material risks
arising from changes in interest rates, however they may be subject to changes
in the financial standing of the issuer of these securities.
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BUSINESS
INTRODUCTION
We are a leader in developing, and believe that we were the first to
complete a commercial sale of, proton-exchange membrane, or PEM, fuel cell
systems. Fuel cells are devices that generate electricity efficiently and
cleanly from the electrochemical reaction of hydrogen and oxygen. Hydrogen is
typically derived from conventional fuels such as natural gas or propane, while
the oxygen is drawn from the air. We have sold fuel cell systems for stationary
and portable and mobile applications on a limited basis to the U.S. Government,
state agencies and domestic and multinational corporations. We expect demand for
our fuel cell products to be driven by the increasing worldwide need for
distributed, off-grid electric power, as well as consumer preference for smaller
power sources with longer operating lives and lighter weights. We believe that
PEM fuel cells have the potential to provide electricity for a wide array of
applications more cost-efficiently, effectively and environmentally cleaner than
existing power generation sources. We were founded in 1989 and have developed,
own or have been granted the exclusive rights to significant patents,
proprietary technology and trade secrets covering fuel cells and ancillary
systems.
OUR PRODUCT FOCUS
Our business focus is to design, manufacture and sell PEM fuel cell systems
that address the needs of existing and near-term commercial markets. We focus on
two major product areas:
- ON-SITE STATIONARY POWER UNITS WITH OUTPUTS OF 1 TO 25 KILOWATTS
Stationary fuel cell systems can provide on-site power to replace or
supplement the electric grid for use in residences, farms, small commercial
establishments and industrial facilities, and certain telecom applications.
- PORTABLE AND MOBILE POWER UNITS WITH OUTPUTS UP TO 15 KILOWATTS
Portable fuel cell systems can power electronic equipment such as highway
variable message signs, communications apparatus, sensor and metering
devices, and personal portable electronic devices, such as video cameras and
laptop computers.
Mobile fuel cell systems can provide auxiliary power to operate the air
conditioning and electronic systems of large vehicles, such as recreational
vehicles or light rail coaches. These systems also can provide primary power
for small, specialty vehicles such as forklifts, golf carts and airport
terminal cars.
FAVORABLE INDUSTRY AND MARKET TRENDS
STATIONARY POWER. According to the U.S. Department of Energy, over the next
ten years, demand for electricity is expected to exceed existing and planned
capacity for regulated utilities. In particular, we believe demand for fuel cell
products will increase as the worldwide need for distributed, off-grid electric
power grows. The restructuring of the electric utility industry is contributing
to a move away from large central power generating plants with high-voltage
transmission lines, to a new model whereby power is increasingly generated and
distributed locally. In addition, environmental compliance requirements and
higher air-quality standards are causing significant and continuous changes in
power generation in the U.S. and worldwide. The distributed power applications
sector, in which a dedicated electricity generator is located at or near the end
user's site, is our principal target market. We believe that fuel cell systems
will allow residential and small commercial consumers to generate electricity
on-site from readily available and potentially renewable fuel sources.
PORTABLE AND MOBILE POWER. We believe that demand for portable and mobile
systems will be driven by consumer preference for smaller power sources with
longer lives and lighter weights. We believe that one of the earliest commercial
opportunities for low-power fuel cells will be as battery
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substitutes. A 1997 study by the Freedonia Group, a market research
organization, has estimated that worldwide battery sales will increase by 8% per
year, reaching $89 billion by 2005. This growth is based on increased demand for
an expanding variety of battery-powered consumer devices, from video cameras and
laptop computers to industrial applications.
We believe that a number of industry and market trends favor significant
penetration by fuel cells into the distributed power generation market. These
trends include:
- increasing requirements for continuous, reliable primary and backup
electric power at residences, on farms, in commercial establishments and
at small manufacturing facilities;
- increasing trend toward decentralized communications systems requiring
more reliable power than is available on the current electric grid;
- continuing privatization and deregulation of utilities, which opens the
market for alternative power;
- rising demand for electric power in rural areas as well as in developing
countries with minimal existing infrastructure;
- increasing desire on the part of utilities to avoid costly transmission,
maintenance and distribution expenditures; and
- increasing regulation of the environmental impact of conventional fossil
fuel and nuclear power generation and transmission.
PATH TO COMMERCIAL PRODUCTION
We believe that we were the first to commercialize fuel cells and that the
following represent key milestones towards our commercialization efforts:
<TABLE>
<CAPTION>
DATE MILESTONE
- ----------------- ------------------------------------------------------------
<S> <C>
February 1998 We began delivering limited-production quantities of 50-watt
and 100-watt fuel cells to Ball Aerospace & Technologies
Corp., a major aerospace company, for integration into
systems it is delivering to the U.S. military.
June 1998 We made our first commercial sale when we began supplying
the New Jersey Department of Transportation with 65 backup
power units for its variable message highway signs. As of
March 31, 2000, we had already delivered 47 of these units,
all of which are in operation. We believe that this sale
represents the world's first commercial order for a sizeable
number of competitively-bid, non-subsidized PEM fuel cell
systems offered with a warranty. The design for this product
has resulted in additional sales of evaluation units to,
among others, a large, foreign energy company for backup
power for solar-powered communications installations.
November 1998 We sold fifteen 50-watt and one 100-watt evaluation systems
to a major Scandinavian energy company for remote
telecommunications backup power applications.
August 1999 We entered into a ten-year agreement with ECO, the
subsidiary of a national energy cooperative formed by
members of the U.S. rural electrical cooperative community.
ECO invested $15 million in our company and paid us $2.5
million as a downpayment for licensing fees, in exchange for
a mutually exclusive marketing, distribution and servicing
arrangement for all of our stationary power products in the
1 to 25 kilowatt range.
</TABLE>
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<TABLE>
<CAPTION>
DATE MILESTONE
- ----------------- ------------------------------------------------------------
<S> <C>
March 2000 We have begun delivering to ECO, as its exclusive supplier,
the prototype of our residential cogeneration unit, or RCU,
which is designed to serve as a primary residential electric
power source. Our goal is to commence shipping our initial
commercial units in the second half of calendar year 2001.
</TABLE>
OUR ECO RELATIONSHIP
ECO is a national energy services cooperative structured as an independent
organization formed in 1998 to assist rural electric cooperatives' efforts to
diversify into fuel cells, distributive generation products, and natural gas and
propane. ECO provides its members with products and services to help them take
advantage of new energy technologies, supports them in their acquisition of
natural gas and propane companies, obtains energy products and services and
provides consulting services. Currently, approximately 240 of the more than 900
rural electric cooperatives in the U.S. are ECO members (who are also its
owners) and membership continues to grow at a rapid pace. ECO is controlled by a
board of directors who are appointed by these same cooperative members. Rural
electric cooperatives currently service 83% of U.S. counties in 47 states and
supply power to approximately 14 million U.S. households, farms and small
businesses and have the right to market to an additional 37 million households.
The 240 rural cooperatives, which are currently the ECO members, currently
service in excess of 9 million homes.
ECO has selected us to be its exclusive supplier of stationary fuel cells in
the 1 to 25 kilowatt range. In addition, ECO has agreed not to sell to its
cooperative members any of our competitors' fuel cell systems, so long as our
fuel cell systems are not significantly less competitive in terms of quality,
price and performance. ECO has already started its marketing efforts nationwide.
ECO, has entered into arrangements with various cooperatives to install 44
of our initial production units in test sites throughout the country. These
locations were chosen based on geography, climatic conditions (e.g. temperature
and humidity) and traditional load curves. It is intended that the data obtained
from these test units will be used to further develop our fuel cell size, design
and operational components. Participation in this testing program was voluntary,
and required participants to pay a test participation fee which will be refunded
against future fuel cell purchases, and territory license purchases.
In furtherance of this testing program, ECO created a fuel cell engineering
committee, consisting of 50 managers, engineers and technical representatives
from these cooperatives. Four sub-committees have also been established to focus
on the fuel cell design and test protocol, safety and interconnection, code and
building inspection and training and maintenance. The objective of these
committees will be to provide guidance on the final commercial development of
the stationary fuel cell.
ECO purchased the exclusive rights on a per-household basis to be the
supplier of fuel cells in the 1 to 25 kilowatt range in the U.S. and made an
initial $2.5 million payment to us in August of 1999. These rights exclude sales
of fuel cells to the national accounts of telecommunications companies for
systems that power telecommunications equipment. The ultimate customer of the
fuel cells will be the rural electric cooperatives. ECO has subdivided its
distribution rights by county, and has itself begun to sell its rights to sell,
distribute, lease, finance and service to ECO members, or to electric
cooperatives which become ECO members. ECO members will be able to purchase the
exclusive rights to the territories to which the cooperatives currently provide
energy services as of August 15, 1999 on an exclusive basis until December 1,
2000. All unsold territories will then be available to be purchased by
cooperatives on a "first come, first serve" basis. Any remaining unsold
territories will revert back to us on the third anniversary of the date on which
fuel cells are first available in commercial quantities. The purchase price paid
to ECO will be based on the number of households in the purchased territory and
a portion of the fee received by ECO will be paid to us. In addition to the
exclusive distribution rights,
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<PAGE>
the rural electric cooperatives will be required to purchase a minimum number of
fuel cells each year, but will also be given volume discounts based on units
purchased.
ECO has agreed to purchase 12,300 of our stationary fuel cell systems at
established unit prices, representing approximately $81 million in revenues.
These purchases must be made within 30 months of the date when the 10th
commercial unit is shipped. ECO's financial ability to perform under the
agreement and to purchase units from us is entirely dependent on its ability to
resell the units to its customer base, the rural electric cooperatives.
OUR COMPETITIVE ADVANTAGES
We believe we have developed a leadership position in the commercialization
of low and medium power sectors of the PEM fuel cell industry. We believe our
fuel cell systems effectively address the requirements of a wide range of
stationary, portable and mobile power applications.
Our competitive advantages include:
- EXISTING PRODUCTION CAPABILITY. Since June 1998, we have been delivering
PEM fuel systems to the New Jersey Department of Transportation, which we
believe represents the world's first commercial fuel cell sale. We
recently have begun to ship our initial prototype RCU units to ECO.
- EXCLUSIVE LICENSE TO FUEL PROCESSING TECHNOLOGY. We hold an exclusive
license to use a proprietary, fuel-processing technology for fuel cell
systems in the 1 to 10 kilowatt range, which encompasses the entire range
suitable for remote and grid-connected residential cogeneration. This
technology is used to process commonly available fuels, such as natural
gas or propane, via steam-reforming, a highly efficient chemical process
for extracting hydrogen from hydrocarbon fuels. H Power has licensed the
technology to reduce the scale of steam-reforming equipment to meet the
needs of a residential-power fuel cell system. We believe that the
high-efficiency of this equipment will provide electricity at a lower cost
per kilowatt-hour than can be achieved by fuel cell generators that use
other types of fuel processors.
- LEADERSHIP IN FUEL CELL AND RELATED TECHNOLOGY. We currently hold 20 U.S.
and international patents related to fuel cells and fuel cell systems. We
have applied for additional domestic and international patents related to
fuel cell technology. We believe our comprehensive knowledge of fuel cell
technology permits us to improve on its key elements and positions us to
lead further technological advances in the industry.
- COGENERATION CAPABILITIES. We believe our initial stationary systems will
be the first to incorporate cogeneration capabilities. Cogeneration allows
us to enhance significantly the overall efficiency of our fuel cell
systems by capturing byproduct heat and supplying it and hot water to
homes in addition to electricity.
- EXTENSIVE EXPERTISE IN FUEL CELL SYSTEM DESIGN AND INTEGRATION. We have
the expertise to design and develop the elements required for complete
fuel cell systems and to select appropriate ancillary components and
subsystems from outside vendors. We assist our customers in integrating
our systems into their products and provide them with a complete,
integrated solution.
- ECO DISTRIBUTION CHANNEL. Our exclusive arrangement with ECO provides us
with a primary distribution channel for our RCU product through which we
can penetrate our target markets.
27
<PAGE>
OUR BUSINESS STRATEGY
Our goal is to establish PEM fuel cells as a major alternative energy source
and to become the leading commercial provider of PEM fuel cells and fuel cell
systems. The following are key elements in our strategy:
- FOCUS ON EXISTING MARKETS FOR STATIONARY POWER PRODUCTS SUCH AS RURAL
AREAS. We intend to initially distribute our stationary products to rural
areas through ECO. We believe rural areas will be among the most likely
early adopters of fuel cell systems because these markets require
alternative stationary power sources such as our RCU systems. In the
future, our goal is for manufacturing efficiencies to lead to cost
reductions that will make our products attractive to more price-sensitive,
grid-connected urban and suburban locations.
- STRENGTHEN AND EXPAND OUR STRATEGIC RELATIONSHIPS. We are seeking to
strengthen our existing strategic relationships, such as our ECO
relationship, as well as aggressively pursue additional manufacturing,
marketing and distribution partnerships.
- PENETRATE MARKETS FOR PORTABLE AND MOBILE FUEL CELL PRODUCTS. We will seek
to increase sales of our portable and mobile fuel cell systems in addition
to continuing to supply demonstration and prototype models of these
systems to a broad range of customers with multiple potential
applications.
- DEVELOP LOW-COST, STATE-OF-THE-ART MANUFACTURING CAPABILITIES. Our goal is
to acquire state-of-the-art manufacturing facilities and develop strategic
manufacturing partnerships, including outsourcing relationships, necessary
to produce our fuel cell systems in commercial quantities on a low-cost,
high-quality basis.
- CAPITALIZE ON OUR TECHNOLOGICAL ADVANTAGES OVER OTHER FUEL CELL DEVELOPERS
AND OTHER POTENTIAL ALTERNATIVE POWER SOURCES. We are seeking to continue
to capitalize on our proprietary technologies in developing our fuel cell
systems. For example, we believe our license for the exclusive use of
steam reforming technology will provide our products with a significant
advantage in hydrogen yield and overall system efficiency as compared with
other fuel processing methodologies.
- DEVELOP AND ACQUIRE ADVANCED COMPLEMENTARY TECHNOLOGIES. We believe that
several new technologies could provide advantages for certain applications
over systems that require fuel processing equipment to deliver hydrogen to
a fuel cell. For example, the direct methanol fuel cell, or DMFC, converts
the chemical energy of liquid methanol directly into electrical energy. We
have been pursuing the development of DMFC technology under U.S.
Government contracts and through internally-funded projects. In addition,
we will evaluate acquiring advanced, complementary technologies.
OUR PRODUCTS
Our current products consist of PEM fuel cell systems for stationary power
and portable and mobile power.
STATIONARY POWER PRODUCTS
Stationary fuel cell systems can provide on-site power to replace or
supplement the electric grid for use in residences, farms, small commercial
establishments and industrial facilities, and certain telecom applications. Our
fuel cells' low emissions, low noise and high efficiency will allow them to be
installed near or at the end-user's location, which will eliminate expensive
transmission and distribution costs. Additionally, our fuel cells' negligible
regulated emissions and quiet operation significantly reduce
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<PAGE>
complex issues associated with siting and licensing traditional power sources.
The following table outlines each of our stationary power products and the
current status of our commercialization efforts.
<TABLE>
<CAPTION>
PRODUCT NAME AND DESCRIPTION APPLICATION STATUS
- ----------------------------- ----------------------------- -----------------------------
<S> <C> <C>
RCU - Residential cogeneration of - Commenced shipping of field
1 to 10 kilowatt AC electricity and heat test units in March 2000
generator of electricity (providing all the - Commercial production is
and by-product heat electricity needs of a expected to commence in the
home) second half of calendar
- Initial market is off-grid year 2001
sites fueled with propane
- Follow-up market is grid-
connected sites fueled with
natural gas
EPAC - Backup power for homes - Available in pre-production
250 or 500 watt AC, during grid power outages quantities for evaluation
hydrogen-fueled power by selected customers
supply
TELPAC - Distributed telecom backup - In preliminary development
500 to 5000 watt, liquid power
fuel power supply
</TABLE>
Our first product for primary power generation at residences is the RCU
system, which will provide 3 kilowatts of continuous power and peak power of up
to 10 to 15 kilowatts. When the system is required to produce more than 3
kilowatts, the excess power will be provided by a battery. The battery will be
recharged when the required power drops below 3 kilowatts. This fuel cell system
will process propane or natural gas, yielding electricity and heat for hot water
as well as space heating. The RCU will incorporate a fuel processor based on
proprietary steam reforming technology, for which we have obtained exclusive
rights. The economics of replacing grid-delivered electricity with
home-generated power are sensitive to fuel efficiency and we believe that our
licensed steam reforming technology will provide a competitive advantage over
other types of fuel processing in the potentially large urban, grid-connected
market for distributed power generation.
Our fuel cell stack operates at near atmospheric pressures, which allows the
use of an air blower, instead of a compressor. This results in substantially
lower power consumption, greater fuel efficiency, less system complexity and
less noise.
[Artist's rendition of the Residential Cogeneration Unit]
In February 1999, our EPAC furnace power backup unit won a first prize in
the Home Energy category at the 20(th) Salon National de l'Habitation, a major
home show held annually in Montreal. The EPAC unit is designed to provide backup
power to gas or oil furnaces during power outages and it also can supply power
to run appliances such as refrigerators, freezers, televisions or sump pumps.
PORTABLE AND MOBILE PRODUCTS
Portable fuel cell systems can power electronic equipment and personal
portable electronic devices. Mobile fuel cell systems can provide auxiliary
power for applications that operate the air conditioning and electronic systems
of large vehicles. The power requirements for portable and mobile electronic
devices continue to expand. Leading battery technologies, however, are rapidly
approaching the practical limits of their energy storage capabilities. In
response to the growing demand for portable and mobile power, we have produced a
wide array of prototypes and commercial portable and mobile fuel cell systems
for product applications that require a low, steady state power draw for long
durations.
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<PAGE>
The following table outlines each of our portable and mobile power products and
the current status of our commercialization efforts.
<TABLE>
<CAPTION>
PRODUCT NAME AND DESCRIPTION APPLICATION STATUS
- ----------------------------- ----------------------------- -----------------------------
<S> <C> <C>
POWERPEM(-REGISTERED TRADEMARK-)-D35-- - Educational - Limited production
35 watt, 12 volt DC, - Demonstration
hydrogen-fueled power - Scientific
supply
POWERPEM(-REGISTERED TRADEMARK-)-VMS50-- - Backup power for solar - Limited commercial
50-100 watt, 12 volt DC, variable-message road signs production
hydrogen-fueled power
supply for battery charging
POWERPEM(-REGISTERED TRADEMARK-)-SSG50-- - General purpose power - Limited production
50 watt, 12 volt DC, - Remote communications and
hydrogen-fueled power instrumentation
supply - Railroad and traffic
equipment
POWERPEM(-REGISTERED TRADEMARK-)-PS100/250-- - Telecommunications backup - Limited production
100 or 250 watt DC, power
hydrogen-fueled power - Auxiliary power units
supplies (railroad/medical)
- Electric wheelchairs
- Small electric vehicles
- Remote power
</TABLE>
In addition to the products outlined above, we are also completing the
design of a hydrogen-fueled, 500 watt DC power supply to extend the range of
applications now addressed by the POWERPEM(-REGISTERED TRADEMARK-)-PS100 and
- -PS250. We are also developing products that can be used to power diverse
applications such as radio transmitters and robotic vehicles. Our development
activities are targeted towards capitalizing on major market opportunities in
both military and commercial sales. Our remote-lighting system products
incorporating the POWERPEM-REGISTERED TRADEMARK--VMS50 are currently under
development and have the potential for wide use in applications such as
construction, advertising and transportation.
KEY BUSINESS RELATIONSHIPS
OUR EQUITY INVESTORS. Our major investors have invested an aggregate of
approximately $46.5 million in cash for the funding of our ongoing and planned
operations. These investors' contributions are not purely financial.
Individually and collectively, they have helped us identify new business
opportunities and potential technology partners. These investors also
participate actively in the management of our business affairs through their
respective representatives or observers on our board of directors. Our major
investors include:
- DQE Enterprises, Inc. is a wholly-owned subsidiary of DQE, Inc.
(NYSE:DQE), which delivers essential products, such as electricity, gas,
water and communications to homes and businesses and offers services which
use technology to increase the value of these essential products for
customers. DQE Enterprises acquires and develops companies involved in
electronic commerce, communications and energy services and technologies,
including power systems for distributed energy generation.
- ECO Fuel Cells, LLC, a subsidiary of Energy Co-Opportunity, Inc., markets
services and products to the more than 900 rural electric cooperatives
that operate in territories comprising about two-thirds of the land mass
of the U.S. ECO will sell, market and distribute our stationary power
products in the 1 to 25 kilowatt range.
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<PAGE>
- Hydro-Quebec CapiTech Inc. is a division of Hydro-Quebec, a major Canadian
electric utility, and specializes in technology investments.
- Singapore Technologies Kinetics Ltd., a division of Singapore Technologies
Engineering Ltd., a large conglomerate headquartered in Singapore. They
principally make ordnance products, such as heavy vehicles for military
use and invests in promising technologies, including power generation.
- Sofinov Societe Financiere d'Innovation, Inc. is the technology investment
arm of Caisse de Depot, a large Canadian pension fund with more than
$70 billion in assets under management.
OUR VENDORS AND TECHNOLOGY PROVIDERS. Several of our suppliers of key
components or materials are working with us in cooperative technology
development programs to improve and optimize system performance through a closer
sharing of development data than is typical in a vendor/user relationship.
Examples of relationships that we currently have in place or are developing
include development programs in the areas of fuel processing, fuel cell stack
components and test equipment. These relationships not only have the potential
to optimize the performance of our fuel cells, but also may decrease our
manufacturing costs significantly.
OTHER STRATEGIC ALLIANCES. We have identified, and will continue to seek
out, partners for strategic alliances that meet our defined business needs. In
January 1999, we established a joint-technology development program with
EPYX, Inc., a subsidiary of Arthur D. Little, Inc., dedicated to fuel processing
technology for stationary and transportation applications. Our development
program is designed to integrate our fuel cell stack and system technology with
the fuel processing technology of EPYX. This two-year, $6.5 million-program is
being partially supported by the National Institute of Science and Technology
under its advanced technology program. In addition, we intend to aggressively
pursue manufacturing, marketing and distribution alliances in the future.
GOVERNMENT SPONSORED RESEARCH AND DEVELOPMENT CONTRACTS. Since inception,
we have been awarded approximately $19.5 million in federal and state government
contracts. We believe most of the technology developed under these government
contracts can be utilized in our fuel cell product applications.
HOW A PEM FUEL CELL FUNCTIONS
A PEM fuel cell is a device that silently produces electricity through an
electrochemical reaction in which hydrogen and oxygen are combined to generate
electricity, with usable heat and water as the principal by-products. The
hydrogen used in the process is derived from fuels such as natural gas, propane,
methanol or other petroleum products and the oxygen is drawn from the air. As is
illustrated by the following diagram, our fuel cells consist principally of two
electrodes, the anode and the cathode, separated by a polymer electrolyte
membrane. Each of the electrodes is coated on one side with a platinum-based
catalyst. Hydrogen fuel is fed into the anode and air enters through the
cathode. In the presence of the platinum catalyst, the hydrogen molecule splits
into two protons and two electrons. The electrons from the hydrogen molecule
flow through an external circuit creating an electric current. Protons from the
hydrogen molecule are transported through the polymer electrolyte membrane and
combine at the cathode with the electrons and oxygen from the air, to form water
and generate by-product heat.
[Functional Diagram of the PEM Fuel Cell]
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<PAGE>
Individual fuel cells are positioned between electrically conducting bipolar
plates and combined into a fuel cell stack as is illustrated in the following
diagram. The voltage of a stack of cells is proportional to the number of cells.
The number of cells in a stack and the cell surface area determine the amount of
electrical power that can be generated. The DC power produced by a fuel cell
stack is either applied directly to a DC load or converted to AC power by an
inverter. The heat generated in the process can be used in cogeneration heating
and offers the potential to enhance significantly the overall efficiency of a
PEM fuel cell system.
[Diagram of a Fuel Cell Stack]
BENEFITS OF FUEL CELL SYSTEMS
Compared with currently available energy storage and production
alternatives, fuel cell systems have a combination of characteristics that make
them attractive for a wide variety of current niche applications. Typically,
fuel cell systems are attractive to users of electricity who require
portability, mobility, an independent off-grid power source, a remotely located
electrical power source or an on-site backup power source when the grid fails.
ADVANTAGES OF PEM FUEL CELLS OVER OTHER TYPES OF FUEL CELLS. Other types of
fuel cells have been under development for a variety of applications but we
believe that PEM fuel cells have distinct advantages over each of these for
immediate commercialization. PEM fuel cells can provide power ranging from
milliwatts to kilowatts, depending on their size and configuration. PEM fuel
cells operate at low temperatures, which allows for faster start-ups. They also
respond rapidly to changes in demand for power. We believe that PEM fuel cells
have the greatest potential for rapid and profitable commercialization of
systems that can be utilized for the broadest range of commercial, industrial
and consumer products. We also believe that PEM fuel cells are better suited for
small portable and mobile applications than other types of fuel cells.
ADVANTAGES OF PEM FUEL CELLS OVER COMBUSTION-POWERED GENERATORS. PEM fuel
cell systems have inherent operational and environmental advantages over
combustion-powered generators:
<TABLE>
<CAPTION>
ATTRIBUTE ADVANTAGE
- --------------------------------------------- ---------------------------------------------
<S> <C>
Fuel cells are electrochemical devices, Greater efficiency and lower operating costs
rather than combustion-powered generators. through fuel savings.
Fuel cells are virtually pollution and More suitable for home use; can be located
odor-free. within the home or business.
Fuel cells operate quietly. More suitable for residential and densely
populated environments.
Fuel cells are reliable and require minimal Better adapted to intermittent use in backup
maintenance. power systems.
Even small units can efficiently recover Greater fuel economy through cogeneration of
by-product heat. power and heat.
</TABLE>
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<PAGE>
ADVANTAGES OF PEM FUEL CELLS AND BATTERY/FUEL CELL HYBRIDS OVER
BATTERIES. Fuel cell systems have the potential to solve the most challenging
current battery problem, which is insufficient energy at a given weight or
volume:
<TABLE>
<CAPTION>
ATTRIBUTE ADVANTAGE
- --------------------------------------------- ---------------------------------------------
<S> <C>
The energy of a fuel cell is limited only by Fuel cells can operate indefinitely when
the availability of its external fuel supply. connected to a pipeline fuel source; fuel
cells can operate longer than batteries for a
given system weight and volume since the
energy of a battery is limited by its size.
Fuel cells can operate more effectively than Greater tolerance to elevated temperatures
conventional batteries at elevated means longer system life and higher
temperatures. reliability in harsh environments.
Commercial fuel cell technology is still in Leading battery technologies are nearing the
the early stages of development. practical limits of their energy storage
capabilities.
</TABLE>
RESEARCH AND DEVELOPMENT
Our research team focuses on improving PEM fuel cell performance by working
to optimize materials and processes. These activities are critical to achieving
a higher cell power density, which leads directly to smaller, lighter,
lower-cost and more fuel-efficient fuel cell stacks and systems.
Our materials research efforts address the function, durability and cost of
our fuel cell stack components, including electrode materials, membranes,
bipolar plates and seals. The bipolar plates are a key area of focus because
they perform a variety of critical fuel cell functions. These functions include
conducting electricity from cell to adjacent cell, distributing the hydrogen and
oxygen over the electrodes and removing the water that is produced as a
by-product.
Our development team improves the designs of our existing products and
generates new product concepts. This team initiates advanced fuel cell stack and
system concepts and develops associated pre-prototype and prototype hardware.
This team also develops new methods for the removal of heat from a fuel cell and
for the humidification of the cell membrane, thereby increasing the utility of
existing products.
The activities of our development team are complemented by the
multi-kilowatt system development team efforts at HPEC. This team, in concert
with our system integration engineers, provides for the specification,
procurement, evaluation and optimization of key subsystem hardware such as fuel
processors, power conditioners and overall system assembly.
STATUS OF OUR TECHNOLOGY
Our in-house PEM fuel cell system development efforts have concentrated on
fuel cell components, fuel cell stack, system components and system integration,
as well as hydrogen storage and generation subsystems for low- and medium-power
applications. The proprietary technologies that we have developed include:
- formulation and fabrication of electrodes and membrane-electrode
assemblies;
- design and fabrication of bipolar plates;
- management of heat and water within the fuel cell stack and overall
system;
- fabrication and assembly methodologies for cells and stacks; and
- hydrogen fuel storage and generation.
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<PAGE>
Our technologies have resulted in compact, efficient fuel cell systems that
we believe can be mass produced, reliably and cost-effectively for a wide array
of current applications. We believe that our fuel processing and overall
system-integration experience, as well as our established relationships with
third-party suppliers, allows us to acquire effectively and economically all
necessary auxiliary components for our fuel cell systems.
OUR FUEL CELL STACKS. Our development program has emphasized the design and
fabrication technologies for fuel cell stacks. The design characteristics differ
between "higher-power," multi-kilowatt stacks, which are used for stationary
power applications and "lower-power" stacks, which are used for portable power
and battery replacement. Our proprietary low-power stack design achieves
compactness and internal humidification, as well as user-friendly features such
as external air-cooling and non-humidified reactants. We have successfully
implemented this technology in many prototype, pre-commercial and commercial
fuel cell systems.
We cool high-power stacks by directing a flow of water through them. This
approach allows the stacks to operate at a higher power and provides by-product
heat for hot water and space heating. Since 1997, we have utilized a
platelet-type bipolar plate technology acquired on an exclusive basis from
Aerojet Corporation, which provides for the incorporation of cooling-water
flow-fields within the bipolar plates of our high-power stacks. We have
fabricated and assembled dozens of developmental fuel cell stacks of this type
in the 1 to 5 kilowatt range. Our internal test results have confirmed that this
platelet-type bipolar plate technology provides compactness and a particularly
high degree of temperature uniformity throughout the fuel cell stack. We believe
that this offers a significant advantage with respect to the reliability and
durability of our PEM fuel cells.
OUR FUEL STORAGE AND PROCESSING-INTEGRATED SYSTEMS. Our low-power fuel cell
systems generally incorporate some means of hydrogen storage and supply.
Examples are pressurized hydrogen vessels, metal-hydride canisters and chemical
hydrides that generate hydrogen upon reaction with water. We typically integrate
pressurized hydrogen or metal-hydride units into our fuel cell systems. We have
delivered many prototype, pre-commercial and commercial systems based on
hydrogen and metal-hydride fuel supplies.
To expand the utility of small fuel cell systems in the marketplace, we are
developing processes in which hydrogen is generated from common,
widely-available fuels such as natural gas, liquid propane or methanol. For
these fuels, we are working with selected outside development companies to
obtain reforming technologies suitable for use in PEM fuel cell systems.
Fuel processing hardware for our multi-kilowatt products will be fabricated
by suitable outside contractors in accordance with our specifications. We have
acquired pre-prototype and prototype fuel processor hardware suitable for
residential applications and this hardware is undergoing evaluation,
optimization and integration within fuel cell systems at our facilities.
Power conditioning hardware, such as DC-to-AC inverters, for our products
will similarly be specified by us and procured from outside contractors. We are
evaluating performance, availability and cost profiles from potential suppliers,
and we have acquired our initial hardware.
MANUFACTURING
PHASE I--LOW VOLUME COMMERCIAL PRODUCTION. Our research and product
development process has evolved over the past two years to the point where we
are in low-volume commercial production of certain fuel cell systems and are
producing prototype versions of other systems. Though the level of automation
has been low, with much of the assembly being manual, we have gone through the
early stages of design optimization and, over time, have produced fuel cells
with increasing power per unit weight and at significantly lower cost than
earlier models. Cost reductions achieved by these efforts over the past two
years are attributable to, among other things, volume purchases of components
and
34
<PAGE>
materials, technological advances and the redesign of our products for ease of
manufacturing. Our goal is to achieve additional cost reductions as we move into
higher-volume manufacturing phases.
PHASE II--MEDIUM TO HIGH VOLUME COMMERCIAL PRODUCTION. The next stage of
our manufacturing strategy is to implement a major upgrade of our production
capabilities to enable medium-to-high-volume commercial production. Existing
forms of equipment and manufacturing processes currently available in the
battery industry are directly applicable to our fuel cell technology.
We recently received a comprehensive manufacturing plant siting study from a
major international consulting firm identifying potential plant locations in the
eastern United States and Canada. We estimate that the size of the facilities
necessary to meet the anticipated demand for our products through 2002 will
exceed 100,000 square feet. We intend to acquire and occupy a new manufacturing
facility by the end of 2000 and our goal is to commence commercial sales of
stationary units by the second half of calendar year 2001.
PHASE III--HIGH VOLUME COMMERCIAL PRODUCTION. To progress to the next stage
of volume manufacturing, we will selectively upgrade a number of the
manufacturing steps to semi-automated operation or create automated cells that
can perform a series of processes. We intend to:
- upgrade product designs for automated production;
- identify and contract with suppliers to outsource certain non-critical
parts and assemblies;
- develop our vendor networks for materials sourcing; and
- procure and install equipment needed to meet production demands.
As we reach successively higher volumes of production, we believe that we
can achieve substantial cost reductions through improved equipment and operator
efficiencies, and by taking advantage of high-volume orders in the purchase of
materials.
SALES AND MARKETING
We sell and market our products to companies and governmental agencies
throughout the world. We intend to expand our existing sales and marketing
organization to fully exploit market opportunities. Integral to our marketing
strategy is the identification and cultivation of partnerships with third
parties, such as ECO, DQE Enterprises, Hydro-Quebec and other potential industry
partners, that can serve as a distribution networks for our products. We also
intend to appoint independent sales representatives and distributors to sell our
products internationally and provide product support functions.
INTELLECTUAL PROPERTY
In general, our proprietary technology is comprised of the physical and
chemical design of our fuel cell components, fuel cell stacks and our
manufacturing and assembling methodology and procedures. We have 17 patents
issued or allowed in the U.S. and one patent issued or allowed in each of
Europe, Taiwan and Singapore covering our proprietary technology. In addition,
we have filed patent applications domestically and internationally relating to
fuel cell technology to protect proprietary features arising from our
development efforts. We also have filed numerous "Document Disclosures" with the
U.S. Patent and Trademark Office in preparation for submitting corresponding
patent applications.
We license some of our technology from third parties. For example, in
August 1998, we acquired the right to use steam reforming technology pursuant to
the grant of an exclusive worldwide license. This license will remain exclusive
unless we fail to meet minimum levels of production and royalty payments during
the next several years.
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<PAGE>
We have also accumulated substantial trade secrets and "know-how" since our
inception relating to fuel cell design and assembly. We rely on confidentiality
agreements to protect our unpatented proprietary information, know-how and trade
secrets. We believe, however, that our success is substantially dependent on the
knowledge, experience and technical expertise of our employees. In this regard,
our employees are required to enter into agreements providing for
confidentiality and the assignment of rights to inventions made by them while
employed by us. These agreements also contain non-competition and
non-solicitation clauses for the term of employment and for one year thereafter.
COMPETITION
We compete primarily on the basis of reliability, efficiency, cost and
environmental considerations. A number of companies located in the United
States, Canada and abroad are developing PEM fuel cell technology. Many of these
companies possess greater financial, technological and personnel resources than
we do and represent significant competition. Ballard Power Systems has been
developing PEM fuel cell technology with a number of partners and is a potential
competitor. A number of major automotive and manufacturing companies also have
in-house PEM fuel cell development efforts. Although we believe several
companies have established residential fuel cell system development programs, we
believe that these companies are still in the development stage. Plug
Power Inc. and Avista Corp. are potential competitors for residential
applications. We are not aware of any competitors in the less than 1 kilowatt
segment of the market, wherein we have four products now in low-volume
production.
We also compete with companies that are developing other types of fuel
cells. In addition to PEM fuel cells, phosphoric acid fuel cells, molten
carbonate fuel cells, solid oxide fuel cells and alkaline fuel cells are
generally considered to have viable commercial applications. These fuel cells
differ in regard to cell materials and operating temperature. While all fuel
cell types have potential environmental and efficiency advantages over
traditional power sources, we believe that PEM fuel cells can be manufactured
less expensively and are more efficient and more practical in small-scale
applications.
We believe that our systems will also compete with other distributed
generation technologies, including microturbines and engine-generators. We
believe that our fuel cell systems will have a competitive advantage because
they can be more easily scaled to residential size and will be more efficient in
handling the load profile of residential customers. We also believe that they
will be quieter, environmentally cleaner, more efficient, and less expensive to
install, service and maintain. We also expect that our systems will compete very
favorably from a cost standpoint with solar- and wind-powered systems.
Furthermore, our products could potentially compete with current conventional
power sources such as batteries and providers of on-grid electricity.
GOVERNMENT REGULATION
We do not believe that we will be subject to existing federal and state
regulatory commissions governing traditional electric utilities and other
regulated entities. We anticipate, however, that our products and their
installation will be subject to oversight and regulation at the local level in
accordance with state and local ordinances relating to building codes, safety,
pipeline connections and related matters. Such regulation may depend, in part,
upon whether a system is placed outside or inside a home. At this time, we do
not know which jurisdictions, if any, will impose regulations upon our products
or installation. We also do not know the extent to which any existing or new
regulations may impact our ability to distribute, install and service our
products. Once our products reach the commercialization stage and we begin
distributing our systems to our early target markets, federal, state or local
government entities or competitors may seek to impose regulations. We intend to
encourage the standardization of industry codes to avoid having to comply with
differing regulations on a state-by-state or locality-by-locality basis.
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EMPLOYEES
As of February 29, 2000, we employed 126 persons. None of our employees is
represented by a labor union. We consider our relationships with our employees
to be satisfactory. All key employees have signed confidentiality and
non-competition agreements. These agreements prohibit our employees from
disclosing any of our confidential information at any time during or after their
employment with us and prohibit them from competing with us for one year
following termination of their employment.
FACILITIES
We lease through two separate leases approximately 27,000 square feet in two
buildings in an industrial park located in Belleville, New Jersey. Each of these
leases expires in July 2001. We have an option to renew the lease for the
building that is dedicated to our product engineering and manufacturing of fuel
cells for an additional year.
In December 1999, we entered into a lease for approximately 4,400 square
feet of office space in Clifton, New Jersey. Our executive offices are located
at this location. This lease expires in July 2001. HPEC leases approximately
9,000 square feet in an industrial park near Montreal which expires in
September 2000. HPEC expects to lease an additional 3,000 square feet of
manufacturing space in Montreal in the near future.
We estimate that we will need at least 100,000 square feet of manufacturing
space in the next few months in order to meet demand for our products through
2002. We believe that additional space will be available on commercially
reasonable terms as and when needed.
LEGAL PROCEEDINGS
We are not a party to any material pending legal proceedings, nor is any of
our property, including intellectual property, the subject of any material
pending legal proceedings.
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MANAGEMENT
OUR DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
Our directors, executive officers and key employees, and their ages and
positions, are:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------- -------- ----------------------------------------------------------------------
<S> <C> <C>
H. Frank Gibbard(1)........ 59 Chief Executive Officer, Director
Arthur Kaufman............. 62 Vice President of Technology
William L. Zang............ 46 Chief Financial Officer, Director
Thomas H. Michael.......... 44 Vice President, Administration and International Operations and
Assistant Secretary
Jean-Guy Chouinard......... 49 General Manager--H Power Enterprises of Canada
Fong Saik Hay(1)........... 43 Director
Rachel K. Lorey............ 35 Director
John A. McSweeney(1)....... 54 Director
Ivan Roch.................. 56 Director
Thomas N. Russo............ 51 Director
</TABLE>
- ------------------------
(1) Member of the compensation committee.
DR. H. FRANK GIBBARD has served as our Chief Executive Officer since
October 1996 and has been a member of our Board of Directors since June 1997.
From 1995 through 1996 Dr. Gibbard operated his own research company, Gibbard
Research and Development Corporation. From 1991 to 1995, Dr. Gibbard was
employed by Duracell Inc. as Vice President, R&D and Advanced Engineering.
Dr. Gibbard received a B.S. degree in Chemistry from the University of Oklahoma
and a Ph.D. in Chemistry from the Massachusetts Institute of Technology.
DR. ARTHUR KAUFMAN has served as our Vice President of Technology since
October 1999, Vice President, Technology & Engineering from November 1996
through October 1999 and Director of Technology from July 1995 through
November 1996. Dr. Kaufman had previously served as our President from 1989
through 1995. Dr. Kaufman has been responsible for our research and development
programs and the administration and performance of all government programs.
Dr. Kaufman was previously employed by Engelhard Corporation, where he served as
Research Manager for that company's fuel cell program, and by United
Technologies Corporation, where he served as Research Engineer in a broad range
of fuel cell development activities. Dr. Kaufman holds B.S., M.S. and Ph.D.
degrees in Chemical Engineering from Massachusetts Institute of Technology,
University of Florida and University of Connecticut, respectively.
WILLIAM L. ZANG has served as our Chief Financial Officer since
December 1999 and has been a member of our Board of Directors since March 2000.
From February 1997 to December 1999, Mr. Zang served as a business and financial
consultant. From March 1997 to June 1999 in his consulting capacity, he acted as
Vice President, General Manager International of Alpha Technologies, a
manufacturer of cable telecommunications power supplies. Mr. Zang was employed
by Alpha Technologies as its Vice President, Corporate Development from
June 1996 to February 1997. Prior to June 1996, Mr. Zang served for
approximately 10 years as the Vice President, Finance and Secretary of
International Power Machines, a manufacturer of high technology power supply
systems. Mr. Zang received a B.S. degree in Accountancy from the University of
Illinois, Champaign and an M.B.A. in Finance from Loyola University.
THOMAS H. MICHAEL has served as our Vice President, Administration and
International Operations since October 1999 and as our Assistant Secretary since
December 1999. He previously served as Director, Corporate Finance of our
Canadian subsidiary, H Power Enterprises of Canada, or HPEC, from April 1998 to
October 1999. Mr. Michael has over 20 years experience in public accounting,
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finance and international business. Prior to joining H Power, from 1997 to 1998,
Mr. Michael was employed as a financial and management consultant for JRM
Global. From 1994 to 1997, Mr. Michael served as Chief Financial Officer of
Decolin Inc. Mr. Michael holds a Bachelor of Commerce and a graduate Diploma in
Accountancy from Concordia University. Mr. Michael is also a Chartered
Accountant and a member of The Canadian Institute of Chartered Accountants.
JEAN-GUY CHOUINARD has served as General Manager of H Power Enterprises of
Canada, Inc. since April 1998. Prior to joining H Power, from 1994 to 1998,
Mr. Chouinard served as Director of Research for Natural Gas Technologies Centre
where he led a research team in the development of gas technologies that
resulted in the issuance of six patents. Prior to 1994, Mr. Chouinard held
several positions at Gaz Metropolitan Limited Partnership, DATECH.
Mr. Chouinard holds B.S. and M.S. degrees in Physics from the University of
Montreal and University of Toronto, respectively, and received an M.B.A. from
Concordia University.
FONG SAIK HAY has been a Director since July 1996. Since 1990, Mr. Fong has
been the Director of Engineering of Singapore Technologies Kinetics Ltd. His
principal roles during this time have involved leading a development staff of
approximately 300 people in developing military and commercial vehicles and
acting as Chief Technology Officer in identifying new technologies. From 1986 to
1989, Mr. Fong was a Principal Engineer in Chartered Industries of
Singapore Ltd.
RACHEL K. LOREY has been a Director since July 1999. Ms. Lorey has served as
Vice President of DQE Enterprises, Inc. since February 1999. Prior to then,
Ms. Lorey practiced as an attorney in the Pittsburgh offices of Jones, Day,
Reavis & Pogue from January 1996 through February 1999, and of Kirkpatrick &
Lockhart L.L.P. from 1989 through 1995. Her practice area focused on corporate
transactions, including mergers and acquisitions, divestitures, joint ventures
and financings.
JOHN A. MCSWEENEY has been a Director since October 1999. Mr. McSweeney has
served as President and Chief Executive Officer of Energy Co-Opportunity, Inc.,
the parent company of ECO Fuel Cells, LLC, since June 1999. Prior to this,
Mr. McSweeney served as a Vice President & General Manager for AmeriGas Propane,
L.P. from 1995 through 1998, where he oversaw AmeriGas' Midwest region, which
consisted of 50 locations and approximately 400 employees.
IVAN ROCH has been a Director since December 1999. From 1997 to 1999,
Mr. Roch served as a consultant (in the capacity of a general manager) to
Ateliers Wood Inc., a company that specializes in electromechanical equipment
repairs. Mr. Roch was employed from 1995 to 1997 as the President and General
Manager of Les Materiaux De Pointe Precitech Inc., a start-up venture that
manufactured powder metal parts for industrial uses. From 1994 to 1995,
Mr. Roch was a Project Manager for Les Enterprises Barrette Ltee and focused on
developing products from excess raw material used in a saw milling operation.
THOMAS N. RUSSO has been a Director since June 1989. Mr. Russo has been
employed by the Federal Energy Regulatory Commission since 1978 and is currently
serving in the Office of External Affairs and Energy Markets. Prior to this,
Mr. Russo was a Special Assistant to the Director in the Offices of Hydropower
Licensing and Pipeline Regulation. During this time, Mr. Russo has been involved
in various electric power, natural gas, hydropower and environmental impact
issues.
BOARD COMMITTEES
The audit committee of our board of directors will be established as soon as
practicable following the closing of this offering. Our audit committee will
have the responsibility of reviewing our audited financial statements and
accounting practices. This committee will consider and recommend the appointment
of independent accountants and approve fee arrangements with them for audit
functions and for advisory and other consulting services. The audit committee
will be composed solely of independent directors and will have at least three
members. We are in the process of identifying and
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intend to retain or appoint the services of additional outside directors to
serve on our audit committee prior to the completion of this offering in
compliance with the rules promulgated by the Securities and Exchange Commission
and The Nasdaq Stock Market, Inc.
Our compensation committee has been in existence since November 1996 and
consists of a majority of independent directors. The compensation committee
reviews and approves compensation and benefits for our employees, consultants
and directors and administers our employee plans.
DIRECTOR COMPENSATION
Directors are reimbursed for expenses actually incurred in connection with
attendance at each meeting of the board or any committee thereof.
EXECUTIVE COMPENSATION
The following table sets forth information concerning all cash and non-cash
compensation awarded to, earned by or paid to our chief executive officer and to
all other executive officers whose total cash consideration exceeded $100,000
for services rendered to us during the fiscal year ended May 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------- -------------------------
SECURITIES
OTHER UNDERLYING ALL
NAME AND ANNUAL OPTIONS/ OTHER
PRINCIPAL POSITION SALARY BONUS COMPENSATION SARS COMPENSATION
- ----------------------------------------- -------- -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
H. Frank Gibbard, Chief Executive
Officer................................ $180,900 -- $7,990 -- --
Arthur Kaufman, Vice
President-Technology................... $122,786 -- $2,486 -- --
</TABLE>
STOCK OPTIONS
No individual grants of stock options were made during the year ended
May 31, 1999 to any of our executive officers named in the summary compensation
table.
The following table sets forth at May 31, 1999 the number of options and the
value of unexercised options held by each of the executive officers named in the
summary compensation table. The dollar values have been calculated by
determining the difference between the fair market value of the securities
underlying the options at May 31, 1999 and the exercise prices of the options.
Solely for purposes of determining the value of options at May 31, 1999, we have
assumed that the fair market value of shares of common stock issuable upon
exercise of options was $[ ]per share, the initial public offering price.
AGGREGATED YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
SUBJECT TO UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT YEAR END AT YEAR END
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
H. Frank Gibbard,
Chief Executive Officer..................... 1,200,000 400,000 [ ] [ ]
Arthur Kaufman,
Vice President-Technology................... -- -- -- --
</TABLE>
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In November 1996, we established a compensation committee which currently
consists of Dr. Gibbard and Messrs. Fong and McSweeney. Prior to November 1996,
matters concerning executive officer compensation were addressed by the entire
board.
EMPLOYMENT AGREEMENTS
In October 1999, we entered into an amended and restated employment
agreement with Dr. H. Frank Gibbard, our Chief Executive Officer. The term of
this agreement expires in October 2002. Pursuant to the terms of this agreement,
Dr. Gibbard is required to devote his full time and attention to our business
and affairs and he receives an annual base salary of $203,320. As part of his
compensation package, Dr. Gibbard receives an automobile allowance and certain
other fringe benefits commensurate with his duties and responsibilities and is
eligible to receive, from time to time, discretionary cash bonuses. If, within a
year after a change in our control, we terminate Dr. Gibbard or we assign him
duties materially inconsistent with his position, he may be entitled to receive
a lump sum payment equal to one-half of his then annual base salary and
incentive compensation. Dr. Gibbard's employment agreement precludes him from
competing with us or soliciting our employees during the period of his
employment and for two years thereafter.
In October 1999, we entered into a three-year employment agreement with
Arthur Kaufman to serve as our Vice President of Technology. Dr. Kaufman is
required to devote his full time and attention to our business and affairs and
he receives an annual base salary of $135,000. As part of his compensation
package, Dr. Kaufman receives an automobile allowance and certain other fringe
benefits commensurate with his duties and responsibilities and is eligible to
receive, from time to time, discretionary cash bonuses. Dr. Kaufman's employment
agreement precludes him from competing with us during the period of his
employment and for one year thereafter or from soliciting any of our employees
during the period of his employment and for two years thereafter.
In November 1999, we entered into a three-year employment agreement with
Thomas H. Michael to serve as our Vice President, Administration and
International Operations. Under the terms of his agreement, Mr. Michael must
devote substantially all of his business time, ability and attention to our
business and affairs and he receives an annual base salary of $117,500.
Mr. Michael received an option to purchase 360,000 shares of our common stock as
part of his compensation package. These options have an exercise price of $1.875
per share, vest over a three-year period ending October 2002 and may be
exercised until December 2004. As part of his compensation package, Mr. Michael
receives an automobile allowance and is eligible, from time to time, to receive
discretionary bonuses. If, within a year after a change in our control, we
terminate Mr. Michael or we assign him duties materially inconsistent with his
position, he may be entitled to receive a lump sum payment equal to one-half of
his then annual base salary. Mr. Michael's employment agreement precludes him
from competing with us or soliciting our employees during the period of his
employment and for two years thereafter.
In November 1999, we entered into a three year employment agreement with
William L. Zang to serve as our Chief Financial Officer. Under the terms of his
agreement, Mr. Zang must devote substantially all of his business time, ability
and attention to our business and affairs and he receives an annual base salary
of $120,000. As part of his compensation package, Mr. Zang also received an
option to purchase 400,000 shares of our common stock at an exercise price of
$1.875 per share. These options vest over a three-year period ending
December 2002 and may be exercised until December 2004. Mr. Zang also receives
an automobile allowance and other fringe benefits commensurate with his duties
and responsibilities and is eligible, from time to time, to receive
discretionary bonuses. If, within a year after a change in our control, we
terminate Mr. Zang or we assign him duties materially inconsistent with his
position, he may be entitled to receive a lump sum payment equal to one-half of
his then annual base salary. Mr. Zang's employment agreement precludes
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<PAGE>
him from competing with us or soliciting our employees during the period of his
employment and for two years thereafter.
OUR STOCK OPTION PLANS
1989 STOCK OPTION PLAN. Pursuant to our June 1989 stock option plan, which
expired on June 6, 1994, options to purchase 1,532,000 shares of our common
stock at $0.50 per share were issued to 21 employees and consultants. Of that
amount, 220,000 have been exercised and 1,142,000 have lapsed. Options to
purchase 170,000 shares are currently exercisable until May 31, 2002. Options
granted under the 1989 Plan must be exercised within three months of the end of
the optionee's status as an employee or consultant, or within 12 months after
the optionee's termination by death or disability, but in no event later than
the expiration of the option term.
2000 STOCK OPTION PLAN. This stock option plan was originally approved by
our stockholders in May 1996 and at that time was named the 1996 Stock Option
Plan. In March 2000, we amended and restated this plan principally to update the
plan to reflect changes in applicable tax and securities laws. The 2000 Plan
authorizes options to purchase up to an aggregate of 6,000,000 shares of our
common stock and is administered by the compensation committee. Options granted
under the 2000 Plan are not generally transferable by the optionee except by
will or by the laws of descent and distribution, and are exercisable during the
lifetime of the optionee only by such optionee. Options granted under the 2000
Plan must be exercised within three months of the end of optionee's status as an
employee or consultant, or within 12 months after such optionee's termination by
death or disability, but in no event later than the expiration of the option
term. The exercise price of all stock options granted under the 2000 Plan will
be determined by the compensation committee. With respect to any participant who
owns stock possessing more than 10% of the voting power of all classes of our
outstanding capital stock, the exercise price of any stock option granted must
equal at least 110% of the fair market value on the grant date. The exercise
price of stock options for all other employees cannot be less than 100% of the
fair market value per share on the date of the grant. The maximum term of an
option granted under the 2000 Plan may not exceed 10 years from the date of
grant, five years in the case of an incentive stock option granted to a 10%
stockholder. As of February 29, 2000, we have granted options to purchase
602,624 shares of our common stock under the 2000 Plan.
OPTIONS GRANTED OUTSIDE THE PLANS. In addition to the options which may be
granted under our 1989 and 2000 Stock Option Plans, we have granted options to
purchase 8,065,000 shares of our common stock outside of those plans at exercise
prices ranging from $.50 to the initial public offering price per share of our
common stock. These grants include options to purchase 1,200,000 shares of our
common stock at an exercise price of $1.5625 granted to Dr. Gibbard in fiscal
1997, options to purchase 400,000 shares at an exercise price of $1.5625 granted
to Dr. Gibbard in fiscal 1998 and options to purchase 800,000 shares of our
common stock at an exercise price of $1.875 granted to Dr. Gibbard in fiscal
2000. In fiscal 2000, we also granted to Mr. Zang options to purchase 400,000
shares of our common stock at an exercise price of $1.875 per share and 200,000
shares at an exercise price equal to the initial public offering price per share
of our common stock. In addition, in fiscal 2000, we granted to Mr. Michael
options to purchase 360,000 shares of our common stock, to Mr. Russo options to
purchase 160,000 shares of our common stock, each at an exercise price of $1.875
per share, and to Mr. Kaufman options to purchase 25,000 shares of our common
stock at an exercise price equal to the initial public offering price of our
common stock. Furthermore, in fiscal 2000 we granted to Mr. Chouinard options to
purchase 200,000 shares of our common stock at an exercise price of $1.875 per
share.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In July 1999, we entered into consulting agreements with Norman Rothstein
and Frederick Entman, who were our founders in 1989 and who also served on our
board of directors from June 1997 until their resignation in April 2000.
Messrs. Rothstein and Entman had previously served as consultants to us since
1996, and Mr. Entman had been our full-time counsel from June 1989 until
May 1996. Mr. Rothstein is the beneficial owner of approximately 18.6% of our
outstanding common stock, and Mr. Entman is the beneficial owner of
approximately 16.9% of our outstanding common stock. Under the terms of their
consulting agreements, Messrs. Rothstein and Entman received annual base
salaries of $113,000 for serving as our consultants on various corporate related
matters and were also entitled to receive bonuses in connection with any public
or private financings consummated by us other than this offering. In connection
with their consulting agreements, our board of directors granted to each of
Mr. Rothstein and Mr. Entman options to purchase 1,200,000 shares of our common
stock at an exercise price of $1.875 per share. These options are fully vested
and may be exercised in cash or by the delivery of other H Power options or
securities.
Norman Rothstein and Frederick Entman resigned from our board of directors
effective April 5, 2000. Messrs. Rothstein and Entman also terminated their
consulting agreements effective as of April 5, 2000 in exchange for which they
each received a cash payment of $1 million and the grant of options to purchase
480,000 shares of our common stock at an exercise price per share equal to the
initial public offering price of our common stock. We have agreed to include all
shares of common stock underlying the options granted to Messrs. Rothstein and
Entman in any future registration statement filed after this offering to
register shares of common stock underlying options granted to any of our
employees or officers. Furthermore, we have agreed that if such a registration
statement is not filed within six months prior to the expiration date of the
options granted to Messrs. Rothstein and Entman, then we will extend the
expiration date of Mr. Rothstein and Mr. Entman's options.
On June 23, 1995, Messrs. Rothstein and Entman, without admitting or denying
allegations, consented to an SEC order to cease and desist from violating or
causing violations or future violations of Section 5(a) and 5(c) of the
Securities Act. In accepting the offers of settlement of Messrs. Rothstein and
Entman, the SEC found that in 1988, Messrs. Rothstein and Entman, acting through
a partnership, sold 80,000 previously registered shares of common stock of
Gil-Med Industries, Inc. to the public through broker-dealers. The SEC
determined that a new registration statement was required, but had not been
filed, with respect to the sale of the 80,000 shares. Messrs. Rothstein and
Entman maintain they were unaware of this requirement.
On April 5, 2000, at the request of Lehman Brothers Inc. in connection with
this offering, we entered into a stockholders' and voting agreement with
Messrs. Rothstein and Entman and certain members of their families, who
collectively own 18.6%, in the case of the Rothstein family, and 16.9%, in the
case of the Entman family, of our common stock. Pursuant to this agreement,
these investors have granted to our independent directors an irrevocable proxy
for their shares and have agreed that:
- their shares will be present and counted for quorum purposes at every
meeting of our stockholders;
- their shares will be voted on all matters in the same proportion as the
votes cast by our other stockholders;
- in the case of a tender offer or an exchange offer for our common stock,
their shares will be tendered in the same proportion as the shares
tendered by our other stockholders;
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<PAGE>
- they will sell or transfer their shares without the prior written consent
of our independent directors, only:
-- in transactions meeting the requirements of Rule 144 under the
Securities Act, so long as in all cases the manner of sale
requirements of Rule 144(f) are complied with;
-- in underwritten public offerings conducted in a manner intended to
effect a broad unaffiliated public distribution;
-- in a private sale to unaffiliated qualified institutional buyers who
will own less than 10% of our outstanding common stock after such
sale;
-- as a bona fide pledge to an independent financial institution to
secure borrowings on a full recourse basis, provided that such
financial institution need not agree to be bound by the terms and
conditions of the stockholders' and voting agreement if such
borrowings do not exceed $2,500,000 in the aggregate;
-- to other Rothstein family members in the case of Rothstein family
members and to other Entman family members in the case of Entman
family members;
-- pursuant to a registration statement in which the sale is consistent
with the manner of sale requirements of Rule 144(f) under the
Securities Act;
-- to H Power in a bona fide repurchase transaction; and
-- pursuant to a tender or exchange offer conducted pursuant to
Regulations M-A, 14D, 14E and/or Rule 13e-4 under the Exchange Act;
and
- they will not increase their percentage ownership in H Power by more than
3% of our outstanding common stock, in the case of each family, above the
levels of fully diluted ownership that exist immediately following this
offering.
In all cases, the foregoing transfers are subject to the terms and
conditions of the lock-up agreements described under "Underwriting."
The investors have also agreed that they will not seek to be represented on,
seek the removal of any directors from, or otherwise change the composition of,
our board of directors or to otherwise control our board of directors or have
any involvement in our management.
The investors have further agreed that neither they nor any person they
control will: (i) conduct or participate in any solicitation of proxies or
consents relating to our common stock or our other securities; (ii) conduct or
participate in any meeting of our stockholders; (iii) request or obtain any
lists of our stockholders; (iv) initiate or encourage the making of any
stockholder proposal; (v) deposit any of their shares of common stock in a
voting trust or enter into any voting agreement or grant any proxy in respect of
their shares; (vi) form, join, or participate with any persons or group for the
purpose of acquiring, holding, voting or disposing of our common stock; (vii)
make any offer or proposal regarding the acquisition of H Power or any of its
securities or assets or with respect to any merger, business combination,
change-in-control, restructuring or recapitalization transaction involving H
Power; (viii) facilitate, encourage, disclose or pursue any intention, purpose,
plan or proposal with respect to H Power, our board of directors or our
management personnel that is inconsistent with the terms of the stockholders'
and voting agreement; (ix) seek any waiver or amendment of the voting and proxy
provisions of the stockholders' and voting agreement; or (x) assist, advise,
facilitate or encourage any person, entity or group to enter into any of the
transactions contemplated by clauses (i) through (ix) above.
The stockholders' and voting agreement has a 10-year term and will continue
in effect until April 5, 2010. However, the agreement will automatically
terminate on October 31, 2000 if we have not
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completed an initial public offering of our common stock by that date, or any
earlier date upon which we withdraw the registration statement of which this
prospectus forms a part and abandon this offering. The agreement will also
terminate with respect to the Rothstein family members when the number of shares
they own collectively is less than 5% of our outstanding common stock. This same
termination provision also applies with respect to the Entman family members.
The agreement would again become operative if the Rothstein family investors or
Entman family investors, as applicable, reacquire, on a collective basis, record
or beneficial ownership of 5% or more of our outstanding common stock, in which
case the agreement would terminate upon the earlier of April 5, 2010 or the date
on which such Rothstein family investors or Entman family investors, as
applicable, collectively own less than 5% of our outstanding common stock. If
our initial public offering has not been completed by October 31, 2000, we will
withdraw the registration statement of which this prospectus forms a part. We
have filed this agreement as an exhibit to that registration statement and we
encourage you to read the agreement carefully and in its entirety.
In February 1995, we entered into an agreement with NBG Technologies, Inc.
(formerly known as TechMatics, Inc.), a company controlled by Mr. Rothstein's
family, whereby NBG provided us with research and development consulting
services and, as consideration therefor, we granted to NBG marketing,
distribution and exclusive manufacturing rights in the U.S. with respect to fuel
cell systems that may be used to power certain consumer products. The agreement
provided that NBG was entitled to any arising technology and patent rights with
respect to all designs, materials and technologies they developed under this
agreement and we were granted a worldwide exclusive paid-up license for any such
designs, materials and technologies. However, if we were to use NBG developed
designs, materials and technologies in products that were not manufactured by
them, the agreement provided that we were to pay NBG a royalty to be determined.
Under this agreement, we have paid approximately $346,000 to NBG over the last
three fiscal years. We believe that the amounts paid to NBG were equivalent to
the amounts that would have been paid in an arm's-length transaction between
unaffiliated parties. All agreements and other arrangements with NBG were
terminated on March 29, 2000, in exchange for a cash payment of $100,000 and the
grant of options to purchase 400,000 shares of our common stock at an exercise
price per share equal to the initial public offering price of our common stock.
The termination of our agreements with NBG, however, does not preclude us from
continuing our involvement with NBG's activities, although we are not obligated
to do so.
In connection with DQE Enterprises' purchase of 200,000 shares of our
Series A preferred stock in 1996 for $3 million, we granted them the exclusive
right to distribute our stationary power fuel cell systems in Pennsylvania, Ohio
and West Virginia. DQE Enterprises recently agreed to modify this right to allow
ECO to distribute stationary power fuel cells systems in those counties in
Pennsylvania, Ohio and West Virginia in which ECO's rural electric cooperative
members provide energy services. As consideration for DQE Enterprises' modifying
its exclusive rights, we agreed to amend our Amended and Restated Certificate of
Incorporation to change the redemption price of our Series A preferred stock
from $16.50 per share to $18.00 per share, thereby increasing the liquidation
value of the Series A preferred stock by $300,000. We also issued to DQE
Enterprises warrants to purchase 800,000 shares of our common stock at $3.125
per share. We recorded a charge to cost of revenues--products totaling $150,000
which represents the fair value of the warrants on August 25, 1999, their date
of issuance. These warrants expire on July 31, 2001.
In May 1997, we entered into a 50-50 joint venture with Sofinov, Societe
Innovatech du Grand Montreal and 9042-0175 Quebec Inc. to establish HPEC. We
granted HPEC an exclusive license to market and distribute certain of our
stationary power products in Canada. Sofinov, Innovatech and 9042-0175
Quebec Inc. have agreed that they will exercise, effective immediately prior to
this offering, their right to convert their 50% interest in HPEC into 333,334
shares of our Series C convertible preferred stock, which, in turn, will be
converted into 2,666,664 shares of our common stock. Upon conversion, HPEC will
become our wholly-owned subsidiary and the territory in which HPEC has the
45
<PAGE>
exclusive right to market and sell certain of our stationary fuel cell products
would expand to cover most of North and South America to the extent it does not
infringe upon the license we granted to ECO.
In November 1999, we issued 3,200,000 shares of our common stock to Sofinov.
Pursuant to the terms of a May 1999 agreement, Sofinov agreed to lend us, at 8%
annual interest, up to $5 million, in increments of at least $150,000. These
loans were payable on demand. Under this agreement, Sofinov could convert all or
any portion of the outstanding balance of the advances and interest thereon into
shares of our common stock at a conversion rate of $1.5625 per share. If the
outstanding balance of advances and interest thereon was less than $5 million,
Sofinov was entitled to purchase additional shares of our common stock at
$1.5625 per share to bring its total purchase up to $5 million. Total advances
to us from Sofinov under this agreement amounted to $2.1 million and on
November 30, 1999, Sofinov exercised its conversion and purchase rights in full.
In May and June of 1999, Allan Rothstein, a son of Norman Rothstein, a
beneficial owner of more than five percent of our outstanding common stock,
loaned us a total of $483,000 evidenced by promissory notes, payable on demand,
with an interest rate of 8.0% per annum. We paid these loans and all accumulated
interest thereon in full in August 1999.
Concurrent with ECO's purchase of 8,000,000 shares of our common stock at a
price of $1.875 per share in August 1999, ECO paid us an initial payment of
$2.5 million for the exclusive right to market, distribute and service certain
of our stationary power products in U.S. counties in which ECO's rural electric
cooperative members provide energy services. The initial term of this agreement
shall remain in effect for a period of 10 years following the date that we
commence shipment of our commercial units to ECO and, at ECO's option, is
renewable thereafter for successive 10-year terms. In addition, we have agreed
to amend our by-laws to provide that ECO will be entitled to designate one
member of our board of directors.
The composition of our board of directors was subject to a stockholders'
rights agreement among Sofinov, Singapore Technologies Kinetics and DQE
Enterprises and certain of our common stockholders. Under this agreement, each
party was required to vote or cause to be voted all of its shares in order to
fix the size of our board of directors at nine and to ensure representation on
our board of each of the parties thereto. This agreement will terminate
immediately prior to the offering upon the conversion of all of our outstanding
shares of convertible preferred stock.
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<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of our common stock as of March 31, 2000, and as adjusted to reflect
the sale of [ ] shares of common stock in this offering, by: (1) each
person known to beneficially own more than 5% of our shares of common stock;
(2) each of our directors; (3) each named executive officer; (4) all of our
executive officers and directors as a group; and (5) certain other significant
stockholders of H Power. All persons listed have sole voting and investment
power with respect to their shares unless otherwise indicated. Unless indicated
otherwise, the business address of the beneficial owners is: c/o H Power Corp.,
1373 Broad Street, Clifton, New Jersey 07013.
<TABLE>
<CAPTION>
PERCENT OF SHARES
BENEFICIALLY OWNED
SHARES ----------------------
BENEFICIALLY BEFORE AFTER
OWNED(1) OFFERING OFFERING
------------ -------- --------
<S> <C> <C> <C>
Norman Rothstein (2)
311 Links Drive
West Oceanside, NY 11572.................................... 13,645,000 18.6%
Frederick Entman (3)
260 Tillou Road
South Orange, NJ 07079...................................... 12,386,800 16.9%
Sofinov Societe Financiere D'Innovation Inc.
1981 Avenue McGill College
Montreal, Quebec H3A 3C7.................................... 10,333,336 14.1%
ECO Fuel Cells, LLC
2201 Cooperative Way
Herndon, VA 20171........................................... 7,600,000 10.4%
John McSweeney (4)
ECO Fuel Cells, LLC
2201 Cooperative Way
Herndon, VA 20171........................................... 8,000,000 10.9%
Gerald Entman, Trustee for Elise Entman
2440 North Lakeview Avenue
Chicago, IL 60614........................................... 5,600,000 7.6%
Cynthia Rothstein
311 Links Drive West
Oceanside, NY 11572......................................... 4,800,000 6.6%
Hydro-Quebec CapiTech Inc.
75, Rene-Levesque Blvd. West, 22(nd) Floor
Montreal, Quebec H2Z 1AU.................................... 3,200,000 4.4%
Singapore Technologies Kinetics Ltd.
5 Portsdown Road
Singapore 139296............................................ 3,200,000 4.4%
DQE Enterprises, Inc. (5)
One North Shore Center, Suite 100
Pittsburgh, PA 15212........................................ 2,400,000 3.2%
Dr. H. Frank Gibbard (6).................................... 1,382,000 1.9%
Dr. Arthur Kaufman.......................................... 1,800,000 2.5%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PERCENT OF SHARES
BENEFICIALLY OWNED
SHARES ----------------------
BENEFICIALLY BEFORE AFTER
OWNED(1) OFFERING OFFERING
------------ -------- --------
<S> <C> <C> <C>
William L. Zang............................................. 0 *
Ivan Roch (7)............................................... 0 *
Thomas Russo (8)............................................ 200,000 *
Rachel K. Lorey (9)......................................... 0 *
Fong Saik Hay (10).......................................... 0 *
All directors and executive officers as a group
(11 persons) (11)......................................... 11,382,000 15.3%
</TABLE>
- ------------------------
* Less than 1% of the outstanding common stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of common stock issuable
pursuant to options, to the extent such options are currently exercisable or
convertible within 60 days of March 31, 2000, are treated as outstanding for
computing the percentage of the person holding these securities but are not
treated as outstanding for computing the percentage of any other person.
Unless otherwise noted, each person or group identified possesses sole
voting and investment power with respect to shares, subject to community
property laws where applicable.
(2) Includes 245,000 shares held by Mr. Rothstein, 4,800,000 shares held by
Cynthia Rothstein, his spouse, 120,000 shares held by his brother Carl
Rothstein and 6,200,000 shares held by his children as follows: Allan
Rothstein 2,600,000 shares, Steven Rothstein 1,600,000 shares and Tammy
Rothstein 1,600,000 shares. Also includes 200,000 shares held by
Mr. Rothstein as trustee for Jordan H. Rothstein 2000 Irrevocable Trust and
200,000 shares held by Mr. Rothstein as trustee for Nicole S. Rothstein 2000
Revocable Trust. Also includes 200,000 shares of common stock held by
Dynamark Corp., a company controlled by Mr. Rothstein. Includes stock
options to purchase 1,680,000 shares granted to Mr. Rothstein and stock
options to purchase 400,000 shares granted to NBG Technologies, Inc., a
company controlled by Mr. Rothstein. Mr. Rothstein disclaims beneficial
ownership of all shares of common stock held by any members of his family.
Substantially all of these shares are subject to a stockholders' and voting
agreement as discussed under "Certain Relationships and Related
Transactions."
(3) Includes 457,000 shares held by Mr. Entman. Also includes 5,600,000 shares
held in trust for Elise Entman, his spouse, and 2,300,000 shares held by
Brian Entman and 2,300,000 shares held by Scott Entman, his children.
Includes stock options to purchase 41,288 shares granted to Scott Entman,
and 8,512 shares granted to Brian Entman. Also includes options to purchase
1,680,000 shares granted to Mr. Entman. Mr. Entman disclaims beneficial
ownership of all shares of common stock held by any members of his family.
All of these shares are subject to a stockholders' and voting agreement as
discussed under "Certain Relationships and Related Transactions."
(4) Includes 7,600,000 shares of common stock held by ECO over which
Mr. McSweeney shares voting power.
(5) Includes warrants to purchase 800,000 shares of common stock. Does not
include shares of common stock issuable to DQE Enterprises in payment of
dividends to which they are entitled.
(6) Includes 138,800 shares owned by Dr. Gibbard, an aggregate of 41,600 shares
held by his eight children and 1,600 shares held by Lindsey Hough, his
nephew. Dr. Gibbard disclaims beneficial
48
<PAGE>
ownership of all shares held by his children and his nephew. Includes stock
options to purchase 1,200,000 shares of common stock.
(7) Mr. Roch is the designee of Sofinov on our board of directors, but he does
not have or share voting or investment control over the 10,333,336 shares of
common stock held by Sofinov.
(8) Includes options to purchase 160,000 shares of common stock.
(9) Ms. Lorey is the designee of DQE Enterprises on our board of directors and
serves as a Vice President of DQE Enterprises, but she does not have or
share voting or investment control over the 1,600,000 shares of common stock
and warrants to purchase 800,000 shares of common stock held by DQE
Enterprises.
(10) Mr. Fong is the designee of Singapore Technologies Kinetics on our board of
directors and serves as a Director of Engineering of Singapore Technologies
Kinetics, but he does not have or share voting or investment control over
the 3,200,000 shares of common stock held by Singapore Technologies
Kinetics.
(11) Includes options to purchase 1,360,000 shares.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
Upon completion of this offering, our authorized capital stock will consist
of 150,000,000 shares of common stock, par value $0.001 per share and 10,000,000
shares of preferred stock, par value $0.001 per share.
The following is a summary of some of the provisions of the common stock and
preferred stock provisions of our amended and restated certificate of
incorporation.
COMMON STOCK
As of February 29, 2000, there were 73,210,976 shares of common stock
outstanding that were held by approximately 207 stockholders of record.
The holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of stockholders. Subject to
preferences that may be applicable to any outstanding shares of preferred stock,
the holders of common stock are entitled to receive ratably such dividends, if
any, as may be declared by the board out of funds legally available for the
payment of dividends. Our common stock does not have cumulative voting rights
which means that the holders of the outstanding common stock voting for the
election of directors can elect all directors then being elected. If we
liquidate, dissolve or wind up, the holders of our common stock will be entitled
to share ratably in all assets remaining after payment of liabilities and
liquidation preferences of any outstanding shares of preferred stock. Holders of
our common stock have no preemptive rights or rights to convert their common
stock into any other securities. There are no redemption or sinking fund
provisions applicable to our common stock. All outstanding shares of common
stock are fully paid and non-assessable, and the shares of common stock to be
issued upon completion of this offering will be fully paid and non-assessable.
PREFERRED STOCK
Upon the closing of this offering, we will not have any shares of our
preferred stock outstanding. The 10,000,000 authorized shares of our preferred
stock may be issued in one or more series without further approval from our
stockholders. Our board of directors is authorized to determine the terms,
limitations and relative rights, qualifications and preferences of our preferred
stock, to establish several series of our preferred stock and to determine the
variations among series. If we issue preferred stock, it would have priority
over our common stock with respect to dividends and to other distributions,
including the distribution of assets upon liquidation. In addition, we may be
obligated to repurchase or redeem our preferred stock. The holders of our
preferred stock may have voting and conversion rights, including multiple voting
rights, which could adversely affect the rights of the holders of our common
stock. We do not have any present plans to issue any shares of preferred stock.
REGISTRATION RIGHTS
Pursuant to agreements between us and DQE Enterprises, Inc., Singapore
Technologies Kinetics Ltd., Sofinov Societe Financiere D'Innovation Inc.,
Societe Innovatech du Grand Montreal, 9042-0175 Quebec Inc., ECO and
Hydro-Quebec CapiTech, these entities are entitled to certain rights with
respect to the registration under the Securities Act of 26,666,664 shares of our
common stock, including the common stock into which the preferred stock is
convertible, that they currently hold. Following the closing of this offering,
if we propose to register any of the shares of our capital stock under the
Securities Act, either for our own account or for the account of other security
holders exercising registration rights, these holders are entitled to notice of
such registration and are entitled to include shares of their common stock in
such registration.
50
<PAGE>
DQE Enterprises, Singapore Technologies Kinetics, Sofinov, Innovatech,
9042-0175 Quebec Inc., ECO and Hydro-Quebec CapiTech have waived their rights to
include their shares in this offering.
Singapore Technologies Kinetics, Sofinov, Innovatech, 9042-0175
Quebec Inc., ECO and Hydro-Quebec CapiTech are also entitled to certain demand
registration rights with respect to 25,066,664 shares of our common stock
pursuant to which they may require us to file a registration statement under the
Securities Act at our expense with respect to their shares of common stock, and
we are required to use our best efforts to effect such registration. Singapore
Technologies Kinetics, Sofinov, Innovatech, 9042-0175 Quebec Inc., ECO and
Hydro-Quebec CapiTech have agreed not to exercise these rights for a period of
one year following the closing of this offering.
Furthermore, Messrs. Rothstein and Entman's consulting agreements provide
for one collective demand registration right and unlimited piggyback
registration rights with respect to an aggregate of approximately 21,630,000
shares. All fees and expenses incurred in connection with any of these
registrations will be borne by us, except that Messrs. Rothstein and Entman will
pay all fees and expenses of their own counsel and all underwriting discounts
and commissions relating to any sale of their common stock. Messrs. Rothstein
and Entman have agreed not to exercise their demand registration rights for
12 months following the closing of this offering and have waived their right to
include their shares in this offering.
DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER PROVISIONS
Under Section 203 of the Delaware General Corporation Law, certain "business
combinations" between a Delaware corporation, whose stock generally is publicly
traded or held of record by more than 2,000 stockholders, and an "interested
stockholder" are prohibited for a three-year period following the date that such
stockholder became an interested stockholder, unless:
- the corporation has elected in its certificate of incorporation or bylaws
not to be governed by the Delaware anti-takeover law (we have not made
such an election);
- the business combination was approved by the board of directors of the
corporation before the other party to the business combination became an
interested stockholder;
- upon consummation of the transaction that made it an interested
stockholder, the interested stockholder owned at least 85% of the voting
stock of the corporation outstanding at the commencement of the
transaction (excluding voting stock owned by directors who are also
officers or held in employee stock plans in which the employees do not
have a right to determine confidentially whether to tender or vote stock
held by the plan); or
- the business combination was approved by the board of directors of the
corporation and ratified by 66 2/3% of the voting stock which the
interested stockholder did not own.
The three-year prohibition does not apply to certain business combinations
proposed by an interested stockholder following the announcement or notification
of certain extraordinary transactions involving the corporation and a person who
had not been an interested stockholder during the previous three years or who
became an interested stockholder with the approval of a majority of the
corporation's directors. The term "business combination" is defined generally to
include mergers or consolidations between a Delaware corporation and an
interested stockholder, transactions with an interested stockholder involving
the assets or stock of the corporation or its majority-owned subsidiaries and
transactions which increase an interested stockholder's percentage ownership of
stock. The term "interested stockholder" is defined generally as a stockholder
who becomes beneficial owner of 15% or more of a Delaware corporation's voting
stock. Section 203 could have the effect of delaying, deferring or preventing
takeover attempts that might result in your receiving a premium over the market
price of our common stock.
51
<PAGE>
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
We will enter into indemnification agreements with our current directors and
executive officers. These agreements and provisions of our amended and restated
certificate of incorporation may have the practical effect in some cases of
eliminating our stockholders' ability to collect monetary damages from our
directors. We believe that these contractual agreements and the provisions of
our amended and restated certificate of incorporation are necessary to attract
and retain qualified persons as directors and officers.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for our common stock is American Stock
Transfer & Trust Company.
52
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
If our stockholders sell substantial amounts of our common stock, including
shares issued upon the exercise of outstanding options, in the public market
following this offering, the market price of our common stock could decline.
These sales also might make it more difficult for us to sell equity or
equity-related securities in the future and at a time and price that we deem
appropriate.
Upon completion of this offering, we will have outstanding an aggregate of
73,210,976 shares of our common stock, assuming no exercise of the underwriters'
over-allotment option and no exercise of outstanding options or warrants. Of
these shares, all of the shares sold in this offering will be freely tradeable
without restriction or further registration under the Securities Act, unless
such shares are purchased by "affiliates" as that term is defined in Rule 144
under the Securities Act. This leaves [ ] shares eligible for sale in the
public market as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES DATE
- ------------------------------------- ------------------------------------------------------------
<S> <C>
After the date of this prospectus.
Commencing on the 91(st) day after the date of this
prospectus, subject, in some cases, to volume limitations.
At various times commencing on the 181(st) day after the
date of this prospectus.
</TABLE>
LOCK-UP AGREEMENTS
All of our officers and directors and substantially all the holders of at
least 5% of our common stock have signed lock-up agreements under which they
agreed not to transfer or dispose of, directly or indirectly, any shares of our
common stock or any securities convertible into or exercisable or exchangeable
for shares of our common stock, for a period of 180 days after the date of this
prospectus. In addition, the underwriters have agreed to allow certain principal
stockholders and their affiliates to sell up to 10% of their common shares
90 days after the date of this prospectus. Transfers or dispositions can be made
sooner:
- with the prior written consent of Lehman Brothers Inc.;
- in the case of gifts or estate planning transfers where the donee signs a
lock-up agreement; or
- in the case of distributions to stockholders or affiliates of the
stockholders where the recipient signs a lock-up agreement.
In addition to the foregoing restrictions, the transfer and sale of common
stock by certain of the stockholders who have entered into the lock-up
agreements described above is further subject to the provisions of the
stockholders' and voting agreement described under "Certain Relationships and
Related Transactions."
RULE 144
In general, under Rule 144 as currently in effect, a person who has
beneficially owned shares of our common stock for at least one year would be
entitled to sell within any three-month period a number of shares that does not
exceed the greater of:
- 1% of the number of shares of our common stock then outstanding, which
will equal approximately [ ] shares immediately after this offering;
or
- the average weekly trading volume of our common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing with
the Securities and Exchange Commission of a notice on Form 144 with
respect to that sale.
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<PAGE>
Sales under Rule 144 are also subject to manner of sale provisions and
notice requirements and to the availability of current public information about
us.
RULE 144(K)
Under Rule 144(k), a person who is not deemed to have been one of our
affiliates at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
generally including the holding period of any prior owner other than an
affiliate, is entitled to sell those shares without complying with the manner of
sale, public information, volume limitation or notice provisions of Rule 144.
Therefore, unless otherwise restricted, Rule 144(k) shares may be sold
immediately upon the completion of this offering. However, our transfer agent
may require an opinion of counsel that a proposed sale of shares comes within
the terms of Rule 144 under the Securities Act prior to effecting a transfer of
the shares. Upon completion of this offering, holders of 56,144,312 shares will
be eligible to freely sell such shares under Rule 144(k).
RULE 701
In general, subject to the volume limitations under Rule 701 of the
Securities Act as currently in effect, any of our employees, consultants or
advisors who purchases shares of our common stock from us in connection with a
compensatory stock or option plan or other written agreement is eligible to
resell those shares 90 days after the effective date of this offering in
reliance on Rule 144, but without compliance with some of the restrictions,
including the holding period, contained in Rule 144.
STOCK OPTIONS
We intend to file a registration statement on Form S-8 under the Securities
Act shortly after the completion of this offering covering 6,000,000 shares of
our common stock reserved for issuance under our stock option plan and
approximately 7,500,000 shares of our common stock issuable upon exercise of
options granted outside of our stock option plan. As of March 24, 2000, options
to purchase 8,732,624 shares of our common stock were issued and outstanding of
which 5,868,000 shares are currently exercisable. Shares of our common stock
registered under the S-8 registration statement will, subject to vesting
provisions and Rule 144 volume limitations applicable to our affiliates, be
available for sale immediately in the open market, subject to the expiration of
any applicable lock-up agreements.
REGISTRATION RIGHTS
After this offering, the holders of 48,568,664 shares of our common stock,
or their transferees, will be entitled to have their shares included for sale in
subsequent registered offerings of our common stock. Furthermore, the holders of
the following number of shares of common stock will be able to require us to
conduct a registered public offering of their shares at the times indicated
below:
- 32,568,664 shares of common stock at any time following the date that is
one year after the closing of this offering;
- 8,000,000 shares of common stock at any time after August 27, 2001; and
- 6,400,000 shares of common stock at any time after November 29, 2001.
If these holders exercise their registration rights, their shares of our common
stock would become freely tradeable without restriction under the Securities
Act. These sales could have a material adverse effect on the trading price of
our common stock.
54
<PAGE>
UNITED STATES TAX CONSEQUENCES TO NON-U.S. HOLDERS
The following discussion summarizes the material United States federal
income and estate tax consequences generally applicable to the ownership and
disposition of our common stock by a non-U.S. holder of common stock. A non-U.S.
holder is a holder of common stock that is not, for United States federal income
tax purposes, any of the following:
- a citizen or resident of the United States;
- a corporation, partnership or other entity created or organized in or
under the laws of the United States or any of its political subdivisions;
- an estate, the income of which is subject to U.S. federal income taxation
regardless of its source; or
- a trust whose administration is subject to the primary supervision of a
U.S. court, and which has one or more U.S. persons who have the authority
to control all substantial decisions of the trust.
This discussion does not consider all aspects of U.S. federal income and
estate taxation or the specific facts and circumstances that may be relevant to
particular non-U.S. holders in light of their personal circumstances, such as
insurance companies, tax-exempt organizations, financial institutions,
broker-dealers or certain U.S. expatriates, and does not address the treatment
of those holders under the laws of any state, local or foreign taxing
jurisdiction. Further, the discussion is based on provisions of the United
States Internal Revenue Code of 1986, as amended, or the "Code," Treasury
regulations under the Code, and administrative and judicial interpretations of
the Code. This discussion is based on the provisions of the Code as they are in
effect on the date of this prospectus. All of these provisions are subject to
change or different interpretation on a possibly retroactive basis. This
discussion is limited to non-U.S. holders who hold our common stock as a capital
asset. Each prospective holder is urged to consult its tax advisor with respect
to the United States federal income and estate tax consequences of acquiring,
holding and disposing of common stock, as well as any tax consequences that may
arise under the laws of any state, local or foreign taxing jurisdiction.
DIVIDENDS
Dividends paid to a non-U.S. holder of common stock generally will be
subject to United States federal withholding tax at a 30% rate or a lower rate
as may be specified by an applicable income tax treaty. Provided that such
non-U.S. holder complies with applicable certification and disclosure
requirements, there will be no withholding tax with respect to dividends that
are effectively connected with the non-U.S. holder's conduct of a trade or
business within the United States (and if an income tax treaty applies, are
attributable to a United States permanent establishment of such non-U.S.
holder). Instead, the "effectively connected" dividends will be subject to net
U.S. federal income tax in the same manner as dividends paid to United States
citizens, resident aliens and domestic United States corporations. Any
effectively connected dividends received by a corporate non-U.S. holder may
also, under certain circumstances, be subject to an additional "branch profits
tax" at a 30% rate or a lower rate as may be specified by an applicable income
tax treaty, on the repatriation from the United States of its "effectively
connected earnings and profits," subject to adjustments.
Under currently effective United States Treasury regulations, dividends paid
prior to January 1, 2000 to an address in a foreign country are presumed to be
paid to a resident of that country, unless the payor has knowledge to the
contrary, for purposes of the withholding discussed above and for purposes of
determining the applicability of a tax treaty rate. Under recently finalized
United States Treasury regulations that will generally be effective for
distributions after December 31, 2000, or the "Final Withholding Regulations,"
however, a non-U.S. holder of common stock who wishes to claim the benefit of an
applicable treaty rate would be required to satisfy applicable certification
requirements. In addition, under the Final Withholding Regulations, in the case
of common stock held
55
<PAGE>
by a foreign partnership, (1) the certification requirements would generally be
applied to the partners of the partnership and (2) the partnership would be
required to provide certain information, including a United States taxpayer
identification number. The Final Withholding Regulations provide look-through
rules for tiered partnerships.
A non-U.S. holder of common stock that is eligible for a reduced rate of
United States withholding tax under a tax treaty may obtain a refund of any
excess amounts currently withheld by filing an appropriate claim for refund with
the United States Internal Revenue Service.
GAIN ON DISPOSITION OF COMMON STOCK
A non-U.S. holder generally will not be subject to United States federal
income tax for gain recognized on a sale or other disposition of common stock
unless one of the following conditions is satisfied:
- the gain is effectively connected with a trade or business conducted by
the non-U.S. holder in the United States (and, if an income tax treaty
applies, is attributable to a permanent establishment maintained in the
United States by such non-U.S. holder). The non-U.S. holder will, unless
an applicable treaty provides otherwise, be taxed on its net gain derived
from the sale or other disposition under regular graduated U.S. federal
income tax rates. Effectively connected gains realized by a corporate
non-U.S. holder may also, under certain circumstances, be subject to an
additional "branch profits tax" at a 30% rate or a lower rate as may be
specified by an applicable income tax treaty;
- in the case of a non-U.S. holder who is an individual and holds the common
stock as a capital asset, the holder is present in the United States for
183 or more days in the taxable year of the sale or other disposition and
certain other conditions exist;
- we are or have been a "United States real property holding corporation"
for U.S. federal income tax purposes within the shorter of the five-year
period preceding such disposition or such non-U.S. holder's holding
period. We believe we are not currently, and do not anticipate becoming, a
"United States real property holding corporation" for U.S. federal income
tax purposes. Further, even if we were to become a "United States real
property holding corporation" for U.S. federal income tax purposes, any
gain recognized by a non-U.S. holder still would not be subject to U.S.
tax if the shares were considered to be "regularly traded on an
established securities market," and the non-U.S. holder did not hold,
directly or indirectly at any time during the shorter of the periods
described above, more than 5% of the common stock; or
- the non-U.S. holder is subject to tax under certain provisions of the Code
applicable to U.S. expatriates.
FEDERAL ESTATE TAX CONSEQUENCES
Common stock held by an individual non-U.S. holder at the time of death will
be included in such holder's gross estate for U.S. federal estate tax purposes,
and may be subject to U.S. federal estate tax, unless an applicable estate tax
treaty provides otherwise.
INFORMATION REPORTING AND BACKUP WITHHOLDING
We must report annually to the United States Internal Revenue Service and to
each non-U.S. holder the amount of dividends paid to, and the tax withheld with
respect to, such holder, regardless of whether any tax was actually withheld.
This information may also be made available to the tax authorities in the
non-U.S. holder's country of residence.
56
<PAGE>
Under current law, United States information reporting requirements, other
than reporting of dividend payments for purposes of the withholding tax noted
above, and backup withholding tax generally will not apply to dividends paid to
non-U.S. holders that are either subject to the 30% withholding discussed above
or that are not subject to withholding because an applicable tax treaty reduces
or eliminates the withholding. Otherwise, backup withholding of United States
federal income tax at a rate of 31% may apply to dividends paid with respect to
common stock to holders that are not "exempt recipients" and that fail to
provide certain information including the holder's United States taxpayer
identification number.
Under current law, generally, unless the payor of dividends has actual
knowledge that the payee is a United States person, the payor may treat dividend
payments to a payee with a foreign address as exempt from information reporting
and backup withholding. However, under the Final Withholding Regulations,
dividend payments generally will be subject to information reporting and backup
withholding unless applicable certification requirements are satisfied. See the
discussion above with respect to the rules applicable to foreign partnerships
under the Final Withholding Regulations.
In general, United States information reporting and backup withholding
requirements also will not apply to a payment made outside the United States of
the proceeds of a sale of common stock to or through an office outside the
United States of a non-United States broker. However, United States information
reporting, but not backup withholding, requirements will apply to a payment made
outside the United States of the proceeds of a sale of common stock through an
office outside the United States of a broker that is a United States person or a
"United States related person" that derives 50% or more of its gross income for
certain periods from the conduct of a trade or business in the United States,
that is a "controlled foreign corporation" for United States federal income tax
purposes, or, in the case of payments made after December 31, 2000, a foreign
partnership with certain connections to the United States, unless the broker has
documentary evidence in its records that the holder or beneficial owner is a
non-United States person or the holder or beneficial owner otherwise establishes
an exemption. Payment of the proceeds of the sale of common stock to or through
a United States office of a broker is currently subject to both United States
backup withholding and information reporting unless the holder certifies its
non-United States status under penalties of perjury or otherwise establishes an
exemption.
Backup withholding is not an additional tax. Amounts withheld under the
backup withholding rules are generally allowable as a refund or credit against
such non-U.S. holder's federal income tax liability, if any, provided that the
required information is furnished to the IRS.
57
<PAGE>
UNDERWRITING
Under the underwriting agreement, which is filed as an exhibit to the
registration statement relating to this prospectus, each of the underwriters
named below for whom Lehman Brothers Inc., CIBC World Markets Corp., Deutsche
Bank Securities Inc., Josephthal & Co. Inc. and Fidelity Capital Markets Corp.,
a division of National Financial Services Corporation, are acting as
representatives, has agreed to purchase from us the respective number of shares
of common stock shown opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITING SHARES
- ------------ ----------
<S> <C>
Lehman Brothers Inc.........................................
CIBC World Markets Corp.....................................
Deutsche Bank Securities Inc................................
Josephthal & Co. Inc........................................
Fidelity Capital Markets Corp., a division of National
Financial Services Corporation............................
----------
Total.......................................................
==========
</TABLE>
The underwriting agreement provides that the underwriters' obligations to
purchase our common stock depend on the satisfaction of the conditions contained
in the underwriting agreement, and that if any of the common stock are purchased
by the underwriters under the underwriting agreement, then all of the common
stock which the underwriters have agreed to purchase under the underwriting
agreement must be purchased. The conditions contained in the underwriting
agreement include that:
- the representations and warranties made by us to the underwriters are
true;
- there is no material change in the financial markets; and
- we deliver customary closing documents to the underwriters.
COMMISSIONS AND EXPENSES
The representatives had advised us that the underwriters propose to offer
the common stock directly to the public at the public offering price presented
on the cover page of this prospectus, and to selected dealers, who may include
the underwriters, at the public offering price less a selling concession not in
excess of $ per share. The underwriters may allow, and the selected dealers
may reallow, a concession not in excess of $ per share to brokers and
dealers. After the offering, the underwriters may change the offering price and
other selling terms.
The following table summarizes the underwriting discounts and commissions we
will pay. The underwriting discounts and commissions are equal to the public
offer price per share, less the amount paid to us per share. The underwriting
discounts and commissions will equal 7% of the public offering price.
<TABLE>
<CAPTION>
TOTAL WITHOUT WITH
PER SHARE OVER-ALLOTMENT OVER-ALLOTMENT
--------- -------------- --------------
<S> <C> <C> <C>
Underwriting discounts and commissions to be paid by
us.................................................... $ $ $
</TABLE>
We estimate that the total expenses of the offering, including registration,
filing and listing fees, printing fees and legal and accounting expenses but
excluding underwriting discounts and commissions, will be approximately
$ million.
OVER-ALLOTMENT OPTION
We have granted to the underwriters an option to purchase up to an aggregate
of additional shares of common stock, exercisable solely to cover
over-allotments, if any, at the public offering price less the underwriting
discounts and commissions shown on the cover page of this
58
<PAGE>
prospectus. The underwriters may exercise this option at any time, and from time
to time, until 30 days after the date of the underwriting agreement. To the
extent the underwriters exercise this option, each underwriter will be
committed, so long as the conditions of the underwriting agreement are
satisfied, to purchase a number of additional shares proportionate to that
underwriter's initial commitment as indicated in the preceding table, and we
will be obligated, under the over-allotment option, to sell the common stock to
the underwriters.
LOCK-UP AGREEMENTS
We have agreed that, without the prior written consent of Lehman
Brothers Inc., we will not, directly or indirectly, offer, sell or dispose of
any common stock or any securities which may be converted into or exchanged for
any common stock for a period of 180 days from the date of this prospectus. We
and all of our executive officers and directors, and substantially all of our
existing shareholders, including Messrs. Norman Rothstein and Frederick Entman
and certain members of their respective families, have agreed under lock-up
agreements that, without the prior written consent of Lehman Brothers Inc., they
will not, directly or indirectly, offer, sell or otherwise dispose of any common
stock or any securities which may be converted into or exchanged or exercised
for any common stock for a period of 180 days from the date of this prospectus.
Notwithstanding the foregoing, during the period commencing on the 91st day
after the date of the underwriting agreement through and including the 180th day
after the date of the underwriting agreement, Messrs. Norman Rothstein and
Frederick Entman may sell up to 10% of their shares of common stock subject, in
all cases, with respect to Messrs. Rothstein and Entman and certain members of
their respective families, to the prohibitions and limitations contained in the
stockholders' and voting agreement described under "Certain Relationships and
Related Transactions."
OFFERING PRICE DETERMINATION
Prior to this offering, there has been no public market for our common
stock. The initial public offering price will be negotiated between the
representatives and us. In determining the initial public offering price of our
common stock, the representatives will consider
- prevailing market conditions;
- our historical performance and capital structure;
- estimates of our business potential and earnings prospects;
- an overall assessment of our management; and
- the consideration of these factors in relation to market valuation of
companies in related businesses.
INDEMNIFICATION
We have agreed to indemnify the underwriters against liabilities relating to
the offering, including liabilities under the Securities Act and liabilities
arising from breaches of the representations and warranties contained in the
underwriting agreement and liabilities incurred in connection with the directed
share program referred to below, and to contribute to payments that the
underwriters may be required to make for these liabilities.
STABILIZATION, SHORT POSITIONS AND PENALTY BIDS
Until the distribution of the common stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the underwriters and
selling group members to bid for and purchase shares of common stock. As an
exception to these rules, the representatives are permitted to engage in
transactions that stabilize the price of our common stock. These transactions
may consist of bids or purchases for the purpose of stabilizing, fixing or
maintaining the price of our common stock.
59
<PAGE>
The underwriters may create a short position in the common stock in
connection with the offering, which means that they may sell more shares of our
common stock than are presented on the cover page of this prospectus. If the
underwriters create a short position, then the representatives may reduce that
short position by purchasing our common stock in the open market. The
representatives also may elect to reduce any short position by exercising all or
part of the over-allotment option described in this prospectus.
The representatives also may impose a penalty bid on underwriters and
selling group members. This means that if the representatives purchase our
common stock in the open market to reduce the underwriters' short position or to
stabilize the price of the common stock, they may reclaim the amount of the
selling concession from the underwriters and selling group members who sold
those shares of our common stock as part of the offering.
In general, purchasers of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might be in the absence of these purchases. The imposition of a
penalty bid could have an effect on the price of a security to the extent that
it were to discourage resales of the security by purchasers in an offering.
Neither we nor any of the underwriters make any representation or prediction
concerning the direction or magnitude of any effect that the transactions
described above may have on the price of our common stock. In addition, neither
we nor any of the underwriters make any representation that the representatives
will engage in these transactions or that any such transaction, once commenced,
will not be discontinued without notice.
FIDELITY CAPITAL MARKETS
Fidelity Capital Markets, a division of National Financial Services
Corporation, is acting as an underwriter in this offering, and will be
facilitating electronic distribution through the Internet/intranet and other
proprietary electronic technology.
STAMP TAXES
Purchasers of the shares of our common stock offered by this prospectus may
be required to pay stamp taxes and other charges under the laws and practices of
the country of purchase, in addition of the offering price listed on the cover
of this prospectus.
OFFER AND SALES IN CANADA
Any offers in Canada will be made only under an exception from the
requirements to file prospectus in relevant province of Canada where sale is
made.
DIRECTED SHARE PROGRAM
At our request, the underwriters have reserved up to shares, or % of
our common stock offered by this prospectus, for sale under a directed share
program to officers, directors, employees, business associates and persons
otherwise associated with us. All of the persons purchasing the reserved shares
must commit to purchase no later than the close of business on the day following
the date of this prospectus. The number of shares available for sale to the
general public will be reduced to the extent these persons purchase the reserved
shares.
The underwriters have informed us that they do not intend to confirm sales
to discretionary accounts that exceed 5% of the total number of shares of our
common stock offered by them.
60
<PAGE>
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for H Power by Fulbright & Jaworski L.L.P., New York, New York. Merrill M.
Kraines, a partner in Fulbright & Jaworski L.L.P., has served as our Secretary
since December 1999. Certain legal matters in connection with the offering will
be passed upon for the underwriters by Greenberg Traurig, LLP, New York, New
York.
EXPERTS
The financial statements as of May 31, 1999 and 1998 and for each of the
three fiscal years in the period ended May 31, 1999 included in this prospectus
have been so included in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement, of which this prospectus constitutes a part, on Form S-1, with
respect to the common stock being sold in this offering. This prospectus
constitutes a part of that registration statement. This prospectus does not
contain all of the information set forth in the registration statement and the
exhibits and schedules to the registration statement, because some parts have
been omitted in accordance with rules and regulations of the Securities and
Exchange Commission. For further information about us and the common stock being
sold in this offering, please refer to the registration statement and the
exhibits and schedules filed as a part of the registration statement. Statements
contained in this prospectus as to the contents of any contract, agreement or
any other document referred to are not necessarily complete; reference is made
in each instance to the copy of such contract or document filed as an exhibit to
the registration statement. Each such statement is qualified in all respects by
reference to such exhibit.
A copy of the registration statement, including exhibits and schedules
thereto, may be inspected without charge and obtained at prescribed rates at the
public reference section of the Securities and Exchange Commission at its
principal offices, located at 450 Fifth Street, N.W., Washington, D.C. 20549,
and maybe inspected without charge at the regional offices of the Securities and
Exchange Commission located at Seven World Trade Center, 13th Floor, New York,
New York 10048, and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. You may also obtain information on the operation of the
Public Reference Room by calling the Securities and Exchange Commission at
1-800-SEC-0330. The registration statement, including the exhibits and schedules
thereto, is also available at the Securities and Exchange Commission's site on
the World Wide Web at http://www.sec.gov.
We intend to furnish our stockholders annual reports containing financial
statements audited by our independent auditors and quarterly reports containing
unaudited financial information.
61
<PAGE>
H POWER CORP.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGES
--------
<S> <C>
Report of Independent Accountants........................... F-2
Consolidated Balance Sheets as of May 31, 1998 and 1999,
November 30, 1999 (unaudited), and November 30, 1999 Pro
Forma (unaudited)......................................... F-3
Consolidated Statements of Operations for the years ended
May 31, 1997, 1998 and 1999 and the six months ended
November 30, 1998 (unaudited) and 1999 (unaudited)........ F-4
Consolidated Statements of Changes in Stockholders' Equity
(Deficit) and Comprehensive Loss for the years ended
May 31, 1997, 1998 and 1999 and the six months ended
November 30, 1998 (unaudited) and 1999 (unaudited)........ F-5
Consolidated Statements of Cash Flows for the years ended
May 31, 1997, 1998 and 1999 and the six months ended
November 30, 1998 (unaudited) and 1999 (unaudited)........ F-6
Notes to Consolidated Financial Statements.................. F-7-F-19
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
H Power Corp.
The stock split described in Note 1 to the consolidated financial statements
has not been consummated at April 6, 2000. When it has been consummated we will
be in position to issue the following report:
"In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of changes in stockholders'
equity (deficit) and comprehensive loss and of cash flows present fairly, in
all material respects, the financial position of H Power Corp. and its
subsidiary (the "Company") at May 31, 1998 and 1999, and the results of
their operations and their cash flows for each of the three years in the
period ended May 31, 1999, in conformity with accounting principles
generally accepted in the United States. These financial statements are the
responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits of these statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and
perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above."
PricewaterhouseCoopers LLP
Florham Park, NJ
August 25, 1999
F-2
<PAGE>
H POWER CORP.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MAY 31, PRO FORMA
--------------------------- NOVEMBER 30, NOVEMBER 30,
1998 1999 1999 1999
------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents................................. $ 4,960,591 $ 242,107 $ 21,366,043 $ 21,366,043
Accounts receivable....................................... 563,874 135,229 1,357,890 1,357,890
Unbilled receivables...................................... 271,300 186,283 289,822 289,822
Inventories............................................... 13,711 341,119 411,289 411,289
Tax credit receivable..................................... 205,131 644,791 889,486 889,486
Prepaid expenses and other current assets................. 118,682 35,188 332,491 332,491
------------ ------------ ------------ ------------
Total current assets.................................... 6,133,289 1,584,717 24,647,021 24,647,021
Plant and equipment, net.................................... 1,048,751 1,438,912 1,372,297 1,372,297
Patents, net of accumulated amortization of $10,085 and
$18,886 at May 31, 1998 and 1999, respectively............ 368,145 415,362 421,844 421,844
Other assets................................................ 82,269 32,900 312,368 312,368
------------ ------------ ------------ ------------
Total assets............................................ $ 7,632,454 $ 3,471,891 $ 26,753,530 $ 26,753,530
============ ============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt...................... $ 125,357 $ 124,219 $ 124,225 $ 124,225
Accounts payable.......................................... 579,829 1,400,915 867,076 867,076
Accrued expenses.......................................... 296,481 472,441 1,389,310 1,389,310
Deferred revenue.......................................... -- -- 2,461,473 2,461,473
Due to related parties.................................... 24,926 1,292,654 80,725 80,725
Estimated losses on uncompleted contracts................. 893,556 -- -- --
------------ ------------ ------------ ------------
Total current liabilities............................... 1,920,149 3,290,229 4,922,809 4,922,809
Long-term debt.............................................. 3,702 69,280 68,088 68,088
------------ ------------ ------------ ------------
Total liabilities....................................... 1,923,851 3,359,509 4,990,897 4,990,897
------------ ------------ ------------ ------------
Commitments and contingencies
Minority interest........................................... 5,000,000 5,000,000 5,000,000 --
------------ ------------ ------------ ------------
Mandatorily redeemable preferred stock:
Series A Convertible Preferred Stock--$.001 par value;
200,000 shares authorized; 200,000 shares issued and
outstanding at May 31, 1998 and 1999 and November 30,
1999; 0 shares issued and outstanding at November 30,
1999 pro forma.......................................... 2,966,471 2,966,471 2,966,471 --
Series B Convertible Preferred Stock--$.001 par value;
400,000 shares authorized; 400,000 shares issued and
outstanding at May 31, 1998 and 1999 and November 30,
1999; 0 shares issued and outstanding at November 30,
1999 pro forma.......................................... 4,944,118 4,944,118 4,944,118 --
Series C Convertible Preferred Stock--$.001 par value;
1,200,000 shares authorized; 600,000 issued and
outstanding at May 31, 1998 and 1999 and November 30,
1999; 0 shares issued and outstanding at November 30,
1999 pro forma.......................................... 7,416,177 7,416,177 7,416,177 --
STOCKHOLDERS' EQUITY
Common stock--$.001 par value; 150,000,000 shares
authorized; 46,424,312 shares issued and outstanding at
May 31, 1998 and 1999; 60,944,312 shares issued and
outstanding at November 30, 1999; 73,210,976 shares
issued and outstanding at November 30, 1999 pro forma... 46,425 46,425 60,945 73,212
Additional paid-in capital................................ 6,828,416 7,646,541 32,929,305 53,243,804
Accumulated deficit....................................... (21,231,175) (27,484,495) (31,205,439) (31,205,439)
Accumulated other comprehensive loss...................... (261,829) (422,855) (348,944) (348,944)
------------ ------------ ------------ ------------
Total stockholders' (deficit) equity.................... (14,618,163) (20,214,384) 1,435,869 21,762,633
------------ ------------ ------------ ------------
Total liabilities and stockholders' equity............ $ 7,632,454 $ 3,471,891 $ 26,753,530 $ 26,753,530
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
H POWER CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED MAY 31, NOVEMBER 30,
--------------------------------------- -------------------------
1997 1998 1999 1998 1999
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES
Products..................... $ 53,798 $ 99,071 $ 501,065 $ 170,420 $ 329,244
Contracts.................... 366,810 890,319 516,967 261,474 1,579,426
----------- ----------- ----------- ----------- -----------
420,608 989,390 1,018,032 431,894 1,908,670
----------- ----------- ----------- ----------- -----------
OPERATING EXPENSES
Cost of revenues--products... 122,506 354,957 613,864 152,637 323,293
Cost of
revenues--contracts........ 239,160 1,030,601 362,321 161,849 1,603,591
Research and development..... 2,038,803 2,454,416 2,849,103 1,430,979 1,644,943
Selling, general, and
administrative............. 2,562,347 3,987,064 3,606,192 1,419,522 2,165,107
----------- ----------- ----------- ----------- -----------
Total operating expenses... 4,962,816 7,827,038 7,431,480 3,164,987 5,736,934
----------- ----------- ----------- ----------- -----------
Loss from operations......... (4,542,208) (6,837,648) (6,413,448) (2,733,093) (3,828,264)
Interest and other income,
net........................ 145,475 723,788 182,378 296,557 184,346
Interest expense............. (173,985) (41,395) (22,250) (1,187) (77,026)
----------- ----------- ----------- ----------- -----------
Net loss................... $(4,570,718) $(6,155,255) $(6,253,320) $(2,437,723) $(3,720,944)
=========== =========== =========== =========== ===========
Loss per share attributable
to common shareholders,
basic and diluted.......... $ (0.10) $ (0.14) $ (0.14) $ (0.05) $ (0.08)
=========== =========== =========== =========== ===========
Weighted average shares
outstanding, basic and
diluted.................... 46,302,136 46,417,664 46,424,312 46,424,312 50,668,688
=========== =========== =========== =========== ===========
Pro forma net loss per share,
basic and diluted.......... $ (0.11) $ (0.06)
=========== ===========
Pro forma weighted average
shares outstanding, basic
and diluted................ 58,690,894 62,935,352
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
H POWER CORP.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) AND
COMPREHENSIVE LOSS
<TABLE>
<CAPTION>
ACCUMULATED
NUMBER OF OTHER
SHARES ISSUED COMMON CAPITAL IN ACCUMULATED COMPREHENSIVE COMPREHENSIVE
AND OUTSTANDING STOCK EXCESS OF PAR DEFICIT LOSS LOSS
--------------- -------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance (deficiency)--May 31, 1996.... 46,157,792 $46,158 $ 6,528,839 $(10,505,202) $ $
Net loss.............................. (4,570,718) (4,570,718)
Issuance of common stock upon exercise
of stock options.................... 80,000 80 39,920
Issuance of common stock upon
conversion of debt.................. 166,520 167 249,677
---------- ------- ----------- ------------ --------- -----------
Balance (deficiency)--May 31, 1997.... 46,404,312 46,405 6,818,436 (15,075,920) (4,570,718)
Net loss.............................. (6,155,255) (6,155,255)
Issuance of common stock upon exercise
of stock options.................... 20,000 20 9,980
Foreign currency translation
adjustment.......................... (261,829) (261,829)
---------- ------- ----------- ------------ --------- -----------
Balance (deficiency)--May 31, 1998.... 46,424,312 46,425 6,828,416 (21,231,175) (261,829) (6,417,084)
Net loss.............................. (6,253,320) (6,253,320)
Stock option compensation expense..... 818,125
Foreign currency translation
adjustment.......................... (161,026) (161,026)
---------- ------- ----------- ------------ --------- -----------
Balance (deficiency)--May 31, 1999.... 46,424,312 46,425 7,646,541 (27,484,495) (422,855) (6,414,346)
(unaudited)
Net Loss.............................. (3,720,944) (3,720,944)
Sale of common stock.................. 13,056,000 13,056 22,974,228
Issuance of common stock upon
conversion of debt.................. 1,344,000 1,344 2,098,656
Issuance of common stock upon exercise
of stock options.................... 120,000 120 59,880
Issuance of warrants.................. 150,000
Foreign currency translation
adjustments......................... 73,911 73,911
---------- ------- ----------- ------------ --------- -----------
Balance (deficiency)--November 30,
1999................................ 60,944,312 $60,945 $32,929,305 $(31,205,439) $(348,944) $(3,647,033)
========== ======= =========== ============ ========= ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
H POWER CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED MAY 31, NOVEMBER 30,
--------------------------------------- -------------------------
1997 1998 1999 1998 1999
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss................................................ $(4,570,718) $(6,155,255) $(6,253,320) $(2,663,222) $(3,720,944)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation and amortization......................... 375,407 408,076 481,977 199,046 260,476
Gain on sale of equipment............................. -- (7,132) -- -- --
Provision for losses on uncompleted contracts......... -- 893,556 -- -- --
Stock option compensation expense..................... -- -- 818,125 -- --
Warrants issued in payment of services................ -- -- -- -- 150,000
Changes in assets and liabilities:
Accounts receivables................................ 51,069 (419,592) 428,645 561,210 (1,222,661)
Unbilled receivables................................ -- (271,300) 85,017 (27,284) (103,539)
Inventories......................................... 19,039 4,674 (327,408) (236,237) (70,170)
Tax credit receivable............................... -- (205,131) (439,660) (184,667) (244,695)
Prepaid expenses and other current assets........... (12,763) (152,095) 132,863 (88,599) (576,771)
Accounts payable.................................... (365,244) 299,892 821,086 199,618 (533,839)
Accrued expenses.................................... (355,643) 47,907 175,960 77,414 289,921
Deferred revenue.................................... -- -- -- -- 2,461,473
Estimated losses on uncompleted contracts........... -- -- (893,556) (653,571) --
----------- ----------- ----------- ----------- -----------
Total adjustments................................. (288,135) 598,855 1,283,049 (147,002) 410,195
----------- ----------- ----------- ----------- -----------
Net cash used by operating activities............. (4,858,853) (5,556,400) (4,970,271) (2,810,224) (3,310,749)
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures.................................... (298,496) (942,930) (919,355) (375,661) (200,342)
Proceeds from sale of equipment......................... -- 45,000 -- -- --
----------- ----------- ----------- ----------- -----------
Net cash used by investing activities............. (298,496) (897,930) (919,355) (375,661) (200,342)
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of preferred stock............... 14,500,000 -- -- -- --
Proceeds from issuance of common stock.................. 5,040,046 10,000 -- -- 23,732,284
Advances (repayment) of related party borrowings........ (1,442,513) (857,458) 1,267,728 -- 830,017
Proceeds from long-term debt............................ -- -- 67,912 -- --
Repayments of long-term debt............................ (768,156) (616,081) -- -- --
Other................................................... (28,174) (5,491) (3,472) (7,184) (1,166)
----------- ----------- ----------- ----------- -----------
Net cash provided by (used for) financing
activities...................................... 17,301,203 (1,469,030) 1,332,168 (7,184) 24,561,135
----------- ----------- ----------- ----------- -----------
Effect of exchange rate changes on cash and cash
equivalents............................................. -- (261,829) (161,026) (237,650) 73,892
----------- ----------- ----------- ----------- -----------
Net increase (decrease) cash and cash
equivalents..................................... 12,143,854 (8,185,189) (4,718,484) (3,430,719) 21,123,936
Cash and cash equivalents at beginning of period.......... 1,001,926 13,145,780 4,960,591 4,960,591 242,107
----------- ----------- ----------- ----------- -----------
Cash and cash equivalents at end of period................ $13,145,780 $ 4,960,591 $ 242,107 $ 1,529,872 $21,366,043
=========== =========== =========== =========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest.................................. $ 1,122,865 $ 143,184 $ 522 $ -- $ 18,971
Conversion of debt equity............................... $ 249,844 $ -- $ -- $ -- $ 2,100,000
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
H POWER CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS AND LIQUIDITY
H Power Corp. (the "Company") was organized on June 6, 1989 under the laws
of the State of Delaware. The Company designs, develops, markets and
manufactures proton-exchange membrane fuel cells and fuel cell systems and
products that utilize hydrogen as an alternative source of energy to generate
electric power.
The Company has raised substantially all of its funding through private
placement of common and preferred stock. The Company incurred net losses of
$4,570,718, $6,155,255 and $6,253,320 for the fiscal years ended May 31, 1997,
1998 and 1999, respectively, and has an accumulated deficit of $15,075,920,
$21,231,175 and $27,484,495 as of these dates, respectively. The Company
believes it can raise adequate additional funding through a public offering or
additional private placements. If the Company is unable to apply its technology
to commercial products, additional funding will be necessary for the Company to
continue as a going concern after May 31, 2000. These financial statements do
not include adjustments that might result from the outcome of this uncertainty.
See Note 13.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
the Company and its Canadian subsidiary, H Power Enterprises of Canada, Inc.
("HPEC"). All significant intercompany accounts and transactions are eliminated.
UNAUDITED PRO FORMA BALANCE SHEET AND EARNINGS PER SHARE INFORMATION
The Company's Series A, Series B and Series C convertible preferred
stockholders have agreed to convert all of their outstanding shares of preferred
stock into common stock concurrent with the closing of this initial public
offering. In addition, the other investors of the Company's 50% owned
subsidiary, HPEC, have agreed to exercise their conversion right concurrent with
the closing of this initial public offering. (See Note 1--Investment in
Subsidiary.) These investors have also agreed to convert their Series C
convertible preferred stock received in that transaction into common stock
concurrent with the closing of this offering. Accordingly, the unaudited pro
forma balance sheet has been presented on a basis to give effect to the
conversion of the stock and equity interests described above, as of the closing
date of an initial public offering, which is assumed to have been converted as
of November 30, 1999. The pro forma earnings per share and share data give
effect to the impact these conversions would have had on the weighted average
share amounts assuming the conversion occurred on June 1, 1998.
UNAUDITED INTERIM RESULTS
The interim financial statements as of November 30, 1999 and for the six
months ended November 30, 1998 and 1999 are unaudited; however, in the opinion
of the Company, the interim data includes all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the financial
position and results of operations for the interim periods. The operating
results for the six months ended November 30, 1999 are not necessarily
indicative of the results to be expected for the full year ending May 31, 2000.
F-7
<PAGE>
H POWER CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
STOCK SPLIT
Prior to the closing of this initial public offering, the Company will
declare an 8:1 stock split effective for stockholders of record upon the closing
of this initial public offering. This stock split will increase the number of
common shares outstanding by 53,326,273 shares at November 30, 1999. All
references in the consolidated financial statements referring to share prices,
conversion rates, per share amounts, stock option plans and common shares issued
and/or outstanding have been adjusted retroactively for the 8-for-1 stock split.
USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported in
its consolidated financial statements and accompanying notes. Actual results
could differ from those estimates.
CASH AND EQUIVALENTS
Cash and equivalents represent cash and short-term, highly liquid
investments with original maturities of three months or less.
CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist primarily of cash and cash equivalents and
accounts receivable. The Company maintains its cash and cash equivalents at high
quality financial institutions and limits the amount of credit exposure to any
one institution. The Company had cash balances on deposit at May 31, 1999 that
exceeded the $100,000 amount insured by the F.D.I.C.
The Company's receivables are derived primarily from sales to U.S.
government agencies. Three government contracts represent approximately 76%, 90%
and 40% of consolidated revenues for the fiscal years ended May 31, 1997, 1998
and 1999, respectively. Amounts due the Company in accounts receivable and
unbilled receivables under these contracts were $539,654 and $150,085 at
May 31, 1998 and 1999, respectively.
INVENTORY
Inventories, which include materials, labor, and overhead, are valued at the
lower of cost or market using the first-in, first-out method.
PLANT AND EQUIPMENT, NET
Plant and equipment are stated at cost, net of accumulated depreciation.
Repairs and maintenance costs are expensed as incurred; major renewals and
betterments are capitalized. When assets are sold or otherwise disposed of, the
cost and related accumulated depreciation are removed from the accounts and any
gain or loss on the disposition is reflected in current operations. Depreciation
is determined on a straight-line basis over the estimated useful lives of the
applicable assets, generally five years for furniture and equipment for
financial reporting purposes and determined on an accelerated method for
F-8
<PAGE>
H POWER CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
tax purposes. Leasehold improvements are depreciated over the lesser of the
lease term or the estimated useful lives of the related assets.
The Company reviews long-lived assets and identifiable intangible assets for
impairment whenever any events or changes in circumstances indicate that the
carrying amount of these assets may not be recoverable.
PATENTS AND OTHER INTANGIBLE ASSETS
Certain costs associated with obtaining and licensing patents are
capitalized as incurred and are amortized on a straight-line basis over
estimated useful lives up to 17 years. Costs associated with patents are
capitalized as incurred. Amortization of such costs begins once the patent has
been issued. Other intangible assets are amortized on a straight-line basis over
estimated useful lives of up to three years. The Company evaluates the
recoverability of the patent and other intangible asset costs at each balance
sheet date based on estimated undiscounted future cash flows.
FOREIGN CURRENCY TRANSLATION
The financial statements of HPEC were prepared in Canadian dollars and
translated into U.S. dollars based on the current exchange rate in effect at the
end of the period for the balance sheet and a weighted-average rate for the
period on the statement of operations. Translation adjustments are reflected as
foreign currency translation adjustments in stockholders' equity and accordingly
have no effect on net income. Transaction gains and losses are included in
income.
REVENUE RECOGNITION
Revenues on products are recognized when the product has been shipped and
the Company has met its obligations under the sales contract. Revenues on
contracts include reimbursed direct costs and allowable allocated indirect costs
incurred, plus recognized profits. Profit is recognized on cost-reimbursable
contracts as costs are incurred, and under fixed-price contracts on the
cost-to-cost method of the percentage-of-completion basis. Revenue recognized on
contracts in excess of related billings is reflected as unbilled receivables.
When it is determined that a loss will result from the performance of a
fixed-price contract, the entire amount of the estimated ultimate loss is
charged against income.
Contract costs, including indirect expenses, are subject to audit and
adjustment by the Defense Contract Audit Agency. Contract costs through 1997
have been finalized, and contract revenues for the current and prior years have
been recorded in amounts which are expected to be realized upon final
settlement. In management's opinion, the results of such audits will not have a
material effect on the Company's financial position, results of operations or
cash flows.
MODIFICATION OF CONTRACT TERMS
Prior to the modification described below, the Company was party to a
government contract with the Sacramento Municipal Utility District ("SMUD") that
was accounted for under the percentage-of-completion method of accounting. At
May 31, 1998, the Company had recognized an estimated loss on this uncompleted
contract of $709,031, of which $236,015 was recorded in cost of
revenues--contracts and $473,016 was recorded in selling, general and
administrative expenses.
F-9
<PAGE>
H POWER CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
During the fiscal year ended May 31, 1999, the Company modified the terms of
this contract with SMUD, which resulted in the creation of a new development
agreement. This new agreement allows either party to terminate the agreement at
any time upon 60 days prior written notice to the other party. Upon such notice
of termination, the Company would immediately cease work under the agreement and
take all steps reasonably necessary to mitigate any costs or expenses for which
SMUD may be liable. As a result of this new agreement, the Company now records
all revenue and costs as they are incurred, and no longer recognizes revenue
under the percentage-of-completion method of accounting. The effect of this
modification of the contract terms was to decrease selling, general and
administrative expenses by $206,969 and costs of revenues--contracts by $103,485
for the fiscal year ended May 31, 1999. This amount represents the reversal of
the $709,031 previously accrued loss, less $398,577 of expenses incurred but not
reimbursed in fiscal 1999 prior to the modification of the contract.
RESEARCH AND DEVELOPMENT
Research and development expenses consist principally of expenditures for
research conducted by the Company. All research and development costs are
expensed as incurred.
Under certain arrangements in which a third party funds a portion of
research and development costs on a specific project, the direct materials and
labor costs of that project are recorded as costs of revenues--contracts while
overhead and general and administrative expenses allowable for inclusion in the
cost reimbursement calculation are recorded as selling, general and
administrative for allowable overhead and general and administrative expenses.
Total research and development spending was $3,638,000, $3,485,000 and
$2,278,000 for the fiscal years ending May 31, 1999, 1998 and 1997,
respectively.
INVESTMENT IN SUBSIDIARY
On May 2, 1997, the Company established a Canadian subsidiary, HPEC,
pursuant to an agreement with Sofinov Societe Financiere D'Innovation Inc.
("Sofinov"), Societe Innovatech du grand Montreal ("Innovatech") and 9042-0175
Quebec, Inc. ("Quebec") (collectively, the "Investors"). The Investors purchased
50% of the common stock of HPEC for $5 million. The investors have the right
until May 2000 to convert their equity interest in HPEC into 333,333 shares of
our Series C convertible preferred stock. The Company licensed its fuel cell
technology and certain Canadian marketing rights to HPEC in exchange for the
other 50% of the common shares.
Pursuant to a stockholder agreement, the day-to-day management and operation
of HPEC is the responsibility of its president, who, as long as the Company owns
at least 33 1/3% of the aggregate common shares of HPEC, will be the nominee of
the Company. HPEC's current president is the chief executive officer of the
Company.
The Company has a controlling interest in HPEC and reports 100% of the
losses of this subsidiary in the consolidated accounts due to the ability of the
Investors to convert their ownership interests in HPEC into ownership interests
in the Company.
F-10
<PAGE>
H POWER CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
401(k) RETIREMENT PLAN
The Company has a noncontributory 401(k) Retirement Plan for eligible
employees. Employees eligible to participate in the Plan must be of age 21 and
have completed twelve months of service. Under the Plan, employees may generally
contribute from 1% to 15% of their salary, however, not in excess of IRS
limitations. The Company does not make matching contributions. Employees are
100% vested in their own contributions plus earnings at all times.
INCOME TAXES AND TAX CREDITS
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the financial
statement carrying amounts of assets and liabilities and their respective tax
basis. A subjective assessment, which includes anticipating future income, is
used in assessing the likelihood of realizing deferred tax assets. Recoverable
tax credits arising from the acquisition of capital assets are recorded as a
deduction from the cost of the assets acquired while those arising from current
expenses are deducted from those expenses in the year of expenditure. All
amounts receivable at the end of fiscal 1998 have been collected during fiscal
1999.
2. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
MAY 31,
------------------- NOVEMBER 30,
1998 1999 1999
-------- -------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials................................ $ 7,111 $149,010 $204,475
Work in process.............................. 6,600 192,109 206,814
Finished goods............................... -- -- --
------- -------- --------
$13,711 $341,119 $411,289
======= ======== ========
</TABLE>
3. PLANT AND EQUIPMENT
Plant and equipment consists of the following:
<TABLE>
<CAPTION>
MAY 31,
-----------------------
1998 1999
---------- ----------
<S> <C> <C>
Furniture and equipment.............................. $1,261,765 $1,936,111
Leasehold Improvements............................... 510,310 705,355
---------- ----------
1,772,075 2,641,466
Less: Accumulated depreciation....................... 723,324 1,202,554
---------- ----------
$1,048,751 $1,438,912
========== ==========
</TABLE>
Depreciation expense for the fiscal years ended May 31, 1997, 1998 and 1999
was $124,194, $164,489 and $473,020, respectively.
F-11
<PAGE>
H POWER CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. NOTES PAYABLE AND LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
MAY 31,
-------------------
1998 1999
-------- --------
<S> <C> <C>
Notes payable, interest at 10%; unsecured, past due..... $121,875 $121,875
Government loan, non-interest bearing................... -- 67,912
Equipment notes payable, payable in various monthly
installments, secured by related equipment............ 7,184 3,712
-------- --------
129,059 193,499
Less: Current portion................................... 125,357 124,219
-------- --------
$ 3,702 $ 69,280
======== ========
</TABLE>
The notes payable are past due pending resolutions of certain matters with
respect to the lenders, and are included in the current portion.
The Government loan proceeds were used to finance the last phase of the
development of a specific product by HPEC. The loan does not bear any interest
and HPEC must repay the loan by paying 1% of the revenue earned on the sale of
the product. The period of the loan is ten years or whenever the loan is paid,
whichever comes first.
Principal payment requirements subsequent to May 31, 1999 are as follows:
<TABLE>
<CAPTION>
YEAR ENDING MAY 31, AMOUNT
- ------------------- --------
<S> <C>
2000........................................................ $124,219
2001........................................................ 1,368
2002........................................................ --
2003........................................................ --
2004........................................................ --
Thereafter.................................................. 67,912
</TABLE>
5. COMMITMENTS
The Company leases two properties under leasehold agreements that expire on
July 31, 2000. The Company has the option to renew these leases for two
additional years. Rental expenditures for 1997, 1998 and 1999 were $64,464,
$110,535 and $117,550, respectively. Commitments for minimum rentals under
noncancellable leases having a remaining term in excess of one year at May 31,
1999 are as follows:
<TABLE>
<CAPTION>
YEAR ENDING MAY 31, AMOUNT
- ------------------- --------
<S> <C>
2000........................................................ $116,700
2001........................................................ 116,700
2002........................................................ 19,500
</TABLE>
The Company has agreements with two of its key officers and two of its
directors. The agreements with its officers expire on October 6, 2000 and
October 10, 2002. These agreements provide for base salaries with increases and
bonuses at the discretion of the Board of Directors. The agreements with its
directors expired on May 31, 1999 but were extended to May 31, 2004. These
agreements provide for base salaries, adjusted annually for cost-of-living
changes, as well as financial advisory bonuses for assistance in facilitating
public and private financings that are consummated by the Company or its
subsidiary subsequent to the Company's initial public offering.
F-12
<PAGE>
H POWER CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. INCOME TAXES
The Company has incurred losses since inception, therefore no provision has
been made for federal and state income taxes. The Company has year-end federal
net operating loss ("NOL") carryforwards of approximately $23,900,000 at
May 31, 1999 which expire in years 2007 to 2014. Valuation allowances were
recognized for the net operating loss carryforwards not anticipated to be
realized before expiration. Under current tax regulations, if certain
substantial changes in the Company's ownership should occur, there would be an
annual limitation on the amount of net operating loss carryforward which could
be utilized.
The following table illustrates the composition of the deferred tax assets:
<TABLE>
<CAPTION>
MAY 31,
-------------------------
1998 1999
----------- -----------
<S> <C> <C>
Federal and state benefit of NOL carryforwards..... $ 7,059,000 $ 9,554,000
Valuation allowance................................ (7,059,000) (9,554,000)
----------- -----------
$ -- $ --
=========== ===========
</TABLE>
7. RELATED COMPANY TRANSACTIONS
The Company's obligation to related parties and other investors is as
follows:
<TABLE>
<CAPTION>
MAY 31,
---------------------
1998 1999
-------- ----------
<S> <C> <C>
Sofinov................................................ $ -- $ 850,000
Other stockholders..................................... -- 396,000
Note payable........................................... 23,983 23,983
Accrued interest....................................... 943 22,671
------- ----------
24,926 1,292,654
Less: Current portion.................................. 24,926 1,292,654
------- ----------
$ -- $ --
======= ==========
</TABLE>
During the fiscal year ended May 31, 1999, the Company received loans from
certain investors to fund its operations at an interest rate of 8%. These notes
are payable on demand.
On May 25, 1999, Sofinov entered an agreement with the Company to make
advances up to $5 million, in increments of at least $150,000, bearing interest
at 8% per annum, calculated and compounded monthly, both before and after
default, and payable on demand. At any time prior to December 31, 1999 or the
completion of an initial public offering, whichever is sooner, Sofinov shall be
entitled to convert all or any portion of the outstanding balance of the
advances and interest thereon into common stock of the Company at a conversion
rate of $1.5625 per common share. If Sofinov exercises its election to convert,
then in the event the outstanding balance of advances and interest thereon is
less that $5 million, Sofinov shall be entitled to purchase additional shares of
the Company's common stock at $1.5625 per share to bring Sofinov's purchase up
to $5 million. As of May 31, 1999, total advances to the Company from Sofinov
under this agreement amounted to $700,000. See Note 13.
The Company has an arrangement with NBG Technologies, Inc. (formerly known
as TechMatics Inc.) whereby NBG provided the Company with R&D consulting
services. The Rothstein
F-13
<PAGE>
H POWER CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. RELATED COMPANY TRANSACTIONS (CONTINUED)
family is a principal stockholder of NBG and also a principal stockholder of the
Company. A member of the Rothstein family serves as a director of the Company
and is responsible for various aspects of the Company's business and strategic
issues. Fees and expenses paid to NBG for consulting services for the fiscal
years ended May 31, 1997, 1998 and 1999 amounted to $234,172, $49,054 and
$63,110, respectively. The Company believes the fees paid were equivalent to
those that would be paid under an arms-length transaction.
Until October 15, 1996, the Company's noteholders had the option to convert
some or all of their debt, including accrued interest, into the Company's common
stock. As of October 15, 1996, $289,844 of debt had been converted into 166,520
shares of common stock. The remaining noteholders elected an interest payment on
October 15, 1996 and full principal payment on October 15, 1997.
8. EMPLOYEE STOCK OPTION PLANS
Under the stock option plan adopted on May 21, 1996, a maximum of 6,000,000
shares of the Company's common stock have been made available for the granting
of options and stock appreciation rights to officers and other key employees of
the Company at prices not less than 100% of fair market value of a share of
common stock on the date of grant. With respect to any participant who owns
stock possessing more than 10% of the voting power of all classes of our
outstanding capital stock, the exercise price of any stock option granted must
equal 110% of the fair market value on the grant date. Such options generally
become exercisable upon date of grant and expire within five years from the date
of grant. We have not granted any options to purchase common stock under our
1996 plan.
Under the stock option plan adopted on June 6, 1989, a maximum of 4,000,000
shares of the Company's common stock were made available for the granting of
options and stock appreciation rights to officers and other key employees of the
Company at prices not less than 80% of fair market value of a share of common
stock on the date of grant. Such options generally become exercisable upon date
of grant and expire within five years from the date of grant. No further options
may be granted under this plan.
The Company has granted options to purchase shares of the Company's common
stock to certain officers and key employees outside of the 1989 and 2000 Stock
Option Plans. Such options generally become exercisable on the date of grant and
expire within five years from the date of grant. These options were generally
granted at the fair market value of the stock on the date of grant.
The Company has adopted the disclosure only provisions of SFAS No. 123 and,
accordingly, applies Accounting Principles Board Opinion ("APB") No. 25 and
related interpretations in accounting for its employee stock option plans. Had
the Company elected to recognize compensation expense in accordance with the
provisions of SFAS No. 123, for the stock option awards granted, its net loss
and loss per basic and diluted share attributable to common stockholders in
1997, 1998 and 1999 would have been $(4,909,092), $(6,669,980) and $(7,462,717)
or $(.11), $(.14) and $(.16) per share, respectively.
On May 31, 1999, 782,000 employee stock options lapsed. The Company extended
the life of 770,000 of the options, until May 31, 2002 at the same option price.
The options were vested upon extension. Under APB No. 25, the extension created
an additional compensation charge for the difference between the option price
and the fair market value of the shares at May 31, 1999 in the
F-14
<PAGE>
H POWER CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. EMPLOYEE STOCK OPTION PLANS (CONTINUED)
amount of $818,125 of which $693,125, $107,000 and $18,000 has been recorded in
selling, general and administrative, research and development and cost of
revenue--contracts, respectively.
The fair value of the Company's stock options used to compute the pro forma
net loss and loss per share disclosures is the estimated present value on grant
date using the Black-Scholes option pricing model with the following weighted
average assumptions:
<TABLE>
<CAPTION>
YEARS ENDED MAY 31,
-------------------
1997 1998 1999
----- ----- -----
<S> <C> <C> <C>
Dividend yield...................................... 0% 0% 0%
Risk-free interest rate............................. 5.95% 5.92% 5.27%
Volatility.......................................... 0% 0% 0%
Expected life (years)............................... 5 5 1.5
</TABLE>
Changes in stock options are as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
-------------------------------------------------------------------
1997 1998 1999
--------------------- -------------------- --------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
---------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Beginning balance................ 3,142,000 $ .69 2,942,000 $1.22 3,182,000 $1.34
Granted or reissued.............. 2,000,000 1.56 400,000 1.88 770,000 .50
Exercised........................ (80,000) .50 (20,000) .50 -- --
Canceled or expired.............. (2,120,000) .78 (140,000) .50 (782,000) .50
---------- ----- --------- ----- --------- -----
Ending balance................. 2,942,000 $1.22 3,182,000 $1.34 3,170,000 $1.34
========== ===== ========= ===== ========= =====
Exercisable...................... 880,000 $1.47 1,191,000 $1.21 2,770,000 $1.27
Fair value of options granted
during the year................ $ .42 $ .48 $1.10
</TABLE>
Summarized information about stock options outstanding and exercisable at
May 31, 1999 is as follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------------- ---------------------
WEIGHTED-
AVG. WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
EXERCISE PRICE OF SHARES LIFE IN YEARS PRICE OF SHARES PRICE
- --------------------- --------- ------------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
$ .50 770,000 3.0 $ .50 770,000 $ .50
1.56 2,000,000 2.1 1.56 2,000,000 1.56
1.88 400,000 2.4 1.88 -- --
--------- --- ----- --------- -----
$.50 to $1.88 3,170,000 2.8 $1.34 2,770,000 $1.27
========= === ===== ========= =====
</TABLE>
F-15
<PAGE>
H POWER CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. COMMON STOCK
The Company's common stockholders are entitled to one vote for each share
held of record on all matters submitted to a vote of stockholders. The Company's
common stockholders have no preemptive rights or rights to convert their common
stock into any other security.
10. REDEEMABLE PREFERRED STOCKS
The Company's Series A, Series B and Series C convertible preferred stock
are classified as mandatorily redeemable as (i) the holders of the Series A,
Series B and Series C convertible preferred stock are entitled to be paid the
original issue price for such class of preferred stock plus all accumulated or
declared and unpaid dividends if the Company enters into any transaction in
which the stockholders of the Company immediately prior to the transaction own
less than 50% of the voting power immediately after the transaction and
(ii) preventing the completion of such a change in control transaction as
described in (i) is considered to be outside the control of the Company.
On May 22, 1996, the Company issued 80,000 shares of Series B convertible
preferred stock, $.001 par value, at $12.50 per share, or $1,000,000 in total,
to Singapore Technologies Automotive ("STA"). One share of the Series B
convertible preferred stock may be converted into eight shares of the Company's
common stock. The Series B shares are entitled to dividends or distributions in
an amount equal per share (on an as-if converted to common stock basis) to the
amount paid, distributed or set aside for eight shares of common stock. Upon any
liquidation, the holder of the Series B convertible preferred stock is entitled
to be paid out an amount equal to the original issue price plus all accumulated
or declared and unpaid dividends. The Company has the option to redeem the
Series B convertible preferred stock, unless it is converted, any time after
May 22, 1998, or the closing of an initial public offering, at the purchase
price plus 10%.
On July 30, 1996, the remaining 320,000 authorized shares of Series B
convertible preferred stock were issued at $12.50 per share to STA. In
connection with the preferred stock issuance, proceeds of $770,105 were used to
repay $550,000 of long-term debt for acquired technology and $220,105 of
short-term debt to STA.
On July 30, 1996, the Company issued 200,000 shares of Series A convertible
preferred stock, $.001 par value, at $15.00 per share, to DQE Enterprises. One
share of Series A convertible preferred stock may be converted into eight shares
of the Company's common stock. The holders of the Series A convertible preferred
stock are entitled to receive cumulative dividends in the form of shares of
common stock at the rate of 7% per annum. In connection with the issuance,
proceeds of $300,000 were used to repay short-term debt to DQE Enterprises. Upon
any liquidation, the holder of the Series A convertible preferred stock is
entitled to be paid an amount equal to the original issuance price plus all
accumulated or declared and unpaid dividends. The Company has the option to
redeem the Series A convertible preferred stock, unless it is converted, at any
time after July 30, 1998, or the closing of an initial public offering, at the
purchase price plus 10% and all accrued but unpaid dividends.
On May 2, 1997, the Company issued 500,000 shares of Series C convertible
preferred stock, $.001 par value at $15.00 per share or $7,500,000 in total, to
Sofinov. One share of the Series C convertible preferred stock may be converted
into eight shares of the Company's common stock. The Series C convertible
preferred shares are entitled to dividends or distributions in an amount equal
per share (on an as-if converted to common stock basis) to the amount paid,
distributed or set aside for eight shares
F-16
<PAGE>
H POWER CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. REDEEMABLE PREFERRED STOCKS (CONTINUED)
of common stock. Upon any liquidation, the holder of the Series C convertible
preferred stock is entitled to be paid an amount equal to the original issuance
price plus all accumulated or declared and unpaid dividends. The Company has the
option to redeem the Series C convertible preferred stock, unless it is
converted, any time after May 2, 1999, or the closing of an initial public
offering, at a price of $15.00 per share.
The holders of Series A and B convertible preferred stock each had the right
to exercise warrants to purchase up to 1,600,000 shares of common stock at
$3.125 per share during the period January 1, 1997 through December 31, 1997.
All of the warrants lapsed on December 31, 1997. In the agreement, if DQE
Enterprises failed to exercise their warrants, the Company was required to issue
an additional 100,000 shares of Series C preferred stock to Sofinov for no
consideration. On December 31, 1997, the DQE Enterprises warrants lapsed
unexercised and the additional 100,000 shares were issued to Sofinov, thus
reducing the redemption price of Series C convertible preferred stock to $12.50
per share.
At May 31, 1999, $595,000 of retained earnings was restricted due to
undeclared and unpaid cumulative dividends on Series A preferred stock. The
redemption value of Series A, B and C convertible preferred stock at May 31,
1999 was $3,895,000, $5,500,000 and $7,500,000, respectively.
11. EARNINGS PER SHARE
Basic earnings per share (EPS) is computed by dividing income available to
common shareholders by the weighted average number of common shares actually
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the Company.
The following table illustrates the calculation of both basic and diluted
EPS:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED MAY 31, NOVEMBER 30,
--------------------------------------- -------------------------
1997 1998 1999 1998 1999
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BASIC AND DILUTED EARNINGS PER SHARE
Net loss............................. $(4,570,718) $(6,155,255) $(6,253,320) $(2,437,723) $(3,720,944)
Accrued dividends on Series A
Convertible Preferred Stock........ (175,000) (210,000) (210,000) (105,000) (105,000)
----------- ----------- ----------- ----------- -----------
Net income available to common
shareholders....................... (4,745,718) (6,365,255) (6,463,320) (2,542,723) (3,825,944)
Weighted average number of common
shares............................. 46,302,136 46,417,664 46,424,320 46,424,320 50,668,688
----------- ----------- ----------- ----------- -----------
Basic and diluted earnings per
share.............................. $ (0.10) $ (0.14) $ (0.14) $ (.05) $ (0.08)
=========== =========== =========== =========== ===========
</TABLE>
If potential common shares were assumed converted, the effect would have
been antidilutive to EPS for all periods. These antidilutive securities are
summarized below.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED MAY 31, NOVEMBER 30,
------------------------------------ -----------------------
1997 1998 1999 1998 1999
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Number of potential common shares........ 15,521,064 15,732,544 15,990,264 15,392,000 14,250,000
</TABLE>
F-17
<PAGE>
H POWER CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. INFORMATION ABOUT GEOGRAPHIC AREAS
The Company operates primarily in one industry segment, that being the
development of technologies, systems and products utilizing hydrogen as an
alternative source of energy. The geographic distributions of the Company's
revenues and identifiable assets are summarized in the following table:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
-------------------------------------
1997 1998 1999
----------- ---------- ----------
<S> <C> <C> <C>
Revenues from unrelated entities
United States......................... $ 420,608 $ 989,390 $1,007,216
Canada................................ -- -- 10,816
----------- ---------- ----------
$ 420,608 $ 989,390 $1,018,032
Assets
United States......................... $ 9,253,367 $2,731,243 $2,074,111
Canada................................ 5,018,355 4,901,211 4,425,330
----------- ---------- ----------
Total identifiable assets............. 14,271,722 7,632,454 6,499,441
Corporate eliminations................ -- -- (3,027,550)
----------- ---------- ----------
Total assets.......................... $14,271,722 $7,632,454 $3,471,891
=========== ========== ==========
</TABLE>
13. SUBSEQUENT EVENTS
On August 25, 1999, ECO Fuel Cells, LLC ("ECO") purchased 8,000,000 shares
of the Company's common stock, $.001 par value, at a price of $1.875 per share
for a total investment of $15,000,000. In addition to the stock purchase, the
Company and ECO entered into a ten year operating agreement pursuant to which
ECO paid to the Company an initial distribution rights fee of $2,500,000 and
agreed to purchase, market and service the Company's stationary power fuel cell
systems in exchange for the exclusive marketing, distribution and servicing
rights to those areas in the United States that are being serviced by ECO's
affiliated rural electric cooperative members (the "Agreement"). Revenue will be
recognized on the initial distribution rights fee on a straight-line basis over
the contractual period.
In order to enter into the Agreement, the Company modified its pre-existing
agreement with DQE Enterprises to allow ECO to have exclusive marketing,
distribution and servicing rights under the Agreement in certain geographic
areas that had previously been granted to DQE Enterprises. As part of the
consideration for modifying the DQE Enterprises agreement, the Company agreed to
amend article IV B3(a)(i) of the Amended and Restated Certificate of
Incorporation to change the redemption price of the Company's Series A
convertible preferred stock from $16.50 per share to $18.00 per share, thus
increasing the liquidation value of the Series A convertible preferred stock by
$300,000. Also as part of the consideration, the Company issued common stock
purchase warrants, which expire on July 31, 2001, to purchase 800,000 shares of
its common stock at $3.125 per share to DQE Enterprises. The Company recorded a
charge to cost of revenues--products totaling $150,000 which represents the fair
value of the warrants on August 25, 1999, their date of issuance.
On November 30, 1999, Sofinov exercised its conversion right (as described
in Note 7) and converted its outstanding advances at that date of $2,100,000
into 1,344,000 shares of our common stock. Furthermore, Sofinov exercised its
purchase right in full and purchased an additional 1,856,000 shares of our
common stock for $2,900,00.
F-18
<PAGE>
H POWER CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. SUBSEQUENT EVENTS (CONTINUED)
On November 30, 1999, Hydro-Quebec CapiTech Inc. purchased 3,200,000 shares
of the Company's common stock, $.001 par value, at a price of $1.875 per share
for a total investment of $6,000,000.
In conjunction with ECO, Sofinov, and Hydro-Quebec CapiTech Inc.'s purchases
of the Company's common stock, the Company incurred stock issue costs
approximating $913,000. $685,000 of the stock issue costs are payable to a
consultant to the Company for services rendered in connection with the foregoing
transactions.
In March 2000, two of the Company's directors resigned from the board of
directors and terminated their agreements with the Company effective as of
February 29, 2000 in exchange for which they each received a cash payment of
$1 million and options to purchase 480,000 shares of our common stock at an
exercise price equal to the Company's initial public offering price. In
addition, the Company terminated all agreements with NBG Technology in exchange
for a cash payment of $100,000 and options to purchase 400,000 shares of the
Company's common stock at an exercise price equal to the initial public offering
price.
F-19
<PAGE>
SHARES
H POWER CORP.
COMMON STOCK
[LOGO]
----------------
P R O S P E C T U S
, 2000
------------------------
LEHMAN BROTHERS
CIBC WORLD MARKETS
DEUTSCHE BANC ALEX. BROWN
JOSEPHTHAL & CO. INC.
FIDELITY CAPITAL MARKETS
A DIVISION OF NATIONAL FINANCING SERVICES CORPORATION
<PAGE>
PART II
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by H Power in connection with
the sale of the common stock being registered hereby. All the amounts shown are
estimated, except the Securities and Exchange Commission ("SEC") registration
fee, the National Association of Securities Dealers, Inc., ("NASD") filing fee
and the Nasdaq National Market listing fee.
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 24,600.00
NASD Filing Fee............................................. 10,500.00
Nasdaq National Market Listing Fee.......................... 90,000.00
Printing Expenses........................................... 200,000.00
Legal Fees and Expenses..................................... 400,000.00
Accounting Fees and Expenses................................ 375,000.00
Blue Sky Expenses and Counsel Fees.......................... 10,000.00
Transfer Agent and Registrar Fees........................... 3,000.00
Miscellaneous............................................... 36,900.00
-------------
Total................................................... $1,150,000.00
=============
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145(a) of the General Corporation Law of the State of Delaware
("DGCL") provides that a Delaware corporation may indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation), by
reason of the fact that the person is or was a director, officer, employee or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by the person in connection with
such action, suit or proceeding if he acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
cause to believe his conduct was unlawful.
Section 145(b) of the DGCL provides that a Delaware corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that the
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by the person in
connection with the defense or settlement of such action or suit if the person
acted under similar standards, except that no indemnification may be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
court in which such action or suit was brought shall determine that despite the
adjudication of liability, such person is fairly and reasonably entitled to be
indemnified for such expenses which the court shall deem proper.
Section 145 of the DGCL further provides that to the extent a director or
officer of a corporation has been successful in the defense of any action, suit
or proceeding referred to in subsections (a) and (b) or in the defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses actually and reasonably incurred by such person in connection
therewith; that indemnification provided for by Section 145 shall not be deemed
exclusive of any other rights to which the indemnified party may be entitled;
and that the corporation may purchase and maintain insurance on behalf of any
II-1
<PAGE>
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or enterprise, against any liability
asserted against such person and incurred by such person in any such capacity or
arising out of such person's status as such whether or not the corporation would
have the power to indemnify such person against such liabilities under such
Section 145.
Section 102(b)(7) of the DGCL provides that a certificate of incorporation
may contain a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director provided that such provision shall not eliminate
or limit the liability of a director: (i) for any breach of the director's duty
of loyalty to the corporation or its stockholders; (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law; (iii) under Section 174 of the DGCL; or (iv) for any transaction from
which the director derived an improper personal benefit.
Our Amended and Restated Certificate of Incorporation provides that we may
indemnify all persons who we are entitled to indemnify under the DGCL to the
fullest extent permitted thereunder. Furthermore, our Amended and Restated
Certificate of Incorporation provides that, to the extent permitted under
Section 102(b)(7) of the DGCL, none of our directors will be personally liable
to H Power or its stockholders for monetary damages for breach of fiduciary duty
as a director. We have entered or will enter into indemnification agreements
with each of our directors and executive officers, which will indemnify these
persons to the fullest extent permitted under the DGCL.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since May 22, 1996, we have sold unregistered securities in the amounts, at
the times, and for the aggregate amounts of consideration listed as follows:
On May 22, 1996, we issued 80,000 shares of Series B mandatorily redeemable
convertible preferred stock, $.001 par value, at $12.50 per share, or $1,000,000
in total, to Singapore Technologies Kinetics, Ltd. in satisfaction of the
initial closing of a stock purchase agreement relating to the purchase of a
total of 400,000 shares of Series B preferred stock by Singapore Technologies
Kinetics. The Series B mandatorily redeemable convertible preferred stock will
automatically convert to 3,200,000 shares of common stock immediately prior to
the consummation of this offering.
On July 30, 1996, we issued 200,000 shares of our Series A preferred stock,
$.001 par value, at $15.00 per share, or $3,000,000 in total, to DQE
Enterprises. DQE Enterprises has agreed to convert all of its Series A preferred
stock to 1,600,000 shares of our common stock immediately prior to this
offering. In addition, we will issue approximately 375,000 shares of common
stock to DQE Enterprises immediately prior to the consummation of this offering
in payment of dividends to which they are entitled.
Until October 15, 1996, our noteholders had the option to convert some or
all of their debt, including accrued interest, into our common stock. As of
October 15, 1996, $249,844 of debt had been converted into 166,520 shares of
common stock. The remaining noteholders elected an interest payment on
October 15, 1996 and full principal payment on October 15, 1997.
On May 2, 1997, we issued 500,000 shares of Series C preferred stock, $.001
par value, at $15.00 per share, or $7,500,000 in total, to Sofinov. Sofinov has
agreed to convert these shares of Series C preferred stock into 4,000,000 shares
of our common stock immediately prior to this offering.
The holders of Series A and Series B preferred stock each had the right to
exercise warrants to purchase up to 1,600,000 shares of common stock at $3.125
per share during the period January 1, 1997 through December 31, 1997. All of
the warrants lapsed on December 31, 1997. The terms of Sofinov's warrant
agreement provided that if DQE Enterprises failed to exercise their warrants, we
were required to issue an additional 100,000 shares of Series C preferred stock
to Sofinov for no consideration. On
II-2
<PAGE>
December 31, 1997, the DQE Enterprises warrants lapsed unexercised and the
additional 100,000 shares were issued to Sofinov, thus reducing the redemption
price of the Series C preferred stock to $12.50 per share. Sofinov has agreed to
convert these shares into 800,000 shares of our common stock immediately prior
to the consummation of the offering.
On August 25, 1999, ECO Fuel Cells, LLC purchased 8,000,000 shares of our
common stock, $.001 par value, at a price of $1.875 per share for a total
investment of $15,000,000. In order to enter into the agreement, we modified our
agreement with DQE Enterprises to allow ECO to have exclusive marketing,
distribution and servicing rights under the agreement in certain geographic
areas that had previously been granted to DQE Enterprises. As part of the
consideration for modifying the DQE Enterprises agreement, on July 28, 1999 we
issued warrants to purchase 800,000 shares of our common stock at $3.125 per
share to DQE Enterprises. These warrants expire on July 31, 2001.
On November 29, 1999, we issued 3,200,000 shares of our common stock, $.001
par value, to Hydro-Quebec CapiTech Inc. at a price of $1.875 per share, or
$6,000,000 in total, pursuant to a letter of intent dated September 7, 1999.
On November 29, 1999, we issued a total of 3,200,000 shares of our common
stock, $.001 par value, to Sofinov at a price of $1.5625 per share, or
$5,000,000 in total, pursuant to a letter agreement dated May 24, 1999. Under
this agreement, Sofinov agreed to lend us up to $5 million in increments of at
least $150,000, payable on demand. Sofinov had the right to convert the
outstanding balance of these advances into shares of our common stock at a
conversion price of $1.5625 per share. In addition, if the outstanding balance
of the advances at the time of conversion was less than $5 million, Sofinov had
the right to purchase additional shares of our common stock at $1.5625 per share
to bring its total purchase up to $5 million. On November 30, 1999, the date
Sofinov exercised its conversion right, the outstanding balance of the advances
was $2.1 million which was converted into 1,344,000 shares of our common stock.
Furthermore, Sofinov exercised its purchase right in full and purchased an
additional 1,856,000 shares of our common stock.
No underwriters were engaged in connection with the foregoing sales of
securities. Such sales of common stock and preferred stock were made in reliance
upon the exemption from registration set forth in Section 4(2) of the Securities
Act of 1933, as amended, (the "Act"), and Rule 506 of Regulation D promulgated
thereunder for transactions not involving a public offering, and all purchasers
were accredited investors as such term is defined in Rule 501(a) of
Regulation D. Issuances of options to our employees, directors and consultants
were made pursuant to Rule 701 promulgated under the Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibit Index
<TABLE>
<CAPTION>
NO. DESCRIPTION
- --------------------- -----------
<C> <S>
1.1 Underwriting Agreement.*
3.1 Amended and Restated Certificate of Incorporation.
3.2 Amended and Restated Certificate of Incorporation (to be
filed prior to effectiveness of this Registration
Statement).*
3.3 By-Laws.
3.4 Amended and Restated By-Laws.*
4.1 Registration Rights Agreement, dated March 25, 1996, between
H Power Corp. and Duquesne Enterprises.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
NO. DESCRIPTION
- --------------------- -----------
<C> <S>
4.2 Investor Rights Agreement, entered into as of May 22, 1996,
by and between H Power Corp. and Singapore Technologies
Automotive Ltd.
4.3 Investor Rights Agreement, entered into as of May 2, 1997,
by and between H Power Corp. and Sofinov Societe Financiere
D'Innovation Inc., Societe Innovatech Du Grand Montreal and
9042-0175 Quebec Inc.
4.4 Letter agreement, dated as of May 2, 1997, between certain
common stockholders of H Power Corp. and Sofinov Societe
Financiere D'Innovation Inc., Societe Innovatech Du Grand
Montreal and 9042-0175 Quebec Inc.
4.5 Stockholders' and Voting Agreement, dated as of April 5,
2000, by and among H Power Corp. and certain common
stockholders.
4.6 Specimen Common Stock Certificate.*
5.1 Opinion of Fulbright & Jaworski L.L.P.*
10.1 H Power Corp 1989 Stock Option Plan.
10.2 H Power Corp. 2000 Stock Option Plan.
10.3 Amended and Restated Officer's Employment Agreement, dated
as of October 1, 1999, between H Power Corp. and H. Frank
Gibbard.
10.4 Executive's Employment Agreement, dated as of October 11,
1999, between H Power Corp. and Arthur Kaufman.
10.5 Officer's Employment Agreement, dated as of November 1,
1999, between H Power Corp. and Thomas H. Michael.
10.6 Officer's Employment Agreement, dated as of November 23,
1999, between H Power Corp. and William L. Zang.
10.7 Consulting Agreement made and entered into as of July 28,
1999, between H Power Corp. and Frederick Entman.
10.8 Consulting Agreement made and entered into as of July 28,
1999, between H Power Corp. and Norman Rothstein.
10.9 Termination Agreement, dated as of April 5, 2000, by and
between H Power Corp. and Norman Rothstein.
10.10 Termination Agreement, dated as of April 5, 2000, by and
between H Power Corp. and Frederick Entman.
10.11 Consulting Agreement, dated as of March 15, 2000, between H
Power Corp. and Millennium Capital Resources, LLC.
10.12 Letter Agreement, dated March 10, 2000, between H Power
Corp. and R. Michael Fromer.
10.13 Stock Purchase Agreement made and entered into as of August
25, 1999, between H Power Corp. and ECO Fuel Cells, LLC.
10.14 Stock Purchase Agreement made and entered into as of
November 29, 1999, between H Power Corp. and Hydro-Quebec
CapiTech Inc.
10.15 Stock Purchase Agreement made and entered into as of
November 29, 1999, between H Power Corp. and Sofinov Societe
Financiere D'Innovation Inc.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
NO. DESCRIPTION
- --------------------- -----------
<C> <S>
10.16 Letter Agreement, dated May 24, 1999, between H Power Corp.
and Sofinov Societe Financiere D'Innovation Inc.
10.17 Agreement, dated July 28, 1999, between H Power Corp. and
Duquesne Enterprises, Inc.
10.18 Subscription Agreement, made and entered into on May 2,
1997, by and between H Power Corp. and 3362469 Canada Inc.
10.19 Shareholders Agreement made and entered into on May 2, 1997,
by and among H Power Corp., Sofinov Societe Financiere
D'Innovation Inc., Societe Innovatech Du Grand Montreal,
9042-0175 Quebec Inc. and 3362469 Canada Inc.
10.20 Stock Exchange Agreement made and entered into on May 2,
1997, by and among H Power Corp. and Sofinov Societe
Financiere D'Innovation Inc., Societe Innovatech Du Grand
Montreal and 9042-0175 Quebec Inc.
10.21 Amended and Restated Stockholders Agreement made and entered
into as of May 2, 1997, by and among H Power Corp., certain
common stockholders of H Power Corp., Duquesne Enterprises,
Singapore Technologies Automotive Ltd., Sofinov Societe
Financiere D'Innovation Inc., Societe Innovatech Du Grand
Montreal and 9042-0175 Quebec Inc.
10.22 Joint Venture Agreement, dated as of December 18, 1998,
between H Power Corp. and Arthur D. Little, Inc.
10.23 Memorandum of Agreement, dated February 9, 2000, between H
Power Corp., Societe Innovatech Du Grand Montreal, Sofinov
Societe Financiere D'Innovation Inc. and 9042-0175 Quebec
Inc.
10.24 Agreement, dated February 15, 1995, between H Power Corp.
and TechMatics Inc.
10.25 Termination Agreement, dated as of March 29, 2000, between H
Power Corp. and NBG Technologies, Inc. (formerly TechMatics
Inc.).
10.26 Letter Agreement, dated March 25, 1996, between H Power
Corp. and Duquesne Enterprises.
10.27 Amended and Restated Fuel Cell Operating Agreement dated
March 9, 2000, between H Power Corp., H Power Enterprises of
Canada, Inc., and ECO Fuel Cells LLC.+
10.28 Agreement dated August 20, 1999, between H Power Corp. and H
Power Enterprises of Canada Inc.
10.29 Technology Licensing Agreement made and entered into on May
2, 1997, by and between H Power Corp. and 3362469 Canada
Inc.
10.30 First Amendment to Technology Licensing Agreement, entered
into as of August 20, 1999, between H Power Corp. and H
Power Enterprises of Canada Inc.
10.31 Development and License Agreement, dated as of August 17,
1998, by and between H Power Enterprises of Canada Inc. and
Harvest Energy Technology Inc.+
10.32 Letter Agreement, dated November 18, 1999, between H Power
Corp. and AvantCell Technologies Inc.
10.33 Amending Agreement, dated January 11, 2000 between H Power
Corp. and AvantCell Technologies Inc.
10.34 Form of Employee's Agreement Re: Inventions, Confidential
Information and Covenant not to Compete.
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
NO. DESCRIPTION
- --------------------- -----------
<C> <S>
10.35 Form of Indemnification Agreement.
10.36 Lease, dated August 8, 1991, between Montbell Associates,
L.L.C. and H Power Corp. ("Lease I").
10.37 Lease, dated August 8, 1991, between Montbell Associates,
L.L.C. and H Power Corp. ("Lease II").
10.38 Addendum, dated April 4, 1996, to Leases dated August 8,
1991, between Montbell Associates, L.L.C. and H Power Corp.
10.39 Addendum, dated March 29, 1999, to Leases dated August 8,
1991, as Modified by Subsequent Addendum dated April 4, 1996
between Montbell Associates, L.L.C. and H Power Corp.
10.40 Agreement of Lease, dated September 17, 1997, between SITQ
Inc. and H Power Enterprises of Canada Inc.
10.41 Lease, dated December 8, 1999, between Khubani Enterprises,
Inc. and H Power Corp.
10.42 Letter Agreement, dated March 29, 2000, between NBG
Technologies, Inc. and H Power Corp.
21.1 List of subsidiaries of H Power Corp.
23.1 Consent of Fulbright & Jaworski L.L.P. (included in Exhibit
5.1)*
23.2 Consent of PricewaterhouseCoopers LLP.
24.1 Power of attorney (on signature page).
27.1 Financial Data Schedule, fiscal year ended May 31, 1999.
27.2 Financial Data Schedule, period ended November 30, 1999.
</TABLE>
- ------------------------
* To be filed by amendment
+ A request for confidential treatment was filed for portions of this
document. Confidential portions have been omitted and filed separately with
the Commission as required by Rule 406.
(b) Financial Statement Schedules. The following financial statement
schedules are filed herewith:
All other schedules are omitted because they are not required or are not
applicable or the information is included in the financial statements or notes
thereto.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers, and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-6
<PAGE>
The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, as amended, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Act shall be deemed to be part of
this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on April 6, 2000.
<TABLE>
<S> <C> <C>
H POWER CORP.
By: /s/ H. FRANK GIBBARD
-----------------------------------------
H. Frank Gibbard
CHIEF EXECUTIVE OFFICER AND DIRECTOR
</TABLE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints H. Frank Gibbard and William L. Zang, or either
of them, as his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement, and any registration statement
relating to the offering hereunder pursuant to Rule 462 under the Securities Act
of 1933, as amended, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or either of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ H. FRANK GIBBARD Chief Executive Officer,
------------------------------------------- Director (principal executive April 6, 2000
H. Frank Gibbard officer)
/s/ WILLIAM L. ZANG Chief Financial Officer,
------------------------------------------- Director (principal financial April 6, 2000
William L. Zang and accounting officer)
/s/ FONG SAIK HAY Director
------------------------------------------- April 6, 2000
Fong Saik Hay
/s/ RACHEL K. LOREY Director
------------------------------------------- April 6, 2000
Rachel K. Lorey
/s/ JOHN MCSWEENEY Director
------------------------------------------- April 6, 2000
John McSweeney
/s/ IVAN ROCH Director
------------------------------------------- April 6, 2000
Ivan Roch
/s/ THOMAS RUSSO Director
------------------------------------------- April 6, 2000
Thomas Russo
</TABLE>
II-8
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
1.1 Underwriting Agreement.*
3.1 Amended and Restated Certificate of Incorporation.
3.2 Amended and Restated Certificate of Incorporation (to be
filed prior to effectiveness of this Registration
Statement).*
3.3 By-Laws.
3.4 Amended and Restated By-Laws.*
4.1 Registration Rights Agreement, dated March 25, 1996, between
H Power Corp. and Duquesne Enterprises.
4.2 Investor Rights Agreement, entered into as of May 22, 1996,
by and between H Power Corp. and Singapore Technologies
Automotive Ltd.
4.3 Investor Rights Agreement, entered into as of May 2, 1997,
by and between H Power Corp. and Sofinov Societe Financiere
D'Innovation Inc., Societe Innovatech Du Grand Montreal and
9042-0175 Quebec Inc.
4.4 Letter agreement, dated as of May 2, 1997, between certain
common stockholders of H Power Corp. and Sofinov Societe
Financiere D'Innovation Inc., Societe Innovatech Du Grand
Montreal and 9042-0175 Quebec Inc.
4.5 Stockholders' and Voting Agreement, dated as of April 5,
2000, by and among H Power Corp. and certain common
stockholders.
4.6 Specimen Common Stock Certificate.*
5.1 Opinion of Fulbright & Jaworski L.L.P.*
10.1 H Power Corp 1989 Stock Option Plan.
10.2 H Power Corp. 2000 Stock Option Plan.
10.3 Amended and Restated Officer's Employment Agreement, dated
as of October 1, 1999, between H Power Corp. and H. Frank
Gibbard.
10.4 Executive's Employment Agreement, dated as of October 11,
1999, between H Power Corp. and Arthur Kaufman.
10.5 Officer's Employment Agreement, dated as of November 1,
1999, between H Power Corp. and Thomas H. Michael.
10.6 Officer's Employment Agreement, dated as of November 23,
1999, between H Power Corp. and William L. Zang.
10.7 Consulting Agreement made and entered into as of July 28,
1999, between H Power Corp. and Frederick Entman.
10.8 Consulting Agreement made and entered into as of July 28,
1999, between H Power Corp. and Norman Rothstein.
10.9 Termination Agreement, dated as of April 5, 2000, by and
between H Power Corp. and Norman Rothstein.
10.10 Termination Agreement, dated as of April 5, 2000, by and
between H Power Corp. and Frederick Entman.
10.11 Consulting Agreement, dated as of March 15, 2000, between H
Power Corp. and Millennium Capital Resources, LLC.
10.12 Letter Agreement, dated March 10, 2000, between H Power
Corp. and R. Michael Fromer.
</TABLE>
<PAGE>
<TABLE>
<C> <S>
10.13 Stock Purchase Agreement made and entered into as of August
25, 1999, between H Power Corp. and ECO Fuel Cells, LLC.
10.14 Stock Purchase Agreement made and entered into as of
November 29, 1999, between H Power Corp. and Hydro-Quebec
CapiTech Inc.
10.15 Stock Purchase Agreement made and entered into as of
November 29, 1999, between H Power Corp. and Sofinov Societe
Financiere D'Innovation Inc.
10.16 Letter Agreement, dated May 24, 1999, between H Power Corp.
and Sofinov Societe Financiere D'Innovation Inc.
10.17 Agreement, dated July 28, 1999, between H Power Corp. and
Duquesne Enterprises, Inc.
10.18 Subscription Agreement, made and entered into on May 2,
1997, by and between H Power Corp. and 3362469 Canada Inc.
10.19 Shareholders Agreement made and entered into on May 2, 1997,
by and among H Power Corp., Sofinov Societe Financiere
D'Innovation Inc., Societe Innovatech Du Grand Montreal,
9042-0175 Quebec Inc. and 3362469 Canada Inc.
10.20 Stock Exchange Agreement made and entered into on May 2,
1997, by and among H Power Corp. and Sofinov Societe
Financiere D'Innovation Inc., Societe Innovatech Du Grand
Montreal and 9042-0175 Quebec Inc.
10.21 Amended and Restated Stockholders Agreement made and entered
into as of May 2, 1997, by and among H Power Corp., certain
common stockholders of H Power Corp., Duquesne Enterprises,
Singapore Technologies Automotive Ltd., Sofinov Societe
Financiere D'Innovation Inc., Societe Innovatech Du Grand
Montreal and 9042-0175 Quebec Inc.
10.22 Joint Venture Agreement, dated as of December 18, 1998,
between H Power Corp. and Arthur D. Little, Inc.
10.23 Memorandum of Agreement, dated February 9, 2000, between H
Power Corp., Societe Innovatech Du Grand Montreal, Sofinov
Societe Financiere D'Innovation Inc. and 9042-0175 Quebec
Inc.
10.24 Agreement, dated February 15, 1995, between H Power Corp.
and TechMatics Inc.
10.25 Termination Agreement, dated as of February 29, 2000,
between H Power Corp. and NBG Technologies, Inc. (formerly
TechMatics Inc.).
10.26 Letter Agreement, dated March 25, 1996, between H Power
Corp. and Duquesne Enterprises.
10.27 Amended and Restated Fuel Cell Operating Agreement dated
March 9, 2000, between H Power Corp., H Power Enterprises of
Canada, Inc., and ECO Fuel Cells LLC.+
10.28 Agreement dated August 20, 1999, between H Power Corp. and H
Power Enterprises of Canada Inc.
10.29 Technology Licensing Agreement made and entered into on May
2, 1997, by and between H Power Corp. and 3362469 Canada
Inc.
10.30 First Amendment to Technology Licensing Agreement, entered
into as of August 20, 1999, between H Power Corp. and H
Power Enterprises of Canada Inc.
10.31 Development and License Agreement, dated as of August 17,
1998, by and between H Power Enterprises of Canada Inc. and
Harvest Energy Technology Inc.+
10.32 Letter Agreement, dated November 18, 1999, between H Power
Corp. and AvantCell Technologies Inc.
10.33 Amending Agreement, dated January 11, 2000 between H Power
Corp. and AvantCell Technologies Inc.
</TABLE>
<PAGE>
<TABLE>
<C> <S>
10.34 Form of Employee's Agreement Re: Inventions, Confidential
Information and Covenant not to Compete.
10.35 Form of Indemnification Agreement.
10.36 Lease, dated August 8, 1991, between Montbell Associates,
L.L.C. and H Power Corp. ("Lease I").
10.37 Lease, dated August 8, 1991, between Montbell Associates,
L.L.C. and H Power Corp. ("Lease II").
10.38 Addendum, dated April 4, 1996, to Leases dated August 8,
1991, between Montbell Associates, L.L.C. and H Power Corp.
10.39 Addendum, dated March 29, 1999, to Leases dated August 8,
1991, as Modified by Subsequent Addendum dated April 4, 1996
between Montbell Associates, L.L.C. and H Power Corp.
10.40 Agreement of Lease, dated September 17, 1997, between SITQ
Inc. and H Power Enterprises of Canada Inc.
10.41 Lease, dated December 8, 1999, between Khubani Enterprises,
Inc. and H Power Corp.
10.42 Letter Agreement, dated March 29, 2000, between NBG
Technologies, Inc. and H Power Corp.
21.1 List of subsidiaries of H Power Corp.
23.1 Consent of Fulbright & Jaworkski L.L.P. (included in Exhibit
5.1).*
23.2 Consent of PricewaterhouseCoopers L.L.P.
24.1 Power of attorney (on signature page).
27.1 Financial Data Schedule, fiscal year ended May 31, 1999.
27.2 Financial Data Schedule, period ended November 30, 1999.
</TABLE>
- ------------------------
* To be filed by amendment.
+ A request for confidential treatment was filed for portions of this
document. Confidential portions have been omitted and filed separately with
the Commission as required by Rule 406.
<PAGE>
Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
H POWER CORP.
H Power Corp. (the "Corporation"), a corporation organized and existing
under and pursuant to the provisions of the General Corporation Law of the State
of Delaware (the "General Corporation Law"), does hereby certify as follows:
FIRST:That the Corporation was originally incorporated under the name of H
POWER CORP. on June 6, 1989 (which certificate of incorporation was previously
amended as of May 22, 1996) pursuant to the General Corporation Law;
SECOND: The amendment and the restatement of the certificate of
incorporation herein certified have been duly adopted by the stockholders in
accordance with the provisions of Sections 228, 242, and 245 of the General
Corporation Law of the State of Delaware. Prompt written notice of the adoption
of the amendment and of the restatement of the certificate of incorporation
herein certified has been given to those stockholders who have not consented in
writing thereto, as provided in Section 228 of the General Corporation Law of
the State of Delaware; and
THIRD: The text of the Restated Certificate of Incorporation is hereby
restated and further amended to read in its entirety as follows:
ARTICLE I
The name of the Corporation is H Power Corp.
ARTICLE II
The registered office of the Corporation is located at 1013 Centre Road,
City of Wilmington, County of New Castle, State of Delaware 19805. The name of
its registered agent at that address is The Prentice-Hall Corporation System,
Inc.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law.
ARTICLE IV
<PAGE>
A. AUTHORIZED STOCK.
The Corporation is authorized to issue two classes of shares,
designated, respectively, Common Stock and Preferred Stock. The total number of
shares of all classes of stock that the Corporation shall have the authority to
issue is 21,800,000 shares, $.001 par value per share, which shall consist of:
20,000,000 shares of Common Stock (the "Common Stock"); and
1,800,000 shares of Preferred Stock (the "Preferred Stock") consisting of
(a) 200,000 shares designated as Series A Convertible Preferred Stock (the
"Series A Preferred Stock"), (b) 400,000 shares designated as Series B
Convertible Preferred Stock (the "Series B Preferred Stock") and (c)
1,200,000 shares designated as Series C Convertible Preferred Stock (the
"Series C Preferred Stock").
B. RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS OF COMMON STOCK AND
PREFERRED STOCK.
The rights, preferences, privileges and restrictions granted to and
imposed upon the Common Stock and the Preferred Stock are set forth in this
Division B.
1. Dividend Provisions.
(a) Holders of Preferred Stock. (i) The holder of Series A
Preferred Stock shall be entitled to receive cumulative dividends in the form
of shares of Common Stock at the rate of 7% per annum. The number of shares
of Common Stock payable as dividends at any time and from time to time shall
be determined by reference to the most recent per share price paid by a
purchaser of Common Stock in an arm's length transaction between unrelated
parties; provided that at least 100,000 shares have been sold in any such
transaction, it being understood that the original issue price of the Series
A Preferred Stock shall be used in such determination in the absence of any
such sales, i.e., $15.00 per share, and the sale of Series B Preferred Stock
shall be disregarded in such determination. No fractional shares of Common
Stock shall be issued. In lieu of any fractional shares to which the holder
would otherwise be entitled, the Corporation shall pay cash equal to such
fraction.
(ii) The Holders of Series B Preferred Stock shall be
entitled to receive, in the event dividends are paid or distributions made on
any share of Common Stock (other than a dividend or distribution that
consists of securities of the Corporation) pursuant to Section 1(b)
hereunder, an additional dividend or distribution in an amount equal per
share (on an as-if-converted to Common Stock basis) to the amount paid,
distributed or set aside for each share of Common Stock.
(iii) The Holders of Series C Preferred Stock shall be
entitled to receive, in the event dividends are paid or distributions made on
any share of Common Stock
<PAGE>
(other than a dividend or distribution that consists of securities of the
Corporation) pursuant to Section 1(b) hereunder, an additional dividend or
distribution in an amount equal per share (on an as-if-converted to Common Stock
basis) to the amount paid, distributed or set aside for each share of Common
Stock.
(iv) Any dividends on the Series A Preferred Stock shall be in
preference and priority to any payment of any dividend on the Common Stock (the
"Junior Shares"). Any such dividends on the Series A Preferred Stock shall
accrue and be deemed to accrue from day to day whether or not declared, and
shall be cumulative so that if such dividends on the Series A Preferred Stock
shall not have been declared and set apart for payment or paid, the deficiency
shall be fully declared or set apart for payment or paid before any dividend
shall be paid or declared or set apart for any Junior Shares.
(v) The holders of the Preferred Stock shall not be entitled
to any other dividends except as provided in this Restated Certificate of
Incorporation.
(b) Holders of Common Stock. Subject to Section 1(a) hereof, the
holders of shares of Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, out of any assets of the Corporation legally
available therefor, such dividends as may be declared from time to time by the
Board of Directors.
2. Liquidation.
(a) Preferred Stock. Upon any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, before any distribution or
payment shall be made to the holders of any stock of the Corporation other than
Preferred Stock, holders of Series A Preferred Stock, Series B Preferred Stock
and Series C Preferred Stock shall be entitled to be paid out of the assets of
the Corporation an amount per share of such class of Preferred Stock equal to
the original issue price for such class of Preferred Stock plus all accumulated
or declared and unpaid dividends on such shares of such class of Preferred Stock
(as adjusted for any stock dividends, combinations, splits, recapitalizations
and the like with respect to such shares) for each share of Preferred Stock held
by them. If, upon any liquidation, distribution or winding up, the assets of the
Corporation shall be insufficient to make payment in full to all holders of
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
of the liquidation preference set forth herein, then such assets shall be
distributed among the holders of Series A Preferred Stock, Series B Preferred
Stock and Series C Preferred Stock at the time outstanding, ratably in
proportion to the full amounts to which they would otherwise be respectively
entitled.
(b) Common Stock. After payment has been made to the holders of
Preferred Stock as set forth in Action 2(a) above, the holders of the Common
Stock shall be entitled to receive, out of the remaining assets of the
Corporation, an amount per share of Common Stock equal to $12.50 plus all
declared and unpaid dividends on such shares of Common Stock (as adjusted for
any stock dividends, combinations, splits, recapitalizations and the like with
respect to such shares) for each share of Common Stock held by them. If, upon
any liquidation,
<PAGE>
distribution or winding up, the assets of the Corporation shall be insufficient
to make payment in full to all holders of Common Stock of the liquidation amount
set forth herein, then such assets shall be distributed among the holders of
Common Stock at the time outstanding, ratably in proportion to the full amounts
to which they would otherwise be respectively entitled.
(c) Remaining Assets. After the payment of the full liquidation
preferences of the Series B Preferred Stock as set forth in Section 2(a) above
and of the Common Stock as set forth in Section 2(b) above, the assets of the
Corporation legally available for distribution, if any, shall be distributed
ratably to the holders of the Common Stock and Series B Preferred Stock pro rata
on an as-if-converted to Common Stock basis.
(d) Sales of Assets. Prior to the closing of the sale of shares of
Common Stock in the initial public offering of the Common Stock of the
Corporation pursuant to a firmly underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the "Initial Public Offering"), any agreement by the Corporation or its
stockholders regarding the sale, lease or other disposition of all or
substantially all of the assets of the Corporation, including a license or
transfer of all or substantially all of the intellectual property rights of the
Corporation if such intellectual property rights constitute all or substantially
all of the Corporation's assets (each an "Asset Transaction") or any
consolidation or merger of the Corporation with or into any other entity, or
other reorganization or similar transaction or series of transactions as a
result of which the stockholders of the Corporation immediately prior to such
consolidation, merger, reorganization or other transaction or series of
transactions own less than 50% of the Corporation's voting power immediately
after such consolidation, merger, reorganization or other transaction or series
of transactions (each an "Acquisition") shall in each case be deemed to be a
liquidation, dissolution or winding up of the Corporation within the meaning of
this Section 2.
(e) Distribution of Proceeds. In order to assure that all proceeds
received by the Corporation or its stockholders in any Asset Transaction or
Acquisition referred to in Section 2(d) above will be distributed to the holders
of Series B Preferred Stock in accordance with the provisions of this Section 2,
each stockholder shall, upon request by the Corporation, pay over to the
Corporation all amounts received by such stockholder, which amounts shall be
distributed by the Corporation to the holders of Series B Preferred Stock in
accordance with the provisions of this Section 2.
3. Redemption.
The Corporation shall have the following redemption rights with
respect to the Preferred Stock:
(a) (i) Subject to the rights of the holders of Series A Preferred
Stock to convert such shares into shares of Common Stock pursuant to Section 4,
the Corporation may at its option at the earlier of (A) the two year anniversary
of the A Closing Date (as hereinafter defined), or (B) the closing of the
Initial Public Offering (the "Series A Redemption Date"),
<PAGE>
redeem all but not less than all of the Series A Preferred Stock from each
holder thereof, by paying in cash out of funds legally available therefor a
redemption price of $16.50 per share (the "Series A Redemption Price"), plus all
accrued but unpaid dividends on the Series A Preferred Stock, in accordance with
the procedures in Section 3(b) below.
(ii) Subject to the rights of the holders of Series B
Preferred Stock to convert such shares into shares of Common Stock pursuant
to Section 5, the Corporation may at its option at any time after the date
(the "Series B Redemption Date") falling two years from the Original Series B
Issue Date (as defined in Section 5(e) below) of the Series B Preferred
Stock, redeem all but not less than all of the Series B Preferred Stock then
outstanding. The redemption price (the "Series B Redemption Price") will be
paid in cash out of funds legally available therefor and will be in an amount
for each share equal to the sum of (A) the Original Series B Issue (as
defined in Section 5(b) below), (b) a dividend (the "Incremental Dividend")
in an amount equal to an annual rate of seven percent (7%) multiplied by the
Original Series B Issue Price per annum which dividend shall be cumulative
and shall accrue based upon the actual number of days elapsed from the
Original Series B Issue Date unless the Corporation has issued for more than
Two Million Dollars ($2,000,000) of consideration a series of Preferred Stock
that is not entitled to receive any dividends in the ordinary course, upon
redemption or otherwise, in which case the Incremental Dividend shall not be
applicable, and (c) 10% of the $12.50 Original Series B Issue Price.
(iii) Subject to the rights of the holders of Series C
Preferred Stock to convert such shares into shares of Common Stock pursuant
to Section 6, the Corporation may at its option at the earlier of (A) the two
year anniversary of the C Closing Date (as hereinafter defined), or (B) the
closing of the Initial Public Offering (the "Series C Redemption Date"),
redeem all but not less than all of the Series C Preferred Stock from each
holder thereof, by paying in cash out of funds legally available therefor a
redemption price of $15.00 per share (or, in the event the additional shares
of Series C Preferred Stock have been issued pursuant to Section 3.3 of the
Subscription Agreement dated May 2, 1997 between the Corporation and Sofinov)
(as defined in Section 6(d)(1)(B)), $12.50 (the "Series C Redemption Price"),
in accordance with the procedures in Section 3(b) below.
(iv) The term "A Closing Date" as used herein refers to the
date on which the first sale and purchase of shares of the Series A Preferred
Stock is consummated between the Corporation and the holders of the Series A
Preferred Stock; the term "C Closing Date" as used herein refers to the date on
which the first sale and purchase of shares of the Series C Preferred Stock is
consummated between the Corporation and the holders of the Series C Preferred
Stock.
(b) (i) At least 15 business days prior to the Series A Redemption
Date, Series B Redemption Date and/or Series C Redemption Date, as applicable,
written notice (the "Redemption Notice") shall be mailed, first class postage
prepaid, to each holder of record (at the close of business on the business day
preceding the day on which notice is given) of the Series A Preferred Stock, the
Series B Preferred Stock and/or the Series C Preferred Stock (as the case
<PAGE>
may be) to be redeemed, at the address last shown on the records of the
Corporation for such holder or given by the holder to the Corporation for the
purpose of notice or if no such address appears or is given at the place where
the principal executive office of the Corporation is located, notifying such
holder of the redemption to be effected, specifying the number of shares to be
redeemed from such holder, the relevant Redemption Date, the relevant Redemption
Price, the place at which payment may be obtained and the date on which such
holder's Series A Conversion Rights or Series B Conversion Rights or Series C
Conversion Rights (each as hereinafter defined) as to such shares terminate, and
calling upon such holder to surrender to the Corporation, in the manner and at
the place designated, the certificate or certificates representing the shares to
be redeemed. Except as provided in Section 3(c) below, on or after the relevant
Redemption Date, each holder of Series A Preferred Stock, Series B Preferred
Stock or Series C Preferred Stock to be redeemed shall surrender to the
Corporation the certificate or certificates representing such shares, in the
manner and at the place designated in the relevant Redemption Notice, and
thereupon the relevant Redemption Price of such shares shall be payable to the
order of the person whose name appears on such certificate or certificates as
the owner thereof and each surrendered certificate shall be canceled.
(ii) From and after the relevant Redemption Date, unless there
shall have been a default in payment of the applicable Series A Redemption
Price, Series B Redemption Price or Series C Redemption Price, all rights of the
holders of such shares as holders of Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock (except the right to receive the
Series A Redemption Price, Series B Redemption Price or Series C Redemption
Price (as the case may be) upon surrender of their certificate or certificates
and any accrued but unpaid Common Stock dividends on the Series A Preferred
Stock or unpaid dividends or distributions on the Series B Preferred Stock or
Series C Preferred Stock) shall cease with respect to such shares, and such
shares shall not thereafter be transferred on the books of the Corporation or be
deemed to be outstanding for any purpose whatsoever.
(iii) Any class of shares of Preferred Stock designated for
redemption in a Redemption Notice but which are not redeemed on the applicable
Redemption Date shall remain outstanding and shall remain entitled to all of the
rights and preferences provided herein.
(c) Notwithstanding any provision to the contrary contained in this
Section 3, a holder of Preferred Stock may elect not to have the eligible shares
of Preferred Stock redeemed on the relevant Redemption Date, by converting such
shares of Preferred Stock into shares of Common Stock pursuant to Sections 4, 5
or 6 (as the case may be) prior to the relevant Redemption Date.
4. Conversion of Series A Preferred Stock.
The holders of Series A Preferred Stock shall have conversion
rights as follows (the "Series A Conversion Rights"):
(a) Right to Convert. Each share of Series A Preferred Stock shall
be
<PAGE>
convertible, at the option of the holder thereof, at any time and from time to
time, into such number of fully paid and nonassessable shares of Common Stock as
is determined by dividing $15.00 (the "Original Series A Issue Price") by the
Series A Conversion Price (as defined below) in effect at the time of
conversion. The conversion price at which shares of Common Stock shall be
deliverable upon conversion of Series A Preferred Stock without the payment of
additional consideration by the holder thereof (the "Series A Conversion Price")
shall initially be $15.00 per share. Such initial Series A Conversion Price, and
the rate of which shares of Series A Preferred Stock may be converted into
shares of Common Stock, shall be subject to adjustment as provided below.
In the event of a liquidation of the Corporation, the Series A
Conversion Rights shall terminate at the close of business on the first full day
preceding the date fixed for the payment of any amounts distributable on
liquidation to the holders of Series A Preferred Stock.
(b) Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of Series A Preferred Stock. In lieu of any fractional
shares to which the holder would otherwise be entitled, the Corporation shall
pay cash equal to such fraction multiplied by the then effective Series A
Conversion Price.
(c) Mechanics of Conversion.
(i) In order for a holder of Series A Preferred Stock to
convert shares of Series A Preferred Stock into shares of Common Stock, such
holder shall surrender the certificate or certificates for such shares of Series
A Preferred Stock, at the office of the transfer agent for the Series A
Preferred Stock (or at the principal office of the Corporation if the
Corporation serves as its own transfer agent), together with written notice that
such holder elects to convert all or any number of the shares of the Series A
Preferred Stock represented by such certificate or certificates.
Such notice shall state such holder's name or the names of the nominees in
which such holder wishes the certificate or certificates for shares of Common
Stock to be issued. If required by the Corporation, certificates surrendered for
conversion shall be endorsed or accompanied by a written instrument or
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the registered holder or its attorney duly authorized in writing. The date of
receipt of such certificates and notice by the transfer agent (or by the
Corporation if the Corporation serves as its own transfer agent) shall be the
conversion date (the "Series A Conversion Date"). The Corporation shall, as soon
as practicable after the Series A Conversion Date, issue and deliver at such
office to such holder of Series A Preferred Stock, or to his or its nominees, a
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled, together with cash in lieu of any fraction of a
share.
(ii) The Corporation shall at all times when the Series A
Preferred Stock shall be outstanding, reserve and keep available out of its
authorized but unissued stock, for the purpose of effecting the conversion of
the Series A Preferred Stock, such number of its duly authorized shares of
Common Stock as shall from time to time be sufficient to effect the
<PAGE>
conversion of all outstanding shares of Series A Preferred Stock. Before taking
any action which would cause an adjustment reducing the Series A Conversion
Price below the then par value of the shares of Common Stock issuable upon
conversion of the Series A Preferred Stock, the Corporation will take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Corporation may validly and legally issue fully paid and nonassessable
shares of Common Stock at such adjusted Series A Conversion Price.
(iii) On the Series A Conversion Date, all shares of Series A
Preferred Stock which shall have been surrendered for conversion as herein
provided shall no longer be deemed to be outstanding and all rights with respect
to such shares, including the rights, if any, to receive notices and to vote,
shall immediately cease and terminate on the Series A Conversion Date, except
only the right of the holders thereof to receive shares of Common Stock in
exchange therefor.
(d) Adjustments to Series A Conversion Price for Diluting Issues.
(i) Special Definitions. For purposes of this Section 4(d)
only, the following definitions shall apply:
(A) "Option" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire Common Stock or Convertible
Securities, excluding rights or options to acquire up to 750,000 shares of
Common Stock granted to employees, directors or consultants of the
Corporation pursuant to the Corporation's stock purchase or stock option
plans or other arrangements that are approved by the Board of Directors.
(B) "Original Series A Issue Date" shall mean the date
on which a share of Series A Preferred Stock was first issued.
(C) "Convertible Securities" shall mean any evidences
of indebtedness, shares or other securities directly or indirectly
convertible into or exchangeable for Common Stock.
(D) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued (or, pursuant to Section 4(d)(iii) below,
deemed to be issued) by the Corporation after the Original Series A Issue
Date, other than shares of Common Stock issued or issuable:
1) upon the conversion of shares of Series A
Preferred Stock or as a dividend or distribution on Series A
Preferred Stock, or upon conversion of shares of Series B Preferred
Stock or as a dividend or distribution on shares of Series B
Preferred Stock to the holders of Series B Preferred Stock or upon
the conversion of shares of Series C Preferred Stock or as a
dividend or distribution on shares of Series C Preferred Stock to
the holders of Series C Preferred Stock or their affiliates at the
same or a higher price per share as the
<PAGE>
Series A Preferred Stock, except as set forth in Section 4(d)(ii);
2) by reason of a dividend, stock split, split-up
or other distribution on shares of Common Stock excluded from the
definition of Additional Shares of Common Stock by the foregoing
clause (1) or this clause (2); or
3) upon the exercise of options excluded from the
definition of "Option" in Section 4(d)(i)(A).
(ii) No Adjustment of Series A Conversion Price. No adjustment
in the number of shares of Common Stock into which the Series A Preferred Stock
is convertible shall be made, by adjustment in the applicable Series A
Conversion Price thereof:
(A) Unless the consideration per share (determined
pursuant to Section 4(d)(v)) for an Additional Share of Common Stock
issued or deemed to be issued by the Corporation is less than the
applicable Series A Conversion Price in effect on the date of, and
immediately prior to, the issue of such Additional Shares;
(B) In the event that the Corporation issues and sells
shares of Series B Preferred Stock or Common Stock to the holders of
Series B Preferred Stock or their affiliates at a price equal to at least
$12.50 per share (in the event that the Corporation issues and sells
shares of Series B Preferred Stock or Common Stock to the holders of
Series B Preferred Stock or their affiliates at a price that is less than
$12.50 per share, the adjustment in the number of shares of Common Stock
into which the Series A Preferred Stock is convertible shall be based upon
the difference between $12.50 and such lesser price per share);
(C) In the event that the Corporation issues and sells
shares of Series C Preferred Stock or Common Stock to the holders of
Series C Preferred Stock or their affiliates at a price equal to at least
$15.00 per share (or, in the event additional shares of Series C Preferred
Stock have been issued pursuant to Section 3.3 of the Subscription
Agreement, as defined in Section 6(d)(1)(B), $12.50 or in the event that
the Corporation issues and sells shares of Series C Preferred Stock or
Common Stock to the holders of Series C Preferred Stock or their
affiliates at a price that is less than $15.00 per share, (or if such
Section 3.3 is applicable, $12.50 per share), the adjustment in the number
of shares of Common Stock into which the Series A Preferred Stock is
convertible shall be based upon the difference between $15.00 and such
lesser price per share);
(D) In the event that the Corporation issues and sells
shares of Common Stock to the holders of promissory notes outstanding the
date hereof, which shares of Common Stock shall be in exchange for any
indebtedness represented by such promissory notes; provided, that the
price at which such promissory notes are exchanged
<PAGE>
for shares of Common Stock is not less than the lower of (1) $12.50 per
share, or (2) 80% of the Initial Public Offering price per share; and
(E) In the event that the Corporation, in connection
with the Initial Public Offering, issues to the underwriter or its
designee of the Initial Public Offering, Options or Additional Shares of
Common Stock in lieu of or in addition to other compensation, including
bridge loans with warrants; provided, that the amount of such compensation
is reasonable and customary in the industry.
(iii) Issue of Securities Deemed Issue of Additional Shares of
Common Stock. If the Corporation at any time or from time to time after the
Original Series A Issue Date shall issue any Options or Convertible Securities
or shall fix a record date for the determination of holders of any class of
securities entitled to receive any such Options or Convertible Securities, then
the maximum number of shares of Common Stock (as set forth in the instrument
relating thereto without regard to any provision contained therein for a
subsequent adjustment of such number) issuable upon the exercise of such Options
or, in the case of Convertible Securities and Options therefor, the conversion
or exchange of such Convertible Securities, shall be deemed to be Additional
Shares of Common Stock issued as of the time of such issue or, in case such a
record date shall have been fixed, as of the close of business on such record
date, provided that Additional Shares of Common Stock, shall not be deemed to
have been issued unless the consideration per share (determined pursuant to
Section 4(d)(v) hereof) of such Additional Shares of Common Stock would be less
than the applicable Series A Conversion Price in effect on the date of and
immediately prior to such issue, or such record date, as the case may be, and
provided further that in any such case in which Additional Shares of Common
Stock are deemed to be issued:
(A) No further adjustment in the Series A Conversion
Price shall be made upon the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of such Options of conversion or
exchange of such Convertible Securities;
(B) If such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any increase in
the consideration payable to the Corporation, or decrease in the number of
shares of Common Stock, issuable upon the exercise, conversion or exchange
thereof, the Series A Conversion Price computed upon the original issue
thereof (or upon the occurrence of a record date with respect thereto),
and any subsequent adjustment based thereon, shall, upon any such increase
or decrease becoming effective, be recomputed to reflect such increase or
decrease insofar as it affects such Options or the rights of conversion or
exchange under such Convertible Securities;
(C) No readjustment pursuant to clause (B) above shall
have the effect of increasing the Series A Conversion Price to an amount
which exceeds the lower of (1) the Series A Conversion Price on the
original adjustment date, and (2) the
<PAGE>
Series A Conversion Price that would have resulted from any issuance of
Additional Shares of Common Stock between the original adjustment date and
such readjustment date;
(D) If any Option or conversion privilege represented
by a Convertible Security shall expire or terminate without having been
exercised, the Series A Conversion Price adjusted upon the issuance of
such Option or Convertible Security shall be readjusted to the Series A
Conversion Price that would have been in effect had the Option or
Convertible Security not been issued; provided, however, that nothing
contained in this clause (D) shall in any way whatsoever have an effect
upon any Common Stock which has been issued upon conversion of the Series
A Preferred Stock;
(E) In the event of any change in the number of shares
of Common Stock issuable upon the exercise, conversion or exchange of any
Option or Convertible Security, including, but not limited to, a change
resulting from the antidilution provisions thereof, the Series A
Conversion Price then in effect shall forthwith be readjusted to such
Series A Conversion Price as would have obtained had the adjustment which
was made upon the issuance of such Option or Convertible Security not
exercised or converted prior to such changes been made upon the basis of
such change, but no further adjustment shall be made for the actual
issuance of Common Stock upon the exercise or conversion of any such
Option or Convertible Security.
(iv) Adjustment of Series A Conversion Price Upon Issuance Of
Additional Shares of Common Stock. Subject to the provisions of Section 4(d)(ii)
above, in the event the Corporation shall at any time after the Original Series
A Issue Date issue at least 1,000 Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to Section
4(d)(iii), but excluding shares issued as a dividend or distribution as provided
in Section 4(f) or upon a stock split or combination as provided in Section
4(e)), without consideration or for a consideration per share less than the
Series A Conversion Price in effect on the date of and immediately prior to such
issue, then and in such event, such Series A Conversion Price shall be reduced,
concurrently with such issue to the price at which such Additional Shares of
Common Stock are issued.
Notwithstanding the foregoing, the applicable Series A
Conversion Price shall not be so reduced at such time if the amount of such
reduction would be an amount less than $.01, but any such amount shall be
carried forward and reduction with respect thereto made at the time of and
together with any subsequent reduction which, together with such amount and any
other amount or amounts so carried forward, shall aggregate $.01 or more.
Notwithstanding any provision to the contrary contained
herein, this Section 4(d)(iv) shall terminate and be of no further force or
effect whatsoever immediately after the closing of the Corporation's Initial
Public Offering.
(v) Determination of Consideration. For purposes of this
Section 4(d),
<PAGE>
the consideration received by the Corporation for the issue of any Additional
Shares of Common Stock shall be computed as follows:
(A) Cash and Property. Such consideration shall:
1) insofar as it consists of cash, be computed as
the aggregate of cash received by the Corporation, excluding amounts
paid or payable for accrued interest or accrued dividends;
2) insofar as it consists of property other than
cash, be computed at the fair market value thereof at the time of
such issue, as determined in good faith by the Board of Directors;
and
3) in the event Additional Shares of Common Stock
are issued together with other shares or securities or other assets
of the Corporation for consideration which covers both, be the
proportion of such consideration so received, computed as provided
in clauses (1) and (2) above, as determined in good faith by the
Board of Directors.
(B) Options and Convertible Securities. The
consideration per share received by the Corporation for Additional Shares
of Common Stock deemed to have been issued pursuant to Section 4(d)(iii),
relating to Options and Convertible Securities, shall be determined by
dividing:
(x) the total amount, if any, received or receivable by
the Corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating
thereto, without regard to any provision contained therein for a
subsequent adjustment of such consideration) payable to the
Corporation upon the exercise of such Options or the conversion or
exchange of such Convertible Securities, or in the case of Options
for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such
Convertible Securities, by
(y) the maximum number of shares of Common Stock, (as
set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or the conversion
or exchange of such Convertible Securities.
(e) Adjustment for Stock Splits and Combinations. If the Corporation
shall at any time, or from time to time after the Original Series A Issue Date,
effect a subdivision of the outstanding Common Stock, the Series A Conversion
Price then in effect immediately before that subdivision shall be
proportionately decreased. Conversely, if the Corporation shall at any time, or
from time to time after the Original Series A Issue Date, combine the
outstanding shares of
<PAGE>
Common Stock into a smaller number of shares, the Series A Conversion Price then
in effect immediately before the combination shall be proportionately increased.
Any adjustment under this subsection shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(f) Adjustment for Certain Dividends and Distributions. In the event
the Corporation at any time, or from time to time after the Original Series A
Issue Date, shall make or issue, or fix a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other distribution
payable in additional shares of Common Stock, then and in each such event the
Series A Conversion Price then in effect shall be decreased as of the time of
such issuance or, in the event such a record date shall have been fixed, as of
the close of business on such record date, by multiplying the Series A
Conversion Price then in effect by a fraction:
(x) the numerator of which shall, be the total number of
shares of Common Stock issued and outstanding immediately prior to
the time of such issuance or the close of business on such record
date, and
(y) the denominator of which shall be the total number
of shares of Common Stock issued and outstanding immediately prior
to the time of such issuance or the close of business on such record
date plus the number of shares of Common Stock issuable in payment
of such dividend or distribution;
provided, however, that if such record date shall have been fixed and such
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Series A Conversion Price shall be recomputed accordingly as
of the close of business on such record date and thereafter the Series A
Conversion Price shall be adjusted pursuant to this subsection to reflect the
actual payment of such dividend or distribution.
(g) Adjustments for Other Dividends and Distributions. In the event
the Corporation at any time, or from time to time after the Original Series A
Issue Date, shall make or issue, or fix a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other distribution
payable in securities of the Corporation other than shares of Common Stock
(other than Common Stock dividends paid under Section 1(a) hereof), then and in
each such event provision shall be made so that the holders of Series A
Preferred Stock shall receive upon conversion thereof in addition to the number
of shares of Common Stock receivable thereupon, the amount of securities of the
Corporation that they would have received had their Series A Preferred Stock
been converted into Common Stock on the date of such event and had thereafter,
during the period from the date of such event to and including the Series A
Conversion Date, retained such securities receivable by them as aforesaid during
such period giving application to all adjustments called for during such period
under this paragraph with respect to the rights of the holders of Series A
Preferred Stock.
(h) Adjustment for Reclassification, Exchange or Substitution. If
the
<PAGE>
Common Stock issuable upon the conversion of the Series A Preferred Stock shall
be changed into the same or a different number of shares of any class or classes
of stock, whether by capital reorganization, reclassification, or otherwise
(other than a subdivision or combination of shares or stock dividend provided
for above, or a reorganization, merger, consolidation, or sale of assets
provided for below), then and in each such event the holder of each such share
of Series A Preferred Stock shall have the right thereafter to convert such
share into the kind and amount of shares of stock and other securities and
property receivable upon such reorganization, reclassification, or other change,
by holders of the number of shares of Common Stock into which such shares of
Series A Preferred Stock might have been converted immediately prior to such
reorganization, reclassification, or change, all subject to further adjustment
as provided herein.
(i) Adjustment for Merger or Reorganization, Etc. In case of any
consolidation or merger of the Corporation with or into another corporation or
the sale of all or substantially all of the assets of the Corporation to another
corporation (other than a sale which is treated as a liquidation pursuant to
Section 2(d)), each share of Series A Preferred Stock shall thereafter be
convertible into the kind and amount of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock of the
Corporation deliverable upon conversion of such Series A Preferred Stock would
have been entitled upon such consolidation, merger or sale; and, in such case,
appropriate adjustment (as determined in good faith by the Board of Directors)
shall be made in the application of the provisions set forth in this Section 4
with respect to the rights and interest thereafter of the holders of Series A
Preferred Stock, to the end that the provisions set forth in this Section 4
(including provisions with respect to changes in and other adjustments of the
Series A Conversion Price) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares of stock or other property
thereafter deliverable upon the conversion of the Series A Preferred Stock.
(j) No Impairment. The Corporation will not, by amendment of this
Restated Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Corporation, but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of
Preferred Stock against impairment.
(k) Certificate as to Adjustments. Upon the occurrence of each
adjustment of the Series A Conversion Price pursuant to this Section 4, the
Corporation at its expense shall promptly compute such adjustment in accordance
with the terms hereof and a certificate setting forth such adjustment, and
showing in detail the facts upon which such adjustment is based. The Corporation
shall upon the written request at any time of any holder of Series A Preferred
Stock, furnish or cause to be furnished to such holder a similar certificate
setting forth (i) such adjustments, (ii) the Series A Conversion Price then in
effect, and (iii) the number of shares of Common Stock and the amount, if any,
of other property which then would be received upon the
<PAGE>
conversion of Series A Preferred Stock.
(l) Notice of Record Date. In the event:
(i) that the Corporation declares a dividend (or any other
distribution) on its Common Stock payable in Common Stock or other securities of
the Corporation;
(ii) that the Corporation subdivides or combines its
outstanding shares of Common Stock;
(iii) of any reclassification of the Common Stock of the
Corporation (other than a subdivision or combination of its outstanding shares
of Common Stock or a stock dividend or stock distribution thereon), or of any
consolidation or merger of the Corporation into or with another corporation, or
of the sale of all or substantially all of the assets of the Corporation; or
(iv) of the involuntary or voluntary dissolution, liquidation
or winding up of the Corporation;
then the Corporation shall cause to be filed at its principal office or at the
office of the transfer agent of the Series A Preferred Stock, and shall cause to
be mailed to the holders of Series A Preferred Stock at their last addresses as
shown on the records of the Corporation or such transfer agent, at least 10 days
prior to the record date specified in (A) below or 20 days before the date
specified in clause (B), a notice stating:
(A) the record date of such dividend, distribution,
subdivision or combination, or, if a record is not to be taken, the date
as of which the holders of Common Stock of record to be entitled to such
dividend, distribution, subdivision or combination are to be determined;
or
(B) the date on which such reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities or other property deliverable upon
such reclassification, consolidation, merger, sale, dissolution or winding
up.
(m) Notices. Any notice required by the provisions of this Section
4 to be given to the holders of shares of Series A Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at its address appearing on the books of the
Corporation.
5. Conversion of Series B Preferred Stock.
<PAGE>
The holders of the Series B Preferred Stock shall have the
following rights with respect to the conversion of the Series B Preferred Stock
into shares of Common Stock (the "Series B Conversion Rights"):
(a) Optional Conversion. Subject to and in compliance with the
provisions of this Section 5, any shares of Series B Preferred Stock may, at the
option of the holder, be converted at any time into fully-paid and nonassessable
shares of Common Stock. The number of shares of Common Stock to which a holder
of Series B Preferred Stock shall be entitled upon conversion shall be the
product obtained by multiplying the "Series B Conversion Rate" then in effect
(determined as provided in Section 5(b)) by the number of shares of Series B
Preferred Stock being converted.
(b) Series B Conversion Rate. The conversion rate in effect at any
time for conversion of the Series B Preferred Stock (the "Series B Conversion
Rate") shall be the quotient obtained by dividing $12.50 (the "Original Series B
Issue Price"), plus any declared and unpaid dividends thereon, by the "Series B
Conversion Price," calculated as provided in Section 5(c).
(c) Series B Conversion Price. The conversion price for the Series B
Preferred Stock shall initially be the Original Series B Issue Price of the
Series B Preferred Stock (the "Series B Conversion Price"). Such initial Series
B Conversion Price shall be adjusted from time to time in accordance with this
Section 5. All references to the Series B Conversion Price herein shall mean the
Series B Conversion Price as so adjusted.
(d) Mechanics of Conversion. Each holder of Series B Preferred Stock
who desires to convert the same into shares of Common Stock pursuant to this
Section 5 shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the Corporation or any transfer agent for the Series
B Preferred Stock, and shall give written notice to the Corporation at such
office that such holder elects to convert the same. Such notice shall state the
number of shares of Series B Preferred Stock being converted. Thereupon, the
Corporation shall promptly issue and deliver at such office to such holder a
certificate or certificates for the number of shares of Common Stock to which
such holder is entitled and shall promptly pay in cash or, to the extent
sufficient funds are not then legally available therefor, in Common Stock (at
the Common Stock's fair market value determined by the Board of Directors as of
the date of such conversion), any declared and unpaid dividends on the shares of
Series B Preferred Stock being converted. Such conversion shall be deemed to
have been made at the close of business on the date of such surrender of the
certificates representing the shares of Series B Preferred Stock to be
converted, and the person entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the record
bolder of such shares of Common Stock on such date.
(e) Adjustment for Stock Splits and Combinations. If the Corporation
shall at any time or from time to time after the date that the first share of
Series B Preferred Stock is issued (the "Original Series B Issue Date") effect a
subdivision of the outstanding Common Stock, the Series B Conversion Price in
effect immediately before that subdivision shall be
<PAGE>
proportionately decreased. Conversely, if the Corporation shall at any time or
from time to time after the Original Series B Issue Date combine the outstanding
shares of Common Stock into a smaller number of shares, the Series B Conversion
Price in effect immediately before the combination shall be proportionately
increased. Any adjustment under this Section 5(e) shall become effective at the
close of business on the date the subdivision or combination becomes effective.
(f) Adjustment for Common Stock Dividends and Distributions. If the
Corporation at any time or from time to time after the Original Series B Issue
Date makes, or fixes a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, in each such event the Series B Conversion
Price that is then in effect shall be decreased as of the time of such issuance
or, in the event such record date is fixed, as of the close of business on such
record date, by multiplying the Series B Conversion Price then in effect by a
fraction (i) the numerator of which is the total number of shares of Common
Stock issued and outstanding immediately prior to the time of such issuance or
the close of business on such record date, and (ii) the denominator of which is
the total number of shares of Common Stock issued and outstanding immediately
prior to the time of such issuance or the close of business on such record date
plus the number of shares of Common Stock issuable in payment of such dividend
or distribution; provided, however, that if such record date is fixed and such
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Series B Conversion Price shall be recomputed accordingly as
of the close of business on such record date and thereafter the Series B
Conversion Price shall be adjusted pursuant to this Section 5(f) to reflect the
actual payment of such dividend or distribution.
(g) Adjustments for Dividends and Distributions of Other Securities.
If the Corporation at any time or from time to time after the Original Series B
Issue Date makes, or fixes a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation other than shares of Common Stock, or assets or
property of the Corporation, in each such event such provision shall be made so
that the holders of the Series B Preferred Stock shall receive upon conversion
thereof, in addition to the number of shares of Common Stock receivable
thereupon, the amount of other securities or assets or property of the
Corporation which they would have received had their Series B Preferred Stock
been converted into Common Stock on the date of such event and had they
thereafter, during the period from the date of such event to and including the
conversion date, retained such securities receivable by them as aforesaid during
such period, subject to all other adjustments called for during such period
under this Section 5 with respect to the rights of the holders of the Series B
Preferred Stock or with respect to such other securities by their terms.
(h) Adjustment for Reclassification, Exchange and Substitution. If
at any time or from time to time after the Original Series B Issue Date, the
Common Stock issuable upon the conversion of the Series B Preferred Stock is
changed into the same or a different number of shares of any class or classes of
stock, whether by recapitalization, reclassification or otherwise (other than an
Acquisition or Asset Transaction or a subdivision or combination of shares or
<PAGE>
stock dividend or a reorganization, merger, consolidation or sale of assets
provided for elsewhere in this Section 5), in any such event each holder of
Series B Preferred Stock shall have the right thereafter to convert such stock
into the kind and amount of stock and other securities and property receivable
upon such recapitalization, reclassification or other change by holders of the
maximum number of shares of Common Stock into which such shares of Series B
Preferred Stock could have been converted immediately prior to such
recapitalization, reclassification or change, all subject to further adjustment
as provided herein or with respect to such other securities or property by the
terms thereof.
(i) Reorganizations, Mergers, Consolidations or Sales of Assets. If
at any time or from time to time after the Original Series B Issue Date, there
is a capital reorganization of the Common Stock (other than an Acquisition or
Asset Transaction or a recapitalization, subdivision, combination,
reclassification, exchange or substitution of shares provided for elsewhere in
this Section 5), as a part of such capital reorganization, provision shall be
made so that the holders of the Series B Preferred Stock shall thereafter be
entitled to receive upon conversion of the Series B Preferred Stock the number
of shares of stock or other securities or property of the Corporation to which a
holder of the number of shares of Common Stock deliverable upon conversion would
have been entitled on such capital reorganization, subject to adjustment in
respect of such stock or securities by the terms thereof. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 5 with respect to the rights of the holders of Series B Preferred
Stock after the capital reorganization to the end that the provisions of this
Section 5 (including adjustment of the Series B Conversion Price then in effect
and the number of shares issuable upon conversion of the Series B Preferred
Stock) shall be applicable after that event and be as nearly equivalent as
practicable.
(j) Sale of Shares Below Series B Conversion Price.
(i) If at any time or from time to time after the Original
Series B Issue Date and prior to an Initial Public Offering (as described in
Section 5(m)), the Corporation issues or sells, or is deemed by the express
provisions of this subsection (j) to have issued or sold, Additional Shares of
Common Stock (as hereinafter defined), other than as a dividend or other
distribution on any class of stock as provided in Section 5(f) above, and other
than a subdivision or combination of shares of Common Stock as provided in
Section 5(e) above, for an Effective Price (as hereinafter defined) less than
the then effective Series B Conversion Price, then and in each such case the
then existing Series B Conversion Price shall be reduced, as of the opening of
business on the date of such issue or sale, to a price determined by multiplying
the Series B Conversion Price by a fraction (A) the numerator of which shall be
(1) the number of shares of Common Stock deemed outstanding (as defined below)
immediately prior to such issue or sale, plus (2) the number of shares of Common
Stock which the aggregate consideration received (as defined in subsection
(j)(ii)) by the Corporation for the total number of Additional Shares of Common
Stock so issued would purchase at such Series B Conversion Price, and (B) the
denominator of which shall be (1) the number of shares of Common Stock deemed
outstanding (as defined below) immediately prior to such issue or sale plus (2)
the total number of Additional Shares of Common Stock so issued.
<PAGE>
For the purposes of the preceding sentence, the number of
shares of Common Stock deemed to be outstanding as of a given date shall be (aa)
the number of shares of Common Stock actually outstanding, and (bb) the number
of shares of Common Stock into which the then-outstanding shares of Series B
Preferred Stock could be converted if fully converted on the day immediately
preceding the given date. The number of shares of Common Stock deemed to be
outstanding as of a given date shall not include any Common Stock which could be
obtained through the exercise of conversion of any other rights, options or
convertible securities.
(ii) For the purpose of making any adjustment required under
this Section 5(j), the consideration received by the Corporation for any issue
or sale of securities shall:
(A) to the extent it consists of cash, be computed at
the net amount of cash received by the Corporation after deduction of any
underwriting or similar commissions, compensation or concessions paid or
allowed by the Corporation in connection with such issue or sale but
without deduction of any expenses payable by the Corporation;
(B) to the extent it consists of services or property
other than cash, be computed at the fair value thereof at the time of such
issue, which shall be determined in good faith by a majority of
disinterested members of the Board; and
(C) if Additional Shares of Common Stock, Convertible
Securities; (as hereinafter defined) or rights or options to purchase
either Additional Shares of Common Stock or Convertible Securities are
issued or sold together with other stock or securities or other assets of
the Corporation for a consideration which covers both, be computed as the
portion of the consideration so received which shall be reasonably
determined in good faith by the Board of Directors to be allocable to such
Additional Shares of Common Stock, Convertible Securities or rights or
options.
(iii) For the purpose of the adjustment required under this
Section 5(j), if the Corporation issues or sells any rights or options for the
purchase of, or stock or other securities convertible into, Additional Shares of
Common Stock (such convertible stock or securities being referred to in this
Section 5(j) as "Convertible Securities") and if the Effective Price of such
Additional Shares of Common Stock is less than the Series B Conversion Price, in
each case the Corporation shall be deemed to have issued at the time of the
issuance of such rights or options or Convertible Securities the maximum number
of Additional Shares of Common Stock issuable upon exercise or conversion
thereof and to have received as consideration for the issuance of such shares an
amount equal to the total amount of the consideration, if any, received by the
Corporation for the issuance of such rights or options or Convertible
Securities, plus, in the case of such rights or options, the minimum amounts of
consideration, if any, payable to the Corporation upon the exercise of all of
such rights or
<PAGE>
options, plus, in the case of Convertible Securities, the minimum amounts of
consideration, if any, payable to the Corporation (other than by cancellation of
liabilities or obligations evidenced by such Convertible Securities) upon the
conversion of all such Convertible Securities; provided, that if in the case of
Convertible Securities the minimum amounts of such consideration cannot be
ascertained, but are a function of antidilution or similar protective clauses,
the Corporation shall be deemed to have received the minimum amounts of
consideration without reference to such clauses; provided, further, that if the
minimum amount of consideration payable to the Corporation upon the exercise or
conversion of rights, options or Convertible Securities is reduced over time or
on the occurrence or non-occurrence of specified events other than by reason of
antidilution adjustments, the Effective Price shall be recalculated using the
figure to which such minimum amount of consideration is reduced; and provided,
further, that if the minimum amount of consideration payable to the Corporation
upon the exercise or conversion of such rights, options or Convertible
Securities is subsequently increased, the Effective Price shall be again
recalculated using the increased minimum amount of consideration payable to the
Corporation upon the exercise or conversion of such rights, options or
Convertible Securities. No further adjustment of the Series B Conversion Price,
as adjusted upon the issuance of such rights, options or Convertible Securities,
shall be made as a result of the actual issuance of Additional Shares of Common
Stock on the exercise of any such rights or options or the conversion of any
such Convertible Securities.
If any such rights or options or the conversion privilege
represented by any such Convertible Securities shall expire without having been
exercised, the Series B Conversion Price as adjusted upon the issuance of such
rights, options or Convertible Securities shall be readjusted to the Series B
Conversion Price which would have been in effect had an adjustment been made on
the basis that the only Additional Shares of Common Stock so issued were the
Additional Shares of Common Stock, if any, actually issued or sold on the
exercise of such rights or options or rights of conversion of such Convertible
Securities, and such Additional Shares of Common Stock, if any, were issued or
sold for the consideration actually received by the Corporation upon such
exercise, plus the consideration, if any, actually received by the Corporation
for the granting of all such rights or options, whether or not exercised, plus
the consideration received for issuing or selling the Convertible Securities
actually converted, plus the consideration, if any, actually received by the
Corporation (other than by cancellation of liabilities or obligations evidenced
by such Convertible Securities) on the conversion of such Convertible
Securities, provided that such readjustment shall not apply to prior conversions
of Series B Preferred Stock.
(iv) "Additional Shares of Common Stock" shall mean all shares
of Common Stock issued by the Corporation or deemed to be issued pursuant to
this Section 5(j), whether or not subsequently reacquired or retired by the
Corporation, other than (A) shares of Common Stock issued upon conversion of the
Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock,
(B) as a dividend or distribution on such shares of Preferred Stock, and (C) up
to 750,000 shares of Common Stock and/or options, warrants or other Common Stock
purchase rights, and the Common Stock issued pursuant to such options, warrants
or other rights (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like) issued or
<PAGE>
to be issued to employees, officers or directors of, or consultants or advisors
to the Corporation or any subsidiary pursuant to stock purchase or stock option
plans or other arrangements that are approved by the Board of Directors.
(v) The "Effective Price" of Additional Shares of Common Stock
shall mean the quotient determined by dividing the total number of Additional
Shares of Common Stock issued or sold, or deemed to have been issued or sold by
the Corporation under this Section 5(j), into the aggregate consideration
received, or deemed to have been received by the Corporation for such issue
under this Section 5(j), for such Additional Shares of Common Stock.
(k) Certificate of Adjustment. In each case of an adjustment or
readjustment of the Series B Conversion Price for the number of shares of Common
Stock or other securities issuable upon conversion of the Series B Preferred
Stock, if the Series B Preferred Stock is then convertible pursuant to this
Section 5, the Corporation, at its expense, shall compute such adjustment or
readjustment in accordance with the provisions hereof and prepare a certificate
showing such adjustment or readjustment, and shall mail such certificate, by
first class mail, postage prepaid, to each registered holder of Series B
Preferred Stock at the holder's address as shown in the Corporation's books. The
certificate shall set forth such adjustment or readjustment, showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (i) the consideration received or deemed to be received by the
Corporation for any Additional Shares of Common Stock issued or sold or deemed
to have been issued or sold, (ii) the Series B Conversion Price at the time in
effect, (iii) the number of Additional Shares of Common Stock and (iv) the type
and amount, if any of other property which at the time would be received upon
conversion of the Series B Preferred Stock.
(l) Notices of Record Date. Upon (i) any taking by the Corporation
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, or (ii) any Acquisition or capital reorganization of the
Corporation, any reclassification or recapitalization of the capital stock of
the Corporation, any merger or consolidation of the Corporation with or into any
other corporation, any Asset Transaction, or any voluntary or involuntary
dissolution, liquidation or winding up of the Corporation, the Corporation shall
mail to each holder of Series B Preferred at least twenty (20) days prior to the
record date specified therein a notice specifying (A) the date on which any such
record is to be taken for the purpose of such dividend or distribution and a
description of such dividend or distribution, (B) the date on which any such
Acquisition, reorganization, reclassification, transfer, consolidation, merger,
Asset Transaction, dissolution, liquidation or winding up is expected to become
effective, and (C) the date, if any, that is to be fixed as to when the holders
of record of Common Stock (or other securities) shall be entitled to exchange
their shares of Common Stock (or other securities) for securities or other
property deliverable upon such Acquisition, reorganization, reclassification,
transfer, consolidation, merger, Asset Transaction, dissolution, liquidation or
winding up.
(m) Automatic Conversion.
<PAGE>
(i) Each share of Series B Preferred Stock shall automatically
be converted into shares of Common Stock, based on the then-effective Series B
Conversion Price, (A) at any time upon the affirmative vote of the holders of at
least sixty-six and two-thirds percent (66 2/3%) of the outstanding shares of
the Series B Preferred Stock, (B) immediately upon the closing of the Initial
Public Offering, covering the offer and sale of Common Stock for the account of
the Corporation in which the gross cash proceeds to the Corporation (after
underwriting discounts, commissions and fees) are at least $7,000,000 including
proceeds from the purchase in such offering of Common Stock by a holder of
Series B Preferred Stock, or (C) at such time that less than 25,000 shares of
Series B Preferred Stock remain outstanding. Upon such automatic conversion, any
declared and unpaid dividends shall be paid in accordance with the provisions of
Section 5(d).
(ii) Upon the occurrence of the event specified in paragraph
(i) above, the outstanding shares of Series B Preferred Stock shall be converted
automatically without any further action by the holders of such shares and
whether or not the certificates representing such shares are surrendered to the
Corporation or its transfer agent; provided, however, that the Corporation shall
not be obligated to issue certificates evidencing the shares of Common Stock
issuable upon such conversion unless the certificates evidencing such shares of
Series B Preferred Stock are either delivered to the Corporation or its transfer
agent as provided below, or the holder notifies the Corporation or its transfer
agent that such certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the Corporation from any
loss incurred by it in connection with such certificates. Upon the occurrence of
such automatic conversion of the Series B Preferred Stock, the holders of Series
B Preferred Stock shall surrender the certificates representing such shares at
the office of the Corporation or any transfer agent for the Series B Preferred
Stock. Thereupon, there shall be issued and delivered to such holder promptly at
such office and in its name as shown on such surrendered certificate or
certificates, a certificate or certificates for the number of shares of Common
Stock into which the shares of Series B Preferred Stock surrendered were
convertible on the date on which such automatic conversion occurred, and the
Corporation shall promptly pay in cash or, at the option of the Corporation,
Common Stock (at the Common Stock's fair market value determined by the Board as
of the date of such conversion), or, at the option of the Corporation, both, all
declared and unpaid dividends on the shares of Series B Preferred Stock being
converted, to and including the date of such conversion.
(n) Fractional Shares. No fractional shares of Common Stock shall
be issued upon conversion of Series B Preferred Stock. All shares of Common
Stock (including fractions thereof) issuable upon conversion of more than one
share of Series B Preferred Stock by a holder thereof shall be aggregated for
purposes of determining whether the conversion would result in the issuance of
any fractional share. If, after the aforementioned aggregation, the conversion
would result in the issuance of any fractional share, the Corporation shall, in
lieu of issuing any fractional share, pay as promptly as possible cash equal to
the product of such fraction multiplied by the Common Stock's fair market value
(as determined by the Board of Directors) on the date of conversion.
<PAGE>
(o) Reservation of Stock Issuable Upon Conversion. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series B Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series B Preferred Stock. If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Series B Preferred Stock,
the Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose.
(p) Notices. Any notice required by the provisions of this Section
5 shall be in writing and shall be deemed effectively given: (i) upon personal
delivery to the party to be notified; (ii) when sent by confirmed telex or
facsimile if sent during normal business hours of the recipient; if not, then on
the next business day, (iii) five (5) days after having been sent by registered
or certified mail, return receipt requested, postage prepaid, or (iv) one (1)
day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt. All notices shall be
addressed to each holder of record at the address of such holder appearing on
the books of the Corporation.
(q) Payment of Taxes. The Corporation will pay all taxes (other
than taxes based upon income) and other governmental charges that may be imposed
with respect to the issue or delivery of shares of Common Stock upon conversion
of shares of Series B Preferred Stock, excluding any tax or other charge imposed
in connection with any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that in which the shares of Series B Preferred
Stock so converted were registered.
(r) No Dilution or Impairment. The Corporation shall not amend this
Restated Certificate of Incorporation or participate in any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, for the purpose of avoiding or seeking
to avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Corporation, but shall at all times in good faith
assist in carrying out all such action as may be reasonably necessary or
appropriate in order to protect the conversion rights of the holders of the
Series B Preferred Stock against dilution or other impairment.
b. Conversion of Series C Preferred Stock.
The holders of Series C Preferred Stock shall have conversion
rights as follows (the "Series C Conversion Rights"):
(a) Right to Convert. Each share of Series C Preferred Stock shall
be convertible, at the option of the holder thereof, at any time and from time
to time, into such number of fully paid and nonassessable shares of Common Stock
as is determined by dividing
<PAGE>
$15.00 (or, in the event additional shares of Series C Preferred Stock have been
issued pursuant to Section 3.3 of the Subscription Agreement dated May 2, 1997
between the Corporation and Sofinov (as defined in Section 6(d)(i)(B), $12.50 )
(the "Original Series C Issue Price") by the Series C Conversion Price (as
defined below) in effect at the time of conversion. The conversion price at
which shares of Common Stock shall be deliverable upon conversion of Series C
Preferred Stock without the payment of additional consideration by the holder
thereof (the "Series C Conversion Price") shall initially be $15.00 per share
(or if such section 3.3 is applicable, $12.50). Such initial Series C Conversion
Price, and the rate of which shares of Series C Preferred Stock may be converted
into shares of Common Stock, shall be subject to adjustment as provided below.
In the event of a liquidation of the Corporation, the Series C
Conversion Rights shall terminate at the close of business on the first full day
preceding the date fixed for the payment of any amounts distributable on
liquidation to the holders of Series C Preferred Stock.
(b) Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of Series C Preferred Stock. In lieu of any fractional
shares to which the holder would otherwise be entitled, the Corporation shall
pay cash equal to such fraction multiplied by the then effective Series C
Conversion Price.
(c) Mechanics of Conversion.
(i) In order for a holder of Series C Preferred Stock to
convert shares of Series C Preferred Stock into shares of Common Stock, such
holder shall surrender the certificate or certificates for such shares of Series
C Preferred Stock, at the office of the transfer agent for the Series C
Preferred Stock (or at the principal office of the Corporation if the
Corporation serves as its own transfer agent), together with written notice that
such holder elects to convert all or any number of the shares of the Series C
Preferred Stock represented by such certificate or certificates. Such notice
shall state such holder's name or the names of the nominees in which such holder
wishes to the certificate or certificates for shares of Common Stock to be
issued. If required by the Corporation, certificates surrendered for conversion
shall be endorsed or accompanied by a written instrument or instruments of
transfer, in form satisfactory to the Corporation, duly executed by the
registered holder or his or its attorney duly authorized in writing. The date of
receipt of such certificates and notice by the transfer agent (or by the
Corporation if the Corporation serves as its own transfer agent) shall be the
conversion date (the "Series C Conversion Date"). The Corporation shall, as soon
as practicable after the Series C Conversion Date, issue and deliver at such
office to such holder of Series C Preferred Stock, or to his or its nominees, a
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled, together with cash in lieu of any fraction of a
share.
(ii) The Corporation shall at all times when the Series C
Preferred Stock shall be outstanding, reserve and keep available out of its
authorized but unissued stock, for the purpose of effecting the conversion of
the Series C Preferred Stock, such number of its duly authorized shares of
Common Stock as shall from time to time be sufficient to effect the
<PAGE>
conversion of all outstanding shares of Series C Preferred Stock. Before taking
any action which would cause an adjustment reducing the Series C Conversion
Price below the then par value of the shares of Common Stock issuable upon
conversion of the Series C Preferred Stock, the Corporation will take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Corporation may validly and legally issue fully paid and nonassessable
shares of Common Stock at such adjusted Series C Conversion Price.
(iii) On the Series C Conversion Date, all shares of Series C
Preferred Stock which shall have been surrendered for conversion as herein
provided shall no longer be deemed to be outstanding and all rights with respect
to such shares, including the rights, if any, to receive notices and to vote,
shall immediately cease and terminate on the Series C Conversion Date, except
only the right of the holders thereof to receive shares of Common Stock in
exchange therefor.
(d) Adjustments to Series C Conversion Price for Diluting Issues.
(i) Special Definitions. For purposes of this Section 6(d)
only, the following definitions shall apply:
(A) "Option" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire Common Stock or Convertible
Securities, excluding rights or options to acquire up to 750,000 shares of
Common Stock granted to employees, directors or consultants of the
Corporation pursuant to the Corporation's stock purchase or stock option
plans or other arrangements that are approved by the Board of Directors.
(B) "Original Series C Issue Date" shall mean the date
on which a share of Series C Preferred Stock was first issued or deemed to
be issued. For the purposes hereof, a share of Series C Preferred Stock
shall be deemed to have been issued on the date on which the first Class A
Common share in the share capital of 3362469 Canada Inc. is issued to
Sofinov Societe Financiere D'Innovation Inc. ("Sofinov"), Societe
Innovatech Du Grand Montreal ("Innovatech"), and 9042-0175 Quebec Inc.
("Quebeco") pursuant to a Subscription Agreement dated May 2, 1997 among
3362469 Canada Inc, Sofinov, Innovatech, and Quebeco.
(C) "Convertible Securities" shall mean any evidences
of indebtedness, shares or other securities directly or indirectly
convertible into or exchangeable for Common Stock.
(D) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued (or, pursuant to Section 6(d)(iii) below,
deemed to be issued) by the Corporation after the Original Series C Issue
Date, other than shares of Common Stock issued or issuable:
1) upon the conversion of shares of Series C
Preferred
<PAGE>
Stock or as a dividend or distribution on Series C Preferred Stock,
or upon conversion of shares of Series A Preferred Stock, or as a
dividend or distribution on shares of Series A Preferred Stock to
the holders of Series A Preferred Stock or upon conversion of shares
of Series B Preferred Stock or as a dividend or distribution on
Shares of Series B Preferred Stock to the holders of Series B
Preferred Stock or their affiliates at the same or a higher price
per share as the Series C Preferred Stock, except as set forth in
Section 6(d)(ii);
2) by reason of a dividend, stock split, split-up
or other distribution on shares of Common Stock excluded from the
definition of Additional Shares of Common Stock by the foregoing
clause (1) or this clause (2); or
3) upon the exercise of options excluded from the
definition of "Option" in Section 6(d)(i)(A).
(ii) No Adjustment of Series C Conversion Price. No adjustment
in the number of shares of Common Stock into which the Series C Preferred Stock
is convertible shall be made, by adjustment to the applicable Series C
Conversion Price thereof:
(A) Unless the consideration per share (determined
pursuant to Section 6(d)(v)) for an Additional Share of Common Stock
issued or deemed to be issued by the Corporation is less than the
applicable Series C Conversion Price in effect on the date of, and
immediately prior to, the issue of such Additional Shares;
(B) In the event that the Corporation issues and sells
shares of Series A Preferred Stock or Common Stock to the holders of
Series B Preferred Stock or their affiliates, at a price equal to at least
$15.00 per share (in the event that the Corporation issues and sells
shares of Series A Preferred Stock or Common Stock to the holders of
Series A Preferred Stock or their affiliates at a price that is less than
$15.00 per share, the adjustment in the number of shares of Common Stock
into which the Series C Preferred Stock is convertible shall be based upon
the difference between $15.00 and such lesser price per share);
(C) In the event that the Corporation issues and sells
shares of Series B Preferred Stock or Common Stock to the holders of
Series B Preferred Stock or their affiliates at a price equal to at least
$15.00 per share (in the event that the Corporation issues and sells
shares of Series B Preferred Stock or Common Stock to the holders of
Series B Preferred Stock or their affiliates at a price that is less than
$15.00 per share, the adjustment in the number of shares of Common Stock
into which the Series C Preferred Stock is convertible shall be based upon
the difference between $15.00 and such lesser price per share);
(D) In the event that the Corporation issues shares of
Common
<PAGE>
Stock to the holders of promissory notes outstanding on the date hereof,
which shares of Common Stock shall be in exchange for any indebtedness
represented by such promissory notes; provided, that the price at which
such promissory notes are exchanged for shares of Common Stock is at least
$15.00 per share (or, in the event additional shares of Series C Preferred
Stock have been issued pursuant to Section 3.3 of the Subscription
Agreement Dated May 2, 1997 between the Corporation and Sofinov (as
defined in Section 6(d)(i)(B),$12.50); and
(E) In the event that the Corporation, in connection
with the Initial Public Offering, issues to the underwriter or its
designee of the Initial Public Offering, Options or Additional Shares of
Common Stock in lieu of or in addition to other compensation, including
bridge loans with warrants; provided, that the amount of such compensation
is reasonable and customary in the industry.
(iii) Issue of Securities Deemed Issue of Additional Shares of
Common Stock. If the Corporation at any time or from time to time after the
Original Series C Issue Date shall issue any Options or Convertible Securities
or shall fix a record date for the determination of holders of any class of
securities entitled to receive any such Options or Convertible Securities, then
the maximum number of shares of Common Stock (as set forth in the instrument
relating thereto without regard to any provision contained therein for a
subsequent adjustment of such number) issuable upon the exercise of such Options
or, in the case of Convertible Securities and Options therefor, the conversion
or exchange of such Convertible Securities, shall be deemed to be Additional
Shares of Common Stock issued as of the time of such issue or, in case such a
record date shall have been fixed, as of the close of business on such record
date, provided that Additional Shares of Common Stock, shall not be deemed to
have been issued unless the consideration per share (determined pursuant to
Section 6(d)(v) hereof) of such Additional Shares of Common Stock would be less
than the applicable Series C Conversion Price in effect on the date of and
immediately prior to such issue, or such record date, as the case may be, and
provided further that in any such case in which Additional Shares of Common
Stock are deemed to be issued:
(A) No further adjustment in the Series C Conversion
Price shall be made upon the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of such Options or conversion or
exchange of such Convertible Securities;
(B) If such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any increase in
the consideration payable to the Corporation, or decrease in the number of
shares of Common Stock, issuable upon the exercise, conversion or exchange
thereof, the Series C Conversion Price computed upon the original issue
thereof (or upon the occurrence of a record date with respect thereto),
and any subsequent adjustment based thereon, shall, upon any such increase
or decrease becoming effective, be recomputed to reflect such increase or
decrease insofar as it affects such Options or the rights of conversion or
exchange under
<PAGE>
such Convertible Securities;
(C) No readjustment pursuant to clause (B) above shall
have the effect of increasing the Series C Conversion Price to an amount
which exceeds the lower of (1) the Series C Conversion Price on the
original adjustment date, or (2) the Series C Conversion Price that would
have resulted from any issuance of Additional Shares of Common Stock
between the original adjustment date and such readjustment date;
(D) If any Option or conversion privilege represented
by a Convertible Security shall expire or terminate without having been
exercised, the Series C Conversion Price adjusted upon the issuance of
such Option or Convertible Security shall be readjusted to the Series C
Conversion Price that would have been in effect had the Option or
Convertible Security not been issued; provided, however, that nothing
contained in this clause (D) shall in any way whatsoever have an effect
upon any Common Stock which has been issued upon conversion of the Series
C Preferred Stock;
(E) In the event of any change in the number of shares
of Common Stock issuable upon the exercise, conversion or exchange of any
Option or Convertible Security, including, but not limited to, a change
resulting from the antidilution provisions thereof, the Series C
Conversion Price then in effect shall forthwith be readjusted to such
Series C Conversion Price as would have been obtained had the adjustment
which was made upon the issuance of such Option or Convertible Security
not exercised or converted prior to such changes have been made upon the
basis of such change, but no further adjustment shall be made for the
actual issuance of Common Stock upon the exercise or conversion of any
such Option or Convertible Security.
(iv) Adjustment of Series C Conversion Price Upon Issuance Of
Additional Shares of Common Stock. Subject to the provisions of Section 6(d)(ii)
above, in the event the Corporation shall at any time after the Original Series
C Issue Date issue at least 1,000 Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to Section
6(d)(iii), but excluding shares issued as a dividend or distribution as provided
in Section 6(f) or upon a stock split or combination as provided in Section
6(e)), without consideration or for a consideration per share less than the
Series C Conversion Price in effect on the date of and immediately prior to such
issue, then and in such event, such Series C Conversion Price shall be reduced,
concurrently with such issue to the price at which such Additional Shares of
Common Stock are issued.
Notwithstanding the foregoing, the applicable Series C
Conversion Price shall not be so reduced at such time if the amount of such
reduction would be an amount less than $.01, but any such amount shall be
carried forward and reduction with respect thereto made at the time of and
together with any subsequent reduction which, together with such amount and any
other amount or amounts so carried forward, shall aggregate $.01 or more.
<PAGE>
Notwithstanding any provision to the contrary contained
herein, this Section 4(d)(iv) shall terminate and be of no further force or
effect whatsoever immediately after the closing of the Corporation's Initial
Public Offering.
(v) Determination of Consideration. For purposes of this
Section 6(d), the consideration received by the Corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(A) Cash and Property. Such consideration shall:
1) insofar as it consists of cash, be computed as
the aggregate of cash received by the Corporation, excluding amounts
paid or payable for accrued interest or accrued dividends;
2) insofar as it consists of property other than
cash, be computed at the fair market value thereof at the time of
such issue, as determined in good faith by the Board of Directors;
and
3) in the event Additional Shares of Common Stock
are issued together with other shares or securities or other assets
of the Corporation for consideration which covers both, be the
proportion of such consideration so received, computed as provided
in clauses (1) and (2) above, as determined in good faith by the
Board of Directors.
(B) Options and Convertible Securities. The
consideration per share received by the Corporation for Additional Shares
of Common Stock deemed to have been issued pursuant to Section 6(d)(iii),
relating to Options and Convertible Securities, shall be determined by
dividing:
(x) the total amount, if any, received or receivable by
the Corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating
thereto, without regard to any provision contained therein for a
subsequent adjustment of such consideration) payable to the
Corporation upon the exercise of such Options or the conversion or
exchange of such Convertible Securities, or in the case of Options
for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such
Convertible Securities, by
(y) the maximum number of shares of Common Stock (as set
forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or the conversion
or exchange of such Convertible Securities.
<PAGE>
(e) Adjustment for Stock Splits and Combinations. If the Corporation
shall at any time, or from time to time after the Original Series C Issue Date,
effect a subdivision of the outstanding Common Stock, the Series C Conversion
Price then in effect immediately before that subdivision shall be
proportionately decreased. Conversely, if the Corporation shall at any time, or
from time to time after the Original Series C Issue Date, combine the
outstanding shares of Common Stock into a smaller number of shares, the Series C
Conversion Price then in effect immediately before the combination shall be
proportionately increased. Any adjustment under this subsection shall become
effective at the close of business on the date the subdivision or combination
becomes effective.
(f) Adjustment for Certain Dividends and Distributions. In the event
the Corporation at any time, or from time to time after the Original Series C
Issue Date, shall make or issue, or fix a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other distribution
payable in additional shares of Common Stock, then and in each such event the
Series C Conversion Price then in effect shall be decreased as of the time of
such issuance or, in the event such a record date shall have been fixed, as of
the close of business on such record date, by multiplying the Series C
Conversion Price then in effect by a fraction:
(x) the numerator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to
the time of such issuance or the close of business on such record
date, and
(y) the denominator of which shall be the total number
of shares of Common Stock issued and outstanding immediately prior
to the time of such issuance or the close of business on such record
date plus the number of shares of Common Stock issuable in payment
of such dividend or distribution;
provided, however, that if such record date shall have been fixed and such
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Series C Conversion Price shall be recomputed accordingly as
of the close of business on such record date and thereafter the Series C
Conversion Price shall be adjusted pursuant to this subsection to reflect the
actual payment of such dividend or distribution.
(g) Adjustments for Other Dividends and Distributions. In the event
the Corporation at any time, or from time to time after the Original Series C
Issue Date, shall make or issue, or fix a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other distribution
payable in securities of the Corporation other than shares of Common Stock
(other than Common Stock dividends paid under Section 1(a) hereof), then and in
each such event provision shall be made so that the holders of Series C
Preferred Stock shall receive upon conversion thereof in addition to the number
of shares of Common Stock receivable thereupon, the amount of securities of the
Corporation that they would have received had their Series C Preferred Stock
been converted into Common Stock on the date of such event
<PAGE>
and, in respect of such securities of the Corporation received by them, had they
thereafter, during the period from the date of such event and, including the
Series C Conversion Date, retained such securities receivable by them as
aforesaid during such period giving application to all adjustments called for
during such period under this paragraph with respect to the rights of the
holders of Series C Preferred Stock.
(h) Adjustment for Reclassification, Exchange or Substitution. If
the Common Stock issuable upon the conversion of the Series C Preferred Stock
shall be changed into the same or a different number of shares of any class or
classes of stock, whether by capital reorganization, reclassification, or
otherwise (other than a subdivision or combination of shares or stock dividend
provided for above, or a reorganization, merger, consolidation, or sale of
assets provided for below), then and in each such event the holder of each such
shares of Series C Preferred Stock shall have the right thereafter to convert
such share into the kind and amount of shares of stock and other securities and
property receivable upon such reorganization, reclassification, or other change,
by holders of the number of shares of Common Stock into which such shares of
Series C Preferred Stock might have been converted immediately prior to such
reorganization, reclassification, or change, all subject to further adjustment
as provided herein.
(i) Adjustment for Merger or Reorganization, Etc. In case of any
consolidation or merger of the Corporation with or into another corporation or
the sale of all or substantially all of the assets of the Corporation to another
corporation (other than a sale which is treated as a liquidation pursuant to
Section 2(d)), each share of Series C Preferred Stock shall thereafter be
convertible into the kind and amount of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock of the
Corporation deliverable upon conversion of such Series C Preferred Stock would
have been entitled upon such consolidation, merger or sale; and, in such case,
appropriate adjustment (as determined in good faith by the Board of Directors)
shall be made in the application of the provisions set forth in this Section 4
with respect to the rights and interest thereafter of the holders of Series C
Preferred Stock, to the end that the provisions set forth in this Section 4
(including provisions with respect to changes in and other adjustment of the
Series C Conversion Price) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares of stock or other property
thereafter deliverable upon the conversion of the Series C Preferred Stock.
(j) No Impairment. The Corporation will not, by amendment of this
Restate Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Corporation, but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 6 and in the taking of all such actions as may be necessary or
appropriate in order to protect the Series C Conversion Rights of the holders of
Series C Preferred Stock against impairment.
(k) Certificate as to Adjustments. Upon the occurrence of each
adjustment of
<PAGE>
the Series C Conversion Price pursuant to this Section 6, the Corporation at its
expense shall promptly compute such adjustment in accordance with the terms
hereof and a certificate setting forth such adjustment, and showing in detail
the facts upon which such adjustment is based. The Corporation shall upon the
written request at any time of any holder of Series C Preferred Stock, furnish
or cause to be furnished to such holder a similar certificate setting forth (i)
such adjustments, (ii) the Series C Conversion Price then in effect, (iii) the
number of shares of Common Stock and the amount, if any, of other property which
then would be received upon the conversion of Series C Preferred Stock.
(l) Notice of Record Date. In the event:
(i) that the Corporation declares a dividend (or any other
distribution) on its Common Stock payable in Common Stock or other securities of
the Corporation;
(ii) that the Corporation subdivides or combines its
outstanding shares of Common Stock;
(iii) of any reclassification of the Common Stock of the
Corporation (other than a subdivision or combination of its outstanding shares
of Common Stock or a stock dividend or stock distribution thereon), or of any
consolidation or merger of the Corporation into or with another corporation, or
of the sale of all or substantially all of the assets of the Corporation; or
(iv) of the involuntary or voluntary dissolution, liquidation
or winding up of the Corporation;
then the Corporation shall cause to be filed at its principal office or at the
office of the transfer agent of the Series C Preferred Stock, and shall cause to
be mailed to the holders of Series C Preferred Stock at their last addresses as
shown on the records of the Corporation or such transfer agent, at least ten
(10) days prior to the record date specified in (A) below or twenty (20) days
before the date specified in clause (B), a notice stating:
(A) the record date of such dividend, distribution,
subdivision or combination, or, if a record is not to be taken, the date
as of which the holders of Common Stock of record to be entitled to such
dividend, distribution, subdivision or combination are to be determined;
or
(B) the date on which such reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities or other property deliverable upon
such reclassification, consolidation, merger, sale, dissolution or winding
up.
<PAGE>
(m) Notices. Any notice required by the provisions of this Section
6 to be given to the holders of shares of Series C Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at its address appearing on the books of the
Corporation.
7. Status of Converted Stock. In the event any shares of Preferred Stock
shall be converted pursuant to Sections 4, 5 or 6 hereof, the shares so
converted shall be canceled and shall not be reissuable by the Corporation, and
this Restated Certificate of Incorporation shall be appropriately amended to
effect the corresponding reduction in the Corporation's authorized capital
stock.
8. Voting Rights.
(a) Preferred Stock Voting Rights. The Preferred Stock shall have
the voting rights required by the General Corporation Law and, in addition,
shall have the voting rights set forth in subsections (b) and (c) below. Except
as otherwise provided herein, the Preferred Stock shall be voted with the shares
of the Common Stock of the Corporation and not as a separate class, at any
annual or special meeting of stockholders of the Corporation, and may act by
written consent in the same manner as the Common Stock in either case upon the
following basis: each holder of outstanding shares of Preferred Stock shall be
entitled to the number of votes equal to the number of whole shares of Common
Stock into which the shares of Series A Preferred Stock or Series B Preferred
Stock or Series C Preferred Stock held by such holder are convertible (as
adjusted from time to time pursuant to Sections 4, 5 or 6 hereof), at each
meeting of stockholders of the Corporation (and written actions of stockholders
in lieu of meetings) with respect to any and all matters presented to the
stockholders of the Corporation for their action or consideration except for
elections of directors of the Corporation which shall be governed by Section
8(e) below. Whenever in this Restated Certificate of Incorporation or otherwise,
the holders of Series A Preferred Stock or Series B Preferred Stock or Series C
Preferred Stock vote separately as a single class, each holder of Series A
Preferred Stock or Series B Preferred Stock or Series C Preferred Stock shall be
entitled to the number of votes equal to the number of whole shares of Common
Stock into which the shares of Series A Preferred Stock or Series B Stock or
Series C Preferred Stock (as the case may be) held by such holder are
convertible (as adjusted from time to time pursuant to Sections 4, 5 or 6
hereof).
(b) Separate Vote of Series A Preferred Stock. So long as shares of
Series A Preferred Stock are outstanding, the Corporation shall not, without the
prior written consent or affirmative vote of the holders of at least 51% of the
outstanding shares of Series A Preferred Stock, given in writing or by vote at a
meeting, consenting or voting, as the case may be, effect or validate the
following actions:
(i) Any amendment, alteration or repeal of any provision of
this Restated Certificate of Incorporation or the by-laws of the Corporation
that affects adversely the voting powers, preferences or other special rights or
privileges, qualifications, limitations or restrictions of the Series A
Preferred Stock;
<PAGE>
(ii) An increase or decrease (other than by redemption or
conversion) in the authorized number of shares of Preferred Stock;
(iii) Any authorization or an increase, whether by
reclassification or otherwise, in the authorized amount of, or any issuance of
any shares of, any class of shares of series of equity securities of the
Corporation ranking senior to the Series A Preferred Stock in right of
redemption, liquidation preference, voting or dividends;
(iv) Any redemption, repurchase, payment of dividends or other
distributions with respect to the capital stock of the Corporation (except for
(A) acquisitions of Common Stock by the Corporation pursuant to agreements which
permit the Corporation to repurchase such shares upon termination of services to
the Corporation or in exercise of the Corporation's right of first refusal upon
a proposed transfer, and (B) any redemption of capital stock for which a
contemporaneous offer is made to repurchase an equal amount of Series A
Preferred Stock (based in each case on the percentage of shares outstanding) at
a price that is equal to or greater than the price paid for such other capital
stock (based on an as converted basis in the case of Common Stock) but in no
event less than the liquidation preference for such Series A Preferred Stock);
or
(v) Any voluntary dissolution or liquidation of the
Corporation.
(C) Separate Vote of Series B Preferred Stock. So long as shares of
Series B Preferred Stock are outstanding, the Corporation shall not, without the
prior written consent or affirmative vote of the holders of at least 5+1 % of
the outstanding shares of Series B Preferred Stock, given in writing or by vote
at a meeting, consenting or voting, as the case may be, effect or validate the
following actions:
(i) Any amendment, alteration or repeal of any provision of
this Restate Certificate of Incorporation or the by-laws of the Corporation tat
affects adversely the voting powers, preferences or other special rights or
privileges, qualifications, limitations or restrictions of the Series B
Preferred Stock;
(ii) An increase or decrease (other than by redemption or
conversion) in the authorized number of shares of Preferred Stock;
(iii) Any authorization or an increase, whether by
reclassification or otherwise, in the authorized amount of, or any issuance of
any shares of, any class of shares of series of equity securities of the
Corporation ranking senior to the Series B Preferred Stock in right of
redemption, liquidation preference, voting or dividends;
(iv) Any redemption, repurchase, payment of dividends or other
distributions with respect to the capital stock of the Corporation (except for
(A) acquisitions of Common Stock by the Corporation pursuant to agreements which
permit the Corporation to
<PAGE>
repurchase such shares upon termination of services to the Corporation or in
exercise of the Corporation's right of first refusal upon a proposed transfer,
and (B) any redemption of capital stock for which a contemporaneous offer is
made to repurchase an equal amount of Series B Preferred Stock (based in each
case on the percentage of shares outstanding) at a price that is equal to or
greater than the price paid for such other capital stock (based on an as
converted basis in the case of Common Stock) but in no event less than the
liquidation preference for such Series B Preferred Stock); or
(v) Any voluntary dissolution or liquidation of the
Corporation.
(d) Separate Vote of Series C Preferred Stock. So long as shares of
Series C Preferred Stock are outstanding, the Corporation shall not, without the
prior written consent or affirmative vote of the holders of at least 51 % of the
outstanding shares of Series C Preferred Stock, given in writing or by vote at a
meeting, consenting or voting, as the case may be, effect or validate the
following actions:
(i) Any amendment, alteration or repeal of any provision of
this Restated Certificate of Incorporation or the by-laws of the Corporation
that affects adversely the voting powers, preferences or other special rights or
privileges, qualifications, limitations or restrictions of the Series C
Preferred Stock;
(ii) An increase or decrease (other than by redemption or
conversion) in the authorized number of shares of Preferred Stock;
(iii) Any authorization or an increase, whether by
reclassification or otherwise, in the authorized amount of, or any issuance of
any shares of, any class of shares of series of equity securities of the
Corporation ranking senior to the Series C Preferred Stock in right of
redemption, liquidation preference, voting or dividends;
(iv) Any redemption, repurchase, payment of dividends or other
distributions with respect to the capital stock of the Corporation (except for
(A) acquisitions of Common Stock by the Corporation pursuant to agreement which
permit the Corporation to repurchase such shares upon termination of services to
the Corporation or in exercise of the Corporation's right of first refusal upon
a proposed transfer, and (B) any redemption of capital stock for which a
contemporaneous offer is made to repurchase an equal amount of Series C
Preferred Stock (based in each case on the percentage of shares outstanding) at
a price that is equal to or greater am the price paid for such other capital
stock (based on an as converted basis in the case of Common Stock) but in no
event less than the liquidation preference for such Series C Preferred Stock);
or
(v) Any voluntary dissolution or liquidation of the
Corporation.
(e) Common Stock Voting Rights. The holder of each outstanding share
of Common Stock shall have the right to one vote, and shall be entitled to
notice of any
<PAGE>
stockholders meeting in accordance with the by-laws of the Corporation, and
shall be entitled to vote upon such matters and in such manner as may be
provided by law. The voting rights of the holders of Common Stock are further
subject to and qualified by the provisions of Section 8(f) hereof
(f) Board of Directors. Notwithstanding any other provisions of this
Section 8, (i) the holders of Series A Preferred Stock, voting, as a separate
class, shall be entitled to elect one member of the Board of Directors at each
meeting or pursuant to each consent of the Corporation's stockholders for the
election of directors, and to remove from office such director and to fill any
vacancy caused by the resignation, death or removal of such director, (ii) the
holders of Series B Preferred Stock, voting as a separate class, shall be
entitled to elect one member of the Board of Directors at each meeting or
pursuant to each consent of the Corporation's stockholders for the election of
directors, and to remove from office such director and to fill any vacancy
caused by the resignation, death or removal of such director, (iii) the holders
of Series C Preferred Stock, voting as a separate class, shall be entitled to
elect one member of the Board of Directors at each meeting or pursuant to each
consent of the Corporation's stockholders for the election of directors, and to
remove from office such director and to fill any vacancy caused by the
resignation, death or removal of such director, (iv) one director who shall be
the senior executive to be initially designated by unanimous agreement of the
outstanding shares of Common Stock, Series A Preferred Stock and Series B
Preferred Stock, each voting as separate classes, at each meeting or pursuant to
each consent of the Corporation's stockholders for the election of directors,
and such shares shall be entitled to remove from office such director and to
fill any vacancy caused by the resignation, death or removal of such director,
and (v) three members of the Board of Directors shall be elected by the holders
of outstanding shares of Common Stock, at each meeting or pursuant to each
consent of the Corporation's stockholders for the election of directors and to
remove from office either such director and to fill any vacancy caused by the
resignation, death or removal of either such director, and (vi) two additional
directors who shall be designated upon the unanimous approval of each of the
directors referred to in (x) clauses (i), (ii), and (iii) above and (y) a
majority of directors in clause (iv) above.
ARTICLE V
Except as otherwise required by statute, the designations and the powers,
preferences and rights, and the qualifications or restrictions thereof of any
class or classes of stock or any series of any class of stock of the Corporation
may be determined from time to time by resolution or resolutions of the Board of
Directors.
ARTICLE VI
The following provisions are inserted for the management of the business
and for the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders;
<PAGE>
1. Election of directors need not be by ballot unless the by-laws so
provide.
2. The Board of Directors shall have power without the assent or vote of
the stockholders:
(a) Except as provided in Article IV Section 8 above, to make,
alter, amend, change, add to or repeal the by-laws of the Corporation; to fix
and vary the amount to be reserved for any proper purpose; to authorize and
cause to be executed mortgages and liens upon all or any part of the property of
the Corporation; to determine the use and disposition of any surplus or net
profits; and to fix the times for the declaration and payment of dividends.
(b) To determine from time to time whether, and to what extent, and
at what times and places, and under what conditions the accounts and books of
the Corporation (other than the stock ledger), or any of them, shall be open to
the inspection of the stockholders.
3. The directors in, their discretion may submit any contract or act for
approval or ratification at any annual meeting of the stockholders or at any
meeting of the stockholders called for the purpose of considering any such act
or contract, and any contract or act that shall be approved or be ratified by
the vote of the holders of a majority of the stock of the Corporation which is
represented in person or by proxy at such meeting and entitled to vote thereat
(provided that a lawful quorum of stockholders be there represented in person or
by proxy) shall be as valid and as binding upon the Corporation and upon all the
stockholders as though it had been approved or ratified by every stockholder of
the Corporation, whether or not the contract or act would otherwise be open to
legal attack because of director's interest, or for any other reason.
4. No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit. The foregoing shall not apply to or have any effect
on the liability or alleged liability of any director of the Corporation for or
with respect to any acts or omissions of such director occurring prior to the
adoption hereof.
5. In addition to the powers and authorities hereinbefore or by statute
expressly conferred upon them, the directors are hereby empowered to exercise an
such powers and do such acts and things as may be exercised or done by the
Corporation; subject, nevertheless, to the provisions of the statutes of
Delaware, of this Restated Certificate of Incorporation, and to any by laws from
time to time made by the stockholders; provided, however, that no by-laws so
made shall invalidate any prior act of the directors which would have been valid
if such by-laws had not been made.
<PAGE>
ARTICLE VII
The Corporation may, to the full extent permitted by Section 145 of the
General Corporation Law, as amended, from time to time, indemnify all persons
whom it may indemnify pursuant thereto.
ARTICLE VIII
Whenever a compromise or arrangement is proposed between the Corporation
and its creditors or any class of them and/or between the Corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware, may, in the application in a summary way of the
Corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for the Corporation under the provisions of
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for the Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation.
ARTICLE IX
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Restated Certificate of Incorporation in the manner
now or hereafter prescribed by law, and all rights and powers conferred herein
on stockholders, directors and officers are subject to this reserved power.
<PAGE>
IN WITNESS WHEREOF, this Corporation has caused this Restated Certificate
of Incorporation to be signed by its duly authorized officers this 2nd day of
May, 1997.
H POWER CORP.
By: /s/ H. Frank Gibbard
------------------------------------
Title: President
<PAGE>
Exhibit 3.3
BY-LAWS OF H POWER CORP
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE
The registered office of the Corporation shall be established and
maintained at The Prentice Hall Corporation System, Inc., 229 South State
Street, Dover, in the County of Kent, in the State of Delaware.
SECTION 2. OTHER OFFICES
The Corporation may have other offices, either within or without the State
of Delaware, at such place or places as the Board of Directors may from time to
time appoint or the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS
SECTION 1. ANNUAL MEETING
An annual meeting of stockholders for the purpose of electing directors
and of transacting such other business as may come before it shall be held each
year at such place, either within or without the State of Delaware, and at such
date and time as the Board of Directors, by resolution, shall determine and as
set forth in the notice of the meeting.
If the date of the annual meeting shall fall upon a legal holiday, the
meeting shall be held on the next succeeding business day.
SECTION 2. SPECIAL MEETINGS
Special meetings of the stockholders for any purpose or purposes may be
held at any time upon call of the Chairman of the Board, if any, the President
or a majority of the Board of Directors, at such date, time and place either
within or without the State of Delaware as may be stated in the notice of such
meeting. A special meeting of stockholders shall be called by the President or
the Secretary upon the written request,
<PAGE>
stating the place, date, time, and purpose or purposes of the meeting, of
stockholders who together own of record Twenty-Five (25%) Percent of the
outstanding stock of all classes entitled to vote at such meeting.
SECTION 3. NOTICE OF MEETINGS
Written notice of a stockholders meeting, stating the place, date and time
thereof, and, in the case of a special meeting the purpose or purposes for which
the meeting is called, shall be given by the Chairman of the Board, if any, the
President, any Vice President, the Secretary, or an Assistant Secretary, to each
stockholder entitled to vote thereat at his or her address as it appears on the
records of the Corporation, not less than ten nor more than sixty days before
the date of the meeting unless a different period is prescribed by law.
SECTION 4. QUORUM
Except as otherwise required by law, by the Certificate of Incorporation
or by these By-Laws, at any meeting of stockholders, the holders of a majority
of the outstanding shares of each class of stock entitled to vote at the meeting
shall be present or represented by proxy in order to constitute a quorum for the
transaction of any business. In the absence of a quorum, a majority in interest
of the stockholders entitled to vote thereat present in person or by proxy or
the chairman of the meeting may adjourn the meeting from time to time in the
manner provided in Article II, Section 5 of these By-Laws until a quorum shall
attend.
SECTION 5. ADJOURNMENT
Any meeting of stockholders, annual or special, may adjourn from time to
time to reconvene at the same or some other place, and notice need not be given
of any such adjourned meeting if the date, time and place thereof are announced
at the meeting at which the adjournment is taken. At any such adjourned meeting
any business may be transacted that might have been transacted at the original
meeting. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
SECTION 6. ORGANIZATION
The Chairman of the Board, if any, or in his or her absence the President,
or in their absence any Vice President, shall call to order meetings of
stockholders and shall act as chairman of such meetings. The Board of Directors,
or, if the Board fails to act,
<PAGE>
the stockholders may appoint any stockholder, director, or officer of the
Corporation to act as chairman of any meeting in the absence of the Chairman of
the Board, the President, and all Vice Presidents.
The Secretary of the Corporation shall act as secretary of all meetings of
stockholders, but, in the absence of the Secretary, the chairman of the meeting
may appoint any other person to act as secretary of the meeting.
SECTION 7. VOTING
Each stockholder entitled to vote in accordance with the terms and
provisions of the Certificate of Incorporation and these By-Laws shall be
entitled to one vote, in person or by proxy, for each share of stock entitled to
vote held by such stockholder, but no proxy shall be voted after three years
from its date unless such proxy provides for a longer period. Except as
otherwise provided by law or in the Certificate of Incorporation or these
By-Laws and except for the election of directors, at any meeting duly called and
held at which a quorum is present, a majority of the votes cast at such meeting
upon a given question by the holders of outstanding shares of stock of all
classes of stock of the Corporation entitled to vote thereon who are present in
person or by proxy shall decide such question. At any meeting duly called and
held for the election of directors at which a quorum is present, directors shall
be elected by a plurality of the votes cast by the holders (acting as such) of
shares of stock of the Corporation entitled to elect such directors. Upon the
demand of any stockholder, the vote for directors and upon any question before a
meeting shall be by ballot.
SECTION 8. STOCKHOLDER LIST
The officer who has charge of the stock ledger of the Corporation shall at
least ten days before each meeting of stockholders prepare a complete
alphabetical addressed list of the stockholders entitled to vote at the ensuing
election, with the number of shares held by each. Said list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at the executive offices of the Corporation or a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall be available for inspection at the meeting.
SECTION 9. ACTION WITHOUT MEETING
Except as otherwise provided by the Certificate of Incorporation, whenever
the vote of stockholders at a meeting thereof is required or permitted to be
taken in connection with any corporate action by any provisions of the statutes
or the Certificate
<PAGE>
of Incorporation or of these By-Laws, the meeting and vote of stockholders may
be dispensed with, if all the stockholders who would have been entitled by vote
upon the action if such meeting were held, shall consent in writing to such
corporate action being taken.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. NUMBER AND TERM OF OFFICE
The business, property, and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors. The number of directors shall
be three to seven. The directors shall be elected at the annual meeting of the
stockholders and each director shall be elected to serve (subject to the
provisions of Article V) until the next succeeding annual meeting of
stockholders and until his or her respective successor shall be elected and
shall qualify. The number of directors may not be less than three except that
where all the shares of the Corporation are owned beneficially and of record by
either one or two stockholders, the number of directors may be less than three
but not less than the number of stockholders.
SECTION 2. INCREASE OF NUMBER
The number of directors may be increased by amendment of these By-Laws by
the affirmative vote of a majority of the directors, though less than a quorum,
or, by the affirmative vote of a majority in interest of the stockholders, at
the annual meeting or at a special meeting called for that purpose, and by like
vote the additional directors may be chosen at such meeting to hold office until
the next annual election and until their successors are elected and qualify.
SECTION 3. CHAIRMAN OF THE BOARD
The directors may elect one of their members to be Chairman of the Board
of Directors. The Chairman shall be subject to the control of and may be removed
by the Board of Directors. He shall perform such duties as may from time to time
be assigned to him or her by the Board.
SECTION 4. MEETINGS
Regular meetings of the Board of Directors may be held without notice at
such
<PAGE>
time and place as shall from time to time be determined by the Board.
Special meetings of the Board of Directors shall be held at such time and
place as shall be designated in the notice of meeting whenever called by the
Chairman of the Board, if any, the President, or by a majority of the directors
then in office.
SECTION 5. NOTICE OF SPECIAL MEETINGS
The Secretary, or in his or her absence any other officer of the
Corporation, shall give each director notice of the date, time and place of
holding of a special meeting of the Board of Directors by mail at least five
days before the meeting, or by fax, telegram, cable, radiogram or personal
service at least three days before the meeting. Unless otherwise stated in the
notice thereof, any and all business may be transacted at any meeting without
specification of such business in the notice.
SECTION 6. QUORUM AND ORGANIZATION OF MEETINGS
A majority of the total number of members of the Board of Directors as
constituted from time to time shall constitute a quorum for the transaction of
business, but, if at any meeting of the Board of Directors (whether or not
adjourned from a previous meeting) there shall be less than a quorum present, a
majority of those present may adjourn the meeting to another time and place, and
the meeting may be held as adjourned without further notice or waiver. Except as
otherwise provided by law or in the Certificate of Incorporation or these
By-Laws, a majority of the directors present at any meeting at which a quorum is
present may decide any question brought before such meeting. Meetings shall be
presided over by the Chairman of the Board, if any, or in his or her absence by
the President, or in the absence of both by such other person as the directors
may select. The Secretary of the Corporation shall act as secretary of the
meeting, but in his or her absence the chairman of the meeting may appoint any
person to act as secretary of the meeting.
SECTION 7. COMMITTEES
The Board of Directors may, by resolution passed by a majority of the
whole Board, designate one or more committees, each committee to consist of one
or more of the directors of the Corporation. The Board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he, she
or they constitute a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in place of any such absent or disqualified
member. Any such committee, to the extent
<PAGE>
provided in the resolution of the Board of Directors, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business, property and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers that may
require it; but no such committee shall have the power or authority in reference
to amending the Certificate of Incorporation of the Corporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease, or exchange of all or substantially all of the Corporation's property and
assets, recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending these By-Laws; and, unless the
resolution expressly so provided, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock. Each
committee that may be established by the Board of Directors or these By-Laws may
fix its own rules and procedures. Notice of meetings of committees, other than
regular meetings prescribed by the rules, shall be given to committee members.
All action taken by committees shall be recorded in minutes of the meetings.
SECTION 8. COMPENSATION
Directors shall not receive any stated salary for their services as
directors or as members of committees, but by resolution of the Board of
Directors a fixed fee and expenses of attendance may be allowed for attendance
at each meeting. Nothing herein contained shall be construed to preclude any
director from serving the Corporation in any other capacity as an officer, agent
or otherwise, and receiving compensation therefor.
SECTION 9. ACTION WITHOUT MEETING
Any action required or permitted to be taken at any meeting of the Board
of Directors, or of any committee thereof, may be taken without a meeting, if
prior to such action a written consent thereto is signed by all members of the
Board, or of such committee as the case may be, and such written consent is
filed with the minutes of proceedings of the Board or committee.
SECTION 10. TELEPHONE MEETINGS
Nothing contained in these By-Laws shall be deemed to restrict the power
of the members of the Board of Directors, or any committee designated by the
Board, to participate in a meeting of the Board, or committee, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other.
<PAGE>
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS
The officers of the Corporation shall be a President, one or more Vice
Presidents, a Treasurer, and a Secretary, each of whom shall be elected by the
Board of Directors. The Board of Directors may elect or appoint such other
officers (including a Controller and one or more Assistant Treasurers and
Assistant Secretaries) as it may deem necessary and desirable. Each officer
shall hold office for such term as may be prescribed by the Board of Directors
from time to time. None of the officers of the Corporation need be directors.
Two or more offices may be held by the same person.
SECTION 2. OTHER OFFICERS AND AGENTS
The Board of Directors may appoint such officers and agents as it may deem
advisable, who shall hold their offices for such terms and shall exercise such
power and perform such duties as shall be determined from time to time by the
Board of Directors.
SECTION 3. POWERS AND DUTIES
The Chairman of the Board, if any, or, in his or her absence, the
President, shall preside at all meetings of the stockholders and of the Board of
Directors. The President shall be the chief executive officer of the
Corporation. In the absence of the President, a Vice President appointed by the
President or, if the President fails to make such appointment, by the Board,
shall perform all the duties of the President. The officers and agents of the
Corporation shall each have such powers and authority and shall perform such
duties in the management of the business, property and affairs of the
Corporation as generally pertain to their respective offices, as well as such
powers and authorities and such duties as from time to time may be prescribed by
the Board of Directors.
ARTICLE V
RESIGNATIONS, REMOVALS, AND VACANCIES
SECTION 1. RESIGNATIONS
<PAGE>
Any director or officer of the Corporation, or any member of any
committee, may resign at any time by giving written notice to the Board of
Directors, the President, or the Secretary of the Corporation. Any such
resignation shall take effect at the time specified therein, or if no time be
specified, then upon receipt thereof. The acceptance of a resignation shall not
be necessary to make it effective.
SECTION 2. REMOVALS
The Board of Directors, by a vote of not less than a majority of the
entire Board, at any meeting thereof, or by written consent, at any time may, to
the extent permitted by law, remove with or without cause from office or
terminate the employment of any officer or member of any committee and may, with
or without cause disband any committee. Any director or the entire Board of
Directors may be removed, with or without cause, at any time by the holders of a
majority of the shares entitled at the time to vote at an election of directors.
SECTION 3. VACANCIES
Any vacancy in the office of any director or officer and any additional
directorship resulting from an increase in the number of directors, may be
filled at any time by a majority of the directors then in office (even though
less than a quorum remains) and, subject to the provisions of this Article V,
the person so chosen shall hold office until his or her successor shall have
been elected and qualified.
ARTICLE VI
CAPITAL STOCK
SECTION 1. CERTIFICATES OF STOCK
Every holder of stock in the Corporation shall be entitled to have a
certificate, signed by, or in the name of the Corporation by, the Chairman of
the Board of Directors, or the President or a Vice President and the Treasurer
or an Assistant Treasurer, or the Secretary or Assistant Secretary of the
Corporation, certifying the number of shares owned by him or her in the
Corporation. If the Corporation shall be authorized to issue more than one class
of stock or more than one series of any class, the designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations, or restrictions of such
preferences and/or rights shall be set forth in full or summarized on the face
or back of the certificate that the Corporation shall issue to represent such
class or series, provided that, except as otherwise provided in Section 202 of
the General Corporation
<PAGE>
Law of Delaware, in lieu of the foregoing requirements, there may be set forth
on the face or back of the certificate that the Corporation shall issue to
represent such class or series of stock, a statement that the Corporation will
furnish without charge to each stockholder who so requests the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights. Where a
certificate is countersigned (1) by a transfer agent other than the Corporation
or its employee, or (2) by a registrar other than the Corporation or its
employee, the signatures of such officers may be facsimiles.
SECTION 2. TRANSFER OF SHARES
Shares of stock of the Corporation may be transferred on the books of the
Corporation only by the holders of such shares or by their duly authorized legal
representatives upon the surrender to the Corporation or its transfer agent of
the certificate representing such stock properly endorsed.
SECTION 3. FIXING RECORD DATE
In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or to express consent to corporate action in writing without a meeting, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which shall not be
more than sixty nor less than ten days before the day of such meeting, nor more
than sixty days prior to any other action. A determination of stockholders of
record entitled to notice of or to vote at a meeting of stockholders shall apply
to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
SECTION 4. LOST CERTIFICATES
A new certificate or certificates of stock may be issued in the place of
any certificate or certificates theretofore issued by the Corporation, alleged
to have been lost or destroyed, upon the making of an affidavit of that fact by
the person claiming the certificate or certificates to be lost, stolen or
destroyed. The Board of Directors may, in its discretion and as a condition
precedent, require the owner of such lost, stolen or destroyed certificate or
certificates, or his or her legal representative, to give the Corporation a
bond, in such sum as they may direct, not exceeding double the value of the
stock, to indemnify the Corporation against any claim that may be made against
the Corporation with respect to the certificate or certificates alleged to have
been lost,
<PAGE>
stolen or destroyed, and such requirement may be general or confined to special
instances.
SECTION 5. REGULATIONS
The Board of Directors shall have the power and authority to make all such
rules and regulations as it may deem expedient concerning the issue, transfer,
registration, cancellation, and replacement of certificates representing stock
of the Corporation.
SECTION 6. DIVIDENDS
Subject to the provisions of the Certificate of Incorporation the Board of
Directors may, out of funds legally available therefor at any regular or special
meeting, declare dividends upon the capital stock of the Corporation as and when
they deem expedient. Before declaring any dividends there may be set apart out
of any funds of the Corporation available for dividends, such sum or sums as the
directors from time to time in their discretion deem proper working capital or
as a reserve fund to meet contingencies or for equalizing dividends or for such
other purposes as the directors shall deem conducive to the interests of the
Corporation.
ARTICLE VII
MISCELLANEOUS
SECTION 1. SEAL
The corporate seal shall be circular in form and shall contain the name of
the Corporation, the year of its creation and the words "CORPORATE SEAL
DELAWARE." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
SECTION 2. FISCAL YEAR
The fiscal year of the Corporation shall be determined by resolution of
the Board of Directors.
SECTION 3. CHECKS
All checks, drafts, or other orders for the payment of money, notes or
other
<PAGE>
evidences of indebtedness issued in the name of the Corporation shall be signed
by the officer or officers, agent or agents of the Corporation, and in such
manner as shall be determined from time to time by resolution of the Board of
Directors.
SECTION 4. NOTICES AND WAIVER OF NOTICES
Whenever any notice whatever is required by law, the Certificate of
Incorporation, or these By-Laws to be given to any stockholder, director, or
officer, such notice, except as otherwise provided by law, may be given
personally, or by mail, or, in the case of directors or officers, by fax,
telegram, cable or radiogram, addressed to such address as appears on the books
of the Corporation. Any notice given by fax, telegram, cable or radiogram shall
be deemed to have been given when it shall have been delivered for transmission
and any notice given by mail shall be deemed to have been given when it shall
have been deposited in the United States mail with postage thereon prepaid.
Whenever any notice is required to be given by law, the Certificate of
Incorporation, or these By- Laws, a written waiver thereof, signed by the person
entitled to such notice, whether before or after the meeting or the time stated
therein, shall be deemed equivalent in all respects to such notice to the full
extent permitted by law. Stockholders not entitled to vote shall not be entitled
to receive notice of any meetings except as otherwise provided by statute.
SECTION 5. STOCK OF OTHER CORPORATIONS OR OTHER INTERESTS
Unless otherwise ordered by the Board of Directors, the President, the
Secretary, and such attorneys or agents of the Corporation as may be from time
to time authorized by the Board of Directors or the President, shall have full
power and authority on behalf of this Corporation to attend and to act and vote
in person or by proxy at any meeting of the holders of securities of any
corporation or other entity in which this Corporation may own or hold shares or
other securities, and at such meetings shall possess and may exercise all rights
and powers incident to the ownership of such shares or other securities that
this Corporation, as the owner or holder thereof, might have possessed and
exercised if present. The President, the Secretary, or such attorneys or agents,
may also execute and deliver on behalf of the Corporation powers of attorney,
proxies, consents, waivers, and other instruments relating to the shares or
securities owned or held by this Corporation.
ARTICLE VIII
AMENDMENTS
The holders of shares entitled at the time to vote for the election of
directors shall have power to adopt, amend, or repeal the By-Laws of the
Corporation by vote of not less than a majority of such shares, and except as
otherwise provided by law, the Board
<PAGE>
of Directors shall have power equal in all respects to that of the stockholders
to adopt, amend, or repeal the By-Laws by vote of not less than a majority of
the entire Board. However, any By-Law adopted by the Board may be amended or
repealed by vote of the holders of the majority of the shares entitled at the
time to vote for the election of directors.
<PAGE>
Exhibit 4.1
REGISTRATION RIGHTS AGREEMENT
March 25, 1996
To Duquesne Enterprises
Grant Building
Suite 2420
Pittsburgh, PA 15219
Gentlemen:
This will confirm that in consideration of your agreement to purchase
certain shares (the "Preferred Shares") of Series A Convertible Preferred Stock,
$.001 par value per share ("Preferred Stock"), of H Power Corp., a Delaware
corporation (the "Company"), pursuant to the Securities Purchase Agreement dated
as of March ___, 1996 (the "Purchase Agreement") between the Company and you,
and as an inducement to you to consummate the transactions contemplated by the
Purchase Agreement, the Company covenants and agrees with you as follows:
1. Certain Definitions. As used in this Registration Rights Agreement
("Agreement"), the following terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Company's Common Stock, $.001 par value per
share, as constituted as of the date of this Agreement.
"Conversion Shares" shall mean shares of Common Stock issued upon
conversion of the Preferred Shares.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Holder" shall mean Duquesne Enterprises, its successors and assigns.
"Restricted Stock" shall mean the Conversion Shares, excluding shares
which have been (a) registered under the securities Act pursuant to an effective
registration statement filed thereunder and disposed of in accordance with the
registration statement covering them, or (b) publicly sold pursuant to Rule 144
under the Securities Act, or (c) which may be sold privately.
<PAGE>
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
2. Registration Rights. If the Company at any time (other than in the
initial public offering) proposes to register any of its equity securities under
the Securities Act for sale to the public, whether for its own account or for
the account of other security holders or both (except with respect to
registration statements on Forms S-4, S-8, or an offering solely to its
stockholders, or another form not available for registering the Restricted Stock
for sale to the public), each such time it will give written notice to the
Holder of its intention so to do, provided that at such time the Holder is the
holder of Registrable Securities. Upon the Holder's written request, received by
the Company within 15 business days after the giving of any such notice by the
Company, to register any of the Holder's Restricted Stock, the Company will use
its best efforts to cause the Restricted Stock as to which registration shall
have been so requested to be included in the securities to be covered by the
registration statement proposed to be filed by the Company, all to the extent
requisite to permit the sale or other disposition by the Holder of such
Restricted Stock so registered. In the event that any registration pursuant to
this Section 2 shall be, in whole or in part, an underwritten public offering of
Common Stock, the number of shares of Restricted Stock to be included in such an
underwriting may be reduced (pro rata among the Holder and all other requesting
security holders having rights similar to the rights granted herein based upon
the number of shares of Restricted Stock owned by such holders) if and to the
extent that the managing underwriter shall be of the opinion that such inclusion
would adversely affect the marketing of the securities to be sold by the Company
therein.
3. Registration Procedures.
(a) If and whenever the company is required by the provisions of
Section 2 to use its best efforts to effect the registration of any shares of
Restricted Stock under the Securities Act, the Company will, as expeditiously as
possible:
(i) prepare and file with the Commission a registration
statement (which, in the case of an underwritten public offering,
shall be on Form S-1 or other form of general applicability
satisfactory to the managing underwriter) with respect to such
securities and use its best efforts to cause such registration
statement to become and remain effective for the period of the
distribution contemplated thereby (determined as hereinafter
provided);
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep registration
statement effective for the period specified in Section 3(i) above
and comply with the provisions of the Securities Act with respect to
the disposition of all Restricted Stock covered by such registration
statement
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<PAGE>
in accordance with the Holder's intended method of disposition set
forth in such registration statement for such period;
(iii) furnish to the Holder and other sellers and to each
underwriter such number of copies of the registration statement and
the prospectus included therein (including each preliminary
prospectus) as such persons reasonably may request in order to
facilitate the public sale or other disposition of the Restricted
Stock covered by such registration statement;
(iv) use its best efforts to register or qualify the
Restricted Stock covered by such registration statement under the
securities or "blue sky" laws of such jurisdictions as the Holder,
or, in the case of an underwritten public offering, the managing
underwriter reasonably shall request; provided, however, that the
Company shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general
service of process in any such jurisdiction;
(v) use its best efforts to list or have admitted for trading
the Restricted Stock covered by such registration statement with any
securities exchange or listing agency (including Nasdaq) on which
the Common Stock of the Company is then listed;
(vi) immediately notify the Holder and each underwriter under
such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the
happening of any event of which the Company has knowledge as a
result of which the prospectus contained in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing;
(vii) if the offering is underwritten and at the request of
the Holder, use its best efforts to furnish on the date that
Restricted Stock is delivered to the underwriters for sale pursuant
to such registration: (A) an opinion dated such date of counsel
representing the Company for the purposes of such registration,
addressed to the underwriters and to the Holder, stating that such
registration statement has become effective under the Securities
Act, and that (1) to the best knowledge of such counsel, no stop
order suspending the effectiveness thereof has been issued and no
proceedings for that purpose have been instituted or are pending
under the Securities Act, (2) the registration statement, the
related prospectus and each amendment or supplement thereto comply
as to form in all material respects with the requirements of the
Securities Act (except that such counsel need not express any
opinion as to financial statements contained therein), and (3) to
such other effects as reasonably may be requested by
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<PAGE>
counsel for the underwriters or by the Holder or its counsel, and
(B) a letter dated such date from the independent public accountants
retained by the Company, addressed to the underwriters and to the
Holder, stating that they are independent public accountants within
the meaning of the Securities Act and that, in the opinion of such
accountants, the financial statements of the Company included in the
registration statement or the prospectus, or any amendment or
supplement thereto, comply as to form in all material respects with
the applicable accounting requirements of the Securities Act, and
such letter shall additionally cover such other financial matters
(including information as to the period ending no more than five
business days prior to the date of such letter) with respect to such
registration as such underwriters reasonably may request; and
(viii) make available for inspection by the Holder and any
underwriter participating in any distribution pursuant to such
registration statement and any attorney, accountant or other agent
retained by the Holder or underwriter, all financial and other
records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors and employees
to supply all information reasonably requested by the Holder,
underwriter, attorney, accountant or agent in connection with such
registration statement.
(b) For purposes of Section 3(i) and 3(ii) hereof, the period of
distribution of Restricted Stock in a firm commitment underwritten public
offering shall be deemed to extend until each underwriter has completed the
distribution of all securities purchased by it, and the period of distribution
of Restricted Stock in any other registration shall be deemed to extend until
the earlier of the sale of all Restricted Stock covered thereby and 120 days
after the effective date thereof.
(c) In connection with each registration hereunder, the Holder will
furnish to the Company in writing such information with respect to itself and
the proposed distribution by it as reasonably shall be necessary in order to
assure compliance with federal and applicable state securities laws.
(d) In connection with each registration pursuant to Section 2
hereof covering an underwritten public offering, the Company and the Holder
agree to enter into a written agreement with the managing underwriter in such
form and containing such provisions as are customary in the securities business
for such an arrangement between such underwriter and companies of the Company's
size and investment stature.
4. Indemnification.
(a) In the event of a registration of any of the Restricted Stock
under the Securities Act pursuant to Section 2, the Company will indemnify and
hold harmless the Holder, each underwriter of such Restricted Stock and each
other person, if any, who controls the Holder or underwriter within
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<PAGE>
the meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which the Holder, underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
Restricted Stock was registered under the Securities Act pursuant to Section 2,
any preliminary prospectus or final prospectus contained therein or any
amendment or supplement thereof, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Holder, underwriter and controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case if and to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by the Holder, underwriter or
controlling person in writing specifically for use in such registration
statement or prospectus.
(b) In the event of a registration of any of the Restricted Stock
under the Securities Act pursuant to Section 2, the Holder will indemnify and
hold harmless the Company, each person, if any, who controls the Company within
the meaning of the Securities Act, each officer of the Company who signs the
registration statement, each director of the Company, each underwriter and each
person who controls any underwriter within the meaning of the Securities Act,
against all losses, claims, damages or liabilities, joint or several, to which
the Company or such officer, director, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the registration statement under which such Restricted Stock
was registered under the Securities Act pursuant to Section 2, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse the Company and each
such officer, director, underwriter and controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Holder will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information pertaining to
the Holder, as such, furnished in writing to the Company by the Holder
specifically for use in such registration statement or prospectus; and further,
provided, that the liability of the Holder hereunder shall be limited to an
amount equal to the proceeds to the Holder of Restricted Stock sold as
contemplated herein.
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made
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<PAGE>
against the indemnifying party hereunder, notify the indemnifying party in
writing thereof, but the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to such indemnified party other
than under this Section 4 and shall only relieve it from any liability which it
may have to such indemnified party under this Section 4 if and to the extent the
indemnifying party is prejudiced by such omission. In case any such action shall
be brought against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake the
defense thereof with counsel satisfactory to such indemnified party, and, after
notice from the indemnifying party to such indemnified party of its election so
to assume and undertake the defense thereof, the indemnifying party shall not be
liable to such indemnified party under this Section 4 for any legal expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation and of liaison with counsel
so selected; provided, however, that, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that the interests of the
indemnified party reasonably may be deemed to conflict with the interests of the
indemnifying party, the indemnified party shall have the right to select a
separate counsel and to assume such legal defenses and otherwise to participate
in the defense of such action, with the expenses and fees of such separate
counsel and other expenses related to such participation to be reimbursed by the
indemnifying party as incurred.
5. Changes in Common Stock or Preferred Stock. If, and as often as, there
is any change in the Common Stock or the Preferred Stock by way of a stock
split, stock dividend, combination or reclassification, or through a merger,
consolidation, reorganization or recapitalization, or by any other means,
appropriate adjustment shall be made in the provisions hereof so that the rights
and privileges granted hereby shall continue with respect to the Common Stock or
the Preferred Stock as so changed.
6. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Stock to the public without registration, at all times
after 90 days after any registration statement covering a public offering of
securities of the Company under the Securities Act shall have become effective,
the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) furnish to the Holder forthwith upon request a written statement
by the Company as to its compliance with the reporting requirements of Rule 144
and of the Securities Act and the Exchange Act, a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so filed
by the Company as such holder may reasonably request in availing itself
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<PAGE>
of any rule or regulation of the commission allowing the Holder to sell any
Restricted Stock without registration.
7. Representations and Warranties of the Company. The Company represents
and warrants to the Holder as follows:
(a) The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite corporate action and will not
violate any provision of law, any order of any court or other agency of
government, the Charter or Bylaws of the Company or any provision of any
indenture, agreement or other instrument to which it or any or its properties or
assets is bound, conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under, any such indenture, agreement
or other instrument or result in the creation or imposition of any lien, charge
or encumbrance of any nature whatsoever upon any of the properties or assets of
the Company.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, subject to applicable bankruptcy,
moratorium and other laws generally affecting the rights and remedies of
creditors.
(c) The Company represents and warrants that it shall not enter into
any other agreement with any holder or prospective holder of any securities of
the Company which would be inconsistent with the terms and provisions contained
in this Agreement.
8. Miscellaneous.
(a) All covenants and agreements contained in this Agreement by or
on behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto (including, without
limitation, transferees of any Preferred Shares or Restricted Stock), whether so
expressed or not.
(b) All notices, requests, consents and other communications
hereunder shall be in writing and shall be mailed by certified or registered
mail, return receipt requested, postage prepaid, or telexed, in the case of
non-U.S. residents, addressed as follows:
(i) If to the Company or to the Holder, at the address of such
party set forth in the Purchase Agreement, with appropriate copies
as noted therein;
(ii) If to any subsequent holder of Preferred Shares or
Restricted Stock, to it at such address as may have been furnished
to the Company in writing by such holder;
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<PAGE>
or, in any case, at such other address or addresses as shall have been furnished
in writing to the Company (in the case of the Holder) or to the Holder (in the
case of the Company) in accordance with the provisions of this paragraph.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.
(d) This Agreement may not be amended or modified, and no provision
hereof may be waived, without the written consent of the Company and the Holder.
(e) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(f) If requested in writing by the underwriters for the initial
underwritten public offering of securities of the Company, the Holder shall
agree not to sell publicly any shares of Restricted Stock or any other shares of
Common Stock (other than shares of Restricted Stock or other shares of Common
Stock being registered in such offering), without the consent of such
underwriters, for a period of not more than 180 days following the effective
date of the registration statement relating to such offering; provided, however,
that all persons entitled to registration rights with respect to shares of
Common Stock who are not parties to this Agreement, all other persons selling
shares of Common Stock in such offering and all executive officers and directors
of the Company, shall also have agreed not to sell publicly their Common Stock
under the circumstances and pursuant to the terms set forth in this Section
8(f).
(g) Notwithstanding the provisions of Section 3(a) hereof, the
Company's obligation to file a registration statement, or cause such
registration statement to become and remain effective, shall be suspended for a
period not to exceed 90 days in any 12-month period if there exists at the time
material non-public information relating to the Company which, in the reasonable
opinion of the Board of Directors of the Company, should not be disclosed.
(h) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
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<PAGE>
Please indicate your acceptance of the foregoing by signing and
returning the enclosed counterpart of this Agreement, whereupon this
Registration Rights Agreement shall be a binding agreement between the Company
and you.
Very truly yours,
H POWER CORP.
By: /s/ R. C. Cope
---------------------------------------
Title: President
---------------------------------------
Accepted and agreed to,
with the intent to be legally bound,
this 25th day of March, 1996.
DUQUESNE ENTERPRISES
By: /s/ Anthony Villioti
---------------------------------------
Title: Vice President
---------------------------------------
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<PAGE>
Exhibit 4.2
H POWER CORP.
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (the "Agreement") is entered into as of the
22nd day of May, 1996 by and between H Power Corp., a Delaware corporation (the
"Company"), and Singapore Technologies Automotive Ltd., a Singapore corporation
(the "Investor").
RECITALS
WHEREAS, the Company proposes to sell and issue shares of its Preferred
Stock pursuant to that certain Series B Preferred Stock Purchase Agreement
between the Company and the Investor dated as of the date hereof (the "Purchase
Agreement"); and
WHEREAS, as a condition of entering into the Purchase Agreement, the
Investor has requested that the Company extend to it registration rights and
other rights as set forth below; and
WHEREAS, the Company desires to grant such rights to the Investor.
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement and in the
Purchase Agreement, the parties mutually agree as follows:
I. GENERAL
1.1. Definitions. As used in this Agreement the following terms shall have
the following respective meanings:
"Common Stock" means the Common Stock of the Company.
"Conversion Shares" means shares of any Common Stock issued or issuable
upon the conversion of the Series B Preferred Stock.
"Holder" means the Investor and any other person or entity owning of
record Registrable Securities (including without limitation Series B Preferred
Stock) other than Registrable Securities that have been sold to the public.
"IPO" means the first firmly underwritten public offering pursuant to an
effective Registration Statement under the Securities Act covering the offer and
sale of Common Stock for the account of the
<PAGE>
Company in which the gross cash proceeds to the Company (after underwriting
discounts, commissions and fees) are at least $7,000,000.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Register," "registered," and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement or document.
"Registrable Securities" means (i) any Common Stock of the Company issued
or issuable on conversion of Series B Preferred Stock, and (ii) any Common Stock
owned (or issuable upon the conversion or exercise of securities owned) by the
Investor.
"Registrable Securities then outstanding" shall be the number of shares
determined by calculating the total number of shares of Common Stock that are
Registrable Securities and either (i) are then issued and outstanding or (ii)
are issuable pursuant to then exercisable or convertible securities.
"Registration Expenses" means all expenses incurred by the Company in
complying with Sections 2.1 and 2.2 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, reasonable fees and disbursements of a single special
counsel for the Holders not to exceed $20,000, blue sky fees and expenses and
the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the Company
which shall be paid in any event by the Company).
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Expenses" means all underwriting discounts, selling commissions
and stock transfer taxes, if any, applicable to the sale.
"Series B Holder" means the Investor and any person or entity owning of
record any Shares, or any shares of Common Stock issued upon the conversion of
Shares, that have not been sold to the public.
"Shares" means shares of the Company's Series B Preferred Stock.
"SEC" means the Securities and Exchange Commission.
II. REGISTRATION RIGHTS
2.1. Demand Registration.
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<PAGE>
2.1.1. Subject to the conditions of this Section 2.1, if the Company
shall receive at any time subsequent to an IPO, a written request from the
Holders of Registrable Securities representing at least $5,000,000 of the equity
securities of the Company then outstanding, that the Company file a registration
statement under the Securities Act covering the registration of at least two
percent (2%) of the Registrable Securities then outstanding (or any lesser
number if the aggregate offering price is not less than $5,000,000) (the Holders
requesting such registration are hereinafter referred to as the "Initiating
Holders"), then the Company shall, within thirty (30) days of the receipt
thereof, give written notice of such request to all Holders and, subject to the
limitations of this Section 2.1, shall use its commercially reasonable efforts
to effect, as soon as practicable, the registration under the Securities Act of
all Registrable Securities that the Holders request to be registered.
2.1.2. The right of any Holder to include his Registrable Securities
in such registration shall be conditioned upon such Holder's participation in an
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by such Holder and the Company)
to the extent provided herein. All Holders proposing to distribute their
securities through such underwriting shall enter into an underwriting agreement
in customary form with the underwriter or underwriters selected by the Company
(which underwriter or underwriters shall be reasonably acceptable to a majority
in interest of the Initiating Holders) and shall enter into customary custody
agreements for selling stockholders. Notwithstanding any other provision of this
Section 2.1, if the underwriter advises the Company in writing that marketing
factors require a limitation of the number of securities to be underwritten
(including Registrable Securities), then the Company shall so advise all Holders
of Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares that may be included in the underwriting shall be
allocated to the Holders of such Registrable Securities on a pro rata basis
based on the number of Registrable Securities held by all such Holders
(including the Initiating Holders). Any Registrable Securities excluded or
withdrawn from such underwriting shall be withdrawn from the registration.
2.1.3. The Company shall not be required to effect a registration
pursuant to this Section 2.1:
(i) after the Company has effected two (2) registrations
pursuant to this Section 2.1, and such registrations have been declared or
ordered effective;
(ii) during the period starting with the date of filing of,
and ending on the date one hundred eighty (180) days following the
effective date of, the registration statement pertaining to the Company's
initial public offering, provided, that the Company is making reasonable
and good faith efforts to cause such registration statement to become
effective;
(iii) if the Company shall furnish to Holders requesting a
registration statement pursuant to this Section 2.1, a certificate stating
that in the good faith judgment of the Board of Directors of the Company,
it would materially and adversely affect the Company for such
3
<PAGE>
registration statement to be filed and it is therefore essential to defer
the filing of such registration statement, in which event the Company
shall have the right to defer such filing for a period of not more than
one hundred eighty (180) days after receipt of the request of the
Initiating Holders; provided, that such right to delay a request shall be
exercised by the Company no more than once in any one year period.
2.2. Piggyback Registrations. The Company shall notify all Holders of
Conversion Shares in writing at least fifteen (15) days prior to the filing of
any registration statement under the Securities Act for purposes of a public
offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to employee benefit
plans and corporate reorganizations or rights offerings to stockholders) and
will afford each such Holder an opportunity to include in such registration
statement all or part of such Registrable Securities held by such Holder. Each
such Holder desiring to include in any such registration statement all or any
part of the Registrable Securities held by it shall, within ten (10) days after
the above-described notice from the Company, so notify the Company in writing.
If a Holder decides not to include all of its Registrable Securities in any
registration statement thereafter filed by the Company, such Holder shall
nevertheless continue to have the right to include any Registrable Securities in
any subsequent registration statement or registration statements as may be filed
by the Company with respect to offerings of its securities, all upon the terms
and conditions set forth herein.
2.2.1. Underwriting. If the registration statement under which the
Company gives notice under this Section 2.2 is for an underwritten offering, the
Company shall so advise the Holders of Conversion Shares. In such event, the
right of any such Holder to be included in a registration pursuant to this
Section 2.2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting and customary custody agreements for selling
stockholders. Notwithstanding any other provision of this Agreement, if the
underwriter determines in good faith that marketing factors require a limitation
of the number of shares to be underwritten, the number of shares that may be
included in the underwriting shall be allocated, first, to the Company; second,
to the Holders of Conversion Shares, the holders of shares of Common Stock
issued upon conversion of the Series A Preferred Stock and the holders of other
securities participating through piggyback registration rights in such offering,
in each case on a pro rata basis based on the total number of Registrable
Securities held by such holders; and third, to any other shareholder of the
Company (on a pro rata basis). No such reduction shall reduce the securities
being offered by the Company for its own account to be included in the
registration and underwriting.
2.2.2. Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2.2 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration. The Registration
Expenses of such withdrawn registration shall be borne by the Company in
accordance with Section 2.4 hereof.
4
<PAGE>
2.3. [Intentionally omitted]
2.4. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Section 2.1 or any registration under Section 2.2 herein shall be borne by the
Company. All Selling Expenses incurred in connection with any registrations
hereunder shall be borne by the holders of the securities so registered pro rata
on the basis of the number of shares so registered. The Company shall not,
however, be required to pay for expenses of any registration proceeding begun
pursuant to Section 2.1, the request of which has been subsequently withdrawn by
the Initiating Holders, unless (a) the withdrawal is based upon material adverse
information concerning the Company of which the Initiating Holders were not
aware at the time of such request or (b) for registration proceedings begun
pursuant to Section 2.1, the Holders of a majority of Registrable Securities
agree to forfeit their right to one requested registration pursuant to Section
2.1 (in which event such right shall be forfeited by all Holders). If the
Holders are required to pay the Registration Expenses, such expenses shall be
borne by the holders of securities (including Registrable Securities) requesting
such registration in proportion to the number of shares for which registration
was requested.
2.5. Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities, the Company shall use its best
efforts, as expeditiously as reasonably possible, to:
2.5.1. Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its commercially reasonable
efforts to cause such registration statement to become effective, and, upon the
request of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to one hundred
eighty (180) days or, if earlier, until the Holder or Holders have completed the
distribution related thereto.
2.5.2. Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
2.5.3. Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
2.5.4. Use its commercially reasonable efforts to register and
qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
5
<PAGE>
2.5.5. In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement and customary custody agreements for selling
stockholders.
2.5.6. Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
2.5.7. Furnish, at the request of a majority of the Holders
participating in the registration, on the date that such Registrable Securities
are delivered to the underwriters for sale, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) in the event of an underwritten public
offering, a copy of the opinion addressed to the underwriters, dated as of such
date, of the counsel representing the Company for the purposes of such
registration, in form and substance as may be requested by the underwriters for
an underwritten public offering which opinion may be relied on by such Holders
and (ii) a letter dated as of such date, from the independent certified public
accountants of the Company, in form and substance as may be requested by the
underwriters for an underwritten public offering (or otherwise in form and
substance as would be customarily given to underwriters in an underwritten
offering and reasonably satisfactory to a majority in interest of the Holders
requesting registration), such letter to be addressed to the underwriters, if
any, and if permitted by applicable accounting standards, to the Holders
requesting registration of Registrable Securities.
2.6. "Market Stand-Off" Agreements.
2.6.1. If requested by the Company or a representative of the
underwriters of Common Stock (or other securities) of the Company, each Holder
shall not sell or otherwise transfer or dispose of any Common Stock (or other
securities) of the Company held by such Holder (other than those included in the
registration) for a period specified by the representative of the underwriters,
not to exceed one hundred eighty (180) days following the effective date of a
registration statement of the Company filed under the Securities Act (the
"Effective Date"); provided, that:
(i) such agreement shall apply only to the Company's initial
public offering; and
(ii) all persons entitled to registration rights similar to
those granted hereunder, all other persons participating in the Company's
initial public offering, all officers and directors of the Company and all
shares that are beneficially owned by any person for any entity that is
the
6
<PAGE>
beneficial owner (as determined in accordance with Rule l3d-3 of the
Securities Exchange Act of 1934) of at least seven percent (7%) of the
Company's voting securities prior to the Company's initial public
offering, shall have entered into similar agreements.
The obligations described in this Section 2.6.1 shall not apply to a
registration relating solely to employee benefit plans on Form S-1 or Form S-8
or similar forms that may be promulgated in the future, or a registration
relating solely to a SEC Rule 145 transaction on Form S-4 or similar forms that
may be promulgated in the future. The Company may impose stop-transfer
instructions with respect to the shares of Common Stock (or other securities)
subject to the foregoing restriction until the end of said one hundred eighty
(180) day period.
2.6.2. To the extent reasonably requested by a representative of the
underwriters of Common Stock for the Company's IPO, each Series B Holder will
agree with such representative not to sell or otherwise transfer or dispose of,
any Common Stock of the Company acquired by such Series B Holder in the
Company's IPO pursuant to Article IV hereof, for a period so requested by the
representative of the underwriters, not to exceed one hundred eighty (180) days
following the Effective Date for the IPO.
2.7. Delay of Registration: Furnishing Information.
2.7.1. No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the result
of any controversy that might arise with respect to the interpretation or
implementation of this Article II.
2.7.2. It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Section 2.1 or 2.2 that the selling
Holders shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them, and the intended method of disposition of
such securities as shall be required to effect the registration of their
Registrable Securities.
2.8. Indemnification. In the event any Registrable Securities are included
in a registration statement under Sections 2.1 or 2.2:
2.8.1. To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the partners, officers and directors of each
Holder, any underwriter (as defined in the Securities Act) for such Holder and
each person, if any, who controls such Holder or underwriter within the meaning
of the Securities Act or the 1934 Act, against any losses, claims, damages or
liabilities (joint or several) to which they may become subject under the
Securities Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any of the following statements, omissions or violations
(collectively a "Violation") by the Company: (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments
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<PAGE>
or supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by the
Company of the Securities Act, the 1934 Act, any state securities law or any
rule or regulation promulgated under the Securities Act, the 1934 Act or any
state securities law in connection with the offering covered by such
registration statement; and the Company will reimburse each such Holder,
partner, officer, director, underwriter or controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this Section 2.8.1 shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, partner, officer, director, underwriter
or controlling person.
2.8.2. To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors and officers,
each person, if any, who controls the Company within the meaning of the
Securities Act, any underwriter and any other Holder selling securities under
such registration statement or any of such other Holder's partners, directors or
officers or any person who controls such Holder, against any losses, claims,
damages or liabilities (joint or several) to which the Company or any such
director, officer, controlling person, underwriter or other such Holder, or
partner, director, officer or controlling person of such other Holder, may
become subject under the Securities Act, the 1934 Act or other federal or state
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder under an
instrument duly executed by such Holder and stated to be specifically for use in
connection with such registration; and each such Holder will reimburse any legal
or other expenses reasonably incurred by the Company or any such director,
officer, controlling person, underwriter or other Holder, or partner, officer,
director or controlling person of such other Holder, in connection with
investigating or defending any such loss, claim, damage, liability or action if
it is judicially determined that there was such a Violation; provided, however,
that the indemnity agreement contained in this Section 2.8.2 shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Holder, which consent
shall not be unreasonably withheld; and, provided further, that in no event
shall any indemnity under this Section 2.8 exceed the gross proceeds from the
offering received by such Holder.
2.8.3. Promptly after receipt by an indemnified party under this
Section 2.8 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 2.8, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying
8
<PAGE>
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 2.8, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 2.8.
2.8.4. If the indemnification provided for in this Section 2.8 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any losses, claims, damages or liabilities referred to
herein, the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation(s) that resulted in such
loss, claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
2.8.5. The obligations of the Company and Holders under this Section
2.8 shall survive the completion of any offering of Registrable Securities in a
registration statement, and otherwise.
2.9. Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities pursuant to this Article II may be assigned by a
Holder to a transferee or assignee of Registrable Securities which (i) is a
subsidiary, parent, general partner, limited partner or retired partner of a
Holder, (ii) is a Holder's family member or trust for the benefit of an
individual Holder, or (iii) acquires at least ten thousand (10,000) shares of
Registrable Securities (as adjusted for stock splits and combinations);
provided, however, (a) the transferor shall, within thirty (30) days after such
transfer, furnish to the Company written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned, and (b) such transferee shall agree in
writing to be subject to all restrictions set forth in this Agreement.
2.10. Amendment of Registration Rights. Any provision of this Article II
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of not less than seventy-five
percent (75%) of the Conversion Shares. Any amendment or waiver effected in
accordance
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<PAGE>
with this Section 2.10 shall be binding upon each such Holder and the Company.
By acceptance of any benefits under this Article II, Holders of Conversion
Shares hereby agree to be bound by the provisions hereunder.
2.11. Limitation on Subsequent Registration Rights. After the date of this
Agreement, the Company shall not, without the prior written consent of the
Holders of not less than fifty percent (50%) of the Conversion Shares, enter
into any agreement with any holder or prospective holder of any securities of
the Company which would allow such holder or prospective holder (a) to include
such securities in any registration filed under Section 2.1 hereof, unless,
under the terms of such agreement, such holder or prospective holder may include
such securities in any such registration only to the extent that the inclusion
of his securities will not reduce the amount of the Registrable Securities of
the Series A Holders which is included, or (b) to make a demand registration
which could result in such registration statement being declared effective prior
to the date set forth in Section 2.1.3(ii) or within one hundred twenty (120)
days of the effective date of any registration statement effected pursuant to
Section 2.1.
2.12. Rule 144 Reporting. With a view to making available to the Series B
Holders the benefits of certain rules and regulations of the SEC which may
permit the sale of the Registrable Securities to the public without
registration, the Company agrees to use its best efforts to:
(i) Make and keep public information available, as those terms
are understood and defined in SEC Rule 144 or any similar or analogous
rule promulgated under the Securities Act, at all times after the
effective date of the first registration filed by the Company for an
offering of its securities to the general public;
(ii) After such registration, file with the SEC, in a timely
manner, all reports and other documents required of the Company under the
Securities Act and the 1934 Act; and
(iii) After such registration and for so long as a Series B
Holder owns any Registrable Securities, furnish to such Holder forthwith
upon request: (A) a written statement by the Company as to its compliance
with the reporting requirements of said Rule 144 of the Securities Act,
and of the 1934 Act (at any time after it has become subject to such
reporting requirements); (B) a copy of the most recent annual or quarterly
report of the Company; and (C) such other reports and documents as a
Holder may reasonably request in availing itself of any rule or regulation
of the SEC allowing it to sell any such securities without registration.
III. COVENANTS OF THE COMPANY
3.1. Financial Information and Reporting.
3.1.1. The Company will maintain true books and records of account
in which full and correct entries will be made of all its business transactions
pursuant to a system of accounting established
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and administered in accordance with generally accepted accounting principles
consistently applied, and will set aside on its books all such proper accruals
and reserves as shall be required under generally accepted accounting principles
consistently applied.
3.1.2. As soon as practicable after the end of each fiscal year of
the Company, and in any event within one hundred twenty (120) days thereafter,
the Company will furnish each Series B Holder a consolidated balance sheet of
the Company, as of the end of such fiscal year, and a consolidated statement of
income and a consolidated statement of cash flows of the Company, for such year,
all prepared in accordance with generally accepted accounting principles and
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail. Such financial statements shall be
accompanied by a report and opinion thereon by one of the "big six" independent
public accounting firms selected by the Company's Board of Directors.
3.1.3. The Company will furnish only upon request to each Series B
Holder owning more than ten percent (10%) of the Series B Preferred Stock, as
soon as practicable after the end of the first, second and third quarterly
accounting periods in each fiscal year of the Company, and in any event within
forty-five (45) days thereafter, a consolidated balance sheet of the Company as
of the end of each such quarterly period, and a consolidated statement of income
and a consolidated statement of cash flows of the Company for such period and
for the current fiscal year to date, prepared in accordance with generally
accepted accounting principles, with the exception that no notes need be
attached to such statements and year-end audit adjustments may not have been
made.
3.1.4. The Company will furnish only upon request to each Series B
Holder owning more than ten percent (10%) of the Series B Preferred Stock:
(i) at least thirty (30) days prior to the beginning of each
fiscal year, an annual budget and operating plans for such fiscal year
(and as soon as available, any subsequent revisions thereto); and
(ii) as soon as practicable after the end of each month, and
in any event within twenty (20) days thereafter, a consolidated balance
sheet of the Company as of the end of each such month, and, a consolidated
statement of income and a consolidated statement of cash flows of the
Company for such month and for the current fiscal year to date, including
a comparison to plan figures for such period, prepared in accordance with
generally accepted accounting principles, with the exception that no notes
need be attached to such statements and year-end audit adjustments may not
have been made.
3.2. Confidentiality of Records.
3.2.1. Each Series B Holder agrees not to use Confidential
Information (as hereinafter defined) of the Company for its own use or for any
purpose except to monitor its equity investment in the
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Company and the performance of the Company as well as to enforce its rights with
respect to the Company from time to time. Except as permitted under Section
3.2.2 below, such Holders agree to use their respective best efforts not to
disclose such Confidential Information to any third parties. Each such Holder
shall undertake to treat such Confidential Information in a manner consistent
with the treatment of its own information of such proprietary nature and agrees
that it shall protect the confidentiality of and use reasonable efforts to
prevent disclosure of the Confidential Information to prevent it from falling
into the public domain or the possession of unauthorized persons. Each
transferee of such Holders who receives Confidential Information shall agree to
be bound by such provisions. For purposes of this Section, "Confidential
Information" means any information, technical data or know-how, including, but
not limited to, the Company's research, products, software, services,
development, inventions, processes, designs, drawings, engineering, marketing,
or finances, disclosed by the Company either directly or indirectly in writing,
orally or by drawings or inspection of parts or equipment.
3.2.2. Confidential Information does not include information,
technical data or know-how which (i) is in a Holder's possession at the time of
disclosure; (ii) before or after it has been disclosed to the Holder, it is part
of the public knowledge or literature, not as a result of any action or inaction
of the Holder; (iii) is approved for release by written authorization of
Company; or (iv) is developed independently by a Holder. The provisions of this
Section shall not apply (a) to the extent that a Holder is required to disclose
Confidential Information pursuant to any law, statute, rule or regulation or any
order of any court or jurisdiction process or pursuant to any direction, request
or requirement (whether or not having the force of law but if not having the
force of law being of a type with which institutional investors in the relevant
jurisdiction are accustomed to comply) of any self-regulating organization or
any governmental, fiscal, monetary or other authority; (b) to the disclosure of
Confidential Information to the Holder's employees, counsel, accountants or
other professional advisors; (c) to the extent that the Holder needs to disclose
Confidential Information for the protection of any of the Holder's rights or
interest against the Company, whether under this Agreement or otherwise; or (d)
to the disclosure of Confidential Information to a prospective transferee of
securities which agrees to be bound by the provisions of this Section in
connection with the receipt of such Confidential Information.
3.3. Proprietary Information. The Company shall require all employees of
and consultants to the Company who have access to proprietary information of the
Company to enter into agreements in the Company's standard form providing for
the protection of proprietary information and inventions.
3.4. Board of Directors Approval.
(i) The Company shall not without the approval of a majority
of the Board of Directors take any of the following actions:
(a) adopt any stock option or purchase plan;
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(b) issue or grant any equity securities of the Company or any
options or securities convertible into equity securities of the
Company other than option grants in the ordinary course of business
for two hundred (200) or fewer shares;
(c) adopt an annual budget, business or financial plan;
(d) enter into any real estate lease or real property purchase
agreement; or
(e) enter into any material transaction outside the ordinary
course of the Company's business.
(ii) The Company's Board of Directors shall set a policy as to
whether the approval of a majority of the Board of Directors is required
to take any of the following actions:
(a) hire or extend an offer of employment to any officer of
the Company;
(b) enter into any consulting or employment arrangement or
agreement involving annual compensation in excess of $75,000; or
(c) adopt any compensation programs including but not limited
to establishing the base salary or bonus for any officer or employee
of the Company who earns greater than $75,000 per year for his or
her services to the Company.
3.5. Board Meetings. Until such time as the Company is profitable or the
Board of Directors otherwise determines, the Company's Board of Directors will
meet either in person or telephonically approximately every two months or at
least six times per year. After such time as the Company is profitable, the
Company's Board of Directors shall generally attempt to meet at least four (4)
times per year.
3.6. Reservation of Common Stock. The Company will at all times reserve
and keep available, solely for issuance and delivery upon the conversion of the
Preferred Stock, all Common Stock issuable from time to timi upon such
conversion.
3.7. Real Property Holding Corporation. The Company covenants that it will
operate in a manner such that it will not become a "United States real property
holding corporation" ("USRPHC") as that term is defined in Section 897(c)(2) of
the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
thereunder ("FIRPTA"). The Company agrees to make determinations as to its
status as a USRPHC, and will file statements concerning those determinations
with the Internal Revenue Service, in the manner and at the times required under
Reg. Sec. 1.897-2(h), or any supplementary or successor provision thereto.
Within 30 days of a request from an Investor or any of its partners, the Company
will inform the requesting party, in the manner set forth in Reg. Sec.
1.897-2(h)(1)(iv) or any supplementary
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or successor provision thereto, whether that party's interest in the Company
constitutes a United States real property interest (within the meaning of Code
Section 897(c)(1) and the regulations thereunder) and whether the Company has
provided to the Internal Revenue Service all required notices as to its USRPHC
status.
3.8. Termination of Covenants. All covenants of the Company contained in
Article III of this Agreement shall expire and terminate as to the Investor on
the Effective Date of the IPO.
3.9. Directors. The Company will reimburse each director of the Company
for all reasonable transportation and out-of-pocket expenses incurred by such
director in the attending of no more than four meetings of the Board of
Directors of the Company or any committees thereof or in carrying out any
business of the Company as authorized by the Board of Directors or any executive
officer of the Company. The Company acknowledges that, for the director who is
the nominee of the Investor, transportation expenses (only Business Class
travel) to and from Asia shall be deemed reasonable. The Board of Directors may
conduct certain meetings telephonically but shall meet at least two times per
year in person.
IV. PRO RATA PURCHASE RIGHTS
4.1. Grant. The Company hereby grants to each Series B Holder, unless
waived by the Holders of not less than fifty percent (50%) of the Conversion
Shares then outstanding, the right to purchase a pro rata share of New
Securities (as defined below) that the Company may, from time to time, propose
to sell and issue up to and including the IPO. Each Series B Holder's pro rata
share, for purposes of this right, is the ratio of (X) the number of shares of
Registrable Securities then owned by such Holder to (Y) the total number of
shares of Registrable Securities of the Company outstanding immediately prior to
the issuance of the New Securities. The purchase rights granted in this Article
IV shall be subject to the following provisions of this Article IV.
4.2. New Securities. "New Securities" shall mean any offering by the
Company of any Common Stock or Preferred Stock of the Company, whether now
authorized or not, and rights, options or warrants to purchase said Common Stock
or Preferred Stock, and securities of any type whatsoever that are, or may
become, convertible into said Common Stock or Preferred Stock; provided,
however, that "New Securities" does not include:
(i) securities issuable upon conversion of the Shares;
(ii) securities issued upon conversion or exchange of
securities outstanding on the date hereof;
(iii) any securities issued after the Company's initial public
offering (but does not exclude shares issued in the initial public
offering);
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(iv) securities issued pursuant to the acquisition of another
entity, business, product or technology by the Company by merger, purchase
of substantially all of the assets, or other reorganization whereby the
Company owns more than 50% of the voting power of such entity, business,
product or technology;
(v) shares of Common Stock (or related options) issued or
issuable at any time to employees, directors or consultants of the
Company, or any subsidiary, pursuant to any employee stock offering, plan,
or arrangement approved by the Board of Directors; and
(vi) shares of Common Stock or Preferred Stock issued in
connection with any stock split, stock dividend, or recapitalization by
the Company.
4.3. Notice and Exercise.
4.3.1. In the event that the Company proposes to undertake an
issuance of New Securities, it shall give each Series B Holder written notice of
its intention, describing the type of New Securities, the price and the general
terms upon which the Company proposes to issue the same. Each such Holder shall
have twenty (20) business days from the date of mailing of any such notice to
agree to purchase its pro rata share of such New Securities for the price and
upon the general terms specified in the notice by giving written notice to the
Company and stating therein the quantity of New Securities to be purchased.
4.3.2. The Company shall promptly, in writing, inform each Series B
Holder which purchases all the New Securities available to it ("Fully-Exercising
Holder") of any other Series B Holder's failure to do likewise. During the ten
(10) business day period commencing after such information is delivered to each
Fully-Exercising Holder, each Fully-Exercising Holder shall be entitled to
obtain that portion of the New Securities for which Series B Holders were
entitled to subscribe, but which were not subscribed for by such Holders, which
is equal to the proportion that the number of Registrable Securities then held
by such Fully-Exercising Holder bears to the total number of shares of
Registrable Securities then held by all Fully-Exercising Holders who wish to
purchase some of the unsubscribed shares.
4.3.3. Notwithstanding the foregoing, the Company shall not be
required to offer or sell New Securities to any Series B Holder who would cause
the Company to be in violation of applicable federal or state securities laws by
virtue of such offer or sale.
4.4. Partial Exercise. In the event that the Series B Holders fail to
exercise in full the pro rata purchase right provided in this Article IV, the
Company shall have one hundred and twenty (120) days thereafter to sell (or
enter into an agreement pursuant to which the sale of New Securities covered
thereby shall be closed, if at all, within thirty (30) days from the date of
said agreement) the New Securities respecting which such Holders' rights were
not exercised at a price and upon general terms materially no more favorable to
the purchasers thereof than specified in the Company's notice. In the event the
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Company has not sold the New Securities within said one hundred and twenty (120)
day period (or sold and issued New Securities in accordance with the foregoing
within one hundred and twenty (120) days from the date of said agreement), the
Company shall not thereafter issue or sell any New Securities without first
offering such securities to the Holders in the manner provided above.
V. MISCELLANEOUS
5.1. Governing Law. This Agreement shall be governed by and construed
under the laws of the State of New York as applied to agreements among New York
residents entered into and to be performed entirely within New York.
5.2. Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Conversion Shares from time to time; provided,
however, that prior to the receipt by the Company of adequate written notice of
the transfer of any Registrable Securities specifying the full name and address
of the transferee, the Company may deem and treat the person listed as the
holder of such shares in its records as the absolute owner and holder of such
shares for all purposes, including the payment of dividends or any redemption
price.
5.3. Separability. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
5.4. Amendment and Waiver.
5.4.1. Except as otherwise expressly provided, this Agreement may be
amended or modified only upon the written consent of the Company and the holders
of not less than fifty percent (50%) of the Conversion Shares.
5.4.2. Except as otherwise expressly provided, the obligations of
the Company and the rights of the Holders under this Agreement may be waived
only with the written consent of the holders of not less than fifty percent
(50%) of the Conversion Shares.
5.5. Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent or approval of any kind or character on
any Holder's part of any breach, default or noncompliance under this Agreement
or any waiver on such Holder's part of any provisions or conditions of this
Agreement must be in writing
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and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement, by law, or otherwise
afforded to Holders, shall be cumulative and not alternative.
5.6. Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient or, if not, then on the next
business day, (iii) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (iv) one (1) day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All communications shall be
sent to the Company and the Investor at their respective addresses set forth on
the signature page hereof or at such other address as any party may designate by
ten (10) days advance written notice to the other parties hereto.
5.7. Attorney's Fees. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
5.8. Titles and Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
5.9. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
5.10. Remedies. The Investor, in addition to being entitled to exercise
all rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agrees
to waive the defense in any action for specific performance that a remedy of law
would be adequate.
5.11. No Third Party Beneficiaries. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
permitted transferees of any Shares or any Common Stock issued upon conversion
or exercise thereof). Nothing in this Agreement, express or implied, is intended
to confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
H POWER CORP. ("Company")
By /s/ R. C. Cope
-----------------------------------------
Name: R. C. Cope
--------------------------------------
Title: President
-------------------------------------
Address:
60 Montgomery Street
Belleville, New Jersey 07109
Attention: Richard Cope
SINGAPORE TECHNOLOGIES AUTOMOTIVE
LTD. ("Investor")
By /s/ Wu Tzu Chien
-----------------------------------------
Name: Wu Tzu Chien
--------------------------------------
Title:
-------------------------------------
Address:
5 Portsdown Road
Singapore 139296
Attention: Fong Saik Hay
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Exhibit 4.3
H POWER CORP.
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (the "Agreement") is entered into as of the
2nd day of May 1997 by and between (a) H Power Corp., a Delaware corporation
(the "Company"), and (b) Sofinov Societe Financiere D'Innovation Inc.
("Sofinov"), Societe Innovatech Du Grand Montreal and 9042-0175 Quebec Inc.,
bodies politic duly incorporated according to law (collectively the
"Investors").
R E C I T A L S:
A. Concurrently with the execution of this Agreement, Sofinov has
subscribed for shares of Series C Preferred Stock of the Company (the "Company
Shares") pursuant to a Subscription Agreement between the Company and Sofinov
(the "Subscription Agreement").
B. Concurrently with the execution of this Agreement, the Investors have
subscribed for shares of Series A Common Shares (the "Canco Shares") of 3362469
Canada Inc., a body politic duly according to law ("Canco"), pursuant to a
Subscription Agreement (the "Canada Subscription Agreement"; together with the
Subscription Agreement, the "Subscription Agreements").
C. The Company has agreed to grant to each of the Investors the right to
exchange its Canco Shares for Company Shares on the terms and conditions set out
in the Stock Exchange Agreement dated the date hereof between the Company and
the Investors (the "Exchange Agreement").
D. Concurrently with the execution of this Agreement, the Company has
granted Sofinov a warrant (the "Warrant") entitling the holder, upon exercise
thereof, to acquire up to 200,000 shares of Common Stock, subject to adjustment
as provided therein.
E. The Company has agreed to provide for the registration of (i) the
shares of Common Stock issuable upon conversion of the Company Shares, (ii) the
shares of Common Stock issuable upon exercise of the Warrant (the "Warrant
Shares"), and (iii) the shares of Common Stock issuable upon the conversion of
the Company Shares issuable upon the exchange of Canco Shares pursuant to the
Exchange Agreement (the "Exchange Shares"), each on the terms and conditions
hereinafter set forth.
<PAGE>
A G R E E M E N T:
NOW, THEREFORE, in consideration of the mutual premises, representations,
warranties, covenants and conditions set forth in this Agreement and in the
Subscription Agreements, the parties mutually agree as follows:
I. DEFINITIONS
1.1. Definitions. As used in this Agreement the following terms shall have
the following respective meanings:
"Common Stock" means the Common Stock, par value $.001 per share, of the
Company.
"Holders" means the Investors and any other person or entity owning of
record Registrable Securities, other than Registrable Securities that have been
sold to the public.
"IPO" means the first family underwritten public offering pursuant to an
effective Registration Statement under the Securities Act covering the offer and
sale of Common Stock for the account of the Company.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Register," "registered," and "registration" refer to a registration
effected by filing a registration statement in compliance with the Securities
Act and the declaration or ordering of effectiveness of such registration
statement or document.
"Registrable Securities" means (i) the Warrant Shares, and (ii) any shares
of Common Stock issued or issuable upon the conversion of any Company Shares or
Exchange Shares.
"Registrable Securities then outstanding" shall be the number of shares
determined by calculating the total number of shares of Common Stock that are
Registrable Securities and either (i) are then issued and outstanding or (ii)
are issuable pursuant to then exercisable or convertible Warrant Shares,
Exchange Shares, or Company Shares.
"Registration Expenses" means all expenses incurred by the Company in
complying with Sections 2.1 and 2.2 hereof, including without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, reasonable fees and disbursements of a single special
counsel for the Holders not to exceed $10,000, blue sky fees and expenses, fees
and expenses associated with any review by the NASD and the expense of any
special audits incident to or required by any such registration
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(but excluding the compensation of regular employees of the Company which shall
be paid in any event by the Company).
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Expenses" means all underwriting discounts, selling commissions
and stock transfer taxes, if any, applicable to the sale of any Registrable
Securities.
"SEC" means the Securities and Exchange Commission.
II. REGISTRATION RIGHTS
2.1. Demand Registration.
2.1.1. Subject to the conditions of this Section 2.1, if the Company shall
receive at any time subsequent to the consummation of the IPO, a written request
from any of the Holders, whose Registrable Securities had an aggregate original
subscription price of at least $2,500,000, that the Company file a registration
statement under the Securities Act covering the registration of at least 2% of
the Registrable Securities then outstanding (or any lesser number if the
aggregate offering price of Registrable Securities to be included in such
offering is not less than $2,500,000) (the Holders requesting such registration,
the"Initiating Holders"), then the Company shall within 15 days of the receipt
thereof, give written notice of such request to all Holders and, subject to the
limitations of this Section 2.1, shall use its commercially reasonable efforts
to effect, as soon as practicable, the registration under the Securities Act of
all Registrable Securities that the Holders request to be registered.
2.1.2. If the registration referred to in Section 2.1.1. is to be an
underwritten offering, the right of any Holder to include his Registrable
Securities in such registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
such Holder and the Company). All Holders proposing to distribute their
securities through such underwriting shall enter into an underwriting agreement
in customary form with the underwriter or underwriters selected by the Company
(which underwriter or underwriters shall be reasonably satisfictory to a
majority in interest of the Initiating Holders) and shall enter into customary
custody agreements for selling stockholders. Notwithstanding any other provision
of this Section 2.1, if the underwriter advises the Company in writing that
marketing factors require a limitation of the number of securities to be
underwritten (including Registrable Securities), or the market otherwise will
likely be unable to accommodate the total amount of Registrable Securities
proposed to be offered and sold, then the Company shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares that may be included in the underwriting shall be
allocated to the Holders of such Registrable Securities on a pro rata basis
based on the number of Registrable Securities held by all such Holders
(including the Initiating Holders). Any Registrable Securities excluded or
withdrawn from such underwriting shall be withdrawn from the registration.
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2.1.3. The Company shall not be required to effect a registration pursuant
to this Section 2.1:
1. after the Company has effected two registrations pursuant
to this Section 2.1 and such registrations have been declared or ordered
effective;
2. during the period starting with the date of filing of, and
ending on the date 180 days following the effective date of the
registration statement pertaining to the IPO; provided, that the Company
is making reasonable and good faith efforts to cause such registration
statement to become effective; or
3. if the Company shall furnish to Holders requesting a
registration statement pursuant to this Section 2.1, a certificate,
stating that in the good faith judgment of the Board of Directors of the
Company, it would materially and adversely affect the Company for such
registration statement to be filed and it is therefore essential to defer
the filing of such registration statement, in which event the Company
shall have the right to defer such filing for a period of not more than
180 days after receipt of the request of the Initiating Holders; provided,
that such right to delay a request shall be exercised by the Company no
more than once in any twelve month period.
2.2. Piggyback Registrations. The Company shall notify all Holders
of Registrable Securities in writing at least 15 days prior to the filing of any
registration statement under the Securities Act for purposes of a public
offering of securities of the Company (including without limitation,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to employee benefit
plans or similar matters and corporate reorganizations or rights offerings to
stockholders) and will afford each such Holder an opportunity to include in such
registration statement all or part of the Registrable Securities held by such
Holder. Each such Holder desiring to include in any such registration statement
all or any part of the Registrable Securities held by it shall, within 10 days
after the above-described notice from the Company, so notify the Company in
writing. If a Holder decides not to include all of its Registrable Securities in
any registration statement thereafter filed by the Company, such Holder shall
nevertheless continue to have the right to include any Registrable Securities in
any subsequent registration statement or registration statements as may be filed
by the Company with respect to offerings of its securities, all upon the terms
and conditions set forth herein.
2.2.1. Underwriting. If the registration statement under which the Company
gives notice under this Section 2.2 is for an underwritten offering, the Company
shall so advise the Holders of Registrable Securities. In such event, the right
of any such Holder to be included in a registration pursuant to this Section 2.2
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to distribute their Registrable
Securities through such underwriting shall enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting (which selection shall be made by the Company) and customary
custody agreements for selling stockholders.
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Notwithstanding any other provision of this Agreement, if the underwriter
determines in good faith that marketing factors require a limitation of the
number of shares to be underwritten, the number of shares that may be included
in the underwriting shall be allocated, first, to the Company; second, to the
Holders of Registrable Securities, the holders of shares of Common Stock issued
upon the conversion of the Series A Preferred Stock and Series B Preferred
Stock, and the holders of other securities participating through piggyback
registration rights in such offering, in each case on a pro rata basis based on
the total number of Registrable Securities held by such holders; and third, to
any selling stockholders (on a pro rata basis). No such reduction shall reduce
the securities being offered by the Company for its own account to be included
in the registration and underwriting.
2.2.2. Right to Terminate Registration. The Company shall have the right
to terminate or withdraw any registration initiated by it under this Section 2.2
prior to the effectiveness of such registration whether or not any Holder has
elected to include securities in such registration. The Registration Expenses of
such withdrawn registration shall be borne by the Company in accordance with
Section 2.4 hereof.
2.3. [intentionally omitted]
2.4. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Section 2.1 or any registration under Section 2.2 herein shall be borne by the
Company. All Selling Expenses incurred in connection with any registrations
hereunder shall be borne by the holders of the securities to be registered, pro
rata on the basis of the number of shares so registered. The Company shall not
however, be required to pay for expenses of any registration proceeding begun
pursuant to Section 2.1, the request of which has been subsequently withdrawn by
the Initiating Holders, unless (a) the withdrawal is based upon material adverse
information concerning the Company of which the Initiating Holders were not
aware at the time of such request or (b) for registration proceedings begun
pursuant to Section 2.1, the Holders of a majority of Registrable Securities
agree to forfeit their right to one requested registration pursuant to Section
2.1 (in which event such right shall be forfeited by all Holders). If the
Holders are required to pay the Registration Expenses, such expenses shall be
borne by the holders of securities (including Registrable Securities) requesting
such registration in proportion to the number of shares for which registration
was requested.
2.5. Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities, the Company shall use its best
efforts, as expeditiously as reasonably possible, to:
2.5.1. Prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use its commercially reasonable efforts to
cause such registration statement to become effective, and, upon the request of
the Holders of a majority of the Registrable Securities registered thereunder,
keep such registration statement effective for up to 270 days or, if earlier,
until the Holder or Holders have completed the distribution related thereto.
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2.5.2. Prepare and file with file SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of to
Securities Act with respect to the disposition of all securities covered by such
registration statement.
2.5.3. Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
2.5.4. Use its commercially reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided, that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.
2.5.5. In the event of any underwritten public offering, enter into and
perform, its obligations under an underwriting agreement in usual and customary
form, with the underwriter(s) of such offering, each Holder participating in
such underwriting shall also enter into and perform its obligations under such
an agreement and customary custody agreements for selling stockholders.
2.5.6. Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
2.5.7. Furnish, at the request of a majority of the Holders participating
in the registration, on the date that such Registrable Securities are delivered.
to the underwriters for sale, if such securities are being sold through
underwriters, or, if such securities are not being sold through underwriters, on
the date that the registration statement with respect to such securities becomes
effective, (i) a copy of an opinion addressed to the holders and if the
applicable underwriters, dated as of such date, of the counsel representing the
Company for the purposes of such registration, in form and substance as may bc
requested by the underwriters for an underwritten public offering which opinion
may be relied on by such Holders and (ii) a letter dated as of such date, from
the independent certified public accountants of the Company, in form and
substance as may be requested by the underwriters for an underwritten public
offering (or otherwise in form and substmace as would be customarily given to
underwriters in an underwritten offering and reasonably satisfactory to a
majority in interest of the Holders requesting registration), such letter to be
addressed to the holders and the underwriters, if any, and if permitted by
applicable accounting standards, to the Holders requesting registration of
Registrable Securities.
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2.6. "Market Stand-Off" Agreements.
2.6.1. If requested by the Company or a representative of the underwriters
of Common Stock or other securities of the Company, each Holder shall not sell
or otherwise transfer or dispose of any Common Stock (or other securities) of
the Company held by such Holder (other than those included in the registration)
for a period specified by the representative of the underwriters, not to exceed
180 days following the effective date of a registration statement of the Company
filed under the Securities Act (the "Effective Date"); provided, that:
(i) such agreement shall apply only to the Company's IPO; and
(ii) all persons entitled to registration rights similar to
those granted hereunder, all other persons participating in the Company's
IPO, all officers and directors of the Company and all shares that are
beneficially owned by any person for any entity that is the beneficial
owner (as determined in accordance with Rule l3d-3 of the Securities
Exchange Act of 1934) of at least 7% of the Company's voting securities
prior to the Company's IPO, shall have entered into similar agreements.
The Company may impose stop-transfer instructions with respect to the
shares of Common Stock (or other securities) subject to tbo foregoing
restriction until the end of such 180-day period.
2.6.2. To the extent reasonably requested by a representative of the
underwriters of Common Stock for the Company's IPO, each Holder will agree with
such representative not to sell or otherwise transfer or dispose of any Common
Stock of the Company acquired by such Holder in the Company's IPO pursuant to
Article IV hereof for a period so requested by the representative of the
underwriters, not to exceed 180 days following the Effective Date of the IPO.
2.7. Delay of Registration; Furnishing Information.
2.7.1. No Holder shall have any right to obtain or seek an injunction
restraining or otherwise delaying any such registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Article II.
2.7.2. It shall be a condition precedent to the obligations of the Company
to take any action pursuant to Section 2.1 or 2.2 that the selling Holders shall
furnish to the Company such information regarding themselves, the Registrable
Securities held by them, and the intended method of disposition of such
securities as shall be required to effect the registration of their Registrable
Securities.
2.8. Indemnification. In the event any Registrable Securities are included
in a registration statement under Sections 2.1 or 2.2:
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2.8.1. To the extent permitted by applicable law, the Company will
indemnify and hold harmless each Holder, the partners, officers and directors of
each Holder, any underwriter (as defined in the Securities Act) for such Holder
and each person, if any, who controls such Holder or underwriter within the
meaning of the Securities Act or the 1934 Act, against any losses, claims
damages or liabilities (joint or several) to which they may become subject under
the Securities Act the 1934 Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any of the following statements, omissions or violations
(collectively "Violation") by the Company: (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein material fact required to be stated therein or necessary to make
the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the 1934 Act or any state securities law in connection with the offering covered
by such registration statement; and the Company will reimburse each such Holder,
partner, officer, director, underwriter or controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided however,
that the indemnity agreement contained in this Section 2.8.1 shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, partner, officer, director, underwriter
or controlling person.
2.8.2. To the extent permitted by law, each selling Holder will indemnify
and hold harmless the Company, each of its directors and officers, each person,
if any, who controls the Company within the meaning of the Securities Act, any
underwriter and any other Holder selling securities under such registration
statement or any of such other Holder's partners, directors or officers or any
person who controls such Holder, against any losses, claims, damages or
liabilities (joint or several) to which the Company or any such director,
officer, controlling person, underwriter or other such Holder, or partner,
director, officer or controlling person of such other Holder, may become subject
under the Securities Act, the 1934 Act or other federal or state law, insofar as
such losses, claims, damages or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by such Holder under an instrument
duly executed by such Holder and stated to be specifically for use in connection
with such registration; and each such Holder will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or other Holder, or partner, officer, director
or controlling pawn of such other Holder, in connection with investigating or
defending any such loss, claim, damage, liability or action if it is judicially
determined that there was such a Violation; provided, however, that the
indemnity agreement contained in this Section 2.8.2 shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
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settlement is effected without the consent of the Holder which consent shall not
be unreasonably withheld, and provided further, that in no event shall any
indemnity under this Secton 2.8 exceed the gross proceeds from the offering
received by such Holder.
2.8.3. Promptly after receipt by an indemnified party under this Section
2.8 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 2.8, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 2.8, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 2.8.
2.8.4. If the indemnification provided for in this Section 2.8 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any losses, claim, damages or liabilities referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party thereunder
shall to the extent permitted by applicable law contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the Violation(s) that resulted in such loss, claim, damage or
liability, as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by a court of law by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
2.8.5. The obligations of the Company and Holders under this Section 2.8
shall survive the completion of any offering of Registrable Securities in a
registration statement, and otherwise.
2.9. Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities pursuant to this Article II may be assigned by a
Holder to a transferee or assignee of Registrable Securities which (i) is a
subsidiary, parent; general partner, limited partner or retired partner of a
Holder, (ii) is a governmental body of or controlled by the government of
Quebec, (iii) is a Holder's family member or trust for the benefit of an
individual Holder, or (iv) acquires at least 10,000 shares of Registrable
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Securities (as adjusted for stock splits and combinations); provided, however,
(a) the transferor shall, within 30 days after such transfer, furnish to the
Company written notice of the name and address of such transferee or assignee
and the securities with respect to which such registration rights are being
assigned, and (b) such transferee shall agree in writing to be subject to all
restrictions set forth in this Agreement.
2.10. Amendment of Registration Rights. Any provision of this Article II
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of not less than 50% of the
Registrable Securities. Any amendment or waiver effected in accordance with this
Section 2.10 shall be binding upon each such Holder and the Company. By
acceptance of any benefit under this Article II Holders of Registrable
Securities hereby agree to be bound by the provisions hereunder.
2.11. Limitation on Subsequent Registration Rights. After the date of this
Agreement, the Company shall not, without the prior written consent of the
Holders of not less than 50% of the Registrable Securities, enter into any
agreement with any holder or prospective holder of any securities of the Company
which would allow such holder or prospective holder (a) to include such
securities in any registration filed under Section 2.1 hereof, unless, under the
terms of such agreement, such holder or prospective holder may include stock
securities in any such registration only to the extent that the inclusion of his
securities will not reduce the amount of the Registrable Securities of the
Holders which is included, or (b) to make a demand registration which could
result in such registration statement being declared effective prior to the date
set forth in Section 2.1.3(2) or within 120 days of the effective date of any
registration statement effected pursuant to Section 2.1.
2.12. Rule 144 Reporting. With a view to making available to the Holders
the benefits of certain rules and regulations of the SEC which may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its best efforts to:
(i) Make and keep public information available, as those terms
are understood and defined in SEC Rule 144 or any similar or analogous
rule promulgated under the Securities Act at all times after the effective
date of the first Registration filed by the Company for an offering of its
securities to the general public;
(ii) After such registration, file with the SEC, in a timely
manner, all reports and other documents required of the Company under the
Securities Act, and the 1934 Act; and
(iii) After such registration and for so long as a Holder owns any
Registrable Securities, furnish to such Holder forthwith upon request, (A)
a written statement by the Company as to its compliance with the reporting
requirements of such Rule 144 of the Securities Act, and of The 1934 Act
(at any time after it has become subject to such reporting requirements);
(B) a copy of the most recent annual or quarterly report of the Company,
and (C) such other reports and
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documents as a Holder may reasonably request in availing itself of any
rule or regulation of the SEC allowing it to sell any such securities
without registration.
III. COVENANTS OF THE COMPANY
3.1. Financial Information and Reporting.
3.1.1. The Company will maintain true books and records of account in
which full and correct entries will be made of all its business transactions
pursuant to a system of accounting established and administered in accordance
with generally accepted accounting principles consistently applied, and will set
aside an its books all such proper accruals and reserves as shall be required
under generally accepted accounting principles consistently applied.
3.1.2. As soon as practicable after the end of each fiscal year of the
Company, and in any event within 120 days thereafter, the Company will furnish
each Holder a consolidated balance sheet of the Company, as of the end of such
fiscal year, and a consolidated statement of income and a consolidated statement
of cash flows of the Company, for each year, all prepared in accordance with
generally accepted accounting principles and setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail. Such financial statements shall be accompanied by a report and opinion
thereon by one of the "big six" independent public accounting firms selected by
the Company's Board of Directors.
3.1.3. The Company will furnish only upon request to each Holder owning
more than 2.75% of the Registrable Securities, as soon as practicable at the end
of the first, second and third quarterly accounting periods in each fiscal year
of the Company, and in any event within 45 days thereafter, a consolidated
balance sheet of the Company as of the end of each such quarterly period, and a
consolidated statement of income and a consolidated statement of cash flows of
the Company for such period and for the current fiscal year to date, prepared in
accordance with generally accepted accounting principles, with the option, that
no notes need be attached to such statements and year-end audit adjustments may
not have been made.
3.1.4. The Company will furnish only upon request to each Holder owning
more than 10% of the Registrable Securities:
(i) at least 30 days prior to the beginning of each fiscal
year, an annual budget and operating plans for such fiscal year (and as
soon as available, any subsequent revisions thereto); and
(ii) as soon as practicable after the end of each month, and
in any event within 20 days thereafter, a consolidated balance sheet of
the Company as of the end of each such month, and, a consolidated
statement of income and a consolidated statement of cash flows of the
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Company for such month and for the current fiscal year to date, including
a comparison to plan figures for such period, prepared in accordance with
generally accepted accounting principles, with the exception that no notes
need be attached to such statements and year-end audit adjustments may not
have been made.
3.2. Confidentiality of Records.
3.2.1. Each Holder agrees not to use Confidential Information (as
hereinafter defined) of the Company for its own use or for any purpose except to
monitor its equity investment in the Company and the performance of the Company
as well as to enforce its rights with respect to the Company from time to time.
Except as permitted under Section 3.12 below, such Holders agree to use their
respective best efforts not to disclose such Confidential Information to any
third parties. Each such Holder shall undertake to treat such proprietary nature
and agrees that it shall protect the confidentiality of and use reasonable
efforts to prevent disclosure of the Confidential Information to prevent it from
falling into the public, domain or the possession of unauthorized persons. Each
transferee of such Holder who receives Confidential Information shall agree to
be bound by such provisions. For purposes of this Section, "Confidential
Information" means any information, technical data or know-how, including, but
not limited to, the Company's research, products, software, services,
development, inventions, processes, designs, drawings, engineering, marketing,
or finances, disclosed by the Company either directly or indirectly in writing,
orally or by drawings or inspection of parts or equipment.
3.2.2. Confidential Information does not include information, technical
data or know-how which (i) is in a Holder's possession at the time of
disclosure, (ii) before or after it has been disclosed to the Holder; it is part
of the public knowledge or literature, not as a result of any action or inaction
of the Holder, (iii) is approved for release by written authorization of
Company; or (iv) is developed independently by a Holder. The provisions of this
Section shall not apply (a) to the extent that a Holder is required to disclose
Confidential Information pursuant to any law, statute, rule, or regulation or
any order of any court or jurisdiction process or pursuant to any direction,
request or requirement (whether or not having the force of law but if not having
the force of law being of a type with which institutional investors in the
relevant jurisdiction are accustomed to comply) of any self-rcgulating
organization or my governmental, fiscal, monetary or other authority; (b) to the
disclosure of Confidential Information to the Holder's employees, counsel,
accountants or other professional advisors; (c) to tho extent that the Holder
needs to disclose Confidential Information for the protection of any of the
Holders rights or interest against the Company, whether under this Agreement or
otherwise; or (d) to the disclosure of Confidential Information to a prospective
transferee of securities which agrees to be bound by the provisions of this
Section in connection with the receipt of such Confidential Information.
3.3. Proprietary Information. The Company shall require all employees of
and consultants to the Company who have access to proprietary information of the
Company to enter into agreements in the Company's standard form providing for
the protection of proprietary information and inventions.
3.4. Board of Directors Approval.
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(i) The Company shall not without the approval of a majority of the
Board of Directors take any of the following actions:
(a) adopt any change to the fundamental nature of the Company or
the business carried on by it or Canco;
(b) transfer or dispose of all or any significant portion of the
assets of the Company,
(c) adopt any material changes in the bylaws, charter documents,
or capital structure of the Company;
(d) voluntarily dissolve the Company or undertake any major
reorganization;
(e) declare a dividend or make a dividend payment;
(f) make a loan or advance to any shareholder, director or officer
or person related to a shareholder, director or officer
excluding such transactions undertaken prior to the date
hereof;
(g) adopt any stock option or purchase plan;
(h) issue or grant equity securities of the Company or any options
or securities convertible into equity securities of the
Company other than option grants in the ordinary course of
business for 200 or fewer shares;
(i) adopt an annual budget;
(j) enter into any real estate lease or real property sales
agreement; or
(k) enter into any material transaction outside the ordinary
course of the Company's business.
(ii) The Company's Board of Directors shall set a policy as to
whether the approval of a majority of the Board of Directors is required to take
any of the following actions:
(a) hire or extend an offer of employment to any officer of the
Company;
(b) enter into any consulting or employment arrangement involving
annual compensation in excess of $75,000; or
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(c) adopt any compensation programs including but not limited to
establishing the base salary or bonus for any officer or
employee of the Company who earns greater than $75,000 per
year for his or her services to the Company.
3.5. Board Meetings. The Board of Directors of the Company shall meet in
person or telephonically at least once every month for the first 24 months after
the date hereof until the initiation of the IPO; thereafter, the Board of
Directors, by the affirmative vote or written consent of a majority of the
directors, may alter the frequency of the regularly scheduled meetings and may
schedule meetings of the Board of Directors at such times, and from time to
time, as shall be deemed to be necessary or advisable. The Company will
reimburse each Director of the Company for all reasonable transportation and
out-of -pocket expenses incurred by such Director in the attending of no more
than four meetings a year of the Board of Directors of the Company or any
committees thereof in carrying out any business of the Company as authorized by
the Board of Director any executive officer of the Company. The Company shall
pay each Director that is not an employee of the Company, a subsidiary of the
Company, or the Investors, a fee for his attendance at each meeting of the
Board. The fees payable to such Directors shall be determined by the Board. The
Board of Directors may conduct certain meetings telephonically but shall meet at
least four times a year in person.
3.6. Reservation of Common. The Company will at all times reserve and keep
available, solely for issuance and delivery upon the conversion of the Company
Shares and Exchange Shares, all Common Stock issuable from time to time upon
such conversion, as well as Common Stock issuable pursuant to the exercise of
the Warrant.
3.7. Real Property Holding Corporation. The Company covenants that it will
operate in a manner such that it will not become a "United States real property
holding corporation" ("USRPHC") as that term is defined in Section 897(c)(2) of
the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
thereunder ("FIRTPA"). The Company agrees to make determinations as to its
status as a USRPHC, and will file statements concerning those determinations
with the Internal Revenue Service, in the manner and at the times required under
Reg. Sec. 1.897-2(h), or any supplementary or successor provision thereto.
Within 30 days of a request from an Investors or any of its partners, the
Company will inform the requesting party, in the manner set forth in Reg. Sec.
1.897-2(h)(1)(iv) or any supplementary or successor provision thereto, whether
that party's interest im the Company constitutes a United States real property
interest (within the meaning of Code Section 897(c)(1) end the regulations
thereunder) and whether the Company has provided to the Internal Revenue Service
all required notices as to its USRPHC status.
3.8. Termination of Covenants. All covenants the Company contained in
Article III of this Agreement shall expire and terminate on the Effective Date
of the IPO.
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IV. PRO RATA PURCHASE RIGHTS
4.1. Grant. The Company hereby grants to each Holder, unless waived by the
Holders of not less than 50% of the Registerable Securities then outstanding the
right to purchase a pro rata share of New Securities (as defined below) that the
Company may, from time to time, propose to sell and issue up to but not
including the IPO. Each Holder's pro rate share, for purposes of this right, is
the ratio of (X) the number of shares of Registrable Securities then owned by
such Holder to (Y) the total number of shares of Registrable Securities of the
Company outstanding immediately prior to the issuance of the New Securities. The
purchase rights granted in this Article IV shall be subject to the following
provisions of this Article IV.
4.2. New Securities. "New Securities" shall mean any offering by the
Company of any Common Stock or Preferred Stock of the Company, whether now
authorized or not, and right, options or warrants to purchase said Common Stock
or Preferred Stock, and securities of any type whatsoever that are, or may
become, convertible into said Common Stock or Preferred Stock; provided,
however, that "New Securities" does not include:
(i) securities issuable upon conversion of the Company Shares,
Exchange Shares or Warrant Shares;
(ii) securities issued upon conversion or exchange of
securities outstanding on the date hereof, including the Series A
Preferred Stock, Series B Preferred Stock or outstanding Warrants on the
date hereof;
(iii) any securities issued after the Company's IPO (but does
not exclude shares issued in the IPO);
(iv) securities issued pursuant to the acquistion of another
entity, business, product or technology by the Company by merger, purchase
substantially all of the assets, or other reorganization whereby the
Company owns more than 50% of the voting power of such entity, business,
product or technology,
(v) shares of Common Stock (or related options) issued or
issuable at any time to employees, directors or consultants of the
Company, or any subsidiary, pursuant to any employee stock offering, plan,
or arrangement approved by the Board of Directors; and
(vi) shares of Common Stock or Preferred Stock issued in
connection with any stock split stock dividend, or recapitalization by the
Company.
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4.3. Notice and Exercise.
4.3.1. In the event that the Company proposes to undertake an issuance of
New Securities, it shall give, each Holder written notice of its intention,
describing the type of New Securities, the price and the general terms upon
which the Company propose to issue the same. Each such Holder shall have 20
business days from the date of mailing of any such notice to agree to purchase
its pro rata share of such New Securities for the price and upon the general
terms specified in the notice by giving written notice to the Company and
stating therein the quantity of New Securities to be purchased.
4.3.2. The Company shall promptly, in writing, inform each Holder which
purchases all the New Securities available to it ("Fully-Exercising Holder") of
any other Holder's failure to do likewise. During the 10 business day period
commencing after such information is delivered to each Fully-Exercising Holder,
each Fully-Exercising Holder shall be entitled to obtain that portion of the New
Securities for which Holders were entitled to subscribe, but which were not
subscribed for by such Holders, which is equal to the proportion that the number
of Registrable Securities then held by such Fully-Exercising Holder bears to the
total number of shares of Registrable Securities then held by all
Fully-Exercising Holders who wish to purchase some of the unsubscribed shares.
4.3.3. Notwithstanding the foregoing the Company shall not be required to
offer or sell New Securities to any Holder who would cause the Company to be in
violation of applicable federal or state securities laws by virtue of such offer
or sale.
4.4. Partial Exercise. In the event that the Holders fail to exercise in
full the pro rata purchase right provided in this Article IV, the Company shall
have 120 days thereafter to sell (or enter into an agreement pursuant to which
the sale of New Securities covered thereby shall be closed, if at all within 30
days from the date of said agreement) the New Securities respecting which such
Holders' rights were not exercised at a price and upon general terms materially
no more favorable to the purchasers thereof than specified in the Company's
notice. In the event the Company has not sold the New Securities within such
120-day period (or sold and issued New Securities in accordance with the
foregoing within 120 days from the date of said agreement), the Company shall
not thereafter issue or sell any New Securities without first offering such
securities to the Holders in the manner provided above.
V. MISCELLANEOUS
5.1. Governing Law. This Agreement shall be governed by and construed
under the laws of the State of New York as applied to agreements among New York
residents entered into and to be performed entirely within New York.
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5.2. Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of be enforceable by each person
who shall be a holder of Registrable Securities from time to time; provided,
however, that prior to the receipt by the Company of adequate written notice of
the transfer of any Registrable Securities specifying the full name and address
of the transferee, the Company may deem and treat the person listed as the
holder of such shares in its records as the absolute owner and holder of such
shares for all purposes, including the payment of dividends or any redemption
price.
5.3. Separability. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
5.4. Amendment and Waiver.
5.4.1. Except as otherwise expressly provided, this agreement may be
amended or modified only upon the written consent of the Company and the holders
of not less than 50% of the Registrable Securities.
5.4.2. Except as otherwise expressly provided, the obligations of the
Company and the rights of the Holders under this Agreement may be waived only
with the written consent of the holders of not less than 50% of the Registrable
Securities.
5.5. Delays or Omission. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right power or remedy, nor shall it be construed to be a waiver of any such
breach, default or noncompliance, or any acquiescence therein, or of any similar
breach, default or noncompliance thereafter occurring. It is further agreed that
any waiver, permit consent or approval of any kind or character on any Holder's
part of any breach, default or noncompliance under this Agreement or any waiver
on such Holder's part of any provisions or conditions of this Agreement must be
in writing and shall be effective only to the extent specifically set forth in
such writing. All remedies, either under this Agreement, by law, or otherwise
afforded to Holders, shall be cumulative and not alternative.
5.6. Notices. All notices required or permitted be under shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient or, if not, then on the next
business day, (iii) five days after having been sent by registered or certified
mail, return receipt requested, postage prepaid, or (iv) or one day after
deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications shall be sent
to the Company and the Investors at their respective addresses set forth on the
signature page hereof or at such other address as any party may designate by 10
days advance written notice to the other parties hereto.
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5.7. Attorney's Fee. In the event the any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
5.8. Titles and Subtitles. The titles of the sections and subsection of
this Agreement for convenience of reference only and are not to be considered in
construing this Agreement.
5.9. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
5.10. Remedies. The Investors, in addition to being entitled to exercise
all rights granted by law, including recovery of damages will be entitled to
specific performance of its rights under this Agreement. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agrees
to waive the defense in any action for specific performance that a remedy of law
would be adequate.
5.11. No Third Party Beneficiaries. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
permitted transferees of any Shares or any Common Stock issued upon conversion
or exercise thereof). Nothing in this Agreement express or implied, is intended
to confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Investor
Rights Agreement as of the date set forth in the first paragraph hereof.
H POWER CORP.
60 Montgomery Street
Belleville, New Jersey 07109
By: /s/ H. Frank Gibbard
--------------------------------------
Name: H. Frank Gibbard
------------------------------------
Title:
-----------------------------------
SOFINOV SOCIETE FINANCIERE
D'INNOVATION INC.
1981 Avenue McGill College
Montreal, Quebec H3A3C7
By: /s/ Denis Dionne
--------------------------------------
Name: Denis Dionne
------------------------------------
Title:
-----------------------------------
By: /s/ Marcel Paquette
--------------------------------------
Name: Marcel Paquette
------------------------------------
Title:
-----------------------------------
SOCIETE INNOVATECH DU GRAND MONTREAL
2020 University Avenue
Suite 1527
Montreal, Quebec H3A2A5
By: /s/ Bernard Coupal
--------------------------------------
Name: Bernard Coupal
------------------------------------
Title:
-----------------------------------
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9042-0175 QUEBEC INC.
c/o Lapointe Rosenstein
1250 Rene Levesque Blvd. West
Suite 1400
Montreal, Quebec H3B5E9
By: /s/ Claude Bergeron
--------------------------------------
Name: Claude Bergeron
------------------------------------
Title:
-----------------------------------
20
<PAGE>
Exhibit 4.4
May 2, 1997
To: Sofinov Societe Financiere D'Innovation Inc. ("Sofinov")
Societe Innovatech Du Grand Montreal ("Innovatech")
9042-0175 Quebec Inc. ("Quebeco")
Gentlemen:
This letter agreement will confirm that in connection with and as
consideration for the investment of Sofinov today of $7.5 million to purchase
initially 500,000 shares of Series C Preferred Stock of H Power Corp., a
Delaware corporation (the "Company"), and the concurrent subscription by
Sofinov, Innovatech, Quebeco and the Company for common shares (the "Canco
Shares") in the capital stock of 3362469 Canada Inc., a body politic duly
incorporated under law ("Canco") and the granting by the Company to Sofinov an
the date hereof of a Warrant (the "Warrant") to purchase up to an additional
200,000 shares of Common Stock, par value $.001 per share (the "Common Stock"),
of the Company, the undersigned (the "Stockholders"), who are holders of Common
Stock who own the shares set forth opposite their respective names on Exhibit A
hereto (together with any other shares of the Company's Common Stock that the
undersigned may hereafter own (the "Shares")), agree to grant to you certain
tag-along rights in connection with any sale of the Stockholders' Shares, as
follows:
1. (a) In the event that any of the Stockholders elects to transfer,
sell or otherwise dispose of any Shares, in a single transaction, or series of
related transactions, aggregating to greater than 50,000 Shares, other than (x)
to any Affiliate (as defined below), provided that prior to any such transfer,
sale or disposition, such Affiliate expressly agrees to be bound by the same
terms as the Stockholders as set forth herein, (y) in connection with a public
offering of shares of Common Stock or under Rule 144 under the Securities Act of
1933 or similar rule or regulation permitting public sales without registration,
or (z) in connection with a pledge, hypothecation or similar transaction, such
Stockholder will, prior to consummating any such transaction, from and after the
date hereof and for the period described in Section 2 below (any such
non-excluded transaction, a "Transaction"), provide written notice (a "Sale
Notice") to each of you of such proposed Transaction, setting forth in
reasonable detail the particulars thereof including the proposed price and terms
thereof. You shall have a period of 30 days from the date of receipt of a Sale
Notice to determine if you desire to participate in such Transaction, on the
same terms as the
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selling Stockholder. If you desire to so participate, you shall inform the
selling Stockholder of such desire in writing within such 30-day period; in such
event, you shall have the right to so participate, on a pro rata basis, based
upon the number of shares of Common Stock that each of you then owns, on an
as-converted or exchanged basis, including any Shares obtained or obtainable by
converting Series C Preferred Stock into Common Stock, any Shares obtained or
obtainable as the result of exercising rights under the Warrant and any Shares
obtained or obtainable by converting into Common Stock any shares of Series C
Preferred Stock received or receivable upon the exchange of any Canco Shares
pursuant to the terms of the Stock Exchange Agreement dated the date hereof
among the Company, Sofinov, Innovatech and Quebeco, as a percentage of the
aggregate shares of Common Stock then owned by the Stockholders and you (i.e.,
those of you desiring to so participate); and the number of Shares proposed to
be sold by such selling Stockholders shall be reduced by up to such amount (at
your election) as is necessary to enable you to so participate. In the event
that you do not so inform the selling Stockholders within such 30-day period in
writing, you shall not have the right to so participate in such Transaction, and
the selling Stockholders shall be free to effect such Transaction for a 180-day
period thereafter on terms no less favorable to the transferee as set forth in
such Sale Notice; thereafter, any such transfer, sale or disposition shall be
subject to the provisions hereof.
(b) Affiliate of any person or entity means any entity controlled,
controlling or under common control with such person or entity and includes any
partnership or joint venture in which he, she or it is a partner and any trust
for which he, she or it is a beneficiary or trustee.
2. Your rights above shall terminate on the earlier of (x) the date
which is four years after the date hereof and (y) the date on which you and your
Affiliates, including any governmental body of or controlled by the Government
of Quebec, collectively own fewer than 500,000 shares of the Company's Common
Stock, on an as-converted basis, including any shares obtained or obtainable by
converting Preferred Stock into Common Stock, any Shares obtained or obtainable
as the result of exercising rights under the Warrant, and any Shares obtained or
obtainable by converting into Common Stock any Preferred Shares received or
receivable upon the exchange of any Canco Shares pursuant to the terms of the
Stock Exchange Agreement dated the date hereof among the Company, Sofinov,
Innovatech and Quebeco.
3. This letter agreement (a) shall be governed by and construed in
accordance with the internal laws of the State of New York, without regard to
principles of conflicts of laws, (b) may not be transferred or assigned by
either party hereto to any other person or entity without the prior written
consent of the other party, but, subject to the foregoing shall be binding upon
the parties' respective successors and assigns and, in the case of the death of
any selling Stockholder, such Selling Stockholder's Shares shall pass to his or
her estate without restriction, but shall be subject to the provisions above in
such estate, and (c) may be executed in counterparts and delivered by facsimile
transmission.
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<PAGE>
Please indicate your agreement to the foregoing by signing a copy of
this letter agreement where indicated below.
Very truly yours,
Agreed to:
Sofinov Societe Financiere D'Innovation Inc.
By: /s/ Denis Dionne
----------------
Name:
Title:
By: /s/ Marcel Paquette
-------------------
Name:
Title:
Societe Innovatech Du Grand Montreal
By: /s/ Bernard Coupal
------------------
Name:
Title:
9042-0175 Quebec Inc.
By: /s/ Claude Bergeron
-------------------
Name:
Title:
3
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Document as
of this 2nd day of May, 1997.
H Power Corp.
Common Stockholders:
Revocable Trust for Elise Entman
By: /s/ Gerald Entman
---------------------------------
Gerald Entman, Trustee
/s/ H. Scott Entman
-------------------------------------
H. Scott Entman
/s/ Brian K. Entman
-------------------------------------
Brian K. Entman
/s/ Frederick Entman
-------------------------------------
Frederick Entman
/s/ Cynthia Rothstein
-------------------------------------
Cynthia Rothstein
/s/ Allan Rothstein
-------------------------------------
Allan Rothstein
/s/ Steven Rothstein
-------------------------------------
Steven Rothstein
/s/ Tammy Rothstein
-------------------------------------
Tammy Rothstein
/s/ Norman Rothstein
-------------------------------------
Norman Rothstein
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<PAGE>
Exhibit 4.5
STOCKHOLDERS' AND VOTING AGREEMENT
This STOCKHOLDERS' AND VOTING AGREEMENT dated this 5th day of April,
2000 (this "Agreement"), among H Power Corp. (the "Company"), Lehman Brothers
Inc. and the other parties signatory hereto (each an "Investor").
WHEREAS, Norman Rothstein and Frederick Entman are retiring from the
Company by resigning as directors of the Company and terminating their positions
as consultants and advisors to the Company on the date hereof;
WHEREAS, the Company's Board of Directors, founders and principal
stockholders have determined that it is in the best interest of the Company and
its stockholders to undertake an underwritten initial public offering of the
Company's common stock, $.001 par value (the "IPO"), and in connection
therewith, to enter into the voting and transfer arrangements hereinafter set
forth;
WHEREAS, the Company has engaged Lehman Brothers Inc. to act as lead
manager of the IPO (the "Lead Manager") and to advise the Company with respect
to appropriate corporate governance arrangements in connection therewith,
including, without limitation, the voting and transfer arrangements hereinafter
set forth;
WHEREAS, for good and valuable consideration, and in order to induce
the Company and the Lead Manager and the other underwriters to undertake an
initial public offering of primary shares of the Company's common stock pursuant
to a registration statement on Form S-1 that will be filed with the Securities
and Exchange Commission, each Investor has entered into this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and the
agreements and undertakings hereinafter set forth, and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. For purposes of this Agreement, and only for
purposes of this Agreement, the following terms shall have the following
respective meanings:
The "A STOCKHOLDER" shall have the meaning assigned to that term in the
preamble of the Amended and Restated Stockholders Agreement.
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<PAGE>
An "AFFILIATE" of any Person, or a Person "AFFILIATED WITH" a specific
Person, is a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Person specified.
The "AMENDED AND RESTATED STOCKHOLDERS AGREEMENT" means the Amended and
Restated Stockholders Agreement dated May 2, 1997, by and among (i) the Company,
(ii) the holders of shares of Common Stock identified on the signature pages
thereto, (iii) Duquesne Enterprises, (iv) Singapore Technologies Automotive
Ltd., (v) Sofinov Societe Financiere D'Innovation Inc., and (vi) Societe
Innovatech du Grand Montreal.
The term "ASSOCIATE" used to indicate a relationship with any Person
means (1) any corporation or organization (other than the Company) of which such
Person is an officer or partner or is, directly or indirectly, the beneficial
owner of 5% or more of any class or series of equity securities, (2) any trust
or other estate in which such Person has a substantial beneficial (under all
circumstances an interest of 5% or greater will be deemed substantial) interest
or as to which such Person serves as trustee, executor, nominee, administrator,
conservator, attorney-in-fact, or in a similar fiduciary capacity, (3) any
member of such Person's Immediate Family, or (4) anyone who resides in such
Person's home. Notwithstanding the foregoing, the Company shall not be deemed an
Associate of any Investor.
The "B STOCKHOLDER" shall have the meaning assigned that term in the
preamble of the Amended and Restated Stockholders Agreement.
A Person shall be deemed the "BENEFICIAL OWNER" of, and shall be deemed
to "BENEFICIAL OWN" and to have "BENEFICIAL OWNERSHIP" of:
(i) any securities that such Person or any of such Person's
Affiliates or Associates, or any member of any 13D Group of which such
Person or any Affiliate or Associate of such Person is a member,
"beneficially owns" within the meaning of Rule 13d-3 under the Exchange
Act, as in effect on the date of this Agreement; and
(ii) any securities (the "underlying securities") that such
Person or any of such Person's Affiliates or Associates has the right
to acquire (whether such right is exercisable immediately or only after
the passage of time, with or without the provision of notice) pursuant
to any agreement, arrangement or understanding (written or oral), or
upon the exercise of any rights, puts, calls, warrants or options, or
otherwise (it being understood that such Person shall also be deemed to
be the beneficial owner of any securities convertible into or
exchangeable or exercisable for any underlying or derivative
securities).
"BOARD" shall mean the Board of Directors of the Company.
The "C STOCKHOLDER" shall have the meaning assigned that term in the
preamble of the Amended and Restated Stockholders Agreement.
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<PAGE>
The "COMMISSION" shall mean the Securities and Exchange Commission.
"COMMON STOCK" shall mean the common stock, $.001 par value, of the
Company and all securities of the Company into which such common stock hereafter
may be reconstituted or recapitalized.
"COMMON STOCKHOLDERS" shall have the meaning assigned that term in the
preamble of the Amended and Restated Stockholders Agreement.
The "COMPANY" shall mean H Power Corp., a corporation organized under
the laws of the State of Delaware, and its successors and assigns.
"CONTROL" shall have the meaning ascribed to such term in Rule 12b-2
under the Exchange Act, as in effect on the date of this Agreement.
"ENTMAN INVESTORS" shall mean Frederick Entman, Elise Entman, Brian
Entman, Scott Entman, Gerald Entman, Trustee for Elise Entman, and every other
Immediate Family member of Frederick Entman and every trust or similar
arrangement established for the benefit of or controlled by Frederick Entman or
members of his Immediate Family.
The "ENTMAN OWNERSHIP CAP PROVISION" shall have the meaning ascribed to
such term in Section 4.1.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as in
effect on the date in question, unless otherwise specifically provided.
"IMMEDIATE FAMILY" shall mean, with respect to any Person, a Person's
spouse, parents, children, siblings, grandchildren, mother-in-law,
father-in-law, brothers-in-law, sisters-in-law daughters-in-law or sons-in-law.
"INDEPENDENT DIRECTORS" shall mean (i) until such time as the Company
becomes subject to the requirements of Section 12 or 15 (d) of the Exchange Act,
the members of the Board who are not otherwise employed, either as an employee
or as an independent contractor, in any capacity by the Company or otherwise
affiliated or associated in any manner or capacity with any Investor, and who
are not otherwise party to any arrangement or relationship which would require
disclosure pursuant to Item 404 of Regulation S-K under the Securities Act
(irrespective of whether the Company is then subject to such Regulation) and
(ii) after such time as the Company becomes subject to the requirements of
Section 12 or 15(d) of the Exchange Act, the independent members (within the
meaning of the Nasdaq National Market Listing Requirements in effect on the date
of this Agreement) of the Audit Committee of the Board.
"INVESTOR" shall mean each Person that executes this Agreement other
than the Company or the Lead Manager.
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<PAGE>
"LEAD MANAGER" shall mean Lehman Brothers Inc.
The "OWNERSHIP CAP PROVISIONS" shall have the meaning ascribed to such
term in Section 4.1.
The term "PERSON" shall mean any individual, firm, corporation,
partnership, limited partnership, charitable organization, limited liability
company, trust, joint venture, estate, association, public or governmental
authority or other entity.
"PREFERRED STOCKHOLDERS" shall have the meaning assigned that term in
the preamble of the Amended and Restated Stockholders Agreement.
The "REGISTRATION STATEMENT" shall mean the Company's registration
statement on Form S-1 as filed by the Company with the Commission relating to
the IPO.
"ROTHSTEIN INVESTORS" shall mean Norman Rothstein, Cynthia Rothstein,
Allan Rothstein, Steven Rothstein, Tammy Rothstein, Carl Rothstein, and Dynamark
Corp., and every other Immediate Family member of Norman Rothstein and every
trust or similar arrangement established for the benefit of or controlled by
Norman Rothstein or members of his Immediate Family.
The "ROTHSTEIN OWNERSHIP CAP PROVISION" shall have the meaning ascribed
to such term in Section 4.1.
"SECURITIES ACT" shall mean the Securities Act of 1933, as in effect on
the date in question, unless otherwise specifically provided.
"13D GROUP" shall mean any group of Persons formed for the purpose of,
directly or indirectly, acquiring, holding, voting or disposing of shares of
Common Stock (or any right thereto or interest therein) which would be required
under Section 13(d) of the Exchange Act, and the rules and regulations of the
Commission thereunder, to file a statement on Schedule 13D with the Commission
as a "person" within the meaning of Section 13 (d) (3) of the Exchange Act if
such group beneficially owned Common Stock representing more than 5% of the
Common Stock (or any securities exercisable or exchangeable for or convertible
into the Common Stock) then outstanding.
ARTICLE II
LEGEND
SECTION 2.1. LEGENDS ON CERTIFICATES. All shares of Common Stock now or
hereafter beneficially owned by any Investor shall be held in certificated form.
Each certificate for shares of Common Stock issued to or beneficially owned by a
Person that is subject to the provisions of this Agreement shall bear the
following legend:
4
<PAGE>
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS' AND VOTING AGREEMENT DATED APRIL 5, 2000 (THE
"STOCKHOLDERS AGREEMENT"), BETWEEN THE COMPANY AND THE ORIGINAL HOLDER
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE. A COPY OF THE
STOCKHOLDERS AGREEMENT MAY BE OBTAINED FROM THE COMPANY FREE OF CHARGE.
BY ITS ACCEPTANCE HEREOF, THE HOLDER OF THIS CERTIFICATE AGREES TO
COMPLY IN ALL RESPECTS WITH THE REQUIREMENTS OF THE STOCKHOLDERS'
AGREEMENT.
Upon any permitted transfer by any Investor to an unaffiliated third party
strictly in compliance with the terms of this Agreement (including the
provisions of Section 4.2 hereof), the foregoing legend shall be removed.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. Each
Investor represents and warrants to the Company, as to such Investor, that:
(a) Each Investor has the legal capacity to execute and
deliver this Agreement. This Agreement has been duly executed and
delivered by such Investor, is a valid and binding agreement of such
Investor, and is enforceable against such Investor in accordance with
its terms.
(b) The execution, delivery and performance by such Investor
of this Agreement does not and will not violate or conflict with or
result in a breach of or constitute (with or without notice or lapse of
time or both) a default under any contract, commitment, agreement,
understanding, arrangement or restriction of any kind to which such
Investor is a party or by which he or she or any of his or her
properties may be bound or subject.
(c) Such Investor is the record owner of the number of shares
of Common Stock set forth beside such Investor's name on SCHEDULE A
hereto, which represent all of the Common Stock owned of record by such
Investor an the date hereof. Also set forth on Schedule A hereto is the
number and record owner of all shares of Common Stock beneficially
owned by such Investor. Except as set forth on SCHEDULE A, no preferred
stock, notes, debentures, warrants, options, puts, calls, rights or
other securities convertible into or exercisable or exchangeable for
shares of capital stock ("Securities") of the Company is owned of
record or beneficially by any Investor or any Immediate Family member
of such Investor.
5
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(d) All shares of Common Stock beneficially owned by such
Investor are in certificated form and under his or her control or in
his or her possession and, except as expressly excluded from the
provisions of this Agreement, bear the legend contained in Section 2.1.
SECTION 3.2. THE COMPANY'S REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants to the Investors that:
(a) The Company is duly authorized to execute, deliver and
perform this Agreement.
(b) This Agreement has been duly executed by the Company, is a
valid and binding agreement of the Company, and is enforceable against
the Company in accordance with its terms.
(c) The execution, delivery and performance by the Company of
this Agreement does not and will not violate or conflict with or result
in a breach of or constitute (with notice of or lapse of time or both)
a default under the Company's Articles of Incorporation, as amended, or
By-laws or under any contract, commitment, agreement, understanding,
arrangement or restriction of any kind to which the Company is a party
or by which it or any of its properties may be bound or subject.
ARTICLE IV
COVENANTS OF THE PARTIES
SECTION 4.1. LIMITATIONS ON OWNERSHIP. The Rothstein Investors shall
not, and shall cause every Person (including each corporation, partnership and
other entity) controlled by any of the Rothstein Investors to not, directly or
indirectly, acquire any shares of Common Stock or other Securities of the
Company (except by way of stock dividends or other distributions made on a pro
rata basis to all holders of Common Stock or upon the exercise of options to
purchase not more than 260,000 shares in the aggregate of Common Stock, which
options are currently outstanding and held by Rothstein Investors and NBG
Technologies Inc. on the date of this Agreement) if immediately following such
acquisition the aggregate number of shares of Common Stock (not including
outstanding options to purchase shares of Common Stock) then beneficially owned
by all Rothstein Investors and their Affiliates and Associates would be greater
than the number of shares of Common Stock on a fully diluted basis beneficially
owned by all Rothstein Investors immediately following the closing of the IPO,
plus 3% (the "Rothstein Ownership Cap Provision"). Should the number of shares
of Common Stock beneficially owned by the Rothstein Investors and their
Affiliates and Associates ever exceed the Rothstein Ownership Cap Provision, the
Rothstein Investors shall promptly sell, in compliance with the provisions of
Section 4.2, such number of shares of Common Stock to cause the number of shares
of Common Stock then beneficially owned by the Rothstein Investors and their
Affiliates and Associates to not exceed the Rothstein Ownership Cap Provision.
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The Entman Investors shall not, and shall cause every Person (including
every corporation, partnership and other entity) controlled by any of the Entman
Investors to not, directly or indirectly, acquire any shares of Common Stock or
other Securities of the Company (except by way of stock dividends or other
distributions made on a pro rata basis to all holders of Common Stock or upon
the exercise of options to purchase not more than 218,249 shares in the
aggregate of Common Stock, which options are currently outstanding and held by
Entman Investors on the date of this Agreement) if immediately following such
acquisition the aggregate number of shares of Common Stock (not including
outstanding options to purchase shares of Common Stock) then beneficially owned
by all Entman Investors and their Affiliates and Associates would be greater
than the number of shares of Common Stock on a fully diluted basis beneficially
owned by all Entman Investors immediately following the closing of the IPO, plus
3% (the "Entman Ownership Cap Provision" and together with the Rothstein
Ownership Cap Provision, the "Ownership Cap Provisions"). Should the number of
shares of Common Stock beneficially owned by the Entman Investors and their
Affiliates and Associates ever exceed the Entman Ownership Cap Provision, the
Entman Investors shall promptly sell, in compliance with the provisions of
Section 4.2, such number of shares of Common Stock to cause the number of shares
of Common Stock then beneficially owned by the Entman Investors and their
Affiliates and Associates to not exceed the Entman Ownership Cap Provision.
SECTION 4.2. TRANSFER RESTRICTIONS. None of the Investors or any Person
controlled by any of the Investors shall (except to the extent expressly
permitted by the provisions of this Agreement), directly or indirectly, sell,
transfer, pledge, encumber or otherwise dispose of any shares of Common Stock
(or any right thereto or interest therein) without the prior written consent of
the Independent Directors; PROVIDED, HOWEVER, that any Investor may sell or
transfer Common Stock without such prior written consent, only:
(i) in a transaction or series of transactions exempt from
registration under the Securities Act in compliance with the resale
limitations of Rule 144 promulgated thereunder; PROVIDED, HOWEVER, that
any such sale or transfer shall comply with the manner of sale
requirements of Rule 144(f), as in effect on the date of this
Agreement, notwithstanding that such requirements may not apply
pursuant to Rule 144(k) or otherwise;
(ii) to the underwriters in connection with an underwritten
public offering of shares of Common Stock on a firm commitment basis
registered under the Securities Act, pursuant to which the sale of
Common Stock is in a manner that is intended to effect a broad
unaffiliated public distribution;
(iii) in a private sale to an unaffiliated third party who is
a "qualified institutional buyer" (as that term is defined in Rule 144A
under the Securities Act) and who would beneficially own, or who is or
would be a member of any "group" (as that term is defined in Section
13(d) of the Exchange Act) that would beneficially own, immediately
after any such sale or transfer, less than 10% of the outstanding
Common
7
<PAGE>
Stock; PROVIDED, HOWEVER, that the Independent Directors unanimously
shall have determined prior to such transfer that the third party
transferee is not an Affiliate or Associate of any Investor;
(iv) to the Company in a bona fide repurchase transaction;
(v) in the case of a Rothstein Investor, to other Rothstein
Investors, and, in the case of an Entman Investor, to other Entman
Investors; PROVIDED, that any such transferee shall, as a condition
precedent to consummation of any such transfer, agree in writing to
comply with all of the terms of this Agreement with respect to all
shares of Common Stock and other Securities owned by such transferee;
(vi) as a bona fide pledge of Common Stock to an independent
financial institution (not constituting an Affiliate or Associate of
any Rothstein Investor or any Entman Investor) to secure borrowings as
permitted by applicable laws, rules and regulations; PROVIDED, HOWEVER,
that (i) such financial institution agrees to be bound by the
provisions of Sections 4.2, 4.3, 4.4, 4.5, 4.6 and 4.7 of this
Agreement (except in the case of any single borrowing or series of
related borrowings, in either case aggregating not in excess of
$2,500,000, by any Rothstein Investor or Entman Investor) and (ii) the
borrowings so secured are full recourse obligations of the pledgor or
and are entered into substantially simultaneously with such pledge;
(vii) pursuant to any tender or exchange offer (conducted
pursuant to Regulations M-A, 14D and 14E, or Rule 13e-4 and Regulations
M-A and 14E, under the Exchange Act) for Common Stock to the extent
required by the provisions of Section 4.5 herein; or
(viii) pursuant to an effective registration statement under
the Securities Act in which the sale or transfer of Common Stock is
consistent with the manner of sale requirements of Rule 144(f), as in
effect on the date of this Agreement.
SECTION 4.3. GRANT OF IRREVOCABLE PROXY. Each Investor hereby
irrevocably grants to and appoints the Independent Directors, and each of them
individually, as the Investor's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of such Investor, to vote
all Common Stock held of record or owned beneficially by the Investor now or at
any time in the future, or to grant a consent or approval in respect of such
Common Stock, and hereby directs that his or her shares be present and voted in
accordance with the provisions of Section 4.4 herein. Each Investor intends that
the proxy granted hereby shall be coupled with an interest pursuant to this
Agreement, and that therefore such proxy shall be irrevocable so long as this
Section 4.3 remains in effect pursuant to the terms of this Agreement.
To evidence, carry out and effectuate the intent and purposes
of this Section 4.3, not later than 10 business days next following the
date of this Agreement, each Investor shall execute and deliver to the
Independent Directors a proxy covering the Common
8
<PAGE>
Stock held of record and/or beneficially owned by such Investor in the
form of Exhibit A hereto and thereafter, from time to time, during the
term of this Agreement, shall further execute and deliver any and all
instruments reasonably requested by the Company and the Lead Manager to
confirm the arrangements contemplated by this Section 4.3.
SECTION 4.4. VOTING. During the term of this Agreement, for so long as
any Investor beneficially owns any Common Stock, the Independent Directors will
take all such action as may be required such that:
(i) all Common Stock beneficially owned by any of the
Investors and subject to the irrevocable proxy granted pursuant to
Section 4.3 will be present for quorum purposes, in Person or
represented by proxy, at every meeting of the Company's stockholders;
and
(ii) all Common Stock beneficially owned by all of the
Investors and subject to the irrevocable proxy granted pursuant to
Section 4.3 is voted at every meeting of the Company's stockholders
(or, if applicable, written consent is given), in the same proportion
as the votes cast by all stockholders of Common Stock excluding the
Investors and their Affiliates and Associates; PROVIDED, HOWEVER, that
nothing contained in this Section 4.4 shall prevent any Investor who is
also a Common Stockholder from causing any of his or her shares that
are also subject to the Amended and Restated Stockholders Agreement to
be voted in accordance with the terms of clauses (i), (ii), and (iii)
of Paragraph 1 of the Amended and Restated Stockholders Agreement until
the earlier to occur of (i) such time as the Company becomes subject to
the requirements of Section 12 or 15(d) of the Exchange Act, or (ii)
the Amended and Restated Stockholders Agreement is terminated with
respect to the Common Stockholders.
SECTION 4.5. REQUIREMENT TO TENDER. Each Investor will take all such
action as may be required such that, in connection with any tender offer or
exchange offer made for the Common Stock (pursuant to Regulations M-A, 14D and
14E, or Rule 13e-4 and Regulations M-A and 14E, under the Exchange Act), all
Common Stock beneficially owned by such Investor and any Person controlled by
such Investor will be validly tendered and not subsequently withdrawn in the
same proportion as the shares so tendered and not withdrawn by all holders of
Common Stock excluding the Investors and their Affiliates and Associates.
SECTION 4.6. BOARD REPRESENTATION. None of the Investors or any Person
controlled by any of the Investors will be appointed, elected or nominated as
officers or directors of the Company or, directly or indirectly, whether alone
or in concert with others, seek election to, seek the removal of any directors
of, or seek a change in the composition or size of, the Board, or otherwise act
in any way, directly or indirectly, to Control the Board or otherwise have any
involvement in the management of the Company. Each Investor who is also a Common
Stockholder hereby expressly waives and agrees not to exercise, in any way, any
rights he or she has pursuant to clauses (iv), (v) and (vi) of paragraph 1 of
the Amended and Restated
9
<PAGE>
Stockholders Agreement, or otherwise, to designate, appoint, elect or nominate,
or to participate in the designation or nomination of, any officers of the
Company or directors to the Board.
SECTION 4.7. PROXY SOLICITATIONS; OTHER ACTIONS. None of the Investors
or any Person controlled by any of the Investors will, directly or indirectly,
whether alone or in concert with others:
(i) make, or in any way participate in, any "solicitation" of
"proxies" (as such terms are used in Regulation 14A promulgated by the
Commission under the Exchange Act) or solicitation of written
authorizations or consents (within the meaning of Regulation 14C
promulgated by the Commission under the Exchange Act) relating to the
Common Stock or any other Securities of the Company;
(ii) call, conduct or in any way consent to or participate in
any special meeting (or action by written authorization or consent) of
stockholders of the Company;
(iii) request, or take any action to obtain or retain, any
list of holders of Common Stock or any Securities of the Company;
(iv) initiate, propose, encourage or participate in the making
of any stockholder proposal relating to the Company;
(v) deposit any Common Stock in a voting trust or subject any
Common Stock to any voting agreement or similar agreement or
arrangement, including any grant of an irrevocable proxy, other than as
contemplated by this Agreement;
(vi) form, join or in any way participate in a partnership,
limited partnership, syndicate or other group (including, but not
limited to, a 13D Group) with respect to, or for the purpose of
acquiring, holding, voting or disposing of, any Common Stock, or any
securities the ownership of which would make the owner thereof a
beneficial owner of Common Stock or other Securities of the Company in
a manner that violates the Ownership Cap Provisions;
(vii) make any offer or proposal with respect to the
acquisition, directly or indirectly, of the Company or any of its
Securities or assets or with respect to any merger, business
combination or similar transaction with, change-in-control of, or
restructuring, recapitalization or other extraordinary transaction
involving the Company or any of its assets or Securities; PROVIDED,
HOWEVER, that this clause (vii) shall not limit the right of any
Investor to acquire shares of Common Stock (to the extent permitted by
Section 4.1);
(viii) facilitate, encourage, disclose or pursue any intent,
purpose, plan or proposal with respect to the Company, the Board,
management, policies or affairs of the Company or any of the Company's
securities or assets or with respect to this Agreement or any of the
parties hereto that is inconsistent with the provisions of this
Agreement,
10
<PAGE>
including any intent, purpose, plan or proposal that is conditioned on,
or would require any waiver, amendment, nullification or invalidation
of, any provision of this Agreement, or take any action that could
require the Company to make any public disclosure relating to any such
intent, purpose, plan, proposal or condition;
(ix) facilitate, encourage, request or seek in any way a
waiver, amendment, consent or modification with respect to Section 4.3,
4.4, 4.5, 4.6 or this Section 4.7; or
(x) assist, advise, facilitate or encourage any Person with
respect to, or seeking to do, any of the foregoing (for purposes of
this clause (x), without giving effect to the proviso to clause (vii)
above).
SECTION 4.8. NOTIFICATION AS TO CERTAIN MATTERS. Each Investor agrees
to notify the Company and the Lead Manager in writing of any change in its
record or beneficial ownership of Common Stock arising from the acquisition of
Common Stock not later than ten business days after such change.
SECTION 4.9. TERMINATION OF AMENDED AND RESTATED STOCKHOLDERS
AGREEMENT. Each Investor who is also a Common Stockholder, hereby agrees, and
hereby also provides his or her written agreement pursuant to Section 5(e) of
the Amended and Restated Stockholders Agreement, that the Amended and Restated
Stockholders Agreement will terminate in its entirety with respect to the Common
Stockholders upon the earlier to occur of (i) the date on which the A
Stockholder, the B Stockholder and the C Stockholder provide their written
agreement to terminate the Amended and Restated Stockholders Agreement or (ii)
the date on which the Amended and Restated Stockholders Agreement is or has
terminated with respect to the Preferred Stockholders.
SECTION 4.10. NBG. As to any Common Stock or other Securities held of
record and/or beneficially owned by NBG Technologies Inc., Norman Rothstein
hereby agrees that any decision to vote (or to provide a written authorization
or consent) in respect of such Common Stock or other Securities will be made (or
omitted) without any, direct or indirect, participation of Norman Rothstein.
ARTICLE V
TERM OF THE AGREEMENT
SECTION 5.1. TERM OF THE AGREEMENT. The term of this Agreement shall be
10 years commencing on April 5, 2000; PROVIDED that this Agreement will
terminate on the earlier of (i) the date on which the Company withdraws the
registration statement relating to the IPO and publicly announces its
abandonment of the IPO, (ii) October 31, 2000, if the IPO shall not have been
consummated by such date or (iii) (a) with respect to the Rothstein Investors,
such date that the shares owned of record or beneficially by all of the
Rothstein Investors constitute less than 5% of the outstanding Common Stock, or
(b) with respect to the Entman Investors, such date that
11
<PAGE>
the shares owned of record or beneficially by all of the Entman Investors
constitute less than 5% of the outstanding Common Stock; PROVIDED, FURTHER, that
if this Agreement is terminated with respect to the Rothstein Investors or the
Entman Investors, respectively, for the reasons set forth in clause (iii)(a) or
(b) of this Section 5.1 prior to the expiration of the 10-year term and the
Rothstein Investors or the Entman Investors, respectively, thereafter reacquire
Securities of the Company which would make them record or beneficial owners of
5% or more of the outstanding Common Stock, the Rothstein Investors or Entman
Investors, respectively, will again become subject to all of the terms of this
Agreement until the earlier of 10 years from the date of this Agreement or the
date referred to in clause (iii)(a) or (b) of this Section 5.1.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES;
ASSIGNMENT. This Agreement (i) constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersedes all other prior
and contemporaneous agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and is not intended to
confer upon any Person other than the parties hereto any rights or remedies
hereunder and (ii) shall not be assigned by operation of law or otherwise
without the prior written consent of the other parties hereto. Any attempted
assignment or transfer in violation of this Section 6.1 shall he void and of no
effect. Subject to the foregoing, the provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
estates, heirs, successors and assigns.
SECTION 6.2. AMENDMENTS; WAIVERS. Neither this Agreement nor any
provision hereof may be waived, modified, amended, altered or supplemented,
except upon the execution and delivery of a written agreement executed by the
Company, the Lead Manager and any Investor affected by such waiver,
modification, amendment, alteration or supplement. The waiver by any party of a
breach of any provision of this Agreement shall not operate, or be construed, as
a waiver of any subsequent breach thereof or a waiver of any other provision of
this Agreement.
SECTION 6.3. ENFORCEABILITY. This Agreement is for the benefit of the
underwriters and public stockholders and may be enforced by the Lead Manager on
their behalf.
SECTION 6.4. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or sent by overnight courier (providing proof of delivery),
to the parties at the following addresses (or at such other address for a party
as shall he specified by like notice):
If to any Rothstein Investor, to:
Norman Rothstein
311 Links Drive West
12
<PAGE>
Oceanside, N.Y. 11572
with a copy (which shall not constitute notice) to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, N.Y. 10103
Attention: Merrill M. Kraines, Esq.
If to any Entman Investor, to:
Frederick Entman
260 Tillou Road
South Orange, New Jersey 07079
with a copy (which shall not constitute notice) to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, N.Y. 10103
Attention: Merrill M. Kraines, Esq.
If to the Company, to:
H Power Corp.
1373 Broad Street
Clifton, New Jersey 07013
Attention: Dr. H. Frank Gibbard
with a copy (which shall not constitute notice) to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, N.Y. 10103
Attention: Merrill M. Kraines, Esq.
If to the Lead Manager, to:
Lehman Brothers Inc.
3 World Financial Center
200 Vesey Street
New York, NY 10285
Attention: Steven Berkenfeld, Esq.
13
<PAGE>
with a copy (which shall not constitute notice) to:
Greenberg Traurig, LLP
The Met Life Building
200 Park Avenue
New York, NY 10016
Attention: Clifford E. Neimeth, Esq.
SECTION 6.5. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to any applicable conflicts of law principles of such State.
SECTION 6.6. ENFORCEMENT. The parties agree that irreparable damage
would occur to the Company in the event that any of the provisions of this
Agreement were not performed fully in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the Company shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
court of the United States located in the State of New York or in New York state
court, this being in addition to any other remedy to which they are entitled at
law or in equity.
In addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any Federal court located in the State of New York or
any New York state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than a Federal or State court sitting in the
State of New York.
SECTION 6.7. STOP TRANSFER PROVISION. The Company shall enter a stop
transfer order with the transfer agent or agents of the Common Stock against the
transfer of shares held by the Investors except in compliance with the
requirements of this Agreement. The Company agrees to remove, upon receipt of an
opinion of counsel satisfactory to the Company, any stop transfer order with
respect to, and to issue unlegended certificates in substitution for, any shares
of Common Stock that are no longer subject to the restrictions contained in this
Agreement.
SECTION 6.8. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
executed in one or more counterparts, all of which shall be considered one and
the same agreement, and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other parties.
SECTION 6.9. INTERPRETATION. When a reference is made in this Agreement
to a Section or Schedule, such reference shall be to a Section of, or Schedule
to, this Agreement unless otherwise indicated. The headings contained in this
Agreement are for reference purpose only
14
<PAGE>
and shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
SECTION 6.10. SEVERABILITY. Whenever possible, each provision or
portion of any provision of this Agreement shall be interpreted in such manner
as to be effective but if any provision or portion of any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
or portion of any provision, and this Agreement will be reformed, construed and
enforced as if such invalid, illegal or unenforceable provision or portion of
any provision had never been contained herein. The parties shall endeavor in
good faith negotiations to replace any invalid, illegal or unenforceable
provision with a valid provision the effects of which come as close as possible
to those of such invalid, illegal or unenforceable provision.
SECTION 6.11. ATTORNEY'S FEES. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the Company shall
be entitled to reasonable attorneys' fees, costs and necessary disbursements, in
addition to any other relief to which it may be entitled.
SECTION 6.12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations, warranties, covenants and agreements contained in this
Agreement shall survive the execution of this Agreement and any investigation at
any time by any Investor or the Company or on behalf of any thereof.
15
<PAGE>
IN WITNESS WHEREOF, the Company and each Investor have caused this
Agreement to be duly executed as of the day and year first above written.
H POWER CORP.
By: /s/ H. Frank Gibbard
---------------------
Name: H. Frank Gibbard
Title: CEO
INVESTORS:
/s/ Norman Rothstein
---------------------
NORMAN ROTHSTEIN
/s/ Cynthia Rothstein
---------------------
CYNTHIA ROTHSTEIN
/s/ Allan Rothstein
---------------------
ALLAN ROTHSTEIN
/s/ Steven Rothstein
---------------------
STEVEN ROTHSTEIN
/s/ Tammy Rothstein
---------------------
TAMMY ROTHSTEIN
/s/ Carl Rothstein
---------------------
CARL ROTHSTEIN
NORMAN ROTHSTEIN, AS
TRUSTEE FOR JORDAN H.
ROTHSTEIN 2000
IRREVOCABLE TRUST
By: /s/ NORMAN ROTHSTEIN
---------------------
16
<PAGE>
NORMAN ROTHSTEIN, AS
TRUSTEE FOR NICOLE S.
ROTHSTEIN 2000
IRREVOCABLE TRUST
By: /s/ Norman Rothstein
---------------------
DYNAMARK CORP,
By /s/ Allan Rothstein
---------------------
Name: Allan Rothstein
Title: President
/s/ Frederick Entman
------------------------
FREDERICK ENTMAN
/s/ Elise Entman
------------------------
ELISE ENTMAN
/s/ Brian Entman
------------------------
BRIAN ENTMAN
/s/ Scott Entman
------------------------
SCOTT ENTMAN
/s/ Gerald Entman
------------------------
GERALD ENTMAN, TRUSTEE
FOR ELISE ENTMAN
17
<PAGE>
LEAD MANAGER
LEHMAN BROTHERS INC.
By: /s/ Steven Berkenfeld
----------------------
Name: Steven Berkenfeld
Title: Managing Director
18
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Number of Shares Held Number of Shares
Name of Investor of Record Beneficially Owned
<S> <C> <C>
Frederick Entman 57,125 267,125(1)
Elise Entman 0 700,000(2)
Brian Entman 287,500 289,139(3)
Scott Entman 287,500 294,110(4)
-------
700,000 700,000
Gerald Entman, Trustee for Elise
Entman
Norman Rothstein 30,625 240,625
Cynthia Rothstein 600,000 600,000
Allan Rothstein 325,000 375,000
Steven Rothstein 200,000 200,000
Tammy Rothstein 200,000 200,000
Carl Rothstein 15,000 15,000
50,000(5)
NBG Technologies, Inc. 0
Dynamark Corp. 25,000 25,000
Norman Rothstein, as trustee for Jordan H 25,000 25,000
Rothstein
2000 Irrevocable Trust
Norman Rothstein, as trustee for Nicole S 25,000 25,000
Rothstein
2000 Irrevocable Trust
</TABLE>
- ---------------------
(1) Includes options to purchase 210,000 shares of Common Stock.
(2) Includes 700,000 shares of Common Stock held in trust for the benefit of
Mrs. Entman.
(3) Includes options to purchase 1,639 shares of Common Stock.
(4) Includes options to purchase 6,610 shares of Common Stock.
(5) Includes options to purchase 50,000 shares of Common Stock.
A-1
<PAGE>
Exhibit A
FORM OF IRREVOCABLE PROXY
Reference is made to that certain Stockholders' and Voting Agreement
(the "Voting Agreement") dated April 5, 2000, among H Power Corp., a Delaware
corporation (the "Company"), Lehman Brothers, Inc., Norman Rothstein, Cynthia
Rothstein, Allan Rothstein, Steven Rothstein, Tammy Rothstein, Carl
Rothstein, Norman Rothstein, Trustee for Jordan H. Rothstein 2000 Irrevocable
Trust, Norman Rothstein, as trustee for Nicole S. Rothstein 2000 Irrevocable
Trust, Frederick Entman, Elise Entman, Brian Entman, Scott Entman, Gerald
Entman, Trustee for Elise Entman and Dynamark Corp.
The undersigned, [NAME OF INVESTOR], hereby irrevocably, constitutes
and appoints each of the Independent Directors (as defined in the Voting
Agreement), or any of them, as proxies, agents and true and lawful
attorneys-in-fact (with full power of substitution or resubstitution by each
Independent Director of any successor Independent Director duly elected to
the Company's Board of Directors) for and in the name, place and stead of the
undersigned, to vote and to execute and deliver any and all written
authorizations and consents on any and all matters which may be presented for
the vote (or authorization or consent) of the stockholders of the Company
with respect to, all shares of common stock of the Company held of record or
owned beneficially by the undersigned, and otherwise to act strictly, and
only, in accordance with the provisions of Section 4.4 of the Voting
Agreement and to the same extent and with the same effect as the undersigned
might or could do under applicable laws and regulations governing the rights
and powers of stockholders of a Delaware corporation. The undersigned hereby
acknowledges and affirms that the proxy granted hereby is coupled with an
interest in the shares of common stock covered hereby and, therefore, this
proxy is intended to be and shall be irrevocable. The undersigned further
acknowledges and affirms that this proxy is hereby granted and is effective
until the earlier of April 5, 2010 or such date on which the Voting Agreement
is terminated.
THIS PROXY SHALL REMAIN IN FULL FORCE AND EFFECT AND BE ENFORCEABLE
AGAINST ANY DONEE, TRANSFEREE OR ASSIGNEE OF THE COMMON STOCK COVERED HEREBY.
Dated this __ day of ______, 2000.
_______________________
[NAME OF INVESTOR]
<PAGE>
Exhibit 10.1
H POWER CORP.
JUNE 6, 1989 STOCK OPTION PLAN
1. PURPOSE
The purpose of the H Power Corp. June 6, 1989 Stock Option Plan ("The
Plan") is to advance the interests of H Power Corp. ("The Corporation"), its
shareholders and its subsidiaries by encouraging and enabling selected officers,
directors, key employees and consultants upon whose judgment, initiative and
effort the Corporation is largely dependent upon for the successful conduct of
its business, to acquire and retain proprietary interests in the Corporation by
ownership of its stock. Options granted under the Plan are intended to be
non-qualified stock options.
2. DEFINITIONS
Whenever used herein, the following terms shall have the following
meanings, respectively:
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Committee" shall mean the Stock Option Committee appointed by the
Board of Directors of the Corporation or, if no committee has been appointed,
reference to "Committee" shall be deemed to refer to the Board of Directors of
the Corporation.
(c) "Common Stock" shall mean the Corporation's Common Stock, par value
$.001 per share, as described in the Corporation's Certificate of Incorporation.
(d) "Corporation" shall mean H Power Corp.
(e) "Employee" shall mean any director, officer, employee or consultant of
the Corporation or any Subsidiary of the Corporation, it being understood that
the Committee may, in its discretion, also grant Options to induce individuals
to become and remain as Employees and that such persons, for purposes of
receiving options hereunder, shall be deemed "Employees."
(f) "Date of Grant" means the date on which an option is granted under the
Plan.
(g) "Option" means an option granted under the Plan.
H Power Stock Option Plan Page 1 of 6 pages
<PAGE>
(h) "Optionee" means a person to whom an option, which has not expired,
has been granted under the Plan.
(i) "Subsidiary" shall mean any corporation, the majority of the
outstanding capital of which is owned, directly or indirectly, by the
Corporation.
3. ADMINISTRATION
(a) The Plan shall be administered either by the Board or, in the
discretion of the Board, by a Committee of at least three persons appointed by
the Board. The Board may from time to time appoint members of the Committee in
substitution for or in addition to members previously appointed and may fill
vacancies.
(b) Any action of the Committee with respect to the administration of the
Plan shall be taken by majority vote or by written consent of a majority of its
members.
(c) Subject to the provisions of the Plan, the Committee or the Board
shall have the authority to construe and interpret the Plan, to define the terms
used therein, to determine the time or times an Option may be exercised and the
number of shares which may be exercised at any one time to prescribe, amend and
rescind rules and regulations relating to the Plan, and to make all other
determinations necessary or advisable for the administration of the Plan. All
determinations and interpretations made by the Committee shall be conclusive and
binding on all Employees and on their guardians, legal representatives and
beneficiaries.
(d) The Corporation will indemnify and hold harmless the members of the
Board of Directors and the Committee from and against any and all liabilities,
costs and expenses incurred by such persons as a result of any act, or omission
to act, in connection with the performance of such persons' duties,
responsibilities and obligations under the Plan, other than such liabilities,
costs and expenses as may result from the negligence, gross negligence, bad
faith, willful misconduct and/or criminal acts of such persons.
4. NUMBERS OF SHARES SUBJECT TO PLAN
The stock to be offered under the Plan shall consist of up to 500,000
shares of the Corporation's Common Stock. If any option granted hereunder shall
expire or terminate for any reason without having been exercised in full, the
unpurchased shares subject thereto shall again be available for purposes of this
Plan.
5. ELIGIBILITY AND PARTICIPATION
H Power Stock Option Plan Page 2 of 6 pages
<PAGE>
The Committee shall determine the Employees to whom Options shall be
granted, the time or times at which such Options shall be granted and the number
of shares to be subject to each Option. An Employee who has been granted an
Option may, if he or she is otherwise eligible, be granted an additional Option
or Options if the Committee shall so determine.
6. OPTION GRANT AND AGREEMENT
Each Option granted hereunder shall be evidenced by an agreement executed
by the Corporation and the Optionee and shall contain such terms and conditions
as may be determined by the Committee consistent with the Plan.
7. OPTION PRICE
The option price per share with respect to each option shall be determined
by the Committee but shall in no instance be less than 80% of the fair market
value of a share of the Common Stock on the Date of Grant. For the purposes
hereof, fair market value shall be as determined by the Committee and such
determination shall be binding upon the Corporation and upon the Optionee. In
the event the Common Stock of the Corporation is publicly traded, the Committee
may, but shall not be required to, make such determination (i) in case the
Common Stock shall not then be listed and traded upon a recognized securities
exchange, upon the basis of the mean between the bid and asked quotations for
such stock on the Date of Grant (as reported by a recognized stock quotation
service) or, in the event that there shall be no bid or asked quotations on the
Date of Grant, then upon the basis of the mean between the bid and asked
quotations on the date nearest preceding the Date of Grant or (ii) in case the
Common Stock shall then be listed and traded upon a recognized securities
exchange, upon the basis of the mean between the highest and lowest selling
prices at which shares of the Common Stock were traded on such recognized
securities exchange on the Date of Grant or, if the Common Stock was not traded
on said Date, upon the basis of the mean of such prices on the date nearest
preceding the Date of Grant, and upon any other factors which the Committee
shall deem appropriate.
8. PERIOD OF OPTION
The expiration date of such option shall be fixed by the Committee, but,
notwithstanding any provision of the Plan to the contrary, such expiration date
shall not be more than five years from the Date of Grant.
9. VESTING OF SHAREHOLDER RIGHTS
H Power Stock Option Plan Page 3 of 6 pages
<PAGE>
Neither any Optionee nor his or her successor shall have any of the rights
of a shareholder of the Corporation until the certificates evidencing the shares
purchased are properly delivered to such Optionee or his or her successor.
10. EXERCISE OF OPTIONS
Options may be exercised in whole or in part at any time within the period
permitted for the exercise thereof, and shall be exercised by written notice of
intent to exercise the Option with respect to a specified number of shares,
delivered to the Corporation at its principal office and payment in full to the
Corporation at said office of the amount of the option price for the number of
shares with respect to which is the option is then being exercised. The exercise
of an Option shall not include any fractional shares. In addition to and at the
time of payment of the Option price, Optionee shall pay to the Corporation in
cash the full amount of all federal and state withholding or other employment
taxes applicable to the taxable income of such Optionee resulting from such
exercise, if any be due.
11. NONTRANSFERABILITY OF OPTION
No option shall be transferable or assignable by an Optionee, otherwise
than by will or the laws of descent and distribution and each option shall be
exercisable, during the Optionee's lifetime, only by him or her. No option shall
be pledged or hypothecated in any way and no option shall be subject to
execution, attachment or similar process except with the express consent of the
Committee.
12. TERMINATION OF EMPLOYMENT OTHER THAN BY DEATH
If any Optionee ceases to be an Employee for any reason other than his or
her death, any Options granted to him or her under the Plan shall terminate 90
days from the date on which the Optionee ceases to be an Employee. During such
90-day period, the Optionee may exercise any Option granted to him or her but
only to the extent such Option was exercisable on the date he or she ceases to
be an Employee and provided that such Option has not expired or otherwise
terminated as provided herein.
13. DEATH OF OPTIONEE
If any Optionee shall die at a time when he or she is an Employee of the
Corporation or any Subsidiary of the Corporation, any Options granted to him or
her under his Plan shall terminate one year after the date of his or her death
unless by its terms it shall expire before such date or otherwise terminate as
provided herein, and shall only be exercisable to the extent that it would have
been exercisable on the date of his or her death. In the event of death, the
Option may be exercised by the person or persons to whom the Optionee's right
under the Option shall pass by will or by the laws of descent and distribution.
14. STOCK PURCHASE NOT FOR DISTRIBUTION
H Power Stock Option Plan Page 4 of 6 pages
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Each Optionee shall, by accepting the grant of an Option under the Plan,
represent and agree, for himself or herself and his or her transferees by will
or the laws of descent and distribution, that all shares of stock purchased upon
exercise of the Option will be received and held without a view to distribution
except as may be permitted by the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder. After each notice of exercise of
any portion of an Option, if requested by the Committee, the person entitled to
exercise the Option must agree in writing that the shares of stock are being
acquired in good faith without a view to distribution.
15. ADJUSTMENTS
(a) In the event that the outstanding shares of Common Stock hereafter are
changed into or exchanged for a different number or kind of shares or other
securities of the Corporation or of another corporation by reason of merger,
consolidation, other reorganization, recapitalization, reclassification,
combination of shares, stock split up or stock dividend:
(i) The aggregate number and kind of shares subject to Options which may
be granted hereunder shall be adjusted appropriately;
(ii) Rights under outstanding Options granted hereunder, both as to the
number of subject shares and the Option price, shall be adjusted
appropriately;
(iii) Where any merger or combination in which the Corporation is not a
surviving corporation is involved, each outstanding Option granted
hereunder shall terminate, but the Optionee shall have the right,
immediately prior to such merger or consolidation, to exercise his or her
Option, in whole or in part, to the extent that it shall not have been
exercised previously.
(b) In the event of the dissolution or liquidation of the Corporation, any
option granted under the Plan shall terminate as of a date to be fixed by the
Committee, provided that not less than 30 days written notice of the date so
fixed shall be given to each Optionee and each such Optionee shall have the
right during such period to exercise his or her option as to all or any part of
the shares covered hereby including shares as to which such Option would not
otherwise be exercisable by reason of an insufficient lapse of time.
(c) Adjustments under this Section shall be made by the Committee, whose
determination as to what adjustment shall be made, and the extent thereof, shall
be final, binding and conclusive. No fractional shares of stock shall be issued
under the Plan or in connection with any such adjustment.
16. AMENDMENT AND TERMINATION OF PLAN
H Power Stock Option Plan Page 5 of 6 pages
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(a) The Board of Directors of the Corporation may from time to time, with
respect to any shares at the time not subject to Options, suspend or terminate
the Plan or amend or revise the terms of the Plan; provided that any amendment
to the Plan shall be approved by a majority of the shareholders of the
Corporation if the amendment would (i) materially increase the benefits accruing
to participants under the Plan; (ii) increase the number of shares of Common
Stock which may be issued under the Plan, except as permitted under the
provisions of Section 15 hereof; or (iii) materially modify the requirements as
to eligibility for participation in the Plan.
(b) No amendment, suspension or termination of the Plan shall, without the
consent of the Optionee, alter or impair any rights or obligations under any
Option theretofore granted to such options under the Plan.
(c) The terms and conditions of any Option granted to an Optionee under
the Plan may be modified or amended only by a written agreement executed by the
Optionee and the Corporation.
17. EFFECTIVE DATE OF PLAN
The Plan shall become effective immediately.
18. TERM OF PLAN
No Option shall be granted pursuant to the Plan after June 6, 1994.
Adopted by the Stockholders
on June 6, 1989
/s/ Frederick Entman
- -----------------------------------
Secretary
H Power Stock Option Plan Page 6 of 6 pages
<PAGE>
Exhibit 10.2
H POWER CORP.
2000 Stock Option Plan
1. PURPOSE OF THE PLAN
The purpose of the H POWER CORP. 2000 STOCK OPTION PLAN (the "Plan")
is (i) to further the growth and success of H POWER CORP., a Delaware
corporation (the "Company"), and its Subsidiaries (as hereinafter defined) by
enabling directors and employees of, and consultants to, the Company and any of
its Subsidiaries to acquire shares of the Company's common stock, $.001 par
value (the "Common Stock"), thereby increasing their personal interest in such
growth and success, and (ii) to provide a means of rewarding outstanding
performance by such persons to the Company and/or its Subsidiaries. Options
granted under the Plan may be either "incentive stock options" ("ISOs"),
intended to qualify as such under the provisions of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or non-qualified stock options
("NSOs"). For purposes of the Plan, the terms "Parent" and "Subsidiary" shall
mean "parent corporation" and "subsidiary corporation," respectively, as such
terms are defined in Sections 424(e) and (f) of the Code. Unless the context
otherwise requires, any ISO or NSO shall hereinafter be referred to as an
"Option."
2. ADMINISTRATION OF THE PLAN
(a) Committee
The Plan shall be administered by the Board of Directors of the
Company (the "Board") or a committee of at least two persons appointed from time
to time by the Board (the "Committee"). The members of the Committee may be
removed by the Board at any time either with or without cause. Any vacancy on
the Committee, whether due to action of the Board or any other cause, shall be
filled by the Board. The term "Committee" shall, for all purposes of the Plan
other than this Section 2, be deemed to refer to the Board if the Board is
administering the Plan.
(b) Procedures
If the Plan is administered by a Committee, the Board shall from
time to time select a Chairman from among the members of the Committee. The
Committee shall adopt such rules and regulations as it shall deem appropriate
concerning the holding of meetings and the administration of the Plan. A
majority of the entire Committee shall constitute a quorum and the actions of a
majority of the members of the Committee present at a meeting at which a quorum
is present, or actions approved in writing by all of the members of the
Committee, shall be the actions of the Committee.
<PAGE>
(c) Interpretation
Except as otherwise expressly provided in the Plan, the Committee
shall have all powers with respect to the administration of the Plan, including,
without limitation, full power and authority to interpret the provisions of the
Plan and any Option Agreement (as defined in Section 5(b)), and to resolve all
questions arising under the Plan. All decisions of the Board or the Committee,
as the case may be, shall be conclusive and binding on all participants in the
Plan.
3. SHARES OF STOCK SUBJECT TO THE PLAN
(a) Number of Shares
Subject to the provisions of Section 9 (relating to adjustments upon
changes in capital structure and other corporate transactions), the number of
shares of Common Stock subject at any one time to Options granted under the
Plan, plus the number of shares of Common Stock theretofore issued and delivered
pursuant to the exercise of Options granted under the Plan, shall not exceed
750,000 shares of Common Stock. If and to the extent that Options granted under
the Plan terminate, expire or are canceled without having been fully exercised,
new Options may be granted under the Plan with respect to the shares of Common
Stock covered by the unexercised portion of such terminated, expired or canceled
Options.
(b) Character of Shares
The shares of Common Stock issuable upon exercise of an Option
granted under the Plan shall be (i) authorized but unissued shares of Common
Stock, (ii) shares of Common Stock held in the Company's treasury or (iii) a
combination of the foregoing.
(c) Reservation of Shares
The number of shares of Common Stock reserved for issuance under the
Plan shall at no time be less than the maximum number of shares which may be
purchased at any time pursuant to outstanding Options.
4. ELIGIBILITY
(a) General
Options may be granted under the Plan only to (i) persons who are
employees of, or consultants to, the Company or any of its Subsidiaries and (ii)
persons who are directors of the Company or any of its Subsidiaries.
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Options granted to employees of the Company or any of its
Subsidiaries shall be, in the discretion of the Committee, either ISOs or NSOs,
and Options granted to consultants to or directors of the Company or any of its
Subsidiaries who are not employees of the Company or any of its Subsidiaries
shall be NSOs. Notwithstanding the foregoing, Options may be conditionally
granted to persons who are prospective employees or directors of, or consultants
to, the Company or any of its Subsidiaries; provided, that any such conditional
grant of an ISO to a prospective employee shall, by its terms, become effective
no earlier than the date on which such person actually becomes an employee.
(b) Exceptions
Anything contained in Section 4(a) to the contrary notwithstanding:
(i) no ISO may be granted under the Plan to an employee
who owns, directly or indirectly (within the meaning of Sections 424(b)(6)
and 424(d) of the Code), stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of its
Parent, if any, or any of its Subsidiaries, unless (A) the Option Price
(as defined in Section 6(a)) of the shares of Common Stock subject to such
ISO is fixed at not less than 110% of the Fair Market Value on the date of
grant (as determined in accordance with Section 6(b)) of such shares and
(B) such ISO by its terms is not exercisable after the expiration of five
years from the date it is granted; and
(ii) no Options may be granted to any person in any one
taxable year of the Company in excess of 33% of the total Options issued
and issuable under the Plan.
5. GRANT OF OPTIONS
(a) General
Options may be granted under the Plan at any time and from time to
time on or prior to the tenth anniversary of the Effective Date (as defined in
Section 11). Subject to the provisions of the Plan, the Committee shall have
plenary authority, in its discretion, to determine:
(i) the persons (from among the class of persons
eligible to receive Options under the Plan) to whom Options shall be
granted (the "Optionees");
(ii) the time or times at which Options shall be
granted;
(iii) the number of shares subject to each Option;
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(iv) the Option Price of the shares subject to each
Option, which price, in the case of ISOs, shall be not less than the
minimum specified in Section 4(b)(i) or 6(a) (as applicable); and
(v) the time(s) when and/or conditions to each Option
becoming exercisable and the duration of the exercise period.
(b) Option Agreements
Each Option granted under the Plan shall be designated as an ISO or
an NSO and shall be subject to the terms and conditions applicable to ISOs
and/or NSOs (as the case may be) set forth in the Plan. In addition, each Option
shall be evidenced by a written agreement (an "Option Agreement"), containing
such terms and conditions and in such form, not inconsistent with the Plan, as
the Committee shall, in its discretion, provide. Each Option Agreement shall be
executed by the Company and the Optionee.
(c) No Evidence of Employment or Service
Nothing contained in the Plan or in any Option Agreement shall
confer upon any Optionee any right with respect to the continuation of his or
her employment by or service with the Company or any of its Subsidiaries or
interfere in any way with the right of the Company or any Subsidiary at any time
to terminate such employment or service or to increase or decrease the
compensation of the Optionee from the rate in existence at the time of the grant
of an Option.
(d) Date of Grant
The date of grant of an Option under the Plan shall be the date as
of which the Committee approves the grant; provided, that in the case of an ISO,
the date of grant shall in no event be earlier than the date as of which the
Optionee becomes an employee of the Company or one of its Subsidiaries.
6. OPTION PRICE
(a) General
Subject to Section 9, the price (the "Option Price") at which each
share of Common Stock subject to an Option granted under the Plan may be
purchased shall be determined by the Committee at the time the Option is granted
(but, to the extent required by applicable law, shall not be less than the par
value of the Common Stock); provided, that in the case of an ISO, such Option
Price shall in no event be less than 100% of the Fair Market Value on the date
of grant (as determined in accordance with Section 6(b)) of such share of Common
Stock.
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(b) Determination of Fair Market Value
Subject to the requirements of Section 422 of the Code, for purposes
of the Plan, the "Fair Market Value" of shares of Common Stock shall be equal
to:
(i) if such shares are publicly traded, (x) the closing
price, if applicable, or the average of the last bid and asked prices on
the date of grant, in the over-the-counter market as reported by NASDAQ
or (y) if the Common Stock is then traded on a national securities
exchange, the average of the high and low prices on the date of grant or
on the principal national securities exchange on which it is so traded; or
(ii) if there is no public trading market for such
shares, the fair value of such shares on the date of grant as determined
in good faith by the Committee.
Notwithstanding anything contained in the Plan to the contrary, all
determinations pursuant to Section 6(b)(ii) shall be made without regard to any
restriction other than a restriction which, by its terms, will never lapse.
(c) Repricing of Options
Subsequent to the date of grant of any Option, the Committee may, at
its discretion and with the consent the Optionee, establish a new Option Price
for such Option so as to increase or decrease the Option Price of such NSO,
subject, in the case of an ISO, to Section 4(6)(i) and 6(a) (with such repricing
being deemed a new grant for purposes thereof).
7. EXERCISABILITY OF OPTIONS
(a) Committee Determination
Each Option granted under the Plan shall be exercisable at such time
or times, or upon the occurrence of such event or events, and for such number of
shares subject to the Option, as shall be determined by the Committee and set
forth in the Option Agreement evidencing such Option; provided, that if the
Company files a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), for the initial public offering of its
securities, no Option granted under the Plan shall be exercisable during the
180-day period immediately following the effective date of such registration
statement. Subject to the proviso of the immediately preceding sentence, if an
Option is not at the time of grant immediately exercisable, the Committee may
(i) in the Option Agreement evidencing such Option, provide for the acceleration
of the exercise date or dates of the subject Option upon the occurrence of
specified events and/or ( ii) at any time prior to the complete termination of
an Option, accelerate the exercise date or dates of such Option.
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<PAGE>
(b) Termination of Employment or Service
Unless otherwise determined by the Committee at grant or, if no
rights of an Optionee are thereby reduced, thereafter, and subject to earlier
termination in accordance with the provisions hereof, the following rules apply
with regard to Options held by an Optionee at the time of his termination of
employment or other service with the Company and its Subsidiaries:
(i) If an Optionee's employment or service terminates by
reason of death or "permanent and total disability" (as defined in Section
22(e)(3) of the Code), then: (x) any Option held by the Optionee that is
not then exercisable shall thereupon terminate, and (y) any Option that is
then exercisable shall remain exercisable by the Optionee (or the deceased
Optionee's beneficiary) for the 12 month period following such termination
or, if sooner, until the expiration of the stated term of the Option, and,
to the extent it is not exercised within such period, shall thereupon
terminate.
(ii) If an Optionee's employment or service is
terminated by the Company or its Subsidiaries for Cause (as defined below)
or if, at the time of his termination, grounds for a termination for Cause
exist, then any Option held by the Optionee (whether or not vested or
exercisable) shall immediately terminate and cease to be exercisable. For
purposes of the Plan, a termination for Cause shall mean: (x) in a case
where there is no employment or consulting agreement between the Optionee
and the Company or its Subsidiaries or where such an agreement exists but
does not define "cause" (or words of like import), a termination
classified by the Company or a Subsidiary as a termination due to an
Optionee's dishonesty, fraud, insubordination, willful misconduct, refusal
to perform services or materially unsatisfactory performance of duties, or
(y) in a case where there is an employment or consulting agreement between
the Optionee and the Company or a Subsidiary, a termination that is or
would be deemed for "cause" (or words of like import) under such
agreement.
(iii) If an Optionee's employment or service terminates
for any reason (other than death, "permanent and total disability" or
Cause or at a time when Cause exists) or no reason, then: (x) any Option
held by the Optionee that is not then exercisable shall thereupon
terminate and (y) any Option held by the Optionee which is exercisable at
the time of such termination shall remain exercisable during the three
month period or, if the Optionee shall die during such three-month period,
the 12 month period following such termination or, if sooner, until the
expiration of the stated term of the Option and, to the extent not
exercised within such period, shall thereupon terminate.
8. PROCEDURE FOR EXERCISE
(a) Payment
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At the time an Option is granted under the Plan or thereafter, the
Committee shall permit the Optionee to specify one or more of the following
forms of payment which may be used by an Optionee upon exercise of his Option:
(i) cash or personal or certified check payable to the
Company in an amount equal to the aggregate Option Price of the shares
with respect to which the Option is being exercised;
(ii) shares of Common Stock having a Fair Market Value
on the date of exercise (as determined in accordance with Section 6(b) as
if the date of exercise were the date of grant) equal to the aggregate
Option Price of the shares with respect to which the Option is being
exercised, provided that, to the extent necessary to avoid adverse
accounting treatment for the Company, such shares have been owned (free
and clear of any liens or encumbrances) for at least six (6) months;
(iii) pursuant to such other methods approved by the
Committee from time to time including, without limitation, in accordance
with a "cashless exercise" procedure established by the Committee;
(iv) a combination of the methods set forth above.
(b) Notice
An Optionee (or other person, as provided in Section 10(b)) may
exercise an Option granted under the Plan in whole or in part (but for the
purchase of whole shares only), as provided in the Option Agreement evidencing
his Option, by delivering a written notice (the "Notice") to the Secretary of
the Company. The Notice shall state:
(i) that the Optionee elects to exercise the Option;
(ii) the number of shares with respect to which the
Option is being exercised (the "Optioned Shares");
(iii) the method of payment for the Optioned Shares
(which method must be available to the Optionee at such time);
(iv) the date upon which the Optionee desires to
consummate the purchase (which date must be prior to the termination of
such Option); and
(v) such further provisions consistent with the Plan as
the Committee may from time to time require.
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The exercise date of an Option shall be the date on which the
Company receives the Notice from the Optionee.
(c) Issuance of Certificates
The Company shall issue a stock certificate in the name of the
Optionee (or such other person exercising the Option in accordance with the
provisions of Section 10(b)) for the Optioned Shares as soon as practicable
after receipt of the Notice and payment of the aggregate Option Price for such
shares. Neither the Optionee nor any person exercising an Option in accordance
with the provisions of Section 10(b) shall have any rights or privileges as a
stockholder of the Company with respect to any shares of stock subject to an
Option granted under the Plan until the date of payment for such shares pursuant
to the Option.
9. ADJUSTMENTS
(a) Changes in Capital Structure
Subject to Section 9(b), if the Common Stock is changed by reason of
a stock split, reverse stock split, stock dividend or recapitalization, or
converted into or exchanged for other securities as a result of a merger,
consolidation or reorganization, the Committee shall make such, adjustments in
the number and class of shares of stock with respect to which Options may be
granted under the Plan as shall be equitable and appropriate in order to make
such Options, as nearly as may be practicable, equivalent to such Options
immediately prior to such change. A corresponding adjustment changing the number
and class of shares allocated to, and the Option Price of, each Option or
portion thereof outstanding at the time of such change shall likewise be made.
Anything contained in the Plan to the contrary notwithstanding, in the case of
ISOs, no adjustment under this Section 9 (a) shall be appropriate if such
adjustment (i) would constitute a modification, extension or renewal of such
ISOs within the meaning of Sections 422 and 424 of the Code, and the regulations
promulgated by the Treasury Department thereunder, or (ii) would, under Section
422 of the Code and the regulations promulgated by the Treasury Department
thereunder, be considered as the adoption of a new plan requiring stockholder
approval.
(b) Corporate Transactions
The following rules shall apply in connection with the dissolution
or liquidation of the Company, a reorganization, merger or consolidation in
which the Company is not the surviving corporation, or a sale of all or
substantially all of the assets of the Company to another person or entity
(each, a "Corporate Transaction"):
(i) each holder of an Option outstanding at such time
shall be given (A) written notice of such Corporate Transaction at least
20 days prior to its proposed effective
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<PAGE>
date (as specified in such notice) and (B) an opportunity, during the
period commencing with delivery of such notice and ending 10 days prior to
such proposed effective date, to exercise the Option with respect to all
shares of Common Stock covered thereby; provided, that upon the occurrence
of a Corporate Transaction, all Options granted under the Plan and not so
exercised shall automatically terminate; and
(ii) anything contained in the Plan to the contrary
notwithstanding, Section 9(b)(i) shall not be applicable if provision
shall be made in connection with such Corporate Transaction for the
assumption of outstanding Options by, or the substitution for such Options
of new options covering the stock of, the surviving, successor or
purchasing corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the number, kind and option prices of shares
subject to such options; provided, that in the case of ISOs, the Board
shall, to the extent not inconsistent with the best interests of the
Company or its Subsidiaries (such best interests to be determined in good
faith by the Board in its sole discretion), use its best efforts to ensure
that any such assumption or substitution will not constitute a
modification, extension or renewal of the ISOs within the meaning of
Section 424(h) of the Code and the regulations promulgated by the Treasury
Department thereunder.
(c) Special Rules
The following rules shall apply in connection with Section 9(a) and
(b) above:
(i) no fractional shares shall be issued as a result of
any such adjustment, and any fractional shares resulting from the
computations pursuant to Section 9(a) or (b) shall be eliminated and the
Optionee shall receive cash consideration for such fractional share at the
rate of the Fair Market Value of such share, determined in accordance with
clause (iv) below;
(ii) no adjustment shall be made for cash dividends or
the issuance to stockholders of rights to subscribe for additional shares
of Common Stock or other securities;
(iii) any adjustments referred to in Section 9(a) or (b)
shall be made by the Board or Committee (as the case may be) in good faith
and shall be conclusive and binding on all persons holding Options granted
under the Plan; and
(iv) Fair Market Value of a share of Common Stock shall
be deemed to be the price to be paid in such Corporate Transaction for
each share of Common Stock.
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<PAGE>
10. RESTRICTIONS ON OPTIONS AND OPTIONED SHARES
(a) Compliance With Securities Laws
No Options shall be granted under the Plan, and no shares of Common
Stock shall be issued and delivered upon the exercise of Options granted under
the Plan, unless and until the Company and/or the Optionee shall have complied
with all applicable Federal or state registration, listing and/or qualification
requirements and all other requirements of law or of any regulatory agencies
having jurisdiction.
The Committee in its discretion may, as a condition to the exercise
of any Option granted under the Plan, require an Optionee (i) to represent in
writing that the shares of Common Stock received upon exercise of an Option are
being acquired for investment and not with a view to distribution and (ii) to
make such other representations and warranties as are deemed appropriate by the
Company. Stock certificates representing shares of Common Stock acquired upon
the exercise of Options that have not been registered under the Securities Act
shall, if required by the Committee, bear the following legend and such
additional legends as may be required by the Option Agreement evidencing a
particular Option:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") . THE
SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE PLEDGED, HYPOTHECATED,
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SHARES UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT."
(b) Nonassignability of Option Rights
No Option granted under the Plan shall be assignable or otherwise
transferable by the Optionee, except by will or by the laws of descent and
distribution, and any attempt to assign or otherwise transfer any such Option
shall be null and void. An Option may be exercised during the lifetime of the
Optionee only by the Optionee. If an Optionee dies, his or her Option shall
thereafter be exercisable, during the period specified in the applicable Option
Agreement, by his or her executors or administrators to the full extent to which
such Option was exercisable by the Optionee at the time of his or her death.
Notwithstanding the foregoing, the Committee may permit an Optionee to transfer
a NSO to such persons and on such terms and conditions as it deems appropriate
from time to time.
11. EFFECTIVE DATE OF PLAN
The Plan became effective on May 21, 1996. The date on which the
Plan became effective is called the "Effective Date" herein.
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12. EXPIRATION AND TERMINATION OF THE PLAN
Except with respect to Options then outstanding, the Plan shall
expire on the first to occur of (i) the tenth anniversary of the Effective Date
and (ii) the date as of which the Board, in its sole discretion, determines that
the Plan shall terminate (the "Expiration Date"). Any Options outstanding as of
the Expiration Date shall remain in effect until they have been exercised or
terminated or have expired by their respective terms.
13. AMENDMENT OF PLAN
The Board may at any time prior to the Expiration Date modify and
amend the Plan in any respect; provided, that the approval of the stockholders
of the Company in accordance with the provisions of its Certificate of
Incorporation and By-laws, shall be obtained prior to any such amendment
becoming effective if such approval is necessary or desirable to comply with
applicable law or self-regulatory organization requirements. No such amendment
to the Plan shall adversely affect the terms or provisions of any Option granted
by the Company prior to the effectiveness of such amendment without the written
consent of the Company and the Optionee who holds such Option.
14. CAPTIONS
The use of captions in the Plan is for convenience. The captions are
not intended to provide substantive rights.
15. DISQUALIFYING DISPOSITIONS
If Optioned Shares acquired by exercise of an ISO granted under the
Plan are disposed of within two years following the date of grant of the ISO or
one year following the issuance of the Optioned Shares to the Optionee (a
"Disqualifying Disposition"), the holder of the Optioned Shares shall,
immediately prior to such Disqualifying Disposition, notify the Company in
writing of the date and terms of such Disqualifying Disposition and provide such
other information regarding the Disqualifying Disposition as the Company may
reasonably require.
16. WITHHOLDING TAXES
As a condition to the exercise of any award or the delivery of any
shares of Common Stock, or in connection with any other event that gives rise to
a federal or other governmental tax withholding obligation on the part of the
Company relating to an Option, (a) the Company may deduct or withhold (or cause
to be deducted or withheld) from any payment or distribution to an Optionee
whether or not pursuant to the Plan or (b) the Company shall be entitled to
require that the Optionee remit cash to the Company (through payroll deduction
or otherwise), in each case in an amount sufficient in the opinion of the
Company to satisfy such withholding obligation. If the event giving rise to the
withholding obligation
-11-
<PAGE>
involves a transfer of shares of Common Stock, then, unless the applicable
Option Agreement provides otherwise, at the discretion of the Committee, the
Optionee may satisfy the withholding obligation described under this Section 16
by electing to have the Company withhold shares of Common Stock (which
withholding will be at a rate not in excess of the statutory minimum rate) or by
tendering previously owned shares of Common Stock, in each case having a Fair
Market Value equal to the amount of tax to be withheld (or by any other
mechanism as may be required or appropriate to conform with local tax and other
rules).
17. OTHER PROVISIONS
Each Option granted under the Plan may contain such other terms and
conditions not inconsistent with the Plan as may be determined by the Committee,
in its sole discretion. Notwithstanding the foregoing, each ISO granted under
the Plan shall include those terms and conditions which are necessary to qualify
the ISO as an "incentive stock option" within the meaning of Section 422 of the
Code and the regulations thereunder and shall not include any terms or
conditions which are inconsistent therewith.
18. NUMBER AND GENDER
With respect to words used in the Plan, the singular form shall
include the plural form, the masculine gender shall include the feminine gender,
and vice-versa, as the context requires.
19. GOVERNING LAW
The validity and construction of the Plan and the instruments
evidencing the Options granted hereunder shall be governed by the laws of the
State of Delaware, without regard to its principles of conflicts of law.
<PAGE>
Exhibit 10.3
F Gibbard Employment Agreement
AMENDED AND RESTATED
OFFICER'S EMPLOYMENT AGREEMENT
This AMENDMENT AND RESTATED OFFICER'S EMPLOYMENT AGREEMENT (this
"Agreement"), dated as of October 1, 1999, is between H Power Corp., a Delaware
corporation, having its principal place of business at 60 Montgomery Street,
Belleville, New Jersey 07109 (hereinafter referred to as the "Company"), and H.
Frank Gibbard, residing at 14 Plumer Road, Epping, New Hampshire 03042
(hereinafter referred to as "Executive"). (The Company and Executive are
collectively referred to as the "Parties.")
WHEREAS, Executive and the Company entered into an Officer's Employment
Agreement, dated as of October 7, 1996 (the "Prior Agreement"); and
WHEREAS, the Parties wish to amend and restate the provisions of the Prior
Agreement on the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants set forth in this
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Term of Employment
Subject to the provisions of this Agreement, the Company hereby agrees to
employ Executive, and Executive hereby agrees to be employed by the Company, for
a term commencing October 1, 1999 and ending October 6, 2002.
2. Titles and Duties
Subject at all times to the supervision and direction of the Board of
Directors of the Company (the "Board"), Executive shall be employed as Chief
Executive Officer of the Company and shall have such duties, authority, rights
and obligations as are usually inherent in such position and as the Board may
reasonably require. In general, Executive shall use his very best efforts to
promote the business of the Company.
In the event that Executive is elected or appointed as a Director or the
Company or as a Director or an Officer of the Company's affiliated or subsidiary
companies, whether now existing or hereafter acquired, Executive consents to
serve in such capacity or capacities as the Board may determine, without
additional compensation.
Page 1 of eleven pages
<PAGE>
F Gibbard Employment Agreement
Executive shall render his services at the Company's principal place of
business or at such other place or places as the Board shall designate.
3. Exclusive Employment
Executive shall devote substantially all his business time, ability and
attention to the business of H Power. Executive shall not directly or indirectly
render any services of a business, commercial, or professional nature, to any
other person or organization, whether for compensation or otherwise, that is in
competition directly or indirectly with the business of H Power except as set
forth in paragraph (d) below.
(a) Executive shall refrain from any act which involves a conflict of
interest between the exercise of his position in the Company and his
personal interest.
(b) Executive shall refrain from exploiting any business opportunity of
the Company for the achievement of an advantage for himself or for
another.
(c) Executive shall disclose to the Company any information and deliver
to it any document that pertains to its affairs and which came into
his possession by virtue of his position with the Company.
(d) Executive is the founder and co-shareholder with Carolyn Gibbard,
his wife, of Gibbard Research and Development Corporation, a
Massachusetts corporation ("GRDC"), which is in the business of
developing lithium ion batteries. The Company is aware that
Executive intends to maintain his interest in GRDC and intends to
devote some minimum time to the affairs of that enterprise. The
Parties agree that, in the event the Company determines that it
would be in its best interest to acquire GRDC, the Parties will
negotiate in good faith to achieve that result.
4. Compensation & Benefits
For the full and faithful performance of his services as set forth
hereunder, Executive shall be entitled to the following:
(a) Base Salary. During the term of this Agreement, Executive shall be
paid an annual salary of Two Hundred and Three Thousand Three
Hundred Twenty
Page 2 of eleven pages
<PAGE>
F Gibbard Employment Agreement
Dollars ($203,320), payable in bi-weekly installments, subject to
all applicable withholding, social security and other payroll taxes.
(b) Salary Adjustments. The rate of salary shall be reviewed by the
Board not less often than annually and may be increased (but not
decreased) from time to time in such amounts as the Board in its
discretion may provide; it being understood, however, that the Board
shall have no obligation to increase said salary.
(c) Benefit Programs. Executive shall be entitled to participate in all
employee benefit programs of the Company available to senior
executives of the Company, as such programs may be in effect from
time to time, including, without limitation: pension or other
retirement plans; profit sharing plans; group life insurance;
accidental death and dismemberment insurance; hospitalization,
surgical and major medical coverage; sick leave, vacation and
holiday benefits; and other employee benefit programs sponsored by
the Company. Such programs may be amended or terminated if done so
for all or a material portion of the Company's executives.
(d) Reimbursement of Expenses. Consistent with established policies of
the Company as in effect from time to time for senior executives,
consultants and members of the Board, the Company shall pay to or
reimburse Executive for all reasonable and actual out-of-pocket
expenses, including without limitation, travel, hotel, automobile,
telephone and cellular telephone expenses, computer and data
processing expenses and similar expenses, incurred by Executive in
performing his obligations under this Agreement. During the term of
this Agreement, as may be extended, the Company shall furnish
Executive with, or shall reimburse Executive for, a vehicle (of
comparable stature to the mark and model of the automobile to which
Executive has been accustomed), as well as insurance costs therefor.
(e) Bonuses. In addition to all other compensation, Executive shall be
entitled to receive such bonuses as the Board shall determine, in
its sole discretion, from time to time; it being understood that the
Board shall have no obligation to award such bonuses.
5. Termination of Employment
(a) For Cause. The Company shall have the right to terminate this
Agreement immediately after written notification to Executive
specifying the basis for the termination, upon the occurrence of any
one of the following events which
Page 3 of eleven pages
<PAGE>
F Gibbard Employment Agreement
shall constitute "cause": (i) the willful failure by Executive to
abide by the terms of this Agreement; or (ii) fraud,
misappropriation, embezzlement, theft, dishonesty or similar actions
by Executive; or (iii) the habitual or willful neglect by Executive
or his employment duties; or (iv) the habitual or willful disregard
of Board mandates; or (v) the willful performance of an unauthorized
act outside the scope of his office; or (vi) an act of moral
turpitude by Executive which tends to reflect unfavorably on the
Company.
In the event that the Company terminates Executive's
employment for cause, Executive shall be entitled only to the unpaid
bi-weekly installments of his Base Salary up to and including the
date of termination and to his approved Business Expense
Reimbursement not paid prior to termination.
(b) In the Event of Death. This Agreement shall terminate in the event
of Executive's death, in which case Executive's estate shall be
entitled to the bi-weekly installments of Executive's Base Salary
for a period of six months following the date of death and
Executive's Business Expense Reimbursement not paid prior to his
death.
(c) In the Event of Disability. The Company shall have the right to
terminate this Agreement in the event of Executive's inability to
substantially perform his duties hereunder for a period of three
months out of any six month period during his employment, whether
such inability results from illness, accident or otherwise.
In the event that the Company terminates Executive's
employment during the term of this Agreement as a result of
Executive's Disability, Executive shall be entitled to the bi-weekly
installments of his Base Salary for a period of six months following
the date of termination; Executive's Business Expense Reimbursement
not paid prior to termination; and the continuation of Executive's
health and welfare benefits through the end of the terms of this
Agreement.
(d) Change in Control. (i) In the event that Executive's employment is
terminated by the Company within one year following a Change in
Control (as defined below) for any reason other than cause, death or
disability, then the Company shall pay Executive one-half his annual
Base Salary at his then current rate and one-half of the latest
annual incentive compensation payment calculated by taking the
highest of the latest two incentive payments earned and paid divided
by two, such payment to be made in one lump sum payment at the time
of termination. Such payments shall be in lieu of any and all other
payments due and owing to Executive under the terms of this
Agreement. The Company shall also provide to the Executive health
insurance for a
Page 4 of eleven pages
<PAGE>
F Gibbard Employment Agreement
period of one year following termination of Executive's employment.
Executive shall not be required to seek other employment or to
otherwise mitigate the effects of such termination, and such
payments shall not be reduced by any income received from other
sources (all compensation and other benefits described above and the
terms thereof shall hereinafter be referred to collectively as the
"Severance Package").
(ii) Executive may terminate his employment hereunder within
one year following a Change of Control for Good Reason; provided
that, (x) the Company has been given notice setting forth in
reasonable detail the nature of the Good Reason and (y) a period of
at least thirty (30) days in which the Company may remedy the
circumstances giving rise to such Good Reason has expired, and the
Company fails to so remedy such circumstances. For purposes of this
Agreement, "Good Reason" shall mean:
(A) the assignment to Executive of any duties materially
inconsistent with Executive's position, duties and
responsibilities as set forth in Section 2 of this Agreement
or any action by the Company which results in a material
diminution in Executive's position, authority, duties or
responsibilities, excluding for this purpose any isolated or
inadvertent action by the Company which is remedied by the
Company promptly after receipt of notice thereof from the
Executive; or
(B) any failure by the Company to comply in all material
respects with the provisions of Section 4 of this Agreement
regarding Executive's compensation, benefits, vacation, and
expenses other than an isolated or inadvertent action by the
Company which is remedied by the Company promptly after
receipt of notice thereof from the Executive.
In the event that Executive terminates his employment for Good
Reason following a Change in Control, then the Company shall pay
Executive the Severance Package.
For purposes of this provision, a "Change in Control" shall be
deemed to have occurred: (i) if any "person" (as such term is used
in Sections 13(d)(3) and 14(d)2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")), other than Executive, who is
not a shareholder of the Company as of the date hereof, shall have
become the beneficial owner, directly or indirectly, of Common Stock
representing thirty-three and one-third percent (33 1/3%) or more of
the combined voting power of the Company's then outstanding
securities, unless three-quarters of the Board of Directors, as
constituted immediately prior to the date of the Change in Control,
decide in their reasonable discretion that no Change in Control has
occurred, the Executive not being allowed to vote on such matter if
he is then a Director;
Page 5 of eleven pages
<PAGE>
F Gibbard Employment Agreement
provided, however, that if any such person other than Executive
(whether or not a stockholder of the Company as of the date hereof)
shall become the beneficial owner, directly or indirectly, of Common
Stock representing fifty percent (50%) or more of the Company's then
outstanding securities, a Change in Control shall ipso facto have
occurred; or (ii) if there is a Change in Control of a nature that,
in the opinion of counsel for the Company, would be required to be
reported in response to Item 6(e) of schedule 14A under the Exchange
Act, unless three-quarters of the Board of Directors, as constituted
immediately prior to the date of the Change in Control, decide in
their reasonable discretion that no Change in Control has occurred,
Executive not being allowed to vote on such matter if he is then a
Director.
6. Unauthorized Disclosure
During the period of his employment and for a period of three (3) years
thereafter, Executive shall not, without the prior written consent of the Board,
disclose to any person other than as required by law or court order, or other
than to an employee of the Company, or to a person to whom disclosure is
necessary or appropriate in connection with the performance by Executive of his
duties as an executive of the Company, any confidential information obtained by
him while in the employ of the Company with respect to any of the Company's
products, services, customers, suppliers, marketing techniques, patents,
proprietary technologies, trade secrets, methods, or future plans, the
disclosure of which will be damaging to the Company; provided, however, that
confidential information shall not include any information known generally to
the public (other than as a result of unauthorized disclosure by Executive).
7. Restrictive Covenant
During the period of his employment and for a period of two (2) years
thereafter, Executive shall not enter into competition with the Company or any
affiliate of the Company without the prior consent of the Board. For purpose of
this paragraph 7, competition shall mean the association of Executive with a
company, corporation, firm or partnership, whether as an employee, consultant,
partner, principal, agent, representative or shareholder, directly or indirectly
(except as a holder, directly or indirectly, of less than Five (5%) Percent of
the outstanding securities of any corporation whose stock is listed for trading
on any securities exchange or are traded in the over-the-counter market) which
competes, directly or indirectly, with the Company in any business in which the
Company is presently engaged or will be engaged upon termination of Executive's
employment, unless such association shall be for purposes and shall impose
duties upon Executive that do not directly relate to the Company's business
activities. If a court of competent jurisdiction should determine that the
period, scope, or geographical area of the restrictions set forth in this
paragraph 7 are unreasonable under the circumstances then existing, the Parties
agree that the period, scope, or geographical area that is reasonable under such
circumstances shall be substituted for the stated period, scope, or geographical
area.
Page 6 of eleven pages
<PAGE>
F Gibbard Employment Agreement
During the term of his employment and for a period of two (2) years
thereafter, Executive shall neither solicit, induce and/or suggest to any of the
employees, consultants to, or other persons having a substantial contractual
relation with, the Company to leave such employ, cease counseling or terminate
such contractual relationship with the Company nor to join Executive as a
partner, co-venturer, employee, investor, or otherwise, in any substantial
business activity whatsoever.
Executive shall at no time take any action or make any statement that
could discredit the reputation of the Company or its personnel, products or
services.
8. Inventions or Discoveries
Executive shall fully and promptly disclose to the Company any and all
improvements, discoveries, and inventions made or conceived by him, whether or
not patentable, whether or not during the working hours of his employment or
with the use of the Company's facilities, materials or personnel, and whether
solely or jointly with others, during his employment by the Company, which
result from or relate to the business of the Company in any way.
Any and all such improvements, discoveries, and inventions are and shall
remain the sole and exclusive property of the Company without royalty or payment
of any further consideration to Executive, on his own behalf and on the behalf
of his heirs, assigns, executors, administrators, and any other legal
representative, except those inventions relating to lithium ion batteries
developed by Executive for GRDC. Inventions relating to lithium ion batteries
developed by Executive for GRDC shall be and remain the property of GRDC.
Executive hereby assigns and transfers all of his right, title and interest in
and to all such improvements, discoveries, and inventions (except as heretofore
noted) to the Company, including, but not limited to, any applications for
United States and/or foreign letter patents and any United States and/or foreign
patents that shall be granted. Executive shall apply, at the Company's request
and expense, for United States and foreign letters patent, whether in his name
or otherwise as the Company shall desire, and shall execute and deliver to the
Company without charge to the Company, but at its expense, such written
instruments and shall do such other acts as may be necessary or appropriate in
the opinion of the Company to obtain and maintain United States and/or foreign
letters patent or proprietary rights and shall vest the entire right entitled
thereto in the Company.
9. Equitable Relief
Executive hereby represents that the services to be performed by him are
of a special, unique, unusual, extraordinary and intellectual character which
gives them a peculiar value, the loss of which cannot be reasonably or
adequately compensated in damages in an action at law and that any violation of
this Agreement will cause the Company immediate and irreparable harm. Executive
therefore expressly agrees that, in addition to any other rights or remedies
which the Company may possess,
Page 7 of eleven pages
<PAGE>
F Gibbard Employment Agreement
the Company shall be entitled to injunctive and other equitable relief to
prevent a breach of this contract by the Company.
10. Indemnification
Executive shall indemnify and save harmless the Company from all liability
from loss, damage or injury to persons or property resulting from the gross
negligence or willful misconduct of Executive.
11. Disputes
Any controversy or claim arising out of or relating to this Agreement, or
any breach thereof, shall be settled by arbitration in accordance with the rules
of the American Arbitration Association then in effect in the State of New
Jersey, and judgment upon such award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof. The arbitration shall be held
in Newark, New Jersey or any other location mutually agreed upon by the Parties.
Each party shall bear its or his own cost of the arbitration. Executive's salary
and benefits shall continue during the period his claim is being arbitrated;
provided, however, that the Company shall not be obligated to make such payment
or provide such benefits after the end of the term of this Agreement and that
the Company may recover the cost of such payments should the arbitrator(s)
decide that Executive was not entitled to such payments.
12. Assignability
No rights or obligations under this Agreement may be assigned or
transferred by Executive except:
(a) Executive's rights to compensation and benefits hereunder shall, in
the event of death, pass to his estate, or to his designated
beneficiary and may be transferred by will or operation of law, and
(b) Executive's rights under the Company's plans, programs and policies
may be assigned or transferred in accordance with the terms of such
plans, programs and policies.
The rights and obligations of the Company under this Agreement shall inure
to the benefit of and shall be binding upon the successors and assigns of the
Company. The Company shall have the right to assign this Agreement to a
successor in the event of a merger, consolidation, sale of a substantial portion
of its assets or a similar transaction.
Page 8 of eleven pages
<PAGE>
F Gibbard Employment Agreement
13. Governing Law
This Agreement shall be governed by the laws of the State of New Jersey
without reference to the principles of conflict of laws.
14. Entire Agreement
Except as otherwise specifically provided herein, this Agreement contains
all the legally binding understandings and representations between the Company
and Executive pertaining to the subject matter hereof and supersedes all
undertakings and agreements, if any, whether oral or in writing, previously
entered into by the Company and Executive with respect to such subject matter.
15. Amendment or Modification; Waiver
No provision of this Agreement may be amended or waived unless such
amendment or waiver is approved by the Board and is signed by Executive and by a
duly authorized officer of the Company. Except as otherwise specifically
provided in this Agreement, no waiver by the Company or Executive of any breach
by the other of any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of a similar or dissimilar provision
or condition at the same or any prior or subsequent time.
16. Notices
Any notice required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been given when delivered personally or
sent by certified or registered mail, postage prepaid, return receipt requested,
duly addressed to the party concerned at the address indicated below or to such
changed address as such party may subsequently give notice of:
If to H Power: H Power Corp.
60 Montgomery Street
Belleville, New Jersey 07109
Attn.: Secretary
If to Executive: H Frank Gibbard
14 Plumer Road
Epping, New Hampshire 03042
17. Severability
Page 9 of eleven pages
<PAGE>
F Gibbard Employment Agreement
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, the remaining
provisions or portions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
18. Survivorship
To the extent contemplated by this Agreement, the respective rights and
obligations of the Parties hereunder shall survive any termination of this
Agreement to the extent necessary to the intended preservation of such rights
and obligations.
19. Representations
(a) By the Executive. Executive represents and warrants that the
performance of his duties under this Agreement will not violate any
agreement between him and any other person, firm or organization.
(b) By the Company. The Company represents and warrants that it is fully
authorized and empowered to enter into this Agreement.
20. References
In the event of Executive's death or a judicial determination of his
incompetence, reference in this Agreement to Executive will be deemed, where
appropriate, to refer to his legal representative or, where appropriate, to his
beneficiary or beneficiaries.
Headings to the sections in this agreement are intended solely for
convenience and no provision of this Agreement shall be construed by reference
to any heading.
21. Mutual Intent
The language used in this Agreement is the language chosen by the Parties
to express their mutual intent. The Parties agree that in the event that any
language, section, clause, phrase or word used in this Agreement is determined
to be ambiguous, no presumption shall arise against or in favor of either party
and that no rule of strict construction shall be applied against either party.
Page 10 of eleven pages
<PAGE>
F Gibbard Employment Agreement
IN WITNESS WHEREOF, Executive and the Company have caused this Agreement
to be executed as of the day and year first above written.
EXECUTIVE H POWER CORP.
/s/ H. Frank Gibbard By: /s/ William L. Zang
- -------------------------- -------------------
H. Frank Gibbard William L. Zang
Chief Financial Officer
Page 11 of eleven pages
<PAGE>
Exhibit 10.4
October 11, 1999 Employment Agreement
EXECUTIVE'S EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of October 11, 1999, between H Power Corp.,
a Delaware corporation, having its principal place of business at 60 Montgomery
Street, Belleville, New Jersey 07109 (hereinafter referred to as the "Company"),
and Arthur Kaufman, residing at 69 Burnett Terrace, West Orange NJ 07052
(hereinafter referred to as "Executive").
1. TERM OF EMPLOYMENT
Subject to the provisions of this employment agreement, the Company hereby
agrees to employ Executive, and Executive hereby agrees to be employed by the
Company, for a term commencing October 11, 1999 and ending October 10, 2002.
2. TITLE AND DUTIES
Subject at all times to the supervision and direction of the Chief
Executive Officer and the Board of Directors of the Company (the "Board"),
Executive shall be employed as "Vice President of Technology" of the Company and
shall have such duties, authority, rights and obligations as are usually
inherent in such position and as the Board may reasonably require. In general,
Executive shall use his very best efforts to promote the business of the
Company.
In the event that Executive is elected or appointed as an officer of the
Company's affiliated or subsidiary companies, whether now existing or hereafter
acquired, Executive consents to serve in such capacity or capacities as the
Board may determine, without additional compensation.
Executive shall render his services at the Company's principal place of
business or at such other place or places as the Company shall designate,
providing that such services are not required on a regular basis at a location
more than 40 miles from the Company's existing place of business.
3. EXCLUSIVE EMPLOYMENT
Executive shall devote his entire productive time, ability and attention
to the business of the Company during his employment. Executive shall not
directly or indirectly render any services of a business, commercial, or
professional nature, to any other person or organization, whether for
compensation or otherwise, without the prior approval of the Board.
(a) Executive shall refrain from any act which involves a conflict of
interest between the exercise of his position in the Company and his
personal interest.
(b) Executive shall refrain from exploiting any business opportunity of
the Company
Page 1 of 8 pages
<PAGE>
October 11, 1999 Employment Agreement
for the achievement of an advantage for himself or for another.
(c) Executive shall disclose to the Company any information and deliver
to it any document that pertains to its affairs and which came into
his possession by virtue of his position with the Company.
4. COMPENSATION & BENEFITS
For the full and faithful performance of his services as set forth
hereunder, Executive shall be entitled to the following during the term of his
employment hereunder:
(a) Base Salary. Executive shall be paid an annual salary of one hundred
thirty-five thousand dollars ($135,000), payable in bi-weekly
installments, subject to all applicable withholding, social security and
other payroll taxes.
(b) Salary Adjustments. The rate of salary shall be reviewed by the Board
not less often than annually and may be increased (but not decreased) from
time to time in such amounts as the Board in its discretion may provide;
it being understood, however, that the Board shall have no obligation to
increase said salary.
(c) Benefit Programs. Executive shall be entitled to participate in all
employee benefit programs of the Company available to senior executives of
the Company, as such programs maybe in effect from time to time,
including, without limitation: pension or other retirement plans; profit
sharing plans; group life insurance; accidental death and dismemberment
insurance; hospitalization, surgical and major medical coverage; sick
leave, vacation and holiday benefits; and other employee benefit programs
sponsored by the Company. Such programs may be amended or terminated if
done so for all or a material portion of the Company's executives.
(d) Business Expense Reimbursement. Executive shall be entitled to receive
reimbursement from the Company for all reasonable and actual out-of-pocket
expenses incurred by him (in accordance with the policies and procedures
established by the Company) in performing services during his employment,
provided that Executive timely submits reasonable documentation with
respect to such expenses.
(e) Automobile. Executive shall be entitled to an automobile allowance of
$10,000 dollars per annum.
(f) Bonuses. In addition to all other compensation, Executive shall be
entitled to receive such bonuses as the Board shall determine, in its sole
discretion, from time to time; it being understood that the Board shall
have no obligation to award such bonuses.
Page 2 of 8 pages
<PAGE>
October 11, 1999 Employment Agreement
5. TERMINATION OF EMPLOYMENT
(a) For Cause. The Company shall have the right to terminate this
employment agreement immediately after written notification to Executive
specifying the basis for the termination, upon the occurrence of any one
of the following events which shall constitute "cause": (i) the willful
failure by Executive to abide by the terms of this employment agreement;
or (ii) fraud, misappropriation, embezzlement, theft, dishonesty or
similar actions by Executive; or (iii) the habitual or willful neglect by
Executive of his employment duties; or (iv) the habitual or willful
disregard of Board mandates; or (v) the willful performance of an
unauthorized act outside the scope of his office; or (vi) an act of moral
turpitude by Executive which tends to reflect unfavorably on the Company.
In the event that the Company terminates Executive's employment for
cause, Executive shall be entitled only to the unpaid bi-weekly
installments of his Base Salary up to and including the date of
termination and to his approved Business Expense Reimbursement not paid
prior to termination.
(b) In the Event of Death. This employment agreement shall terminate in
the event of Executive's death, in which case Executive's estate shall be
entitled to the bi-weekly installments of Executive's Base Salary for a
period of six months following the date of death and Executive's Business
Expense Reimbursement not paid prior to his death.
(c) In the Event of Disability. The Company shall have the right to
terminate this employment agreement in the event of Executive's inability
to substantially perform his duties hereunder for a period of three months
out of any six month period during his employment, whether such inability
results from illness, accident or otherwise.
In the event that the Company terminates Executive's employment
during the term of this employment agreement as a result of Executive's
Disability, Executive shall be entitled to the bi-weekly installments of
his Base Salary for a period of six months following the date of
termination; Executive's Business Expense Reimbursement not paid prior to
termination; and the continuation of Executive's health and welfare
benefits through the end of the term of this employment agreement.
6. UNAUTHORIZED DISCLOSURE
During the period of his employment and for a period of three (3) years
thereafter, Executive shall not, without the prior written consent of the Board,
disclose to any person other than as required by law or court order, or other
than to an employee of the Company, or to a person to whom disclosure is
necessary or appropriate in connection with the performance by Executive of his
duties as an executive of the Company, any confidential information obtained by
Page 3 of 8 pages
<PAGE>
October 11, 1999 Employment Agreement
him while in the employ of the Company with respect to any of the Company's
products, services, customers, suppliers, marketing techniques, patents,
proprietary technologies, trade secrets, methods, or future plans, the
disclosure of which will be damaging to the Company; provided, however, that
confidential information shall not include any information known generally to
the public (other than as a result of unauthorized disclosure by Executive).
7. RESTRICTIVE COVENANT
During the period of his employment and for a period of one (1) year
thereafter, Executive shall not enter into competition with the Company or any
affiliate of the Company without the prior consent of the Board. For the purpose
of this paragraph 7, competition shall mean the association of Executive with a
company, corporation, firm or partnership, whether as an employee, consultant,
partner, principal, agent, representative or shareholder, directly or indirectly
(except as a holder, directly or indirectly, of less than Five (5%) Percent of
the outstanding securities of any corporation whose stock is listed for trading
on any securities exchange or are traded in the over-the-counter market), which
competes, directly or indirectly, with the Company in any business in which the
Company is presently engaged or will be engaged upon termination of Executive's
employment, unless such association shall be for purposes and shall impose
duties upon Executive that do not directly relate to the Company's business
activities. If a court of competent jurisdiction should determine that the
period, scope, or geographical area of the restrictions set forth in this
paragraph 7 are unreasonable under the circumstances then existing, the Parties
agree that the period, scope, or geographical area that is reasonable under such
circumstances shall be substituted for the stated period, scope, or geographical
area.
During the term of his employment and for a period of two (2) years
thereafter, Executive shall neither solicit, induce and/or suggest to any of the
employees, consultants to, or other persons having a substantial contractual
relation with, the Company to leave such employ, cease counseling or terminate
such contractual relationship with the Company nor to join Executive as a
partner, co-venturer, employee, investor, or otherwise, in any substantial
business activity whatsoever.
Executive shall at no time take any action or make any statement that
could discredit the reputation of the Company or its personnel, products or
services.
8. INVENTIONS OR DISCOVERIES
Executive shall fully and promptly disclose to the Company any and all
improvements, discoveries, and inventions made or conceived by him, whether or
not patentable, whether or not during the working hours of his employment or
with the use of the Company's facilities, materials or personnel, and whether
solely or jointly with others, during his employment by the Company, which
result from or relate to the business of the Company in any way.
Page 4 of 8 pages
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October 11, 1999 Employment Agreement
Any and all such improvements, discoveries, and inventions are and remain
the sole and exclusive property of the Company without royalty or payment of any
further consideration to Executive, on his own behalf and on the behalf of his
heirs, assigns, executors, administrators, and any other legal representative.
Executive hereby assigns and transfers all of his right, title and interest in
and to all such improvements, discoveries, and inventions to the Company,
including, but not limited to, any applications for United States and/or foreign
letter patents and any United States and/or foreign patents that shall be
granted. Executive shall apply, at the Company's request and expense, for United
States and foreign letters patent, whether in his name or otherwise as the
Company shall desire, and shall execute and deliver to the Company without
charge to the Company, but at its expense, such written instruments and shall do
such other acts as may be necessary or appropriate in the opinion of he Company
to obtain and maintain United States and/or foreign letters patent or other
proprietary rights and shall vest the entire right entitled thereto in the
Company.
9. EQUITABLE RELIEF
Executive hereby represents that the services to be performed by him are
of a special, unique, unusual, extraordinary and intellectual character which
gives them a peculiar value, the loss of which cannot be reasonably or
adequately compensated in damages in an action at law and that any violation of
this employment agreement will cause the Company immediate and irreparable harm.
Executive therefore expressly agrees that, in addition to any other rights or
remedies which the Company may possess, the Company shall be entitled to
injunctive and other equitable relief to prevent a breach of this contract by
the Company.
10. INDEMNIFICATION
Executive shall indemnify and save harmless the Company from all liability
from loss, damage or injury to persons or property resulting from the gross
negligence or willful misconduct of Executive.
11. DISPUTES
Any controversy or claim arising out of or relating to this employment
agreement, or any breach thereof, shall be settled by arbitration in accordance
with the rules of the American Arbitration Association then in effect in the
State of New Jersey, and judgment upon such award rendered by the arbitrator(s)
may be entered in any court having jurisdiction thereof. The arbitration shall
be held in Manhattan or any other location mutually agreed upon by the Parties.
Each Party shall bear its or his own cost of the arbitration. Executive's salary
and benefits shall continue during the period his claim is being arbitrated;
provided, however, that the Company shall not be obligated to make such payment
or provide such benefits after the end of the term of this employment agreement
and that the Company may recover the cost of such payments should the
arbitrator(s) decide that Executive was not entitled to such payments.
Page 5 of 8 pages
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October 11, 1999 Employment Agreement
12. ASSIGNABILITY
No rights or obligations under this employment agreement may be assigned
or transferred by Executive except:
(a) Executive's rights to compensation and benefits hereunder shall, in
the event of death, pass to his estate, or to his designated beneficiary
and may be transferred by will or operation of law, and
(b) Executive's rights under the Company's plans, programs and policies
may be assigned or transferred in accordance with the terms of such
plans, programs and policies.
The rights and obligations of the Company under this employment agreement
shall inure to the benefit of and shall be binding upon the successors and
assigns of the Company. The Company shall have the right to assign this
agreement to a successor in the event of a merger, consolidation, sale of a
substantial portion of its assets or a similar transaction.
13. GOVERNING LAW
This employment agreement shall be governed by the laws of the State of
New Jersey without reference to the principles of conflict of laws.
14. ENTIRE AGREEMENT
Except as otherwise specifically provided herein, this employment
agreement contains all the legally binding understandings and representations
between the Company and Executive pertaining to the subject matter hereof and
supersedes all undertakings and agreements, if any, whether oral or in writing,
previously entered into by the Company and Executive with respect to such
subject matter.
15. AMENDMENT OR MODIFICATION; WAIVER
No provision of this employment agreement may be amended or waived unless
such amendment or waiver is approved by the Board and is signed by Executive and
by a duly authorized officer of the Company. Except as otherwise specifically
provided in this employment agreement, no waiver by the Company or Executive of
any breach by the other of any condition or provision of this employment
agreement to be performed by such other party shall be deemed a waiver of a
similar or dissimilar provision or condition at the same or any prior or
subsequent time.
16. NOTICES
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October 11, 1999 Employment Agreement
Any notice required or permitted to be given under this employment
agreement shall be in writing and shall be deemed to have been given when
delivered personally or sent by certified or registered mail, postage prepaid,
return receipt requested, duly addressed to the party concerned at the address
indicated below or to such changed address as such party may subsequently give
notice of:
If to H Power: H Power Corp.
60 Montgomery Street
Belleville, New Jersey 07109
Attn: Secretary
If to Executive: 69 Burnett Terrace
West Orange, NJ 07052
17. SEVERABILITY
In the event that any provision or portion of this employment agreement
shall be determined to be invalid or unenforceable for any reason, the remaining
provisions or portions of this employment agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by
law.
18. SURVIVORSHIP
To the extent contemplated by this employment agreement, the respective
rights and obligations of the Parties hereunder shall survive any termination of
this employment agreement to the extent necessary to the intended preservation
of such rights and obligations.
19. REPRESENTATIONS
(a) By the Executive. Executive represents and warrants that the
performance of his duties under this employment agreement will not violate
any agreement between him and any other person, firm or organization.
(b) By the Company. The Company represents and warrants that it is fully
authorized and empowered to enter into this employment agreement.
Page 7 of 8 pages
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October 11, 1999 Employment Agreement
20. REFERENCES
In the event of Executive's death or a judicial determination of his
incompetence, reference in this employment agreement to Executive will be
deemed, where appropriate, to refer to his legal representative or, where
appropriate, to his beneficiary or beneficiaries.
21. HEADINGS
Headings to the sections in this agreement are intended solely for
convenience and no provision of this employment agreement shall be construed by
reference to any heading.
22. MUTUAL INTENT
The language used in this employment agreement is the language chosen by
the Parties to express their mutual intent. The Parties agree that in the event
that any language, section, clause, phrase or word used in this employment
agreement is determined to be ambiguous, no presumption shall arise against or
in favor of either party and that no rule of strict construction shall be
applied against either party.
IN WITNESS WHEREOF, Executive and the Company have caused this employment
agreement to be executed as of the day and year first above written.
EXECUTIVE H POWER CORP.
a Delaware Corporation
By: /s/ Arthur Kaufman By: /s/ H. Frank Gibbard
--------------------------- --------------------
Page 8 of 8 pages
<PAGE>
Exhibit 10.5
T. Michael Employment Agreement
OFFICER'S EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of November 1, 1999, between H Power Corp.,
a Delaware corporation, having its principal place of business at 60 Montgomery
Street, Belleville, New Jersey 07109 (hereinafter referred to as the "Company"),
and Thomas H. Michael, residing at Mountain View Crossing, Crossing Way, Apt. #
2221, Wayne, New Jersey 07470 (hereinafter referred to as "Executive"). (The
Company and Executive are collectively referred to as the "Parties.")
1. Term of Employment
Subject to the provisions of this employment agreement, the Company hereby
agrees to employ Executive, and Executive hereby agrees to be employed by the
Company, for a term commencing November 1, 1999 and ending October 31, 2002 (the
"Term"). This contract will renew automatically in one year increments unless
written notice is given by either party of an intent to terminate the contract
within six months of the expiration date then in effect for the contract.
2. Titles and Duties
Subject at all times to the supervision and direction of the Chief
Executive Officer of the Company (the "CEO"), Executive shall be employed as
Vice President, Administration and International Operations, and shall have such
duties, authority, rights and obligations as are usually inherent in such
position and as the CEO may reasonably require. In general, Executive shall use
his very best efforts to promote the business of the Company. In the event that
Executive is elected or appointed as a Director or an Officer of the Company's
affiliated or subsidiary companies, whether now existing or hereafter acquired,
Executive consents to serve in such capacity or capacities as the CEO may
determine, without additional compensation.
Executive shall render his services at the Company's principal place of
business or at such other place or places as the Board shall designate.
3. Exclusive Employment
Executive shall devote substantially all his business time, ability and
attention to the business of H Power. Executive shall not directly or indirectly
render any services of a business, commercial, or professional nature to any
other person or organization, whether for compensation or otherwise, that is in
competition directly or indirectly with the business of H Power.
4. Compensation & Benefits
For the full and faithful performance of his services as set forth
hereunder, Executive shall be
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T. Michael Employment Agreement
entitled to the following:
(a) Base Salary. During the Term, Executive shall be paid an annual
salary of $117,500.00, payable in bi-weekly installments, subject to
all applicable withholding, social security and other payroll taxes.
(b) Salary Adjustments. The rate of salary shall be reviewed by the
Board not less often than annually and may be increased (but not
decreased) from time to time in such amounts as the Board in its
discretion may provide; it being understood, however, that the Board
shall have no obligation to increase said salary.
(c) Benefit Programs. Executive shall be entitled to participate in all
employee benefit programs of the Company available to senior
executives of the Company, as such programs may be in effect from
time to time, including, without limitation: pension or other
retirement plans; profit sharing plans; group life insurance;
accidental death and dismemberment insurance; hospitalization,
surgical and major medical coverage; sick leave, vacation and
holiday benefits; and other employee benefit programs sponsored by
the Company; provided, however, that there is no obligation on the
part of the Company to provide these benefits to senior executives.
Such programs may be amended or terminated if done so for all or a
material portion of the Company's executives.
(d) Business Expense Reimbursement. Executive shall be entitled to
receive reimbursement from the Company for all reasonable and actual
out-of-pocket expenses incurred by him (in accordance with the
policies and procedures established by the Company) in performing
services during his employment, provided that Executive timely
submits reasonable documentation with respect to such expenses.
(e) Bonuses. In addition to all other compensation, Executive shall be
entitled to receive such bonuses as the Board shall determine, in
its sole discretion, from time to time; it being understood that the
Board shall have no obligation to award such bonuses.
(f) Stock Options. Executive shall be granted five-year stock options to
purchase 45,000 shares of the Company's Common Stock, par value
$.001 per share, at a price of $15.00 per share. The options may be
exercised as follows: one-third as of October 31, 2000, one-third as
of October 31, 2001, and the final third as of October 31, 2002.
5. Termination of Employment
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T. Michael Employment Agreement
(a) For Cause. The Company shall have the right to terminate this
employment agreement immediately after written notification to
Executive specifying the basis for the termination, upon the
occurrence of any one of the following events which shall constitute
"cause": (i) the willful failure by Executive to abide by the terms
of this employment agreement; or (ii) fraud, misappropriation,
embezzlement, theft, dishonesty or similar actions by Executive; or
(iii) the habitual or willful neglect by Executive of his employment
duties; or (iv) an act of moral turpitude by Executive which tends
to reflect unfavorably on the Company.
In the event that the Company terminates Executive's
employment for cause, Executive shall be entitled only to the unpaid
bi-weekly installments of his Base Salary up to and including the
date of termination and to his approved Business Expense
Reimbursement not paid prior to termination.
(b) In the Event of Death. This employment agreement shall terminate in
the event of Executive's death, in which case Executive's estate
shall be entitled to the bi-weekly installments of Executive's Base
Salary for a period of six months following the date of death and
Executive's Business Expense Reimbursement not paid prior to his
death.
(c) In the Event of Disability. The Company shall have the right to
terminate this employment agreement in the event of Executive's
inability to substantially perform his duties hereunder for a period
of three months out of any six-month period during his employment,
whether such inability results from illness, accident or otherwise.
In the event that the Company terminates Executive's
employment during the term of this employment agreement as a result
of Executive's Disability, Executive shall be entitled to the
bi-weekly installments of his Base Salary for a period of six months
following the date of termination; Executive's Business Expense
Reimbursement not paid prior to termination; and the continuation of
Executive's health and welfare benefits through the end of the term
of this employment agreement.
(d) Change in Control. (i) In the event that Executive's employment is
terminated by the Company within one year following a Change in
Control (as defined below) for any reason other than cause, death or
disability, then the Company shall pay Executive one-half his annual
Base Salary at his then current rate and one-half of the latest
annual incentive compensation payment calculated by taking the
highest of the latest two incentive payments earned and paid divided
by two, such payment to be made in one lump sum payment at the time
of termination. Such payments shall be in lieu of any and all other
payments due and owing to Executive under the terms of this
Agreement. The Company shall also provide to the Executive health
insurance for a period of one year following termination of
Executive's employment. Executive shall not be required to seek
other employment or to
Page 3 of ten pages
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T. Michael Employment Agreement
otherwise mitigate the effects of such termination, and such
payments shall not be reduced by any income received from other
sources (all compensation and other benefits described above and the
terms thereof shall hereinafter be referred to collectively as the
"Severance Package").
(ii) Executive may terminate his employment hereunder within
one year following a Change of Control for Good Reason; provided
that, (x) the Company has been given notice setting forth in
reasonable detail the nature of the Good Reason and (y) a period of
at least thirty (30) days in which the Company may remedy the
circumstances giving rise to such Good Reason has expired, and the
Company fails to so remedy such circumstances. For purposes of this
Agreement, "Good Reason" shall mean:
(A) the assignment to Executive of any duties materially
inconsistent with Executive's position, duties and
responsibilities as set forth in Section 2 of this Agreement
or any action by the Company which results in a material
diminution in Executive's position, authority, duties or
responsibilities, excluding for this purpose any isolated or
inadvertent action by the Company which is remedied by the
Company promptly after receipt of notice thereof from the
Executive; or
(B) any failure by the Company to comply in all material
respects with the provisions of Section 4 of this Agreement
regarding Executive's compensation, benefits, vacation, and
expenses other than an isolated or inadvertent action by the
Company which is remedied by the Company promptly after
receipt of notice thereof from the Executive.
In the event that Executive terminates his employment for Good
Reason following a Change in Control, then the Company shall pay
Executive the Severance Package.
For purposes of this provision, a "Change in Control" shall be
deemed to have occurred: (i) if any "person" (as such term is used
in Sections 13(d)(3) and 14(d)2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")), other than Executive, who is
not a shareholder of the Company as of the date hereof, shall have
become the beneficial owner, directly or indirectly, of Common Stock
representing thirty-three and one-third percent (331/3%) or more of
the combined voting power of the Company's then outstanding
securities, unless three-quarters of the Board of Directors, as
constituted immediately prior to the date of the Change in Control,
decide in their reasonable discretion that no Change in Control has
occurred, the Executive not being allowed to vote on such matter if
he is then a Director; provided, however, that if any such person
other than Executive (whether or not a stockholder of the Company as
of the date hereof) shall become the beneficial owner, directly or
indirectly, of Common Stock
Page 4 of ten pages
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T. Michael Employment Agreement
representing fifty percent (50%) or more of the Company's then
outstanding securities, a Change in Control shall ipso facto have
occurred; or (ii) if there is a Change in Control of a nature that,
in the opinion of counsel for the Company, would be required to be
reported in response to Item 6(e) of schedule 14A under the Exchange
Act, unless three-quarters of the Board of Directors, as constituted
immediately prior to the date of the Change in Control, decide in
their reasonable discretion that no Change in Control has occurred,
Executive not being allowed to vote on such matter if he is then a
Director.
6. Unauthorized Disclosure
During the period of his employment and for a period of three (3) years
thereafter, Executive shall not, without the prior written consent of the Board,
disclose to any person other than as required by law or court order (10 days'
prior written notice having been given to the Company in order to formulate a
response), or other than to an employee of the Company, or to a person to whom
disclosure is necessary or appropriate in connection with the performance by
Executive of his duties as an executive of the Company, any confidential
information obtained by him while in the employ of the Company with respect to
any of the Company's products, services, customers, suppliers, marketing
techniques, patents, proprietary technologies, trade secrets, methods, or future
plans, the disclosure of which will be damaging to the Company; provided,
however, that confidential information shall not include any information known
generally to the public (other than as a result of unauthorized disclosure by
Executive).
7. Restrictive Covenant
During the period of his employment and for a period of two (2) years
thereafter, Executive shall not enter into competition with the Company or any
affiliate of the Company without the prior consent of the Board. For the purpose
of this paragraph 7, competition shall mean the association of Executive with a
company, corporation, firm or partnership, whether as an employee, consultant,
partner, principal, agent, representative or shareholder, directly or indirectly
(except as a holder, directly or indirectly, of less than Five (5%) Percent of
the outstanding securities of any corporation whose stock is listed for trading
on any securities exchange or are traded in the over-the-counter market), which
competes, directly or indirectly, with the Company in any business in which the
Company is presently engaged, including but not limited to the development,
marketing, manufacturing, or distribution of fuel cell system, or will be
engaged upon termination of Executive's employment, unless such association
shall be for purposes and shall impose duties upon Executive that do not
directly relate to the Company's business activities. If a court of competent
jurisdiction should determine that the period, scope, or geographical area of
the restrictions set forth in this paragraph 7 are unreasonable under the
circumstances then existing, the Parties agree that the period, scope, or
geographical area that is reasonable under such circumstances shall be
substituted for the stated period, scope, or geographical area.
Page 5 of ten pages
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T. Michael Employment Agreement
During the Term and for a period of two (2) years thereafter, Executive
shall neither solicit, induce and/or suggest to any of the employees,
consultants to, or other persons having a substantial contractual relation with,
the Company to leave such employ, cease consulting or terminate such contractual
relationship with the Company nor to join Executive as a partner, co-venturer,
employee, investor, or otherwise, in any substantial business activity
whatsoever.
Executive shall at no time take any action or make any statement that
could discredit the reputation of the Company or its personnel, products or
services.
8. Inventions or Discoveries
Executive shall fully and promptly disclose to the Company any and all
improvements, discoveries, and inventions made or conceived by him, whether or
not patentable, whether or not during the working hours of his employment or
with the use of the Company's facilities, materials or personnel, and whether
solely or jointly with others, during his employment by the Company, which
result from or relate to the business of the Company in any way.
Any and all such improvements, discoveries, and inventions are and shall
remain the sole and exclusive property of the Company without royalty or payment
of any further consideration to Executive, on his own behalf and on the behalf
of his heirs, assigns, executors, administrators, and any other legal
representative. Executive hereby assigns and transfers all of his right, title
and interest in and to all such improvements, discoveries, and inventions to the
Company, including, but not limited to, any applications for United States
and/or foreign letter patents and any United States and/or foreign patents that
shall be granted. Executive shall apply, at the Company's request and expense,
for United States and foreign letters patent, whether in his name or otherwise
as the Company shall desire, and shall execute and deliver to the Company
without charge to the Company, but at its expense, such written instruments and
shall do such other acts as may be necessary or appropriate in the opinion of
the Company to obtain and maintain United States and/or foreign letters patent
or other proprietary rights and shall vest the entire right entitled thereto in
the Company.
9. Equitable Relief
Executive hereby represents that the services to be performed by him are
of a special, unique, unusual, extraordinary and intellectual character which
gives them a peculiar value, the loss of which cannot be reasonably or
adequately compensated in damages in an action at law and that any violation of
this employment agreement will cause the Company immediate and irreparable harm.
Executive therefore expressly agrees that, in addition to any other rights or
remedies which the Company may possess, the Company shall be entitled to
injunctive and other equitable relief to prevent a breach of this contract by
the Company.
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T. Michael Employment Agreement
10. Indemnification
Executive shall indemnify and save harmless the Company from all liability
from loss, damage or injury to persons or property resulting from the gross
negligence or willful misconduct of Executive.
11. Assignability
No rights or obligations under this employment agreement may be assigned
or transferred by Executive except:
(a) Executive's rights to compensation and benefits hereunder shall, in
the event of death, pass to his estate, or to his designated
beneficiary and may be transferred by will or operation of law, and
(b) Executive's rights under the Company's plans, programs and policies
may be assigned or transferred in accordance with the terms of such
plans, programs and policies.
The rights and obligations of the Company under this employment agreement
shall inure to the benefit of and shall be binding upon the successors and
assigns of the Company. The Company shall have the right to assign this
agreement to a successor in the event of a merger, consolidation, sale of a
substantial portion of its assets or a similar transaction.
12. Governing Law
This employment agreement shall be governed by the laws of the State of
New Jersey without reference to the principles of conflict of laws.
13. Entire Agreement
Except as otherwise specifically provided herein, this employment
agreement contains all the legally binding understandings and representations
between the Company and Executive pertaining to the subject matter hereof and
supersedes all undertakings and agreements, if any, whether oral or in writing,
previously entered into by the Company and Executive with respect to such
subject matter.
14. Amendment or Modification; Waiver
No provision of this employment agreement may be amended or waived unless
such amendment or waiver is approved by the Board and is signed by Executive and
by a duly authorized officer of the Company. Except as otherwise specifically
provided in this employment agreement, no waiver by the Company or Executive of
any breach by the other of any condition or provision of this employment
agreement to be performed by such other party shall be deemed a waiver of a
similar or dissimilar provision or condition at the same or any prior or
subsequent time.
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T. Michael Employment Agreement
15. Notices
Any notice required or permitted to be given under this employment
agreement shall be in writing and shall be deemed to have been given when
delivered personally or sent by certified or registered mail, postage prepaid,
return receipt requested, duly addressed to the party concerned at the address
indicated below or to such changed address as such party may subsequently give
notice of:
If to H Power: H Power Corp.
60 Montgomery Street
Belleville, New Jersey 07109
Attn.: Secretary
If to Executive: Thomas H. Michael
Mountain View Crossing
Crossing Way, Apt. #2221
Wayne, New Jersey 07470
16. Severability
In the event that any provision or portion of this employment agreement
shall be determined to be invalid or unenforceable for any reason, the remaining
provisions or portions of this employment agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by
law.
17. Survivorship
To the extent contemplated by this employment agreement, the respective
rights and obligations of the Parties hereunder shall survive any termination of
this employment agreement to the extent necessary to the intended preservation
of such rights and obligations.
18. Representations
(a) By the Executive. Executive represents and warrants that the
performance of his duties under this employment agreement will not
violate any agreement between him and any other person, firm or
organization.
(b) By the Company. The Company represents and warrants that it is fully
authorized and empowered to enter into this employment agreement.
19. References
In the event of Executive's death or a judicial determination of his
incompetence, reference in this employment agreement to Executive will be
deemed, where appropriate, to refer to his legal representative or, where
appropriate, to his beneficiary or beneficiaries.
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T. Michael Employment Agreement
Headings to the sections in this agreement are intended solely for
convenience and no provision of this employment agreement shall be construed by
reference to any heading.
20. Mutual Intent
The language used in this employment agreement is the language chosen by
the Parties to express their mutual intent. The Parties agree that in the event
that any language, section, clause, phrase or word used in this employment
agreement is determined to be ambiguous, no presumption shall arise against or
in favor of either party and that no rule of strict construction shall be
applied against either party.
Page 9 of ten pages
<PAGE>
T. Michael Employment Agreement
IN WITNESS WHEREOF, Executive and the Company have caused this employment
agreement to be executed as of the day and year first above written.
EXECUTIVE H POWER CORP.
/s/ Thomas H. Michael By: /s/ H. Frank Gibbard
- ------------------------------------- --------------------
Thomas H. Michael H. Frank Gibbard
Chief Executive Officer
Page 10 of ten pages
<PAGE>
Exhibit 10.6
W. Zang Employment Agreement
OFFICER'S EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of November 23, 1999, between H Power
Corp., a Delaware corporation, having its principal place of business at 60
Montgomery Street, Belleville, New Jersey 07109 (hereinafter referred to as the
"Company"), and William L. Zang, residing at 1406 Langara Circle, Bellingam, WA
98226 (hereinafter referred to as "Executive"). (The Company and Executive are
collectively referred to as the "Parties.")
1. Term of Employment
Subject to the provisions of this employment agreement, the Company hereby
agrees to employ Executive, and Executive hereby agrees to be employed by the
Company, for a term commencing December 6, 1999 and ending December 5, 2002 (the
"Term"). This contract will renew automatically in one year increments unless
written notice is given by either party of an intent to terminate the contract
within six months of the expiration date then in effect for the contract.
2. Titles and Duties
Subject at all times to the supervision and direction of the Chief
Executive Officer of the Company (the "CEO"), Executive shall be employed as
Chief Financial Officer, and shall have such duties, authority, rights and
obligations as are usually inherent in such position and as the CEO may
reasonably require. In general, Executive shall use his very best efforts to
promote the business of the Company. In the event that Executive is elected or
appointed as a Director or an Officer of the Company's affiliated or subsidiary
companies, whether now existing or hereafter acquired, Executive consents to
serve in such capacity or capacities as the CEO may determine, without
additional compensation.
Executive shall render his services at the Company's principal place of
business or at such other place or places as the Board shall designate.
3. Exclusive Employment
Executive shall devote substantially all his business time, ability and
attention to the business of H Power. Executive shall not directly or indirectly
render any services of a business, commercial, or professional nature to any
other person or organization, whether for compensation or otherwise, that is in
competition directly or indirectly with the business of H Power.
4. Compensation & Benefits
For the full and faithful performance of his services as set forth
hereunder, Executive shall be entitled to the following:
Page 1 of ten pages
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W. Zang Employment Agreement
a. Base Salary. During the Term, Executive shall be paid an annual
salary of $120,000.00, payable in bi-weekly installments, subject to
all applicable withholding, social security and other payroll taxes.
b. Salary Adjustments. The rate of salary shall be reviewed by the
Board not less often than annually and may be increased (but not
decreased) from time to time in such amounts as the Board in its
discretion may provide; it being understood, however, that the Board
shall have no obligation to increase said salary.
c. Benefit Programs. Executive shall be entitled to participate in all
employee benefit programs of the Company available to senior
executives of the Company, as such programs may be in effect from
time to time, including, without limitation: pension or other
retirement plans; profit sharing plans; group life insurance;
accidental death and dismemberment insurance; hospitalization,
surgical and major medical coverage; sick leave, vacation and
holiday benefits; and other employee benefit programs sponsored by
the Company; provided, however, that there is no obligation on the
part of the Company to provide these benefits to senior executives.
Such programs may be amended or terminated if done so for all or a
material portion of the Company's executives.
d. Business Expense Reimbursement. Executive shall be entitled to
receive reimbursement from the Company for all reasonable and actual
out-of-pocket expenses incurred by him (in accordance with the
policies and procedures established by the Company) in performing
services during his employment, provided that Executive timely
submits reasonable documentation with respect to such expenses.
e. Automobile. Executive shall be entitled to an automobile allowance
of eight thousand dollars ($8,000) per annum.
f. Bonuses. In addition to all other compensation, Executive shall be
entitled to receive such bonuses as the Board shall determine, in
its sole discretion, from time to time; it being understood that the
Board shall have no obligation to award such bonuses.
g. Stock Options. Executive shall be granted five-year stock options to
purchase 50,000 shares of the Company's Common Stock, par value
$.001 per share, at a price of $15.00 per share. The options may be
exercised as follows: one-third as of December 5, 2000, one-third as
of December 5, 2001, and the final third as of December 5, 2002.
h. Vacation. Executive will be entitled to three weeks vacation during
the first five years of
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W. Zang Employment Agreement
service, four weeks during the second five years of service and five
weeks vacation for service in excess of 10 years.
5. Termination of Employment
a. For Cause. The Company shall have the right to terminate this
employment agreement immediately after written notification to
Executive specifying the basis for the termination, upon the
occurrence of any one of the following events which shall constitute
"cause": (i) the willful failure by Executive to abide by the terms
of this employment agreement; or (ii) fraud, misappropriation,
embezzlement, theft, dishonesty or similar actions by Executive; or
(iii) the habitual or willful neglect by Executive of his employment
duties; or (iv) an act of moral turpitude by Executive which tends
to reflect unfavorably on the Company.
In the event that the Company terminates Executive's
employment for cause, Executive shall be entitled only to the unpaid
bi-weekly installments of his Base Salary up to and including the
date of termination and to his approved Business Expense
Reimbursement not paid prior to termination.
b. In the Event of Death. This employment agreement shall terminate in
the event of Executive's death, in which case Executive's estate
shall be entitled to the bi-weekly installments of Executive's Base
Salary for a period of six months following the date of death and
Executive's Business Expense Reimbursement not paid prior to his
death.
c. In the Event of Disability. The Company shall have the right to
terminate this employment agreement in the event of Executive's
inability to substantially perform his duties hereunder for a period
of three months out of any six-month period during his employment,
whether such inability results from illness, accident or otherwise.
In the event that the Company terminates Executive's
employment during the term of this employment agreement as a result
of Executive's Disability, Executive shall be entitled to the
bi-weekly installments of his Base Salary for a period of six months
following the date of termination; Executive's Business Expense
Reimbursement not paid prior to termination; and the continuation of
Executive's health and welfare benefits through the end of the term
of this employment agreement.
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W. Zang Employment Agreement
d. Change in Control. (i) In the event that Executive's employment is
terminated by the Company within one year following a Change in
Control (as defined below) for any reason other than cause, death or
disability, then the Company shall pay Executive one-half his annual
Base Salary at his then current rate and one-half of the latest
annual incentive compensation payment calculated by taking the
highest of the latest two incentive payments earned and paid divided
by two, such payment to be made in one lump sum payment at the time
of termination. Such payments shall be in lieu of any and all other
payments due and owing to Executive under the terms of this
Agreement. The Company shall also provide to the Executive health
insurance for a period of one year following termination of
Executive's employment. Executive shall not be required to seek
other employment or to otherwise mitigate the effects of such
termination, and such payments shall not be reduced by any income
received from other sources (all compensation and other benefits
described above and the terms thereof shall hereinafter be referred
to collectively as the "Severance Package").
(ii) Executive may terminate his employment hereunder within
one year following a Change of Control for Good Reason; provided
that, (x) the Company has been given notice setting forth in
reasonable detail the nature of the Good Reason and (y) a period of
at least thirty (30) days in which the Company may remedy the
circumstances giving rise to such Good Reason has expired, and the
Company fails to so remedy such circumstances. For purposes of this
Agreement, "Good Reason" shall mean:
(A) the assignment to Executive of any duties materially
inconsistent with Executive's position, duties and
responsibilities as set forth in Section 2 of this Agreement
or any action by the Company which results in a material
diminution in Executive's position, authority, duties or
responsibilities, excluding for this purpose any isolated or
inadvertent action by the Company which is remedied by the
Company promptly after receipt of notice thereof from the
Executive; or
(B) any failure by the Company to comply in all material
respects with the provisions of Section 4 of this Agreement
regarding Executive's compensation, benefits, vacation, and
expenses other than an isolated or inadvertent action by the
Company which is remedied by the Company promptly after
receipt of notice thereof from the Executive.
In the event that Executive terminates his employment for Good
Reason following a Change in Control, then the Company shall pay
Executive the Severance Package.
For purposes of this provision, a "Change in Control" shall be
deemed to have occurred: (i) if any "person" (as such term is used
in Sections 13(d)(3) and 14(d)2) of the
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W. Zang Employment Agreement
Securities Exchange Act of 1934, as amended (the "Exchange Act")),
other than Executive, who is not a shareholder of the Company as of
the date hereof, shall have become the beneficial owner, directly or
indirectly, of Common Stock representing thirty-three and one-third
percent (33 1/3%) or more of the combined voting power of the
Company's then outstanding securities, unless three-quarters of the
Board of Directors, as constituted immediately prior to the date of
the Change in Control, decide in their reasonable discretion that no
Change in Control has occurred, the Executive not being allowed to
vote on such matter if he is then a Director; provided, however,
that if any such person other than Executive (whether or not a
stockholder of the Company as of the date hereof) shall become the
beneficial owner, directly or indirectly, of Common Stock
representing fifty percent (50%) or more of the Company's then
outstanding securities, a Change in Control shall ipso facto have
occurred; or (ii) if there is a Change in Control of a nature that,
in the opinion of counsel for the Company, would be required to be
reported in response to Item 6(e) of schedule 14A under the Exchange
Act, unless three-quarters of the Board of Directors, as constituted
immediately prior to the date of the Change in Control, decide in
their reasonable discretion that no Change in Control has occurred,
Executive not being allowed to vote on such matter if he is then a
Director.
6. Unauthorized Disclosure
During the period of his employment and for a period of three (3) years
thereafter, Executive shall not, without the prior written consent of the Board,
disclose to any person other than as required by law or court order (10 days'
prior written notice having been given to the Company in order to formulate a
response), or other than to an employee of the Company, or to a person to whom
disclosure is necessary or appropriate in connection with the performance by
Executive of his duties as an executive of the Company, any confidential
information obtained by him while in the employ of the Company with respect to
any of the Company's products, services, customers, suppliers, marketing
techniques, patents, proprietary technologies, trade secrets, methods, or future
plans, the disclosure of which will be damaging to the Company; provided,
however, that confidential information shall not include any information known
generally to the public (other than as a result of unauthorized disclosure by
Executive).
7. Restrictive Covenant
During the period of his employment and for a period of two (2) years
thereafter, Executive shall not enter into competition with the Company or any
affiliate of the Company without the prior consent of the Board. For the purpose
of this paragraph 7, competition shall mean the association of Executive with a
company, corporation, firm or partnership, whether as an employee, consultant,
partner, principal, agent, representative or shareholder, directly or indirectly
(except as a holder, directly or indirectly,
Page 5 of ten pages
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W. Zang Employment Agreement
of less than Five (5%) Percent of the outstanding securities of any corporation
whose stock is listed for trading on any securities exchange or are traded in
the over-the-counter market), which competes, directly or indirectly, with the
Company in any business in which the Company is presently engaged, including but
not limited to the development, marketing, manufacturing, or distribution of
fuel cell system, or will be engaged upon termination of Executive's employment,
unless such association shall be for purposes and shall impose duties upon
Executive that do not directly relate to the Company's business activities. If a
court of competent jurisdiction should determine that the period, scope, or
geographical area of the restrictions set forth in this paragraph 7 are
unreasonable under the circumstances then existing, the Parties agree that the
period, scope, or geographical area that is reasonable under such circumstances
shall be substituted for the stated period, scope, or geographical area.
During the Term and for a period of two (2) years thereafter, Executive
shall neither solicit, induce and/or suggest to any of the employees,
consultants to, or other persons having a substantial contractual relation with,
the Company to leave such employ, cease consulting or terminate such contractual
relationship with the Company nor to join Executive as a partner, co-venturer,
employee, investor, or otherwise, in any substantial business activity
whatsoever.
Executive shall at no time take any action or make any statement that
could discredit the reputation of the Company or its personnel, products or
services.
8. Inventions or Discoveries
Executive shall fully and promptly disclose to the Company any and all
improvements, discoveries, and inventions made or conceived by him, whether or
not patentable, whether or not during the working hours of his employment or
with the use of the Company's facilities, materials or personnel, and whether
solely or jointly with others, during his employment by the Company, which
result from or relate to the business of the Company in any way.
Any and all such improvements, discoveries, and inventions are and shall
remain the sole and exclusive property of the Company without royalty or payment
of any further consideration to Executive, on his own behalf and on the behalf
of his heirs, assigns, executors, administrators, and any other legal
representative. Executive hereby assigns and transfers all of his right, title
and interest in and to all such improvements, discoveries, and inventions to the
Company, including, but not limited to, any applications for United States
and/or foreign letter patents and any United States and/or foreign patents that
shall be granted. Executive shall apply, at the Company's request and expense,
for United States and foreign letters patent, whether in his name or otherwise
as the Company shall desire, and shall execute and deliver to the Company
without charge to the Company, but at its expense, such written instruments and
shall do such other acts as may be necessary or appropriate in the opinion of
the Company to obtain and maintain United States and/or foreign letters patent
or other proprietary rights and shall vest the entire right entitled thereto in
the Company.
9. Equitable Relief
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W. Zang Employment Agreement
Executive hereby represents that the services to be performed by him are
of a special, unique, unusual, extraordinary and intellectual character which
gives them a peculiar value, the loss of which cannot be reasonably or
adequately compensated in damages in an action at law and that any violation of
this employment agreement will cause the Company immediate and irreparable harm.
Executive therefore expressly agrees that, in addition to any other rights or
remedies which the Company may possess, the Company shall be entitled to
injunctive and other equitable relief to prevent a breach of this contract by
the Company.
10. Indemnification
Executive shall indemnify and save harmless the Company from all liability
from loss, damage or injury to persons or property resulting from the gross
negligence or willful misconduct of Executive.
11. Assignability
No rights or obligations under this employment agreement may be assigned
or transferred by Executive except:
a. Executive's rights to compensation and benefits hereunder shall, in
the event of death, pass to his estate, or to his designated
beneficiary and may be transferred by will or operation of law, and
b. Executive's rights under the Company's plans, programs and policies
may be assigned or transferred in accordance with the terms of such
plans, programs and policies.
The rights and obligations of the Company under this employment agreement
shall inure to the benefit of and shall be binding upon the successors and
assigns of the Company. The Company shall have the right to assign this
agreement to a successor in the event of a merger, consolidation, sale of a
substantial portion of its assets or a similar transaction.
12. Governing Law
This employment agreement shall be governed by the laws of the State of
New Jersey without reference to the principles of conflict of laws.
13. Entire Agreement
Except as otherwise specifically provided herein, this employment
agreement contains all the legally binding understandings and representations
between the Company and Executive pertaining to the subject matter hereof and
supersedes all undertakings and agreements, if any, whether oral or in writing,
previously entered into by the Company and Executive with respect to such
subject matter.
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W. Zang Employment Agreement
14. Amendment or Modification; Waiver
No provision of this employment agreement may be amended or waived unless
such amendment or waiver is approved by the Board and is signed by Executive and
by a duly authorized officer of the Company. Except as otherwise specifically
provided in this employment agreement, no waiver by the Company or Executive of
any breach by the other of any condition or provision of this employment
agreement to be performed by such other party shall be deemed a waiver of a
similar or dissimilar provision or condition at the same or any prior or
subsequent time.
15. Notices
Any notice required or permitted to be given under this employment
agreement shall be in writing and shall be deemed to have been given when
delivered personally or sent by certified or registered mail, postage prepaid,
return receipt requested, duly addressed to the party concerned at the address
indicated below or to such changed address as such party may subsequently give
notice of:
If to H Power: H Power Corp.
60 Montgomery Street
Belleville, New Jersey 07109
Attn.: Secretary
If to Executive: William L. Zang
1406 Langara Circle
Bellingam, WA 98226
16. Severability
In the event that any provision or portion of this employment agreement
shall be determined to be invalid or unenforceable for any reason, the remaining
provisions or portions of this employment agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by
law.
17. Survivorship
To the extent contemplated by this employment agreement, the respective
rights and obligations of the Parties hereunder shall survive any termination of
this employment agreement to the extent necessary to the intended preservation
of such rights and obligations.
18. Representations
a. By the Executive. Executive represents and warrants that the
performance of his duties under this employment agreement will not
violate any agreement between him and any other person, firm or
organization.
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W. Zang Employment Agreement
b. By the Company. The Company represents and warrants that it is fully
authorized and empowered to enter into this employment agreement.
19. References
In the event of Executive's death or a judicial determination of his
incompetence, reference in this employment agreement to Executive will be
deemed, where appropriate, to refer to his legal representative or, where
appropriate, to his beneficiary or beneficiaries.
Headings to the sections in this agreement are intended solely for
convenience and no provision of this employment agreement shall be construed by
reference to any heading.
20. Mutual Intent
The language used in this employment agreement is the language chosen by
the Parties to express their mutual intent. The Parties agree that in the event
that any language, section, clause, phrase or word used in this employment
agreement is determined to be ambiguous, no presumption shall arise against or
in favor of either party and that no rule of strict construction shall be
applied against either party.
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W. Zang Employment Agreement
IN WITNESS WHEREOF, Executive and the Company have caused this employment
agreement to be executed as of the day and year first above written.
EXECUTIVE H POWER CORP.
/s/ William L. Zang By: /s/ H. Frank Gibbard
- ------------------------ --------------------
William L. Zang H. Frank Gibbard
Chief Executive Officer
Page 10 of ten pages
<PAGE>
Exhibit 10.7
CONSULTING AGREEMENT
This Consulting Agreement, made and entered into as of July 28, 1999
between H Power Corp., a Delaware corporation having its principal place of
business at 60 Montgomery Street, Belleville, New Jersey 07109 (the "Company"),
and Frederick Entman, an individual residing at 260 Tillou Road, South Orange,
New Jersey 07079 (the "Consultant").
R E C I T A L S:
WHEREAS, the Company considers it in its best interest and in the best
interest of its stockholders to foster the retention and engagement of key
senior personnel; and
WHEREAS, for the foregoing reasons the Company desires to retain the
services of the Consultant on the terms and subject to the conditions provided
in this Agreement; and
WHEREAS, the Consultant desires to accept such engagement by the Company
and to render services to the Company on the terms and subject to the conditions
provided in this Agreement;
NOW THEREFORE, The parties hereto agree as follows:
1. Engagement
The Company hereby agrees to retain the services of the Consultant, and
the Consultant agrees to be retained by the Company, to render services to
the Company for the period, at the rate of compensation and upon the other
terms and conditions, set forth in this Agreement.
2. Term
The term of the Consultant's engagement under this Agreement (the "Term")
shall commence on June 1, 1999 and shall continue through and including
May 31, 2004, unless earlier terminated in accordance with Section 7, in
which event the Termination Date as set forth therein shall be deemed the
end of the Term. If not earlier terminated, the Term shall be
automatically extended for successive 12-month periods unless either Party
shall object to any extension, in writing, no later than 90 days prior to
the first day of such extension.
3. Position and Duties
(a) Position as Consultant
The Consultant shall serve as a senior consultant to the Company.
During his engagement hereunder, the Consultant shall report
directly to the Board of Directors of the Company (the "Board"). The
Consultant shall be obligated to devote a reasonable amount of his
business time to the Company in satisfaction of his duties hereunder
during any Engagement Year (as defined in Section 4(a) below); it
being understood that the parties contemplate
<PAGE>
that the Consultant shall have other businesses and endeavors and
shall not devote all or even a substantial amount of his business
time to the fulfillment of such duties.
(b) Duties as Consultant
During the Term, the Consultant shall, subject to supervision by the
Board, perform duties consistent with his experience and abilities,
as may be reasonably and properly assigned to the Consultant by the
Board. It is contemplated that the Consultant shall render services
to the Company from his residence and/or from such other location(s)
as may from time to time be convenient to the Consultant. Upon the
Consultant's request, the Company shall provide him with an office,
furnished and equipped in a manner consistent with the position as a
senior consultant and paid for by the Company, at a location
reasonably selected by the Consultant.
4. Compensation and Reimbursement of Expenses
(a) Compensation
For purposes of this Agreement, each consecutive 12 month period
during the Term ending on each May 31st (commencing with May 31,
2000) during the Term shall be referred to as an "Engagement Year."
For services rendered by the Consultant under this Agreement, the
Company shall pay to the Consultant during each Engagement Year
during the Term the following, which shall be considered his "Base
Compensation": a base salary of $113,100 per year payable in equal
biweekly installments, commencing with the end of the pay period
which next follows the commencement of the Term; provided, that such
base salary shall be adjusted at the beginning of each Engagement
Year by a factor equal to the current rate of inflation during the
period from the last such adjustment, or in the case of the first
adjustment, from the date hereof, as shown by the U.S. Bureau of
Labor Statistics Consumer Price Index for Urban Wage Earners and
Clerical Workers ("Index"). Should the U.S. Department of Labor
discontinue the publication of the Index, or publish same less
frequently, or alter same in any other manner, then Company may
adopt a substitute index or substitute procedure which reasonably
reflects and monitors consumer prices within the United States.
The Base Compensation shall be subject to customary payroll
deductions (i.e., for social security, federal, state and local
taxes and other amount customarily withheld from the compensation of
members of the Board and/or employees of the Company).
(b) Financial Advisory Bonus
Except for the Company's initial public offering, arranged for with
Josephthal & Co., Inc., the Company shall pay to the Consultant and
the Consultant shall be entitled to receive from the Company, an
amount or amounts which shall be customary at such time for brokers,
business opportunity finders, financial intermediaries or persons or
entities performing similar functions, in connection with any and
all public and private financings
Page 2 of 14
<PAGE>
consummated by the Company or any of its subsidiaries or affiliates
during the Term hereunder and in connection with which the
Consultant provides assistance, makes any introduction or otherwise
facilitates such transaction, in each case, payable to the
Consultant upon the receipt of said gross proceeds by the Company.
In the event that the Consultant and the Company are unable to agree
upon the amount of such compensation, they shall reasonably agree
upon an independent investment banking firm to make such
determination, which shall be binding upon them.
(c) Options
Nothing herein shall limit or restrict the Consultant's ability to
participate in the Company's 1996 Stock Option Plan (the "Plan"). On
the date hereof, the Company hereby grants to the Consultant
pursuant to the Plan the option (the "Consulting Options") to
acquire 100,000 shares of the Company's common stock at a price of
$15.00 per share (each of such amounts being subject to customary
anti-dilution adjustments, including in connection with any stock
split, recombination, reclassification or similar transaction). The
Initial Option shall have a term of five years from the date hereof,
irrespective of any termination of this Agreement, and shall be
fully exercisable and vested from and after the date hereof. The
Consulting Options may be exercised by cash tender or by tender of
other options or securities of the Company, upon customary
conditions relating to a cashless exercise of options.
(d) Reimbursement of Expenses; Office Equipment
Consistent with established policies of the Company as in effect
from time to time for senior executives, consultants and members of
the Board, the Company shall pay to or reimburse the Consultant for
all reasonable and actual out-of-pocket expenses, including without
limitation, travel, hotel, automobile, telephone and cellular
telephone expenses, computer and data processing expenses and
similar expenses, incurred by the Consultant in performing his
obligations under this Agreement. During the term of this Agreement,
as may be extended, the Company shall furnish the Consultant with,
or shall reimburse the Consultant for, a vehicle (of comparable
stature to the make and model of the automobile to which the
Consultant has been accustomed), as well as insurance costs
therefor. In addition, the Company shall provide the Consultant with
reasonable and necessary office furniture, equipment and supplies
including without limitation, a desk top computer with a full
keyboard and 17 inch screen, a laser jet printer, a modem, a
scanner, tape back-up and uninterrupted power supply equipment, and
programs required for the Consultant's duties hereunder for his use
at his residence or at such other location the Consultant may
select.
Page 3 of 14
<PAGE>
5. Benefits
(a) Benefit Plans
The payments provided in Section 4 above are in addition to any
benefits to which the Consultant may be, or may become, entitled
under any of the Company's benefit plans or programs for which
members of the Board or senior executive officers of or consultants
to the Company are or shall become eligible. During the term the
Consultant shall be eligible to receive benefits and emoluments
which are consistent with the benefits and emoluments provided to
senior executive officers of the Company, and subsequent to the term
shall be entitled to all health benefits for the life of the
consultant.
(b) Vacation
The Consultant shall be entitled to reasonable periods of vacation
and sick time consistent with his role as a senior consultant to the
Company, during which periods the Company shall not expect the
Consultant to perform services hereunder.
(c) No Reduction
There shall be no material reduction or diminution of the benefits
provided in this Section 5 during the Term unless (i) the Consultant
shall have provided his consent to such reduction or diminution or
(ii) an equitable arrangement (embodied in an ongoing substitute or
alternative benefit or plan) has been made with respect to such
benefit or plan or (iii) such reduction is part of an
across-the-board reduction affecting all senior executives of the
Company.
6. Benefits Payable Upon Disability
(a) Disability Benefits
During any period of Disability (as defined below) occurring during
the Term, the Company shall continue to pay to the Consultant the
Base Compensation as provided herein and continue to extend to him
the benefits described in Sections 4 and 5 hereof; it being
understood that if disability benefits are provided under any
disability insurance or similar policy maintained by the Company (or
maintained by the Consultant, the cost of which is reimbursed or
paid by the Company), payments under such policy shall be considered
as payments by the Company and, to the extent received, shall offset
any Base Compensation payable to the Consultant under this
Agreement. As used in this Agreement, "Disability" shall mean the
inability (as determined by a majority of the remaining members of
the Board, other than the Consultant, voting for such determination)
of the Consultant to render services to the Company, as provided
herein, as a result of physical or mental infirmity or disability.
(b) Services During Disability
Page 4 of 14
<PAGE>
During the Term, notwithstanding any Disability, the Consultant
shall, to the extent that he is physically and mentally able to do
so, furnish information, assistance and services to the Company.
7. Termination
This Agreement shall be terminated in accordance with the provisions of
this Section 7, in which case the provision of Section 8 below shall be
applicable.
(a) Upon Expiration of the Term
This Agreement shall terminate in accordance with Section 2 above.
(b) By the Company
In addition to the provisions of Section 7(a) above, this Agreement
is subject to earlier termination by the Company, as follows:
(i) Death of Consultant
If the Consultant dies, this Agreement shall terminate, the
Termination Date being the date of the Consultant's death.
(ii) Disability
If the Consultant is unable to perform his services as
required in this Agreement, as a result of his Disability
during an Engagement Year, the Company shall have the right to
terminate this Agreement as determined by a majority of the
remaining members of the Board, other than the Consultant,
voting for such determination), the Termination Date being 15
days after notice thereof is provided to the Consultant.
(iii) Termination by the Company for Cause
The Company shall have the right to terminate the Consultant's
engagement under this Agreement for Cause (as defined below),
the Termination Date to be immediately upon notice thereof
from the Company to the Consultant. For purposes of this
Agreement, "Cause" shall mean the Consultant's (A) conviction
of any misdemeanor involving moral turpitude or any felony,
(B) misappropriation or embezzlement from the Company, (C)
breach during the Term of Sections 10 or 11 below or (D)
persistent refusal (after 30 days' prior written notice during
which such refusal may be cured by the Consultant) to perform
his duties hereunder.
(iv) No Termination by the Company Without Cause
Page 5 of 14
<PAGE>
The Company shall not have the right to terminate the
Consultant's engagement hereunder for any reason not
specifically set forth in clauses (i), (ii) or (iii) of this
Section 7(b).
(c) By The Consultant
In addition to the provisions of Section 7(a) above, this Agreement
is subject to earlier termination by the Consultant, as follows:
(i) Termination by the Consultant for Just Cause
The Consultant shall have the right to terminate his
employment under this Agreement upon the occurrence of a
material breach of this Agreement by the Company. The
Termination Date shall be 15 days after the date of the
applicable notice giving rise to a termination, by the
Consultant to the Company.
(ii) Termination by the Consultant Without Just Cause
The Consultant shall have the right to terminate the
Consultant's employment under this Agreement for any other
reason not set forth in clause (i) of this Section 7(c), the
Termination Date being 15 days after notice thereof from the
Consultant to the Company.
8. Effect of Termination
The following provisions shall be applicable in the event of the
termination of this Agreement as provided in Section 7 above.
(a) Expiration of Term
Upon termination of this Agreement as provided in Section 7(a)
above, this Agreement shall terminate and be of no further force and
effect, except as provided in Sections 11, 12 and 13(b) below which
shall survive such termination.
(b) Death
Upon the termination of this Agreement as provided in Section
7(b)(i) above, the Company shall pay to the Consultant's estate (i)
the Base Compensation otherwise payable to the Consultant hereunder
for the six-month period following the Termination Date, payable
within 180 days after the Termination Date (but not earlier than any
recovery of insurance proceeds in respect thereof, as provided
below), and (ii) any bonus for the Engagement Year in which the
Termination Date occurs that the Board determines would otherwise
have been payable had the Consultant not died, which Annual Bonus
shall be reduced by pro prorating it through the Termination Date,
payable, in the case of this clause (ii), at the time such payment
would otherwise be due and payable hereunder, and (iii) expense
reimbursement amounts accrued through the Termination Date, at the
time such payment would otherwise be due and payable thereunder.
Neither party shall have
Page 6 of 14
<PAGE>
any further liability or obligation to the other except as provided
in Sections 11, 12 and 13(b) hereunder which shall survive the
Termination Date. Notwithstanding the provisions of clause (i) and
(ii) above, the Company shall have the right to provide for either
or both of the payments described therein by purchasing life
insurance on the Consultant's life or reimbursing to the Consultant
the cost of the premiums in respect of such life insurance which may
be purchased directly by the Consultant if he so elects.
In the event that the Consultant shall own any employee, director
and/or consultant stock options as of the Termination Date, all of
such options which are unvested as of the Termination Date shall
vest and become exercisable by virtue of any termination under
Section 7(b)(i) and, notwithstanding the provisions of the Plan
pursuant to which such options may have been granted, the
Consultant's estate shall have a period of two years from the
Termination Date to exercise such options, except that the
Consulting Options shall have the term provided in Section 4(c)
above.
(c) Disability
Upon the termination of this Agreement as provided in Section
7(b)(ii) above, the Company shall pay to the Consultant (i) an
amount equal to the compensation otherwise payable to the Consultant
hereunder for the six-month period following the Termination Date
and (ii) any bonus for the Employment Year in which the Termination
Date occurs that the Board determines would otherwise have been
payable had the Consultant not become Disabled, which Annual Bonus
shall be reduced by prorating it through the Termination Date, in
each case, payable at the times such payments would otherwise be due
and payable hereunder and (iii) expense reimbursement amounts
accrued through the Termination Date, at the time such payment would
otherwise be due and payable thereunder. Neither party shall have
any further liability or obligation to the other except as provided
in Sections 11, 12 and 13(b) hereunder which shall survive the
Termination Date. Notwithstanding the provisions of clauses (i) and
(ii) above, the Company shall have the right to provide for either
or both of such payments described therein by purchasing disability
insurance in respect of the Consultant or reimbursing to the
Consultant the cost of the premiums in respect of such disability
insurance which may be purchased directly by the Consultant if he so
elects. In the event that the Consultant shall own any employee,
director and/or consultant stock options as of the Termination Date,
all of such options which are unvested as of the Termination Date
shall vest and become exercisable by virtue of any termination under
Section 7(b)(ii) and, notwithstanding the provisions of the
Company's Stock Option Plan pursuant to which such options may have
been granted, the Consultant shall have a period of two years from
the Termination Date to exercise such options, except that the
Consulting Options shall have the term provided in Section 4(c)
above.
(d) Termination by the Company For Cause
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<PAGE>
Upon the termination of this Agreement as provided in Section
7(b)(iii) above, the Company shall pay to the Consultant (i) the
accrued and unpaid Base Compensation, if any, through the
Termination Date and (ii) expense reimbursement amounts accrued
through the Termination Date, at the time such payments are
otherwise due and payable thereunder. Neither party shall have any
further liability or obligation to the other except as provided in
Sections 11, 12 and 13(b) hereunder which shall survive the
Termination Date. No unvested employee, director and/or consultant
stock options shall vest or become exercisable by virtue of any
termination under Section 7(b)(iii) and any and all rights thereto
then possessed by the Consultant shall be terminated and of no
further force and effect; it being understood that the foregoing
shall not affect the Consulting Options.
(e) Termination by the Consultant for Just Cause
Upon termination of this Agreement as provided in Section 7(c)(i)
above, the Company shall pay to the Consultant (i) the Base
Compensation which would otherwise have been payable hereunder for
the remainder of the Term had the Agreement not been terminated and,
(ii) expense reimbursement amounts accrued through the Termination
Date, in each case, in the case of clause (i) and (ii) above, at the
time such payments are otherwise due and payable thereunder. Neither
party shall have any further liability or obligation to the other
except as provided in Sections 11, 12 and 13(b) hereunder which
shall survive the Termination Date. All unvested employee, director
and/or consultant stock options, if any, shall vest and become
exercisable for their remaining term absent such termination by
virtue of any termination under Section 7(c)(i).
(f) Termination by the Consultant Without Just Cause
Upon the termination of this Agreement as provided in Section
7(c)(ii) above, the Company shall pay to the Consultant (i) the
accrued and unpaid Base Compensation, if any, through the
Termination Date, and (ii) expense reimbursement amounts accrued
through the Termination Date. Neither party shall have any further
liability or obligation to the other except as provided in Sections
11, 12 and 13(b) hereunder which shall survive the Termination Date.
No unvested employee or directors options shall vest or become
exercisable by virtue of any termination under Section 7(c)(ii)
above and any and all rights thereto to such unvested options then
possessed by the Consultant shall be terminated and of no further
force and effect; it being understood that the foregoing shall not
affect the Consulting Options.
9. Federal Income Tax and Other Withholdings
The Company shall withhold from any benefits payable pursuant to this
Agreement such federal, state, city or other taxes and other amounts as
may be required to be withheld pursuant to any applicable law or
governmental regulations or ruling and shall timely pay over to the
appropriate governmental or other authorities the amount withheld,
together with any additional amounts required to be paid by the Company in
respect thereof.
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<PAGE>
10. Non-Competition and Confidential Information During the Term
(a) Non-Competition
The Consultant covenants and agrees that he will not at any time
during the Term engage in a business which is on the date hereof or
during the Term in competition with the business of the Company, or
solicit the services of any employee of the Company in connection
therewith.
(b) Confidential Information
The Consultant shall, during the Term hold in a fiduciary capacity
for the benefit of the Company and its stockholders all secret,
confidential or proprietary information, knowledge or data relating
to the Company (and any of its subsidiaries or affiliates), which
shall have been obtained by the Consultant during or by reason of
his engagement by the Company. During the Term, the Consultant shall
not, without the prior written consent of the Company, communicate
or divulge any such information, knowledge or data to any person or
entity other than the Company (or such applicable subsidiaries or
affiliates) and those designated by them which would result in any
misappropriation or improper use hereof, except that, during his
engagement hereunder, in furtherance of the business and for the
benefit of the Company, the Consultant may provide confidential
information as appropriate to attorneys, accountants, financial
institutions or other persons or entities engaged in business with
the Company from time to time.
11. Indemnification and Liability Insurance
(a) Indemnification
The Company shall indemnify and hold the Consultant harmless, to the
fullest extent permitted by applicable laws and regulations, against
any and all expenses, liabilities and losses (including without
limitation, reasonable attorneys' fees and disbursements of counsel
reasonably satisfactory to the Company), incurred or suffered by him
in connection with his service hereunder, except to the extent of
the Consultant's gross negligence or willful misconduct.
(b) Insurance
To the extent available at commercially reasonable rates, the
Company shall maintain for the benefit of the Consultant, a
directors' and officers' liability insurance policy insuring the
Consultant's service hereunder and, if the Consultant is a member of
the Board, as a member thereof, during the Term in accordance with
its customary practices as in effect from time to time during the
Term; provided, that all other directors of the Company are also
covered by such insurance. The parties acknowledge and agree that
such policy may cover other directors and officers of the Company in
addition to the Consultant.
12. Registration Rights
Page 9 of 14
<PAGE>
The Company acknowledges that the Consultant and certain of his family
members, namely his children Scott and Brian, and his wife Elise or trusts
for the benefit of such persons or entities owned or controlled by such
persons (together with the Consultant, the "Holders") are the holders in a
substantial number of shares of Common Stock of the Company (the
"Registrable Securities"). In connection with this Agreement and the
transactions contemplated hereby, the Company desires to grant to the
Holders certain registration rights relating to the Registrable
Securities.
(a) Demand Registration
The Holders and the holders under a Consulting Agreement dated the
date hereof between the Company and Mr. Norman Rothstein
collectively shall have the one-time right at any time from time to
time to request registration under the Securities Act of 1933 of all
or part of their Registrable Securities on Form S-1, S-2 or S-3 (if
available) or any similar registration (each, a "Demand
Registration"); provided, that the Company need not effect the
Demand Registration unless such Demand Registration of all the
Holders shall include at least 100,000 shares of Common Stock. In
the event of a Demand Registration, the Company shall use its best
efforts to file and cause to become effect such registration
statement and take other appropriate methods to effect such
distributions of securities, as shall be necessary or appropriate,
upon customary terms and conditions.
(b) Piggyback Registration
Whenever the Company proposes to register any of its securities
under the Securities Act (other than in a registration relating to
sales of securities to participants in a Company dividend
reinvestment plan, S-4, or S-8 or any successor form or in
connection with an exchange offer or an offering of securities
solely to the existing stockholders or employees of the Company),
the Company will give prompt written notice to all Holders of
Registrable Securities of its intention to effect such a
registration and will include in such registration (subject to
customary underwriters' limitations, cut-backs and restrictions, if
any, upon written notice from the Company's underwriters) all
Registrable Securities with respect to which the Company has
received written requests for inclusion therein.
(c) Expenses of Registration
Except as otherwise provided herein, all registration expenses
incurred in connection with all registrations pursuant to this
Section 12 shall be borne by the Company; provided, that
underwriters' or brokers' discounts, fees or selling commissions
shall be borne by the Holders and not by the Company.
(d) Indemnification
The Company agrees to indemnify, to the fullest extent permitted by
applicable law, each Holder of Registrable Securities, against all
losses, claims, damages, liabilities, expenses or any amounts paid
in settlement of any litigation, investigation or proceeding
commenced or threatened (collectively, "Claims") to which each such
indemnified party may become
Page 10 of 14
<PAGE>
subject under the Securities Act (except to the extent based solely
on information furnished to the Company in writing by such Holder
for inclusion in any registration statement); the Consultant shall
indemnify the Company against any claims under the Securities Act
resulting solely from information furnished in writing to the
Company by the Consultant for inclusion in a registration statement
under which the Holders are selling security holders.
13. General Provisions
(a) Assignment
Neither this Agreement nor any right or interest hereunder shall be
assignable by the Consultant or the Company without the prior
written consent of the other; provided, that (i) in the event of the
Consultant's Death during the Term, the Consultant's estate and his
heir, executors, administrators, legatees and distributees shall
have the rights and obligations set forth herein, as provided
herein, and (ii) nothing contained in this Agreement shall limit or
restrict the Company's ability to merge or consolidate or effect any
similar transaction with any other entity, irrespective of whether
the Company is the surviving entity; provided, that such surviving
entity shall continue to be bound by the provisions hereof binding
upon the Company.
(b) Binding Agreement
This Agreement shall be binding upon, and inure to the benefit of
the Consultant and the Company and their respective heirs,
executors, administrators legatees and distributees, successors and
permitted assigns.
(c) Amendment of Agreement
This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(d) Severability
If, for any reason, any provision of this Agreement is determined to
be invalid or unenforceable, such invalidity or lack of
enforceability shall not affect any other provision of this
Agreement not so determined to be invalid or unenforceable, and each
such other provision shall, to the full extent consistent with
applicable law, continue in full force and effect, irrespective of
such invalid or unenforceable provision.
(e) Effect of Prior Agreements
This Agreement contains the entire understanding between the parties
hereto respecting the Consultant's engagement by the Company, and
supersedes any prior agreement between the Company and the
Consultant relating to the retention of the Consultant as a
consultant to the Company.
(f) Notices
Page 11 of 14
<PAGE>
For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given (i) when delivered, if
sent by telecopy or by hand, (ii) one business day after sending, if
sent by reputable overnight courier service, such as Federal
Express, or (iii) three business days after being mailed, if sent by
United States certified or registered mail, return receipt
requested, postage prepaid. Notices shall be sent by one of the
method described above; provided, that any notice sent by telecopy
shall also be sent by any other method permitted above. Notices
shall be sent, if to the Consultant, to Frederick Entman, 260 Tillou
Road, South Orange, New Jersey 07079; and if to the Company to H
Power Corporation, 60 Montgomery Street, Belleville, New Jersey
07109; telecopy no. (201) 450-9850, directed to the attention of the
Board with copies to the Chairman and the Secretary of the Company;
or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.
(g) Counterparts
This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together
shall constitute one and the same instrument. This Agreement may be
executed by facsimile transmission.
(h) Arbitration
In the event of a dispute or controversy arising under or in
connection with this Agreement, the Consultant shall give the
Company or the Company shall give the Consultant, as applicable, a
written demand for relief. If the dispute or controversy is not
resolved, it shall be settled exclusively by arbitration, conducted
in Essex County, Newark, the State of New Jersey, in accordance with
the rules of the American Arbitration Association. Judgment shall be
entered on the arbitrator's award in any court having jurisdiction
over the parties hereto.
(i) Indulgences, Etc.
Neither the failure nor any delay on the part of either party to
exercise any right, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other
or further exercise of the same or of any other right, remedy, power
or privilege, nor shall any waiver of any right, remedy, power or
privilege with respect to any occurrence be construed as a waiver of
such right, remedy, power or privilege with respect to any other
occurrence.
(j) Headings
The headings of sections and paragraphs herein are included solely
for convenience of reference and shall not control the meaning or
interpretation any of the provisions of this Agreement.
Page 12 of 14
<PAGE>
(k) Governing Law
This Assignment shall be governed by and construed in accordance
with the internal laws of the State of New Jersey, without regard to
principles of conflicts of laws.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement, comprised of 14 pages
including this page, to be executed by its duly authorized officer, and the
Consultant has signed this Agreement, all as of the date first set forth above.
Consultant: H Power Corp.:
/s/ Frederick Entman By: /s/ H. Frank Gibbard
- ----------------------- --------------------
Frederick Entman CEO
Page 14 of 14
<PAGE>
Exhibit 10.8
HP/Rothstein Consultation Agreement
CONSULTING AGREEMENT
This Consulting Agreement, made and entered into as of July 28, 1999
between H Power Corp., a Delaware corporation having its principal place of
business at 60 Montgomery Street, Belleville, New Jersey 07109 (the "Company"),
and Norman Rothstein, an individual residing at 311 Links Drive West, Oceanside,
New York 11572 (the "Consultant").
RE C I T A L S:
WHEREAS, the Company considers it in its best interest and in the best
interest of its stockholders to foster the retention and engagement of key
senior personnel; and
WHEREAS, for the foregoing reasons the Company desires to retain the
services of the Consultant on the terms and subject to the conditions provided
in this Agreement; and
WHEREAS, the Consultant desires to accept such engagement by the Company
and to render services to the Company on the terms and subject to the conditions
provided in this Agreement;
NOW THEREFORE, the parties hereto agree as follows:
1. Engagement
The Company hereby agrees to retain the services of the Consultant, and
the Consultant agrees to be retained by the Company, to render services to
the Company for the period, at the rate of compensation and upon the other
terms and conditions, set forth in this Agreement.
2. Term
The term of the Consultant's engagement under this Agreement (the "Term")
shall commence on June 1, 1999 and shall continue through and including
May 31, 2004, unless earlier terminated in accordance with Section 7, in
which event the Termination Date as set forth therein shall be deemed the
end of the Term. If not earlier terminated, the Term shall be
automatically extended for successive 12-month periods unless either Party
shall object to any extension, in writing, no later than 90 days prior to
the first day of such extension.
Page 1 of 15 Pages
<PAGE>
HP/Rothstein Consultation Agreement
3. Position and Duties
(a) Position as Consultant
The Consultant shall serve as a senior consultant to the Company.
During his engagement hereunder, the Consultant shall report
directly to the Board of Directors of the Company (the "Board"). The
Consultant shall be obligated to devote a reasonable amount of his
business time to the Company in satisfaction of his duties hereunder
during any Engagement Year (as defined in Section 4(a) below); it
being understood that the parties contemplate that the Consultant
shall have other businesses and endeavors and shall not devote all
or even a substantial amount of his business time to the fulfillment
of such duties.
(b) Duties as Consultant
During the Term, the Consultant shall, subject to supervision by the
Board, perform duties consistent with his experience and abilities,
as may be reasonably and properly assigned to the Consultant by the
Board. It is contemplated that the Consultant shall render services
to the Company from his residence and/or from such other location(s)
as may from time to time be convenient to the Consultant. Upon the
Consultant's request, the Company shall provide him with an office,
furnished and equipped in a manner consistent with the position as a
senior consultant and paid for by the Company, at a location
reasonably selected by the Consultant.
4. Compensation and Reimbursement of Expenses
(a) Compensation
For purposes of this Agreement, each consecutive 12 month period
during the Term ending on each May 31st (commencing with May 31,
2000) during the Term shall be referred to as an "Engagement Year."
For services rendered by the Consultant under this Agreement, the
Company shall pay to the Consultant during each Engagement Year
during the Term the following, which shall be considered his "Base
Compensation": a base salary of $113,100 per year payable in equal
biweekly installments, commencing with the end of the pay period
which next follows the commencement of the Term; provided, that such
base salary shall be adjusted at the beginning of each Engagement
Year by a factor equal to the current rate of inflation during the
period from the last such adjustment, or in the case of the first
adjustment, from the date hereof, as shown by the U.S. Bureau of
Labor Statistics Consumer Price Index for Urban Wage Earners and
Clerical Workers ("Index").
Page 2 of 15 Pages
<PAGE>
HP/Rothstein Consultation Agreement
Should the U.S. Department of Labor discontinue the publication of
the Index, or publish same less frequently, or alter same in any
other manner, then Company may adopt a substitute index or
substitute procedure which reasonably reflects and monitors consumer
prices within the United States.
The Base Compensation shall be subject to customary payroll
deductions (i.e., for social security, federal, state and local
taxes and other amounts customarily withheld from the compensation
of members of the Board and/or employees of the Company).
(b) Financial Advisory Bonus
Except for the Company's initial public offering, arranged for with
Josephthal & Co., Inc., the Company shall pay to the Consultant and
the Consultant shall be entitled to receive from the Company, an
amount or amounts which shall be customary at such time for brokers,
business opportunity finders, financial intermediaries or persons or
entities performing similar functions, in connection with any and
all public and private financings consummated by the Company or any
of its subsidiaries or affiliates during the Term hereunder and in
connection with which the Consultant provides assistance, makes any
introduction or otherwise facilitates such transaction, in each
case, payable to the Consultant upon the receipt of said gross
proceeds by the Company. In the event that the Consultant and the
Company are unable to agree upon the amount of such compensation,
they shall reasonably agree upon an independent investment banking
firm to make such determination, which shall be binding upon them.
(c) Options
Nothing herein shall limit or restrict the Consultant's ability to
participate in the Company's 1996 Stock Option Plan (the "Plan"). On
the date hereof, the Company hereby grants to the Consultant
pursuant to the Plan the option (the "Consulting Options") to
acquire 100,000 shares of the Company's common stock at a price of
$15.00 per share (each of such amounts being subject to customary
anti-dilution adjustments, including in connection with any stock
split, recombination, reclassification or similar transaction). The
Initial Option shall have a term of five years from the date hereof,
irrespective of any termination of this Agreement, and shall be
fully exercisable and vested from and after the date hereof. The
Consulting Options may be exercised by cash tender or by tender of
other options or securities of the Company, upon customary
conditions relating to a cashless exercise of options.
Page 3 of 15 Pages
<PAGE>
HP/Rothstein Consultation Agreement
(d) Reimbursement of Expenses; Office Equipment
Consistent with established policies of the Company as in effect
from time to time for senior executives, consultants and members of
the Board, the Company shall pay to or reimburse the Consultant for
all reasonable and actual out-of-pocket expenses, including without
limitation, travel, hotel, automobile, telephone and cellular
telephone expenses, computer and data processing expenses and
similar expenses, incurred by the Consultant in performing his
obligations under this Agreement. During the term of this Agreement,
as may be extended, the Company shall furnish the Consultant with,
or shall reimburse the Consultant for, a vehicle (of comparable
stature to the make and model of the automobile to which the
Consultant has been accustomed), as well as insurance costs
therefor. In addition, the Company shall provide the Consultant with
reasonable and necessary office furniture, equipment and supplies,
including without limitation, a desk top computer with a full
keyboard and 17 inch screen, a laser jet printer, a modem, a
scanner, tape back-up and uninterrupted power supply equipment, and
programs required for the Consultant's duties hereunder for his use
at his residence or at such other location the Consultant may
select.
5. Benefits
(a) Benefit Plans
The payments provided in Section 4 above are in addition to any
benefits to which the Consultant may be, or may become, entitled
under any of the Company's benefit plans or programs for which
members of the Board or senior executive officers of or consultants
to the Company are or shall become eligible. During the term the
Consultant shall be eligible to receive benefits and emoluments
which are consistent with the benefits and emoluments provided to
senior executive officers of the Company, and subsequent to the term
shall be entitled to all health benefits for the life of the
consultant.
(b) Vacation
The Consultant shall be entitled to reasonable periods of vacation
and sick time consistent with his role as a senior consultant to the
Company, during which periods the Company shall not expect the
Consultant to perform services hereunder.
Page 4 of 15 Pages
<PAGE>
HP/Rothstein Consultation Agreement
(c) No Reduction
There shall be no material reduction or diminution of the benefits
provided in this Section 5 during the Term unless (i) the Consultant
shall have provided his consent to such reduction or diminution or
(ii) an equitable arrangement (embodied in an ongoing substitute or
alternative benefit or plan) has been made with respect to such
benefit or plan or (iii) such reduction is part of an
across-the-board reduction affecting all senior executives of the
Company.
6. Benefits Payable Upon Disability
(a) Disability Benefits
During any period of Disability (as defined below) occurring during
the Term, the Company shall continue to pay to the Consultant the
Base Compensation as provided herein and continue to extend to him
the benefits described in Sections 4 and 5 hereof; it being
understood that if disability benefits are provided under any
disability insurance or similar policy maintained by the Company (or
maintained by the Consultant, the cost of which is reimbursed or
paid by the Company), payments under such policy shall be considered
as payments by the Company and, to the extent received, shall offset
any Base Compensation payable to the Consultant under this
Agreement. As used in this Agreement, "Disability" shall mean the
inability (as determined by a majority of the remaining members of
the Board, other than the Consultant, voting for such determination)
of the Consultant to render services to the Company, as provided
herein, as a result of physical or mental infirmity or disability.
(b) Services During Disability
During the Term, notwithstanding any Disability, the Consultant
shall, to the extent that he is physically and mentally able to do
so, furnish information, assistance and services to the Company.
7. Termination
This Agreement shall be terminated in accordance with the provisions of
this Section 7, in which case the provision of Section 8 below shall be
applicable.
(a) Upon Expiration of the Term
Page 5 of 15 Pages
<PAGE>
HP/Rothstein Consultation Agreement
This Agreement shall terminate in accordance with Section 2 above.
(b) By the Company
In addition to the provisions of Section 7(a) above, this Agreement
is subject to earlier termination by the Company, as follows:
(i) Death of Consultant
If the Consultant dies, this Agreement shall terminate, the
Termination Date being the date of the Consultant's death.
(ii) Disability
If the Consultant is unable to perform his services as
required in this Agreement, as a result of his Disability
during an Engagement Year, the Company shall have the right to
terminate this Agreement as determined by a majority of the
remaining members of the Board, other than the Consultant,
voting for such determination), the Termination Date being 15
days after notice thereof is provided to the Consultant.
(iii) Termination by the Company for Cause
The Company shall have the right to terminate the Consultant's
engagement under this Agreement for Cause (as defined below),
the Termination Date to be immediately upon notice thereof
from the Company to the Consultant. For purposes of this
Agreement, "Cause" shall mean the Consultant's (A) conviction
of any misdemeanor involving moral turpitude or any felony,
(B) misappropriation or embezzlement from the Company, (C)
breach during the Term of Sections 10 or 11 below or (D)
persistent refusal (after 30 days' prior written notice during
which such refusal may be cured by the Consultant) to perform
his duties hereunder.
(iv) No Termination by the Company Without Cause
The Company shall not have the right to terminate the
Consultant's engagement hereunder for any reason not
specifically set forth in clauses (i), (ii) or (iii) of this
Section 7(b).
Page 6 of 15 Pages
<PAGE>
HP/Rothstein Consultation Agreement
(c) By The Consultant
In addition to the provisions of Section 7(a) above, this Agreement
is subject to earlier termination by the Consultant, as follows:
(i) Termination by the Consultant for Just Cause
The Consultant shall have the right to terminate his
employment under this Agreement upon the occurrence of a
material breach of this Agreement by the Company. The
Termination Date shall be 15 days after the date of the
applicable notice giving rise to a termination, by the
Consultant to the Company.
(ii) Termination by the Consultant Without just Cause
The Consultant shall have the right to terminate the
Consultant's employment under this Agreement for any other
reason not set forth in clause (i) of this Section 7(c), the
Termination Date being 15 days after notice thereof from the
Consultant to the Company.
8. Effect of Termination
The following provisions shall be applicable in the event of the
termination of this Aareement as provided in Section 7 above.
(a) Expiration of Term
Upon termination of this Agreement as provided in Section 7(a)
above, this Agreement shall terminate and be of no further force and
effect, except as provided in Sections 11, 12 and 13(b) below which
shall survive such termination.
(b) Death
Upon the termination of this Agreement as provided in Section
7(b)(i) above, the Company shall pay to the Consultant's estate (i)
the Base Compensation otherwise payable to the Consultant hereunder
for the six-month period following the Termination Date, payable
within 180 days after the Termination Date (but not earlier than any
recovery of insurance proceeds in respect thereof, as provided
below), and (ii) any bonus for the Engagement Year in which the
Termination Date occurs that the Board determines
Page 7 of 15 Pages
<PAGE>
HP/Rothstein Consultation Agreement
would otherwise have been payable had the Consultant not died, which
Annual Bonus shall be reduced by prorating it through the
Termination Date, payable, in the case of this clause (ii), at the
time such payment would otherwise be due and payable hereunder, and
(iii) expense reimbursement amounts accrued through the Termination
Date, at the time such payment would otherwise be due and payable
thereunder. Neither party shall have any further liability or
obligation to the other except as provided in Sections 11, 12 and
13(b) hereunder which shall survive the Termination Date.
Notwithstanding the provisions of clauses (i) and (ii) above, the
Company shall have the right to provide for either or both of the
payments described therein by purchasing life insurance on the
Consultant's life or reimbursing to the Consultant the cost of the
premiums in respect of such life insurance which may be purchased
directly by the Consultant if he so elects.
In the event that the Consultant shall own any employee, director
and/or consultant stock options as of the Termination Date, all of
such options which are unvested as of the Termination Date shall
vest and become exercisable by virtue of any termination under
Section 7(b)(i) and, notwithstanding the provisions of the Plan
pursuant to which such options may have been granted, the
Consultant's estate shall have a period of two years from the
Termination Date to exercise such options, except that the
Consulting Options shall have the term provided in Section 4(c)
above.
(c) Disability
Upon the termination of this Agreement as provided in Section
7(b)(ii) above, the Company shall pay to the Consultant (i) an
amount equal to the compensation otherwise payable to the Consultant
hereunder for the six-month period following the Termination Date
and (ii) any bonus for the Employment Year in which the Termination
Date occurs that the Board determines would otherwise have been
payable had the Consultant not become Disabled, which Annual Bonus
shall be reduced by prorating it through the Termination Date, in
each case, payable at the times such payments would otherwise be due
and payable hereunder and (iii) expense reimbursement amounts
accrued through the Termination Date, at the time such payment would
otherwise be due and payable thereunder. Neither party shall have
any further liability or obligation to the other except as provided
in Sections 11, 12 and 13(b) hereunder which shall survive the
Termination Date. Notwithstanding the provisions of clauses (i) and
(ii) above, the Company shall have the right to provide for either
or both of such payments described therein by purchasing disability
insurance in respect of the Consultant or reimbursing to the
Consultant the cost of the premiums in respect of such disability
insurance which may be purchased directly by the Consultant if he so
elects. In the event that the Consultant shall own any employee,
Page 8 of 15 Pages
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HP/Rothstein Consultation Agreement
director and/or consultant stock options as of the Termination Date,
all of such options which are unvested as of the Termination Date
shall vest and become exercisable by virtue of any termination under
Section 7(b)(ii) and, notwithstanding the provisions of the
Company's Stock Option Plan pursuant to which such options may have
been granted, the Consultant shall have a period of two years from
the Termination Date to exercise such options, except that the
Consulting Options shall have the term provided in Section 4(c)
above.
(d) Termination by the Company For Cause
Upon the termination of this Agreement as provided in Section
7(b)(iii) above, the Company shall pay to the Consultant (i) the
accrued and unpaid Base Compensation, if any, through the
Termination Date and (ii) expense reimbursement amounts accrued
through the Termination Date, at the time such payments are
otherwise due and payable thereunder. Neither party shall have any
further liability or obligation to the other except as provided in
Sections 11, 12 and 13(b) hereunder which shall survive the
Termination Date. No unvested employee, director and/or consultant
stock options shall vest or become exercisable by virtue of any
termination under Section 7(b)(iii) and any and all rights thereto
then possessed by the Consultant shall be terminated and of no
further force and effect; it being understood that the foregoing
shall not affect the Consulting Options.
(e) Termination by the Consultant for Just Cause
Upon termination of this Agreement as provided in Section 7(c)(i)
above, the Company shall pay to the Consultant (i) the Base
Compensation which would otherwise have been payable hereunder for
the remainder of the Term had the Agreement not been terminated and,
(ii) expense reimbursement amounts accrued through the Termination
Date, in each case, in the case of clause (i) and (ii) above, at the
time such payments are otherwise due and payable thereunder. Neither
party shall have any further liability or obligation to the other
except as provided in Sections 11, 12 and 13(b) hereunder which
shall survive the Termination Date. All unvested employee, director
and/or consultant stock options, if any, shall vest and become
exercisable for their remaining term absent such termination by
virtue of any termination under Section 7(c)(i).
(f) Termination by the Consultant Without Just Cause
Upon the termination of this Agreement as provided in Section
7(c)(ii) above, the Company shall pay to the Consultant (i) the
accrued and unpaid Base Compensation, if
Page 9 of 15 Pages
<PAGE>
HP/Rothstein Consultation Agreement
any, through the Termination Date, and (ii) expense reimbursement
amounts accrued through the Termination Date. Neither party shall
have any further liability or obligation to the other except as
provided in Sections 11, 12 and 13(b) hereunder which shall survive
the Termination Date. No unvested employee or directors options
shall vest or become exercisable by virtue of any termination under
Section 7(c)(ii) above and any and all rights thereto to such
unvested options then possessed by the Consultant shall be
terminated and of no further force and effect; it being understood
that the foregoing shall not affect the Consulting Options.
9. Federal Income Tax and Other Withholdings
The Company shall withhold from any benefits payable pursuant to this
Agreement such federal, state, city or other taxes and other amounts as
may be required to be withheld pursuant to any applicable law or
governmental regulations or ruling and shall timely pay over to the
appropriate governmental or other authorities the amount withheld,
together with any additional amounts required to be paid by the Company in
respect thereof.
10. Non-Competition and Confidential Information During the Term
(a) Non-Competition
The Consultant covenants and agrees that he will not at any time
during the Term engage in a business which is on the date hereof or
during the Term in competition with the business of the Company, or
solicit the services of any employee of the Company in connection
therewith.
(b) Confidential Information
The Consultant shall, during the Term hold in a fiduciary capacity
for the benefit of the Company and its stockholders all secret,
confidential or proprietary information, knowledge or data relating
to the Company (and any of its subsidiaries or affiliates), which
shall have been obtained by the Consultant during or by reason of
his engagement by the Company. During the Term, the Consultant shall
not, without the prior written consent of the Company, communicate
or divulge any such information, knowledge or data to any person or
entity other than the Company (or such applicable subsidiaries or
affiliates) and those designated by them which would result in any
misappropriation or improper use hereof, except that, during his
engagement hereunder, in furtherance of the business and for the
benefit of the Company, the Consultant may provide confidential
information as
Page 10 of 15 Pages
<PAGE>
HP/Rothstein Consultation Agreement
appropriate to attorneys, accountants, financial institutions or
other persons or entities engaged in business with the Company from
time to time.
11. Indemnification and Liability Insurance
(a) Indemnification
The Company shall indemnify and hold the Consultant harmless, to the
fullest extent permitted by applicable laws and regulations, against
any and all expenses, liabilities and losses (including without
limitation, reasonable attorneys' fees and disbursements of counsel
reasonably satisfactory to the Company), incurred or suffered by him
in connection with his service hereunder, except to the extent of
the Consultant's gross negligence or willful misconduct.
(b) Insurance
To the extent available at commercially reasonable rates, the
Company shall maintain for the benefit of the Consultant, a
directors' and officers' liability insurance policy insuring the
Consultant's service hereunder and, if the Consultant is a member of
the Board, as a member thereof, during the Term in accordance with
its customary practices as in effect from time to time during the
Term; provided, that all other directors of the Company are also
covered by such insurance. The parties acknowledge and agree that
such policy may cover other directors and officers of the Company in
addition to the Consultant.
12. Registration Rights
The Company acknowledges that the Consultant and certain of his family
members, namely his children Steven, Allan and Tammy, and his wife Cynthia
or trusts for the benefit of such persons or entities owned or controlled
by such persons (together with the Consultant, the "Holders") are the
holders in a substantial number of shares of Common Stock of the Company
(the "Registrable Securities"). In connection with this Agreement and the
transactions contemplated hereby, the Company desires to grant to the
Holders certain registration rights relating to the Registrable
Securities.
(a) Demand Registration
The Holders and the holders under a Consulting Agreement dated the
date hereof between the Company and Mr. Frederick Entman
collectively shall have the one-time right at any
Page 11 of 15 Pages
<PAGE>
HP/Rothstein Consultation Agreement
time from time to time to request registration under the Securities
Act of 1933 of all or part of their Registrable Securities on Form
S-1, S-2 or S-3 (if available) or any similar registration (each, a
"Demand Registration"); provided, that the Company need not effect
the Demand Registration unless such Demand Registration of all the
Holders shall include at least 100,000 shares of Common Stock. In
the event of a Demand Registration, the Company shall use its best
efforts to file and cause to become effect such registration
statement and take other appropriate methods to effect such
distributions of securities, as shall be necessary or appropriate,
upon customary terms and conditions.
(b) Piggyback Registration
Whenever the Company proposes to register any of its securities
under the Securities Act (other than in a registration relating to
sales of securities to participants in a Company dividend
reinvestment plan, S4, or S-8 or any successor form or in connection
with an exchange offer or an offering of securities solely to the
existing stockholders or employees of the Company), the Company will
give prompt written notice to all Holders of Registrable Securities
of its intention to effect such a registration and will include in
such registration (subject to customary underwriters' limitations,
cut-backs and restrictions, if any, upon written notice from the
Company's underwriters) all Registrable Securities with respect to
which the Company has received written requests for inclusion
therein.
(c) Expenses of Registration
Except as otherwise provided herein, all registration expenses
incurred in connection with all registrations pursuant to this
Section 12 shall be borne by the Company; provided, that
underwriters' or brokers' discounts, fees or selling commissions
shall be borne by the Holders and not by the Company.
(d) Indemnification
The Company agrees to indemnify, to the fullest extent permitted by
applicable law, each Holder of Registrable Securities, against all
losses, claims, damages, liabilities, expenses or any amounts paid
in settlement of any litigation, investigation or proceeding
commenced or threatened (collectively, "Claims") to which each such
indemnified party may become subject under the Securities Act
(except to the extent based solely on information furnished to the
Company in writing by such Holder for inclusion in any registration
statement); the Consultant shall indemnify the Company against any
claims under the Securities Act
Page 12 of 15 Pages
<PAGE>
HP/Rothstein Consultation Agreement
resulting solely from information furnished in writing to the
Company by the Consultant for inclusion in a registration statement
under which the Holders are selling security holders.
13. General Provisions
(a) Assignment
Neither this Agreement nor any right or interest hereunder shall be
assignable by the Consultant or the Company without the prior
written consent of the other; provided, that (i) in the event of the
Consultant's Death during the Term, the Consultant's estate and his
heir, executors, administrators, legatees and distributees shall
have the rights and obligations set forth herein, as provided
herein, and (ii) nothing contained in this Agreement shall limit or
restrict the Company's ability to merge or consolidate
or effect any similar transaction with any other entity,
irrespective of whether the Company is the surviving entity;
provided, that such surviving entity shall continue to be bound by
the provisions hereof binding upon the Company.
(b) Binding Agreement
This Agreement shall be binding upon, and inure to the benefit of
the Consultant and the Company and their respective heirs,
executors, administrators, legatees and distributees, successors and
permitted assigns.
(c) Amendment of Agreement
This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(d) Severability
If, for any reason, any provision of this Agreement is determined to
be invalid or unenforceable, such invalidity or lack of
enforceability shall not affect any other provision of this
Agreement not so determined to be invalid or unenforceable, and each
such other provision shall, to the full extent consistent with
applicable law, continue in full force and effect, irrespective of
such invalid or unenforceable provision.
(e) Effect of Prior Agreements
Page 13 of 15 Pages
<PAGE>
HP/Rothstein Consultation Agreement
This Agreement contains the entire understanding between the parties
hereto respecting the Consultant's engagement by the Company, and
supersedes any prior agreement between the Company and the
Consultant relating to the retention of the Consultant as a
consultant to the Company.
(f) Notices
For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given (i) when delivered, if
sent by telecopy or by hand, (ii) one business day after sending, if
sent by reputable overnight courier service, such as Federal
Express, or (iii) three business days after being mailed, if sent by
United States certified or registered mail, return receipt
requested, postage prepaid. Notices shall be sent by one of the
method described above; provided, that any notice sent by telecopy
shall also be sent by any other method permitted above. Notices
shall be sent, if to the Consultant, to Norman Rothstein, 311 Links
Drive West, Oceanside, New York 11572; and if to the Company to H
Power Corporation, 60 Montgomery Street, Belleville, New Jersey
07109; telecopy no. (201) 450-9850, directed to the attention of the
Board with copies to the Chairman and the Secretary of the Company;
or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.
(g) Counterparts
This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together
shall constitute one and the same instrument. This Agreement may be
executed by facsimile transmission.
(h) Arbitration
In the event of a dispute or controversy arising under or in
connection with this Agreement, the Consultant shall give the
Company or the Company shall give the Consultant, as applicable, a
written demand for relief. If the dispute or controversy is not
resolved, it shall be settled exclusively by arbitration, conducted
in Essex County, Newark, the State of New Jersey, in accordance with
the rules of the American Arbitration Association. Judgment shall be
entered on the arbitrator's award in any court having jurisdiction
over the parties hereto.
Page 14 of 15 Pages
<PAGE>
HP/Rothstein Consultation Agreement
(i) Indulgences, Etc.
Neither the failure nor any delay on the part of either party to
exercise any right, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other
or further exercise of the same or of any other right, remedy, power
or privilege, nor shall any waiver of any right, remedy, power or
privilege with respect to any occurrence be construed as a waiver of
such right, remedy, power or privilege with respect to any other
occurrence.
(j) Headings
The headings of sections and paragraphs herein are included solely
for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
(k) Governing Law
This Assignment shall be governed by and construed in accordance
with the internal laws of the State of New Jersey, without regard to
principles of conflicts of laws.
IN WITNESS WHEREOF, the Company has caused this Agreement, comprised of 15 pages
including this page, to be executed by its duly authorized officer, and the
Consultant has signed this Agreement, all as of the date first set forth above.
Consultant: H Power Corp.:
/s/ Norman Rothstein By: /s/ H. Frank Gibbard
- ---------------------------------------- --------------------
Norman Rothstein CEO
Page 15 of 15 Pages
<PAGE>
Exhibit 10.9
TERMINATION AGREEMENT
TERMINATION AGREEMENT, made as of the 5th day of April, 2000, by and
between H POWER CORP., a Delaware corporation having its principal place of
business at 1373 Broad Street, Clifton, New Jersey 07013 (the "Company"), and
Norman Rothstein, an individual residing at 311 Links Drive West, Oceanside,
N.Y. 11572 (the "Consultant").
W I T N E S S E T H :
WHEREAS, the Company and the Consultant are parties to a Consulting
Agreement, dated July 28, 1999 (the "Consulting Agreement"), pursuant to which
the Consultant has provided consulting services to the Company on
corporate-related matters, including the Company's capital raising activities;
and
WHEREAS, the Company and the Consultant deem it in their respective
best interests to terminate the Consulting Agreement.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. TERMINATION. Effective as of the date hereof, the Consulting Agreement,
and each of the terms, provisions and covenants contained therein, shall
terminate and be of no further force or effect; PROVIDED, HOWEVER, that the
option grant and registration rights provisions contained in Sections 4(c) and
12, respectively, of the Consulting Agreement shall continue in full force and
effect.
2. TERMINATION BENEFITS. Pursuant to this Termination Agreement, the
Company shall provide the Consultant with the following benefits, and no other:
(a) a lump sum cash payment of $1,000,000;
(b) options to purchase 60,000 shares (the "Options") of the
Company's common stock (as same may be adjusted for any stock
splits or dividends) at an exercise price per share equal to
the IPO price of the Company's common stock;
(c) for a period of ten (10) years from the date hereof, health
insurance for the Consultant, his spouse and any minor
dependents substantially equivalent to the health insurance
package currently provided to the Company's executive
officers;
<PAGE>
(d) the Consultant may retain possession of any computer
furniture, hardware and/or software that has been provided by
the Company for use at the Consultant's residential offices;
(e) the Company shall include all shares of common stock
underlying the Options in any Registration Statement on Form
S-8 filed by the Company with respect to options granted to
the Company's employees or officers, and if such registration
statement is not filed within six months prior to the
expiration date of the Options, the Company shall amend the
underlying option agreement to extend the expiration date of
the Options for a period of not less than six (6) months after
the effective date of the Registration Statement on Form S-8;
and
(f) transfer into the Consultant's name, at the Company's expense,
the automobile lease currently in place for the Consultant's
benefit, with all future lease payments to be the sole
responsibility and obligation of the Consultant.
3. RELEASE OF CLAIMS
(a) In consideration of the benefits offered herein, Consultant
hereby agrees to release and discharge the Company, and the
Company's officers, directors, employees, and agents
(collectively, the "Released Parties") from any and all
claims, causes of action and demands of every kind, arising at
law or in equity, which Consultant has or ever had against any
of them, arising up to and including the date Consultant signs
this Termination Agreement, including, but not limited to
claims arising out of the Consulting Agreement, Consultant's
relationship with the Company or the termination thereof under
any contract, tort, federal, state or local fair employment
practices or civil rights law including, but not limited to,
Title VII of the Civil Rights Act of 1964, as amended, the
Civil Rights Act of 1991, the Americans with Disabilities Act,
the Age Discrimination in Employment Act, the Older Workers
Benefit Protection Act, the Employee Retirement Income
Security Act of 1974, the New Jersey Law Against
Discrimination, or any claim for physical or emotional
distress or injuries, or any other duty or obligation of any
kind or description. This release shall apply to all known,
unknown, unsuspected and unanticipated claims, liens, injuries
and damages including, but not limited to, claims of
employment discrimination, indemnity or discharge, or claims
sounding in tort or in contract, express or implied as of the
date of the execution of this Termination Agreement. Except to
enforce the provisions of this Termination Agreement,
Consultant agrees not to initiate any legal action, charge or
complaint seeking to recover damages against any of the
Released Parties relating to the matters covered or
contemplated by this Termination Agreement or that is based on
events that took place prior to the date of execution hereof
or claims existing as of the date of execution hereof. In the
event Consultant asserts any such actions, charges or
complaints in the future, Consultant agrees that the Company,
in addition to any other remedies available at law or in
equity, shall be entitled to recover its costs and the
attorneys fees incurred by one or more of the Released Parties
in defending such action, charge or complaint. This
Termination
2
<PAGE>
Agreement shall not affect Consultant's rights and obligations
under the terms of any pension or 401k plan.
(b) The Company hereby agrees to release and discharge Consultant
from any and all claims, causes of action and demands of every
kind, arising at law or in equity, whether known or unknown,
which the Company has, ever had had, and ever in the future
may have against Consultant, arising up to and including the
date the Company signs this Termination Agreement, provided
that with respect to Consultant's actions as a director of the
Company the foregoing release shall not apply to any claims
arising from or related to (i) any breach of Consultant's duty
of loyalty to the Company or its stockholders; (ii) acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law; (iii) section
174 of the Delaware General Corporation Law, or (iv) any
transaction from which the Consultant derived an improper
personal benefit. Except to enforce the provisions of this
Termination Agreement or as otherwise provided herein, the
Company agrees not to initiate any legal action, charge or
complaint seeking to recover damages against Consultant
relating to the matters covered or contemplated by this
Termination Agreement or that is based on events that took
place prior to the date of execution hereof or claims existing
as of the date of execution hereof. In the event the Company
asserts any such actions, charges or complaints in the future,
Consultant agrees that the Company, in addition to any other
remedies available at law or in equity, shall be entitled to
recover its costs and the attorneys fees incurred by
Consultant in defending such action, charge or complaint.
(c) Consultant hereby acknowledges that he has been provided an
opportunity to consult with an attorney or other advisor of
his choice regarding the terms of this Termination Agreement,
that he has been given 45 days in which to consider whether he
wishes to enter into this Termination Agreement, and that he
has elected to enter this Termination Agreement knowingly and
voluntarily. Consultant further acknowledges that he may
revoke his assent to this Agreement within seven days of its
execution by Consultant. If Consultant wishes to revoke his
agreement, he must notify William L. Zang within the seven day
revocation period. The voluntary payments to be provided
hereunder will be held in escrow by Fulbright & Jaworski
L.L.P., counsel to the Company, and will be released upon
expiration of the revocation period.
4. COOPERATION AND INDEMNIFICATION
(a) Consultant agrees to reasonably cooperate and assist in the
defense of all actions or proceedings brought against the
Company. The Company will reimburse Consultant for all related
and customary out-of-pocket expenses in connection therewith
and will pay Consultant reasonable per diem compensation.
(b) The Company acknowledges that the execution of this
Termination Agreement is not intended to modify or alter any
corporate indemnification rights which Consultant may have as
an officer, director, employee or agent of the Company
3
<PAGE>
pursuant to the Company's organizational documents, by-laws,
resolutions or other corporate instruments or by-law. In
addition, the Company shall indemnify Consultant if Consultant
is made a party or threatened to be made a party to any
action, suit or proceeding, whether civil or criminal,
administrative or investigative by reason of the fact that
Consultant is or was a director, officer , employee or agent
of the Company, or is or was serving at the request of the
Company, against expenses (including attorneys' fees),
judgment, fines, and amounts paid in settlement actually and
reasonable incurred by Consultant in connection with such
action, suit or proceeding if Consultant acted in good faith
and in a manner reasonably believed to be in or not opposed to
the best interests of the Company, and with respect to any
criminal action or proceedings, had no reasonable cause to
believe his conduct was unlawful.
5. MISCELLANEOUS PROVISIONS.
(a) This Termination Agreement shall not be amended or modified
except by a written instrument signed by the Company and the
Consultant.
(b) Any and all other previous or contemporaneous agreements,
understandings, representations and statements, oral or
written, between the parties relating to consulting or other
services provided by the Consultant are hereby superceded and
shall be of no further force or effect.
(c) This Termination Agreement may be executed in counterparts,
each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall
together constitute one and the same agreement. This
Termination Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall
bear the signatures of all of the parties reflected hereon as
the signatories.
(d) This Termination Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey,
without regard to the conflicts of laws principles thereof.
(e) This Termination Agreement shall inure to the benefit of, be
enforceable by, and bind the parties hereto and their
respective successors and assigns. Except as specifically set
forth or referred to herein, nothing herein expressed or
implied is intended or shall be construed to confer upon or
give to any person other than the parties hereto and their
successors or assigns any rights or remedies under or by
reason of this Termination Agreement.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Termination Agreement as of the day and year first above written.
H POWER CORP.
By: /s/ H. Frank Gibbard
-------------------------
H. Frank Gibbard
Chief Executive Officer
/s/ Norman Rothstein
---------------------------
Norman Rothstein
Consultant
5
<PAGE>
Exhibit 10.10
TERMINATION AGREEMENT
TERMINATION AGREEMENT, made as of the 5th day of April, 2000, by and
between H POWER CORP., a Delaware corporation having its principal place of
business at 1373 Broad Street, Clifton, New Jersey 07013 (the "Company"), and
Frederick Entman, an individual residing at 260 Tillou Road, South Orange, New
Jersey 07079 (the "Consultant").
W I T N E S S E T H :
WHEREAS, the Company and the Consultant are parties to a Consulting
Agreement, dated July 28, 1999 (the "Consulting Agreement"), pursuant to which
the Consultant has provided consulting services to the Company on
corporate-related matters, including the Company's capital raising activities;
and
WHEREAS, the Company and the Consultant deem it in their respective
best interests to terminate the Consulting Agreement.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. TERMINATION. Effective as of the date hereof, the Consulting Agreement,
and each of the terms, provisions and covenants contained therein, shall
terminate and be of no further force or effect; PROVIDED, HOWEVER, that the
option grant and registration rights provisions contained in Sections 4(c) and
12, respectively, of the Consulting Agreement shall continue in full force and
effect.
2. TERMINATION BENEFITS. Pursuant to this Termination Agreement, the
Company shall provide the Consultant with the following benefits, and no other:
(a) a lump sum cash payment of $1,000,000;
(b) options to purchase 60,000 shares (the "Options") of the
Company's common stock (as same may be adjusted for any stock
splits or dividends) at an exercise price per share equal to
the IPO price of the Company's common stock;
(c) for a period of ten (10) years from the date hereof, health
insurance for the Consultant, his spouse and any minor
dependents substantially equivalent to the health insurance
package currently provided to the Company's executive
officers;
<PAGE>
(d) the Consultant may retain possession of any computer
furniture, hardware and/or software that has been provided by
the Company for use at the Consultant's residential offices;
(e) the Company shall include all shares of common stock
underlying the Options in any Registration Statement on Form
S-8 filed by the Company with respect to options granted to
the Company's employees or officers, and if such registration
statement is not filed within six months prior to the
expiration date of the Options, the Company shall amend the
underlying option agreement to extend the expiration date of
the Options for a period of not less than six (6) months after
the effective date of the Registration Statement on Form S-8;
and
(f) transfer into the Consultant's name, at the Company's expense,
the automobile lease currently in place for the Consultant's
benefit, with all future lease payments to be the sole
responsibility and obligation of the Consultant.
3. RELEASE OF CLAIMS
(a) In consideration of the benefits offered herein, Consultant
hereby agrees to release and discharge the Company, and the
Company's officers, directors, employees, and agents
(collectively, the "Released Parties") from any and all
claims, causes of action and demands of every kind, arising at
law or in equity, which Consultant has or ever had against any
of them, arising up to and including the date Consultant signs
this Termination Agreement, including, but not limited to
claims arising out of the Consulting Agreement, Consultant's
relationship with the Company or the termination thereof under
any contract, tort, federal, state or local fair employment
practices or civil rights law including, but not limited to,
Title VII of the Civil Rights Act of 1964, as amended, the
Civil Rights Act of 1991, the Americans with Disabilities Act,
the Age Discrimination in Employment Act, the Older Workers
Benefit Protection Act, the Employee Retirement Income
Security Act of 1974, the New Jersey Law Against
Discrimination, or any claim for physical or emotional
distress or injuries, or any other duty or obligation of any
kind or description. This release shall apply to all known,
unknown, unsuspected and unanticipated claims, liens, injuries
and damages including, but not limited to, claims of
employment discrimination, indemnity or discharge, or claims
sounding in tort or in contract, express or implied as of the
date of the execution of this Termination Agreement. Except to
enforce the provisions of this Termination Agreement,
Consultant agrees not to initiate any legal action, charge or
complaint seeking to recover damages against any of the
Released Parties relating to the matters covered or
contemplated by this Termination Agreement or that is based on
events that took place prior to the date of execution hereof
or claims existing as of the date of execution hereof. In the
event Consultant asserts any such actions, charges or
complaints in the future, Consultant agrees that the Company,
in addition to any other remedies available at law or in
equity, shall be entitled to recover its costs and the
attorneys fees incurred by one or more of the Released
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Parties in defending such action, charge or complaint. This
Termination Agreement shall not affect Consultant's rights and
obligations under the terms of any pension or 401k plan.
(b) The Company hereby agrees to release and discharge Consultant
from any and all claims, causes of action and demands of every
kind, arising at law or in equity, whether known or unknown,
which the Company has, ever had had, and ever in the future
may have against Consultant, arising up to and including the
date the Company signs this Termination Agreement, provided
that with respect to Consultant's actions as a director of the
Company the foregoing release shall not apply to any claims
arising from or related to (i) any breach of Consultant's duty
of loyalty to the Company or its stockholders; (ii) acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law; (iii) section
174 of the Delaware General Corporation Law, or (iv) any
transaction from which the Consultant derived an improper
personal benefit. Except to enforce the provisions of this
Termination Agreement or as otherwise provided herein, the
Company agrees not to initiate any legal action, charge or
complaint seeking to recover damages against Consultant
relating to the matters covered or contemplated by this
Termination Agreement or that is based on events that took
place prior to the date of execution hereof or claims existing
as of the date of execution hereof. In the event the Company
asserts any such actions, charges or complaints in the future,
Consultant agrees that the Company, in addition to any other
remedies available at law or in equity, shall be entitled to
recover its costs and the attorneys fees incurred by
Consultant in defending such action, charge or complaint.
(c) Consultant hereby acknowledges that he has been provided an
opportunity to consult with an attorney or other advisor of
his choice regarding the terms of this Termination Agreement,
that he has been given 45 days in which to consider whether he
wishes to enter into this Termination Agreement, and that he
has elected to enter this Termination Agreement knowingly and
voluntarily. Consultant further acknowledges that he may
revoke his assent to this Agreement within seven days of its
execution by Consultant. If Consultant wishes to revoke his
agreement, he must notify William L. Zang within the seven day
revocation period. The voluntary payments to be provided
hereunder will be held in escrow by Fulbright & Jaworski
L.L.P., counsel to the Company, and will be released upon
expiration of the revocation period.
4. COOPERATION AND INDEMNIFICATION
(a) Consultant agrees to reasonably cooperate and assist in the
defense of all actions or proceedings brought against the
Company. The Company will reimburse Consultant for all related
and customary out-of-pocket expenses in connection therewith
and will pay Consultant reasonable per diem compensation.
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(b) The Company acknowledges that the execution of this
Termination Agreement is not intended to modify or alter any
corporate indemnification rights which Consultant may have as
an officer, director, employee or agent of the Company
pursuant to the Company's organizational documents, by-laws,
resolutions or other corporate instruments or by-law. In
addition, the Company shall indemnify Consultant if Consultant
is made a party or threatened to be made a party to any
action, suit or proceeding, whether civil or criminal,
administrative or investigative by reason of the fact that
Consultant is or was a director, officer , employee or agent
of the Company, or is or was serving at the request of the
Company, against expenses (including attorneys' fees),
judgment, fines, and amounts paid in settlement actually and
reasonable incurred by Consultant in connection with such
action, suit or proceeding if Consultant acted in good faith
and in a manner reasonably believed to be in or not opposed to
the best interests of the Company, and with respect to any
criminal action or proceedings, had no reasonable cause to
believe his conduct was unlawful.
5. MISCELLANEOUS PROVISIONS.
(a) This Termination Agreement shall not be amended or modified
except by a written instrument signed by the Company and the
Consultant.
(b) Any and all other previous or contemporaneous agreements,
understandings, representations and statements, oral or
written, between the parties relating to consulting or other
services provided by the Consultant are hereby superceded and
shall be of no further force or effect.
(c) This Termination Agreement may be executed in counterparts,
each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall
together constitute one and the same agreement. This
Termination Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall
bear the signatures of all of the parties reflected hereon as
the signatories.
(d) This Termination Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey,
without regard to the conflicts of laws principles thereof.
(e) This Termination Agreement shall inure to the benefit of, be
enforceable by, and bind the parties hereto and their
respective successors and assigns. Except as specifically set
forth or referred to herein, nothing herein expressed or
implied is intended or shall be construed to confer upon or
give to any person other than the parties hereto and their
successors or assigns any rights or remedies under or by
reason of this Termination Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Termination Agreement as of the day and year first above written.
H POWER CORP.
By: /s/ H. Frank Gibbard
--------------------------------
H. Frank Gibbard
Chief Executive Officer
/s/ Frederick Entman
-----------------------------------
Frederick Entman
Consultant
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Exhibit 10.11
CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement") is made and entered into this
15th day of March, 2000, by and between H POWER CORP., a Delaware corporation
with principal offices located at 1373 Broad Street, Clifton, New Jersey 07013
(the "Company"), and MILLENNIUM CAPITAL RESOURCES, LLC, a Delaware limited
liability company with principal offices located at 1 Soundshore Drive,
Greenwich, Connecticut 06830 (the "Consultant").
WITNESSETH:
WHEREAS, the Company wishes to avail itself of the advice and services of
the Consultant, and the Consultant is desirous of providing such advice and
services to the Company, pursuant to the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants herein contained, it is agreed as follows:
1. Retention:
(a) The Company hereby retains the Consultant to perform
non-exclusive consulting services related to corporate finance, and other
matters, and the Consultant hereby accepts such retention and shall undertake
reasonable efforts to perform for the Company the duties described herein. In
this regard, subject to Section 7 hereof, the Consultant shall devote such time
and attention to the business of the Company, as shall be reasonably necessary
to carry out its duties hereunder, subject to the direction of the Chief
Executive Officer or Board of Directors of the Company.
(b) In addition to the general financial consulting services set
forth in subsection (a) above, at the Company's prior written request, the
Consultant agrees to place at the disposal of the Company its judgment and
experience and to provide business development services to the Company,
including, but not limited to, the following:
(i) Assist the Company in developing a strategy for acquiring
companies and/or technologies or for entering into strategic
alliances in the Company's business sector, defined as encompassing
alternative energy, fuel cells and distributed energy (the
"Sector");
(ii) Assist the Company in identifying specific candidates in
the Sector that meet the Company's investment or acquisition profile
for the purpose of a purchase or equity investment, strategic
partnership or other form of strategic alliance;
<PAGE>
(iii) Assist the Company in identifying domestic and
international marketing and sales opportunities in the Sector that
meet the Company's criteria as potential partners or customers for
on-site power units (units of 1 to 25 kilowatts) and portable power
units (units of 0.05 to 15 kilowatts);
(iv) Assist the Company in formulating and implementing a
financial strategy in the conduct of its business in the Sector; and
(v) Assist the Company in expanding its business activities in
the Sector, including assistance in sales and marketing of the
Company's products.
The Company and Consultant shall mutually agree in advance in writing on (i) the
scope of any such business development services (the "Work Program") to be
undertaken by the Consultant on behalf of the Company and (ii) the amount, terms
and other conditions of the "Success Fee," if any, payable to the Consultant.
2. Term: The parties agree that the Consultant shall perform general financial
consulting services for the Company for a period of thirty-six (36) months,
commencing October 2, 2000. This Agreement may be terminated at any time by the
Company upon the delivery of written notice of termination to the Consultant.
Upon any early termination of this Agreement by the Company, the quarterly sums
payable to the Consultant pursuant to Section 3(a) shall be accelerated and
become due and payable to the Consultant immediately in their entirety. The
Consultant may terminate this Agreement at any time by the delivery of written
notice of termination to the Company. Upon any early termination of this
Agreement by the Consultant, the Company shall have no obligation to make any
further quarterly payments to the Consultant pursuant to Section 3(a) for any
period subsequent to such date of termination. Any quarterly compensation that
has accrued to the Consultant under Section 3(a) and is unpaid at the date of
any termination by the Consultant shall be forfeited by the Consultant.
3. Compensation:
(a) As compensation for its general financial consulting services
hereunder, the Consultant shall receive a quarterly retainer of $60,000, payable
in arrears on the first business day of each calendar quarter commencing January
2, 2001, so long as it remains a Consultant. Upon the failure by the Company to
make payment of any quarterly installment, the Consultant may make written
demand for payment. Upon the failure of the Company to make payment within 30
days after receipt of notice of any written demand for payment, the Company's
obligations under this Agreement shall be accelerated and the unpaid balance
shall thereupon immediately become due and payable in full.
(b) If, as a result of the Work Program commenced by the Consultant,
the Company during the term of this Agreement and for a period of six (6) months
thereafter consummates a Transaction with a company and/or technology introduced
to the Company by the Consultant, the Company shall pay
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the Consultant the "Success Fee," if any, previously negotiated by the parties
as provided for in Section 1(b) above so long as all of terms and conditions of
that "Success Fee" have been met to the reasonable satisfaction of the Company.
For purposes of this Agreement, a "Transaction" shall mean any transaction or
series or combination of transactions, including multi-step transactions,
whereby, the Company directly or indirectly, acquires control over, or a
material interest in, or enters into a strategic alliance with, any business
and/or technology introduced to the Company by the Consultant pursuant to the
Work Program. A Transaction shall include: a sale or exchange of capital stock
or assets; a lease of assets or intellectual properties, with or without
purchase options; a merger or consolidation; a tender or exchange offer; a
leveraged buy-out; a joint venture, partnership or other form of strategic
alliance; a minority investment; a loan; or any other form of business
combination.
4. Expenses: The Company agrees to reimburse the Consultant for any reasonable
out-of-pocket expenses (in accordance with normal Company policy) incurred by
the Consultant in connection with the services rendered hereunder upon
presentment of vouchers for those expenses. Major travel and expense
expenditures shall be precleared by the Company and incurred in accordance with
normal Company travel and expense policies.
5. Company Property; Confidentiality:
(a) The Consultant agrees that all data, reports, equipment and
other property furnished to Consultant by the Company or produced by Consultant
in connection with its consulting services hereunder shall remain the property
of the Company.
(b) The Consultant will not disclose to any other person, firm,
entity or corporation, nor use for its own benefit, during or after the term of
its engagement, any trade secrets or other information reasonably deemed or
designated as confidential by the Company which are acquired by the Consultant
in the course of performing its services. (A trade secret is information not
generally known to the trade which gives the Company an advantage over its
competitors. Trade secrets can include, by way of example, products or services
under development, production methods and processes, sources of supply, customer
lists, marketing plans, and information concerning the filing or pendency of
patent applications.) Any financial advice rendered by the Consultant pursuant
to its engagement, may not be disclosed publicly in any manner without the prior
written approval of the Company. At the conclusion of its engagement, the
Consultant shall return all material deemed confidential, supplied by the
Company.
6. Status of Consultant: The Consultant shall be deemed to be an independent
contractor, and, except as expressly provided or authorized in this Agreement,
shall have no authority to act for or represent the Company. The Consultant
shall have no authority to bind the Company to any contract or other legal
obligation, whether written, oral or implied.
7. Other Activities of Consultant: The Company recognizes that the Consultant
now renders and may continue to render financial consulting and other investment
banking services to other companies which
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may or may not conduct business and activities similar to those of the Company.
The Company and Consultant shall schedule periodic meetings at the Company's
offices in Clifton, New Jersey at intervals to be established to review and
consult.
8. Control: Nothing contained herein shall be deemed to require the Company to
take any action contrary to its Certificate of Incorporation, as amended, or
By-Laws, as amended, or any applicable statute or regulation, or to deprive its
Board of Directors of their responsibility for overseeing the business and
affairs of the Company.
9. Notice: Any notices hereunder shall be sent to the Company and the Consultant
at their respective addresses as set forth above. Any notice shall be given by
registered or certified mail, postage prepaid, and shall be deemed to have been
given when deposited in the United States mail. Either party may designate any
other address to which notice shall be given, by giving written notice to the
other of such change of address in the manner herein provided.
10. Governing Law: This Agreement has been made in the State of New York and
shall be construed and governed in accordance with the laws thereof without
regard to conflicts of laws.
11. Arbitration of Disputes: Any controversy or claim arising out of or relating
to this Agreement or the breach thereof, shall be settled by arbitration in the
City of New York in accordance with the then existing expedited rules of the
American Arbitration Association (three arbitrators), and judgment upon the
award rendered may be entered in any court having jurisdiction thereof. The
parties shall split equally the costs of arbitration unless the arbitrators
order otherwise, or unless the parties agree to allocate the costs differently.
The parties agree that the award of the arbitrators shall be final and binding.
12. Entire Agreement: This Agreement contains the entire agreement between the
parties and may not be altered or modified, except by means of a writing signed
by each of the parties hereto. Any and all previous or contemporaneous
agreements, understandings, representations and statements, oral or written,
between the parties relating to consulting and/or advisory services are hereby
superceded and shall be of no further force or effect.
13. Binding Effect: Assignment: This Agreement shall be binding upon the parties
hereto and their respective heirs, administrators, successors, and assigns.
Notwithstanding the foregoing, the Consultant may not assign this Agreement and
may not assign or subcontract the performance of its services hereunder.
14. Counterparts: This Agreement may be executed in counterparts, each of which
shall be deemed to be an original as against any party whose signature appears
thereon, and all of which shall together constitute one and the same agreement.
This Agreement shall become binding when one or more counterparts hereof,
individually or taken together, shall bear the signatures of all of the parties
reflected hereon as the signatories.
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15. Severability: If any provision of this Agreement for any reason shall be
held to be illegal, invalid or unenforceable, such provision shall not effect
any other provision of this Agreement, and this Agreement shall be construed as
if such illegal, invalid or unenforceable provision had never been included
herein.
16. Limitation of Liability: In the event the Consultant fails to perform, is
unable to perform or is prevented from performing its duties under this
Agreement, the Consultant's entire liability shall not exceed the amount of
compensation the Consultant has received from the Company.
17. Drafting: Each party acknowledges that its legal counsel participated in the
preparation of this Agreement and, therefore, stipulates that the rule of
construction that ambiguities are to be resolved against the drafting party
shall not be applied in the interpretation of this Agreement to favor any party
against the other.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
H POWER CORP.
By: /s/ H. Frank Gibbard
-----------------------------
H. Frank Gibbard
Chief Executive Officer
MILLENNIUM CAPITAL RESOURCES, LLC
By: /s/ R. Michael Fromer
-----------------------------
R. Michael Fromer
Managing Director
<PAGE>
Exhibit 10.12
[H Power Corp. Letterhead]
March 10, 2000
Mr. R. Michael Fromer
175 East 96th Street
Suite 16-O
New York, New York 10128
Dear Mr. Fromer:
Reference is made to the Letter Agreement, dated January 7, 1999 (the
"Letter Agreement"), between you and H. Power Corp. (the "Company"). Additional
reference is made to the investment by ECO Fuel Cells, LLC on August 25, 1999 of
$15,000,000 of the Company's common stock and to the investments on November 30,
1999 by Hydro-Quebec CapiTech Inc. and Sofinov Societe Fianciere D'Innovation
Inc. of $6,000,000 and $2,900,000, respectively, of the Company's common stock.
The Company hereby acknowledges your services in connection with the
foregoing financings, including, but not limited to, your review of our
financial and operating performance and current financial condition and
prospects, review of budgets, assistance in preparing the confidential
information memoranda, assistance in valuing the Company's securities,
assistance in structuring the foregoing financings and assistance with the
engagement of professional services.
In consideration of such services related to the foregoing transactions
and in full and complete satisfaction of all amounts owed to you under the
Letter Agreement, including, but not limited to, the advisory fees set forth in
Section 3 thereof, the Company hereby pays you the sum of $685,000. The parties
hereby agree that the terms and provisions of the Letter Agreement shall no
longer be of any force or effect. You further agree to fully and completely
release and discharge the Company and its directors, officers, employees and
agents from any and all claims, causes of action and demands, of any kind or
nature whatsoever, arising at law or in equity, whether known or unknown, that
you have, ever have had, and ever in the future may have, against any of them
arising out of or otherwise related to the Letter Agreement.
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Please indicate your acceptance of the foregoing by signing below.
Very truly yours,
H POWER CORP.
By: /s/ H. Frank Gibbard
-----------------------
H. Frank Gibbard
Chief Executive Officer
Accepted and Agreed To:
/s/ R. Michael Fromer
- ------------------------
R. Michael Fromer
<PAGE>
Exhibit 10.13
H Power Corp.
STOCK PURCHASE AGREEMENT
This Agreement (the "Agreement") is made and entered into as of the 25th
day of August, 1999, between H Power Corp. ("H Power"), a Delaware corporation
(the "Company"), and ECO Fuel Cells, LLC ("ECO LLC"), a Delaware limited
liability company (the "Investor").
For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Company and the Investor agree as follows:
1. Sale and Purchase of Shares. Subject to the terms and conditions
hereof, the Company agrees to sell to the Investor, and the Investor agrees to
purchase from the Company on the Closing Date (as defined in Section 2 hereof),
one million shares (the "Shares") of common stock, $0.001 par value, of the
Company (the "Common Stock") at a purchase price of Fifteen U.S. Dollars
($15.00) per share.
2. Closing.
(a) The initial closing (the "Initial Closing") shall take place at
the offices of National Utilities Cooperative Finance Corporation, 2201
Cooperative Way, Herndon, Virginia, on August 25, 1999 or at such other place or
different day as may be mutually acceptable to the Investor and the Company.
(b) The final closing and funding (the "Closing") shall take place
at the offices of National Utilities Cooperative Finance Corporation, 2201
Cooperative Way, Herndon, Virginia, on August 27, 1999 (the "Closing Date"), or
such other date as mutually agreed upon by the parties, but in no event shall
the Closing be after September 30, 1999. At the Closing, the Company will
deliver to the Investor a certificate, dated the Closing Date, representing the
Shares purchased by Investor on the Closing Date, registered in its name against
payment to the Company of the purchase price of the Shares.
3. Representations and Warranties by the Company. In order to induce the
Investor to enter into this Agreement and to purchase the Shares, the Company
hereby represents and warrants to the Investor that as of the Closing and except
as disclosed in the attached Exhibit A:
3.1 Organization, Standing, etc. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware, and has the requisite corporate power and authority to own or lease
its properties and assets and to carry on its business in all material respects
as it is now being conducted. The Company has the requisite corporate power and
authority to issue the Shares and to otherwise perform its obligations under
this Agreement.
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3.2 Governing Instruments. The copies of the Certificate of
Incorporation and bylaws of the Company which have been delivered to legal
counsel for the Investor prior to the execution of this Agreement are true and
complete copies of the duly and legally adopted Certificate of Incorporation and
bylaws of the Company in effect as of the date of this Agreement.
3.3 Subsidiaries, Etc. Except as disclosed on Exhibit A, the Company
does not have any direct or indirect ownership interest in any corporation,
partnership, joint venture, association or other business enterprise. If any
entity is listed on Exhibit A (each such entity a "Subsidiary") and the Company
owns a controlling interest in such entity, each of the representations and
warranties set forth in this Section 3 are being hereby restated with respect to
such entity (modified as appropriate to the nature of such entity).
3.4 Qualification. The Company is duly qualified, licensed or
domesticated as a foreign corporation in good standing in each jurisdiction
wherein the nature of its activities or the properties owned or leased by it
makes such qualification, licensing or domestication necessary and in which
failure to so qualify or be licensed or domesticated would have a material
adverse impact upon its business.
3.5 Financial Statements. Attached to this Agreement as Exhibit B
are (a) a balance sheet, as at May 31, 1998 for the Company, together with the
related statements of income and retained earnings and changes in financial
position for the fiscal year then ended, which balance sheet and related
statements have been audited by Price Waterhouse Coopers, LLC, and (b) an
unaudited balance sheet, as at May 31, 1999 for the Company, together with the
related statement of income and retained earnings for the fiscal year then
ended. Such financial statements, subject to year-end audited adjustments (i)
are in accordance with the books and records of the Company, (ii) present fairly
the financial condition of the Company at the balance sheets dates and the
results of its operations for the periods therein specified, and (iii) have been
(or will be, as applicable) prepared in accordance with generally accepted
accounting principles applied on a basis consistent with prior accounting
periods. Without limiting the generality of the foregoing, the balance sheets or
notes thereto disclose all of the debts, liabilities and obligations of any
nature (whether absolute, accrued or contingent and whether due or to become
due) of the Company at May 31, 1998, and May 31, 1999, which, individually or in
the aggregate, are material and which in accordance with generally accepted
accounting principles would be required to be disclosed in such balance sheets,
and include appropriate reserves for all taxes and other liabilities accrued as
of such dates but not yet payable.
3.6 Tax Returns and Audits. All required federal, state and local
tax returns or appropriate extension requests of the Company have been filed,
and all federal, state and local taxes required to be paid with respect to such
returns have been paid or due provision for the payment thereof has been made.
The Company is not delinquent in the payment of any such tax or in the payment
of any assessment or governmental charge. The Company has not received notice of
any tax deficiency proposed or assessed against it, and it has not executed any
waiver of any statute of limitations on the assessment or collection of any tax.
The Company has not received notice that any of the Company's tax returns has
been audited by governmental
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authorities. The Company does not have any tax liabilities except those
reflected on Exhibit B or those incurred in the ordinary course of business
since May 31, 1999.
3.7 Changes, Dividends, etc. Except for the transactions
contemplated by this Agreement, since May 31, 1999, the Company has not: (i)
incurred any debts, obligations or liabilities, absolute, accrued or contingent
and whether due or to become due, except current liabilities incurred in the
ordinary course of business which (individually or in the aggregate) will not
materially and adversely affect the business, properties or prospects of the
Company; (ii) paid any obligation or liability other than, or discharged or
satisfied any liens or encumbrances other than those securing, current
liabilities, in each case in the ordinary course of business; (iii) declared or
made any payment to or distribution to its shareholders as such, or purchased or
redeemed any of its shares of capital stock, or obligated itself to do so; (iv)
mortgaged, pledged or subjected to lien, charge, security interest or other
encumbrance any of its assets, tangible or intangible, except in the ordinary
course of business; (v) sold, transferred or leased any of its assets except in
the ordinary course of business; (vi) suffered any physical damage, destruction
or loss (whether or not covered by insurance) materially and adversely affecting
the properties, business or prospects of the Company; (vii) entered into any
transaction other than in the ordinary course of business; (viii) encountered
any labor difficulties or labor union organizing activities; (ix) issued or sold
any shares of capital stock or other securities or granted any options,
warrants, or other purchase rights with respect thereto other than pursuant to
this Agreement; (x) made any acquisition or disposition of any material assets
or became involved in any other material transaction, other than for fair value
in the ordinary course of business; (xi) increased the compensation payable, or
to become payable, to any of its directors or employees, or made any bonus
payment or similar arrangement with any directors or employees or increased the
scope or nature of any fringe benefits provided for its employees or directors;
or (xii) agreed to do any of the foregoing other than pursuant hereto. There has
been no material adverse change in the financial condition, operations, results
of operations or business of the Company since May 31, 1999.
3.8 Title to Properties and Encumbrances. Except as otherwise set
forth in Exhibit A, and except for properties and assets disposed of in the
ordinary course of business since May 31, 1999, the Company has good and
marketable title to all of its properties and assets included in the balance
sheet dated May 31, 1999 and the properties and assets reflected used in the
conduct of its business, which properties and assets are not subject to any
mortgage, pledge, lease, lien, charge, security interest, encumbrance or
restriction, except (a) those which are shown and described on Exhibit B, (b)
liens for taxes and assessments or governmental charges or levies not at the
time due or in respect of which the validity thereof is currently be contested
in good faith by appropriate proceedings, or (c) those which do not materially
affect the value of or interfere with the use made of such properties and
assets.
3.9. Conditions of Properties. The plant, offices and equipment of
the Company are in good condition and repair, subject to normal wear and tear.
3.10 Litigation; Governmental Proceedings. There are no legal
actions, suits, arbitrations or other legal, administrative or governmental
proceedings or investigations pending
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or, to the knowledge of the Company, threatened against the Company, or its
properties or business, and the Company is not aware of any facts which are
likely to result in or form the basis for any such action, suit or other
proceeding. The Company is not in default with respect to any judgment, order or
decree of any court or any governmental agency or instrumentality. The Company
has not been threatened with any action or proceeding under any business or
zoning ordinance, law or regulation.
3.11 Compliance With Applicable Laws and Other Instruments. The
business and operations of the Company have been and are being conducted in all
material respects in accordance with all applicable laws, rules and regulations
of all governmental authorities. Neither the execution nor delivery of, nor the
performance of or compliance with, this Agreement nor the consummation of the
transactions contemplated hereby will, with or without the giving of notice or
passage of time, result in any breach of, or constitute a default under, or
result in the imposition of any lien or encumbrance upon any asset or property
of the Company pursuant to, any Agreement or other instrument to which the
Company is a party or by which it or any of its properties, assets or rights is
bound or affected, and will not violate the Certificate of Incorporation or
bylaws of the Company. The Company is not in violation of its Certificate of
Incorporation or bylaws nor in violation of, or in default under, any lien,
indenture, mortgage, lease, agreement, instrument, commitment or arrangement in
any material respect. The Company is not subject to any restriction which would
prohibit it from entering into or performing its obligations under this
Agreement.
3.12 Shares, Additional Shares and Adjustment Shares. The Shares,
when issued and paid for pursuant to the terms of this Agreement, any Additional
Shares (as that term is defined in Section 11.1 hereof) and any Adjustment
Shares (as that term is defined in Section 12.1 hereof), when issued to the
Investor pursuant to the terms of this Agreement, will be duly authorized,
validly issued and outstanding, fully paid, nonassessable shares and shall be
free and clear of all pledges, liens, encumbrances and restrictions.
3.13 Securities Laws. Based in part upon the representations of the
Investor in Section 4, no consent, authorization, approval, permit or order of
or filing with any governmental or regulatory authority is required under
current laws and regulations in connection with the execution and delivery of
this Agreement or the offer, issuance, sale or delivery of the Shares, the
Additional Shares or the Adjustment Shares, other than the qualification
thereof, if required, under applicable state securities laws, which
qualification has been or will be effected by the Company if required. The
Company has not, directly or through an agent, offered the Shares or any similar
securities for sale to, or solicited any offers to acquire such securities from,
persons other than the Investor or other accredited investors. Under the
circumstances contemplated by this Agreement and assuming the accuracy of the
representations of the Investor in Section 4, the offer, issuance, sale and
delivery of the Shares, the Additional Shares and the Adjustment Shares, if any,
will not, under current laws and regulations, require compliance with the
prospectus delivery or registration requirements of the federal Securities Act
of 1933, as amended (the "Securities Act").
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3.14 Intellectual Property.
(a) Intellectual Property Assets--The term "Intellectual Property
Assets" includes:
(1) the name "H Power," all fictional business names, trading
names, registered and unregistered trademarks, service marks, and
applications (collectively, "Marks");
(2) all patents, patent applications, and inventions and
discoveries that may be patentable (collectively, "Patents");
(3) all copyrights in both published works and unpublished
works (collectively, "Copyrights");
(4) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process
technology, plans, drawings, and blue prints (collectively, "Trade
Secrets"),
in each case owned, used, or licensed by the Company as licensee or licensor.
(b) Agreements--Exhibit C attached hereto contains a complete and
accurate list and summary description, including any royalties paid or received
by the Company, of all material contracts and agreements relating to the
Intellectual Property Assets to which the Company is a party or by which the
Company is bound, except for any license implied by the sale of a product and
perpetual, paid-up licenses for commonly available software programs with a
value of less than $10,000 under which the Company is the licensee. There is no
outstanding and, to the Company's knowledge, no threatened dispute or
disagreement with respect to any such agreement.
(c) Know-How Necessary to Conduct the Company's Business
(1) To the Company's knowledge, the Intellectual Property
Assets are all those necessary for the operation of the Company's
business as it is currently conducted. The Company either owns or
has licensed sufficient rights to each of the Intellectual Property
Assets, free and clear of all liens, security interests, charges,
encumbrances, equities, and other adverse claims, and has the right
to use without payment to a third party, except for royalties
described in Exhibit C, all of the Intellectual Property Assets.
(2) The Company has a policy that requires all current
employees of the Company to execute written contracts with the
Company that assign to the Company all rights to any inventions,
improvements, discoveries, or information relating to the business
of the Company, and all of the Company's former and current
employees have executed such a contract. No employee of the Company
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has entered into any contract or agreement that restricts or limits
in any way the scope or type of work in which the employee may be
engaged or requires the employee to transfer, assign, or disclose
information concerning his work to anyone other than the Company.
(d) Patents
(1) Exhibit C contains a complete and accurate list and
summary description of all Patents. Except as set forth on Exhibit
C, the Company owns no Patents. The Company has exclusive rights to
use the Patents that it uses or licenses, in each case free and
clear of all liens, security interests, charges, encumbrances,
entities, and other adverse claims except for any royalties
described in Exhibit C.
(2) To the Company's knowledge, all of the Patents licensed to
or used by the Company, are currently in compliance with formal
legal requirements (including payment of filing, examination, and
maintenance fees and proofs of working or use), and, to the
Company's knowledge, are valid and enforceable.
(3) No Patent has been or is now involved in any interference,
reissue, reexamination, or opposition proceeding or has had an
unfavorable final ruling against its interests in any such
proceeding. To the Company's knowledge, there is no potentially
interfering patent or patent application of any third party.
(4) To the Company's knowledge, no Patent is infringed or has
been challenged or threatened in any way. To the Company's
knowledge, none of the products manufactured and sold, nor any
process or know-how used, by the Company infringes or is alleged to
infringe any patent or other proprietary right of any other person.
(5) All products made, used, or sold under the Patents have
been marked in compliance with 35 United States Code ss. 287 and the
comparable requirements of any jurisdiction in which the products
are made, used or sold.
(e) Trademarks
(1) The Company is the owner of all right, title, and interest
in and to each of its Marks, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse
claims.
(2) All Marks that have been registered with the United States
Patent and Trademark Office are currently in compliance with all
formal legal requirements (including the timely post-registration
filing of affidavits of use and incontestability and renewal
applications), and, to the Company's knowledge, are valid and
enforceable.
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(3) No Mark has been or is now involved in any opposition,
invalidation, or cancellation and, to the Company's knowledge, no
such action is threatened with the respect to any of the Marks.
(4) To the Company's knowledge, there is no potentially
interfering trademark or trademark application of any third party.
(5) To the Company's knowledge, no Mark is infringed or has
been challenged or threatened in any way. To the Company's
knowledge, none of the Marks used by the Company infringes or is
alleged to infringe any trade name, trademark, or service mark of
any third party.
(6) All products and materials containing a Mark marking in
compliance with 15 United States Code ss. 1111 or the comparable
requirements of any jurisdiction in which such products and
materials are sold.
(f) Copyrights
(1) The Company is the owner of all right, title, and interest
in and to each of its copyrights, free and clear of all liens,
security interests, charges, encumbrances, equities, and other
adverse claims.
(2) All the Copyrights are currently in compliance with legal
requirements and are, to the Company's knowledge, valid and
enforceable.
(3) No Copyright is infringed or, to the Company's knowledge,
has been challenged or threatened in any way. To the Company's
knowledge, none of the subject matter of any of the Copyrights
infringes or is alleged to infringe any copyright of any third party
or is a derivative work based on the work of a third party.
(g) Trade Secrets
(1) The Company has taken reasonable precautions to protect
the confidentiality and value of the Trade Secrets.
(2) The Company either owns or has licensed the rights to use
the Trade Secrets that are necessary and sufficient for the
operation of the Company's business as it is currently conducted. To
the Company's knowledge, those Trade Secrets that are not part of
the public knowledge or literature have not been used, divulged, or
appropriated either for the benefit of any person or to the
detriment of the Company.
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(3) The Company has not been charged with misappropriation of
know-how or trade secrets. To the Company's knowledge, no third
party has misappropriated or attempted to misappropriate the Trade
Secrets.
3.15 Capital Stock.
(a) At the date hereof, the authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock and 1,800,000 shares of
Preferred Stock, $0.01 par value (the "Preferred Stock"), of which 200,000
shares are designated as Series A Convertible Preferred Stock (the "Series
A Stock"), 400,000 shares are designated as Series B Convertible Preferred
Stock (the "Series B Stock"), and 1,200,000 shares are designated as
Series C Convertible Preferred Stock (the "Series C Stock"). As of the
date hereof, 200,000 shares of Series A Stock are issued and outstanding,
400,000 shares of Series B Stock are issued and outstanding, 600,000
shares of Series C Stock are issued and outstanding and 5,803,039 shares
of Common Stock are issued and outstanding. All of the outstanding shares
of the Company were duly authorized, validly issued and are fully paid and
nonassessable. Except as set forth in Exhibit A, there are no outstanding
subscriptions, options, warrants, calls, contracts, demands, commitments,
convertible securities or other agreements or arrangements of any
character or nature whatever, other than this Agreement, under which the
Company is obligated to issue any securities of any kind representing an
ownership interest in the Company. Exhibit A contains a complete and
accurate description of all outstanding subscriptions, options, warrants,
calls, contracts, demands, commitments, convertible securities or other
agreements or arrangements of any character or nature whatever, other than
this Agreement, under which the Company is obligated to issue any
securities of any kind representing an ownership interest in the Company.
Neither the offer nor the issuance or sale of the Shares constitutes an
event, under any anti-dilution provisions of any securities issued or
issuable by the Company or any agreements with respect to the issuance of
securities by the Company, which will either increase the number of shares
issuable pursuant to such provisions or decrease the consideration per
share to be received by the Company pursuant to such provisions. No holder
of any security of the Company is entitled to any preemptive or similar
rights to purchase any securities of the Company from the Company;
provided, however, that nothing in this section shall affect, alter or
diminish any right granted to the Investor in this Agreement. All
outstanding securities of the Company have been issued in full compliance
with an exemption or exemptions from the registration and prospectus
delivery requirements of the Securities Act and from the registration and
qualification requirements of all applicable state securities laws.
(b) Upon consummation of the transactions contemplated herein, the
authorized capital stock of the Company shall consist of 20,000,000 shares
of Common Stock, of which 6,803,039 shares are issued and outstanding, and
1,800,000 shares of Preferred Stock, of which 200,000 shares of Series A
Stock, 400,000 shares of Series B Stock and 600,000 shares of Series C
Stock are issued and outstanding.
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3.16 Outstanding Debt. The Company does not have any material
indebtedness incurred as the result of a direct borrowing of money, including,
but not limited to, indebtedness with respect to trade accounts, except as set
forth in Exhibit B. The Company is not in default in the payment of the
principal of or interest or premium on any such indebtedness, and no event has
occurred or is continuing under the provisions of any instrument, document or
agreement evidencing or relating to any such indebtedness which with the lapse
of time or the giving of notice, or both, would constitute an event of default
thereunder.
3.17 Schedule of Assets and Contracts. Attached as Exhibit D are
schedules listing the following items:
(a) Schedule 1: a true and complete description of all real
properties owned by the Company;
(b) Schedule 2: each indenture, lease, sublease, license or other
instrument under which the Company claims or holds a leasehold interest in
real property;
(c) Schedule 3: each lease of personal property involving payments
remaining to or from the Company in excess of 100,000;
(d) Schedule 4: each written or oral contract, agreement,
subcontract, purchase order, commitment or arrangement involving payments
remaining to or from the Company in excess of $25,000 and each other
agreement material to the Company's business to which the Company is a
party or by which it is bound, under which full performance (including
payment) has not been rendered by any party thereto;
(e) Schedule 5: any collective bargaining agreements, employment
agreements, consulting agreements, noncompetition agreements,
nondisclosure agreements, executive compensation plans, profit sharing
plans, bonus plans, deferred compensation agreements, employee pension
retirement plans and employee benefit stock option or stock purchase plans
and other employee benefit plans, entered into or adopted by the Company;
(f) Schedule 6: the name of each executive officer of the Company
and the remuneration currently payable to each such executive officer; and
(g) Schedule 7: any royalty or license agreement relating to
software, except for paid-up licenses for commonly available software
programs with a value of less than $10,000 under which the Company is the
licensee.
Prior to the Closing Date, the Company shall provide legal counsel
for the Investor with a true and complete copy of each document referred to on
such schedules which such counsel requests to examine.
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The Company has in all material respects substantially performed all
obligations required to be performed by it to date and is not in default in any
material respect under any of the contracts, agreements, leases, documents,
commitments or other arrangements to which it is a party or by which it is
otherwise bound. All instruments referred to in the Schedules described in this
Section 3.17 are in effect and enforceable according to their respective terms,
and there is not under any of such instruments any existing material default or
event of default or event which, with notice or lapse of time or both, would
constitute an event of default thereunder. All parties having material
contractual arrangements with the Company are in substantial compliance
therewith and none are in material default in any respect thereunder. All plans
or arrangements listed on Schedule 5 are fully funded to the extent that such
funding is required by generally accepted accounting principles.
3.18 Corporate Acts and Proceedings. This Agreement has been duly
authorized by all necessary corporate and shareholder action on behalf of the
Company, has been duly executed and delivered by authorized officers of the
Company, and is a valid and binding agreement on the part of the Company that is
enforceable against the Company in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and to judicial limitations on the enforcement of the remedy of
specific performance and other equitable remedies. All corporate and shareholder
action necessary to the authorization, creation, issuance and delivery of the
Shares, the Adjustment Shares and the Additional Shares has been taken by the
Company, or will be taken by the Company on or prior to the Closing Date.
3.19 Accounts Receivable. To the extent that they exceed the
reserves for doubtful accounts set forth in Exhibit B, the accounts receivable
which are reflected in Exhibit B and all accounts receivable of the Company
which have arisen since May 31, 1999 (except such accounts receivable as have
been collected since May 31, 1999) are valid and enforceable claims, and the
goods and services sold and delivered which gave rise to such accounts were sold
and delivered in conformity with the applicable purchase orders, agreements and
specifications. Such accounts receivable are subject to no valid defense or
offsets except routine customer complaints or warranty demands of an immaterial
nature. The reserve for doubtful accounts that is included in Exhibit B is
adequate.
3.20 Inventories. The inventories of the Company which are reflected
in Exhibit B and all inventory items which have been acquired since May 31, 1999
consist of raw materials, supplies, work-in-process and finished goods of such
quality and quantities as are currently usable or salable in the ordinary course
of its business.
3.21 Purchase Commitments and Outstanding Bids. No material purchase
commitment of the Company is in excess of normal, ordinary and usual
requirements of its business, or was made at any price in excess of the then
current market price, or contains terms and conditions more onerous than those
usual and customary in the industry. There is no outstanding material bid, sales
proposal, contract or unfilled order of the Company which (a) will, or could if
accepted, require the Company to supply goods or services at a cost to the
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Company in excess of the revenues to be received therefrom, or (b) quotes prices
which do not include a mark-up over reasonably estimated costs consistent with
past mark-ups on similar business or market conditions current at the time.
3.22 Insurance Coverage. There are in full force policies of
insurance issued by insurers of recognized responsibility insuring the Company
and its properties and business against such losses and risks, and in such
amounts as are required under the terms of the Fuel Cell Operating Agreement (as
defined in Section 5.11 hereof) and to the extent not set forth in the Fuel Cell
Operating Agreement, in such amounts as is customary in the case of corporations
of established reputation in the same or similar business and similarly
situated.
3.23 No Brokers or Finders. No person, firm or corporation has or
will have, as a result of any act or omission of the Company, any right,
interest or valid claim against the Company or the Investor for any commission,
fee or other compensation as a finder or broker in connection with the
transactions contemplated by this Agreement. The Company will indemnify and hold
the Investor harmless against any and all liability with respect to any such
commission, fee or other compensation which may be payable or determined to be
payable in connection with the transactions contemplated by this Agreement.
3.24 Conflicts of Interest. No officer, director or shareholder of
the Company or any affiliate (as such term is defined in Rule 405 under the
Securities Act) of any such person has any direct or indirect interest (a) in
any entity which does business with the Company, (b) in any property, asset or
right which is used by the Company in the conduct of its business, or (c) in any
contractual relationship with the Company other than as an employee. For the
purpose of this section, there shall be disregarded any interest which arises
solely from the ownership of less than a 1% equity interest in a corporation
whose stock is regularly traded on any national securities exchange or in the
over-the-counter market.
3.25 Licenses. The Company possesses from the appropriate agency,
commission, board and government body and authority, whether state, local or
federal, all licenses, permits, authorizations, approvals, franchises and rights
which (a) are necessary for it to engage in the business currently conducted by
it, and (b) if not possessed by the Company would have an adverse impact on the
Company's business. The Company has no knowledge that would lead it to believe
that it will not be able to obtain all licenses, permits, authorizations,
approvals, franchises and rights that may be required for any business the
Company proposes to conduct.
3.26 Disclosure. The Company has not knowingly withheld from the
Investor any material facts relating to the assets, business, operations,
financial condition or prospects of the Company. No representation or warranty
in this Agreement or in any certificate, schedule, statement or other document
furnished or to be furnished to the Investor pursuant hereto or in connection
with the transactions contemplated hereby contains or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
required to be stated herein or therein or necessary to make the statements
herein or therein not misleading.
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3.27 Registration Rights. Other than under this Agreement or as set
forth in Exhibit A, the Company has not agreed to register any of its authorized
or outstanding securities under the Securities Act.
3.28 Retirement Plans. The Company does not have any retirement plan
in which any employees of the Company participate that is subject to any
provisions of the Employee Retirement Income Security Act of 1974 and of the
regulations adopted pursuant thereto ("ERISA"). Exhibit A contains all
information regarding employee benefit plans that is material to the business,
operations and financial condition of the Company.
3.29 Environmental and Safety Laws. The Company is not knowingly in
violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, and no material expenditures are
or will be required in order to comply with any such existing statute, law or
regulation.
3.30 Employees. To the best of the Company's knowledge, no officer
of the Company or employee of the Company (whose annual compensation is in
excess of $100,000) has any plans to terminate his or her employment with the
Company. The Company has complied in all material respects with all laws
relating to the employment of labor, including provisions relating to wages,
hours, equal opportunity, collective bargaining and payment of Social Security
and other taxes, and the Company has not encountered any material labor
difficulties. The Company does not have any worker's compensation liabilities,
except those reflected on Exhibit B.
3.30 Absence of Restrictive Agreements. Except as provided in
Exhibit A, no employee of the Company is subject to any secrecy or
non-competition agreement or any agreement or restriction of any kind that would
impede in any way the ability of such employee to carry out fully all activities
of such employee in furtherance of the business of the Company.
3.31 Material Contracts. Each of the contracts set forth on Schedule
4 prepared in accordance with Section 3.17 hereof is in full force and effect
and constitutes a valid and binding obligation of the Company and, to the
Company's knowledge, the other party thereto.
3.32 Actions and Proceedings. Exhibit A contains a complete and
accurate description of all legal action or other claims asserted against the
officers and directors of the Company, whether civil, criminal, administrative,
arbitral or otherwise, including diciplinary actions by any professional
association and regardless of whether such legal or other actions relate to
activities of the Company's officers and directors prior to becoming an officer
or director of the Company, and regardless of the disposition or settlement of
such actions or proceedings.
4. Representations of the Investor. The Investor represents that:
4.1 Investment Intent. The Shares being acquired by the Investor are
being purchased for investment for the Investor's own account and not with the
view to, or for resale in
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connection with, any distribution or public offering thereof. The Investor
understands that the Shares have not been registered under the Securities Act or
any state securities laws and that the Shares may not be transferred or resold
without (i) registration under the Securities Act and any applicable state
securities laws, or (ii) an exemption from the requirements of the Securities
Act and applicable state securities laws.
4.2 Acts and Proceedings. This Agreement has been duly authorized by
all necessary action on the part of the Investor, has been duly executed and
delivered by the Investor, and is a valid and binding agreement of the Investor.
4.3 No Brokers or Finders. No person, firm or corporation has or
will have, as a result of any act or omission by the Investor, any right,
interest or valid claim against the Company for any commission, fee or other
compensation as a finder or broker, or in any similar capacity, in connection
with the transactions contemplated by this Agreement. The Investor will
indemnify and hold the Company harmless against any and all liability with
respect to any such commission, fee or other compensation which may be payable
or determined to be payable as a result of the actions of the Investor in
connection with the transactions contemplated by this Agreement.
4.4 Best Efforts. Investor shall use its best efforts to assist the
Company in preparing an initial public offering of shares of Common Stock.
4.5 Accredited Investor. Investor qualifies as an "accredited
investor" for purposes of Regulation D promulgated under the Securities Act of
1933, as amended.
5. Conditions of Investor's Obligation. The obligation to purchase and pay
for the Shares which the Investor has agreed to purchase on the Closing Date is
subject to the fulfillment prior to or on the Closing Date of the conditions set
forth in this Section 5. In the event that any such condition is not fulfilled
to the satisfaction of the Investor, then the Investor shall not be obligated to
proceed with the purchase of the Shares.
5.1 No Errors, etc. The representations and warranties of the
Company under this Agreement shall be true in all material respects as of the
Closing Date with the same effect as though made on and as of the Closing Date.
5.2 Compliance with Agreement. The Company shall have performed and
complied with in all material respects all agreements or conditions required by
this Agreement to be performed and complied with by it prior to or as of the
Closing Date.
5.3 Certificate of Officers. The Company shall have delivered to the
Investor a certificate, dated the Closing Date, executed by the Chief Executive
Officer of the Company and certifying to the satisfaction of the conditions
specified in sections 5.1 and 5.2.
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5.4 Opinion of the Company's Counsel. The Company shall have
delivered to the Investor an opinion, satisfactory to the Investor, of Fulbright
& Jaworski, L.L.P., counsel for the Company, dated the Closing Date, to the
effect that:
(a) The Company is a corporation duly organized and validly existing
in good standing under the laws of the state of Delaware, and has the
corporate power and authority to own and hold the properties owned and
leased by it and to carry on the business in which it is engaged. The
Company has the corporate power and authority to enter into this
Agreement, to issue and sell the Shares and to carry out the provisions of
this Agreement.
(b) This Agreement has been duly authorized, executed and delivered
by the Company, is the legal, valid and binding agreement of the Company
and is enforceable against the Company in accordance with its terms,
subject, as to the enforcement of remedies, to limitations under
applicable bankruptcy, insolvency, moratorium, reorganization, and other
laws affecting the rights of creditors generally and to judicial
limitations on the enforcement of the remedy of specific performance and
other equitable remedies.
(c) The Shares being purchased on the Closing Date have been duly
authorized and, upon delivery thereof and payment therefore in accordance
with the Stock Purchase Agreement will be fully paid and nonassessable,
and are entitled to the rights, preferences and provisions of the
Company's Certificate of Incorporation and the benefits of the provisions
of this Agreement applicable thereto. The certificate evidencing the
Shares is in valid and sufficient form under Delaware law.
(d) All corporate proceedings required by law or by the provisions
of this Agreement to be taken by the Board of Directors and shareholders
of the Company on or prior to such Closing Date in connection with the
execution and delivery of this Agreement, the offer, issuance and sale of
the Shares and the consummation of the transactions contemplated by this
Agreement, have been duly and validly taken.
(e) The Company is authorized by its Certificate of Incorporation to
issue 20,000,000 shares of Common Stock and 1,800,000 shares of Preferred
Stock. Immediately prior to the Closing Date there were 5,803,039 shares
of Common Stock, 200,000 shares of Series A Stock, 400,000 shares of
Series B Stock and 600,000 shares of Series C Stock issued and
outstanding. All shares outstanding immediately prior to the Closing Date
have been duly authorized and validly issued. To the best of such
counsel's knowledge, the Company holds no shares in its treasury. Except
for shares of Common Stock and shares of Series A Stock, Series B Stock
and Series C Stock, the Company has no other authorized series or class of
capital stock and, to the best of such counsel's knowledge, has no
outstanding options, warrants or other rights to acquire securities of the
Company, other than as disclosed in Exhibit A to this Agreement.
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(f) To the best of such counsel's knowledge, no security holder of
the Company is entitled to preemptive or similar rights as a result of the
execution or delivery of this Agreement or the issuance of the Shares and
the Adjustment Shares other than as expressly set forth in this Agreement.
(g) Assuming the accuracy of the representations made by the
Investor in Section 4, the Company has obtained the approval or consent of
all governmental agencies or bodies required for the legal and valid
execution and delivery of this Agreement and the legal and valid offer,
issuance and sale of the Shares and for the performance of the obligations
of the Company under all provisions of this Agreement, other than those
with respect to registration rights. Assuming the accuracy of the
representations made by the Investor in Section 4, the execution, delivery
and performance of this Agreement, the offer, issuance and sale of the
Shares and the issuance of Adjustment Shares, and the consummation of the
transactions contemplated by this Agreement will not result in any breach
or violation of the terms or provisions of, or constitute a default under,
the Certificate of Incorporation or the bylaws of the Company or any
statute, rule or regulation affecting the Company or its business. To the
best of such counsel's knowledge, the execution, delivery and performance
of this Agreement by the Company, the offer, issuance and sale of the
Shares and the consummation of the transactions contemplated by this
Agreement will not result in any violation of any agreement or other
instrument to which the Company is a party or by which it is bound or to
which any of its properties, assets or business is subject or any
judgment, decree or order.
(h) Assuming the accuracy of the representations made by the
Investor in Section 4, the offer, sale, issuance and delivery of the
Shares to the Investor under this Agreement are exempt from the
registration and prospectus delivery requirements of the Securities Act
and all applicable state securities laws.
(i) Except for matters disclosed on Exhibit A, such counsel has no
knowledge of any litigation, proceeding or governmental investigation
pending or threatened against the Company or its properties or business.
5.5 Opinion of Intellectual Property. The Company shall have
delivered to Investor an opinion, satisfactory to the Investor, of Salzman &
Levy, intellectual property counsel for the Company, dated the Closing Date to
the effect that:
(a) The material references in Section 3.14 of the Stock Purchase
Agreement do not contain any untrue statement of a material fact or omit
to state a material fact so as to make the statements therein, in light of
the circumstances under which they were made, misleading.
(b) Except as described in the Stock Purchase Agreement, there are
no United States patents of third parties which are infringed by the
manufacture, use or sale of the products or processes currently made, used
or sold by the Company.
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(c) There are no legal, governmental or administrative proceedings
pending or threatened against the Company that relate to patents,
trademarks or other intellectual property, except for pending or proposed
United States or foreign patent or trademark applications.
(d) The Company has not received any notice of conflict with the
asserted rights of others in respect of any trademarks, service marks,
trade names, trademark registrations, service mark registrations,
copyrights, licenses, inventions, trade secrets, patents, patent
applications, know-how or similar rights, nor of any threatened actions
with respect thereto, which, if determined adversely to the Company, would
individually or in the aggregate have a material adverse affect on the
business affairs, financial position, net worth or operations of the
Company.
(e) The Company owns or has licensed all such material trademarks,
trademark applications, trademark registrations, service marks, service
mark registrations, copyrights, patents, patent applications and other
rights as are described in the Stock Purchase Agreement and which are
necessary and sufficient for the Company's present or planned future
business as described in the Stock Purchase Agreement of Fuel Cell
Operating Agreement.
(f) The patents described in Exhibit C of the Stock Purchase
Agreement are valid and enforceable.
5.6 Supporting Documents. The Investor shall have received the
following:
(a) A copy of resolutions of the Board of Directors of the Company
certified by the Secretary of the Company authorizing and approving the
execution, delivery and performance of this Agreement and expansion of the
Company's Board of Directors as required under Section 6.1 of this
Agreement.
(b) A certificate of incumbency executed by the Secretary of the
Company certifying the names, titles and signatures of the officers
authorized to execute this Agreement and further certifying that the
Certificate of Incorporation and bylaws of the Company delivered to legal
counsel for the Investor at the time of the execution of this Agreement
have been validly adopted and have not been amended or modified.
(c) Such additional supporting documentation and other information
with respect to the transactions contemplated hereby as legal counsel for
the Investor may reasonably request.
5.7 Qualification Under State Securities Laws. All registrations,
qualifications, permits and approvals required under applicable state securities
laws for the lawful execution and delivery of this Agreement and the offer,
sale, issuance and delivery of the Shares to the Investor at the Closing shall
have been obtained.
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5.8 Board of Directors. The Company shall have taken such actions as
shall be appropriate to reconstitute its Board of Directors in the manner
contemplated by Section 6.1 of this Agreement.
5.9 Due Diligence. Investor shall have completed its due diligence
investigation of the Company to its satisfaction and Investor determines there
are no material impediments to consummation of the transactions contemplated
herein.
5.10 Timing. The transactions contemplated by this Agreement are
consummated prior to any initial public offering of the Company's stock.
5.11 Fuel Cell Operating Agreement; Addendum Agreement. The parties
hereto have signed that certain Fuel Cell Operating Agreement, dated as of July
29, 1999 (the "Fuel Cell Operating Agreement) and the Addendum Agreement
relating thereto, and said Fuel Cell Operating Agreement and Addendum Agreement
are in full force and effect in accordance with their terms as of the Closing
Date.
5.12 Necessary Consents. On or before the Closing Date, the Company
shall have obtained any consents of any person or governmental authority
necessary for the consummation of the transactions contemplated under this
Agreement and the Investor shall have received satisfactory evidence of such
consents.
5.13 No Material Adverse Effect. Since May 31, 1999 no event, change
or effect shall have occurred that is materially adverse to the consolidated
financial condition, business, results of operations, cash flows or prospects of
the Company or that materially impairs the ability of the Company to perform or
the Investor to enforce the obligations of the Company under this Agreement.
5.14. Proceedings and Documents. All corporate and other proceedings
and actions taken in connection with the transactions contemplated hereby and
all certificates, opinions, agreements, instruments and documents mentioned
herein or incident to any such transaction shall be satisfactory in form and
substance to legal counsel for the Investor.
5.15 Other Agreements. The Company shall have delivered the
following executed documents to Investor: (i) Consent in the form of Exhibit E
attached hereto executed by Sofinov Societe Financiere D'Innovation, Inc.; (ii)
Agreement in the form of Exhibit F attached hereto executed by the Company and H
Power Enterprises of Canada; and (iii) First Amendment to Technology Licensing
Agreement in the form of Exhibit G attached hereto executed by the Company and H
Power Enterprises of Canada, Inc.
5.16. Patent Validity Opinion. The Investor shall have received a
patent validity opinion acceptable to Investor from Salzman & Levy, intellectual
property counsel for the Company, to the effect that none of the Company's
products or proposed products, including the Fuel Cell System (as defined in the
Fuel Cell Operating Agreement referred to in Section 5.11
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hereof) infringe upon U.S. Patent 5,879,826 to Lehman, et. al, Proton Exchange
Membrane Fuel Cell, assigned to Humboldt State University Foundation.
6. Affirmative Covenants of the Company. Subject to the provisions of
Section 11, the Company covenants and agrees as follows:
6.1 Representation on Board of Directors; Directors' and
Shareholders' Meetings. From and after the Closing Date, the Investor shall be
entitled to one (1) seat on the Board of Directors of the Company (the "ECO
Director"). In the event of the death, resignation or removal of the ECO
Director, the Investor shall be entitled to designate such director's successor.
The Company agrees, as a general practice, to hold meetings of its Board of
Directors at least once every calendar quarter, and during each year to hold its
annual meeting of shareholders on or approximately on the date provided in its
bylaws. The Company shall reimburse the Investor for the reasonable
out-of-pocket travel expenses incurred by the ECO Director designated as
provided in this Section 6.1 in connection with attending meetings or otherwise
fulfilling his or her fiduciary responsibilities as a director, and shall
maintain a provision in its bylaws providing for the indemnification of its
directors to the full extent permitted by the law of the State of Delaware.
6.2 The Company shall at all times maintain an audit committee and a
compensation committee consisting of at least three (3) members of the Board of
Directors.
6.3 Within thirty (30) days of the Closing Date, the Company shall
have amended its bylaws to provide a Board seat for Investor as described in the
first two sentences of Section 6.1 hereof, said amendment to include a provision
that subsequent amendment of the Company's bylaws with respect to the number or
designation of directors may not be subsequently amended without the unanimous
approval of the Board of Directors.
6.4 Investor's Right to Sell if Company Shareholders Sell. In the
event that Company stockholders holding a majority of the outstanding Common
Stock (the "Majority Shareholders") enter into an agreement to sell their shares
of Common Stock to a third party (the "Proposed Sale"), the Company shall
provide notice of the Proposed Sale to Investor within fifteen (15) days after
notice of the Proposed Sale was received by the Company stating the terms and
conditions of the Proposed Sale, including, without limitation, the number of
shares proposed to be sold or transferred, the nature of such sale or transfer,
the consideration to be paid, and the name and address of each prospective
purchaser. Investor shall have the right, exercisable upon written notice to the
Company within fifteen (15) days of receipt of notice of the Proposed Sale by
the Company, to participate in the Proposed Sale pursuant to the specified terms
and conditions of the proposed sale as set forth in the notice (the "Take-Along
Right"). To the extent Investor exercises the Take-Along Right, the number of
shares the Majority Shareholders may sell pursuant to the Purchase Offer shall
be reduced as provided herein.
(a) Each shareholder participating in the Proposed Sale may sell all
or any part of that number of shares of Common Stock equal to the product
obtained by multiplying (i) the aggregate number of shares of Common Stock
covered by the Purchase Offer by
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(ii) a fraction, the numerator of which is the number of shares of Common
Stock at the time owned by such participating shareholder and the
denominator of which is the sum of (A) the total number of shares of
Common Stock owned by all participating shareholders (other than Majority
Shareholders) plus (B) the total number of shares of Common Stock owned by
the Majority Shareholders.
6.5 Financial and Business Information. The Company will maintain,
and cause each of its Subsidiaries to maintain, a system of accounting
established in accordance with sound business practices to permit preparation of
financial statements in conformity with generally accepted accounting principles
(GAAP). The Company during the term of this Agreement will, and will cause its
Subsidiaries to, deliver to the Investor:
(a) As soon as practicable and in any event within 120 days after
the close of each fiscal year of the Company, a consolidated and
consolidating balance sheet of the Company and its Subsidiaries as of the
close of such fiscal year and consolidated statements of operations,
shareholders' equity and cash flows for the Company and its Subsidiaries
for the fiscal year then ended, together with the report thereon of
independent certified public accountants acceptable to Investor;
(b) As soon as practicable and in any event within 45 days after the
end of the first three fiscal quarters of each fiscal year, the
consolidated and consolidating balance sheet of the Company and its
Subsidiaries as at the end of such fiscal quarter and the related
consolidated and consolidating statements of operations, shareholders'
equity and cash flows of the Company and its Subsidiaries for such fiscal
quarter and for the period from the beginning of the current fiscal year
to the end of such fiscal quarter, all in reasonable detail and certified
by the chief financial officer of the Company that they fairly present the
financial condition of Company and its Subsidiaries as the dates indicated
and the results of its operations and its cash flows for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustments;
(c) As soon as practicable and in any event within 30 days after the
end of each month, the internal financial statements of the Company and
its Subsidiaries for such month (other than the months referred to in
Section 6.5(a) and Section 6.5(b) above) and certified by the Chief
Executive Officer of the Company that such statements were prepared in
accordance with the Company's accounting policies, consistently applied
for the period indicated;
(d) Prompt notice of any event having a material adverse effect on
the business, operations, financial condition, prospects or results of
operation of the Company;
(e) Promptly upon their becoming available, copies of (a) all
financial statements, reports, notices and proxy statements sent or made
available generally by the Company to its security holders, (b) all
regular and periodic reports filed by the Company or any of its
Subsidiaries with any securities exchange or with the SEC or any
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governmental or private regulatory authority, (c) all press releases and
other statements made available generally by the Company or any of its
Subsidiaries to the public concerning material developments in the
business of the Company or any of its Subsidiaries;
(f) Promptly upon any officer of Company or any of its Subsidiaries
obtaining knowledge of any condition or event that constitutes a violation
or default or potential event of default under any indebtedness of the
Company or any of its Subsidiaries, or becoming aware that any person has
given any notice or taken any other action with respect to a claimed event
of default or potential event of default, notice of any such event; and
(g) Within a reasonable time, such other information about the
property, financial condition and operations of the Company and its
Subsidiaries as the Investors may from time to time reasonably request.
6.6 Patent Protection. With respect to any patents identified on
Exhibit A, the Company shall within thirty (30) days after the Closing Date,
commence protection proceedings for all such patents.
6.7 Year 2000 Compliance. Within thirty (30) days after the Closing
Date, the Company shall certify to the Investor, compliance with the following:
(a) The Company has investigated the possibility of the occurrence
of Year 2000 Errors in its business operations and has: (i) established a
written plan for dealing with the possibility of Year 2000 Errors and
provided a copy of such plan to Investor; (ii) obtained confirmation from
the suppliers of all the material computer systems, hardware, software or
other processing equipment used in the Company's business that Year 2000
Errors will not occur or (where such confirmation has not been
forthcoming) has obtained satisfactory assurances that appropriate
modification will be made to such systems, hardware, software or equipment
to test and remedy any and all Year 2000 Errors prior to October 31, 1999;
(iii) tested the principal computer systems, hardware, software and other
processing equipment used in the Company's business to determine whether
Year 2000 Errors are possible; and (iv) compiled an accurate estimate of
the cost of preventing Year 2000 Errors or dealing with any Year 2000
Errors which may arise, which estimate has been submitted to the Investor.
(b) The Company has provided a complete and accurate list of all
Year 2000 Errors of which the Company, its officers, directors, employees,
agents or shareholders are aware.
(c) The products and/or technology manufactured, licensed, sold or
otherwise distributed by the Company shall function without, and shall not
contain, any Year 2000 Errors.
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(d) None of the software used in the business of, or manufactured,
licensed, sold or otherwise distributed by, the Company contains any
virus, logic bomb, time bomb, worm, undisclosed protect codes or other
harmful code which might have a significant adverse effect on the
processing of data for the business, or the use of the software.
(e) For purposes of this Agreement, the term "Year 2000 Error" means
(i) any failure of computer hardware or software products or technology
(or any components thereof) properly to create, receive, recognize,
record, store, process, calculate, present or exchange calendar dates
falling on and after (and if applicable, spans of time including) January
1, 2000 (including, without limitation, leap years) as a result of the
occurrence, or use of data consisting of, such dates; (ii) any failure of
computer hardware or software products or technology (or any components
thereof) to create, receive, recognize, record, store, process, calculate,
present or exchange any information or data dependent on or relating to
dates on or after January 1, 2000 (including, without limitation, forward
and backward calculations from, into and between the 20th and 21st
centuries, the years 1999 and 2000 and leap years) in the same manner, and
with the same functionality, data integrity and performance, as such
computer hardware or software products or technology (or any components
thereof) creates, receives, recognizes, records, stores, processes,
calculates, presents or exchanges calendar dates on or before December 31,
1999, or information or data dependent on or relating to such dates; or
(iii) any loss of functionality or performance or incorrect results with
respect to the introduction of records or processing of data containing
dates falling on or after January 1, 2000 (including, without limitation,
leap years).
7. Future Registration Rights. Except for any registration expressly
permitted by Section 8 of this Agreement, and except for an underwriting
agreement between the Company and one or more professional underwriters of
securities, the Company shall not, without the prior written consent of the
Investor, grant any registration rights that are greater than the registration
rights of the Investor as set forth in Exhibit E attached hereto.
8. Registration Rights. The Company acknowledges and agrees that the
Investor shall have the registration rights set forth in Exhibit H attached
hereto.
9. Restriction on Transfer of Shares.
9.1 Restrictions. The Shares are only transferable pursuant to (a) a
public offering registered under the Securities Act, (b) Rule 144 of the
Commission (or any similar rule then in effect) if such rule is available, and
(c) subject to the conditions specified elsewhere in this Section 10, any other
legally available means of transfer.
9.2 Legend. Each certificate representing Shares shall be endorsed
with the following legend:
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"The shares represented by this certificate may not be transferred
without (i) the opinion of counsel satisfactory to this corporation
that such transfer may lawfully be made without registration under
the Federal Securities Act of 1933 and all applicable state
securities laws or (ii) such registration."
9.3 Removal of Legend. Any legend endorsed on a certificate
evidencing a security pursuant to Section 9.1 hereof shall be removed, and the
Company shall issue a certificate without such legend to the holder of such
security, if such security is being disposed of pursuant to a registration under
the Securities Act or pursuant to Rule 144 or any similar rule then in effect or
if such holder provides the Company with an opinion of counsel satisfactory to
the Company to the effect that a transfer of such security may be made without
registration. In addition, if the holder of such security delivers to the
Company an opinion of such counsel to the effect that no subsequent transfer of
such security will require registration under the Securities Act, the Company
will promptly upon such contemplated transfer deliver new certificates
evidencing such security that do not bear the legend set forth in Section 9.2.
10. Termination of Certain Covenants.
(a) The obligations of the Company under Section 6.4 of this
Agreement shall terminate and shall be of no further force or effect at
the earlier of (a) the completion of an initial public offering of its
capital stock to the public pursuant to a registration statement filed
with and declared effective by the Commission which results in net
proceeds to the Company of at least $45,000,000 and a per share purchase
price of at least $15.00, or such lesser gross proceeds or per share
purchase price as the Investor may agree upon in writing.
(b) The obligations of the Company under Section 6.5 of this
Agreement shall terminate and shall be of no further force and effect upon
completion of an initial public offering by the Company.
11. Right to Purchase Additional Shares.
11.1 Right to Purchase Additional Shares. If the Company should
decide to issue and sell additional shares of stock (the "Additional Shares"),
excluding (a) shares of Common Stock sold to the public pursuant to a
registration statement filed under the Securities Act, (b) shares of Common
Stock that may be issued upon the exercise of stock options outstanding as of
the Closing Date and disclosed in Exhibit A; (c) stock options and shares of
Common Stock issuable upon the exercise of such options granted to employees and
directors of the Company pursuant to the terms of the Company's stock option
plans in effect as of the Closing Date and disclosed in Exhibit A; (d) Common
Stock issuable upon the exercise of a warrant in favor of Duquesne Enterprises
that, as of the Closing Date, entitled the holder thereof to purchase 100,000
shares of Common Stock; (e) Common Stock issuable upon the conversion of the
Company's Series A Convertible Preferred Stock, Series B Convertible Preferred
Stock or Series C Convertible Preferred Stock; (f) shares of Preferred Stock, up
to an aggregate maximum of 266,667 shares; and (g) shares of Common Stock in an
amount less than 1% of the shares of
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Common Stock owned by Investor as of the Closing Date, whether issued in one
transaction or a series of transactions subsequent to the Closing Date, up to a
maximum of 10,000 shares in the aggregate for all such transactions
(collectively "Permitted Issuances"), the Company shall first offer to sell to
Investor, upon the same terms and conditions as the Company is proposing to
issue and sell the Additional Shares to others, Investor's pro rata share (as
defined below) of such Additional Shares.
Such offer to Investor shall be made by written notice given to
Investor (the "Offer Notice") specifying the amount of the Additional Shares
being offered, the purchase price for the Additional Shares and any other terms
of the offer. Investor shall have a period of thirty (30) days from and after
the date such Offer Notice was received by Investor within which to accept such
offer (the "Acceptance Period"). Investor shall accept an offer to purchase all
or any portion of the Additional Shares specified in the Offer Notice by written
notice to the Company and tender of the purchase price for the Additional Shares
within the Acceptance Period. If Investor fails to accept such offer within the
Acceptance Period, any Additional Shares not purchased by Investor may be
offered for sale to others by the Company for a period of one hundred eighty
(180) days from the last day of the Acceptance Period, but only on the same
terms and conditions as set forth in the Offer Notice delivered to Investor,
free and clear of the restrictions imposed by this Section 11.
11.2 Pro Rata Share. For purposes of Section 11.1, Purchaser's "pro
rata share" shall be determined by the following formula:
P = N/O x A
Where,
"P" equals Investor's pro rata share of Additional Shares (rounded to the
nearest whole share);
"N" equals the number of shares of Common Stock owned by Investor immediately
prior to the issuance of the Additional Shares being offered;
"O" equals the total number of shares of the Company's Common Stock outstanding
immediately prior to the issuance of the Additional Shares; and
"A" equals the total number of Additional Shares being offered.
11.3 Termination. Investor's rights under this Section 11 shall
terminate in their entirety on the earlier of (a) the consummation of an initial
public offering of the Company's Common Stock or other securities, or (b) the
acquisition of the Company by another entity by means of any transaction or
series of related transactions (including, without limitation, any
reorganization, merger or consolidation) that results in the transfer of fifty
percent (50%) or more of the outstanding voting power of the Company or a sale
of all or substantially all of the assets of the Company.
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12. Anti-dilution.
12.1 Right to Receive Adjustment Shares. If at any time after the
date of this Agreement, the Company issues or sells, or is deemed to have issued
or sold, any shares of its Common Stock for consideration per share less than
$15.00, then, unless such issuance or sale was a Permitted Issuance (as defined
in Section 11.1 hereof), immediately upon such issue or sale or deemed issuance
or sale, the Company shall issue to Investor a number of Adjustment Shares
determined in accordance with Section 12.2 hereof without payment of any cash or
other consideration to the Company.
12.2 Calculation of Adjustment Shares. The number of Adjustment
Shares to be issued to Investor under Section 12.1 shall be determined in
accordance with the following formula:
A = C/S - E
Where,
"A" = Number of Adjustment Shares
"C" = Purchase Price paid by Investor for the Shares ($15,000,000)
"S" = per share price of Additional Shares
"E" = Number of Shares owned by Investor immediately preceding issuance
of Additional Shares.
12.3 Subdivisions and Combinations. In case the Company shall at any
time subdivide or split its outstanding shares of Common Stock into a greater
number of shares, or combine the outstanding shares of Common Stock into a
smaller number of shares, the Company shall issue to Investor a number of
Adjustment Shares sufficient to reflect such stock split or combination.
12.4 Termination. Investor's rights under this Section 12 shall
terminate in their entirety on the earlier of (a) the consummation of an initial
public offering of the Company's Common Stock or other securities; or (b) the
acquisition of the Company by another entity by means of any transaction or
series of related transactions (including, without limitation, any
reorganization, merger or consolidation) that results in the transfer of fifty
percent (50%) or more of the outstanding voting power of the Company or a sale
of all or substantially all of the assets of the Company.
13. Survival. Except as specifically provided in Section 10 and Section 12
of this Agreement, all representations, warranties and covenants contained
herein shall survive the execution and delivery of this Agreement, any
investigation at any time made by the Investor or
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on its behalf, and the sale and purchase of the Shares and payment therefor for
a period of two years. All statements contained in any certificate, instrument
or other writing delivered by or on behalf of the Company pursuant to this
Agreement (other than legal opinions) or in connection with or in contemplation
of the transactions herein contemplated shall constitute representations and
warranties by the Company hereunder.
14. Indemnification.
14.1 Indemnification by Company. The Company agrees to indemnify in
full Investor, its officers, directors, employees, agents and stockholders
(collectively, the "Investor Indemnified Parties") and hold them harmless
against any loss, liability, deficiency, damage, expense or cost (including
reasonable legal expenses), whether or not actually incurred or paid prior to
the third anniversary of the Closing Date (collectively, "Losses"), which
Investor Indemnified Parties may suffer, sustain or become subject to, as a
result of (i) any misrepresentation in any of the representations and warranties
of the Company contained in this Agreement or in any exhibits, schedules,
certificates or other documents delivered or to be delivered by or on behalf of
the Company pursuant to the terms of this Agreement or otherwise referenced or
incorporated in this Agreement (collectively, the "Related Documents"), (ii) any
breach of, or failure to perform, any agreement of the Company contained in this
Agreement or any of the Related Documents, or (iii) any "Claims" (as defined in
Section 14.3(a) hereof) or threatened Claims against Investor arising out of the
actions or inactions of the Company or the Company with respect to the Company's
business prior to the Closing (collectively, "Investor Losses").
The Company shall be liable to the Investor Indemnified Parties for
any Investor Losses only if Investor or another Investor Indemnified Party
delivers to the Company written notice, setting forth in reasonable detail the
identity, nature and amount of Investor Losses related to such claim or claims
prior to the third anniversary of the Closing Date; provided, however, that the
Investor Indemnified Party's failure to provide the detail required by this
Section 15.1 shall not constitute either a breach of this Agreement by the
Investor Indemnified Party or any basis for the Company to assert that the
Investor Indemnified Party did not comply with the terms of this Section 14.1
sufficient to cause the Investor Indemnified Party to have waived its rights
under this Section 15.1.
14.2 Indemnification by Investor . The Investor agrees to indemnify
in full the Company, and its officers, directors, employees, agents and
stockholders (collectively, the "Company Indemnified Parties") and hold them
harmless against any Losses which any of the Company Indemnified Parties may
suffer, sustain or become subject to as a result of (i) any misrepresentation in
any of the representations and warranties of Investor contained in this
Agreement or in any of the Related Documents, (ii) any breach of, or failure to
perform, any agreement of Investor contained in this Agreement or any of the
Related Documents, or (iii) any Claims or threatened Claims against the Company
arising out of the actions or inactions of Investor with respect to the
Company's business or the Real Property after the Closing (collectively,
"Losses").
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Investor shall be liable to the Seller Indemnified Parties for any
Seller Losses (i) only if the Company or another Company Indemnified Party
delivers to Investor written notice, setting forth in reasonable detail the
identity, nature and amount of Company Losses related to such claim or claims
prior to the third anniversary of the Closing Date; provided, however, that the
Company Indemnified Party's failure to provide the detail required in this
Section 14.2 shall not constitute either a breach of this Agreement by the
Company Indemnified Party or any basis for Investor to assert that the Company
Indemnified Party did not comply with the terms of this Section 14.2 sufficient
to cause the Company Indemnified Party to have waived its rights under this
Section 14.2.
14.3 Method of Asserting Claims. As used herein, an "Indemnified
Party" shall refer to a "Investor Indemnified Party" or "Company Indemnified
Party," as applicable, the "Notifying Party" shall refer to the party hereto
whose Indemnified Parties are entitled to indemnification hereunder, and the
"Indemnifying Party" shall refer to the party hereto obligated to indemnify such
Notifying Party's Indemnified Parties.
(a) In the event that any of the Indemnified Parties is made a
defendant in or party to any action or proceeding, judicial or
administrative, instituted by any third party for the liability or the
costs or expenses of which are Losses (any such third party action or
proceeding being referred to as a "Claim"), the Notifying Party shall give
the Indemnifying Party prompt notice thereof. The failure to give such
notice shall not affect any Indemnified Party's ability to seek
reimbursement unless such failure has materially and adversely affected
the Indemnifying Party's ability to defend successfully a Claim. The
Indemnifying Party shall be entitled to contest and defend such Claim;
provided, that the Indemnifying Party (i) has a reasonable basis for
concluding that such defense may be successful and (ii) diligently
contests and defends such Claim. Notice of the intention so to contest and
defend shall be given by the Indemnifying Party to the Notifying Party
within 20 business days after the Notifying Party's notice of such Claim
(but, in all events, at least five business days prior to the date that an
answer to such Claim is due to be filed). Such contest and defense shall
be conducted by reputable attorneys employed by the Indemnifying Party.
The Notifying Party shall be entitled at any time, at its own cost and
expense (which expense shall not constitute a Loss unless the Notifying
Party reasonably determines that the Indemnifying Party is not adequately
representing or, because of a conflict of interest, may not adequately
represent, any interests of the Indemnified Parties, and only to the
extent that such expenses are reasonable), to participate in such contest
and defense and to be represented by attorneys of its or their own
choosing. If the Notifying Party elects to participate in such defense,
the Notifying Party will cooperate with the Indemnifying Party in the
conduct of such defense. Neither the Notifying Party nor the Indemnifying
Party may concede, settle or compromise any Claim without the consent of
the other party, which consents will not be unreasonably withheld.
Notwithstanding the foregoing, (i) if a Claim seeks equitable relief or
(ii) if the subject matter of a Claim relates to the ongoing business of
any of the Indemnified Parties, which Claim, if decided against any of the
Indemnified Parties, would materially adversely affect the ongoing
business or reputation of any of the Indemnified Parties, then, in each
such case, the Indemnified Parties alone shall be entitled to contest,
defend
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and settle such Claim in the first instance and, if the Indemnified
Parties do not contest, defend or settle such Claim, the Indemnifying
Party shall then have the right to contest and defend (but not settle)
such Claim.
(b) In the event any Indemnified Party should have a claim against
any Indemnifying Party that does not involve a Claim, the Notifying Party
shall deliver a notice of such claim with reasonable promptness to the
Indemnifying Party. If the Indemnifying Party notifies the Notifying Party
that it does not dispute the claim described in such notice or fails to
notify the Notifying Party within 30 days after delivery of such notice by
the Notifying Party whether the Indemnifying Party disputes the claim
described in such notice, the Loss in the amount specified in the
Notifying Party's notice will be conclusively deemed a liability of the
Indemnifying Party and the Indemnifying Party shall pay the amount of such
Loss to the Indemnified Party on demand. If the Indemnifying Party has
timely disputed its Liability with respect to such claim, the Chief
Executive Officers of each of the Indemnifying Party and the Notifying
Party will proceed in good faith to negotiate a resolution of such
dispute, and if not resolved through the negotiations of such Chief
Executive Officers within 60 days after the delivery of the Notifying
Party's notice of such claim, such dispute shall be resolved fully and
finally as provided in Section 15.7 of this Agreement.
(c) After the Closing, the rights set forth in this Section 15 shall
be each party's sole and exclusive remedies against the other party hereto
for misrepresentations or breaches of covenants contained in this
Agreement and the Related Documents. Notwithstanding the foregoing,
nothing herein shall prevent any of the Indemnified Parties from bringing
an action based upon allegations of fraud or other intentional breach of
an obligation of or with respect to either party in connection with this
Agreement and the Related Documents. In the event such action is brought,
the prevailing party's attorneys' fees and costs shall be paid by the
nonprevailing party.
14.4 Adjustment. Any indemnification payable under this Section 14
shall be, to the extent permitted by law, an adjustment to the aggregate
purchase price paid for the Shares.
15. Miscellaneous.
15.1 Waivers, Amendments and Approvals. In each case in which
approval of the Investor is required by the terms of this Agreement, such
requirement shall be satisfied by a vote or the written action of Investor. With
the written consent of Investor, the obligations of the Company under this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) and with the written approval of Investor, the
Company may enter into a supplementary agreement for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of any supplemental agreement or modifying in any manner the
rights and obligations of the holders of the shares of the Company; provided,
however, that no such waiver or supplemental agreement shall (a) amend the terms
of the Common Stock or any other classes of stock as set forth in the Company's
Certificate of Incorporation, (b) amend the provisions of this Agreement
granting
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rights to the holders of the Shares (including, but not limited to, registration
rights under Section 8) without the written consent of the holders of a majority
of the Shares, or (c) reduce the aforesaid proportions of Shares the holders of
which are required to consent to any waiver or supplemental agreement, without
the consent of all of the record holders of Shares whose rights would be
affected by such reduction. Written notice of any such waiver, consent or
agreement of amendment, modification or supplement shall be given to the record
holders of the Shares who have not previously consented thereto in writing. In
all cases in which the consent or approval of, or actions by, the Investor or
the holders of the Shares is required by the terms of this Agreement, the number
of Shares owned by such holder or Investor shall be determined on an
as-if-converted basis, when applicable.
15.2 Changes, Waivers, Etc. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, but only by a
statement in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, except to the extent
provided in Section 15.1.
15.3 Payment of Fees and Expenses of the Investors. The Company
agrees to reimburse the Investor for legal expenses incurred by the Investor to
its special legal counsel, Dorsey & Whitney LLP, in connection with the
transactions contemplated by this Agreement in an amount not to exceed $95,000.
The Company also agrees to reimburse the Investor for the reasonable legal
expenses incurred by the Investor in retaining special counsel in connection
with any future amendments or waivers under or with respect to this Agreement
and for any expenses incurred by the Investor in making public announcements of
the investment contemplated hereby.
15.4 Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall be
delivered, or mailed first-class postage prepaid, fedex, registered or certified
mail,
(a) if to any holder of any Shares addressed to such holder at its
address as shown on the books of the Company, or at such other address as
such holder may specify by written notice to the Company, or
(b) if to the Company at: 60 Montgomery Street, Bellville, NJ 07109.
Attention: Frank Gibbard; or at such other address as the Company may
specify by written notice to the Investor.
and such notices and other communications shall for all purposes of this
Agreement be treated as being effective or having been given if delivered
personally, sent by fax with confirmation sheet, or, if sent by mail, when
received.
15.5 Parties in Interest. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto, whether so
expressed or not, and, in particular, shall inure to the benefit of and be
enforceable by the holder or holders from time to time of any of the Shares;
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provided, however, that a successor or assign of an Investor shall not be
regarded as an "Investor".
15.6 Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and do not constitute a part of
this Agreement.
15.7 Choice of Law; Jurisdiction and Venue. The laws of the State of
Delaware shall govern the validity of this Agreement, the construction of its
terms and the interpretation of the rights and duties of the parties hereunder.
THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR STATE COURT SITTING IN
THE STATE OF VIRGINIA, AND EACH PARTY CONSENTS TO THE JURISDICTION AND VENUE OF
SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUM IS NOT CONVENIENT.
IF ANY PARTY COMMENCES ANY ACTION UNDER ANY TORT OR CONTRACT THEORY ARISING
DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT IN
ANOTHER JURISDICTION OR VENUE, THE OTHER PARTY TO THIS AGREEMENT SHALL HAVE THE
OPTION OF TRANSFERRING THE CASE TO THE ABOVE-DESCRIBED JURISDICTION OR, IF SUCH
TRANSFER CANNOT BE ACCOMPLISHED OR THE PARTY DECLINES TO ELECT SUCH CHANGE OF
VENUE, TO HAVE THE CASE DISMISSED WITHOUT PREJUDICE.
15.8 Counterparts. This Agreement may be executed concurrently in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
15.9 Survival of Representations and Warranties. The representations
and warranties contained in Sections 3 and 4 of this Agreement shall survive the
Initial Closing and be true in all material respects as of the Closing.
[REMAINING PORTION OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company and the Investor have each caused this
Agreement to be executed by their respective duly authorized representative.
H POWER CORP.
By: /s/ H. Frank Gibbard
Its: CEO
ECO FUEL CELLS, LLC
By: /s/ John McSweeney
Its: CEO and President
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EXHIBIT H
REGISTRATION RIGHTS PROVISIONS
Capitalized terms used herein have the meanings set forth in Section 8 hereof.
1. Demand Registration.
(a) At any time after the second anniversary of the Closing of the
Stock Purchase Agreement, a Majority-in-Interest of the Holders shall have the
right, by written notice (the "Demand Notice") given to the Company, to request
the Company to file with the SEC a Registration Statement with respect to all or
any portion of the Registrable Shares held by such Holders. Upon receipt of any
such Demand Notice, the Company shall promptly, but in no event more than five
days after receipt thereof, notify all other Holders of the receipt of such
Demand Notice and, subject to the limitations set forth below, shall include in
the proposed registration all Registrable Shares with respect to which the
Company has received written requests for inclusion therein within 20 days after
delivery of the Company's notice. In connection with any Demand Registration in
which more than one holder of securities participates, in the event that such
Demand Registration involves an underwritten offering and the managing
underwriter or underwriters participating in such offering advise in writing the
Holders of Registrable Shares and the holders of other securities to be included
in such offering that the total number of Registrable Shares and other
securities to be included in such offering exceeds the amount that can be sold
in (or during the time of) such offering without delaying or jeopardizing the
success of such offering (including the price per share of the Registrable
Shares and other securities to be sold), then the amount of Registrable Shares
and other securities to be offered for the account of such Holders shall be
reduced as follows: first, pro rata on the basis of the number of securities
other than Registrable Shares requested to be registered by the holders of such
securities; and second, pro rata on the basis of the number of Registrable
Shares requested to be registered by the holders of such securities. The Holders
as a group shall be entitled to two Demand Registrations pursuant to this
Section 1; provided, that any Demand Registration that does not become effective
or is not maintained for the time period required in accordance with Section
1(c) shall not count as one of such Demand Registrations, except as set forth in
Section 1(e); provided, further, that if the Demanding Holders have requested
inclusion in such Demand Registration and 75% or less of the securities so
requested to be included have been included, the Holders as a group shall be
entitled to an additional Demand Registration hereunder on the same terms and
conditions as would have applied to the Holders had such earlier Demand
Registration not been made. Anything herein to the contrary notwithstanding, the
Company shall not be required to effect a Demand Registration pursuant to this
Section 1 within a period of six (6) months after the effective date of any
other Demand Registration.
(b) The Company, within 45 days of the date on which the Company
receives a Demand Notice given by Holders in accordance with Section 1(a)
hereof, shall file with the SEC, and the Company shall thereafter use its best
efforts to cause to be declared effective within 90 days following the date the
Company receives such Demand Notice, a Registration Statement
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on the appropriate form for the registration and sale, in accordance with the
intended method or methods of distribution requested by the Holders, of the
total number of Registrable Shares specified by the Holders in such Demand
Notice (a "Demand Registration").
(c) The Company shall use commercially reasonable efforts to keep
each Registration Statement filed pursuant to this Section 1 continuously
effective and usable for the resale of the Registrable Shares covered thereby
for a period of 270 days from the date on which the SEC declares such
Registration Statement effective, as such period may be extended pursuant to
this Section 1, or in the case of a Shelf Registration, for a period of two
years from the date that the SEC declares such "shelf" Registration Statement
effective, or if shorter, until all the Registrable Shares covered by such
Registration Statement have been sold pursuant to such Registration Statement.
(d) The Company shall be entitled to postpone the filing of any
Registration Statement otherwise required to be prepared and filed by the
Company pursuant to this Section 1, or suspend the use of any effective
Registration Statement under this Section 1, for a reasonable period of time
which shall be as short as practicable, but in any event not in excess of 60
days (a "Delay Period"), if the Company determines in good faith that the
registration and distribution of the Registrable Shares covered or to be covered
by such Registration Statement would materially interfere with any pending
material financing, acquisition or corporate reorganization or other material
corporate development involving the Company or any of its Subsidiaries or would
require premature disclosure thereof and promptly gives the Holders written
notice of such determination, containing a statement of the reasons for such
postponement and an approximation of the period of the anticipated delay;
provided, however, that (i) the aggregate number of days included in all Delay
Periods during any consecutive 12 months shall not exceed the aggregate of (x)
180 days minus (y) the number of days occurring during all Interruption Periods
during such consecutive 12 months and (ii) a period of at least 60 days shall
elapse between the termination of any Delay Period or Interruption Period and
the commencement of the immediately succeeding Delay Period. If the Company
shall so postpone the filing of a Registration Statement, the Holders of
Registrable Shares to be registered shall have the right to withdraw the request
for registration by giving written notice to the Company from the Holders of a
majority of the Registrable Shares that were to be registered within 45 days
after receipt of the notice of postponement or, if earlier, the termination of
such Delay Period. The time period for which the Company is required to maintain
the effectiveness of any Registration Statement shall be extended by the
aggregate number of days of all Delay Periods and all Interruption Periods
occurring during such Registration and any extension thereof is hereinafter
referred to as the "Effectiveness Period". The Company shall not be entitled to
initiate a Delay Period unless it shall (A) to the extent permitted by
agreements with other security holders of the Company, concurrently prohibit
sales by such other security holders under registration statements covering
securities held by such other security holders and (B) in accordance with the
Company's policies from time to time in effect, forbid purchases and sales in
the open market by senior executives of the Company.
(e) The Demanding Holders may, at any time prior to the effective
date of the Registration Statement relating to a Demand Registration, revoke
such request by providing a written notice to the Company revoking such request.
In the event of such revocation, the
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Demanding Holders shall reimburse the Company for all of its out-of-pocket
expenses incurred in connection with the preparation, filing and processing of
the Registration Statement, unless (i) there has been a material adverse change
in the business, assets, properties, condition (financial or other), results of
operations or prospects of the Company and its Subsidiaries, since the time of
the Demand Notice, (ii) such revocation was based on the Company's failure to
comply in any material respect with its obligations hereunder or (iii) the
Demanding Holders choose to count the Demand Registration as one of the Demand
Registrations to which the Demanding Holders are entitled pursuant to the
penultimate sentence of Section 1(a).
2. Piggyback Registration.
(a) Right to Piggyback. If at any time the Company proposes to file
a registration statement under the Securities Act with respect to a public
offering of securities of the same type as the Registrable Shares for its own
account (other than a registration statement (i) on Form S-8 or any successor
form thereto, (ii) filed solely in connection with a dividend reinvestment plan
or employee benefit plan covering officers or directors of the Company or its
Affiliates or (iii) on Form S-4 or any successor form thereto, in connection
with a merger, acquisition or similar corporate transaction) or for the account
of any holder of securities of the same type as the Registrable Shares, then the
Company shall give written notice of such proposed filing to the Holders at
least 30 days before the anticipated filing date. Such notice shall offer the
Holders the opportunity to register such number of Registrable Shares as they
may request (a "Piggyback Registration"). Subject to Section 2(b) hereof, the
Company shall include in each such Piggyback Registration all Registrable Shares
with respect to which the Company has received written requests for inclusion
therein within 20 days after notice has been given to the Holders. Each Holder
shall be permitted to withdraw all or any portion of the Registrable Shares of
such Holder from a Piggyback Registration at any time prior to the effective
date of such Piggyback Registration.
(b) Priority on Piggyback Registrations. The Company shall permit
the Holders to include all such Registrable Shares on the same terms and
conditions as any similar securities, if any, of the Company included therein.
Notwithstanding the foregoing, if the Company or the managing underwriter or
underwriters participating in such offering advise the Holders in writing that
the total number of securities requested to be included in such Piggyback
Registration exceeds the number which can be sold in (or during the time of)
such offering without delaying or jeopardizing the success of the offering
(including the price per share of the securities to be sold), then the number of
securities to be offered for the account of the Holders and other holders of
securities who requested to have securities included in such Piggyback
Registration shall be reduced (to zero if necessary) pro rata on the basis of
the number or amount of Common Stock (or the equivalent) requested to be
registered by each such Holder or holder participating in such offering.
(c) Right To Abandon. Nothing in this Section 2 shall create any
liability on the part of the Company to the Holders if the Company in its sole
discretion should decide not to file a registration statement proposed to be
filed pursuant to Section 2(a) hereof or to withdraw such registration statement
subsequent to its filing, regardless of any action whatsoever that a
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Holder may have taken, whether as a result of the issuance by the Company of any
notice hereunder or otherwise.
3. Registration Procedures. In connection with the registration
obligations of the Company pursuant to and in accordance with Sections 1 and 2
hereof (and subject to Sections 1 and 2 hereof), the Company shall use
commercially reasonable efforts to effect such registration to permit the sale
of such Registrable Shares in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Company shall as expeditiously as
possible (but subject to Sections 1 and 2 hereof):
(a) prepare and file with the SEC a Registration Statement for the
sale of the Registrable Shares on any form for which the Company then qualifies
or which counsel for the Company shall deem appropriate in accordance with such
Holders' intended method or methods of distribution thereof, subject to Section
1(b) hereof, and use commercially reasonable efforts to cause such Registration
Statement to become effective and remain effective as provided herein;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) to such Registration Statement, and such supplements
to the related Prospectus, as may be required by the applicable rules,
regulations or instructions under the Securities Act during the applicable
period in accordance with the intended methods of disposition specified by the
Holders of the Registrable Shares covered by such Registration Statement, make
generally available earnings statements satisfying the provisions of Section
11(a) of the Securities Act (provided that the Company shall be deemed to have
complied with this clause if it has complied with Rule 158 under the Securities
Act), and cause the related Prospectus as so supplemented to be filed pursuant
to Rule 424 under the Securities Act; provided, however, that before filing a
Registration Statement or Prospectus, or any amendments or supplements thereto
(other than reports required to be filed by it under the Exchange Act), the
Company shall furnish to the Holders of Registrable Shares covered by such
Registration Statement and their counsel for review and comment, copies of all
documents proposed to be filed;
(c) notify the Holders of any Registrable Shares covered by such
Registration Statement promptly and (if requested) confirm such notice in
writing, (i) when a Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to such Registration Statement or
any post-effective amendment, when the same has become effective, (ii) of any
request by the SEC for amendments or supplements to such Registration Statement
or the related Prospectus or for additional information regarding such Holders,
(iii) of the issuance by the SEC of any stop order suspending the effectiveness
of such Registration Statement or the initiation of any proceedings for that
purpose, (iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, and (v) of the happening of any
event that requires the making of any changes in such Registration Statement,
Prospectus or documents incorporated or deemed to be incorporated therein by
reference so that they will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading;
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(d) use commercially reasonable efforts to obtain the withdrawal of
any order suspending the effectiveness of such Registration Statement, or the
lifting of any suspension of the qualification or exemption from qualification
of any Registrable Shares for sale in any jurisdiction in the United States;
(e) furnish to the Holder of any Registrable Shares covered by such
Registration Statement, each counsel for such Holders and each managing
underwriter, if any, without charge, one conformed copy of such Registration
Statement, as declared effective by the SEC, and of each post-effective
amendment thereto, in each case including financial statements and schedules and
all reports incorporated or deemed to be incorporated therein by reference; and
deliver, without charge, such number of copies of the preliminary prospectus,
any amended preliminary prospectus, each final Prospectus and any post-effective
amendment or supplement thereto, as such Holder may reasonably request in order
to facilitate the disposition of the Registrable Shares of such Holder covered
by such Registration Statement in conformity with the requirements of the
Securities Act;
(f) prior to any public offering of Registrable Shares covered by
such Registration Statement, use commercially reasonable efforts to register or
qualify such Registrable Shares for offer and sale under the securities or Blue
Sky laws of such jurisdictions as the Holders of such Registrable Shares shall
reasonably request in writing; provided, however, that the Company shall in no
event be required to qualify generally to do business as a foreign corporation
or as a dealer in any jurisdiction where it is not at the time so qualified or
to execute or file a general consent to service of process in any such
jurisdiction where it has not theretofore done so or to take any action that
would subject it to general service of process or taxation in any such
jurisdiction where it is not then subject;
(g) upon the occurrence of any event contemplated by paragraph
3(c)(v) above, prepare a supplement or post-effective amendment to such
Registration Statement or the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference and file any other required
document so that, as thereafter delivered to the purchaser of the Registrable
Shares being sold thereunder (including upon the termination of any Delay
Period), such Prospectus will not contain an untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading;
(h) use its best efforts to cause all Registrable Shares covered by
such Registration Statement to be listed on each securities exchange, if any, on
which similar securities issued by the Company are then listed or quoted and, if
no such securities are so listed, to be listed on the Nasdaq Stock Market and,
if listed on the Nasdaq Stock Market, use its best efforts to secure designation
of all such Registrable Shares covered by such registration statement as "NASDAQ
Securities" within the meaning of Rule 11Aa2-1 promulgated under the Exchange
Act or, failing that, to secure Nasdaq Stock Market authorization for such
Registrable Shares;
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(i) on or before the effective date of such Registration Statement,
provide the transfer agent of the Company for the Registrable Shares with
printed certificates for the Registrable Shares covered by such Registration
Statement, which are in a form eligible for deposit with The Depository Trust
Company;
(j) make available for inspection by any Holder of Registrable
Shares included in such Registration Statement, any underwriter participating in
any offering pursuant to such Registration Statement, and any attorney,
accountant or other agent retained by any such Holder or underwriter
(collectively, the "Inspectors"), all financial and other records and other
information, pertinent corporate documents and properties of any of the Company
and its Subsidiaries and affiliates (collectively, the "Records"), as shall be
reasonably necessary to enable them to exercise their due diligence
responsibilities; provided, however, that the Records that the Company
determines, in good faith, to be confidential and which it notifies the
Inspectors in writing are confidential shall not be disclosed to any Inspector
unless such Inspector signs a confidentiality agreement reasonably satisfactory
to the Company (which shall permit the disclosure of such Records in such
Registration Statement or the related Prospectus if necessary to avoid or
correct a material misstatement in or material omission from such Registration
Statement or Prospectus) or either (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such Registration
Statement or (ii) the release of such Records is ordered pursuant to a subpoena
or other order from a court of competent jurisdiction; provided, further, that
(A) any decision regarding the disclosure of information pursuant to subclause
(i) shall be made only after consultation with counsel for the applicable
Inspectors and the Company and (B) with respect to any release of Records
pursuant to subclause (ii), each Holder of Registrable Shares agrees that it
shall, promptly after learning that disclosure of such Records is sought in a
court having jurisdiction, give notice to the Company so that the Company, at
the Company's expense, may undertake appropriate action to prevent disclosure of
such Records; and
(k) if such offering is an underwritten offering, enter into such
agreements (including an underwriting agreement in form, scope and substance as
is customary in underwritten offerings) and take all such other appropriate and
reasonable actions requested by the Holders of a majority of the Registrable
Shares being sold in connection therewith (including those reasonably requested
by the managing underwriters) in order to expedite or facilitate the disposition
of such Registrable Shares, and in such connection, (i) use commercially
reasonable efforts to obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters and counsel to the Holders
of the Registrable Shares being sold), addressed to each selling Holder of
Registrable Shares covered by such Registration Statement and each of the
underwriters as to the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably requested by
such counsel and underwriters, (ii) use commercially reasonable efforts to
obtain "cold comfort" letters and updates thereof from the independent certified
public accountants of the Company (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company or of any business
acquired by the Company for which financial statements and financial data are,
or are required to be, included in the Registration Statement), addressed to
each selling holder of Registrable Shares covered by the Registration Statement
(unless such accountants shall be prohibited from so
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addressing such letters by applicable standards of the accounting profession)
and each of the underwriters, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters in connection
with underwritten offerings, (iii) if requested and if an underwriting agreement
is entered into, provide indemnification provisions and procedures reasonably
requested by such underwriters. The above shall be done at each closing under
such underwriting or similar agreement, or as and to the extent required
thereunder. The Company may require each Holder of Registrable Shares covered by
a Registration Statement to furnish, within a period not less than 20 days from
the date of receipt of such request, such information regarding such Holder and
such Holder's intended method of disposition of such Registrable Shares as it
may from time to time reasonably request in writing. If any such information is
not furnished within such period, the Company may exclude such Holder's
Registrable Shares from such Registration Statement. Each Holder of Registrable
Shares covered by a Registration Statement agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 3(c)(ii), 3(c)(iii), 3(c)(iv) or 3(c)(v) hereof, that such Holder shall
forthwith discontinue disposition of any Registrable Shares covered by such
Registration Statement or the related Prospectus until receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 3(g) hereof, or
until such Holder is advised in writing by the Company that the use of the
applicable Prospectus may be resumed, and has received copies of any amended or
supplemented Prospectus or any additional or supplemental filings which are
incorporated, or deemed to be incorporated, by reference in such Prospectus
(such period during which disposition is discontinued being an "Interruption
Period") and, if requested by the Company, the Holder shall deliver to the
Company (at the expense of the Company) all copies then in its possession, other
than permanent file copies then in such holder's possession, of the Prospectus
covering such Registrable Shares at the time of receipt of such request. Each
Holder of Registrable Shares covered by a Registration Statement further agrees
not to utilize any material other than the applicable current preliminary
prospectus or Prospectus in connection with the offering of such Registrable
Shares.
4. Registration Expenses. Whether or not any Registration Statement
is filed or becomes effective but subject to Section 1(e), the Company shall pay
all costs, fees and expenses incident to the Company's performance of or
compliance with this Agreement, including (i) all registration and filing fees,
including National Association of Securities Dealers filing fees, (ii) all fees
and expenses of compliance with securities or Blue Sky laws, including
reasonable fees and disbursements of counsel in connection therewith, (iii)
printing expenses (including expenses of printing certificates for Registrable
Shares and of printing prospectuses if the printing of prospectuses is requested
by the Holders or the managing underwriter, if any), (iv) messenger, telephone
and delivery expenses, (v) fees and disbursements of counsel for the Company,
(vi) fees and disbursements of all independent certified public accountants of
the Company (including expenses of any "cold comfort" letters required in
connection with this Agreement) and all other persons retained by the Company in
connection with such Registration Statement, (vii) fees and disbursements of one
counsel, other than the Company's counsel, representing all of the Holders of
Registrable Shares being registered, selected by a Majority-in-Interest of
Holders of the Registrable Shares being registered, or in the event of a Demand
Registration, selected by the Demanding Holders and reasonably satisfactory to a
Majority-in-Interest of Holders of the Registrable Shares being registered other
than the Demanding Holders, (viii) fees and
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disbursements of underwriters customarily paid by the issuers or sellers of
securities and (ix) all other costs, fees and expenses incident to the Company's
performance or compliance with this Agreement. Notwithstanding the foregoing,
any discounts, commissions or brokers' fees or fees of similar securities
industry professionals and any transfer taxes relating to the disposition of the
Registrable Shares by a Holder, will be payable by such Holder and the Company
will have no obligation to pay any such amounts.
5. Underwriting Requirements.
(a) Subject to Section 5(b) hereof, the Demanding Holders shall have
the right, by written notice, to require that any Demand Registration provide
for an underwritten offering.
(b) In the case of any underwritten offering pursuant to a Demand
Registration, the Demanding Holders shall select the institution or institutions
that shall manage or lead such offering, which institution or institutions shall
be reasonably satisfactory to the Company. In the case of any underwritten
offering pursuant to a Piggyback Registration, the Company shall select the
institution or institutions that shall manage or lead such offering. No Holder
shall be entitled to participate in an underwritten offering unless and until
such Holder has entered into an underwriting or other agreement with such
institution or institutions for such offering in such form as the Company and
such institution or institutions shall determine and such form is on terms
customary for such an offering.
(c) Each Holder participating in a Registration shall promptly
supply in writing such information as the Demanding Holders, the Company or the
underwriters reasonably request.
6. Indemnification.
(a) Indemnification by the Company. The Company shall indemnify and
hold harmless, to the full extent permitted by law, each Holder of Registrable
Shares whose Registrable Shares are covered by a Registration Statement or
Prospectus, the officers, directors and agents and employees of each of them,
each Person who controls each such Holder (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the fullest
extent lawful, from and against any and all losses, claims, damages,
liabilities, judgment, costs (including, without limitation, costs of
investigation, preparation and reasonable attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or based upon any untrue
or alleged untrue statement of a material fact contained in such Registration
Statement or Prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or based upon any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as the same are based upon
information furnished in writing to the Company by or on behalf of such Holder
expressly for use therein.
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(b) Indemnification by Holder of Registrable Shares. In connection
with any Registration Statement in which a Holder is participating, such Holder
shall indemnify and hold harmless, to the full extent permitted by law, the
Company, its directors, officers, agents or employees, each Person who controls
the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act) and the directors, officers, agents or employees of such
controlling Persons, from and against all Losses arising out of or based upon
any untrue or alleged untrue statement of a material fact contained in such
Registration Statement or the related Prospectus or any amendment or supplement
thereto, or any preliminary prospectus, or arising out of or based upon any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, to the extent, but only
to the extent, that such untrue or alleged untrue statement or omission or
alleged omission is based upon any information furnished in writing by or on
behalf of such Holder to the Company expressly for use in such Registration
Statement or Prospectus. Each Holder's indemnity obligations under this Section
6 shall be limited to the total sales proceeds (net of all underwriting
discounts and commissions) actually received by such Holder in connection with
the applicable offering.
(c) Conduct of Indemnification Proceedings. If any Person shall be
entitled to indemnity hereunder (an "indemnified party"), such indemnified party
shall give prompt notice to the party from which such indemnity is sought (the
"indemnifying party") of any claim or of the commencement of any proceeding with
respect to which such indemnified party seeks indemnification or contribution
pursuant hereto; provided, however, that the delay or failure to so notify the
indemnifying party shall not relieve the indemnifying party from any obligation
or liability except to the extent that the indemnifying party has been
prejudiced by such delay or failure. The indemnifying party shall have the
right, exercisable by giving written notice to an indemnified party promptly
after the receipt of written notice from such indemnified party of such claim or
proceeding, to assume, at the indemnifying party's expense, the defense of any
such claim or proceeding, with counsel reasonably satisfactory to such
indemnified party; provided, however, that (i) an indemnified party shall have
the right to employ separate counsel in any such claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless: (1) the indemnifying
party agrees to pay such fees and expenses; (2) the indemnifying party fails
promptly to assume the defense of such claim or proceeding or fails to employ
counsel reasonably satisfactory to such indemnified party; or (3) the named
parties to any proceeding (including impleaded parties) include both such
indemnified party and the indemnifying party, and such indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it that are inconsistent with those available to the indemnifying
party or that a conflict of interest is likely to exist among such indemnified
party and any other indemnified parties (in which case the indemnifying party
shall not have the right to assume the defense of such action on behalf of such
indemnified party); and (ii) subject to clause (3) above, the indemnifying party
shall not, in connection with any one such claim or proceeding or separate but
substantially similar or related claims or proceedings in the same jurisdiction,
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one firm of attorneys (together with appropriate
local counsel) at any time for all of the indemnified parties, or for fees and
expenses that are not reasonable. Whether or not such defense is assumed by the
indemnifying
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party, such indemnified party shall not be subject to any liability for any
settlement made without its consent. The indemnifying party shall not consent to
entry of any judgment or enter into any settlement unless (i) there is no
finding or admission of any violation of any rights of any person and no effect
on any other claims that may be made against the indemnified party, (ii) the
sole relief provided is monetary damages that are paid in full by the
indemnifying party and (iii) such judgment or settlement includes as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release, in form and substance reasonably satisfactory to
the indemnified party, from all liability in respect of such claim or litigation
for which such indemnified party would be entitled to indemnification hereunder.
(d) Contribution. If the indemnification provided for in this
Section 6 is unavailable to an indemnified party in respect of any Losses (other
than in accordance with its terms), then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party, on the one hand, and such indemnified party, on the other hand, in
connection with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The relative
fault of such indemnifying party, on the one hand, and indemnified party, on the
other hand, shall be determined by reference to, among other things, whether any
action in question, including any untrue statement of a material fact or
omission or alleged omission to state a material fact, has been taken by, or
relates to information supplied by, such indemnifying party or indemnified
party, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent any such action, statement or omission. The
amount paid or payable by a party as a result of any Losses shall be deemed to
include any legal or other fees or expenses incurred by such party in connection
with any investigation or proceeding. The parties hereto agree that it would not
be just and equitable if contribution pursuant to this Section 6(d) were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in the two
immediately preceding sentences. Notwithstanding the provisions of this Section
6(d), an indemnifying party that is a Holder shall not be required to contribute
any amount which is in excess of the amount by which the total proceeds (net of
all underwriting discounts and commissions) received by such Holder from the
sale of the Registrable Shares sold by such Holder in the applicable offering
exceed the amount of any damages that such indemnifying party has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
7. Granting of Registration Rights. The Company shall not grant any
registration rights inconsistent with those granted hereunder or that give any
security holder a position with respect to cut-backs that are superior to the
Holders' position as granted herein, without the consent of a
Majority-in-Interest of the Holders of the Registrable Shares (voting together
as a single class).
8. Definitions. As used in this Exhibit E, the following terms shall
have the following meanings:
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"Business Day" means any day that is not a Saturday, a Sunday or a
legal holiday on which banking institutions in the State of New York are not
required to be open.
"Common Stock" means the Company's Common Stock, $.001 par value and
any other securities into which such Common Stock may hereafter be changed.
"Delay Period" shall have the meaning set forth in Section 1(d)
hereof.
"Demand Notice" shall have the meaning set forth in Section 1(a)
hereof.
"Demand Registration" shall have the meaning set forth in Section
1(b) hereof.
"Demanding Holders" means the Holders delivering the Demand Notice
pursuant to Section 1(a) hereof.
"Effectiveness Period" shall have the meaning set forth in Section
1(d) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Holders" means ECO Fuel Cells, LLC, a Delaware limited liability
company and any other holder of Registrable Shares or securities exercisable for
Registrable Shares.
"Interruption Period" shall have the meaning set forth in Section
3(k) hereof.
"Majority-in-Interest" of any group of Holders means holders of more
than 50% of the Registrable Shares held by such Holders.
"person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Piggyback Registration" shall have the meaning set forth in Section
2 hereof.
"Prospectus" means the prospectus included in any Registration
Statement (including a prospectus that discloses information previously omitted
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Shares covered by such Registration Statement and all other
amendments and supplements to such prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
"Registrable Shares" means (i) shares of Common Stock issued or
issuable to Holders; and (ii) any shares of Common Stock issued or issuable with
respect to the shares of
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Common Stock referred to in clause (i) above upon any stock split,
recapitalization or similar event; provided, however, that shares of Common
Stock shall only be registrable pursuant to this Agreement if and so long as
they have not been (i) sold to or through a broker or dealer or underwriter in a
public distribution or a public securities transaction, or (ii) sold in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act under Section 4(1) thereof so that all transfer restrictions
and restrictive legends with respect to such shares of Common Stock are removed
upon the consummation of such sale and the Company and the seller and purchaser
of such shares of Common Stock shall have received an opinion of counsel for the
seller, which shall be in form and content reasonably satisfactory to the
Company and the seller and purchaser and their respective counsel, to the effect
that such shares of Common Stock in the hands of the purchaser are freely
transferable without restriction or registration under the Securities Act in any
public or private transaction.
"Registration" means registration under the Securities Act of an
offering of Registrable Shares pursuant to a Demand Registration or a Piggyback
Registration.
"Registration Statement" means any registration statement under the
Securities Act of the Company that covers any of the Registrable Shares pursuant
to the provisions of this Agreement, including the related Prospectus, all
amendments and supplements to such registration statement, including pre- and
post-effective amendments, all exhibits thereto and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Shelf Registration" means an offering on a delayed or continuous
basis pursuant to Rule 415 (or any similar rule that may be adopted by the SEC)
promulgated under the Securities Act.
"Stock Purchase Agreement" means the Stock Purchase Agreement, dated
as of August 25, 1999, between the Company and the Investor.
"underwritten registration or underwritten offering" means a
registration under the Securities Act in which securities of the Company are
sold to an underwriter for reoffering to the public.
Unless otherwise stated other capitalized terms contained herein
have the meanings set forth in the Stock Purchase Agreement.
9. Miscellaneous.
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(a) Rules 144 and 144A. The Company covenants that it will file any
reports required to be filed by it under the Securities Act and the Exchange Act
so as to enable Holders holding Registrable Shares to sell such Registrable
Shares without registration under the Securities Act within the limitation of
the exemptions provided by (a) Rules 144 and 144A under the Securities Act, as
each such Rule may be amended from time to time, or (b) any similar rule or
rules hereafter adopted by the SEC. Upon the request of any such Holder, the
Company will forthwith deliver to such Holder a written statement as to whether
it has complied with such requirements.
(b) Termination. This Agreement and the obligations of the Company
and the Holders hereunder (other than Section 6 hereof) shall terminate on the
first date on which no Registrable Shares remain outstanding.
(c) Notices. All notices, demands, requests, or other communications
which may be or are required to be given, served, or sent by any party to any
other party pursuant to the Registration Rights set forth in this Exhibit E
shall be given in accordance with Section 14.4 of the Stock Purchase Agreement.
(d) Stock Purchase Agreement. This Exhibit H is deemed a part of the
Stock Purchase Agreement.
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Exhibit 10.14
H Power Corp.
STOCK PURCHASE AGREEMENT
This Agreement (the "Agreement") is made and entered into as of the 30 day
of November, 1999, between H Power Corp. ("H Power"), a Delaware corporation
(the "Company"), and Hydro-Quebec CapiTech Inc. ("CapiTech"), a Quebec
corporation (the "Investor").
For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Company and the Investor agree as follows:
1. Sale and Purchase of Shares. Subject to the terms and conditions
hereof, the Company agrees to sell to the Investor, and the Investor agrees to
purchase from the Company on the Closing Date (as defined in Section 2 hereof),
400,000 (four hundred thousand) shares (the "Shares") of common stock,$0.001 par
value, of the Company (the "Common Stock") at a purchase price of fifteen U.S.
Dollars ($15.00) per share.
2. Closing.
The closing (the "Closing") shall take place at the offices of
Fulbright & Jaworski L.L.P., on November 29, 1999 (the "Closing Date"), or such
other date as mutually agreed upon by the parties. At the Closing, the Company
will deliver to the Investor a certificate, dated the Closing Date, representing
the Shares purchased by Investor on the Closing Date, registered in its name
against payment to the Company of the purchase price of the Shares.
3. Representations and Warranties by the Company. In order to induce the
Investor to enter into this Agreement and to purchase the Shares, the Company
hereby represents and warrants to the Investor that as of the Closing and except
as disclosed in the attached Exhibit A:
3.1 Organization, Standing, etc. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware, and has the requisite corporate power and authority to own or lease
its properties and assets and to carry on its business in all material respects
as it is now being conducted. The Company has the requisite corporate power and
authority to issue the Shares and to otherwise perform its obligations under
this Agreement.
3.2 Governing Instruments. The copies of the Certificate of
Incorporation and bylaws of the Company which have been delivered to legal
counsel for the Investor prior to the execution of this Agreement are true and
complete copies of the duly and legally adopted
<PAGE>
Certificate of Incorporation and bylaws of the Company in effect as of the date
of this Agreement.
3.3 Subsidiaries, Etc. Except as disclosed on Exhibit A, the Company
does not have any direct or indirect ownership interest in any corporation,
partnership, joint venture, association or other business enterprise. If any
entity is listed on Exhibit A (each such entity a "Subsidiary") and the Company
owns a controlling interest in such entity, each of the representations and
warranties set forth in this Section 3 are being hereby restated with respect to
such entity (modified as appropriate to the nature of such entity).
3.4 Qualification. The Company is duly qualified, licensed or
domesticated as a foreign corporation in good standing in each jurisdiction
wherein the nature of its activities or the properties owned or leased by it
makes such qualification, licensing or domestication necessary and in which
failure to so qualify or be licensed or domesticated would have a material
adverse impact upon its business.
3.5 Financial Statements. Attached to this Agreement as Exhibit B
are audited financial statements, as at May 31, 1999 for the Company, together
with the related statements of income and retained earnings and changes in
financial position for the fiscal year then ended and (b) an unaudited balance
sheet, as at August 31, 1999, together with related statements of income and
earnings (the "August Financials"). Such financial statements, subject to
year-end audited adjustment in the case of the August Financials (i) are in
accordance with the books and records of the Company, (ii) present fairly the
financial condition of the Company at the balance sheets dates and the results
of its operations for the periods therein specified, and (iii) have been (or
will be, as applicable) prepared in accordance with generally accepted
accounting principles applied on a basis consistent with prior accounting
periods, except in the case of the August Financials. Without limiting the
generality of the foregoing, the balance sheets or notes thereto disclose all of
the debts, liabilities and obligations of any nature (whether absolute, accrued
or contingent and whether due or to become due) of the Company at May 31, 1999
and August 31, 1999, which, individually or in the aggregate, are material and
which in accordance with generally accepted accounting principles would be
required to be disclosed in such balance sheets, and include appropriate
reserves for all taxes and other liabilities accrued as of such dates but not
yet payable.
3.6 Tax Returns and Audits. All required federal, state and local
tax returns or appropriate extension requests of the Company have been filed,
and all federal, state and local taxes required to be paid with respect to such
returns have been paid or due provision for the payment thereof has been made.
The Company is not delinquent in the payment of any such tax or in the payment
of any assessment or governmental charge. The Company has not received notice of
any tax deficiency proposed or assessed against it, and it has not executed any
waiver of any statute of limitations on the assessment or collection of any tax.
The Company has not received notice that any of the Company's tax returns has
been audited by governmental authorities. The Company does not have any tax
liabilities except those reflected on Exhibit B or those incurred in the
ordinary course of business since August 31, 1999.
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3.7 Changes, Dividends, etc. Except for the transactions
contemplated by this Agreement, since August 31, 1999, the Company has not: (i)
incurred any debts, obligations or liabilities, absolute, accrued or contingent
and whether due or to become due, except current liabilities incurred in the
ordinary course of business which (individually or in the aggregate) will not
materially and adversely affect the business, properties or prospects of the
Company; (ii) paid any obligation or liability other than, or discharged or
satisfied any liens or encumbrances other than those securing, current
liabilities, in each case in the ordinary course of business; (iii) declared or
made any payment to or distribution to its shareholders as such, or purchased or
redeemed any of its shares of capital stock, or obligated itself to do so; (iv)
mortgaged, pledged or subjected to lien, charge, security interest or other
encumbrance any of its assets, tangible or intangible, except in the ordinary
course of business; (v) sold, transferred or leased any of its assets except in
the ordinary course of business; (vi) suffered any physical damage, destruction
or loss (whether or not covered by insurance) materially and adversely affecting
the properties, business or prospects of the Company; (vii) entered into any
transaction other than in the ordinary course of business; (viii) encountered
any labor difficulties or labor union organizing activities; (ix) issued or sold
any shares of capital stock or other securities or granted any options,
warrants, or other purchase rights with respect thereto other than pursuant to
this Agreement; (x) made any acquisition or disposition of any material assets
or became involved in any other material transaction, other than for fair value
in the ordinary course of business; (xi) increased the compensation payable, or
to become payable, to any of its directors or employees, or made any bonus
payment or similar arrangement with any directors or employees or increased the
scope or nature of any fringe benefits provided for its employees or directors;
or (xii) agreed to do any of the foregoing other than pursuant hereto. There has
been no material adverse change in the financial condition, operations, results
of operations or business of the Company since August 31, 1999.
3.8 Title to Properties and Encumbrances. Except as otherwise set
forth in Exhibit A, and except for properties and assets disposed of in the
ordinary course of business since August 31, 1999, the Company has good and
marketable title to all of its properties and assets included in the balance
sheet dated August 31, 1999 and the properties and assets reflected used in the
conduct of its business, which properties and assets are not subject to any
mortgage, pledge, lease, lien, charge, security interest, encumbrance or
restriction, except (a) those which are shown and described on Exhibit B, (b)
liens for taxes and assessments or governmental charges or levies not at the
time due or in respect of which the validity thereof is currently be contested
in good faith by appropriate proceedings, or (c) those which do not materially
affect the value of or interfere with the use made of such properties and
assets.
3.9. Conditions of Properties. The plant, offices and equipment of
the Company are in good condition and repair, subject to normal wear and tear.
3.10 Litigation; Governmental Proceedings. There are no legal
actions, suits, arbitrations or other legal, administrative or governmental
proceedings or investigations pending or, to the knowledge of the Company,
threatened against the Company, or its properties or business, and the Company
is not aware of any facts which are likely to result in or form the
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<PAGE>
basis for any such action, suit or other proceeding. The Company
is not in default with respect to any judgment, order or decree of any court or
any governmental agency or instrumentality. The Company has not been threatened
with any action or proceeding under any business or zoning ordinance, law or
regulation.
3.11 Compliance With Applicable Laws and Other Instruments. The
business and operations of the Company have been and are being conducted in all
material respects in accordance with all applicable laws, rules and regulations
of all governmental authorities. Neither the execution nor delivery of, nor the
performance of or compliance with, this Agreement nor the consummation of the
transactions contemplated hereby will, with or without the giving of notice or
passage of time, result in any breach of, or constitute a default under, or
result in the imposition of any lien or encumbrance upon any asset or property
of the Company pursuant to, any Agreement or other instrument to which the
Company is a party or by which it or any of its properties, assets or rights is
bound or affected, and will not violate the Certificate of Incorporation or
bylaws of the Company. The Company is not in violation of its Certificate of
Incorporation or bylaws nor in violation of, or in default under, any lien,
indenture, mortgage, lease, agreement, instrument, commitment or arrangement in
any material respect. The Company is not subject to any restriction which would
prohibit it from entering into or performing its obligations under this
Agreement.
3.12 Shares, Additional Shares and Adjustment Shares. The Shares,
when issued and paid for pursuant to the terms of this Agreement, any Additional
Shares (as that term is defined in Section 11.1 hereof) and any Adjustment
Shares (as that term is defined in Section 12.1 hereof), when issued to the
Investor pursuant to the terms of this Agreement, will be duly authorized,
validly issued and outstanding, fully paid, nonassessable shares and shall be
free and clear of all pledges, liens, encumbrances and restrictions.
3.13 Securities Laws. Based in part upon the representations of the
Investor in Section 4, no consent, authorization, approval, permit or order of
or filing with any governmental or regulatory authority is required under
current laws and regulations in connection with the execution and delivery of
this Agreement or the offer, issuance, sale or delivery of the Shares, the
Additional Shares or the Adjustment Shares, other than the qualification
thereof, if required, under applicable state securities laws, which
qualification has been or will be effected by the Company if required. The
Company has not, directly or through an agent, offered the Shares or any similar
securities for sale to, or solicited any offers to acquire such securities from,
persons other than the Investor or other accredited investors. Under the
circumstances contemplated by this Agreement and assuming the accuracy of the
representations of the Investor in Section 4, the offer, issuance, sale and
delivery of the Shares, the Additional Shares and the Adjustment Shares, if any,
will not, under current laws and regulations, require compliance with the
prospectus delivery or registration requirements of the federal Securities Act
of 1933, as amended (the "Securities Act").
3.14 Intellectual Property.
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(a) Intellectual Property Assets--The term "Intellectual Property
Assets" includes:
(1) the name "H Power," all fictional business names, trading
names, registered and unregistered trademarks, service marks, and
applications (collectively, "Marks");
(2) all patents, patent applications, and inventions and
discoveries that may be patentable (collectively, "Patents");
(3) all copyrights in both published works and unpublished
works (collectively, "Copyrights");
(4) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process
technology, plans, drawings, and blue prints (collectively, "Trade
Secrets"),
in each case owned, used, or licensed by the Company as licensee or licensor.
(b) Agreements--Exhibit C attached hereto contains a complete and
accurate list and summary description, including any royalties paid or received
by the Company, of all material contracts and agreements relating to the
Intellectual Property Assets to which the Company is a party or by which the
Company is bound, except for any license implied by the sale of a product and
perpetual, paid-up licenses for commonly available software programs with a
value of less than $10,000 under which the Company is the licensee. There is no
outstanding and, to the Company's knowledge, no threatened dispute or
disagreement with respect to any such agreement.
(c) Know-How Necessary to Conduct the Company's Business
(1) To the Company's knowledge, the Intellectual Property
Assets are all those necessary for the operation of the Company's
business as it is currently conducted. The Company either owns or
has licensed sufficient rights to each of the Intellectual Property
Assets, free and clear of all liens, security interests, charges,
encumbrances, equities, and other adverse claims, and has the right
to use without payment to a third party, except for royalties
described in Exhibit C, all of the Intellectual Property Assets.
(2) The Company has a policy that requires all current
employees of the Company to execute written contracts with the
Company that assign to the Company all rights to any inventions,
improvements, discoveries, or information relating to the business
of the Company, and all of the Company's former and current
employees have executed such a contract. No employee of the Company
has entered into any contract or agreement that restricts or limits
in any way the
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<PAGE>
scope or type of work in which the employee may be engaged or
requires the employee to transfer, assign, or disclose information
concerning his work to anyone other than the Company.
(d) Patents
(1) Exhibit C contains a complete and accurate list and
summary description of all Patents. Except as set forth on Exhibit
C, the Company owns no Patents. The Company has exclusive rights to
use the Patents that it uses or licenses, in each case free and
clear of all liens, security interests, charges, encumbrances,
entities, and other adverse claims except for any royalties
described in Exhibit C.
(2) To the Company's knowledge, all of the Patents licensed to
or used by the Company, are currently in compliance with formal
legal requirements (including payment of filing, examination, and
maintenance fees and proofs of working or use), and, to the
Company's knowledge, are valid and enforceable.
(3) No Patent has been or is now involved in any interference,
reissue, reexamination, or opposition proceeding or has had an
unfavorable final ruling against its interests in any such
proceeding. To the Company's knowledge, there is no potentially
interfering patent or patent application of any third party.
(4) To the Company's knowledge, no Patent is infringed or has
been challenged or threatened in any way. To the Company's
knowledge, none of the products manufactured and sold, nor any
process or know-how used, by the Company infringes or is alleged to
infringe any patent or other proprietary right of any other person.
(5) All products made, used, or sold under the Patents have
been marked in compliance with 35 United States Code ss. 287 and the
comparable requirements of any jurisdiction in which the products
are made, used or sold.
(e) Trademarks
(1) The Company is the owner of all right, title, and interest
in and to each of its Marks, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse
claims.
(2) All Marks that have been registered with the United States
Patent and Trademark Office are currently in compliance with all
formal legal requirements (including the timely post-registration
filing of affidavits of use and incontestability and renewal
applications), and, to the Company's knowledge, are valid and
enforceable.
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(3) No Mark has been or is now involved in any opposition,
invalidation, or cancellation and, to the Company's knowledge, no
such action is threatened with the respect to any of the Marks.
(4) To the Company's knowledge, there is no potentially
interfering trademark or trademark application of any third party.
(5) To the Company's knowledge, no Mark is infringed or has
been challenged or threatened in any way. To the Company's
knowledge, none of the Marks used by the Company infringes or is
alleged to infringe any trade name, trademark, or service mark of
any third party.
(6) All products and materials containing a Mark marking in
compliance with 15 United States Code ss. 1111 or the comparable
requirements of any jurisdiction in which such products and
materials are sold.
(f) Copyrights
(1) The Company is the owner of all right, title, and interest
in and to each of its copyrights, free and clear of all liens,
security interests, charges, encumbrances, equities, and other
adverse claims.
(2) All the Copyrights are currently in compliance with legal
requirements and are, to the Company's knowledge, valid and
enforceable.
(3) No Copyright is infringed or, to the Company's knowledge,
has been challenged or threatened in any way. To the Company's
knowledge, none of the subject matter of any of the Copyrights
infringes or is alleged to infringe any copyright of any third party
or is a derivative work based on the work of a third party.
(g) Trade Secrets
(1) The Company has taken reasonable precautions to protect
the confidentiality and value of the Trade Secrets.
(2) The Company either owns or has licensed the rights to use
the Trade Secrets that are necessary and sufficient for the
operation of the Company's business as it is currently conducted. To
the Company's knowledge, those Trade Secrets that are not part of
the public knowledge or literature have not been used, divulged, or
appropriated either for the benefit of any person or to the
detriment of the Company.
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(3) The Company has not been charged with misappropriation of
know-how or trade secrets. To the Company's knowledge, no third
party has misappropriated or attempted to misappropriate the Trade
Secrets.
3.15 Capital Stock.
(a) At the date hereof, the authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock and 1,800,000 shares of Preferred
Stock, $0.01 par value (the "Preferred Stock"), of which 200,000 shares are
designated as Series A Convertible Preferred Stock (the "Series A Stock"),
400,000 shares are designated as Series B Convertible Preferred Stock (the
"Series B Stock"), and 1,200,000 shares are designated as Series C Convertible
Preferred Stock (the "Series C Stock"). As of the date hereof, 200,000 shares of
Series A Stock are issued and outstanding, 400,000 shares of Series B Stock are
issued and outstanding, 600,000 shares of Series C Stock are issued and
outstanding and 7,203,039 shares of Common Stock are issued and outstanding. All
of the outstanding shares of the Company were duly authorized, validly issued
and are fully paid and nonassessable. Except as set forth in Exhibit A, there
are no outstanding subscriptions, options, warrants, calls, contracts, demands,
commitments, convertible securities or other agreements or arrangements of any
character or nature whatever, other than this Agreement, under which the Company
is obligated to issue any securities of any kind representing an ownership
interest in the Company. Exhibit A contains a complete and accurate description
of all outstanding subscriptions, options, warrants, calls, contracts, demands,
commitments, convertible securities or other agreements or arrangements of any
character or nature whatever, other than this Agreement, under which the Company
is obligated to issue any securities of any kind representing an ownership
interest in the Company. Neither the offer nor the issuance or sale of the
Shares constitutes an event, under any anti-dilution provisions of any
securities issued or issuable by the Company or any agreements with respect to
the issuance of securities by the Company, which will either increase the number
of shares issuable pursuant to such provisions or decrease the consideration per
share to be received by the Company pursuant to such provisions. No holder of
any security of the Company is entitled to any preemptive or similar rights to
purchase any securities of the Company from the Company; provided, however, that
nothing in this section shall affect, alter or diminish any right granted to the
Investor in this Agreement. All outstanding securities of the Company have been
issued in full compliance with an exemption or exemptions from the registration
and prospectus delivery requirements of the Securities Act and from the
registration and qualification requirements of all applicable state securities
laws.
(b) Upon consummation of the transactions contemplated herein, the
authorized capital stock of the Company shall consist of 20,000,000 shares of
Common Stock, of which 7,603,039 shares are issued and outstanding, and
1,800,000 shares of Preferred Stock, of which 200,000 shares of Series A Stock,
400,000 shares of Series B Stock and 600,000 shares of Series C Stock are issued
and outstanding.
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3.16 Outstanding Debt. The Company does not have any material
indebtedness incurred as the result of a direct borrowing of money, including,
but not limited to, indebtedness with respect to trade accounts, except as set
forth in Exhibit B. The Company is not in default in the payment of the
principal of or interest or premium on any such indebtedness, and no event has
occurred or is continuing under the provisions of any instrument, document or
agreement evidencing or relating to any such indebtedness which with the lapse
of time or the giving of notice, or both, would constitute an event of default
thereunder.
3.17 Schedule of Assets and Contracts. Attached as Exhibit D are
schedules listing the following items:
(a) Schedule 1: a true and complete description of all real
properties owned by the Company;
(b) Schedule 2: each indenture, lease, sublease, license or
other instrument under which the Company claims or holds a leasehold
interest in real property;
(c) Schedule 3: each lease of personal property involving
payments remaining to or from the Company in excess of 100,000;
(d) Schedule 4: each written or oral contract, agreement,
subcontract, purchase order, commitment or arrangement involving
payments remaining to or from the Company in excess of $25,000 and
each other agreement material to the Company's business to which the
Company is a party or by which it is bound, under which full
performance (including payment) has not been rendered by any party
thereto;
(e) Schedule 5: any collective bargaining agreements,
employment agreements, consulting agreements, noncompetition
agreements, nondisclosure agreements, executive compensation plans,
profit sharing plans, bonus plans, deferred compensation agreements,
employee pension retirement plans and employee benefit stock option
or stock purchase plans and other employee benefit plans, entered
into or adopted by the Company;
(f) Schedule 6: the name of each executive officer of the
Company and the remuneration currently payable to each such
executive officer; and
(g) Schedule 7: any royalty or license agreement relating to
software, except for paid-up licenses for commonly available
software programs with a value of less than $10,000 under which the
Company is the licensee.
Prior to the Closing Date, the Company shall provide legal counsel
for the Investor with a true and complete copy of each document referred to on
such schedules which such counsel requests to examine.
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The Company has in all material respects substantially performed all
obligations required to be performed by it to date and is not in default in any
material respect under any of the contracts, agreements, leases, documents,
commitments or other arrangements to which it is a party or by which it is
otherwise bound. All instruments referred to in the Schedules described in this
Section 3.17 are in effect and enforceable according to their respective terms,
and there is not under any of such instruments any existing material default or
event of default or event which, with notice or lapse of time or both, would
constitute an event of default thereunder. All parties having material
contractual arrangements with the Company are in substantial compliance
therewith and none are in material default in any respect thereunder. All plans
or arrangements listed on Schedule 5 are fully funded to the extent that such
funding is required by generally accepted accounting principles.
3.18 Corporate Acts and Proceedings. This Agreement has been duly
authorized by all necessary corporate and shareholder action on behalf of the
Company, has been duly executed and delivered by authorized officers of the
Company, and is a valid and binding agreement on the part of the Company that is
enforceable against the Company in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and to judicial limitations on the enforcement of the remedy of
specific performance and other equitable remedies. All corporate and shareholder
action necessary to the authorization, creation, issuance and delivery of the
Shares, the Adjustment Shares and the Additional Shares has been taken by the
Company, or will be taken by the Company on or prior to the Closing Date.
3.19 Accounts Receivable. To the extent that they exceed the
reserves for doubtful accounts set forth in Exhibit B, the accounts receivable
which are reflected in Exhibit B and all accounts receivable of the Company
which have arisen since August 31, 1999 (except such accounts receivable as have
been collected since August 31, 1999) are valid and enforceable claims, and the
goods and services sold and delivered which gave rise to such accounts were sold
and delivered in conformity with the applicable purchase orders, agreements and
specifications. Such accounts receivable are subject to no valid defense or
offsets except routine customer complaints or warranty demands of an immaterial
nature. The reserve for doubtful accounts that is included in Exhibit B is
adequate.
3.20 Inventories. The inventories of the Company which are reflected
in Exhibit B and all inventory items which have been acquired since August 31,
1999 consist of raw materials, supplies, work-in-process and finished goods of
such quality and quantities as are currently usable or salable in the ordinary
course of its business.
3.21 Purchase Commitments and Outstanding Bids. No material purchase
commitment of the Company is in excess of normal, ordinary and usual
requirements of its business, or was made at any price in excess of the then
current market price, or contains terms and conditions more onerous than those
usual and customary in the industry. There is no
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outstanding material bid, sales proposal, contract or unfilled order of the
Company which (a) will, or could if accepted, require the Company to supply
goods or services at a cost to the Company in excess of the revenues to be
received therefrom, or (b) quotes prices which do not include a mark-up over
reasonably estimated costs consistent with past mark-ups on similar business or
market conditions current at the time.
3.22 Insurance Coverage. There are in full force policies of
insurance issued by insurers of recognized responsibility insuring the Company
and its properties and business against such losses and risks, and in such
amounts as is customary in the case of corporations of established reputation in
the same or similar business and similarly situated.
3.23 No Brokers or Finders. No person, firm or corporation has or
will have, as a result of any act or omission of the Company, any right,
interest or valid claim against the Company or the Investor for any commission,
fee or other compensation as a finder or broker in connection with the
transactions contemplated by this Agreement. The Company will indemnify and hold
the Investor harmless against any and all liability with respect to any such
commission, fee or other compensation which may be payable or determined to be
payable in connection with the transactions contemplated by this Agreement.
3.24 Conflicts of Interest. No officer, director or shareholder of
the Company or any affiliate (as such term is defined in Rule 405 under the
Securities Act) of any such person has any direct or indirect interest (a) in
any entity which does business with the Company, (b) in any property, asset or
right which is used by the Company in the conduct of its business, or (c) in any
contractual relationship with the Company other than as an employee. For the
purpose of this section, there shall be disregarded any interest which arises
solely from the ownership of less than a 1% equity interest in a corporation
whose stock is regularly traded on any national securities exchange or in the
over-the-counter market.
3.25 Licenses. The Company possesses from the appropriate agency,
commission, board and government body and authority, whether state, local or
federal, all licenses, permits, authorizations, approvals, franchises and rights
which (a) are necessary for it to engage in the business currently conducted by
it, and (b) if not possessed by the Company would have an adverse impact on the
Company's business. The Company has no knowledge that would lead it to believe
that it will not be able to obtain all licenses, permits, authorizations,
approvals, franchises and rights that may be required for any business the
Company proposes to conduct.
3.26 Disclosure. The Company has not knowingly withheld from the
Investor any material facts relating to the assets, business, operations,
financial condition or prospects of the Company. No representation or warranty
in this Agreement or in any certificate, schedule, statement or other document
furnished or to be furnished to the Investor pursuant hereto or in connection
with the transactions contemplated hereby contains or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
required to be stated herein or therein or necessary to make the statements
herein or therein not misleading.
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3.27 Registration Rights. Other than under this Agreement or as set
forth in Exhibit A, the Company has not agreed to register any of its authorized
or outstanding securities under the Securities Act.
3.28 Retirement Plans. The Company does not have any retirement plan
in which any employees of the Company participate that is subject to any
provisions of the Employee Retirement Income Security Act of 1974 and of the
regulations adopted pursuant thereto ("ERISA"). Exhibit A contains all
information regarding employee benefit plans that is material to the business,
operations and financial condition of the Company.
3.29 Environmental and Safety Laws. The Company is not knowingly in
violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, and no material expenditures are
or will be required in order to comply with any such existing statute, law or
regulation.
3.30 Employees. To the best of the Company's knowledge, no officer
of the Company or employee of the Company (whose annual compensation is in
excess of $100,000) has any plans to terminate his or her employment with the
Company. The Company has complied in all material respects with all laws
relating to the employment of labor, including provisions relating to wages,
hours, equal opportunity, collective bargaining and payment of Social Security
and other taxes, and the Company has not encountered any material labor
difficulties. The Company does not have any worker's compensation liabilities,
except those reflected on Exhibit B.
3.31 Absence of Restrictive Agreements. Except as provided in
Exhibit A, no employee of the Company is subject to any secrecy or
non-competition agreement or any agreement or restriction of any kind that would
impede in any way the ability of such employee to carry out fully all activities
of such employee in furtherance of the business of the Company.
3.32 Actions and Proceedings. Exhibit A contains a complete and
accurate description of all legal action or other claims asserted against the
officers and directors of the Company, whether civil, criminal, administrative,
arbitral or otherwise, including diciplinary actions by any professional
association and regardless of whether such legal or other actions relate to
activities of the Company's officers and directors prior to becoming an officer
or director of the Company, and regardless of the disposition or settlement of
such actions or proceedings.
4. Representations of the Investor. The Investor represents that:
4.1 Investment Intent. The Shares being acquired by the Investor are
being purchased for investment for the Investor's own account and not with the
view to, or for resale in connection with, any distribution or public offering
thereof. The Investor understands that the Shares have not been registered under
the Securities Act or any state securities laws and that the Shares may not be
transferred or resold without (i) registration under the Securities Act and any
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applicable state securities laws, or (ii) an exemption from the requirements of
the Securities Act and applicable state securities laws.
4.2 Acts and Proceedings. This Agreement has been duly authorized by
all necessary action on the part of the Investor, has been duly executed and
delivered by the Investor, and is a valid and binding agreement of the Investor.
4.3 No Brokers or Finders. No person, firm or corporation has or
will have, as a result of any act or omission by the Investor, any right,
interest or valid claim against the Company for any commission, fee or other
compensation as a finder or broker, or in any similar capacity, in connection
with the transactions contemplated by this Agreement. The Investor will
indemnify and hold the Company harmless against any and all liability with
respect to any such commission, fee or other compensation which may be payable
or determined to be payable as a result of the actions of the Investor in
connection with the transactions contemplated by this Agreement.
4.4 Best Efforts. Investor shall use its best efforts to assist the
Company in preparing an initial public offering of shares of Common Stock.
4.5 Accredited Investor. Investor qualifies as an "accredited
investor" for purposes of Regulation D promulgated under the Securities Act of
1933, as amended.
5. Conditions of Investor's Obligation. The obligation to purchase and pay
for the Shares which the Investor has agreed to purchase on the Closing Date is
subject to the fulfillment prior to or on the Closing Date of the conditions set
forth in this Section 5. In the event that any such condition is not fulfilled
to the satisfaction of the Investor, then the Investor shall not be obligated to
proceed with the purchase of the Shares.
5.1 No Errors, etc. The representations and warranties of the
Company under this Agreement shall be true in all material respects as of the
Closing Date with the same effect as though made on and as of the Closing Date.
5.2 Compliance with Agreement. The Company shall have performed and
complied with in all material respects all agreements or conditions required by
this Agreement to be performed and complied with by it prior to or as of the
Closing Date.
5.3 Certificate of Officers. The Company shall have delivered to the
Investor a certificate, dated the Closing Date, executed by the Chief Executive
Officer of the Company and certifying to the satisfaction of the conditions
specified in sections 5.1 and 5.2.
5.4 Opinion of the Company's Counsel. The Company shall have
delivered to the Investor an opinion, satisfactory to the Investor, of Fulbright
& Jaworski L.L.P., counsel for the Company, dated the Closing Date, to the
effect that:
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(a) The Company is a corporation duly organized and validly existing
in good standing under the laws of the state of Delaware, and has the
corporate power and authority to own and hold the properties owned and
leased by it and to carry on the business in which it is engaged. The
Company has the corporate power and authority to enter into this
Agreement, to issue and sell the Shares and to carry out the provisions of
this Agreement.
(b) This Agreement has been duly authorized, executed and delivered
by the Company, is the legal, valid and binding agreement of the Company
and is enforceable against the Company in accordance with its terms,
subject, as to the enforcement of remedies, to limitations under
applicable bankruptcy, insolvency, moratorium, reorganization, and other
laws affecting the rights of creditors generally and to judicial
limitations on the enforcement of the remedy of specific performance and
other equitable remedies.
(c) The Shares being purchased on the Closing Date have been duly
authorized and, upon delivery thereof and payment therefore in accordance
with the Stock Purchase Agreement will be fully paid and nonassessable,
and are entitled to the rights, preferences and provisions of the
Company's Certificate of Incorporation and the benefits of the provisions
of this Agreement applicable thereto. The certificate evidencing the
Shares is in valid and sufficient form under Delaware law.
(d) All corporate proceedings required by law or by the provisions
of this Agreement to be taken by the Board of Directors and shareholders
of the Company on or prior to such Closing Date in connection with the
execution and delivery of this Agreement, the offer, issuance and sale of
the Shares and the consummation of the transactions contemplated by this
Agreement, have been duly and validly taken.
(e) The Company is authorized by its Certificate of Incorporation to
issue 20,000,000 shares of Common Stock and 1,800,000 shares of Preferred
Stock. Immediately prior to the Closing Date there were 7,203,039 shares
of Common Stock, 200,000 shares of Series A Stock, 400,000 shares of
Series B Stock and 600,000 shares of Series C Stock issued and
outstanding. All shares outstanding immediately prior to the Closing Date
have been duly authorized and validly issued. To the best of such
counsel's knowledge, the Company holds no shares in its treasury. Except
for shares of Common Stock and shares of Series A Stock, Series B Stock
and Series C Stock, the Company has no other authorized series or class of
capital stock and, to the best of such counsel's knowledge, has no
outstanding options, warrants or other rights to acquire securities of the
Company, other than as disclosed in Exhibit A to this Agreement.
(f) To the best of such counsel's knowledge, no security holder of
the Company is entitled to preemptive or similar rights as a result of the
execution or delivery of this Agreement or the issuance of the Shares and
the Adjustment Shares other than as expressly set forth in this Agreement.
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(g) Assuming the accuracy of the representations made by the
Investor in Section 4, the Company has obtained the approval or consent of
all governmental agencies or bodies required for the legal and valid
execution and delivery of this Agreement and the legal and valid offer,
issuance and sale of the Shares and for the performance of the obligations
of the Company under all provisions of this Agreement, other than those
with respect to registration rights. Assuming the accuracy of the
representations made by the Investor in Section 4, the execution, delivery
and performance of this Agreement, the offer, issuance and sale of the
Shares and the issuance of Adjustment Shares, and the consummation of the
transactions contemplated by this Agreement will not result in any breach
or violation of the terms or provisions of, or constitute a default under,
the Certificate of Incorporation or the bylaws of the Company or any
statute, rule or regulation affecting the Company or its business. To the
best of such counsel's knowledge, the execution, delivery and performance
of this Agreement by the Company, the offer, issuance and sale of the
Shares and the consummation of the transactions contemplated by this
Agreement will not result in any violation of any agreement or other
instrument to which the Company is a party or by which it is bound or to
which any of its properties, assets or business is subject or any
judgment, decree or order.
(h) Assuming the accuracy of the representations made by the
Investor in Section 4, the offer, sale, issuance and delivery of the
Shares to the Investor under this Agreement are exempt from the
registration and prospectus delivery requirements of the Securities Act
and all applicable state securities laws.
(i) Except for matters disclosed on Exhibit A, such counsel has no
knowledge of any litigation, proceeding or governmental investigation
pending or threatened against the Company or its properties or business.
5.5 Opinion of Intellectual Property. The Company shall have
delivered to Investor an opinion, satisfactory to the Investor, of Salzman &
Levy, intellectual property counsel for the Company, dated the Closing Date to
the effect that:
(a) The material references in Section 3.14 of the Stock Purchase
Agreement do not contain any untrue statement of a material fact or omit
to state a material fact so as to make the statements therein, in light of
the circumstances under which they were made, misleading.
(b) Except as described in the Stock Purchase Agreement, there are
no United States patents of third parties which are infringed by the
manufacture, use or sale of the products or processes currently made, used
or sold by the Company.
(c) There are no legal, governmental or administrative proceedings
pending or threatened against the Company that relate to patents,
trademarks or other intellectual property, except for pending or proposed
United States or foreign patent or trademark applications.
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(d) The Company has not received any notice of conflict with the
asserted rights of others in respect of any trademarks, service marks,
trade names, trademark registrations, service mark registrations,
copyrights, licenses, inventions, trade secrets, patents, patent
applications, know-how or similar rights, nor of any threatened actions
with respect thereto, which, if determined adversely to the Company, would
individually or in the aggregate have a material adverse affect on the
business affairs, financial position, net worth or operations of the
Company.
(e) The Company owns or has licensed all such material trademarks,
trademark applications, trademark registrations, service marks, service
mark registrations, copyrights, patents, patent applications and other
rights as are described in the Stock Purchase Agreement and which are
necessary and sufficient for the Company's present or planned future
business as described in the Stock Purchase Agreement or Fuel Cell
Operating Agreement.
(f) The patents described in Exhibit C of the Stock Purchase
Agreement are valid and enforceable.
5.6 Supporting Documents. The Investor shall have received the
following:
(a) A copy of resolutions of the Board of Directors of the Company
certified by the Secretary of the Company authorizing and approving the
execution, delivery and performance of this Agreement.
(b) A certificate of incumbency executed by the Secretary of the
Company certifying the names, titles and signatures of the officers
authorized to execute this Agreement and further certifying that the
Certificate of Incorporation and bylaws of the Company delivered to legal
counsel for the Investor at the time of the execution of this Agreement
have been validly adopted and have not been amended or modified.
(c) Such additional supporting documentation and other information
with respect to the transactions contemplated hereby as legal counsel for
the Investor may reasonably request.
5.7 Qualification Under State Securities Laws. All registrations,
qualifications, permits and approvals required under applicable state securities
laws for the lawful execution and delivery of this Agreement and the offer,
sale, issuance and delivery of the Shares to the Investor at the Closing shall
have been obtained.
5.8 Due Diligence. Investor shall have completed its due diligence
investigation of the Company to its satisfaction and Investor determines there
are no material impediments to consummation of the transactions contemplated
herein.
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5.9 Timing. The transactions contemplated by this Agreement are
consummated prior to any initial public offering of the Company's stock.
5.10 Necessary Consents. On or before the Closing Date, the Company
shall have obtained any consents of any person or governmental authority
necessary for the consummation of the transactions contemplated under this
Agreement and the Investor shall have received satisfactory evidence of such
consents.
5.11 Shareholders Agreement. The Company shall have executed with
the other shareholders of H Power Enterprises of Canada Inc. ("HPEC"), an
amendment to the HPEC Shareholders Agreement dated May 2, 1997 providing for an
obligation of the shareholders of HPEC to appoint, on an annual basis, a
representative of the Investor as a member of the Board of Directors of HPEC.
5.12 No Material Adverse Effect. Since August 31, 1999 no event,
change or effect shall have occurred that is materially adverse to the
consolidated financial condition, business, results of operations, cash flows or
prospects of the Company or that materially impairs the ability of the Company
to perform or the Investor to enforce the obligations of the Company under this
Agreement.
5.13 Proceedings and Documents. All corporate and other proceedings
and actions taken in connection with the transactions contemplated hereby and
all certificates, opinions, agreements, instruments and documents mentioned
herein or incident to any such transaction shall be satisfactory in form and
substance to legal counsel for the Investor.
6. Affirmative Covenants of the Company. Subject to the provisions of
Section 11, the Company covenants and agrees as follows:
6.1 Observer Rights. The Company shall, on an annual basis, cause to
be named as an observer at all meetings of the Company's Board of Directors, a
representative of the Investor, which representative shall be designated by the
Investor.
6.2 Audit and Compensation Committees. The Company shall at all
times maintain an audit committee and a compensation committee consisting of at
least three members of the Board of Directors.
6.3 Investor's Right to Sell if Company Shareholders Sell. In the
event that Company stockholders holding a majority of the outstanding Common
Stock (the "Majority Shareholders") enter into an agreement to sell their shares
of Common Stock to a third party (the "Proposed Sale"), the Company shall
provide notice of the Proposed Sale to Investor within fifteen (15) days after
notice of the Proposed Sale was received by the Company stating the terms and
conditions of the Proposed Sale, including, without limitation, the number of
shares proposed to be sold or transferred, the nature of such sale or transfer,
the consideration to be paid, and the name and address of each prospective
purchaser. Investor shall have the right, exercisable upon written notice to the
Company within fifteen (15) days of receipt of notice of the Proposed Sale by
the Company,
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to participate in the Proposed Sale pursuant to the specified terms and
conditions of the proposed sale as set forth in the notice (the "Take-Along
Right"). To the extent Investor exercises the Take-Along Right, the number of
shares the Majority Shareholders may sell pursuant to the Purchase Offer shall
be reduced as provided herein.
(a) Each shareholder participating in the Proposed Sale may sell all
or any part of that number of shares of Common Stock equal to the product
obtained by multiplying (i) the aggregate number of shares of Common Stock
covered by the Purchase Offer by (ii) a fraction, the numerator of which
is the number of shares of Common Stock at the time owned by such
participating shareholder and the denominator of which is the sum of (A)
the total number of shares of Common Stock owned by all participating
shareholders (other than Majority Shareholders) plus (B) the total number
of shares of Common Stock owned by the Majority Shareholders.
6.4 Financial and Business Information. The Company will maintain,
and cause each of its Subsidiaries to maintain, a system of accounting
established in accordance with sound business practices to permit preparation of
financial statements in conformity with generally accepted accounting principles
(GAAP). The Company during the term of this Agreement will, and will cause its
Subsidiaries to, deliver to the Investor:
(a) As soon as practicable and in any event within 120 days after
the close of each fiscal year of the Company, a consolidated and
consolidating balance sheet of the Company and its Subsidiaries as of the
close of such fiscal year and consolidated statements of operations,
shareholders' equity and cash flows for the Company and its Subsidiaries
for the fiscal year then ended, together with the report thereon of
independent certified public accountants acceptable to Investor;
(b) As soon as practicable and in any event within 45 days after the
end of the first three fiscal quarters of each fiscal year, the
consolidated and consolidating balance sheet of the Company and its
Subsidiaries as at the end of such fiscal quarter and the related
consolidated and consolidating statements of operations, shareholders'
equity and cash flows of the Company and its Subsidiaries for such fiscal
quarter and for the period from the beginning of the current fiscal year
to the end of such fiscal quarter, all in reasonable detail and certified
by the chief financial officer of the Company that they fairly present the
financial condition of Company and its Subsidiaries as the dates indicated
and the results of its operations and its cash flows for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustments;
(c) As soon as practicable and in any event within 30 days after the
end of each month, the internal financial statements of the Company and
its Subsidiaries for such month (other than the months referred to in
Section 6.4(a) and Section 6.4(b) above) and certified by the Chief
Executive Officer of the Company that such statements were prepared in
accordance with the Company's accounting policies, consistently applied
for the period indicated;
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(d) Prompt notice of any event having a material adverse effect on
the business, operations, financial condition, prospects or results of
operation of the Company;
(e) Promptly upon their becoming available, copies of (a) all
financial statements, reports, notices and proxy statements sent or made
available generally by the Company to its security holders, (b) all
regular and periodic reports filed by the Company or any of its
Subsidiaries with any securities exchange or with the SEC or any
governmental or private regulatory authority, (c) all press releases and
other statements made available generally by the Company or any of its
Subsidiaries to the public concerning material developments in the
business of the Company or any of its Subsidiaries;
(f) Promptly upon any officer of Company or any of its Subsidiaries
obtaining knowledge of any condition or event that constitutes a violation
or default or potential event of default under any indebtedness of the
Company or any of its Subsidiaries, or becoming aware that any person has
given any notice or taken any other action with respect to a claimed event
of default or potential event of default, notice of any such event; and
(g) Within a reasonable time, such other information about the
property, financial condition and operations of the Company and its
Subsidiaries as the Investors may from time to time reasonably request.
6.5 Patent Protection. With respect to any patents identified on
Exhibit A, the Company shall within thirty (30) days after the Closing Date,
commence protection proceedings for all such patents.
6.6 Year 2000 Compliance. Within thirty (30) days after the Closing
Date, the Company shall certify to the Investor, compliance with the following:
(a) The Company has investigated the possibility of the occurrence
of Year 2000 Errors in its business operations and has: (i) established a
written plan for dealing with the possibility of Year 2000 Errors and
provided a copy of such plan to Investor; (ii) obtained confirmation from
the suppliers of all the material computer systems, hardware, software or
other processing equipment used in the Company's business that Year 2000
Errors will not occur or (where such confirmation has not been
forthcoming) has obtained satisfactory assurances that appropriate
modification will be made to such systems, hardware, software or equipment
to test and remedy any and all Year 2000 Errors prior to October 31, 1999;
(iii) tested the principal computer systems, hardware, software and other
processing equipment used in the Company's business to determine whether
Year 2000 Errors are possible; and (iv) compiled an accurate estimate of
the cost of preventing Year 2000 Errors or dealing with any Year 2000
Errors which may arise, which estimate has been submitted to the Investor.
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(b) The Company has provided a complete and accurate list of all
Year 2000 Errors of which the Company, its officers, directors, employees,
agents or shareholders are aware.
(c) The products and/or technology manufactured, licensed, sold or
otherwise distributed by the Company shall function without, and shall not
contain, any Year 2000 Errors.
(d) None of the software used in the business of, or manufactured,
licensed, sold or otherwise distributed by, the Company contains any
virus, logic bomb, time bomb, worm, undisclosed protect codes or other
harmful code which might have a significant adverse effect on the
processing of data for the business, or the use of the software.
(e) For purposes of this Agreement, the term "Year 2000 Error" means
(i) any failure of computer hardware or software products or technology
(or any components thereof) properly to create, receive, recognize,
record, store, process, calculate, present or exchange calendar dates
falling on and after (and if applicable, spans of time including) January
1, 2000 (including, without limitation, leap years) as a result of the
occurrence, or use of data consisting of, such dates; (ii) any failure of
computer hardware or software products or technology (or any components
thereof) to create, receive, recognize, record, store, process, calculate,
present or exchange any information or data dependent on or relating to
dates on or after January 1, 2000 (including, without limitation, forward
and backward calculations from, into and between the 20th and 21st
centuries, the years 1999 and 2000 and leap years) in the same manner, and
with the same functionality, data integrity and performance, as such
computer hardware or software products or technology (or any components
thereof) creates, receives, recognizes, records, stores, processes,
calculates, presents or exchanges calendar dates on or before December 31,
1999, or information or data dependent on or relating to such dates; or
(iii) any loss of functionality or performance or incorrect results with
respect to the introduction of records or processing of data containing
dates falling on or after January 1, 2000 (including, without limitation,
leap years).
7. Future Registration Rights. Except for any registration expressly
permitted by Section 8 of this Agreement, and except for an underwriting
agreement between the Company and one or more professional underwriters of
securities, the Company shall not, without the prior written consent of the
Investor, grant any registration rights that are greater than the registration
rights of the Investor as set forth in Exhibit F attached hereto.
8. Registration Rights. The Company acknowledges and agrees that the
Investor shall have the registration rights set forth in Exhibit F attached
hereto.
9. Restriction on Transfer of Shares.
9.1 Restrictions. The Shares are only transferable pursuant to (a) a
public offering registered under the Securities Act, (b) Rule 144 of the
Commission (or any similar rule
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then in effect) if such rule is available, and (c) subject to the conditions
specified elsewhere in this Section 10, any other legally available means of
transfer.
9.2 Legend. Each certificate representing Shares shall be endorsed
with the following legend:
"The shares represented by this certificate may not be transferred
without (i) the opinion of counsel satisfactory to this corporation
that such transfer may lawfully be made without registration under
the Federal Securities Act of 1933 and all applicable state
securities laws or (ii) such registration."
9.3 Removal of Legend. Any legend endorsed on a certificate
evidencing a security pursuant to Section 9.1 hereof shall be removed, and the
Company shall issue a certificate without such legend to the holder of such
security, if such security is being disposed of pursuant to a registration under
the Securities Act or pursuant to Rule 144 or any similar rule then in effect or
if such holder provides the Company with an opinion of counsel satisfactory to
the Company to the effect that a transfer of such security may be made without
registration. In addition, if the holder of such security delivers to the
Company an opinion of such counsel to the effect that no subsequent transfer of
such security will require registration under the Securities Act, the Company
will promptly upon such contemplated transfer deliver new certificates
evidencing such security that do not bear the legend set forth in Section 9.2.
10. Termination of Certain Covenants.
The obligations of the Company under Sections 6.1, 6.2 and 6.3 of this
Agreement shall terminate and shall be of no further force and effect upon
completion of an initial public offering by the Company.
11. Right to Purchase Additional Shares.
11.1 Right to Purchase Additional Shares. If the Company should
decide to issue and sell additional shares of stock (the "Additional Shares"),
excluding (a) shares of Common Stock sold to the public pursuant to a
registration statement filed under the Securities Act, (b) shares of Common
Stock that may be issued upon the exercise of stock options outstanding as of
the Closing Date and disclosed in Exhibit A; (c) stock options and shares of
Common Stock issuable upon the exercise of such options granted to employees and
directors of the Company pursuant to the terms of the Company's stock option
plans in effect as of the Closing Date and disclosed in Exhibit A; (d) Common
Stock issuable upon the exercise of a warrant in favor of Duquesne Enterprises
that, as of the Closing Date, entitled the holder thereof to purchase 100,000
shares of Common Stock; (e) Common Stock issuable upon the conversion of the
Company's Series A Convertible Preferred Stock, Series B Convertible Preferred
Stock or Series C Convertible Preferred Stock; (f) shares of Preferred Stock, up
to an aggregate maximum of 266,667 shares; and (g) shares of Common Stock in an
amount less than 1% of the shares of Common Stock owned by Investor as of the
Closing Date, whether issued in one transaction or a series of transactions
subsequent to the Closing Date, up to
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a maximum of 10,000 shares in the aggregate for all such transactions
(collectively "Permitted Issuances"), the Company shall first offer to sell to
Investor, upon the same terms and conditions as the Company is proposing to
issue and sell the Additional Shares to others, Investor's pro rata share (as
defined below) of such Additional Shares.
Such offer to Investor shall be made by written notice given to
Investor (the "Offer Notice") specifying the amount of the Additional Shares
being offered, the purchase price for the Additional Shares and any other terms
of the offer. Investor shall have a period of thirty (30) days from and after
the date such Offer Notice was received by Investor within which to accept such
offer (the "Acceptance Period"). Investor shall accept an offer to purchase all
or any portion of the Additional Shares specified in the Offer Notice by written
notice to the Company and tender of the purchase price for the Additional Shares
within the Acceptance Period. If Investor fails to accept such offer within the
Acceptance Period, any Additional Shares not purchased by Investor may be
offered for sale to others by the Company for a period of one hundred eighty
(180) days from the last day of the Acceptance Period, but only on the same
terms and conditions as set forth in the Offer Notice delivered to Investor,
free and clear of the restrictions imposed by this Section 11.
11.2 Pro Rata Share. For purposes of Section 11.1, Purchaser's "pro
rata share" shall be determined by the following formula:
P = N/O x A
Where,
"P" equals Investor's pro rata share of Additional Shares (rounded to the
nearest whole share);
"N" equals the number of shares of Common Stock owned by Investor immediately
prior to the issuance of the Additional Shares being offered;
"O" equals the total number of shares of the Company's Common Stock outstanding
immediately prior to the issuance of the Additional Shares; and
"A" equals the total number of Additional Shares being offered.
11.3 Termination. Investor's rights under this Section 11 shall
terminate in their entirety on the earlier of (a) the consummation of an initial
public offering of the Company's Common Stock or other securities, or (b) the
acquisition of the Company by another entity by means of any transaction or
series of related transactions (including, without limitation, any
reorganization, merger or consolidation) that results in the transfer of fifty
percent (50%) or more of the outstanding voting power of the Company or a sale
of all or substantially all of the assets of the Company.
12. Anti-dilution.
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12.1 Right to Receive Adjustment Shares. If at any time after the
date of this Agreement, the Company issues or sells, or is deemed to have issued
or sold, any shares of its Common Stock for consideration per share less than
$15.00, then, unless such issuance or sale was a Permitted Issuance (as defined
in Section 11.1 hereof), immediately upon such issue or sale or deemed issuance
or sale, the Company shall issue to Investor a number of Adjustment Shares
determined in accordance with Section 12.2 hereof without payment of any cash or
other consideration to the Company.
12.2 Calculation of Adjustment Shares. The number of Adjustment
Shares to be issued to Investor under Section 12.1 shall be determined in
accordance with the following formula:
A = C/S - E
Where,
"A" = Number of Adjustment Shares
"C" = Purchase Price paid by Investor for the Shares ($6,000,000)
"S" = per share price of Additional Shares
"E" = Number of Shares owned by Investor immediately preceding issuance of
Additional Shares.
12.3 Subdivisions and Combinations. In case the Company shall at any
time subdivide or split its outstanding shares of Common Stock into a greater
number of shares, or combine the outstanding shares of Common Stock into a
smaller number of shares, the Company shall issue to Investor a number of
Adjustment Shares sufficient to reflect such stock split or combination.
12.4 Termination. Investor's rights under this Section 12 shall
terminate in their entirety on the earlier of (a) the consummation of an initial
public offering of the Company's Common Stock or other securities; or (b) the
acquisition of the Company by another entity by means of any transaction or
series of related transactions (including, without limitation, any
reorganization, merger or consolidation) that results in the transfer of fifty
percent (50%) or more of the outstanding voting power of the Company or a sale
of all or substantially all of the assets of the Company.
13. Survival. Except as specifically provided in Section 10 and Section 12
of this Agreement, all representations, warranties and covenants contained
herein shall survive the execution and delivery of this Agreement, any
investigation at any time made by the Investor or on its behalf, and the sale
and purchase of the Shares and payment therefor for a period of two years. All
statements contained in any certificate, instrument or other writing delivered
by or on behalf of the Company pursuant to this Agreement (other than legal
opinions) or in connection with or in contemplation of the transactions herein
contemplated shall constitute representations and warranties by the Company
hereunder.
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14. Indemnification.
14.1 Indemnification by Company. The Company agrees to indemnify in
full Investor, its officers, directors, employees, agents and stockholders
(collectively, the "Investor Indemnified Parties") and hold them harmless
against any loss, liability, deficiency, damage, expense or cost (including
reasonable legal expenses), whether or not actually incurred or paid prior to
the third anniversary of the Closing Date (collectively, "Losses"), which
Investor Indemnified Parties may suffer, sustain or become subject to, as a
result of (i) any misrepresentation in any of the representations and warranties
of the Company contained in this Agreement or in any exhibits, schedules,
certificates or other documents delivered or to be delivered by or on behalf of
the Company pursuant to the terms of this Agreement or otherwise referenced or
incorporated in this Agreement (collectively, the "Related Documents"), (ii) any
breach of, or failure to perform, any agreement of the Company contained in this
Agreement or any of the Related Documents, or (iii) any "Claims" (as defined in
Section 14.3(a) hereof) or threatened Claims against Investor arising out of the
actions or inactions of the Company or the Company with respect to the Company's
business prior to the Closing (collectively, "Investor Losses").
The Company shall be liable to the Investor Indemnified Parties for
any Investor Losses only if Investor or another Investor Indemnified Party
delivers to the Company written notice, setting forth in reasonable detail the
identity, nature and amount of Investor Losses related to such claim or claims
prior to the third anniversary of the Closing Date; provided, however, that the
Investor Indemnified Party's failure to provide the detail required by this
Section 14.1 shall not constitute either a breach of this Agreement by the
Investor Indemnified Party or any basis for the Company to assert that the
Investor Indemnified Party did not comply with the terms of this Section 14.1
sufficient to cause the Investor Indemnified Party to have waived its rights
under this Section 14.1.
14.2 Indemnification by Investor. The Investor agrees to indemnify
in full the Company, and its officers, directors, employees, agents and
stockholders (collectively, the "Company Indemnified Parties") and hold them
harmless against any Losses which any of the Company Indemnified Parties may
suffer, sustain or become subject to as a result of (i) any misrepresentation in
any of the representations and warranties of Investor contained in this
Agreement or in any of the Related Documents, (ii) any breach of, or failure to
perform, any agreement of Investor contained in this Agreement or any of the
Related Documents, or (iii) any Claims or threatened Claims against the Company
arising out of the actions or inactions of Investor with respect to the
Company's business or the Real Property after the Closing (collectively, "
Losses").
Investor shall be liable to the Seller Indemnified Parties for any
Seller Losses (i) only if the Company or another Company Indemnified Party
delivers to Investor written notice, setting forth in reasonable detail the
identity, nature and amount of Company Losses related to such claim or claims
prior to the third anniversary of the Closing Date; provided, however, that the
Company Indemnified Party's failure to provide the detail required in this
Section 14.2 shall not constitute either a breach of this Agreement by the
Company Indemnified Party or any basis for Investor to
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assert that the Company Indemnified Party did not comply with the terms of this
Section 14.2 sufficient to cause the Company Indemnified Party to have waived
its rights under this Section 14.2.
14.3 Method of Asserting Claims. As used herein, an "Indemnified
Party" shall refer to a "Investor Indemnified Party" or "Company Indemnified
Party," as applicable, the "Notifying Party" shall refer to the party hereto
whose Indemnified Parties are entitled to indemnification hereunder, and the
"Indemnifying Party" shall refer to the party hereto obligated to indemnify such
Notifying Party's Indemnified Parties.
(a) In the event that any of the Indemnified Parties is made a
defendant in or party to any action or proceeding, judicial or
administrative, instituted by any third party for the liability or the
costs or expenses of which are Losses (any such third party action or
proceeding being referred to as a "Claim"), the Notifying Party shall give
the Indemnifying Party prompt notice thereof. The failure to give such
notice shall not affect any Indemnified Party's ability to seek
reimbursement unless such failure has materially and adversely affected
the Indemnifying Party's ability to defend successfully a Claim. The
Indemnifying Party shall be entitled to contest and defend such Claim;
provided, that the Indemnifying Party (i) has a reasonable basis for
concluding that such defense may be successful and (ii) diligently
contests and defends such Claim. Notice of the intention so to contest and
defend shall be given by the Indemnifying Party to the Notifying Party
within 20 business days after the Notifying Party's notice of such Claim
(but, in all events, at least five business days prior to the date that an
answer to such Claim is due to be filed). Such contest and defense shall
be conducted by reputable attorneys employed by the Indemnifying Party.
The Notifying Party shall be entitled at any time, at its own cost and
expense (which expense shall not constitute a Loss unless the Notifying
Party reasonably determines that the Indemnifying Party is not adequately
representing or, because of a conflict of interest, may not adequately
represent, any interests of the Indemnified Parties, and only to the
extent that such expenses are reasonable), to participate in such contest
and defense and to be represented by attorneys of its or their own
choosing. If the Notifying Party elects to participate in such defense,
the Notifying Party will cooperate with the Indemnifying Party in the
conduct of such defense. Neither the Notifying Party nor the Indemnifying
Party may concede, settle or compromise any Claim without the consent of
the other party, which consents will not be unreasonably withheld.
Notwithstanding the foregoing, (i) if a Claim seeks equitable relief or
(ii) if the subject matter of a Claim relates to the ongoing business of
any of the Indemnified Parties, which Claim, if decided against any of the
Indemnified Parties, would materially adversely affect the ongoing
business or reputation of any of the Indemnified Parties, then, in each
such case, the Indemnified Parties alone shall be entitled to contest,
defend and settle such Claim in the first instance and, if the Indemnified
Parties do not contest, defend or settle such Claim, the Indemnifying
Party shall then have the right to contest and defend (but not settle)
such Claim.
(b) In the event any Indemnified Party should have a claim against
any Indemnifying Party that does not involve a Claim, the Notifying Party
shall deliver a notice of such claim with reasonable promptness to the
Indemnifying Party. If the Indemnifying Party notifies the Notifying Party
that it does not dispute the claim described in such notice or fails to
notify the
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Notifying Party within 30 days after delivery of such notice by the
Notifying Party whether the Indemnifying Party disputes the claim
described in such notice, the Loss in the amount specified in the
Notifying Party's notice will be conclusively deemed a liability of the
Indemnifying Party and the Indemnifying Party shall pay the amount of such
Loss to the Indemnified Party on demand. If the Indemnifying Party has
timely disputed its Liability with respect to such claim, the Chief
Executive Officers of each of the Indemnifying Party and the Notifying
Party will proceed in good faith to negotiate a resolution of such
dispute, and if not resolved through the negotiations of such Chief
Executive Officers within 60 days after the delivery of the Notifying
Party's notice of such claim, such dispute shall be resolved fully and
finally as provided in Section 15.7 of this Agreement.
(c) After the Closing, the rights set forth in this Section 14 shall
be each party's sole and exclusive remedies against the other party hereto
for misrepresentations or breaches of covenants contained in this
Agreement and the Related Documents. Notwithstanding the foregoing,
nothing herein shall prevent any of the Indemnified Parties from bringing
an action based upon allegations of fraud or other intentional breach of
an obligation of or with respect to either party in connection with this
Agreement and the Related Documents. In the event such action is brought,
the prevailing party's attorneys' fees and costs shall be paid by the
nonprevailing party.
14.4 Adjustment. Any indemnification payable under this Section 14
shall be, to the extent permitted by law, an adjustment to the aggregate
purchase price paid for the Shares.
15. Miscellaneous.
15.1 Waivers, Amendments and Approvals. In each case in which
approval of the Investor is required by the terms of this Agreement, such
requirement shall be satisfied by a vote or the written action of Investor. With
the written consent of Investor, the obligations of the Company under this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) and with the written approval of Investor, the
Company may enter into a supplementary agreement for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of any supplemental agreement or modifying in any manner the
rights and obligations of the holders of the shares of the Company; provided,
however, that no such waiver or supplemental agreement shall (a) amend the terms
of the Common Stock or any other classes of stock as set forth in the Company's
Certificate of Incorporation, (b) amend the provisions of this Agreement
granting rights to the holders of the Shares (including, but not limited to,
registration rights under Section 8) without the written consent of the holders
of a majority of the Shares, or (c) reduce the aforesaid proportions of Shares
the holders of which are required to consent to any waiver or supplemental
agreement, without the consent of all of the record holders of Shares whose
rights would be affected by such reduction. Written notice of any such waiver,
consent or agreement of amendment, modification or supplement shall be given to
the record holders of the Shares who have not previously consented thereto in
writing. In all cases in which the consent or approval of, or actions by, the
Investor or the holders
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of the Shares is required by the terms of this Agreement, the number of Shares
owned by such holder or Investor shall be determined on an as-if-converted
basis, when applicable.
15.2 Changes, Waivers, Etc. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, but only by a
statement in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, except to the extent
provided in Section 15.1.
15.3 Payment of Fees and Expenses of the Investor. The Company
agrees to reimburse the Investor for legal expenses incurred by the Investor to
its special legal counsel, Lapointe Rosenstein, in connection with the
transactions contemplated by this Agreement. The Company also agrees to
reimburse the Investor for engagement and study fees incurred in connection with
the transactions contemplated by this Agreement, by way of a lump sum payment of
$90,000.
15.4 Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall be
delivered, or mailed first-class postage prepaid, fedex, registered or certified
mail,
(a) if to any holder of any Shares addressed to such holder at its
address as shown on the books of the Company, or at such other address as
such holder may specify by written notice to the Company, or
(b) if to the Company at: 60 Montgomery Street, Belleville, NJ
07109. Attention: Frank Gibbard; or at such other address as the Company
may specify by written notice to the Investor.
and such notices and other communications shall for all purposes of this
Agreement be treated as being effective or having been given if delivered
personally, sent by fax with confirmation sheet, or, if sent by mail, when
received.
15.5 Parties in Interest. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto, whether so
expressed or not, and, in particular, shall inure to the benefit of and be
enforceable by the holder or holders from time to time of any of the Shares;
provided, however, that a successor or assign of an Investor shall not be
regarded as an "Investor".
15.6 Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and do not constitute a part of
this Agreement.
15.7 Choice of Law; Jurisdiction and Venue. The laws of the State of
Delaware shall govern the validity of this Agreement, the construction of its
terms and the interpretation of the rights and duties of the parties hereunder.
THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR STATE COURT SITTING IN
THE STATE OF NEW JERSEY, AND EACH PARTY CONSENTS TO THE JURISDICTION AND VENUE
OF SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUM IS NOT
CONVENIENT. IF
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ANY PARTY COMMENCES ANY ACTION UNDER ANY TORT OR CONTRACT THEORY ARISING
DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT IN
ANOTHER JURISDICTION OR VENUE, THE OTHER PARTY TO THIS AGREEMENT SHALL HAVE THE
OPTION OF TRANSFERRING THE CASE TO THE ABOVE-DESCRIBED JURISDICTION OR, IFSUCH
TRANSFER CANNOT BE ACCOMPLISHED OR THE PARTY DECLINES TO ELECT SUCH CHANGE OF
VENUE, TO HAVE THE CASE DISMISSED WITHOUT PREJUDICE.
15.8 Counterparts. This Agreement may be executed concurrently in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
[REMAINING PORTION OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company and the Investor have each caused this
Agreement to be executed by their respective duly authorized representative.
H POWER CORP.
By: /s/ Thomas Michael
----------------------------------------
Its: Vice President
HYDRO-QUEBEC CAPITECH INC.
By: /s/ Michel De Broux
----------------------------------------
Its: Vice President Investments & Affiliates
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Exhibit F
REGISTRATION RIGHTS PROVISIONS
Capitalized terms used herein have the meanings set forth in Section 8 hereof.
1. Demand Registration.
(a) At any time after the second anniversary of the Closing of the
Stock Purchase Agreement, a Majority-in-Interest of the Holders shall have the
right, by written notice (the "Demand Notice") given to the Company, to request
the Company to file with the SEC a Registration Statement with respect to all or
any portion of the Registrable Shares held by such Holders. Upon receipt of any
such Demand Notice, the Company shall promptly, but in no event more than five
days after receipt thereof, notify all other Holders of the receipt of such
Demand Notice and, subject to the limitations set forth below, shall include in
the proposed registration all Registrable Shares with respect to which the
Company has received written requests for inclusion therein within 20 days after
delivery of the Company's notice. In connection with any Demand Registration in
which more than one holder of securities participates, in the event that such
Demand Registration involves an underwritten offering and the managing
underwriter or underwriters participating in such offering advise in writing the
Holders of Registrable Shares and the holders of other securities to be included
in such offering that the total number of Registrable Shares and other
securities to be included in such offering exceeds the amount that can be sold
in (or during the time of) such offering without delaying or jeopardizing the
success of such offering (including the price per share of the Registrable
Shares and other securities to be sold), then the amount of Registrable Shares
and other securities to be offered for the account of such Holders shall be
reduced as follows: first, pro rata on the basis of the number of securities
other than Registrable Shares requested to be registered by the holders of such
securities; and second, pro rata on the basis of the number of Registrable
Shares requested to be registered by the holders of such securities. The Holders
as a group shall be entitled to two Demand Registrations pursuant to this
Section 1; provided, that any Demand Registration that does not become effective
or is not maintained for the time period required in accordance with Section
1(c) shall not count as one of such Demand Registrations, except as set forth in
Section 1(e); provided, further, that if the Demanding Holders have requested
inclusion in such Demand Registration and 75% or less of the securities so
requested to be included have been included, the Holders as a group shall be
entitled to an additional Demand Registration hereunder on the same terms and
conditions as would have applied to the Holders had such earlier Demand
Registration not been made. Anything herein to the contrary notwithstanding, the
Company shall not be required to effect a Demand Registration pursuant to this
Section 1 within a period of six (6) months after the effective date of any
other Demand Registration.
(b) The Company, within 45 days of the date on which the Company
receives a Demand Notice given by Holders in accordance with Section 1(a)
hereof, shall file with the SEC, and the Company shall thereafter use its best
efforts to cause to be declared effective within 90 days following the date the
Company receives such Demand Notice, a Registration Statement on the appropriate
form for the registration and sale, in accordance with the intended method or
methods of distribution requested by the Holders, of the total number of
Registrable Shares specified by the Holders in such Demand Notice (a "Demand
Registration").
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(c) The Company shall use commercially reasonable efforts to keep
each Registration Statement filed pursuant to this Section 1 continuously
effective and usable for the resale of the Registrable Shares covered thereby
for a period of 270 days from the date on which the SEC declares such
Registration Statement effective, as such period may be extended pursuant to
this Section 1, or in the case of a Shelf Registration, for a period of two
years from the date that the SEC declares such "shelf" Registration Statement
effective, or if shorter, until all the Registrable Shares covered by such
Registration Statement have been sold pursuant to such Registration Statement.
(d) The Company shall be entitled to postpone the filing of any
Registration Statement otherwise required to be prepared and filed by the
Company pursuant to this Section 1, or suspend the use of any effective
Registration Statement under this Section 1, for a reasonable period of time
which shall be as short as practicable, but in any event not in excess of 60
days (a "Delay Period"), if the Company determines in good faith that the
registration and distribution of the Registrable Shares covered or to be covered
by such Registration Statement would materially interfere with any pending
material financing, acquisition or corporate reorganization or other material
corporate development involving the Company or any of its Subsidiaries or would
require premature disclosure thereof and promptly gives the Holders written
notice of such determination, containing a statement of the reasons for such
postponement and an approximation of the period of the anticipated delay;
provided, however, that (i) the aggregate number of days included in all Delay
Periods during any consecutive 12 months shall not exceed the aggregate of (x)
180 days minus (y) the number of days occurring during all Interruption Periods
during such consecutive 12 months and (ii) a period of at least 60 days shall
elapse between the termination of any Delay Period or Interruption Period and
the commencement of the immediately succeeding Delay Period. If the Company
shall so postpone the filing of a Registration Statement, the Holders of
Registrable Shares to be registered shall have the right to withdraw the request
for registration by giving written notice to the Company from the Holders of a
majority of the Registrable Shares that were to be registered within 45 days
after receipt of the notice of postponement or, if earlier, the termination of
such Delay Period. The time period for which the Company is required to maintain
the effectiveness of any Registration Statement shall be extended by the
aggregate number of days of all Delay Periods and all Interruption Periods
occurring during such Registration and any extension thereof is hereinafter
referred to as the "Effectiveness Period". The Company shall not be entitled to
initiate a Delay Period unless it shall (A) to the extent permitted by
agreements with other security holders of the Company, concurrently prohibit
sales by such other security holders under registration statements covering
securities held by such other security holders and (B) in accordance with the
Company's policies from time to time in effect, forbid purchases and sales in
the open market by senior executives of the Company.
(e) The Demanding Holders may, at any time prior to the effective
date of the Registration Statement relating to a Demand Registration, revoke
such request by providing a written notice to the Company revoking such request.
In the event of such revocation, the Demanding Holders shall reimburse the
Company for all of its out-of-pocket expenses incurred in connection with the
preparation, filing and processing of the Registration Statement, unless (i)
there has been a material adverse change in the business, assets, properties,
condition (financial or other), results of operations or prospects of the
Company and its Subsidiaries, since the time of the Demand Notice,
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<PAGE>
(ii) such revocation was based on the Company's failure to comply in any
material respect with its obligations hereunder or (iii) the Demanding Holders
choose to count the Demand Registration as one of the Demand Registrations to
which the Demanding Holders are entitled pursuant to the penultimate sentence of
Section 1(a).
2. Piggyback Registration.
(a) Right to Piggyback. If at any time the Company proposes to file
a registration statement under the Securities Act with respect to a public
offering of securities of the same type as the Registrable Shares for its own
account (other than a registration statement (i) on Form S-8 or any successor
form thereto, (ii) filed solely in connection with a dividend reinvestment plan
or employee benefit plan covering officers or directors of the Company or its
Affiliates or (iii) on Form S-4 or any successor form thereto, in connection
with a merger, acquisition or similar corporate transaction) or for the account
of any holder of securities of the same type as the Registrable Shares, then the
Company shall give written notice of such proposed filing to the Holders at
least 30 days before the anticipated filing date. Such notice shall offer the
Holders the opportunity to register such number of Registrable Shares as they
may request (a "Piggyback Registration"). Subject to Section 2(b) hereof, the
Company shall include in each such Piggyback Registration all Registrable Shares
with respect to which the Company has received written requests for inclusion
therein within 20 days after notice has been given to the Holders. Each Holder
shall be permitted to withdraw all or any portion of the Registrable Shares of
such Holder from a Piggyback Registration at any time prior to the effective
date of such Piggyback Registration.
(b) Priority on Piggyback Registrations. The Company shall permit
the Holders to include all such Registrable Shares on the same terms and
conditions as any similar securities, if any, of the Company included therein.
Notwithstanding the foregoing, if the Company or the managing underwriter or
underwriters participating in such offering advise the Holders in writing that
the total number of securities requested to be included in such Piggyback
Registration exceeds the number which can be sold in (or during the time of)
such offering without delaying or jeopardizing the success of the offering
(including the price per share of the securities to be sold), then the number of
securities to be offered for the account of the Holders and other holders of
securities who requested to have securities included in such Piggyback
Registration shall be reduced (to zero if necessary) pro rata on the basis of
the number or amount of Common Stock (or the equivalent) requested to be
registered by each such Holder or holder participating in such offering.
(c) Right To Abandon. Nothing in this Section 2 shall create any
liability on the part of the Company to the Holders if the Company in its sole
discretion should decide not to file a registration statement proposed to be
filed pursuant to Section 2(a) hereof or to withdraw such registration statement
subsequent to its filing, regardless of any action whatsoever that a Holder may
have taken, whether as a result of the issuance by the Company of any notice
hereunder or otherwise.
3. Registration Procedures. In connection with the registration
obligations of the Company pursuant to and in accordance with Sections 1 and 2
hereof (and subject to Sections 1 and 2 hereof), the Company shall use
commercially reasonable efforts to effect such registration to permit the sale
of such Registrable Shares in accordance with the intended method or methods of
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disposition thereof, and pursuant thereto the Company shall as expeditiously as
possible (but subject to Sections 1 and 2 hereof):
(a) prepare and file with the SEC a Registration Statement for the
sale of the Registrable Shares on any form for which the Company then qualifies
or which counsel for the Company shall deem appropriate in accordance with such
Holders' intended method or methods of distribution thereof, subject to Section
1(b) hereof, and use commercially reasonable efforts to cause such Registration
Statement to become effective and remain effective as provided herein;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) to such Registration Statement, and such supplements
to the related Prospectus, as may be required by the applicable rules,
regulations or instructions under the Securities Act during the applicable
period in accordance with the intended methods of disposition specified by the
Holders of the Registrable Shares covered by such Registration Statement, make
generally available earnings statements satisfying the provisions of Section
11(a) of the Securities Act (provided that the Company shall be deemed to have
complied with this clause if it has complied with Rule 158 under the Securities
Act), and cause the related Prospectus as so supplemented to be filed pursuant
to Rule 424 under the Securities Act; provided, however, that before filing a
Registration Statement or Prospectus, or any amendments or supplements thereto
(other than reports required to be filed by it under the Exchange Act), the
Company shall furnish to the Holders of Registrable Shares covered by such
Registration Statement and their counsel for review and comment, copies of all
documents proposed to be filed;
(c) notify the Holders of any Registrable Shares covered by such
Registration Statement promptly and (if requested) confirm such notice in
writing, (i) when a Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to such Registration Statement or
any post-effective amendment, when the same has become effective, (ii) of any
request by the SEC for amendments or supplements to such Registration Statement
or the related Prospectus or for additional information regarding such Holders,
(iii) of the issuance by the SEC of any stop order suspending the effectiveness
of such Registration Statement or the initiation of any proceedings for that
purpose, (iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, and (v) of the happening of any
event that requires the making of any changes in such Registration Statement,
Prospectus or documents incorporated or deemed to be incorporated therein by
reference so that they will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading;
(d) use commercially reasonable efforts to obtain the withdrawal of
any order suspending the effectiveness of such Registration Statement, or the
lifting of any suspension of the qualification or exemption from qualification
of any Registrable Shares for sale in any jurisdiction in the United States;
(e) furnish to the Holder of any Registrable Shares covered by such
Registration Statement, each counsel for such Holders and each managing
underwriter, if any, without charge,
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one conformed copy of such Registration Statement, as declared effective by the
SEC, and of each post-effective amendment thereto, in each case including
financial statements and schedules and all reports incorporated or deemed to be
incorporated therein by reference; and deliver, without charge, such number of
copies of the preliminary prospectus, any amended preliminary prospectus, each
final Prospectus and any post-effective amendment or supplement thereto, as such
Holder may reasonably request in order to facilitate the disposition of the
Registrable Shares of such Holder covered by such Registration Statement in
conformity with the requirements of the Securities Act;
(f) prior to any public offering of Registrable Shares covered by
such Registration Statement, use commercially reasonable efforts to register or
qualify such Registrable Shares for offer and sale under the securities or Blue
Sky laws of such jurisdictions as the Holders of such Registrable Shares shall
reasonably request in writing; provided, however, that the Company shall in no
event be required to qualify generally to do business as a foreign corporation
or as a dealer in any jurisdiction where it is not at the time so qualified or
to execute or file a general consent to service of process in any such
jurisdiction where it has not theretofore done so or to take any action that
would subject it to general service of process or taxation in any such
jurisdiction where it is not then subject;
(g) upon the occurrence of any event contemplated by paragraph
3(c)(v) above, prepare a supplement or post-effective amendment to such
Registration Statement or the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference and file any other required
document so that, as thereafter delivered to the purchaser of the Registrable
Shares being sold thereunder (including upon the termination of any Delay
Period), such Prospectus will not contain an untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading;
(h) use its best efforts to cause all Registrable Shares covered by
such Registration Statement to be listed on each securities exchange, if any, on
which similar securities issued by the Company are then listed or quoted and, if
no such securities are so listed, to be listed on the Nasdaq Stock Market and,
if listed on the Nasdaq Stock Market, use its best efforts to secure designation
of all such Registrable Shares covered by such registration statement as "NASDAQ
Securities" within the meaning of Rule 11Aa2-1 promulgated under the Exchange
Act or, failing that, to secure Nasdaq Stock Market authorization for such
Registrable Shares;
(i) on or before the effective date of such Registration Statement,
provide the transfer agent of the Company for the Registrable Shares with
printed certificates for the Registrable Shares covered by such Registration
Statement, which are in a form eligible for deposit with The Depository Trust
Company;
(j) make available for inspection by any Holder of Registrable
Shares included in such Registration Statement, any underwriter participating in
any offering pursuant to such Registration Statement, and any attorney,
accountant or other agent retained by any such Holder or underwriter
(collectively, the "Inspectors"), all financial and other records and other
information, pertinent corporate documents and properties of any of the Company
and its Subsidiaries and
F-5
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affiliates (collectively, the "Records"), as shall be reasonably necessary to
enable them to exercise their due diligence responsibilities; provided, however,
that the Records that the Company determines, in good faith, to be confidential
and which it notifies the Inspectors in writing are confidential shall not be
disclosed to any Inspector unless such Inspector signs a confidentiality
agreement reasonably satisfactory to the Company (which shall permit the
disclosure of such Records in such Registration Statement or the related
Prospectus if necessary to avoid or correct a material misstatement in or
material omission from such Registration Statement or Prospectus) or either (i)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in such Registration Statement or (ii) the release of such Records
is ordered pursuant to a subpoena or other order from a court of competent
jurisdiction; provided, further, that (A) any decision regarding the disclosure
of information pursuant to subclause (i) shall be made only after consultation
with counsel for the applicable Inspectors and the Company and (B) with respect
to any release of Records pursuant to subclause (ii), each Holder of Registrable
Shares agrees that it shall, promptly after learning that disclosure of such
Records is sought in a court having jurisdiction, give notice to the Company so
that the Company, at the Company's expense, may undertake appropriate action to
prevent disclosure of such Records; and
(k) if such offering is an underwritten offering, enter into such
agreements (including an underwriting agreement in form, scope and substance as
is customary in underwritten offerings) and take all such other appropriate and
reasonable actions requested by the Holders of a majority of the Registrable
Shares being sold in connection therewith (including those reasonably requested
by the managing underwriters) in order to expedite or facilitate the disposition
of such Registrable Shares, and in such connection, (i) use commercially
reasonable efforts to obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters and counsel to the Holders
of the Registrable Shares being sold), addressed to each selling Holder of
Registrable Shares covered by such Registration Statement and each of the
underwriters as to the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably requested by
such counsel and underwriters, (ii) use commercially reasonable efforts to
obtain "cold comfort" letters and updates thereof from the independent certified
public accountants of the Company (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company or of any business
acquired by the Company for which financial statements and financial data are,
or are required to be, included in the Registration Statement), addressed to
each selling holder of Registrable Shares covered by the Registration Statement
(unless such accountants shall be prohibited from so addressing such letters by
applicable standards of the accounting profession) and each of the underwriters,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings, (iii) if requested and if an underwriting agreement is entered into,
provide indemnification provisions and procedures reasonably requested by such
underwriters. The above shall be done at each closing under such underwriting or
similar agreement, or as and to the extent required thereunder. The Company may
require each Holder of Registrable Shares covered by a Registration Statement to
furnish, within a period not less than 20 days from the date of receipt of such
request, such information regarding such Holder and such Holder's intended
method of disposition of such Registrable Shares as it may from time to time
reasonably request in writing. If any such information is not furnished within
such period, the Company may exclude such Holder's
F-6
<PAGE>
Registrable Shares from such Registration Statement. Each Holder of Registrable
Shares covered by a Registration Statement agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 3(c)(ii), 3(c)(iii), 3(c)(iv) or 3(c)(v) hereof, that such Holder shall
forthwith discontinue disposition of any Registrable Shares covered by such
Registration Statement or the related Prospectus until receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 3(g) hereof, or
until such Holder is advised in writing by the Company that the use of the
applicable Prospectus may be resumed, and has received copies of any amended or
supplemented Prospectus or any additional or supplemental filings which are
incorporated, or deemed to be incorporated, by reference in such Prospectus
(such period during which disposition is discontinued being an "Interruption
Period") and, if requested by the Company, the Holder shall deliver to the
Company (at the expense of the Company) all copies then in its possession, other
than permanent file copies then in such holder's possession, of the Prospectus
covering such Registrable Shares at the time of receipt of such request. Each
Holder of Registrable Shares covered by a Registration Statement further agrees
not to utilize any material other than the applicable current preliminary
prospectus or Prospectus in connection with the offering of such Registrable
Shares.
4. Registration Expenses. Whether or not any Registration Statement
is filed or becomes effective but subject to Section 1(e), the Company shall pay
all costs, fees and expenses incident to the Company's performance of or
compliance with this Agreement, including (i) all registration and filing fees,
including National Association of Securities Dealers filing fees, (ii) all fees
and expenses of compliance with securities or Blue Sky laws, including
reasonable fees and disbursements of counsel in connection therewith, (iii)
printing expenses (including expenses of printing certificates for Registrable
Shares and of printing prospectuses if the printing of prospectuses is requested
by the Holders or the managing underwriter, if any), (iv) messenger, telephone
and delivery expenses, (v) fees and disbursements of counsel for the Company,
(vi) fees and disbursements of all independent certified public accountants of
the Company (including expenses of any "cold comfort" letters required in
connection with this Agreement) and all other persons retained by the Company in
connection with such Registration Statement, (vii) fees and disbursements of one
counsel, other than the Company's counsel, representing all of the Holders of
Registrable Shares being registered, selected by a Majority-in-Interest of
Holders of the Registrable Shares being registered, or in the event of a Demand
Registration, selected by the Demanding Holders and reasonably satisfactory to a
Majority-in-Interest of Holders of the Registrable Shares being registered other
than the Demanding Holders, (viii) fees and disbursements of underwriters
customarily paid by the issuers or sellers of securities and (ix) all other
costs, fees and expenses incident to the Company's performance or compliance
with this Agreement. Notwithstanding the foregoing, any discounts, commissions
or brokers' fees or fees of similar securities industry professionals and any
transfer taxes relating to the disposition of the Registrable Shares by a
Holder, will be payable by such Holder and the Company will have no obligation
to pay any such amounts.
5. Underwriting Requirements.
(a) Subject to Section 5(b) hereof, the Demanding Holders shall have
the right, by written notice, to require that any Demand Registration provide
for an underwritten offering.
F-7
<PAGE>
(b) In the case of any underwritten offering pursuant to a Demand
Registration, the Demanding Holders shall select the institution or institutions
that shall manage or lead such offering, which institution or institutions shall
be reasonably satisfactory to the Company. In the case of any underwritten
offering pursuant to a Piggyback Registration, the Company shall select the
institution or institutions that shall manage or lead such offering. No Holder
shall be entitled to participate in an underwritten offering unless and until
such Holder has entered into an underwriting or other agreement with such
institution or institutions for such offering in such form as the Company and
such institution or institutions shall determine and such form is on terms
customary for such an offering.
(c) Each Holder participating in a Registration shall promptly
supply in writing such information as the Demanding Holders, the Company or the
underwriters reasonably request.
6. Indemnification.
(a) Indemnification by the Company. The Company shall indemnify and
hold harmless, to the full extent permitted by law, each Holder of Registrable
Shares whose Registrable Shares are covered by a Registration Statement or
Prospectus, the officers, directors and agents and employees of each of them,
each Person who controls each such Holder (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the fullest
extent lawful, from and against any and all losses, claims, damages,
liabilities, judgment, costs (including, without limitation, costs of
investigation, preparation and reasonable attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or based upon any untrue
or alleged untrue statement of a material fact contained in such Registration
Statement or Prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or based upon any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as the same are based upon
information furnished in writing to the Company by or on behalf of such Holder
expressly for use therein.
(b) Indemnification by Holder of Registrable Shares. In connection
with any Registration Statement in which a Holder is participating, such Holder
shall indemnify and hold harmless, to the full extent permitted by law, the
Company, its directors, officers, agents or employees, each Person who controls
the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act) and the directors, officers, agents or employees of such
controlling Persons, from and against all Losses arising out of or based upon
any untrue or alleged untrue statement of a material fact contained in such
Registration Statement or the related Prospectus or any amendment or supplement
thereto, or any preliminary prospectus, or arising out of or based upon any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, to the extent, but only
to the extent, that such untrue or alleged untrue statement or omission or
alleged omission is based upon any information furnished in writing by or on
behalf of such Holder to the Company expressly for use in such Registration
Statement or Prospectus. Each Holder's indemnity obligations under this Section
6 shall be limited to the total sales proceeds (net of all underwriting
discounts and commissions) actually received by such Holder in connection with
the applicable offering.
F-8
<PAGE>
(c) Conduct of Indemnification Proceedings. If any Person shall be
entitled to indemnity hereunder (an "indemnified party"), such indemnified party
shall give prompt notice to the party from which such indemnity is sought (the
"indemnifying party") of any claim or of the commencement of any proceeding with
respect to which such indemnified party seeks indemnification or contribution
pursuant hereto; provided, however, that the delay or failure to so notify the
indemnifying party shall not relieve the indemnifying party from any obligation
or liability except to the extent that the indemnifying party has been
prejudiced by such delay or failure. The indemnifying party shall have the
right, exercisable by giving written notice to an indemnified party promptly
after the receipt of written notice from such indemnified party of such claim or
proceeding, to assume, at the indemnifying party's expense, the defense of any
such claim or proceeding, with counsel reasonably satisfactory to such
indemnified party; provided, however, that (i) an indemnified party shall have
the right to employ separate counsel in any such claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless: (1) the indemnifying
party agrees to pay such fees and expenses; (2) the indemnifying party fails
promptly to assume the defense of such claim or proceeding or fails to employ
counsel reasonably satisfactory to such indemnified party; or (3) the named
parties to any proceeding (including impleaded parties) include both such
indemnified party and the indemnifying party, and such indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it that are inconsistent with those available to the indemnifying
party or that a conflict of interest is likely to exist among such indemnified
party and any other indemnified parties (in which case the indemnifying party
shall not have the right to assume the defense of such action on behalf of such
indemnified party); and (ii) subject to clause (3) above, the indemnifying party
shall not, in connection with any one such claim or proceeding or separate but
substantially similar or related claims or proceedings in the same jurisdiction,
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one firm of attorneys (together with appropriate
local counsel) at any time for all of the indemnified parties, or for fees and
expenses that are not reasonable. Whether or not such defense is assumed by the
indemnifying party, such indemnified party shall not be subject to any liability
for any settlement made without its consent. The indemnifying party shall not
consent to entry of any judgment or enter into any settlement unless (i) there
is no finding or admission of any violation of any rights of any person and no
effect on any other claims that may be made against the indemnified party, (ii)
the sole relief provided is monetary damages that are paid in full by the
indemnifying party and (iii) such judgment or settlement includes as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release, in form and substance reasonably satisfactory to
the indemnified party, from all liability in respect of such claim or litigation
for which such indemnified party would be entitled to indemnification hereunder.
(d) Contribution. If the indemnification provided for in this
Section 6 is unavailable to an indemnified party in respect of any Losses (other
than in accordance with its terms), then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party, on the one hand, and such indemnified party, on the other hand, in
connection with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The
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relative fault of such indemnifying party, on the one hand, and indemnified
party, on the other hand, shall be determined by reference to, among other
things, whether any action in question, including any untrue statement of a
material fact or omission or alleged omission to state a material fact, has been
taken by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent any such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include any legal or other fees or expenses incurred by such party
in connection with any investigation or proceeding. The parties hereto agree
that it would not be just and equitable if contribution pursuant to this Section
6(d) were determined by pro rata allocation or by any other method of allocation
that does not take account of the equitable considerations referred to in the
two immediately preceding sentences. Notwithstanding the provisions of this
Section 6(d), an indemnifying party that is a Holder shall not be required to
contribute any amount which is in excess of the amount by which the total
proceeds (net of all underwriting discounts and commissions) received by such
Holder from the sale of the Registrable Shares sold by such Holder in the
applicable offering exceed the amount of any damages that such indemnifying
party has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
7. Granting of Registration Rights. The Company shall not grant any
registration rights inconsistent with those granted hereunder or that give any
security holder a position with respect to cut-backs that are superior to the
Holders' position as granted herein, without the consent of a
Majority-in-Interest of the Holders of the Registrable Shares (voting together
as a single class).
8. Definitions. As used in this Exhibit F, the following terms shall
have the following meanings:
"Business Day" means any day that is not a Saturday, a Sunday or a
legal holiday on which banking institutions in the State of New York are not
required to be open.
"Common Stock" means the Company's Common Stock, $.001 par value and
any other securities into which such Common Stock may hereafter be changed.
"Delay Period" shall have the meaning set forth in Section 1(d)
hereof.
"Demand Notice" shall have the meaning set forth in Section 1(a)
hereof.
"Demand Registration" shall have the meaning set forth in Section
1(b) hereof.
"Demanding Holders" means the Holders delivering the Demand Notice
pursuant to Section 1(a) hereof.
"Effectiveness Period" shall have the meaning set forth in Section
1(d) hereof.
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Holders" means Hydro-Quebec CapiTech Inc., a Quebec corporation and
any other holder of Registrable Shares or securities exercisable for Registrable
Shares.
"Interruption Period" shall have the meaning set forth in Section
3(k) hereof.
"Majority-in-Interest" of any group of Holders means holders of more
than 50% of the Registrable Shares held by such Holders.
"person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Piggyback Registration" shall have the meaning set forth in Section
2 hereof.
"Prospectus" means the prospectus included in any Registration
Statement (including a prospectus that discloses information previously omitted
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Shares covered by such Registration Statement and all other
amendments and supplements to such prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
"Registrable Shares" means (i) shares of Common Stock issued or
issuable to Holders; and (ii) any shares of Common Stock issued or issuable with
respect to the shares of Common Stock referred to in clause (i) above upon any
stock split, recapitalization or similar event; provided, however, that shares
of Common Stock shall only be registrable pursuant to this Agreement if and so
long as they have not been (i) sold to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction, or (ii)
sold in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act under Section 4(1) thereof so that all
transfer restrictions and restrictive legends with respect to such shares of
Common Stock are removed upon the consummation of such sale and the Company and
the seller and purchaser of such shares of Common Stock shall have received an
opinion of counsel for the seller, which shall be in form and content reasonably
satisfactory to the Company and the seller and purchaser and their respective
counsel, to the effect that such shares of Common Stock in the hands of the
purchaser are freely transferable without restriction or registration under the
Securities Act in any public or private transaction.
"Registration" means registration under the Securities Act of an
offering of Registrable Shares pursuant to a Demand Registration or a Piggyback
Registration.
"Registration Statement" means any registration statement under the
Securities Act of the Company that covers any of the Registrable Shares pursuant
to the provisions of this Agreement, including the related Prospectus, all
amendments and supplements to such registration
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statement, including pre- and post-effective amendments, all exhibits thereto
and all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Shelf Registration" means an offering on a delayed or continuous
basis pursuant to Rule 415 (or any similar rule that may be adopted by the SEC)
promulgated under the Securities Act.
"Stock Purchase Agreement" means the Stock Purchase Agreement, dated
as of November 29, 1999, between the Company and the Investor.
"underwritten registration or underwritten offering" means a
registration under the Securities Act in which securities of the Company are
sold to an underwriter for reoffering to the public.
Unless otherwise stated other capitalized terms contained herein
have the meanings set forth in the Stock Purchase Agreement.
9. Miscellaneous.
(a) Rules 144 and 144A. The Company covenants that it will file any
reports required to be filed by it under the Securities Act and the Exchange Act
so as to enable Holders holding Registrable Shares to sell such Registrable
Shares without registration under the Securities Act within the limitation of
the exemptions provided by (a) Rules 144 and 144A under the Securities Act, as
each such Rule may be amended from time to time, or (b) any similar rule or
rules hereafter adopted by the SEC. Upon the request of any such Holder, the
Company will forthwith deliver to such Holder a written statement as to whether
it has complied with such requirements.
(b) Termination. This Agreement and the obligations of the Company
and the Holders hereunder (other than Section 6 hereof) shall terminate on the
first date on which no Registrable Shares remain outstanding.
(c) Notices. All notices, demands, requests, or other communications
which may be or are required to be given, served, or sent by any party to any
other party pursuant to the Registration Rights set forth in this Exhibit F
shall be given in accordance with Section 14.4 of the Stock Purchase Agreement.
(d) Stock Purchase Agreement. This Exhibit F is deemed a part of the
Stock Purchase Agreement.
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Exhibit 10.15
H Power Corp.
STOCK PURCHASE AGREEMENT
This Agreement (the "Agreement") is made and entered into as of the 29th
day of November, 1999, between H Power Corp. ("H Power"), a Delaware corporation
(the "Company"), and Sofinov Societe Financiere D'Innovation Inc. ("Sofinov"), a
Quebec corporation (the "Investor").
For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Company and the Investor agree as follows:
1. Sale and Purchase of Shares. Subject to the terms and conditions
hereof, the Company agrees to sell to the Investor, and the Investor agrees to
purchase from the Company on the Closing Date (as defined in Section 2 hereof),
400,000 shares (the "Shares") of common stock,$0.001 par value, of the Company
(the "Common Stock") at a purchase price of twelve U.S. Dollars and fifty cents
($12.50) per share for an aggregate purchase price of $5,000,000 (the "Purchase
Price").
2. Closing.
The closing (the "Closing") shall take place at the offices of
Fulbright & Jaworski L.L.P., on November 29, 1999 (the "Closing Date"), or such
other date as mutually agreed upon by the parties. At the Closing, the Company
will deliver to the Investor a certificate, dated the Closing Date, representing
the Shares purchased by Investor on the Closing Date, registered in its name
against payment to the Company of the Purchase Price. The Purchase Price shall
be payable as follows: $2,900,000 in readily available funds and $2,100,000
through the conversion of existing debt due by H Power to Sofinov.
3. Representations and Warranties by the Company. In order to induce the
Investor to enter into this Agreement and to purchase the Shares, the Company
hereby represents and warrants to the Investor that as of the Closing and except
as disclosed in the attached Exhibit A:
3.1 Organization, Standing, etc. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware, and has the requisite corporate power and authority to own or lease
its properties and assets and to carry on its business in all material respects
as it is now being conducted. The Company has the requisite corporate power and
authority to issue the Shares and to otherwise perform its obligations under
this Agreement.
<PAGE>
3.2 Governing Instruments. The copies of the Certificate of
Incorporation and bylaws of the Company which have been delivered to legal
counsel for the Investor prior to the execution of this Agreement are true and
complete copies of the duly and legally adopted Certificate of Incorporation and
bylaws of the Company in effect as of the date of this Agreement.
3.3 Subsidiaries, Etc. Except as disclosed on Exhibit A, the Company
does not have any direct or indirect ownership interest in any corporation,
partnership, joint venture, association or other business enterprise. If any
entity is listed on Exhibit A (each such entity a "Subsidiary") and the Company
owns a controlling interest in such entity, each of the representations and
warranties set forth in this Section 3 are being hereby restated with respect to
such entity (modified as appropriate to the nature of such entity).
3.4 Qualification. The Company is duly qualified, licensed or
domesticated as a foreign corporation in good standing in each jurisdiction
wherein the nature of its activities or the properties owned or leased by it
makes such qualification, licensing or domestication necessary and in which
failure to so qualify or be licensed or domesticated would have a material
adverse impact upon its business.
3.5 Financial Statements. Attached to this Agreement as Exhibit B
are audited financial statements, as at May 31, 1999 for the Company, together
with the related statements of income and retained earnings and changes in
financial position for the fiscal year then ended and (b) an unaudited balance
sheet, as at August 31, 1999, together with related statements of income and
earnings (the "August Financials"). Such financial statements, subject to
year-end audited adjustment in the case of the August Financials (i) are in
accordance with the books and records of the Company, (ii) present fairly the
financial condition of the Company at the balance sheets dates and the results
of its operations for the periods therein specified, and (iii) have been (or
will be, as applicable) prepared in accordance with generally accepted
accounting principles applied on a basis consistent with prior accounting
periods, except in the case of the August Financials. Without limiting the
generality of the foregoing, the balance sheets or notes thereto disclose all of
the debts, liabilities and obligations of any nature (whether absolute, accrued
or contingent and whether due or to become due) of the Company at May 31, 1999
and August 31, 1999, which, individually or in the aggregate, are material and
which in accordance with generally accepted accounting principles would be
required to be disclosed in such balance sheets, and include appropriate
reserves for all taxes and other liabilities accrued as of such dates but not
yet payable.
3.6 Tax Returns and Audits. All required federal, state and local
tax returns or appropriate extension requests of the Company have been filed,
and all federal, state and local taxes required to be paid with respect to such
returns have been paid or due provision for the payment thereof has been made.
The Company is not delinquent in the payment of any such tax or in the payment
of any assessment or governmental charge. The Company has not received notice of
any tax deficiency proposed or assessed against it, and it has not executed any
waiver of any statute of limitations on the assessment or collection of any tax.
The Company has not received notice that any of the Company's tax returns has
been audited by governmental
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authorities. The Company does not have any tax liabilities except those
reflected on Exhibit B or those incurred in the ordinary course of business
since August 31, 1999.
3.7 Changes, Dividends, etc. Except for the transactions
contemplated by this Agreement, since August 31, 1999, the Company has not: (i)
incurred any debts, obligations or liabilities, absolute, accrued or contingent
and whether due or to become due, except current liabilities incurred in the
ordinary course of business which (individually or in the aggregate) will not
materially and adversely affect the business, properties or prospects of the
Company; (ii) paid any obligation or liability other than, or discharged or
satisfied any liens or encumbrances other than those securing, current
liabilities, in each case in the ordinary course of business; (iii) declared or
made any payment to or distribution to its shareholders as such, or purchased or
redeemed any of its shares of capital stock, or obligated itself to do so; (iv)
mortgaged, pledged or subjected to lien, charge, security interest or other
encumbrance any of its assets, tangible or intangible, except in the ordinary
course of business; (v) sold, transferred or leased any of its assets except in
the ordinary course of business; (vi) suffered any physical damage, destruction
or loss (whether or not covered by insurance) materially and adversely affecting
the properties, business or prospects of the Company; (vii) entered into any
transaction other than in the ordinary course of business; (viii) encountered
any labor difficulties or labor union organizing activities; (ix) issued or sold
any shares of capital stock or other securities or granted any options,
warrants, or other purchase rights with respect thereto other than pursuant to
this Agreement; (x) made any acquisition or disposition of any material assets
or became involved in any other material transaction, other than for fair value
in the ordinary course of business; (xi) increased the compensation payable, or
to become payable, to any of its directors or employees, or made any bonus
payment or similar arrangement with any directors or employees or increased the
scope or nature of any fringe benefits provided for its employees or directors;
or (xii) agreed to do any of the foregoing other than pursuant hereto. There has
been no material adverse change in the financial condition, operations, results
of operations or business of the Company since August 31, 1999.
3.8 Title to Properties and Encumbrances. Except as otherwise set
forth in Exhibit A, and except for properties and assets disposed of in the
ordinary course of business since August 31, 1999, the Company has good and
marketable title to all of its properties and assets included in the balance
sheet dated August 31, 1999 and the properties and assets reflected used in the
conduct of its business, which properties and assets are not subject to any
mortgage, pledge, lease, lien, charge, security interest, encumbrance or
restriction, except (a) those which are shown and described on Exhibit B, (b)
liens for taxes and assessments or governmental charges or levies not at the
time due or in respect of which the validity thereof is currently be contested
in good faith by appropriate proceedings, or (c) those which do not materially
affect the value of or interfere with the use made of such properties and
assets.
3.9. Conditions of Properties. The plant, offices and equipment of
the Company are in good condition and repair, subject to normal wear and tear.
3.10 Litigation; Governmental Proceedings. There are no legal
actions, suits, arbitrations or other legal, administrative or governmental
proceedings or investigations pending
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or, to the knowledge of the Company, threatened against the Company, or its
properties or business, and the Company is not aware of any facts which are
likely to result in or form the basis for any such action, suit or other
proceeding. The Company is not in default with respect to any judgment, order or
decree of any court or any governmental agency or instrumentality. The Company
has not been threatened with any action or proceeding under any business or
zoning ordinance, law or regulation.
3.11 Compliance With Applicable Laws and Other Instruments. The
business and operations of the Company have been and are being conducted in all
material respects in accordance with all applicable laws, rules and regulations
of all governmental authorities. Neither the execution nor delivery of, nor the
performance of or compliance with, this Agreement nor the consummation of the
transactions contemplated hereby will, with or without the giving of notice or
passage of time, result in any breach of, or constitute a default under, or
result in the imposition of any lien or encumbrance upon any asset or property
of the Company pursuant to, any Agreement or other instrument to which the
Company is a party or by which it or any of its properties, assets or rights is
bound or affected, and will not violate the Certificate of Incorporation or
bylaws of the Company. The Company is not in violation of its Certificate of
Incorporation or bylaws nor in violation of, or in default under, any lien,
indenture, mortgage, lease, agreement, instrument, commitment or arrangement in
any material respect. The Company is not subject to any restriction which would
prohibit it from entering into or performing its obligations under this
Agreement.
3.12 Shares, Additional Shares and Adjustment Shares. The Shares,
when issued and paid for pursuant to the terms of this Agreement, any Additional
Shares (as that term is defined in Section 11.1 hereof) and any Adjustment
Shares (as that term is defined in Section 12.1 hereof), when issued to the
Investor pursuant to the terms of this Agreement, will be duly authorized,
validly issued and outstanding, fully paid, nonassessable shares and shall be
free and clear of all pledges, liens, encumbrances and restrictions.
3.13 Securities Laws. Based in part upon the representations of the
Investor in Section 4, no consent, authorization, approval, permit or order of
or filing with any governmental or regulatory authority is required under
current laws and regulations in connection with the execution and delivery of
this Agreement or the offer, issuance, sale or delivery of the Shares, the
Additional Shares or the Adjustment Shares, other than the qualification
thereof, if required, under applicable state securities laws, which
qualification has been or will be effected by the Company if required. The
Company has not, directly or through an agent, offered the Shares or any similar
securities for sale to, or solicited any offers to acquire such securities from,
persons other than the Investor or other accredited investors. Under the
circumstances contemplated by this Agreement and assuming the accuracy of the
representations of the Investor in Section 4, the offer, issuance, sale and
delivery of the Shares, the Additional Shares and the Adjustment Shares, if any,
will not, under current laws and regulations, require compliance with the
prospectus delivery or registration requirements of the federal Securities Act
of 1933, as amended (the "Securities Act").
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3.14 Intellectual Property.
(a) Intellectual Property Assets--The term "Intellectual Property
Assets" includes:
(1) the name "H Power," all fictional business names, trading
names, registered and unregistered trademarks, service marks, and
applications (collectively, "Marks");
(2) all patents, patent applications, and inventions and
discoveries that may be patentable (collectively, "Patents");
(3) all copyrights in both published works and unpublished
works (collectively, "Copyrights");
(4) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process
technology, plans, drawings, and blue prints (collectively, "Trade
Secrets"),
in each case owned, used, or licensed by the Company as licensee or licensor.
(b) Agreements--Exhibit C attached hereto contains a complete and
accurate list and summary description, including any royalties paid or received
by the Company, of all material contracts and agreements relating to the
Intellectual Property Assets to which the Company is a party or by which the
Company is bound, except for any license implied by the sale of a product and
perpetual, paid-up licenses for commonly available software programs with a
value of less than $10,000 under which the Company is the licensee. There is no
outstanding and, to the Company's knowledge, no threatened dispute or
disagreement with respect to any such agreement.
(c) Know-How Necessary to Conduct the Company's Business
(1) To the Company's knowledge, the Intellectual Property
Assets are all those necessary for the operation of the Company's
business as it is currently conducted. The Company either owns or
has licensed sufficient rights to each of the Intellectual Property
Assets, free and clear of all liens, security interests, charges,
encumbrances, equities, and other adverse claims, and has the right
to use without payment to a third party, except for royalties
described in Exhibit C, all of the Intellectual Property Assets.
(2) The Company has a policy that requires all current
employees of the Company to execute written contracts with the
Company that assign to the Company all rights to any inventions,
improvements, discoveries, or information relating to the business
of the Company, and all of the Company's former and
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current employees have executed such a contract. No employee of the
Company has entered into any contract or agreement that restricts or
limits in any way the scope or type of work in which the employee
may be engaged or requires the employee to transfer, assign, or
disclose information concerning his work to anyone other than the
Company.
(d) Patents
(1) Exhibit C contains a complete and accurate list and
summary description of all Patents. Except as set forth on Exhibit
C, the Company owns no Patents. The Company has exclusive rights to
use the Patents that it uses or licenses, in each case free and
clear of all liens, security interests, charges, encumbrances,
entities, and other adverse claims except for any royalties
described in Exhibit C.
(2) To the Company's knowledge, all of the Patents licensed to
or used by the Company, are currently in compliance with formal
legal requirements (including payment of filing, examination, and
maintenance fees and proofs of working or use), and, to the
Company's knowledge, are valid and enforceable.
(3) No Patent has been or is now involved in any interference,
reissue, reexamination, or opposition proceeding or has had an
unfavorable final ruling against its interests in any such
proceeding. To the Company's knowledge, there is no potentially
interfering patent or patent application of any third party.
(4) To the Company's knowledge, no Patent is infringed or has
been challenged or threatened in any way. To the Company's
knowledge, none of the products manufactured and sold, nor any
process or know-how used, by the Company infringes or is alleged to
infringe any patent or other proprietary right of any other person.
(5) All products made, used, or sold under the Patents have
been marked in compliance with 35 United States Code ss. 287 and the
comparable requirements of any jurisdiction in which the products
are made, used or sold.
(e) Trademarks
(1) The Company is the owner of all right, title, and interest
in and to each of its Marks, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse
claims.
(2) All Marks that have been registered with the United States
Patent and Trademark Office are currently in compliance with all
formal legal requirements (including the timely post-registration
filing of affidavits of use and
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incontestability and renewal applications), and, to the Company's
knowledge, are valid and enforceable.
(3) No Mark has been or is now involved in any opposition,
invalidation, or cancellation and, to the Company's knowledge, no
such action is threatened with the respect to any of the Marks.
(4) To the Company's knowledge, there is no potentially
interfering trademark or trademark application of any third party.
(5) To the Company's knowledge, no Mark is infringed or has
been challenged or threatened in any way. To the Company's
knowledge, none of the Marks used by the Company infringes or is
alleged to infringe any trade name, trademark, or service mark of
any third party.
(6) All products and materials containing a Mark marking in
compliance with 15 United States Code ss. 1111 or the comparable
requirements of any jurisdiction in which such products and
materials are sold.
(f) Copyrights
(1) The Company is the owner of all right, title, and interest
in and to each of its copyrights, free and clear of all liens,
security interests, charges, encumbrances, equities, and other
adverse claims.
(2) All the Copyrights are currently in compliance with legal
requirements and are, to the Company's knowledge, valid and
enforceable.
(3) No Copyright is infringed or, to the Company's knowledge,
has been challenged or threatened in any way. To the Company's
knowledge, none of the subject matter of any of the Copyrights
infringes or is alleged to infringe any copyright of any third party
or is a derivative work based on the work of a third party.
(g) Trade Secrets
(1) The Company has taken reasonable precautions to protect
the confidentiality and value of the Trade Secrets.
(2) The Company either owns or has licensed the rights to use
the Trade Secrets that are necessary and sufficient for the
operation of the Company's business as it is currently conducted. To
the Company's knowledge, those Trade Secrets that are not part of
the public knowledge or literature have not been used,
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divulged, or appropriated either for the benefit of any person or to
the detriment of the Company.
(3) The Company has not been charged with misappropriation of
know-how or trade secrets. To the Company's knowledge, no third
party has misappropriated or attempted to misappropriate the Trade
Secrets.
3.15 Capital Stock.
(a) At the date hereof, the authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock and 1,800,000 shares of
Preferred Stock, $0.01 par value (the "Preferred Stock"), of which 200,000
shares are designated as Series A Convertible Preferred Stock (the "Series
A Stock"), 400,000 shares are designated as Series B Convertible Preferred
Stock (the "Series B Stock"), and 1,200,000 shares are designated as
Series C Convertible Preferred Stock (the "Series C Stock"). As of the
date hereof, 200,000 shares of Series A Stock are issued and outstanding,
400,000 shares of Series B Stock are issued and outstanding, 600,000
shares of Series C Stock are issued and outstanding and 6,803,039 shares
of Common Stock are issued and outstanding. All of the outstanding shares
of the Company were duly authorized, validly issued and are fully paid and
nonassessable. Except as set forth in Exhibit A, there are no outstanding
subscriptions, options, warrants, calls, contracts, demands, commitments,
convertible securities or other agreements or arrangements of any
character or nature whatever, other than this Agreement, under which the
Company is obligated to issue any securities of any kind representing an
ownership interest in the Company. Exhibit A contains a complete and
accurate description of all outstanding subscriptions, options, warrants,
calls, contracts, demands, commitments, convertible securities or other
agreements or arrangements of any character or nature whatever, other than
this Agreement, under which the Company is obligated to issue any
securities of any kind representing an ownership interest in the Company.
Neither the offer nor the issuance or sale of the Shares constitutes an
event, under any anti-dilution provisions of any securities issued or
issuable by the Company or any agreements with respect to the issuance of
securities by the Company, which will either increase the number of shares
issuable pursuant to such provisions or decrease the consideration per
share to be received by the Company pursuant to such provisions. No holder
of any security of the Company is entitled to any preemptive or similar
rights to purchase any securities of the Company from the Company;
provided, however, that nothing in this section shall affect, alter or
diminish any right granted to the Investor in this Agreement. All
outstanding securities of the Company have been issued in full compliance
with an exemption or exemptions from the registration and prospectus
delivery requirements of the Securities Act and from the registration and
qualification requirements of all applicable state securities laws.
(b) Upon consummation of the transactions contemplated herein, the
authorized capital stock of the Company shall consist of 20,000,000 shares
of Common Stock, of which 7,203,039 shares are issued and outstanding, and
1,800,000 shares of
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Preferred Stock, of which 200,000 shares of Series A Stock, 400,000 shares
of Series B Stock and 600,000 shares of Series C Stock are issued and
outstanding.
3.16 Outstanding Debt. The Company does not have any material
indebtedness incurred as the result of a direct borrowing of money, including,
but not limited to, indebtedness with respect to trade accounts, except as set
forth in Exhibit B. The Company is not in default in the payment of the
principal of or interest or premium on any such indebtedness, and no event has
occurred or is continuing under the provisions of any instrument, document or
agreement evidencing or relating to any such indebtedness which with the lapse
of time or the giving of notice, or both, would constitute an event of default
thereunder.
3.17 Schedule of Assets and Contracts. Attached as Exhibit D are
schedules listing the following items:
(a) Schedule 1: a true and complete description of all real
properties owned by the Company;
(b) Schedule 2: each indenture, lease, sublease, license or
other instrument under which the Company claims or holds a leasehold
interest in real property;
(c) Schedule 3: each lease of personal property involving
payments remaining to or from the Company in excess of 100,000;
(d) Schedule 4: each written or oral contract, agreement,
subcontract, purchase order, commitment or arrangement involving
payments remaining to or from the Company in excess of $25,000 and
each other agreement material to the Company's business to which the
Company is a party or by which it is bound, under which full
performance (including payment) has not been rendered by any party
thereto;
(e) Schedule 5: any collective bargaining agreements,
employment agreements, consulting agreements, noncompetition
agreements, nondisclosure agreements, executive compensation plans,
profit sharing plans, bonus plans, deferred compensation agreements,
employee pension retirement plans and employee benefit stock option
or stock purchase plans and other employee benefit plans, entered
into or adopted by the Company;
(f) Schedule 6: the name of each executive officer of the
Company and the remuneration currently payable to each such
executive officer; and
(g) Schedule 7: any royalty or license agreement relating to
software, except for paid-up licenses for commonly available
software programs with a value of less than $10,000 under which the
Company is the licensee.
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Prior to the Closing Date, the Company shall provide legal counsel
for the Investor with a true and complete copy of each document referred to on
such schedules which such counsel requests to examine.
The Company has in all material respects substantially performed all
obligations required to be performed by it to date and is not in default in any
material respect under any of the contracts, agreements, leases, documents,
commitments or other arrangements to which it is a party or by which it is
otherwise bound. All instruments referred to in the Schedules described in this
Section 3.17 are in effect and enforceable according to their respective terms,
and there is not under any of such instruments any existing material default or
event of default or event which, with notice or lapse of time or both, would
constitute an event of default thereunder. All parties having material
contractual arrangements with the Company are in substantial compliance
therewith and none are in material default in any respect thereunder. All plans
or arrangements listed on Schedule 5 are fully funded to the extent that such
funding is required by generally accepted accounting principles.
3.18 Corporate Acts and Proceedings. This Agreement has been duly
authorized by all necessary corporate and shareholder action on behalf of the
Company, has been duly executed and delivered by authorized officers of the
Company, and is a valid and binding agreement on the part of the Company that is
enforceable against the Company in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and to judicial limitations on the enforcement of the remedy of
specific performance and other equitable remedies. All corporate and shareholder
action necessary to the authorization, creation, issuance and delivery of the
Shares, the Adjustment Shares and the Additional Shares has been taken by the
Company, or will be taken by the Company on or prior to the Closing Date.
3.19 Accounts Receivable. To the extent that they exceed the
reserves for doubtful accounts set forth in Exhibit B, the accounts receivable
which are reflected in Exhibit B and all accounts receivable of the Company
which have arisen since August 31, 1999 (except such accounts receivable as have
been collected since August 31, 1999) are valid and enforceable claims, and the
goods and services sold and delivered which gave rise to such accounts were sold
and delivered in conformity with the applicable purchase orders, agreements and
specifications. Such accounts receivable are subject to no valid defense or
offsets except routine customer complaints or warranty demands of an immaterial
nature. The reserve for doubtful accounts that is included in Exhibit B is
adequate.
3.20 Inventories. The inventories of the Company which are reflected
in Exhibit B and all inventory items which have been acquired since August 31,
1999 consist of raw materials, supplies, work-in-process and finished goods of
such quality and quantities as are currently usable or salable in the ordinary
course of its business.
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3.21 Purchase Commitments and Outstanding Bids. No material purchase
commitment of the Company is in excess of normal, ordinary and usual
requirements of its business, or was made at any price in excess of the then
current market price, or contains terms and conditions more onerous than those
usual and customary in the industry. There is no outstanding material bid, sales
proposal, contract or unfilled order of the Company which (a) will, or could if
accepted, require the Company to supply goods or services at a cost to the
Company in excess of the revenues to be received therefrom, or (b) quotes prices
which do not include a mark-up over reasonably estimated costs consistent with
past mark-ups on similar business or market conditions current at the time.
3.22 Insurance Coverage. There are in full force policies of
insurance issued by insurers of recognized responsibility insuring the Company
and its properties and business against such losses and risks, and in such
amounts as is customary in the case of corporations of established reputation in
the same or similar business and similarly situated.
3.23 No Brokers or Finders. No person, firm or corporation has or
will have, as a result of any act or omission of the Company, any right,
interest or valid claim against the Company or the Investor for any commission,
fee or other compensation as a finder or broker in connection with the
transactions contemplated by this Agreement. The Company will indemnify and hold
the Investor harmless against any and all liability with respect to any such
commission, fee or other compensation which may be payable or determined to be
payable in connection with the transactions contemplated by this Agreement.
3.24 Conflicts of Interest. No officer, director or shareholder of
the Company or any affiliate (as such term is defined in Rule 405 under the
Securities Act) of any such person has any direct or indirect interest (a) in
any entity which does business with the Company, (b) in any property, asset or
right which is used by the Company in the conduct of its business, or (c) in any
contractual relationship with the Company other than as an employee. For the
purpose of this section, there shall be disregarded any interest which arises
solely from the ownership of less than a 1% equity interest in a corporation
whose stock is regularly traded on any national securities exchange or in the
over-the-counter market.
3.25 Licenses. The Company possesses from the appropriate agency,
commission, board and government body and authority, whether state, local or
federal, all licenses, permits, authorizations, approvals, franchises and rights
which (a) are necessary for it to engage in the business currently conducted by
it, and (b) if not possessed by the Company would have an adverse impact on the
Company's business. The Company has no knowledge that would lead it to believe
that it will not be able to obtain all licenses, permits, authorizations,
approvals, franchises and rights that may be required for any business the
Company proposes to conduct.
3.26 Disclosure. The Company has not knowingly withheld from the
Investor any material facts relating to the assets, business, operations,
financial condition or prospects of the Company. No representation or warranty
in this Agreement or in any certificate, schedule, statement or other document
furnished or to be furnished to the Investor pursuant hereto or in connection
with the transactions contemplated hereby contains or will contain any untrue
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statement of a material fact or omits or will omit to state any material fact
required to be stated herein or therein or necessary to make the statements
herein or therein not misleading.
3.27 Registration Rights. Other than under this Agreement or as set
forth in Exhibit A, the Company has not agreed to register any of its authorized
or outstanding securities under the Securities Act.
3.28 Retirement Plans. The Company does not have any retirement plan
in which any employees of the Company participate that is subject to any
provisions of the Employee Retirement Income Security Act of 1974 and of the
regulations adopted pursuant thereto ("ERISA"). Exhibit A contains all
information regarding employee benefit plans that is material to the business,
operations and financial condition of the Company.
3.29 Environmental and Safety Laws. The Company is not knowingly in
violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, and no material expenditures are
or will be required in order to comply with any such existing statute, law or
regulation.
3.30 Employees. To the best of the Company's knowledge, no officer
of the Company or employee of the Company (whose annual compensation is in
excess of $100,000) has any plans to terminate his or her employment with the
Company. The Company has complied in all material respects with all laws
relating to the employment of labor, including provisions relating to wages,
hours, equal opportunity, collective bargaining and payment of Social Security
and other taxes, and the Company has not encountered any material labor
difficulties. The Company does not have any worker's compensation liabilities,
except those reflected on Exhibit B.
3.31 Absence of Restrictive Agreements. Except as provided in
Exhibit A, no employee of the Company is subject to any secrecy or
non-competition agreement or any agreement or restriction of any kind that would
impede in any way the ability of such employee to carry out fully all activities
of such employee in furtherance of the business of the Company.
3.32 Actions and Proceedings. Exhibit A contains a complete and
accurate description of all legal action or other claims asserted against the
officers and directors of the Company, whether civil, criminal, administrative,
arbitral or otherwise, including diciplinary actions by any professional
association and regardless of whether such legal or other actions relate to
activities of the Company's officers and directors prior to becoming an officer
or director of the Company, and regardless of the disposition or settlement of
such actions or proceedings.
4. Representations of the Investor. The Investor represents that:
4.1 Investment Intent. The Shares being acquired by the Investor are
being purchased for investment for the Investor's own account and not with the
view to, or for resale in
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connection with, any distribution or public offering thereof. The Investor
understands that the Shares have not been registered under the Securities Act or
any state securities laws and that the Shares may not be transferred or resold
without (i) registration under the Securities Act and any applicable state
securities laws, or (ii) an exemption from the requirements of the Securities
Act and applicable state securities laws.
4.2 Acts and Proceedings. This Agreement has been duly authorized by
all necessary action on the part of the Investor, has been duly executed and
delivered by the Investor, and is a valid and binding agreement of the Investor.
4.3 No Brokers or Finders. No person, firm or corporation has or
will have, as a result of any act or omission by the Investor, any right,
interest or valid claim against the Company for any commission, fee or other
compensation as a finder or broker, or in any similar capacity, in connection
with the transactions contemplated by this Agreement. The Investor will
indemnify and hold the Company harmless against any and all liability with
respect to any such commission, fee or other compensation which may be payable
or determined to be payable as a result of the actions of the Investor in
connection with the transactions contemplated by this Agreement.
4.4 Best Efforts. Investor shall use its best efforts to assist the
Company in preparing an initial public offering of shares of Common Stock.
4.5 Accredited Investor. Investor qualifies as an "accredited
investor" for purposes of Regulation D promulgated under the Securities Act of
1933, as amended.
5. Conditions of Investor's Obligation. The obligation to purchase and pay
for the Shares which the Investor has agreed to purchase on the Closing Date is
subject to the fulfillment prior to or on the Closing Date of the conditions set
forth in this Section 5. In the event that any such condition is not fulfilled
to the satisfaction of the Investor, then the Investor shall not be obligated to
proceed with the purchase of the Shares.
5.1 No Errors, etc. The representations and warranties of the
Company under this Agreement shall be true in all material respects as of the
Closing Date with the same effect as though made on and as of the Closing Date.
5.2 Compliance with Agreement. The Company shall have performed and
complied with in all material respects all agreements or conditions required by
this Agreement to be performed and complied with by it prior to or as of the
Closing Date.
5.3 Certificate of Officers. The Company shall have delivered to the
Investor a certificate, dated the Closing Date, executed by the Chief Executive
Officer of the Company and certifying to the satisfaction of the conditions
specified in sections 5.1 and 5.2.
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5.4 Opinion of the Company's Counsel. The Company shall have
delivered to the Investor an opinion, satisfactory to the Investor, of Fulbright
& Jaworski, L.L.P., counsel for the Company, dated the Closing Date, to the
effect that:
(a) The Company is a corporation duly organized and validly existing
in good standing under the laws of the state of Delaware, and has the
corporate power and authority to own and hold the properties owned and
leased by it and to carry on the business in which it is engaged. The
Company has the corporate power and authority to enter into this
Agreement, to issue and sell the Shares and to carry out the provisions of
this Agreement.
(b) This Agreement has been duly authorized, executed and delivered
by the Company, is the legal, valid and binding agreement of the Company
and is enforceable against the Company in accordance with its terms,
subject, as to the enforcement of remedies, to limitations under
applicable bankruptcy, insolvency, moratorium, reorganization, and other
laws affecting the rights of creditors generally and to judicial
limitations on the enforcement of the remedy of specific performance and
other equitable remedies.
(c) The Shares being purchased on the Closing Date have been duly
authorized and, upon delivery thereof and payment therefore in accordance
with the Stock Purchase Agreement will be fully paid and nonassessable,
and are entitled to the rights, preferences and provisions of the
Company's Certificate of Incorporation and the benefits of the provisions
of this Agreement applicable thereto. The certificate evidencing the
Shares is in valid and sufficient form under Delaware law.
(d) All corporate proceedings required by law or by the provisions
of this Agreement to be taken by the Board of Directors and shareholders
of the Company on or prior to such Closing Date in connection with the
execution and delivery of this Agreement, the offer, issuance and sale of
the Shares and the consummation of the transactions contemplated by this
Agreement, have been duly and validly taken.
(e) The Company is authorized by its Certificate of Incorporation to
issue 20,000,000 shares of Common Stock and 1,800,000 shares of Preferred
Stock. Immediately prior to the Closing Date there were 6,803,039 shares
of Common Stock, 200,000 shares of Series A Stock, 400,000 shares of
Series B Stock and 600,000 shares of Series C Stock issued and
outstanding. All shares outstanding immediately prior to the Closing Date
have been duly authorized and validly issued. To the best of such
counsel's knowledge, the Company holds no shares in its treasury. Except
for shares of Common Stock and shares of Series A Stock, Series B Stock
and Series C Stock, the Company has no other authorized series or class of
capital stock and, to the best of such counsel's knowledge, has no
outstanding options, warrants or other rights to acquire securities of the
Company, other than as disclosed in Exhibit A to this Agreement.
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(f) To the best of such counsel's knowledge, no security holder of
the Company is entitled to preemptive or similar rights as a result of the
execution or delivery of this Agreement or the issuance of the Shares and
the Adjustment Shares other than as expressly set forth in this Agreement.
(g) Assuming the accuracy of the representations made by the
Investor in Section 4, the Company has obtained the approval or consent of
all governmental agencies or bodies required for the legal and valid
execution and delivery of this Agreement and the legal and valid offer,
issuance and sale of the Shares and for the performance of the obligations
of the Company under all provisions of this Agreement, other than those
with respect to registration rights. Assuming the accuracy of the
representations made by the Investor in Section 4, the execution, delivery
and performance of this Agreement, the offer, issuance and sale of the
Shares and the issuance of Adjustment Shares, and the consummation of the
transactions contemplated by this Agreement will not result in any breach
or violation of the terms or provisions of, or constitute a default under,
the Certificate of Incorporation or the bylaws of the Company or any
statute, rule or regulation affecting the Company or its business. To the
best of such counsel's knowledge, the execution, delivery and performance
of this Agreement by the Company, the offer, issuance and sale of the
Shares and the consummation of the transactions contemplated by this
Agreement will not result in any violation of any agreement or other
instrument to which the Company is a party or by which it is bound or to
which any of its properties, assets or business is subject or any
judgment, decree or order.
(h) Assuming the accuracy of the representations made by the
Investor in Section 4, the offer, sale, issuance and delivery of the
Shares to the Investor under this Agreement are exempt from the
registration and prospectus delivery requirements of the Securities Act
and all applicable state securities laws.
(i) Except for matters disclosed on Exhibit A, such counsel has no
knowledge of any litigation, proceeding or governmental investigation
pending or threatened against the Company or its properties or business.
5.5 Opinion of Intellectual Property. The Company shall have
delivered to Investor an opinion, satisfactory to the Investor, of Salzman &
Levy, intellectual property counsel for the Company, dated the Closing Date to
the effect that:
(a) The material references in Section 3.14 of the Stock Purchase
Agreement do not contain any untrue statement of a material fact or omit
to state a material fact so as to make the statements therein, in light of
the circumstances under which they were made, misleading.
(b) Except as described in the Stock Purchase Agreement, there are
no United States patents of third parties which are infringed by the
manufacture, use or sale of the products or processes currently made, used
or sold by the Company.
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(c) There are no legal, governmental or administrative proceedings
pending or threatened against the Company that relate to patents,
trademarks or other intellectual property, except for pending or proposed
United States or foreign patent or trademark applications.
(d) The Company has not received any notice of conflict with the
asserted rights of others in respect of any trademarks, service marks,
trade names, trademark registrations, service mark registrations,
copyrights, licenses, inventions, trade secrets, patents, patent
applications, know-how or similar rights, nor of any threatened actions
with respect thereto, which, if determined adversely to the Company, would
individually or in the aggregate have a material adverse affect on the
business affairs, financial position, net worth or operations of the
Company.
(e) The Company owns or has licensed all such material trademarks,
trademark applications, trademark registrations, service marks, service
mark registrations, copyrights, patents, patent applications and other
rights as are described in the Stock Purchase Agreement and which are
necessary and sufficient for the Company's present or planned future
business as described in the Stock Purchase Agreement or Fuel Cell
Operating Agreement.
(f) The patents described in Exhibit C of the Stock Purchase
Agreement are valid and enforceable.
5.6 Supporting Documents. The Investor shall have received the
following:
(a) A copy of resolutions of the Board of Directors of the Company
certified by the Secretary of the Company authorizing and approving the
execution, delivery and performance of this Agreement.
(b) A certificate of incumbency executed by the Secretary of the
Company certifying the names, titles and signatures of the officers
authorized to execute this Agreement and further certifying that the
Certificate of Incorporation and bylaws of the Company delivered to legal
counsel for the Investor at the time of the execution of this Agreement
have been validly adopted and have not been amended or modified.
(c) Such additional supporting documentation and other information
with respect to the transactions contemplated hereby as legal counsel for
the Investor may reasonably request.
5.7 Qualification Under State Securities Laws. All registrations,
qualifications, permits and approvals required under applicable state securities
laws for the lawful execution and delivery of this Agreement and the offer,
sale, issuance and delivery of the Shares to the Investor at the Closing shall
have been obtained.
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5.8 Due Diligence. Investor shall have completed its due diligence
investigation of the Company to its satisfaction and Investor determines there
are no material impediments to consummation of the transactions contemplated
herein.
5.9 Timing. The transactions contemplated by this Agreement are
consummated prior to any initial public offering of the Company's stock.
5.10 Necessary Consents. On or before the Closing Date, the Company
shall have obtained any consents of any person or governmental authority
necessary for the consummation of the transactions contemplated under this
Agreement and the Investor shall have received satisfactory evidence of such
consents.
5.11 No Material Adverse Effect. Since August 31, 1999 no event,
change or effect shall have occurred that is materially adverse to the
consolidated financial condition, business, results of operations, cash flows or
prospects of the Company or that materially impairs the ability of the Company
to perform or the Investor to enforce the obligations of the Company under this
Agreement.
5.12 Proceedings and Documents. All corporate and other proceedings
and actions taken in connection with the transactions contemplated hereby and
all certificates, opinions, agreements, instruments and documents mentioned
herein or incident to any such transaction shall be satisfactory in form and
substance to legal counsel for the Investor.
6. Affirmative Covenants of the Company. Subject to the provisions of
Section 11, the Company covenants and agrees as follows:
6.1 Observer Rights. The Company shall, on an annual basis, cause to
be named as an observer at all meetings of the Company's Board of Directors, a
representative of the Investor, which representative shall be designated by the
Investor.
6.2 Audit and Compensation Committees. The Company shall at all
times maintain an audit committee and a compensation committee consisting of at
least three members of the Board of Directors.
6.3 Investor's Right to Sell if Company Shareholders Sell. In the
event that Company stockholders holding a majority of the outstanding Common
Stock (the "Majority Shareholders") enter into an agreement to sell their shares
of Common Stock to a third party (the "Proposed Sale"), the Company shall
provide notice of the Proposed Sale to Investor within fifteen (15) days after
notice of the Proposed Sale was received by the Company stating the terms and
conditions of the Proposed Sale, including, without limitation, the number of
shares proposed to be sold or transferred, the nature of such sale or transfer,
the consideration to be paid, and the name and address of each prospective
purchaser. Investor shall have the right, exercisable upon written notice to the
Company within fifteen (15) days of receipt of notice of the Proposed Sale by
the Company, to participate in the Proposed Sale pursuant to the specified terms
and conditions of the proposed sale as set forth in the notice (the "Take-Along
Right"). To the extent Investor exercises the
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Take-Along Right, the number of shares the Majority Shareholders may sell
pursuant to the Purchase Offer shall be reduced as provided herein.
(a) Each shareholder participating in the Proposed Sale may sell all
or any part of that number of shares of Common Stock equal to the product
obtained by multiplying (i) the aggregate number of shares of Common Stock
covered by the Purchase Offer by (ii) a fraction, the numerator of which
is the number of shares of Common Stock at the time owned by such
participating shareholder and the denominator of which is the sum of (A)
the total number of shares of Common Stock owned by all participating
shareholders (other than Majority Shareholders) plus (B) the total number
of shares of Common Stock owned by the Majority Shareholders.
6.4 Financial and Business Information. The Company will maintain,
and cause each of its Subsidiaries to maintain, a system of accounting
established in accordance with sound business practices to permit preparation of
financial statements in conformity with generally accepted accounting principles
(GAAP). The Company during the term of this Agreement will, and will cause its
Subsidiaries to, deliver to the Investor:
(a) As soon as practicable and in any event within 120 days after
the close of each fiscal year of the Company, a consolidated and
consolidating balance sheet of the Company and its Subsidiaries as of the
close of such fiscal year and consolidated statements of operations,
shareholders' equity and cash flows for the Company and its Subsidiaries
for the fiscal year then ended, together with the report thereon of
independent certified public accountants acceptable to Investor;
(b) As soon as practicable and in any event within 45 days after the
end of the first three fiscal quarters of each fiscal year, the
consolidated and consolidating balance sheet of the Company and its
Subsidiaries as at the end of such fiscal quarter and the related
consolidated and consolidating statements of operations, shareholders'
equity and cash flows of the Company and its Subsidiaries for such fiscal
quarter and for the period from the beginning of the current fiscal year
to the end of such fiscal quarter, all in reasonable detail and certified
by the chief financial officer of the Company that they fairly present the
financial condition of Company and its Subsidiaries as the dates indicated
and the results of its operations and its cash flows for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustments;
(c) As soon as practicable and in any event within 30 days after the
end of each month, the internal financial statements of the Company and
its Subsidiaries for such month (other than the months referred to in
Section 6.4(a) and Section 6.4(b) above) and certified by the Chief
Executive Officer of the Company that such statements were prepared in
accordance with the Company's accounting policies, consistently applied
for the period indicated;
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(d) Prompt notice of any event having a material adverse effect on
the business, operations, financial condition, prospects or results of
operation of the Company;
(e) Promptly upon their becoming available, copies of (a) all
financial statements, reports, notices and proxy statements sent or made
available generally by the Company to its security holders, (b) all
regular and periodic reports filed by the Company or any of its
Subsidiaries with any securities exchange or with the SEC or any
governmental or private regulatory authority, (c) all press releases and
other statements made available generally by the Company or any of its
Subsidiaries to the public concerning material developments in the
business of the Company or any of its Subsidiaries;
(f) Promptly upon any officer of Company or any of its Subsidiaries
obtaining knowledge of any condition or event that constitutes a violation
or default or potential event of default under any indebtedness of the
Company or any of its Subsidiaries, or becoming aware that any person has
given any notice or taken any other action with respect to a claimed event
of default or potential event of default, notice of any such event; and
(g) Within a reasonable time, such other information about the
property, financial condition and operations of the Company and its
Subsidiaries as the Investors may from time to time reasonably request.
6.5 Patent Protection. With respect to any patents identified on
Exhibit A, the Company shall within thirty (30) days after the Closing Date,
commence protection proceedings for all such patents.
6.6 Year 2000 Compliance. Within thirty (30) days after the Closing
Date, the Company shall certify to the Investor, compliance with the following:
(a) The Company has investigated the possibility of the occurrence
of Year 2000 Errors in its business operations and has: (i) established a
written plan for dealing with the possibility of Year 2000 Errors and
provided a copy of such plan to Investor; (ii) obtained confirmation from
the suppliers of all the material computer systems, hardware, software or
other processing equipment used in the Company's business that Year 2000
Errors will not occur or (where such confirmation has not been
forthcoming) has obtained satisfactory assurances that appropriate
modification will be made to such systems, hardware, software or equipment
to test and remedy any and all Year 2000 Errors prior to October 31, 1999;
(iii) tested the principal computer systems, hardware, software and other
processing equipment used in the Company's business to determine whether
Year 2000 Errors are possible; and (iv) compiled an accurate estimate of
the cost of preventing Year 2000 Errors or dealing with any Year 2000
Errors which may arise, which estimate has been submitted to the Investor.
(b) The Company has provided a complete and accurate list of all
Year 2000 Errors of which the Company, its officers, directors, employees,
agents or shareholders are aware.
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(c) The products and/or technology manufactured, licensed, sold or
otherwise distributed by the Company shall function without, and shall not
contain, any Year 2000 Errors.
(d) None of the software used in the business of, or manufactured,
licensed, sold or otherwise distributed by, the Company contains any
virus, logic bomb, time bomb, worm, undisclosed protect codes or other
harmful code which might have a significant adverse effect on the
processing of data for the business, or the use of the software.
(e) For purposes of this Agreement, the term "Year 2000 Error" means
(i) any failure of computer hardware or software products or technology
(or any components thereof) properly to create, receive, recognize,
record, store, process, calculate, present or exchange calendar dates
falling on and after (and if applicable, spans of time including) January
1, 2000 (including, without limitation, leap years) as a result of the
occurrence, or use of data consisting of, such dates; (ii) any failure of
computer hardware or software products or technology (or any components
thereof) to create, receive, recognize, record, store, process, calculate,
present or exchange any information or data dependent on or relating to
dates on or after January 1, 2000 (including, without limitation, forward
and backward calculations from, into and between the 20th and 21st
centuries, the years 1999 and 2000 and leap years) in the same manner, and
with the same functionality, data integrity and performance, as such
computer hardware or software products or technology (or any components
thereof) creates, receives, recognizes, records, stores, processes,
calculates, presents or exchanges calendar dates on or before December 31,
1999, or information or data dependent on or relating to such dates; or
(iii) any loss of functionality or performance or incorrect results with
respect to the introduction of records or processing of data containing
dates falling on or after January 1, 2000 (including, without limitation,
leap years).
7. Future Registration Rights. Except for any registration expressly
permitted by Section 8 of this Agreement, and except for an underwriting
agreement between the Company and one or more professional underwriters of
securities, the Company shall not, without the prior written consent of the
Investor, grant any registration rights that are greater than the registration
rights of the Investor as set forth in Exhibit F attached hereto.
8. Registration Rights. The Company acknowledges and agrees that the
Investor shall have the registration rights set forth in Exhibit F attached
hereto.
9. Restriction on Transfer of Shares.
9.1 Restrictions. The Shares are only transferable pursuant to (a) a
public offering registered under the Securities Act, (b) Rule 144 of the
Commission (or any similar rule then in effect) if such rule is available, and
(c) subject to the conditions specified elsewhere in this Section 10, any other
legally available means of transfer.
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9.2 Legend. Each certificate representing Shares shall be endorsed
with the following legend:
"The shares represented by this certificate may not be transferred
without (i) the opinion of counsel satisfactory to this corporation
that such transfer may lawfully be made without registration under
the Federal Securities Act of 1933 and all applicable state
securities laws or (ii) such registration."
9.3 Removal of Legend. Any legend endorsed on a certificate
evidencing a security pursuant to Section 9.1 hereof shall be removed, and the
Company shall issue a certificate without such legend to the holder of such
security, if such security is being disposed of pursuant to a registration under
the Securities Act or pursuant to Rule 144 or any similar rule then in effect or
if such holder provides the Company with an opinion of counsel satisfactory to
the Company to the effect that a transfer of such security may be made without
registration. In addition, if the holder of such security delivers to the
Company an opinion of such counsel to the effect that no subsequent transfer of
such security will require registration under the Securities Act, the Company
will promptly upon such contemplated transfer deliver new certificates
evidencing such security that do not bear the legend set forth in Section 9.2.
10. Termination of Certain Covenants.
The obligations of the Company under Sections 6.1, 6.2 and 6.3 of this
Agreement shall terminate and shall be of no further force and effect upon
completion of an initial public offering by the Company.
11. Right to Purchase Additional Shares.
11.1 Right to Purchase Additional Shares. If the Company should
decide to issue and sell additional shares of stock (the "Additional Shares"),
excluding (a) shares of Common Stock sold to the public pursuant to a
registration statement filed under the Securities Act, (b) shares of Common
Stock that may be issued upon the exercise of stock options outstanding as of
the Closing Date and disclosed in Exhibit A; (c) stock options and shares of
Common Stock issuable upon the exercise of such options granted to employees and
directors of the Company pursuant to the terms of the Company's stock option
plans in effect as of the Closing Date and disclosed in Exhibit A; (d) Common
Stock issuable upon the exercise of a warrant in favor of Duquesne Enterprises
that, as of the Closing Date, entitled the holder thereof to purchase 100,000
shares of Common Stock; (e) Common Stock issuable upon the conversion of the
Company's Series A Convertible Preferred Stock, Series B Convertible Preferred
Stock or Series C Convertible Preferred Stock; (f) shares of Preferred Stock, up
to an aggregate maximum of 266,667 shares; and (g) shares of Common Stock in an
amount less than 1% of the shares of Common Stock owned by Investor as of the
Closing Date, whether issued in one transaction or a series of transactions
subsequent to the Closing Date, up to a maximum of 10,000 shares in the
aggregate for all such transactions (collectively "Permitted Issuances"), the
Company shall first offer to sell to Investor, upon the same terms and
conditions as
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the Company is proposing to issue and sell the Additional Shares to others,
Investor's pro rata share (as defined below) of such Additional Shares.
Such offer to Investor shall be made by written notice given to
Investor (the "Offer Notice") specifying the amount of the Additional Shares
being offered, the purchase price for the Additional Shares and any other terms
of the offer. Investor shall have a period of thirty (30) days from and after
the date such Offer Notice was received by Investor within which to accept such
offer (the "Acceptance Period"). Investor shall accept an offer to purchase all
or any portion of the Additional Shares specified in the Offer Notice by written
notice to the Company and tender of the purchase price for the Additional Shares
within the Acceptance Period. If Investor fails to accept such offer within the
Acceptance Period, any Additional Shares not purchased by Investor may be
offered for sale to others by the Company for a period of one hundred eighty
(180) days from the last day of the Acceptance Period, but only on the same
terms and conditions as set forth in the Offer Notice delivered to Investor,
free and clear of the restrictions imposed by this Section 11.
11.2 Pro Rata Share. For purposes of Section 11.1, Purchaser's "pro
rata share" shall be determined by the following formula:
P = N/O x A
Where,
"P" equals Investor's pro rata share of Additional Shares (rounded to the
nearest whole share);
"N" equals the number of shares of Common Stock owned by Investor immediately
prior to the issuance of the Additional Shares being offered;
"O" equals the total number of shares of the Company's Common Stock outstanding
immediately prior to the issuance of the Additional Shares; and
"A" equals the total number of Additional Shares being offered.
11.3 Termination. Investor's rights under this Section 11 shall
terminate in their entirety on the earlier of (a) the consummation of an initial
public offering of the Company's Common Stock or other securities, or (b) the
acquisition of the Company by another entity by means of any transaction or
series of related transactions (including, without limitation, any
reorganization, merger or consolidation) that results in the transfer of fifty
percent (50%) or more of the outstanding voting power of the Company or a sale
of all or substantially all of the assets of the Company.
12. Anti-dilution.
12.1 Right to Receive Adjustment Shares. If at any time after the
date of this Agreement, the Company issues or sells, or is deemed to have issued
or sold, any shares of its
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Common Stock for consideration per share less than $15.00, then, unless such
issuance or sale was a Permitted Issuance (as defined in Section 11.1 hereof),
immediately upon such issue or sale or deemed issuance or sale, the Company
shall issue to Investor a number of Adjustment Shares determined in accordance
with Section 12.2 hereof without payment of any cash or other consideration to
the Company.
12.2 Calculation of Adjustment Shares. The number of Adjustment
Shares to be issued to Investor under Section 12.1 shall be determined in
accordance with the following formula:
A = C/S - E
Where,
"A" = Number of Adjustment Shares
"C" = Purchase Price paid by Investor for the Shares ($5,000,000)
"S" = per share price of Additional Shares
"E" = Number of Shares owned by Investor immediately preceding issuance of
Additional Shares.
12.3 Subdivisions and Combinations. In case the Company shall at any
time subdivide or split its outstanding shares of Common Stock into a greater
number of shares, or combine the outstanding shares of Common Stock into a
smaller number of shares, the Company shall issue to Investor a number of
Adjustment Shares sufficient to reflect such stock split or combination.
12.4 Termination. Investor's rights under this Section 12 shall
terminate in their entirety on the earlier of (a) the consummation of an initial
public offering of the Company's Common Stock or other securities; or (b) the
acquisition of the Company by another entity by means of any transaction or
series of related transactions (including, without limitation, any
reorganization, merger or consolidation) that results in the transfer of fifty
percent (50%) or more of the outstanding voting power of the Company or a sale
of all or substantially all of the assets of the Company.
13. Survival. Except as specifically provided in Section 10 and Section 12
of this Agreement, all representations, warranties and covenants contained
herein shall survive the execution and delivery of this Agreement, any
investigation at any time made by the Investor or on its behalf, and the sale
and purchase of the Shares and payment therefor for a period of two years. All
statements contained in any certificate, instrument or other writing delivered
by or on behalf of the Company pursuant to this Agreement (other than legal
opinions) or in connection with or in contemplation of the transactions herein
contemplated shall constitute representations and warranties by the Company
hereunder.
14. Indemnification.
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14.1 Indemnification by Company. The Company agrees to indemnify in
full Investor, its officers, directors, employees, agents and stockholders
(collectively, the "Investor Indemnified Parties") and hold them harmless
against any loss, liability, deficiency, damage, expense or cost (including
reasonable legal expenses), whether or not actually incurred or paid prior to
the third anniversary of the Closing Date (collectively, "Losses"), which
Investor Indemnified Parties may suffer, sustain or become subject to, as a
result of (i) any misrepresentation in any of the representations and warranties
of the Company contained in this Agreement or in any exhibits, schedules,
certificates or other documents delivered or to be delivered by or on behalf of
the Company pursuant to the terms of this Agreement or otherwise referenced or
incorporated in this Agreement (collectively, the "Related Documents"), (ii) any
breach of, or failure to perform, any agreement of the Company contained in this
Agreement or any of the Related Documents, or (iii) any "Claims" (as defined in
Section 14.3(a) hereof) or threatened Claims against Investor arising out of the
actions or inactions of the Company or the Company with respect to the Company's
business prior to the Closing (collectively, "Investor Losses").
The Company shall be liable to the Investor Indemnified Parties for
any Investor Losses only if Investor or another Investor Indemnified Party
delivers to the Company written notice, setting forth in reasonable detail the
identity, nature and amount of Investor Losses related to such claim or claims
prior to the third anniversary of the Closing Date; provided, however, that the
Investor Indemnified Party's failure to provide the detail required by this
Section 14.1 shall not constitute either a breach of this Agreement by the
Investor Indemnified Party or any basis for the Company to assert that the
Investor Indemnified Party did not comply with the terms of this Section 14.1
sufficient to cause the Investor Indemnified Party to have waived its rights
under this Section 14.1.
14.2 Indemnification by Investor. The Investor agrees to indemnify
in full the Company, and its officers, directors, employees, agents and
stockholders (collectively, the "Company Indemnified Parties") and hold them
harmless against any Losses which any of the Company Indemnified Parties may
suffer, sustain or become subject to as a result of (i) any misrepresentation in
any of the representations and warranties of Investor contained in this
Agreement or in any of the Related Documents, (ii) any breach of, or failure to
perform, any agreement of Investor contained in this Agreement or any of the
Related Documents, or (iii) any Claims or threatened Claims against the Company
arising out of the actions or inactions of Investor with respect to the
Company's business or the Real Property after the Closing (collectively, "
Losses").
Investor shall be liable to the Seller Indemnified Parties for any
Seller Losses (i) only if the Company or another Company Indemnified Party
delivers to Investor written notice, setting forth in reasonable detail the
identity, nature and amount of Company Losses related to such claim or claims
prior to the third anniversary of the Closing Date; provided, however, that the
Company Indemnified Party's failure to provide the detail required in this
Section 14.2 shall not constitute either a breach of this Agreement by the
Company Indemnified Party or any basis for Investor to assert that the Company
Indemnified Party did not comply with the terms of this Section 14.2 sufficient
to cause the Company Indemnified Party to have waived its rights under this
Section 14.2.
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14.3 Method of Asserting Claims. As used herein, an "Indemnified
Party" shall refer to a "Investor Indemnified Party" or "Company Indemnified
Party," as applicable, the "Notifying Party" shall refer to the party hereto
whose Indemnified Parties are entitled to indemnification hereunder, and the
"Indemnifying Party" shall refer to the party hereto obligated to indemnify such
Notifying Party's Indemnified Parties.
(a) In the event that any of the Indemnified Parties is made a
defendant in or party to any action or proceeding, judicial or
administrative, instituted by any third party for the liability or the
costs or expenses of which are Losses (any such third party action or
proceeding being referred to as a "Claim"), the Notifying Party shall give
the Indemnifying Party prompt notice thereof. The failure to give such
notice shall not affect any Indemnified Party's ability to seek
reimbursement unless such failure has materially and adversely affected
the Indemnifying Party's ability to defend successfully a Claim. The
Indemnifying Party shall be entitled to contest and defend such Claim;
provided, that the Indemnifying Party (i) has a reasonable basis for
concluding that such defense may be successful and (ii) diligently
contests and defends such Claim. Notice of the intention so to contest and
defend shall be given by the Indemnifying Party to the Notifying Party
within 20 business days after the Notifying Party's notice of such Claim
(but, in all events, at least five business days prior to the date that an
answer to such Claim is due to be filed). Such contest and defense shall
be conducted by reputable attorneys employed by the Indemnifying Party.
The Notifying Party shall be entitled at any time, at its own cost and
expense (which expense shall not constitute a Loss unless the Notifying
Party reasonably determines that the Indemnifying Party is not adequately
representing or, because of a conflict of interest, may not adequately
represent, any interests of the Indemnified Parties, and only to the
extent that such expenses are reasonable), to participate in such contest
and defense and to be represented by attorneys of its or their own
choosing. If the Notifying Party elects to participate in such defense,
the Notifying Party will cooperate with the Indemnifying Party in the
conduct of such defense. Neither the Notifying Party nor the Indemnifying
Party may concede, settle or compromise any Claim without the consent of
the other party, which consents will not be unreasonably withheld.
Notwithstanding the foregoing, (i) if a Claim seeks equitable relief or
(ii) if the subject matter of a Claim relates to the ongoing business of
any of the Indemnified Parties, which Claim, if decided against any of the
Indemnified Parties, would materially adversely affect the ongoing
business or reputation of any of the Indemnified Parties, then, in each
such case, the Indemnified Parties alone shall be entitled to contest,
defend and settle such Claim in the first instance and, if the Indemnified
Parties do not contest, defend or settle such Claim, the Indemnifying
Party shall then have the right to contest and defend (but not settle)
such Claim.
(b) In the event any Indemnified Party should have a claim against
any Indemnifying Party that does not involve a Claim, the Notifying Party
shall deliver a notice of such claim with reasonable promptness to the
Indemnifying Party. If the Indemnifying Party notifies the Notifying Party
that it does not dispute the claim described in such notice or fails to
notify the Notifying Party within 30 days after delivery of such notice by
the Notifying Party whether the Indemnifying Party disputes the claim
described in such notice, the Loss in the amount specified in the
Notifying Party's notice will be conclusively deemed a liability of the
Indemnifying Party
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and the Indemnifying Party shall pay the amount of such Loss to the
Indemnified Party on demand. If the Indemnifying Party has timely disputed
its Liability with respect to such claim, the Chief Executive Officers of
each of the Indemnifying Party and the Notifying Party will proceed in
good faith to negotiate a resolution of such dispute, and if not resolved
through the negotiations of such Chief Executive Officers within 60 days
after the delivery of the Notifying Party's notice of such claim, such
dispute shall be resolved fully and finally as provided in Section 15.7 of
this Agreement.
(c) After the Closing, the rights set forth in this Section 14 shall
be each party's sole and exclusive remedies against the other party hereto
for misrepresentations or breaches of covenants contained in this
Agreement and the Related Documents. Notwithstanding the foregoing,
nothing herein shall prevent any of the Indemnified Parties from bringing
an action based upon allegations of fraud or other intentional breach of
an obligation of or with respect to either party in connection with this
Agreement and the Related Documents. In the event such action is brought,
the prevailing party's attorneys' fees and costs shall be paid by the
nonprevailing party.
14.4 Adjustment. Any indemnification payable under this Section 14
shall be, to the extent permitted by law, an adjustment to the aggregate
purchase price paid for the Shares.
15. Miscellaneous.
15.1 Waivers, Amendments and Approvals. In each case in which
approval of the Investor is required by the terms of this Agreement, such
requirement shall be satisfied by a vote or the written action of Investor. With
the written consent of Investor, the obligations of the Company under this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) and with the written approval of Investor, the
Company may enter into a supplementary agreement for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of any supplemental agreement or modifying in any manner the
rights and obligations of the holders of the shares of the Company; provided,
however, that no such waiver or supplemental agreement shall (a) amend the terms
of the Common Stock or any other classes of stock as set forth in the Company's
Certificate of Incorporation, (b) amend the provisions of this Agreement
granting rights to the holders of the Shares (including, but not limited to,
registration rights under Section 8) without the written consent of the holders
of a majority of the Shares, or (c) reduce the aforesaid proportions of Shares
the holders of which are required to consent to any waiver or supplemental
agreement, without the consent of all of the record holders of Shares whose
rights would be affected by such reduction. Written notice of any such waiver,
consent or agreement of amendment, modification or supplement shall be given to
the record holders of the Shares who have not previously consented thereto in
writing. In all cases in which the consent or approval of, or actions by, the
Investor or the holders of the Shares is required by the terms of this
Agreement, the number of Shares owned by such holder or Investor shall be
determined on an as-if-converted basis, when applicable.
15.2 Changes, Waivers, Etc. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, but only by a
statement in writing signed by the
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party against which enforcement of the change, waiver, discharge or termination
is sought, except to the extent provided in Section 15.1.
15.3 Payment of Fees and Expenses of the Investor. The Company
agrees to reimburse the Investor for legal expenses incurred by the Investor to
its special legal counsel, Lapointe Rosenstein, in connection with the
transactions contemplated by this Agreement.
15.4 Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall be
delivered, or mailed first-class postage prepaid, fedex, registered or certified
mail,
(a) if to any holder of any Shares addressed to such holder at its
address as shown on the books of the Company, or at such other address as
such holder may specify by written notice to the Company, or
(b) if to the Company at: 60 Montgomery Street, Belleville, NJ
07109. Attention: Frank Gibbard; or at such other address as the Company
may specify by written notice to the Investor.
and such notices and other communications shall for all purposes of this
Agreement be treated as being effective or having been given if delivered
personally, sent by fax with confirmation sheet, or, if sent by mail, when
received.
15.5 Parties in Interest. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto, whether so
expressed or not, and, in particular, shall inure to the benefit of and be
enforceable by the holder or holders from time to time of any of the Shares;
provided, however, that a successor or assign of an Investor shall not be
regarded as an "Investor".
15.6 Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and do not constitute a part of
this Agreement.
15.7 Choice of Law; Jurisdiction and Venue. The laws of the State of
Delaware shall govern the validity of this Agreement, the construction of its
terms and the interpretation of the rights and duties of the parties hereunder.
THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR STATE COURT SITTING IN
THE STATE OF NEW JERSEY, AND EACH PARTY CONSENTS TO THE JURISDICTION AND VENUE
OF SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUM IS NOT
CONVENIENT. IF ANY PARTY COMMENCES ANY ACTION UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT
IN ANOTHER JURISDICTION OR VENUE, THE OTHER PARTY TO THIS AGREEMENT SHALL HAVE
THE OPTION OF TRANSFERRING THE CASE TO THE ABOVE-DESCRIBED JURISDICTION OR, IF
SUCH TRANSFER CANNOT BE ACCOMPLISHED OR THE PARTY
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DECLINES TO ELECT SUCH CHANGE OF VENUE, TO HAVE THE CASE DISMISSED WITHOUT
PREJUDICE.
15.8 Counterparts. This Agreement may be executed concurrently in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
[REMAINING PORTION OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the Company and the Investor have each caused this
Agreement to be executed by their respective duly authorized representative.
H POWER CORP.
By: /s/ Thomas Michael
------------------------------------
Its: Vice President
-----------------------------------
SOFINOV SOCIETE FINANCIERE
D'INNOVATION INC.
By: /s/ Ginette Depelteau
------------------------------------
Its:
-----------------------------------
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Exhibit F
REGISTRATION RIGHTS PROVISIONS
Capitalized terms used herein have the meanings set forth in Section 8 hereof.
1. Demand Registration.
(a) At any time after the second anniversary of the Closing of the
Stock Purchase Agreement, a Majority-in-Interest of the Holders shall have the
right, by written notice (the "Demand Notice") given to the Company, to request
the Company to file with the SEC a Registration Statement with respect to all or
any portion of the Registrable Shares held by such Holders. Upon receipt of any
such Demand Notice, the Company shall promptly, but in no event more than five
days after receipt thereof, notify all other Holders of the receipt of such
Demand Notice and, subject to the limitations set forth below, shall include in
the proposed registration all Registrable Shares with respect to which the
Company has received written requests for inclusion therein within 20 days after
delivery of the Company's notice. In connection with any Demand Registration in
which more than one holder of securities participates, in the event that such
Demand Registration involves an underwritten offering and the managing
underwriter or underwriters participating in such offering advise in writing the
Holders of Registrable Shares and the holders of other securities to be included
in such offering that the total number of Registrable Shares and other
securities to be included in such offering exceeds the amount that can be sold
in (or during the time of) such offering without delaying or jeopardizing the
success of such offering (including the price per share of the Registrable
Shares and other securities to be sold), then the amount of Registrable Shares
and other securities to be offered for the account of such Holders shall be
reduced as follows: first, pro rata on the basis of the number of securities
other than Registrable Shares requested to be registered by the holders of such
securities; and second, pro rata on the basis of the number of Registrable
Shares requested to be registered by the holders of such securities. The Holders
as a group shall be entitled to two Demand Registrations pursuant to this
Section 1; provided, that any Demand Registration that does not become effective
or is not maintained for the time period required in accordance with Section
1(c) shall not count as one of such Demand Registrations, except as set forth in
Section 1(e); provided, further, that if the Demanding Holders have requested
inclusion in such Demand Registration and 75% or less of the securities so
requested to be included have been included, the Holders as a group shall be
entitled to an additional Demand Registration hereunder on the same terms and
conditions as would have applied to the Holders had such earlier Demand
Registration not been made. Anything herein to the contrary notwithstanding, the
Company shall not be required to effect a Demand Registration pursuant to this
Section 1 within a period of six (6) months after the effective date of any
other Demand Registration.
(b) The Company, within 45 days of the date on which the Company
receives a Demand Notice given by Holders in accordance with Section 1(a)
hereof, shall file with the SEC, and the Company shall thereafter use its best
efforts to cause to be declared effective within 90 days following the date the
Company receives such Demand Notice, a Registration Statement on the appropriate
form for the registration and sale, in accordance with the intended method or
methods
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of distribution requested by the Holders, of the total number of Registrable
Shares specified by the Holders in such Demand Notice (a "Demand Registration").
(c) The Company shall use commercially reasonable efforts to keep
each Registration Statement filed pursuant to this Section 1 continuously
effective and usable for the resale of the Registrable Shares covered thereby
for a period of 270 days from the date on which the SEC declares such
Registration Statement effective, as such period may be extended pursuant to
this Section 1, or in the case of a Shelf Registration, for a period of two
years from the date that the SEC declares such "shelf" Registration Statement
effective, or if shorter, until all the Registrable Shares covered by such
Registration Statement have been sold pursuant to such Registration Statement.
(d) The Company shall be entitled to postpone the filing of any
Registration Statement otherwise required to be prepared and filed by the
Company pursuant to this Section 1, or suspend the use of any effective
Registration Statement under this Section 1, for a reasonable period of time
which shall be as short as practicable, but in any event not in excess of 60
days (a "Delay Period"), if the Company determines in good faith that the
registration and distribution of the Registrable Shares covered or to be covered
by such Registration Statement would materially interfere with any pending
material financing, acquisition or corporate reorganization or other material
corporate development involving the Company or any of its Subsidiaries or would
require premature disclosure thereof and promptly gives the Holders written
notice of such determination, containing a statement of the reasons for such
postponement and an approximation of the period of the anticipated delay;
provided, however, that (i) the aggregate number of days included in all Delay
Periods during any consecutive 12 months shall not exceed the aggregate of (x)
180 days minus (y) the number of days occurring during all Interruption Periods
during such consecutive 12 months and (ii) a period of at least 60 days shall
elapse between the termination of any Delay Period or Interruption Period and
the commencement of the immediately succeeding Delay Period. If the Company
shall so postpone the filing of a Registration Statement, the Holders of
Registrable Shares to be registered shall have the right to withdraw the request
for registration by giving written notice to the Company from the Holders of a
majority of the Registrable Shares that were to be registered within 45 days
after receipt of the notice of postponement or, if earlier, the termination of
such Delay Period. The time period for which the Company is required to maintain
the effectiveness of any Registration Statement shall be extended by the
aggregate number of days of all Delay Periods and all Interruption Periods
occurring during such Registration and any extension thereof is hereinafter
referred to as the "Effectiveness Period". The Company shall not be entitled to
initiate a Delay Period unless it shall (A) to the extent permitted by
agreements with other security holders of the Company, concurrently prohibit
sales by such other security holders under registration statements covering
securities held by such other security holders and (B) in accordance with the
Company's policies from time to time in effect, forbid purchases and sales in
the open market by senior executives of the Company.
(e) The Demanding Holders may, at any time prior to the effective
date of the Registration Statement relating to a Demand Registration, revoke
such request by providing a written notice to the Company revoking such request.
In the event of such revocation, the Demanding Holders shall reimburse the
Company for all of its out-of-pocket expenses incurred in connection with the
preparation, filing and processing of the Registration Statement, unless (i)
there has been
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<PAGE>
a material adverse change in the business, assets, properties, condition
(financial or other), results of operations or prospects of the Company and its
Subsidiaries, since the time of the Demand Notice, (ii) such revocation was
based on the Company's failure to comply in any material respect with its
obligations hereunder or (iii) the Demanding Holders choose to count the Demand
Registration as one of the Demand Registrations to which the Demanding Holders
are entitled pursuant to the penultimate sentence of Section 1(a).
2. Piggyback Registration.
(a) Right to Piggyback. If at any time the Company proposes to file
a registration statement under the Securities Act with respect to a public
offering of securities of the same type as the Registrable Shares for its own
account (other than a registration statement (i) on Form S-8 or any successor
form thereto, (ii) filed solely in connection with a dividend reinvestment plan
or employee benefit plan covering officers or directors of the Company or its
Affiliates or (iii) on Form S-4 or any successor form thereto, in connection
with a merger, acquisition or similar corporate transaction) or for the account
of any holder of securities of the same type as the Registrable Shares, then the
Company shall give written notice of such proposed filing to the Holders at
least 30 days before the anticipated filing date. Such notice shall offer the
Holders the opportunity to register such number of Registrable Shares as they
may request (a "Piggyback Registration"). Subject to Section 2(b) hereof, the
Company shall include in each such Piggyback Registration all Registrable Shares
with respect to which the Company has received written requests for inclusion
therein within 20 days after notice has been given to the Holders. Each Holder
shall be permitted to withdraw all or any portion of the Registrable Shares of
such Holder from a Piggyback Registration at any time prior to the effective
date of such Piggyback Registration.
(b) Priority on Piggyback Registrations. The Company shall permit
the Holders to include all such Registrable Shares on the same terms and
conditions as any similar securities, if any, of the Company included therein.
Notwithstanding the foregoing, if the Company or the managing underwriter or
underwriters participating in such offering advise the Holders in writing that
the total number of securities requested to be included in such Piggyback
Registration exceeds the number which can be sold in (or during the time of)
such offering without delaying or jeopardizing the success of the offering
(including the price per share of the securities to be sold), then the number of
securities to be offered for the account of the Holders and other holders of
securities who requested to have securities included in such Piggyback
Registration shall be reduced (to zero if necessary) pro rata on the basis of
the number or amount of Common Stock (or the equivalent) requested to be
registered by each such Holder or holder participating in such offering.
(c) Right To Abandon. Nothing in this Section 2 shall create any
liability on the part of the Company to the Holders if the Company in its sole
discretion should decide not to file a registration statement proposed to be
filed pursuant to Section 2(a) hereof or to withdraw such registration statement
subsequent to its filing, regardless of any action whatsoever that a Holder may
have taken, whether as a result of the issuance by the Company of any notice
hereunder or otherwise.
3. Registration Procedures. In connection with the registration
obligations of the Company pursuant to and in accordance with Sections 1 and 2
hereof (and subject to Sections 1 and
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2 hereof), the Company shall use commercially reasonable efforts to effect such
registration to permit the sale of such Registrable Shares in accordance with
the intended method or methods of disposition thereof, and pursuant thereto the
Company shall as expeditiously as possible (but subject to Sections 1 and 2
hereof):
(a) prepare and file with the SEC a Registration Statement for the
sale of the Registrable Shares on any form for which the Company then qualifies
or which counsel for the Company shall deem appropriate in accordance with such
Holders' intended method or methods of distribution thereof, subject to Section
1(b) hereof, and use commercially reasonable efforts to cause such Registration
Statement to become effective and remain effective as provided herein;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) to such Registration Statement, and such supplements
to the related Prospectus, as may be required by the applicable rules,
regulations or instructions under the Securities Act during the applicable
period in accordance with the intended methods of disposition specified by the
Holders of the Registrable Shares covered by such Registration Statement, make
generally available earnings statements satisfying the provisions of Section
11(a) of the Securities Act (provided that the Company shall be deemed to have
complied with this clause if it has complied with Rule 158 under the Securities
Act), and cause the related Prospectus as so supplemented to be filed pursuant
to Rule 424 under the Securities Act; provided, however, that before filing a
Registration Statement or Prospectus, or any amendments or supplements thereto
(other than reports required to be filed by it under the Exchange Act), the
Company shall furnish to the Holders of Registrable Shares covered by such
Registration Statement and their counsel for review and comment, copies of all
documents proposed to be filed;
(c) notify the Holders of any Registrable Shares covered by such
Registration Statement promptly and (if requested) confirm such notice in
writing, (i) when a Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to such Registration Statement or
any post-effective amendment, when the same has become effective, (ii) of any
request by the SEC for amendments or supplements to such Registration Statement
or the related Prospectus or for additional information regarding such Holders,
(iii) of the issuance by the SEC of any stop order suspending the effectiveness
of such Registration Statement or the initiation of any proceedings for that
purpose, (iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, and (v) of the happening of any
event that requires the making of any changes in such Registration Statement,
Prospectus or documents incorporated or deemed to be incorporated therein by
reference so that they will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading;
(d) use commercially reasonable efforts to obtain the withdrawal of
any order suspending the effectiveness of such Registration Statement, or the
lifting of any suspension of the qualification or exemption from qualification
of any Registrable Shares for sale in any jurisdiction in the United States;
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(e) furnish to the Holder of any Registrable Shares covered by such
Registration Statement, each counsel for such Holders and each managing
underwriter, if any, without charge, one conformed copy of such Registration
Statement, as declared effective by the SEC, and of each post-effective
amendment thereto, in each case including financial statements and schedules and
all reports incorporated or deemed to be incorporated therein by reference; and
deliver, without charge, such number of copies of the preliminary prospectus,
any amended preliminary prospectus, each final Prospectus and any post-effective
amendment or supplement thereto, as such Holder may reasonably request in order
to facilitate the disposition of the Registrable Shares of such Holder covered
by such Registration Statement in conformity with the requirements of the
Securities Act;
(f) prior to any public offering of Registrable Shares covered by
such Registration Statement, use commercially reasonable efforts to register or
qualify such Registrable Shares for offer and sale under the securities or Blue
Sky laws of such jurisdictions as the Holders of such Registrable Shares shall
reasonably request in writing; provided, however, that the Company shall in no
event be required to qualify generally to do business as a foreign corporation
or as a dealer in any jurisdiction where it is not at the time so qualified or
to execute or file a general consent to service of process in any such
jurisdiction where it has not theretofore done so or to take any action that
would subject it to general service of process or taxation in any such
jurisdiction where it is not then subject;
(g) upon the occurrence of any event contemplated by paragraph
3(c)(v) above, prepare a supplement or post-effective amendment to such
Registration Statement or the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference and file any other required
document so that, as thereafter delivered to the purchaser of the Registrable
Shares being sold thereunder (including upon the termination of any Delay
Period), such Prospectus will not contain an untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading;
(h) use its best efforts to cause all Registrable Shares covered by
such Registration Statement to be listed on each securities exchange, if any, on
which similar securities issued by the Company are then listed or quoted and, if
no such securities are so listed, to be listed on the Nasdaq Stock Market and,
if listed on the Nasdaq Stock Market, use its best efforts to secure designation
of all such Registrable Shares covered by such registration statement as "NASDAQ
Securities" within the meaning of Rule 11Aa2-1 promulgated under the Exchange
Act or, failing that, to secure Nasdaq Stock Market authorization for such
Registrable Shares;
(i) on or before the effective date of such Registration Statement,
provide the transfer agent of the Company for the Registrable Shares with
printed certificates for the Registrable Shares covered by such Registration
Statement, which are in a form eligible for deposit with The Depository Trust
Company;
(j) make available for inspection by any Holder of Registrable
Shares included in such Registration Statement, any underwriter participating in
any offering pursuant to such Registration Statement, and any attorney,
accountant or other agent retained by any such Holder or
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underwriter (collectively, the "Inspectors"), all financial and other records
and other information, pertinent corporate documents and properties of any of
the Company and its Subsidiaries and affiliates (collectively, the "Records"),
as shall be reasonably necessary to enable them to exercise their due diligence
responsibilities; provided, however, that the Records that the Company
determines, in good faith, to be confidential and which it notifies the
Inspectors in writing are confidential shall not be disclosed to any Inspector
unless such Inspector signs a confidentiality agreement reasonably satisfactory
to the Company (which shall permit the disclosure of such Records in such
Registration Statement or the related Prospectus if necessary to avoid or
correct a material misstatement in or material omission from such Registration
Statement or Prospectus) or either (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such Registration
Statement or (ii) the release of such Records is ordered pursuant to a subpoena
or other order from a court of competent jurisdiction; provided, further, that
(A) any decision regarding the disclosure of information pursuant to subclause
(i) shall be made only after consultation with counsel for the applicable
Inspectors and the Company and (B) with respect to any release of Records
pursuant to subclause (ii), each Holder of Registrable Shares agrees that it
shall, promptly after learning that disclosure of such Records is sought in a
court having jurisdiction, give notice to the Company so that the Company, at
the Company's expense, may undertake appropriate action to prevent disclosure of
such Records; and
(k) if such offering is an underwritten offering, enter into such
agreements (including an underwriting agreement in form, scope and substance as
is customary in underwritten offerings) and take all such other appropriate and
reasonable actions requested by the Holders of a majority of the Registrable
Shares being sold in connection therewith (including those reasonably requested
by the managing underwriters) in order to expedite or facilitate the disposition
of such Registrable Shares, and in such connection, (i) use commercially
reasonable efforts to obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters and counsel to the Holders
of the Registrable Shares being sold), addressed to each selling Holder of
Registrable Shares covered by such Registration Statement and each of the
underwriters as to the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably requested by
such counsel and underwriters, (ii) use commercially reasonable efforts to
obtain "cold comfort" letters and updates thereof from the independent certified
public accountants of the Company (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company or of any business
acquired by the Company for which financial statements and financial data are,
or are required to be, included in the Registration Statement), addressed to
each selling holder of Registrable Shares covered by the Registration Statement
(unless such accountants shall be prohibited from so addressing such letters by
applicable standards of the accounting profession) and each of the underwriters,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings, (iii) if requested and if an underwriting agreement is entered into,
provide indemnification provisions and procedures reasonably requested by such
underwriters. The above shall be done at each closing under such underwriting or
similar agreement, or as and to the extent required thereunder. The Company may
require each Holder of Registrable Shares covered by a Registration Statement to
furnish, within a period not less than 20 days from the date of receipt of such
request, such information regarding such Holder and such Holder's intended
method of
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disposition of such Registrable Shares as it may from time to time reasonably
request in writing. If any such information is not furnished within such period,
the Company may exclude such Holder's Registrable Shares from such Registration
Statement. Each Holder of Registrable Shares covered by a Registration Statement
agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv) or 3(c)(v)
hereof,that such Holder shall forthwith discontinue disposition of any
Registrable Shares covered by such Registration Statement or the related
Prospectus until receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(g) hereof, or until such Holder is advised in writing
by the Company that the use of the applicable Prospectus may be resumed, and has
received copies of any amended or supplemented Prospectus or any additional or
supplemental filings which are incorporated, or deemed to be incorporated, by
reference in such Prospectus (such period during which disposition is
discontinued being an "Interruption Period") and, if requested by the Company,
the Holder shall deliver to the Company (at the expense of the Company) all
copies then in its possession, other than permanent file copies then in such
holder's possession, of the Prospectus covering such Registrable Shares at the
time of receipt of such request. Each Holder of Registrable Shares covered by a
Registration Statement further agrees not to utilize any material other than the
applicable current preliminary prospectus or Prospectus in connection with the
offering of such Registrable Shares.
4. Registration Expenses. Whether or not any Registration Statement
is filed or becomes effective but subject to Section 1(e), the Company shall pay
all costs, fees and expenses incident to the Company's performance of or
compliance with this Agreement, including (i) all registration and filing fees,
including National Association of Securities Dealers filing fees, (ii) all fees
and expenses of compliance with securities or Blue Sky laws, including
reasonable fees and disbursements of counsel in connection therewith, (iii)
printing expenses (including expenses of printing certificates for Registrable
Shares and of printing prospectuses if the printing of prospectuses is requested
by the Holders or the managing underwriter, if any), (iv) messenger, telephone
and delivery expenses, (v) fees and disbursements of counsel for the Company,
(vi) fees and disbursements of all independent certified public accountants of
the Company (including expenses of any "cold comfort" letters required in
connection with this Agreement) and all other persons retained by the Company in
connection with such Registration Statement, (vii) fees and disbursements of one
counsel, other than the Company's counsel, representing all of the Holders of
Registrable Shares being registered, selected by a Majority-in-Interest of
Holders of the Registrable Shares being registered, or in the event of a Demand
Registration, selected by the Demanding Holders and reasonably satisfactory to a
Majority-in-Interest of Holders of the Registrable Shares being registered other
than the Demanding Holders, (viii) fees and disbursements of underwriters
customarily paid by the issuers or sellers of securities and (ix) all other
costs, fees and expenses incident to the Company's performance or compliance
with this Agreement. Notwithstanding the foregoing, any discounts, commissions
or brokers' fees or fees of similar securities industry professionals and any
transfer taxes relating to the disposition of the Registrable Shares by a
Holder, will be payable by such Holder and the Company will have no obligation
to pay any such amounts.
5. Underwriting Requirements.
F-7
<PAGE>
(a) Subject to Section 5(b) hereof, the Demanding Holders shall have
the right, by written notice, to require that any Demand Registration provide
for an underwritten offering.
(b) In the case of any underwritten offering pursuant to a Demand
Registration, the Demanding Holders shall select the institution or institutions
that shall manage or lead such offering, which institution or institutions shall
be reasonably satisfactory to the Company. In the case of any underwritten
offering pursuant to a Piggyback Registration, the Company shall select the
institution or institutions that shall manage or lead such offering. No Holder
shall be entitled to participate in an underwritten offering unless and until
such Holder has entered into an underwriting or other agreement with such
institution or institutions for such offering in such form as the Company and
such institution or institutions shall determine and such form is on terms
customary for such an offering.
(c) Each Holder participating in a Registration shall promptly
supply in writing such information as the Demanding Holders, the Company or the
underwriters reasonably request.
6. Indemnification.
(a) Indemnification by the Company. The Company shall indemnify and
hold harmless, to the full extent permitted by law, each Holder of Registrable
Shares whose Registrable Shares are covered by a Registration Statement or
Prospectus, the officers, directors and agents and employees of each of them,
each Person who controls each such Holder (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the fullest
extent lawful, from and against any and all losses, claims, damages,
liabilities, judgment, costs (including, without limitation, costs of
investigation, preparation and reasonable attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or based upon any untrue
or alleged untrue statement of a material fact contained in such Registration
Statement or Prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or based upon any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as the same are based upon
information furnished in writing to the Company by or on behalf of such Holder
expressly for use therein.
(b) Indemnification by Holder of Registrable Shares. In connection
with any Registration Statement in which a Holder is participating, such Holder
shall indemnify and hold harmless, to the full extent permitted by law, the
Company, its directors, officers, agents or employees, each Person who controls
the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act) and the directors, officers, agents or employees of such
controlling Persons, from and against all Losses arising out of or based upon
any untrue or alleged untrue statement of a material fact contained in such
Registration Statement or the related Prospectus or any amendment or supplement
thereto, or any preliminary prospectus, or arising out of or based upon any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, to the extent, but only
to the extent, that such untrue or alleged untrue statement or omission or
alleged omission is based upon any information furnished in writing by or on
behalf of such Holder to the Company expressly for use
F-8
<PAGE>
in such Registration Statement or Prospectus. Each Holder's indemnity
obligations under this Section 6 shall be limited to the total sales proceeds
(net of all underwriting discounts and commissions) actually received by such
Holder in connection with the applicable offering.
(c) Conduct of Indemnification Proceedings. If any Person shall be
entitled to indemnity hereunder (an "indemnified party"), such indemnified party
shall give prompt notice to the party from which such indemnity is sought (the
"indemnifying party") of any claim or of the commencement of any proceeding with
respect to which such indemnified party seeksindemnification or contribution
pursuant hereto; provided, however, that the delay or failure to so notify the
indemnifying party shall not relieve the indemnifying party from any obligation
or liability except to the extent that the indemnifying party has been
prejudiced by such delay or failure. The indemnifying party shall have the
right, exercisable by giving written notice to an indemnified party promptly
after the receipt of written notice from such indemnified party of such claim or
proceeding, to assume, at the indemnifying party's expense, the defense of any
such claim or proceeding, with counsel reasonably satisfactory to such
indemnified party; provided, however, that (i) an indemnified party shall have
the right to employ separate counsel in any such claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless: (1) the indemnifying
party agrees to pay such fees and expenses; (2) the indemnifying party fails
promptly to assume the defense of such claim or proceeding or fails to employ
counsel reasonably satisfactory to such indemnified party; or (3) the named
parties to any proceeding (including impleaded parties) include both such
indemnified party and the indemnifying party, and such indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it that are inconsistent with those available to the indemnifying
party or that a conflict of interest is likely to exist among such indemnified
party and any other indemnified parties (in which case the indemnifying party
shall not have the right to assume the defense of such action on behalf of such
indemnified party); and (ii) subject to clause (3) above, the indemnifying party
shall not, in connection with any one such claim or proceeding or separate but
substantially similar or related claims or proceedings in the same jurisdiction,
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one firm of attorneys (together with appropriate
local counsel) at any time for all of the indemnified parties, or for fees and
expenses that are not reasonable. Whether or not such defense is assumed by the
indemnifying party, such indemnified party shall not be subject to any liability
for any settlement made without its consent. The indemnifying party shall not
consent to entry of any judgment or enter into any settlement unless (i) there
is no finding or admission of any violation of any rights of any person and no
effect on any other claims that may be made against the indemnified party, (ii)
the sole relief provided is monetary damages that are paid in full by the
indemnifying party and (iii) such judgment or settlement includes as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release, in form and substance reasonably satisfactory to
the indemnified party, from all liability in respect of such claim or litigation
for which such indemnified party would be entitled to indemnification hereunder.
(d) Contribution. If the indemnification provided for in this
Section 6 is unavailable to an indemnified party in respect of any Losses (other
than in accordance with its terms), then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such Losses,
F-9
<PAGE>
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party, on the one hand, and such indemnified party, on the other
hand, in connection with the actions, statements or omissions that resulted in
such Losses as well as any other relevant equitable considerations. The relative
fault of such indemnifying party, on the one hand, and indemnified party, on the
other hand, shall be determined by reference to, among other things, whether any
action in question, including any untrue statement of a material fact or
omission or alleged omission to state a material fact, has been taken by, or
relates to information supplied by, such indemnifying party or indemnified
party, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent any such action, statement or omission. The
amount paid or payable by a party as a result of any Losses shall be deemed to
include any legal or other fees or expenses incurred by such party in connection
with any investigation or proceeding. The parties hereto agree that it would not
be just and equitable if contribution pursuant to this Section 6(d) were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in the two
immediately preceding sentences. Notwithstanding the provisions of this Section
6(d), an indemnifying party that is a Holder shall not be required to contribute
any amount which is in excess of the amount by which the total proceeds (net of
all underwriting discounts and commissions) received by such Holder from the
sale of the Registrable Shares sold by such Holder in the applicable offering
exceed the amount of any damages that such indemnifying party has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
7. Granting of Registration Rights. The Company shall not grant any
registration rights inconsistent with those granted hereunder or that give any
security holder a position with respect to cut-backs that are superior to the
Holders' position as granted herein, without the consent of a
Majority-in-Interest of the Holders of the Registrable Shares (voting together
as a single class).
8. Definitions. As used in this Exhibit F, the following terms shall
have the following meanings:
"Business Day" means any day that is not a Saturday, a Sunday or a
legal holiday on which banking institutions in the State of New York are not
required to be open.
"Common Stock" means the Company's Common Stock, $.001 par value and
any other securities into which such Common Stock may hereafter be changed.
"Delay Period" shall have the meaning set forth in Section 1(d)
hereof.
"Demand Notice" shall have the meaning set forth in Section 1(a)
hereof.
"Demand Registration" shall have the meaning set forth in Section
1(b) hereof.
"Demanding Holders" means the Holders delivering the Demand Notice
pursuant to Section 1(a) hereof.
F-10
<PAGE>
"Effectiveness Period" shall have the meaning set forth in Section
1(d) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Holders" means Societe Financiere D'Innovation Inc., a Quebec
corporation and any other holder of Registrable Shares or securities exercisable
for Registrable Shares.
"Interruption Period" shall have the meaning set forth in Section
3(k) hereof.
"Majority-in-Interest" of any group of Holders means holders of more
than 50% of the Registrable Shares held by such Holders.
"person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Piggyback Registration" shall have the meaning set forth in Section
2 hereof.
"Prospectus" means the prospectus included in any Registration
Statement (including a prospectus that discloses information previously omitted
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Shares covered by such Registration Statement and all other
amendments and supplements to such prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
"Registrable Shares" means (i) shares of Common Stock issued or
issuable to Holders; and (ii) any shares of Common Stock issued or issuable with
respect to the shares of Common Stock referred to in clause (i) above upon any
stock split, recapitalization or similar event; provided, however, that shares
of Common Stock shall only be registrable pursuant to this Agreement if and so
long as they have not been (i) sold to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction, or (ii)
sold in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act under Section 4(1) thereof so that all
transfer restrictions and restrictive legends with respect to such shares of
Common Stock are removed upon the consummation of such sale and the Company and
the seller and purchaser of such shares of Common Stock shall have received an
opinion of counsel for the seller, which shall be in form and content reasonably
satisfactory to the Company and the seller and purchaser and their respective
counsel, to the effect that such shares of Common Stock in the hands of the
purchaser are freely transferable without restriction or registration under the
Securities Act in any public or private transaction.
"Registration" means registration under the Securities Act of an
offering of Registrable Shares pursuant to a Demand Registration or a Piggyback
Registration.
F-11
<PAGE>
"Registration Statement" means any registration statement under the
Securities Act of the Company that covers any of the Registrable Shares pursuant
to the provisions of this Agreement, including the related Prospectus, all
amendments and supplements to such registration statement, including pre- and
post-effective amendments, all exhibits thereto and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Shelf Registration" means an offering on a delayed or continuous
basis pursuant to Rule 415 (or any similar rule that may be adopted by the SEC)
promulgated under the Securities Act.
"Stock Purchase Agreement" means the Stock Purchase Agreement, dated
as of November 29, 1999, between the Company and the Investor.
"underwritten registration or underwritten offering" means a
registration under the Securities Act in which securities of the Company are
sold to an underwriter for reoffering to the public.
Unless otherwise stated other capitalized terms contained herein
have the meanings set forth in the Stock Purchase Agreement.
9. Miscellaneous.
(a) Rules 144 and 144A. The Company covenants that it will file any
reports required to be filed by it under the Securities Act and the Exchange Act
so as to enable Holders holding Registrable Shares to sell such Registrable
Shares without registration under the Securities Act within the limitation of
the exemptions provided by (a) Rules 144 and 144A under the Securities Act, as
each such Rule may be amended from time to time, or (b) any similar rule or
rules hereafter adopted by the SEC. Upon the request of any such Holder, the
Company will forthwith deliver to such Holder a written statement as to whether
it has complied with such requirements.
(b) Termination. This Agreement and the obligations of the Company
and the Holders hereunder (other than Section 6 hereof) shall terminate on the
first date on which no Registrable Shares remain outstanding.
(c) Notices. All notices, demands, requests, or other communications
which may be or are required to be given, served, or sent by any party to any
other party pursuant to the Registration Rights set forth in this Exhibit F
shall be given in accordance with Section 14.4 of the Stock Purchase Agreement.
(d) Stock Purchase Agreement. This Exhibit F is deemed a part of the
Stock Purchase Agreement.
F-12
<PAGE>
Exhibit 10.16
SOFINOV
SOCIETE FINANCIERE
D'INNOVATION
FILIALE DE LA CAISSE DE DEPOT ET PLACEMENT DU QUEBEC
- --------------------------------------------------------------------------------
May 24, 1999
Mr. H. Frank Gibbard, CEO
H Power Corp.
60 Montgomery Street
Belleville, New Jersey 07109
USA
Dear Mr. Gibbard:
Sofinov has made loans and hereby offers to continue to lend to H Power Corp.
(the "Corporation") (the "Advance" or "Advances") up to US $5,000,000.00,
subject to the following terms and conditions:
1. The aggregate of all Advances to be made pursuant hereto shall not exceed US
$5,000,000.00.
2. Any Advance may be made by Sofinov upon written request by the Corporation,
which Advance shall be made at the sole and entire discretion of Sofinov.
3. Any Advance must be for at least US $150,000.00.
4. Each Advance shall bear interest at the rate of 8% per annum, calculated and
compounded monthly, both before and after default, and shall be payable on
demand.
5. Each Advance shall be evidenced by a promissory note payable on demand.
6. At any time prior to December 31, 1999 or the completion of an Initial Public
Offering, whichever the sooner, Sofinov shall be entitled to convert all or any
portion of the outstanding balance of the Advances and interest thereon into
common shares of the Corporation at a conversion rate of US $12.50 per common
share.
<PAGE>
7. If Sofinov exercises its election to convert, then in the event the
outstanding balance of Advances and interest thereon is less than US
$5,000,000.00 Sofinov shall be entitled to purchase additional shares of the
Corporation at US $12.50 per common share to bring Sofinov's purchase up to US
$5,000,000.00 during the period mentioned in paragraph 6 hereinabove.
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<PAGE>
Kindly please indicate your acceptance of the foregoing by signing below.
Yours Truly,
SOFINOV SOCIETE FINANCIERE D'INNOVATION INC.
Per: /s/ Denis Dionne
-----------------------------
Per: /s/ Marcel Paquette
-----------------------------
Accepted May 25, 1999
H POWER CORP.
Per: /s/ H. Frank Gibbard
-----------------------------
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<PAGE>
Exhibit 10.17
This Agreement is made on this 28th day of July 1999, between Duquesne
Enterprises, Inc., a Pennsylvania corporation ("Duquesne") and H Power Corp., a
Delaware corporation, with its principal offices at 60 Montgomery Street,
Belleville, NJ 07109 ("H Power").
Whereas, in 1996 Duquesne and H Power entered into a series of agreements
setting forth the terms and conditions of Duquesne's equity investment in H
Power and H Power's grant to Duquesne of an exclusive distributorship to market
H Power's fuel cell stationary power systems within the states of Pennsylvania,
Ohio and West Virginia; and
Whereas, H Power is negotiating an arrangement with ECO Fuel Cells, LLC, a
membership organization whose members are cooperative electric utilities
("ECO"); and
Whereas, the arrangement with ECO is twofold, being comprised of a substantial
equity investment in H Power and an exclusive distributorship to market H
Power's fuel cell stationary power systems within all the countries presently
served by ECO's members; and
Whereas, some of the terms requested by ECO appear to conflict with Duquesne's
and H Power's Securities Purchase and Distributorship Agreements; and
Whereas, Duquesne is willing to cooperate with H Power to amend potential
conflicts;
Now, Therefore, in consideration of these premises and other good and valuable
consideration, the Parties hereby agree as follows:
1. Notwithstanding the terms of Paragraph 4.5 of the H Power Securities
Purchase Agreement, dated March 25, 1996, whereby the sale in a private
transaction of H Power securities to any domestic utilities is prohibited,
Duquesne hereby grants H Power the right to sell its securities to ECO
Fuel Cells, LLC, its parent Energy Co-Opportunity, Inc. and its affiliate
The National Rural Utilities Cooperative Finance Corporation.
2. Notwithstanding the terms of the H Power Distributorship Agreement whereby
Duquesne was granted the exclusive distribution rights for the states of
Pennsylvania, Ohio and West Virginia for H Power's stationary power fuel
cell systems, Duquesne hereby relinquishes those rights but only to the
extent that they infringe on the rights granted to ECO Fuel Cells, LLC by
the H Power and the ECO Fuel Cells, LLC Product Operating Agreement.
3. Duquesne, at its option, may cancel the purchase order for 2 residential
fuel cell systems it has placed with H Power calling for the purchase of 2
residential fuel cell units at $100,000 per unit.
4. H Power agrees to amend Article IV B 3. (a) (i) of the Restated
Certificate of Incorporation to change the redemption price therein stated
from $16.50 per share to $18.00 per share.
<PAGE>
5. H Power agrees to issue to Duquesne common stock purchase warrants to
purchase 100,000 shares of H Power Common stock at $25.00 per share. Said
warrants shall expire July 31, 2001. Within 15 days from the date of
execution of this agreement said warrant, containing terms and conditions
acceptable to Duquesne, shall be delivered to Duquesne.
6. This Agreement embodies all the understandings and agreements of the
Parties and supersedes all prior and contemporaneous, oral or written
agreements or understandings relating to the matters referred to herein.
7. This Agreement may be amended or modified only by an instrument of equal
formality signed by duly authorized officers or representatives of the
respective Parties.
8. The validity, performance, construction, and effect of this Agreement will
be governed by the law of the State of New Jersey. This Agreement shall be
binding upon the Parties hereto and their respective executors,
administrators, heirs, assigns and successors in interest.
9. Notwithstanding anything else in this Agreement to the contrary, those
provisions of this Agreement which by their nature survive the termination
or expiration of this Agreement shall do so to the extent required thereby
for the full observation and performance by any or all of the Parties
hereto.
10. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, all of which shall constitute one
and the same Agreement.
IN WITNESS WHEREOF, H Power has caused this Agreement to be signed by its
corporate officer thereunto duly authorized, and Duquesne has signed this
Agreement, all as of the date first above written.
H POWER CORP. DUQUESNE ENTERPRISES, INC.
By: /s/ H. Frank Gibbard By: /s/ Rachel Lorey
-------------------------------- -------------------------------
CEO Vice President
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<PAGE>
Exhibit 10.18
SUBSCRIPTION AGREEMENT MADE AND ENTERED INTO IN THE CITY AND DISTRICT OF
MONTREAL, ON THE 2ND DAY OF MAY, 1997
BY AND BETWEEN: H POWER CORP., a Delaware corporation, having its head office
and principal place of business in the City of Belleville,
State of New Jersey,
(hereinafter referred to as "H Power")
PARTY OF THE FIRST PART
AND: 3362469 CANADA INC., a body politic and corporate, duly
incorporated according to the Canada Business Corporations
Act, having its head office and principal place of business in
the City of Montreal, Province of Quebec,
(hereinafter referred to as the "Corporation")
PARTY OF THE SECOND PART
SECTION 1 - PREAMBLE
1.1 WHEREAS H Power wishes to subscribe for shares from the treasury of the
Corporation at the price set forth hereinafter, the whole on the terms and
conditions hereinafter set out in this Agreement.
1.2 WHEREAS concurrently with the execution of this Agreement, the Investors
entered into a Subscription Agreement with the Corporation (the "Investors'
Subscription Agreement") providing for the subscription by the Investors for
shares from the treasury of the Corporation.
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
SECTION 2 - INTERPRETATION
2.1 Definitions. In this Agreement:
2.1.1 "Agreement" means this Subscription Agreement and all instruments
supplemental hereto or in amendment or confirmation hereof; "herein",
"hereof", "hereto", "hereunder" and similar expressions mean and refer to
this Agreement and not to any particular Section, subsection or other
subdivision; "Section", "subsection" or other subdivision of this
Agreement means and refers to the specified Section, subsection or other
subdivision of this Agreement;
<PAGE>
2.1.2 "Applicable Law" means any domestic or foreign federal, state,
provincial, county, local, municipal and regional statute, law,
ordinance, rule, regulation, restriction, regulatory policy or guideline,
by-law (zoning or otherwise), principles of common law, civil law or
equity, as well as Permits, Orders, decrees and rules (having the force
of law); and any judgments or injunctions issued, prolongated, approved
or entered thereunder;
2.1.3 "Business Day" means any day, other than a Saturday or Sunday or a day on
which the principal commercial banks in the Province of Quebec are not
open for business during normal banking hours;
2.1.4 "Class B Common Shares" has the meaning ascribed thereto in the Articles
of Incorporation of the Corporation;
2.1.5 "dollar", "dollars" and the sign "$", unless otherwise indicated, each
mean lawful money of the United States of America;
2.1.6 "Governmental Body" means (i) any domestic or foreign national, federal,
provincial, state, municipal or other government or body, (ii) any
multinational, multilateral or international body, (iii) any subdivision,
agent, commission, board, instrumentality or authority of any of the
foregoing governments or bodies, (iv) any quasi-governmental or private
body exercising any regulatory, expropriation or taxing authority under
or for the account of any of the foregoing governments or bodies, or (v)
any domestic, foreign, international, multilateral or multinational
judicial, quasi-judicial, arbitration or administrative court, tribunal,
commission, board or panel;
2.1.7 "H Power License Agreement" means the license agreement entered into
between the Corporation and H Power on the date hereof by which H Power
licenses and/or sub-licenses to the Corporation all of its technology in
connection with Stationary Fuel-Cell-Power Systems for South America,
Central America and North America (other than the States of Pennsylvania,
Ohio and West Virginia);
2.1.8 "H Power Shares" has the meaning ascribed thereto in subsection 3.1;
2.1.9 "Investors" means Societe Innovatech du Grand Montreal, Sofinov Societe
Financiere d'Innovation Inc. and 9042-0175 Quebec Inc., collectively, and
"Investor" means any of them;
2.1.10 "Investors' Subscription Agreement" has the meaning ascribed thereto in
subsection 1.2;
2.1.11 "Person" means an individual, corporation, company, cooperative,
partnership, trust, unincorporated association, entity with judicial
personality, Governmental Body; and pronouns when they refer to a Person
have a similarly extended meaning;
-2-
<PAGE>
2.1.12 "Prime Rate" means the interest rate quoted publicly by the Corporation's
regular bankers as the reference rate of interest for commercial demand
loans made in Canadian dollars and commonly known as such bank's prime
rate, as adjusted from time to time, on the basis of the Prime Rate in
effect on the first day of each month;
2.1.13 "Shareholders Agreement" means the Shareholders Agreement of even date
among the parties hereto and the Investors, setting forth the terms and
conditions which will govern the relationship of H Power and the
Investors as shareholders of the Corporation.
2.2 Gender. Any reference in this Agreement to any gender shall include both
genders and the neutral, and words used herein importing the singular number
only shall include the plural and vice versa.
2.3 Headings. The division of this Agreement into Sections, subsections and
other subdivisions, and the insertion of headings are for convenience of
reference only and shall not affect or be utilized in the construction or
interpretation of this Agreement.
2.4 Severability. Any Section, subsection or other subdivision of this Agreement
or any other provision of this Agreement which is, or becomes, illegal, invalid
or unenforceable shall be severed therefrom and shall be ineffective to the
extent of such illegality, invalidity or unenforceability and shall not affect
or impair the remaining provisions hereof, which provisions shall be severed
from an illegal or unenforceable Section, subsection or other subdivision of
this Agreement or any other provisions of this Agreement.
2.5 Entire Agreement. This Agreement, together with any other instruments to be
delivered pursuant hereto, constitute the entire agreement among the parties
pertaining to the subject matter hereof and supersede all prior agreements,
understandings, negotiations, and discussions, whether oral or written, among
any or all of the parties.
2.6 Amendments. No amendment of this Agreement shall be binding unless otherwise
expressly provided in an instrument duly executed by each of the parties hereto.
2.7 Waiver. Except as otherwise provided in this Agreement, no waiver of any of
the provisions of this Agreement shall be deemed to constitute a waiver of any
other provisions (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided in an instrument duly
executed by the parties.
2.8 Delays. When calculating the period of time within which or following which
any act is to be done or step taken pursuant to this Agreement, the day which is
the reference day in calculating such period shall be excluded. If the day on
which such delay expires is not a Business Day, then the delay shall be extended
to the next succeeding Business Day.
2.9 Preamble. The preamble hereof shall form an integral part of this Agreement.
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<PAGE>
2.10 Governing Law. This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the Province of Quebec and the laws of
Canada applicable therein.
SECTION 3 - SUBSCRIPTIONS
3.1 H Power Subscription. H Power hereby subscribes for 333,333 Class B Common
Shares (collectively the "H Power Shares") of the Corporation's share capital in
consideration of the signing by H Power of and the granting by H Power to the
Corporation of rights pursuant to the H Power License Agreement. The parties
hereby agree that the fair market value of such consideration is $5,000,000. The
Corporation hereby accepts the subscription of H Power for the H Power Shares
subject to the terms and conditions contained herein.
3.2 Payment and Issue of H Power Shares. H Power hereby agrees to sign the H
Power License Agreement and grant the rights contemplated thereby to the
Corporation on the date hereof, and the Corporation shall, upon the signature by
H Power of the H Power License Agreement, issue the H Power Shares to H Power
and deliver share certificates representing same.
SECTION 4 - REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of H Power. H Power hereby represents and
warrants to the Corporation and acknowledges and confirms that the Corporation
is relying upon such representations and warranties in connection herewith and
would not have entered into this Agreement without such representations and
warranties:
4.1.1 H Power is duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation;
4.1.2 H Power has the necessary corporate power and authority to execute this
Agreement and to perform its obligations hereunder. The execution of this
Agreement by H Power and the performance by H Power of its obligations
hereunder have been duly authorized by all necessary action on its part
and do not require any action or consent of, any registration with, or
notification to any Person, or any action or consent under any laws to
which H Power is subject;
4.1.3 the execution of this Agreement, the consummation of the transactions
contemplated herein, the performance by H Power of its obligations
hereunder and the compliance by it with this Agreement do not:
4.1.3.1 violate, contravene or breach, or constitute a default under, the
constating documents or by-laws of H Power;
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4.1.3.2 violate, contravene or breach, or constitute a default under any
contract, agreement, indenture, instruments, or commitment to which H
Power may be a party, or its properties may be subject, or by which it is
bound or affected; or
4.1.3.3 violate, contravene or breach any laws to which H Power is
subject;
4.1.4 neither H Power nor any of its respective shareholders, directors,
officers, employees or agents has employed or incurred any liability to
any broker, finder or agent for any brokerage fees, finder's fees,
commissions or other amounts with respect to this Agreement or any of the
transactions contemplated hereby except for the commitment fee payable by
H Power to the Investors.
4.2 Representations and Warranties of the Corporation. The Corporation hereby
represents and warrants as follows to H Power and acknowledges and confirms that
H Power is relying upon such representations and warranties in connection
herewith and would not have entered into this Agreement without such
representations and warranties:
4.2.1 the Corporation:
4.2.1.1 is duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation; and
4.2.1.2 has not carried on any business since its incorporation;
4.2.2 the Corporation has the necessary corporate power and authority to
execute this Agreement and to perform its obligations hereunder. The
execution of this Agreement by the Corporation and the performance by the
Corporation of its obligations hereunder have been duly authorized by all
necessary action on its part and do not require any actions or consent
of, any registration with, or notification to, any Person, or any action
or consent under any laws to which the Corporation is subject;
4.2.3 the execution of this Agreement, the consummation of the transactions
contemplated herein, the performance by the Corporation of its
obligations hereunder and the compliance by it with this Agreement do
not:
4.2.3.1 violate, contravene or breach, or constitute a default under, the
constating documents or by-laws of the Corporation;
4.2.3.2 violate, contravene or breach, or constitute a default under any
contract, agreement, indenture, instruments, or commitment to which the
Corporation may be a party, or its properties may be subject, or by which
it is bound or affected; or
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4.2.3.3 violate, contravene or breach any applicable laws to which the
Corporation is subject;
4.2.4 the authorized capital of the Corporation consists of an unlimited number
of Class A Common Shares and Class B Common Shares. After giving effect
to this Agreement and the Investors' Subscription Agreement, the only
shares of the Corporation which will be issued and outstanding will be
the H Power Shares, the Sofinov Shares (as defined in the Investors'
Subscription Agreement), the Innovatech Shares (as defined in the
Investors' Subscription Agreement) and the 9042-0175 Shares (as defined
in the Investors' Subscription Agreement), and upon receipt by the
Corporation of payment therefor in full, such shares will be issued and
outstanding as fully paid and non-assessable;
4.2.5 no Person has any agreement, option, right or privilege (whether
pre-emptive or contractual) capable of becoming an agreement for the
purchase from the Corporation of any securities of the Corporation, other
than as provided in the Investors' Subscription Agreement and in the
Shareholders Agreement;
4.2.6 neither the Corporation nor any of its respective directors, officers,
employees or agents has employed or incurred any liability to any broker,
finder or agent for any brokerage fees, finder's fees, commissions or
other amounts with respect to this Agreement or any of the transactions
contemplated hereby;
4.2.7 the Corporation is not a non-resident of Canada within the meaning of the
Income Tax Act (Canada).
4.3 Reliance on Representations and Warranties. Notwithstanding any
investigation conducted prior or subsequent to the date hereof, the parties
shall be entitled to rely upon the representations and warranties set forth
herein and the obligations of the parties with respect thereto shall survive the
execution of this Agreement for a period of two (2) years except for the
representations and warranties set forth in subsections 4.2.4 and 4.2.5 which
shall survive indefinitely.
SECTION 5 - INDEMNIFICATION
5.1 Definitions. As used in this Section 5:
5.1.1 "Additional Indemnity" means indirect damages;
5.1.2 "Claim" means any act, omission or state of facts and any demand, action,
suit, proceeding, investigation, arbitration, trial, claim, assessment,
judgment, settlement or compromise relating thereto which may give rise
to a right to indemnification under subsection 5.2 or 5.3 hereof;
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5.1.3 "Direct Claim" means any Claim by an Indemnified Party against an
Indemnifying Party which does not result from a Third Party Claim;
5.1.4 "Indemnifying Party" means any party obligated to provide indemnification
under this Agreement;
5.1.5 "Indemnified Party" means any party entitled to indemnification under
this Agreement;
5.1.6 "Indemnity Payment" means the aggregate amount of each Loss and
Additional Indemnity required to be paid pursuant to subsection 5.2 or
the amount of each Loss required to be paid pursuant to subsection 5.3
hereof;
5.1.7 "Loss" means any and all loss, liability, damage, cost, expense, charge,
fine, penalty or assessment, resulting from or arising out of any Claim,
including the costs and expenses of any action, suit, proceeding, demand,
assessment, judgment, settlement or compromise relating thereto and all
interest, punitive damages, fines and penalties and reasonable
attorneys', accountants' and experts' fees and expenses incurred in
connection therewith; and
5.1.8 "Third Party Claim" means any Claim asserted against an Indemnified Party
by any Person who is not a party to this Agreement.
5.2 Indemnification by the Corporation. The Corporation hereby agrees to
indemnify and save and hold harmless H Power from and against any Loss suffered
or incurred, directly or indirectly, by H Power as a result of, arising out of
or relating to:
5.2.1 any violation, contravention or breach of any covenant, agreement or
obligation of the Corporation under or pursuant to this Agreement or any
other document or certificate delivered to H Power by or on behalf of the
Corporation in connection therewith, as well as any Claim by any Person
containing allegations which, if true, would constitute such an event;
and
5.2.2 any incorrectness in, or breach of, any representation or warranty made
by the Corporation in this Agreement, or made or to be made in any other
document or certificate delivered or to be delivered to H Power by or on
behalf of the Corporation in connection therewith, as well as any Claim
by any Person containing allegations which, if true, would constitute
such an event.
5.3 Indemnification by H Power. H Power hereby agrees to indemnify and save and
hold harmless the Corporation from and against any Loss suffered or incurred,
directly or indirectly, by it as a result of, arising out of or relating to:
5.3.1 any violation, contravention or breach of any covenant, agreement or
obligation of such Investor under or pursuant to this Agreement or any
other document or certificate delivered
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to the Corporation by or on behalf of H Power in connection therewith, as
well as any Claim by any Person containing allegations which, if true,
would constitute such an event; and
5.3.2 any incorrectness in, or breach of, any representation or warranty made
by H Power in this Agreement, or made or to be made in any other document
or certificate delivered or to be delivered to the Corporation by or on
behalf of H Power in connection therewith, as well as any Claim by any
Person containing allegations which, if true, would constitute such an
event.
5.4 Payment and Interest. The Indemnifying Party shall reimburse, on demand, to
the Indemnified Party the amount of each Loss suffered or incurred by the
Indemnified Party and, in the event that subsection 5.5 applies, shall pay, on
demand, to the Indemnified Party the amount of the Additional Indemnity, the
whole as of the date that the Indemnified Party incurs such Loss, together with
interest on such amount(s) from the aforesaid date until payment in full at a
rate per annum equal to the Prime Rate, plus three (3) percentage points.
Interest shall be calculated and payable monthly on the last day of each month
during which any amount in respect of any Loss and/or any Additional Indemnity,
if applicable, remained unpaid, both before and after an arbitration award
and/or judgment, with interest on overdue interest calculated and payable at the
same rate.
5.5 Additional Indemnity. If the Corporation is the Indemnifying Party, in
addition to the reimbursement to the Indemnified Party of the amount of each
Loss suffered or incurred by the Indemnified Party as provided in subsection 5.4
hereof, the Indemnifying Party shall pay, on demand to the Indemnified Party the
Additional Indemnity, the whole as provided in subsection 5.4 hereof.
5.6 Notification. Promptly upon obtaining knowledge thereof, the Indemnified
Party shall notify the Indemnifying Party of each Claim which the Indemnified
Party has determined has given or could give rise to indemnification under this
Section 5, describing such Claim in reasonable detail. In circumstances where
the Indemnifying Party is notified of such Claim but not promptly, the
Indemnifying Party shall not be relieved from any duty to indemnify and save and
hold harmless which otherwise might exist with respect to such Claim unless (and
only to that extent) the omission to notify promptly materially prejudices the
ability of the Indemnifying Party to exercise its right to defend provided in
this Section 5.
5.7 Defense of Third Party Claims. The Indemnifying Party shall have the right,
after receipt of the Indemnified Party's notice under subsection 5.6 hereof with
respect to a Third Party Claim and upon giving written notice to the Indemnified
Party within ten (10) Business Days of such receipt, and subject to the rights
of any insurer or other third party having potential liability therefor, to
defend the Third Party Claim at its own cost and expense with counsel of its own
selection, provided that:
5.7.1 the Indemnified Party shall at all times have the right to fully
participate in the defense at its own expense;
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5.7.2 the Third Party Claim seeks only monetary damages and does not seek any
injunctive or other relief against the Indemnified Party;
5.7.3 the Indemnifying Party unconditionally acknowledges in writing its
obligation to indemnify and save and hold the Indemnified Party harmless
with respect to the Third Party Claim, if it is found that such
obligation exists;
5.7.4 legal counsel chosen by the Indemnifying Party is satisfactory to the
Indemnified Party, acting reasonably; and
5.7.5 if required to be delivered by Applicable Law or in order to prevent the
Indemnified Party from losing its right to proceed with its defense of
the Third Party Claim as a result of the intervention of the Indemnifying
Party, the Indemnifying Party delivers a letter of credit, surety bond or
such other security in an amount and in form and substance as is so
required. Amounts payable by the Indemnifying Party pursuant to a Third
Party Claim shall be paid in accordance with the terms of the settlement
or judgment, as applicable, but in any event prior to the expiry of any
delay for a judgment to become executory.
5.8 Waiver of Right to Defend Third Party Claims. If the Indemnifying Party
fails:
5.8.1 within fifteen (15) Business Days from receipt of the notice of a Third
Party Claim to give notice of its intention to defend the Third Party
Claim in accordance with subsection 5.7 hereof, or
5.8.2 to comply, at any time and in any material respect, with any of
subsections 5.7.1 through 5.7.5 (inclusively) hereof,
then the Indemnifying Party shall be deemed to have waived its right to defend
the Third Party Claim and the Indemnified Party shall have the right (but not
the obligation) to undertake the defense of the Third Party Claim and compromise
and settle the Third Party Claim on behalf, for the account and at the risk and
expense of the Indemnifying Party.
5.9 Direct Claims. If the Indemnifying Party fails to respond in writing to any
written notice of a Direct Claim given by the Indemnified Party pursuant to
subsection 5.5 hereof, and fails to make an Indemnity Payment to the Indemnified
Party within ten (10) Business Days thereof, the Indemnifying Party shall be
deemed to have rejected such Direct Claim, in which event the Indemnified Party
shall be free to pursue such rights, recourses and remedies as may be available
to it.
5.10 Deductible. Notwithstanding anything contained herein, neither of the
parties shall be entitled to indemnification pursuant to this Section 5 until
the aggregate amount of all sums payable by the Indemnifying Party in connection
with its indemnification obligations pursuant to this Section
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5 exceeds $100,000, after which point such minimum threshold will no longer
apply with respect to such Indemnifying Party.
5.11 Maximum Liability. Notwithstanding anything contained herein, the liability
of either Indemnifying Party pursuant to the provisions of this Section 5 shall
in no event exceed $5,000,000.
5.12 Right of Offset. Without in any way limiting the terms of this Section 5,
each party shall have the right to offset against all amounts payable from time
to time by it to any other party, howsoever arising, including under this
Agreement, any amount owing by such other party pursuant to the indemnification
obligations contained in this Agreement to the party intending to offset.
5.13 Cumulative Rights. The rights, recourses and remedies provided to an
Indemnified Party under this Section 5 are cumulative with any other right,
recourse and remedy such Indemnified Party may have or may hereafter acquire
under Applicable Law, and any right, recourse or remedy of such Indemnified
Party may be asserted completely against the Indemnifying Party, without regard
to the rights, recourses or remedies the Indemnified Party may have against any
other Person.
SECTION 6 - GENERAL PROVISIONS
6.1 Further Assurances. Each party, upon the request of the other, shall do,
execute, acknowledge and deliver or cause to be done, executed, acknowledged or
delivered all such further acts, deeds, documents, assignments, transfers,
conveyances, powers of attorney and assurances as may be reasonably necessary or
desirable to effect complete consummation of the transactions contemplated by
this Agreement.
6.2 Default Interest. Subject to subsection 5.4 hereof, if any party fails to
pay to the other party any amounts due hereunder within ten (10) days of the due
date, the party owing such money shall pay to the party owed such money, from
the date such amount was due, interest at the Prime Rate, plus three (3)
percentage points, compounded monthly and payable on demand.
6.3 Successors in Interest. This Agreement and the provisions hereof shall enure
to the benefit of and be binding upon the parties and their respective
successors and permitted assigns.
6.4 Arbitration. Any dispute or controversy between the Corporation and H Power
relating to any matter arising out of or connected with the rights and
obligations of the parties hereto under this Agreement shall be settled in
accordance with the provisions of Section 19 of the Shareholders Agreement.
6.5 Notices. All offers, acceptances, rejections, notices, requests,
authorizations, permissions directions, demands and other communications
hereunder shall be given in writing and shall be given by telecopier, or
delivered by hand, to the other party at the following addresses:
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if to H Power: H POWER CORP.
60 Montgomery Street
Belleville, New Jersey
07109, U.S.A.
Attention: the President
Telecopier: (201) 450-9850
if to the
Corporation: 3362469 CANADA INC.
c/o Lapointe Rosenstein
1250 Rene-Levesque Blvd. West
Suite 1400
Montreal, Quebec
H3B 5E9
Attention: Claude Bergeron
Telecopier: (514) 925-9001
with a copy in
all cases to: LAPOINTE ROSENSTEIN
1250 Rene-Levesque Blvd. West
Suite 1400
Montreal, Quebec
H3B 5E9
Attention: Claude Bergeron
Telecopier: (514) 925-9001
with a copy in
all cases to: BROCK FENSTERSTOCK ET AL
153 East 53rd Street
56th Floor
New York, NY 10022
Attention: David Robbins
Telecopier: (212) 371-5500
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or at such other address as a party may have previously indicated to the other
party in writing in conformity with the foregoing. Any such notice, request,
demand or other communication shall be deemed to have been received on the date
of delivery if delivered by hand, or the next Business Day immediately following
the date of transmission if sent by telecopier. The original copy of any notice
sent by telecopier shall be forwarded to the other party by registered mail,
receipt return requested.
6.6 Time of the essence. Time shall be of the essence in this Agreement.
6.7 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same document.
6.8 Language. The parties hereto state their express wish that this version of
this Agreement as well as all documentation contemplated hereby or pertaining
hereto or to be executed in connection herewith be drawn up in English; les
parties expriment leur desir explicite a l'effet que cette version de cette
convention de meme que tous documents envisages par les presentes ou y ayant
trait ou qui seront signes relativement aux presentes soient rediges en anglais.
IN WITNESS WHEREOF, the parties have signed at the place and on the
date first herein above mentioned.
H POWER CORP. 3362469 CANADA INC.
Per: /s/ H. Frank Gibbard Per: /s/ Marcel Paquette
------------------------------ ----------------------------
H. Frank Gibbard Marcel Paquette
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Exhibit 10.19
SHAREHOLDERS AGREEMENT MADE AND ENTERED INTO IN THE CITY AND
DISTRICT OF MONTREAL, ON THE 2ND DAY OF MAY, 1997
BY AND AMONG: H POWER CORP., a Delaware corporation, having its head office
and principal place of business in the City of Belleville,
State of New Jersey,
(hereinafter referred to as "H Power")
PARTY OF THE FIRST PART
AND: SOCIETE INNOVATECH DU GRAND MONTREAL, a body politic duly
constituted according to An Act respecting Societe Innovatech
du Grand Montreal, R.S.Q., ch. S-17.2, having its head office
and principal place of business in the City of Montreal,
Province of Quebec,
(hereinafter referred to as "Innovatech")
PARTY OF THE SECOND PART
AND: SOFINOV SOCIETE FINANCIERE D'INNOVATION INC., a body politic
and corporate, duly incorporated according to the Companies
Act (Quebec), having its head office and principal place of
business in the City of Montreal, Province of Quebec,
(hereinafter referred to as "Sofinov")
PARTY OF THE THIRD PART
AND: 9042-0175 QUEBEC INC., a body politic, duly incorporated
according to the Companies Act (Quebec), having its head
office and principal place of business in the City of
Montreal, Province of Quebec,
(hereinafter referred to as "9042-0175")
PARTY OF THE FOURTH PART
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AND: 3362469 CANADA INC., a body politic and corporate, duly
incorporated according to the Canada Business Corporations
Act, having its head office and principal place of business in
the City of Montreal, Province of Quebec,
(hereinafter referred to as the "Corporation")
PARTY OF THE FIFTH PART
SECTION 1 - PREAMBLE
1.1 WHEREAS the Corporation was incorporated pursuant to the CBCA by Certificate
and Articles of Incorporation dated April 4, 1997 in order to (i) carry on
scientific research and experimental development activities in respect of the
Technology and (ii) manufacture and commercialize stationary fuel-cell-power
systems of 2kW or more based on the Technology and all improvements thereon
throughout the Territory;
1.2 WHEREAS the Corporation will be based in the Montreal area;
1.3 WHEREAS the Corporation's activities will be conducted in the Montreal area;
1.4 WHEREAS pursuant to the Subscription Agreement and the H Power Subscription
Agreement, each of the Shareholders holds the following number and class of
Shares as of the date hereof:
Shareholder Number and Class
----------- ----------------
H Power 333,333 Class B Common Shares
Innovatech 133,333 Class A Common Shares
Sofinov 166,667 Class A Common Shares
9042-0175 33,333 Class A Common Shares
1.5 WHEREAS the parties hereto wish to determine their respective rights, duties
and obligations in and to the Corporation and towards one another.
<PAGE>
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NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
SECTION 2 - INTERPRETATION
2.1 Definitions. In this Agreement:
2.1.1 "Accepting Investor" has the meaning ascribed thereto at subsection
11.3;
2.1.2 "Accepting Investors" has the meaning ascribed thereto at subsection
11.4;
2.1.3 "Accepting Offeree Shareholders" has the meaning ascribed thereto at
subsection 13.3.2;
2.1.4 "Additional Offer" has the meaning ascribed thereto at subsection
13.3.2;
2.1.5 "Additional Shares" has the meaning ascribed thereto at subsection
11.1;
2.1.6 "Affiliate" or "Affiliated" has the meaning ascribed thereto in the
CBCA;
2.1.7 "Agreement" shall mean this Shareholders Agreement and all
instruments supplemental hereto or in amendment or confirmation
hereof; "herein", "hereof", "hereto", "hereunder" and similar
expressions mean and refer to this Agreement and not to any
particular Section, subsection or other subdivision; "Section",
"subsection" or other subdivision of this Agreement means and refers
to the specified Section, subsection or other subdivision of this
Agreement;
2.1.8 "Arm's Length" shall mean, in respect of any Person, a relationship
between such Person and any particular Person which would be an
arm's length relationship between such Person and the particular
Person within the meaning of the Income Tax Act (Canada);
2.1.9 "Auditors" shall mean Price Waterhouse;
2.1.10 "Board" shall mean the Board of Directors of the Corporation;
2.1.11 "Business Day" shall mean any day, other than a Saturday or Sunday
or a day on which the principal commercial banks in the Province of
Quebec are not open for business during normal banking hours;
2.1.12 "CBCA" shall mean the Canada Business Corporations Act;
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2.1.13 "Class A Common Shares" shall have the meaning ascribed thereto in
the Articles of Incorporation of the Corporation;
2.1.14 "Class B Common Shares" shall have the meaning ascribed thereto in
the Articles of Incorporation of the Corporation;
2.1.15 "Closing" shall mean the sale of the Offered Shares by the Offering
Shareholder pursuant to subsection 13.4;
2.1.16 "Closing Date" shall mean, pursuant to subsections 13.1 and 15.2,
the date which is sixty (60) days after the expiry of the last offer
period described therein in which the Purchaser agrees to purchase
the Offered Shares; provided, however, that if on the Closing Date
all Governmental Body and third party approvals, consents,
notifications and assurances (including, without limitation,
approvals under the Investment Canada Act) necessary to permit the
consummation of the transactions contemplated by the Closing have
been applied for but not yet received by the Purchaser, then the
Closing Date shall be postponed to the thirtieth (30th) day after
the receipt by the Purchaser of the last of the aforesaid approvals,
consents, notifications and assurances; notwithstanding the
foregoing, the Closing shall not be extended more than one hundred
and eighty (180) days after the date which was supposed to have been
the original Closing Date herein;
2.1.17 "Confidential Information" shall mean all information howsoever
received or obtained by the Shareholder from or through the
Corporation before or after the date hereof which the Corporation
identifies in writing as being confidential or proprietary at the
time of disclosure or within ten (10) days thereafter; provided,
however, that the phrase "Confidential Information" shall not
include information which:
2.1.17.1 is in the public domain through no fault of the Shareholder
or any of its former or current directors, officers or employees,
2.1.17.2 is properly within the legitimate possession of the
Shareholder prior to its disclosure hereunder and without any
obligation of confidence,
2.1.17.3 after disclosure, is lawfully received by the Shareholder
from another Person who is lawfully in possession of such
Confidential Information and such other Person was not restricted
from disclosing the information to the Shareholder,
2.1.17.4 is independently developed by the Shareholder through
Persons who have not had access to, or knowledge of, the
Confidential Information, or
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2.1.17.5 is approved by the Corporation in writing for disclosure
prior to its disclosure;
2.1.18 "Contesting Notice" has the meaning ascribed thereto at subsection
15.2;
2.1.19 "Declining Investors" has the meaning ascribed thereto at subsection
11.3;
2.1.20 "Declining Investor" has the meaning ascribed thereto at subsection
11.4;
2.1.21 "Declining Investors' Shares" has the meaning ascribed thereto at
subsection 11.3;
2.1.22 "Declining Investor's Shares" has the meaning ascribed thereto at
subsection 11.4;
2.1.23 "Dispute" shall mean any dispute or controversy between the
Corporation and any Shareholder relating to any matter arising out
of or connected with the rights and obligations of any Shareholders
vis-a-vis the Corporation or the Corporation vis-a-vis any
Shareholder under any Material Agreement;
2.1.24 "Equipment" has the meaning ascribed thereto in the License
Agreement;
2.1.25 "Final Accepting Investor" has the meaning ascribed thereto at
subsection 11.4;
2.1.26 "Final Declining Investor" has the meaning ascribed thereto at
subsection 11.4;
2.1.27 "Final Declining Investor's Shares" has the meaning ascribed thereto
at subsection 11.4;
2.1.28 "First Offer" has the meaning ascribed thereto at subsection 13.3.1;
2.1.29 "Governmental Body" shall mean (i) any domestic or foreign national,
federal, provincial, state, municipal or other government or body,
(ii) any multinational, multilateral or international body, (iii)
any subdivision, agent, commission, board, instrumentality or
authority of any of the foregoing governments or bodies, (iv) any
quasi-governmental or private body exercising any regulatory,
expropriation or taxing authority under or for the account of any of
the foregoing governments or bodies, or (v) any domestic, foreign,
international, multilateral or multinational judicial,
quasi-judicial, arbitration or administrative court, tribunal,
commission, board or panel;
2.1.30 "H Offer" has the meaning ascribed thereto at subsection 13.2;
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2.1.31 "H Power Subscription Agreement" shall mean the subscription
agreement dated the date hereof between the Corporation and H Power
setting forth inter alia the rights and obligations of H Power with
respect to its subscription for Class B Common Shares;
2.1.32 "Investors" shall mean Innovatech, Sofinov and 9042-0175, and all
transferees of Shares of Innovatech, Sofinov or 9042-0175 and all
transferees of Shares of such transferees, collectively, and
"Investor" shall mean any one of them;
2.1.33 "Involved Party" shall mean the Shareholder(s) involved in a
Dispute;
2.1.34 "License Agreement" shall mean the license agreement entered into
between H Power and the Corporation on the date hereof by which H
Power licenses and/or sub-licenses to the Corporation the Technology
for the production and commercialization of Products throughout the
Territory;
2.1.35 "Material Agreement" shall mean any agreement, other than this
Agreement, creating obligations between the Corporation and any
Shareholder;
2.1.36 "Neutral Party" shall mean the Shareholder(s) who is/are not
involved in a Dispute;
2.1.37 "New Meeting" has the meaning ascribed thereto at subsection 6.4;
2.1.38 "I Offer" has the meaning ascribed thereto at subsection 13.1;
2.1.39 "Offer" shall mean for purposes of (i) subsection 13.1, each of the
offers made by an Investor; and (ii) 13.2, each of the offers made
by H Power;
2.1.40 "Offered Shares" has the meaning, ascribed thereto at subsections
13.1.1 and 13.2;
2.1.41 "Offeree Shareholders" has the meaning ascribed thereto at
subsection 13.3;
2.1.42 "Offering Investor" has the meaning ascribed thereto at subsection
13.1;
2.1.43 "Offering Shareholder" has the meaning ascribed thereto at
subsection 13.3;
2.1.44 "Other Investors" has the meaning ascribed thereto at subsection
13.1.1;
2.1.45 "Other Shareholders" has the meaning ascribed thereto at subsections
13.1.4 and 13.2.1;
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2.1.46 "Partner" shall mean either the Investors collectively (the
Investors acting together and being considered as one party) or H
Power, and "Partners" shall mean both of them;
2.1.47 "Permitted Transferee" shall, in respect of a Shareholder, mean a
corporation, all of the shares of which are owned by such
Shareholder, both as registered owner and as beneficial owner;
2.1.48 "Person" shall mean an individual, corporation, company,
cooperative, partnership, trust, unincorporated association, entity
with judicial personality, Governmental Body; and pronouns when they
refer to a Person have a similarly extended meaning;
2.1.49 "Prime Rate" means the interest rate quoted publicly by the
Corporation's regular bankers as the reference rate of interest for
commercial demand loans made in Canadian dollars and commonly known
as such bank's prime rate, as adjusted from time to time, on the
basis of the Prime Rate in effect on the first day of each month;
2.1.50 "Prior Offers" has the meaning ascribed thereto at subsection
13.3.2;
2.1.51 "Products" has the meaning ascribed thereto in the License
Agreement;
2.1.52 "Proportion" shall mean a fraction, the numerator of which shall be
the number of Class A Common Shares or Class B Common Shares owned
by the particular Shareholder to whom reference is made and the
denominator of which shall be the total of the Class A Common Shares
and Class B Common Shares owned by all the Shareholders;
2.1.53 "Proportionate Share" shall mean, for purposes of subsection 13.3,
the amount of the Offered Shares determined by multiplying the
number of Shares offered times a fraction, the numerator of which is
the number of Class A Common Shares or Class B Common Shares held by
a particular Offeree Shareholder or Accepting Offeree Shareholder,
as the case may be, entitled to accept an offer and the denominator
of which is the total number of Class A Common Shares, and Class B
Common Shares held by all Offeree Shareholders or all Accepting
Offeree Shareholders, as the case may be, entitled to accept the
same offer;
2.1.54 "Purchaser" has the meaning ascribed thereto at subsection 13.4.6.1;
2.1.55 "Related" shall mean related as that term is used in the Income Tax
Act (Canada);
2.1.56 "Remaining Offered Shares" has the meaning ascribed thereto at
subsection 13.3.2;
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2.1.57 "Share(s)" shall mean any share(s) of any class, series or category
in the capital stock of the Corporation;
2.1.58 "Shareholder" shall mean any of the Shareholders;
2.1.59 "Shareholders" shall initially mean H Power, Innovatech, Sofinov and
9042-0175, and the definition shall be deemed to be modified from
time to time to (i) delete Persons who cease to hold Shares in
accordance with the terms of this Agreement, and (ii) add all
Persons who, from time to time, become holders of Shares and who
undertake in writing to be bound by the provisions of this
Agreement;
2.1.60 "Stock Exchange Agreement" shall mean the stock exchange agreement
dated the date hereof among the Investors and H Power, providing
inter alia for the exchange by the Investors of the Shares held by
them for shares in the capital stock of H Power;
2.1.61 "Subscription Agreement" shall mean the subscription agreement dated
the date hereof among the Corporation and the Investors setting
forth inter alia the rights and obligations of each of the Investors
with respect to its subscription for Class A Common Shares;
2.1.62 "TP Offer" has the meaning ascribed thereto at subsection 13.1 or
13.2, as the case may be;
2.1.63 "TP Offeror" has the meaning ascribed thereto at subsection 13.1 or
13.2, as the case may be;
2.1.64 "Third Party" has the meaning ascribed thereto at subsection 13.1.4
or 13.2.3, as the case may be;
2.1.65 "Technology" has the meaning ascribed thereto in the License
Agreement;
2.1.66 "Territory" has the meaning ascribed thereto in the License
Agreement;
2.1.67 "Trade Marks" has the meaning ascribed thereto in the License
Agreement;
2.1.68 "Unaccepted Additional Shares" has the meaning ascribed thereto at
subsection 11.5;
2.1.69 "Unaccepted offered Shares" has the meaning ascribed thereto at
subsection 13.1.2;
2.1.70 "Unusual Event" has the meaning ascribed thereto at subsection 15.
1;
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2.1.71 "Voting Shares" shall mean Shares to which are attached votes that
may be cast to elect directors of the Corporation, consisting of
Class A Common Shares and Class B Common Shares.
2.2 Gender. Any reference in this Agreement to any gender shall include both
genders and the neutral, and words used herein importing the singular number
only shall include the plural and vice versa.
2.3 Headings. The division of this Agreement into Sections, subsections and
other subdivisions, and the insertion of headings are for convenience of
reference only and shall not affect or be utilized in the construction or
interpretation of this Agreement.
2.4 Severability. Any Section, subsection or other subdivision of this Agreement
or any other provision of this Agreement which is, or becomes, illegal, invalid
or unenforceable shall be severed therefrom and shall be ineffective to the
extent of such illegality, invalidity or unenforceability and shall not affect
or impair the remaining provisions hereof, which provisions shall be severed
from an illegal or unenforceable Section, subsection or other subdivision of
this Agreement or any other provisions of this Agreement.
2.5 Entire Agreement. This Agreement together with any other instruments to be
delivered pursuant hereto, constitute the entire agreement among the parties
pertaining to the subject matter hereof and supersede all prior agreements,
understandings, negotiations, and discussions, whether oral or written, among
any or all of the parties.
2.6 Amendments. No amendment of this Agreement shall be binding unless otherwise
expressly provided in an instrument duly executed by the Shareholders and the
Corporation.
2.7 Waiver. Except as otherwise provided in this Agreement, no waiver of any of
the provisions of this Agreement shall be deemed to constitute a waiver of any
other provisions (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided in an instrument duly
executed by the parties.
2.8 Delays. When calculating the period of time within which or following which
any act is to be done or step taken pursuant to this Agreement, the day which is
the reference day in calculating such period shall be excluded. If the day on
which such delay expires is not a Business Day, then the delay shall be extended
to the next succeeding Business Day.
2.9 Conflict. This Agreement shall override the Schedules annexed hereto to the
extent of any inconsistency. If any conflict should appear between this
Agreement and the Articles, by-laws or resolutions of the Corporation, then the
provisions of this Agreement shall prevail.
2.10 Preamble. The preamble hereof shall form an integral part of this
Agreement.
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2.11 Governing Law. This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the Province of Quebec and the laws of
Canada applicable therein.
2.12 Language. This Agreement is executed by all the parties hereto in French
and only by the Corporation in English. The parties hereto expressly agree that
in the event of any misunderstanding, dispute or controversy (collectively, a
"Controversy") amongst them with respect to any of the provisions of this
Agreement, the French version of this Agreement will have precedence and be the
only version to apply and be used for the resolution of such Controversy. As an
exception only, and recognizing the principle that the French version shall have
precedence, if a Controversy arises between any of the parties hereto in
connection with the interpretation of given to any provision of this Agreement,
any court or arbitrator before which any such Controversy is referred for
resolution will be permitted to refer to the English version of this Agreement
in order to determine the intention of the parties at the time the provisions of
this Agreement were drafted.
SECTION 3 - COMMISSIONS, FEES, ETC.
3.1 Commissions. Except as provided in subsection 3.2 hereof, no fee, rebate,
commission or gain of whatsoever nature shall be earned by any of the
Shareholders as a result of that Shareholder obtaining financing for or on
behalf of the Corporation.
3.2 Commitment Fee. The parties hereto acknowledge and confirm that,
concurrently with the execution hereof, the Corporation shall pay to Sofinov a
commitment fee in the amount of $75,000.
SECTION 4 - OPERATIONS OF THE CORPORATION
4.1 Business of the Corporation. The Corporation shall not carry on any business
other than:
4.1.1 using the Technology that is relevant and necessary to conduct
research and development activities in connection with the design,
development and production of Products,
4.1.2 using the Equipment and Technology that is relevant and necessary
for the manufacture, integration, incorporation and assembly of all
the components of the Products, and
4.1.3 using the Technology and the Trade Marks that are relevant and
necessary for the marketing, promotion, advertising, sale,
servicing, distribution and merchandising of the Products,
all within the Territory and not elsewhere.
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SECTION 5 - BOOKS OF ACCOUNT
5.1 Books of account. Proper and correct books of account and such other books
as may be necessary for the business of the Corporation shall be kept, in which
shall be entered all such transactions as are usually entered and written in
books of account kept by persons engaged in businesses of a similar nature, and
the Shareholders or a chartered accountant appointed by any of them shall have
free access at all reasonable times upon reasonable prior notice to inspect,
examine and copy same.
SECTION 6 - DIRECTORS
6.1 Board and Quorum. So long as each Partner owns fifty percent (50%) of the
aggregate of the issued and outstanding Class A Common Shares and Class B Common
Shares, the Shareholders agree to vote their Shares each and every year at the
annual meetings of Shareholders or at any other meeting of Shareholders at which
directors shall be elected or appointed so as to cause six (6) directors to be
elected to the Board, three (3) of which shall be nominees of H Power and three
(3) of which shall be nominees of the Investors. Two (2) of the nominees of the
Investors shall be appointed by Sofinov and one (1) of such nominees shall be
appointed by Innovatech. In such circumstances, a quorum of a meeting of
directors shall be a majority of the elected directors provided that two (2)
directors appointed by H Power and two (2) directors appointed by the Investors
form part of such quorum and all decisions of the Board shall require the
unanimous approval of all the directors present at a meeting of the Board at
which a quorum was present and all decisions having the object or purposes set
forth in Section 3 of the By-Law referred to in Section 8 hereof shall be
submitted to the Shareholders pursuant to Section 3 of the By-Law referred to in
Section 8 hereof. In the event that the Board is unable to reach a unanimous
decision on any matter, such matter shall be submitted to the Shareholders.
6.2 Changes in the Board and Quorum. At such time as a Partner ceases to own at
least fifty percent (50%) of the aggregate of the issued and outstanding Class A
Common Shares and Class B Common Shares but both Partners own at least ten
percent (10%) of the aggregate of the issued and outstanding Class A Common
Shares and Class B Common Shares, the Shareholders agree to vote their Shares at
a special meeting of the Shareholders duly convened and to continue to do so
each and every year at the annual meetings of Shareholders or at any other
meeting of Shareholders at which directors shall be elected or appointed so as
to cause six (6) directors to be elected to the Board, with each Partner being
entitled to appoint, as nearly as practicable, a pro rata number of nominees to
the Board. In the event that the Investors are entitled to appoint three (3)
nominees to the Board, two (2) of such nominees shall be appointed by Sofinov
and one (1) of such nominees shall be appointed by Innovatech. In the event that
the Investors are entitled to appoint two (2) nominees to the Board, each of
Sofinov and Innovatech shall be entitled to appoint one (1) of such nominees. In
the event that the Investors are entitled to appoint one (1) nominee to the
Board, such nominee shall be appointed by Sofinov. In such circumstances, a
quorum of a meeting of directors shall be a majority of the elected directors
provided that one (1) director appointed by H
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Power and one (1) director appointed by the Investors form part of such quorum
and all decisions of the Board shall require the approval of a majority of the
directors present at a meeting of the Board at which a quorum was present. So
long as both Partners own at least forty percent (40%) of the aggregate of the
issued and outstanding Class A Common Shares and Class B Common Shares, all
decisions having the object or purposes set forth in Section 3 of the By-Law
referred to in Section 8 hereof shall be submitted to the Shareholders pursuant
to Section 3 of the By-Law referred to in Section 8 hereof. At such time as one
Partner ceases to own at least ten percent (10%) of the aggregate of the issued
and outstanding Class A Common Shares and Class B Common Shares, such Partner
shall cease to be entitled to the election of any of its nominee to the Board.
Notwithstanding anything contained in this Agreement, the Investors shall be
entitled to nominate at least one (1) director to the Board (which nominee shall
be appointed by Sofinov) for so long as the Investors collectively own at least
2.5% of the issued and outstanding shares of Common Stock (on a fully-converted
basis) in the capital stock of H Power.
6.3 Designation of Nominees. Each of the Partners shall advise the other Partner
and the Corporation in writing of the names of the individuals such Partner has
designated as its nominee to the Board as soon as practicable before each
meeting of Shareholders. In the event that any of the nominees to the Board of
an Investor is not an employee of such Investor or that any nominees to the
Board of H Power is not an employee of H Power or the Corporation, the
Corporation shall pay to such nominee a fee and traveling costs for his
attendance at each meeting of the Board. The fees payable to such nominees shall
be determined by the Board. In addition, the Corporation shall reimburse each
nominee to the Board that is an employee of H Power or an employee of an
Investor his reasonable out-of-pocket expenses (including traveling costs)
incurred in connection with his attendance at each meeting of the Board.
6.4 Absence of Quorum. In the event that a meeting of the Board cannot be held
because quorum was not obtained on two successive occasions, a third board
meeting may be convened for the same purposes (the "New Meeting"), upon notice
of at least seven (7) Business Days. The quorum at the New Meeting shall still
be the majority of the elected directors but there shall be no requirement that
any directors appointed by any Shareholder be present at the New Meeting. This
exception shall, however, only be valid for the New Meeting.
6.5 Replacement of a Director. In the event that a director(s) nominated by a
Shareholder dies or resigns or a Shareholder wishes to replace its nominee
director(s) on the Board, the Shareholders agree to vote their Shares at a
special meeting of Shareholders duly convened, or to sign any written
resolution, to remove and/or elect such new nominee director(s) as is(are)
designated by the Shareholder whose nominee died, resigned or was replaced. Such
Shareholder shall advise the other Shareholders and the Corporation in writing
of the name(s) of the individual(s) such Shareholder has designated as its new
nominee(s) to the Board as soon as practicable before the meeting of
Shareholders called for such purpose.
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6.6 Voting by Nominees. Each Shareholder shall at all times carry out and use
its best efforts to cause the Corporation and its nominees on the Board to carry
out the provisions of this Agreement, subject to the fiduciary obligations of
the directors. Each Shareholder shall duly and punctually do, or cause to be
done, all such things, including, without limitation, voting or causing to be
voted all the Shares held by the Shareholder as shall be necessary or desirable
to give effect to this Agreement. In the event any of the directors does not
vote at meetings of the Board in a manner consistent with this Agreement, all of
the Shareholders shall cause a meeting of Shareholders to be held and agree to
vote their Shares either to remove and/or replace such directors or take such
other actions as shall be necessary or desirable to give effect to this
Agreement.
6.7 Directors and Officers Insurance. The Corporation shall as soon as
reasonably practicable but not later than thirty (30) days from the date hereof
take out and thereafter maintain in full force at all times insurance covering
directors and officers liability.
6.8 Meeting of the Board. The parties hereto acknowledge and confirm that there
shall be a minimum of: (i) one (1) telephone, conference-call meeting of the
Board per month and (ii) four (4) physical meetings of the Board in each fiscal
year of the Corporation, to be held in Montreal, Quebec or such other place as
the Board may determine.
6.9 Executive Committee. The Board shall create, within 30 days after execution
of this Agreement, an executive committee consisting of the Chairman of the
Board and the President. The members of the executive committee will advise the
Board on the matters determined by the Board from time to time. Members of the
executive committee shall be entitled to the reimbursement of their reasonable
travel expenses related thereto.
6.10 Fiscal Year. The fiscal year of the Corporation shall terminate on May 31
or such other date as H Power may determine.
6.11 Proceeding Instituted Against the Corporation. In the event that a
Shareholder institutes an action against the Corporation in connection with a
Dispute, the Neutral Party shall be entitled to cause the Corporation to respond
to and defend such action which it alone, without the Involved Party, determines
is appropriate, and such determination by the Neutral Party will be valid and
binding upon the Corporation notwithstanding any provision herein to the
contrary.
6.12 Conflict of Interest. Notwithstanding any provision of this Agreement, any
decision, action or resolution of the Board relating to any decision related to
the consequences of a material breach of a Material Agreement in respect of a
Dispute between a Shareholder and the Corporation including, without limitation,
the sending of a default notice or a letter of demand, the referral of the
matter to a fairness committee, mediation or arbitration or the early
termination of such Material Agreement or relating to any decision not to renew
a Material Agreement shall be taken by the nominees on the Board appointed by
the Neutral Party. A quorum at a meeting of the Board called for such purpose
shall be a majority of the directors of the Board entitled to vote on such
decision,
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action or resolution as aforesaid and any such decision, action or resolution of
the Board shall be valid provided that it is approved by a majority of the
directors present at such a meeting at which a quorum was present. Without
limiting the generality of the foregoing, for purposes of clarity only, in no
circumstances and notwithstanding any provision hereof, no such decision, action
or resolution shall be made by the Shareholders or be subject to ratification or
approval of the Shareholders.
SECTION 7 - OFFICERS
7.1 Officers. The initial officers of the Corporation shall include H. Frank
Gibbard, as President, and Marcel Paquette, as Chairman of the Board and
Secretary, and such other officers as the Board may determine from time to time.
The President of the Corporation shall be its chief executive officer and shall
be responsible for the day-to-day management and operations of the Corporation
in a manner consistent with this Agreement, the Articles of Incorporation of the
Corporation, the by-laws of the Corporation and the operating and capital
budgets, subject, however, to overall supervision of the Board. As long as H
Power owns at least thirty-three and one-third percent (33 1/3 %) of the
aggregate of the issued and outstanding Class A Common Shares and Class B Common
Shares, the President shall be a nominee of H Power. The Board shall also
appoint a Chairman. As long as the Investors collectively own at least
thirty-three and one-third percent (33 1/3%) of the aggregate of the issued and
outstanding Class A Common Shares and Class B Common Shares, the Chairman of the
Board shall be a nominee of the Investors which nominee shall be determined
among the Investors.
SECTION 8 - ADOPTION OF BY-LAWS
8.1 Adoption of By-law. The Shareholders undertake to take whatever steps that
may be necessary to adopt a by-law of the Corporation in the form attached as
Schedule 8 hereto and they furthermore undertake that, as long as each Partner
owns at least forty percent (40%) of the aggregate of the issued and outstanding
Class A Common Shares and Class B Common Shares, they will not vote their Shares
or exercise any voting rights or otherwise make any decision or take any action
in any manner or capacity whatsoever, for the purpose of amending or repealing
such by-law, once adopted, unless they do so unanimously. This by-law, once
adopted, shall override, supersede and amend all previous by-laws, resolutions,
decisions or acts of the Corporation inconsistent therewith.
SECTION 9 - BANKERS AND BANKING ARRANGEMENTS
9.1 Bankers. The bankers of the Corporation shall be such bank or banks as may
be agreed upon from time to time by the Board.
9.2 Signatories. All drafts, cheques and bills of exchange for or on behalf of
the Corporation's bank accounts shall require the signatures of such individuals
as may be agreed upon from time to time by the Board.
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SECTION 10 - AUDITORS OF THE CORPORATION
10.1 Auditors. The auditors of the Corporation shall be the Auditors.
SECTION 11 - PREEMPTIVE RIGHT
11.1 Issuance of Class B Common Shares. Should the Board decide that the
Corporation requires additional funds and is unable to obtain such funds from
its bankers on commercially reasonable terms, then the Shareholders hereby agree
to cause the Corporation to raise such funds by issuing Class B Common Shares
from treasury in accordance with this Section 11. Each Shareholder shall have
preemptive rights with respect to the issue of such additional Class B Common
Shares (the "Additional Shares"), such that the Corporation shall not issue any
Additional Shares without offering to each Shareholder the right to subscribe
for its Proportion of the Additional Shares to be issued by the Corporation.
11.2 Notice to Shareholders. If the Corporation decides to issue any Additional
Shares, then the Corporation shall give detailed notice thereof to each
Shareholder. Each Investor may assign to the other Investors all or a portion of
its right to subscribe for its Proportion of the Additional Shares. Each
Shareholder shall have forty-five (45) days from the receipt of such notice
within which to notify the Corporation of its intent to exercise its right under
subsections 11.1 and 11.2 in connection with such issue of Additional Shares. If
a Shareholder fails to so notify the Corporation within the prescribed delay,
then such Shareholder shall be conclusively deemed to have waived its preemptive
right in connection with such issue of Additional Shares. If all of the
Shareholders waive or are deemed to have waived their preemptive rights in
connection with such issue of Additional Shares, then the Corporation shall be
free for a period of sixty (60) days thereafter to sell such Additional Shares
to any Person not Affiliated or Related to any Shareholder, on terms not more
favourable than those provided in the original offer of the Corporation to issue
Additional Shares, provided, however, that it is a condition precedent to such
sale that such Person has executed a counterpart of this Agreement in accordance
with subsection 20.6 and has agreed to be bound by the terms and conditions of
this Agreement and any other agreement executed by the parties in connection
with this Agreement.
11.3 Declining Investors. If only one of the Investors has agreed to exercise
its right under subsections 11.1 and. 11.2 hereof to subscribe for its
Proportion of the Additional Shares (the "Accepting Investor") and the other
Investors have, or are deemed to have, declined to exercise such preemptive
right (the "Declining Investors"), the Corporation shall, within seven (7) days
of the end of the above forty-five (45) day period, be required to offer by
written notice to the Accepting Investor all of the Additional Shares which
could have been subscribed for by the Declining Investors (the "Declining
Investors' Shares") before H Power is offered pursuant to subsection 11.5 its
pro rata share of such Declining Investors' Shares. The Accepting Investor shall
have thirty (30) days from the receipt of the notice mentioned above to notify
the Corporation of its intent to exercise its right to subscribe for the
Declining Investors' Shares, failing which the
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Accepting Investor shall be deemed to have waived its preemptive right in
connection with the issue of the Declining Investors' Shares.
11.4 Declining Investor. If two of the Investors have agreed to exercise their
right under subsections 11.1 and 11.2 hereof to subscribe for their respective
Proportion of the Additional Shares (the "Accepting Investors") and the other
Investor has, or is deemed to have, declined to exercise such preemptive right
(the "Declining Investor"), the Corporation shall, within seven (7) days of the
end of the above forty-five (45) day period, be required to offer by written
notice to the Accepting Investors all of the Additional Shares which could have
been subscribed for by the Declining Investor (the "Declining Investor's
Shares") before H Power is offered pursuant to subsection 11.5 its pro rata
share of such Declining Investor's Shares. The Accepting Investors shall, unless
otherwise agreed to between themselves, be entitled to subscribe for that
proportion of the Declining Investor's Shares which is equal to the number of
Class A Common Shares held by each of the Accepting Investors in relation to the
total number of Class A Common Shares held by both Accepting Investors. Each of
the Accepting Investors shall have thirty (30) days from the receipt of the
notice mentioned above to notify the Corporation of its intent to exercise its
right to subscribe for the Declining Investor's Shares, failing which it shall
be deemed to have waived its preemptive right in connection with the issue of
its proportion of the Declining Investor's Shares. If only one of the Accepting
Investors (the "Final Accepting Investor") agrees to subscribe for its
proportion of the Declining Investor's Shares in accordance with this subsection
11.4 and the other Accepting Investor (the, "Final Declining Investor") has
declined or is deemed to have declined its right to subscribe for its proportion
of the Declining Investor's Shares (the "Final Declining Investor's Shares") in
accordance with this subsection 11.4, then the Corporation shall, within seven
(7) days of the end of the above seven (7) day period, be required to offer by
written notice to the Final Accepting Investor all of the Final Declining
Investor's Shares before H Power is offered pursuant to subsection 11.5 its pro
rata share of such Final Declining Investor's Shares. The Final Accepting
Investor shall have thirty (30) days from the receipt of the notice mentioned
above to notify the Corporation of its intent to exercise its right to subscribe
for the Final Declining Investor's Shares, failing which the Final Accepting
Investor shall be deemed to have waived its preemptive right in connection with
the issue of the Final Declining Investor's Shares.
11.5 Shareholders Rights. If (i) one (1) or more Shareholders has or is deemed
to have declined its right to subscribe for its Proportion of the Additional
Shares, and, (a) in the event such Additional Shares were offered to the
Accepting Investor pursuant to subsection 11.3 and the Accepting Investor has or
is deemed to have declined to exercise its right to acquire all of the Declining
Investors' Shares, or (b) in the event such Additional Shares were offered to
the Accepting Investors pursuant to subsection 11.4 and the Accepting Investors
have or are deemed to have declined to exercise their rights to acquire all of
the Declining Investor's Shares or the Final Accepting Investor has or is deemed
to have declined to exercise its right to acquire all of the Final Declining
Investor's Shares, or (ii) if one (1) or more Shareholders has or is deemed to
have declined its right to subscribe for its Proportion of the Additional Shares
and subsections 11.3 and 11.4 are not applicable, then the Corporation, within
five (5) days of the end of the above forty-five (45) day
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period provided for in subsection 11.2 or within seven (7) days of the end of
the last seven (7) day period provided for in subsection 11.3 or 11.4, as the
case may be, shall be required to offer by written notice to the Shareholder(s)
who agreed to exercise its or their right under subsections 11.1 and 11. 2 in
connection with the initial issue of Additional Shares, to issue to such
Shareholder(s), in addition to any Additional Shares such Shareholder(s) agreed
to subscribe for, its or their pro rata share of the Additional Shares for which
any other Shareholder(s) has, or is deemed to have, waived its or their
preemptive right hereunder (collectively the "Unaccepted Additional Shares").
For the purposes of the preceding, each such Shareholder's pro rata share of the
Unaccepted Additional Shares shall, unless otherwise agreed to among themselves,
be equal to the proportion that the number of Class A Common Shares or Class B
Common Shares held by such Shareholder is to the aggregate of all the Class A
Common Shares and Class B Common Shares held by all Shareholders who agreed to
exercise their right under subsections 11. 1 and 11. 2 and shall take into
account the Additional Shares subscribed for pursuant to subsections 11.2, 11.3
and 11.4.
11.6 Notice for Unaccepted Additional Shares. Each Shareholder who has been
offered to subscribe for Unaccepted Additional Shares by the Corporation
pursuant to subsection 11.5 shall have thirty (30) days from the receipt of the
notice mentioned therein to notify the Corporation of its intent to exercise its
right to subscribe for its pro rata share of such Unaccepted Additional Shares,
failing which such Shareholder shall be deemed to have waived its preemptive
right in connection with the issue of such Unaccepted Additional Shares.
11.7 Sale to Any Person. The procedures set forth in subsections 11.5 and 11.6
shall be repeated, mutatis mutandis, with respect to any Unaccepted Additional
Shares which have not been subscribed for by a Shareholder until (i) all
Shareholders who have been made the most recent additional offer shall have or
be deemed to have declined it, or (ii) all Additional Shares (including
Unaccepted Additional Shares) which have been offered by the Corporation
pursuant to this Section 11 shall have been subscribed for by some or all of the
Shareholders. If upon completion of the above procedures some or all of the
Additional Shares which the Corporation intended to issue will not be purchased
by the Shareholders pursuant to the exercise of their preemptive rights, the
Corporation shall be free for a period of sixty (60) days thereafter to sell
such Additional Shares, which will not be purchased by a Shareholder, to any
Person not Affiliated or Related to any Shareholder, on terms not more
favourable than those provided in the original offer of the Corporation to issue
Additional Shares; provided, however, that it shall be a condition precedent to
such sale that such Person has executed a counterpart of this Agreement in
accordance with subsection 20.6 and has agreed to be bound by the terms and
conditions of this Agreement. The purchase of Additional Shares (including
Unaccepted Additional Shares) by one (1) or more Shareholders, shall be
suspended until the day of the sale by the Corporation to such Person of the
Additional Shares (including Unaccepted Additional Shares) which have not been
subscribed for by a Shareholder. If the Corporation is unable to sell such
Additional Shares which have not been subscribed for by a Shareholder to a
Person as provided for in this subsection 11.7, then the Corporation shall
forthwith advise the Shareholders of same in writing and any Shareholder who has
agreed to subscribe for Additional Shares (including Unaccepted Additional
Shares) shall have the
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right to decide not to purchase such Additional Shares by notifying the
Corporation in writing thereof within five (5) days of having been advised by
the Corporation that the Corporation was unable to sell such Additional Shares
to such Person.
11.8 Closing. Subject to subsection 11.7, the closing in connection with the
issuance of Additional Shares to any Shareholder or Person pursuant to
subsections 11.1 to 11.7 shall be held at the principal offices of the
Corporation at 10:00 a.m. on the date which is thirty (30) days after the expiry
of the applicable period under subsections 11.2 to 11.7, as the case may be, or
at such other place, at such other time or on such other date as the parties
thereto may agree. Payment for the Additional Shares being issued shall be made
in full at such closing. All payments shall be made by way of bank draft or
electronic fund transfer to the Corporation's account.
11.9 Percentage Held by Sofinov. If Sofinov would, pursuant to the exercise of
its rights under this Section 11, hold more than thirty percent (30%) of the
outstanding Voting Shares after such exercise, Sofinov shall be entitled to
designate a third party who may purchase the Additional Shares to which Sofinov
would otherwise be entitled (but such third party may only purchase that number
of Additional Shares which would result in Sofinov holding more than 30% of the
outstanding Voting Shares), provided that:
11.9.1 the third party is a Governmental Body of or controlled by the
Province of Quebec;
11.9.2 the third party complies with all applicable laws, including
securities laws of the relevant jurisdiction; and
11.9.3 the third party, prior to issuance of any Shares thereto, executes
and delivers an agreement in form and on terms satisfactory to the
directors of the Corporation, where such third party agrees to be
bound by the provisions of this Agreement as if it were an original
party to this Agreement and such third party shall thereupon have
the same rights, and shall be subject to the same obligations and
restrictions, of the Shareholders hereunder.
11.10 Rights Attached to the Additional Shares. All Additional Shares issued to
an Investor pursuant to the provisions of this Section 11 shall form part of the
shares entitled to be exchanged pursuant to the Stock Exchange Agreement at the
exchange rate provided in the Stock Exchange Agreement.
SECTION 12 - ALIENATION OF SHARES
12.1 Alienation Prohibited. Unless otherwise provided for in accordance with the
terms hereof or the Stock Exchange Agreement, no Shareholder shall transfer,
assign, cede, pledge, mortgage, hypothecate, charge or otherwise encumber,
alienate or dispose of in any manner
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whatsoever the whole or any part of its Shares without first obtaining the
written consent of the other Shareholders.
12.2 Transfers between Investors and to Permitted Transferee. Notwithstanding
any provision of this Agreement, any of the Investors may transfer all or part
of its Shares to the other Investor(s), to a Permitted Transferee or to any
Governmental Body of or controlled by the Government of Quebec, at any time and
from time to time without being subject to the other terms and conditions in
this Section 12 or in Section 13; provided however, none of the Investors shall
be permitted to transfer its Shares to a Permitted Transferee or any
Governmental Body of or controlled by the Government of Quebec unless such
Permitted Transferee or Governmental Body shall have first (i) executed a
counterpart of this Agreement in accordance with subsection 20.6, and (ii) have
agreed, in form and terms satisfactory to the legal counsel of the Corporation,
acting reasonably, that as long as it shall hold such Shares it shall be bound
by the terms and conditions of this Agreement, as if the Permitted Transferee or
the Governmental Body had been an original party to this Agreement as a
Shareholder and an Investor. In addition, 9042-0175 may transfer all or part of
its Shares to any Person, at any time and from time to time without being
subject to the other terms and conditions in this Section 12 or in Section 13;
provided however, 9042-0175 shall not be permitted to transfer its Shares to
such Person unless (i) H Power and the other Investors shall have each approved
in writing of such transfer within thirty (30) days of their receipt from
9042-0175 of a notice in connection therewith, it being understood that any
party so failing to respond to such notice within the said thirty (30) day
period shall be deemed to have approved of such transfer, (ii) such Person shall
have first executed a counterpart of this Agreement in accordance with
subsection 20.6, and (iii) such Person shall have agreed, in form and terms
satisfactory to the legal counsel of the Corporation, acting reasonably, that as
long as it shall hold such Shares it shall be bound by the terms and conditions
of this Agreement, as if such Person had been an original party to this
Agreement as a Shareholder and an Investor. The parties hereto hereby further
acknowledge and agree that the sole shareholder of 9042-0175 shall be entitled
to transfer all (and only all) of the shares held by such shareholder in the
share capital of 9042-0175 to any Person, at any time, provided that H Power and
the other Investors shall have each approved in writing of such transfer within
thirty (30) days of their receipt from the sole shareholder of 9042-0175 of a
notice in connection therewith, it being understood that any party so failing to
respond to such notice within the said thirty (30) day period shall be deemed to
have approved of such transfer.
SECTION 13 - RIGHTS OF FIRST REFUSAL AND PIGGY BACK
13.1 Alienation by Investors. Notwithstanding the prohibition, in accordance
with subsection 12.1, against any Shareholder transferring, assigning, ceding,
pledging, mortgaging, hypothecating, charging or otherwise encumbering,
alienating or disposing of in any manner whatsoever the whole or any part of its
Shares without first obtaining the written consent of the other Shareholders,
if, at any time after the date hereof, (i) one or more Investors (the "Offering
Investor") receives an irrevocable offer (the "TP Offer") from a Person acting
at Arm's Length to the Offering Investor (the "TP Offeror") to purchase for cash
(all of which is payable at closing)
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all (but not less than all) of the Shares held by the Offering Investor, which
TP Offer the Offering Investor wishes to accept, in accordance with the
procedures set forth hereinafter, or (ii) the Offering Investor wishes to sell
all (but not less than all) of the Shares held by the Offering Investor, the
Offering Investor shall make an irrevocable offer (the "I Offer") in accordance
with the procedures set forth hereinafter (the TP Offer and I Offer are
hereinafter referred to as the "Investor Offer"):
13.1.1 The Offering Investor shall first offer to the other Investors (the
"Other Investors") options to purchase such Shares (the "Offered
Shares") in accordance with subsection 13.3. Should one or more of
the Other Investors exercise such option so as to purchase all of
the Offered Shares, the Offering Investor shall sell to each of such
Other Investors the Offered Shares, for which it has delivered
notice(s) of exercise, in accordance with this Agreement and the
terms and conditions of the Investor Offer.
13.1.2 Unless one or more the Other Investors elects within the time
required to exercise the option pursuant to subsection 13.1.1 such
that all of the Offered Shares shall be purchased by the Other
Investors, then the Offering Investor shall offer the Offered Shares
which were unaccepted by the Other Investors (the "Unaccepted
Offered Shares") to H Power in accordance with the procedures set
forth in subsection 13.3.
13.1.3 Should H Power exercise its option pursuant to subsection 13.1.2 so
as to purchase all of the Unaccepted Offered Shares, the Offering
Investor shall sell to the Other Investors the Offered Shares for
which they have delivered notice of exercise and to H Power the
Unaccepted Offered Shares for which it has delivered notice of
exercise, in accordance with this Agreement and the terms and
conditions of the TP Offer, or the I Offer, as the case may be.
13.1.4 Unless the Other Investors and/or H Power (the "Other Shareholders")
have elected within the time required to exercise their options
pursuant to subsections 13.1.1 and/or 13.1.2 such that all of the
Offered Shares shall be purchased by the Other Shareholders, the
option of the Other Shareholders shall expire, none of the Other
Shareholders shall be eligible to purchase the Offered Shares, and
the Offering Investor shall be free for a period of ninety (90) days
from the end of the expiration of the last offer period to sell all
(but not less than all) of the Offered Shares to either (i) the TP
Offeror on the terms and conditions provided in the TP Offer, or
(ii) in the event of an I Offer, to a Person acting at Arm's Length
to the Offering Investor (the "Third Party") on the terms and
conditions provided in the I Offer; provided, however, that, in both
cases, it shall be a condition precedent to the right of the
Offering Investor to sell the Offered Shares that the TP Offeror or
Third Party has executed a counterpart of this Agreement in
accordance with subsection 20.6 and has agreed to be bound by the
terms and conditions of this Agreement, as if the TP Offeror or the
Third Party had been an original party to such agreement in place of
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the Offering Investor. If no sale takes place within the ninety (90)
day period referred to in this subsection, then the Offering
Investor shall not transfer the Offered Shares without again
following and being subject to this Section 13.
13.2 Alienation by H Power. Notwithstanding the prohibition, in accordance with
subsection 12.1, against any Shareholder transferring, assigning, ceding,
pledging, mortgaging, hypothecating, charging or otherwise encumbering,
alienating or disposing of in any manner whatsoever the whole or any part of its
Shares without first obtaining the written consent of the other Shareholders,
if, at any time on or after the date hereof, (i) H Power receives an irrevocable
offer (the "TP Offer") from a Person acting at Arm's Length to H Power (the "TP
Offeror") to purchase for cash (all of which is payable at closing) all (but not
less than all) of the Shares held by H Power (the "Offered Shares"), which H
Power wishes to accept, in accordance with the procedures set forth hereinafter,
or (ii) H Power wishes to sell all (but not less than all) of the Shares held by
H Power, H Power shall make an irrevocable offer (the "H Offer") in accordance
with the procedures set forth hereinafter (the TP Offer and H Offer are
hereinafter referred to as the "H Power Offer"):
13.2.1 H Power shall offer the Offered Shares to the Investors (together
the "Other Shareholders") in accordance with the procedures set
forth in subsection 13.3.
13.2.2 Should one or more of the Other Shareholders exercise options
pursuant to subsection 13.2.1 so as to purchase all of the Offered
Shares, H Power shall sell to each such Other Shareholder the
Offered Shares for which it has delivered notice(s) of exercise, in
accordance with this Agreement and the terms and conditions of the H
Power Offer.
13.2.3 Unless one or more of the Other Shareholders elects within the time
required to exercise its options pursuant to subsection 13.2.1 such
that all of the Offered Shares shall be purchased by the Other
Shareholders, the option of the Other Shareholders shall expire,
none of the Other Shareholders shall be eligible to purchase the
Offered Shares, and H Power shall be free for a period of ninety
(90) days from the end of the expiration of the last offer period,
to sell all (but not less than all) of the Offered Shares to either
(i) the TP Offeror on the terms and conditions provided in the TP
Offer, or (ii), in the event of a H Offer, to a Person acting at
Arm's Length to H Power (the "Third Party") on the terms and
conditions provided in the H Offer, provided, however, that, in both
cases, it sha1l be a condition precedent to the right of H Power to
sell the Offered Shares that the TP Offeror or Third Party has
executed a counterpart of this Agreement in accordance with
subsection 20.6 and has agreed to be bound by the terms and
conditions of this Agreement, as if the TP Offeror or Third Party
had been an original party to such agreement in place of H Power. If
no sale takes place within the ninety (90) day period referred to in
this subsection, then H Power shall not transfer the Offered Shares
without again following and being subject to this Section 15.
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13.2.4 In the event of a sale by H Power of its Offered Shares pursuant to
this subsection 13.2, H Power shall remain bound by the Stock
Exchange Agreement.
13.3 Procedure for Offers. Offers by the Offering Investor (pursuant to
subsection 13. 1) or H Power (pursuant to subsection 13.2) (the "Offering
Shareholder") to the Other Investors (pursuant to subsection 13. 1. 1), H Power
(pursuant to subsection 13.1.2) or the Other Shareholders (pursuant to
subsection 13.2. 1) (the "Offeree Shareholders") shall be conducted in
accordance with the following procedures:
13.3.1 The Offering Shareholder shall deliver a notice of its desire to
sell the Offered Shares in accordance with the terms of the Offer to
the Offeree Shareholders, and then each of the Offeree Shareholders
shall have an option to acquire its Proportionate Share of the
Offered Shares or, if subsection 13.1.2 applies, the Unaccepted
Offered Shares (the "First Offer"). Each of the Offeree Shareholders
who elects to exercise its option under this subsection shall
deliver a notice to the Offering Shareholder, each other Offeree
Shareholder and the Corporation indicating its exercise of the
option, such notice to be sent no later than thirty (30) days after
the date on which the notice is received, after which time the
option hereby granted to the Offeree Shareholders shall expire.
13.3.2 If after the First Offer or any Additional Offer made pursuant to
this subsection 13.3.2 (the "Prior Offers"), there remains Offered
Shares that the Offeree Shareholders have not accepted in the Prior
Offers (the "Remaining Offered Shares"), the Offering Shareholder
shall deliver a notice to the Offeree Shareholders that accepted the
last such offer (the "Accepting Offeree Shareholders"), of each such
Accepting Offeree Shareholder's option to purchase its Proportionate
Share of the Remaining Offered Shares (an "Additional Offer"). Each
Accepting Offeree Shareholders who elects to exercise its option
under this subsection shall deliver a notice to the Offering
Shareholder, each other Accepting Offeree Shareholder and the
Corporation indicating its exercise of the option, such notice to be
sent no later than ten (10) days after the date on which the notice
of the Additional Offer is received, after which time the option
hereby granted to the Accepting Offeree Shareholders shall expire.
The Offering Shareholder shall continue to make offers pursuant to
this subsection 13.3.2 until there is no Accepting Offeree
Shareholders or no Remaining Offered Shares.
13.4 Validity of Offer and Closing Provisions. Each offer made pursuant to
subsections 13.1 and 13.2 shall be in a writing signed by the Offering
Shareholder and addressed to the Offeree Shareholders and shall:
13.4.1 identify the subsection pursuant to which it is delivered and
identify and provide particulars of the Offered Shares;
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13.4.2 require that the sale of the Offered Shares be on the same terms and
conditions as the TP Offer (this provision shall not apply in the
event of an I Offer or a H Offer);
13.4.3 provide sufficient evidence that the TP Offeror is financially
capable to purchase the Offered Shares (this provision shall not
apply in the event of an I Offer or a H Offer);
13.4.4 state the purchase price per Offered Share, which purchase price
shall be payable in full, in cash, at Closing;
13.4.5 state the name and address of the TP Offeror to whom it proposes to
sell the Offered Shares, and include a copy of the TP Offer (this
provision shall not apply in the event of an I Offer or a H Offer);
13.4.6 provide that the Closing shall be held at the principal offices of
the Corporation at 10:00 a.m. on the Closing Date, or at such other
place, at such other time or on such other date as the parties
thereto may agree, in accordance with the following terms and
conditions:
13.4.6.1 at Closing, the Offering Shareholder shall deliver to the
Offeree Shareholders who have accepted an Offer (the "Purchaser")
certificates representing the Offered Shares being transferred,
which certificates shall be accompanied by a duly executed
assignment of the Offered Shares to the Purchaser;
13.4.6.2 payment for the Offered Shares being transferred shall be
made in full at Closing. All payments shall be made by way of bank
draft or electronic fund transfer to the Offering Shareholder's
account in Canada (in the United States if the Offering Shareholder
is H Power);
13.4.6.3 at Closing, the Offering Shareholder shall deliver to the
Purchaser a written warranty that:
13.4.6.3.1 there are no contractual or other restrictions on the
transfer of the Offered Shares being transferred (other
than the restrictions set out in the Articles of
Incorporation of the Corporation and in this Agreement);
13.4.6.3.2 the Offering Shareholder is the registered and
beneficial owner of the Offered Shares being transferred
with fall right, title and authority to transfer such
Offered Shares to the Purchaser, free and clear of all
claims, liens and other encumbrances whatsoever;
<PAGE>
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13.4.6.4 if there is more than one Purchaser, then the obligations
of each Purchaser in connection with the purchase of the Offered
Shares shall be independent of the obligations of the other
Purchaser in that regard. If, however, at the Closing one of the
Purchasers fails to pay for its Offered Shares but the other
Purchasers pay for their Offered Shares, then the Offering
Shareholder shall not be obliged to proceed with the Closing with
the other Purchasers;
13.4.6.5 at Closing, all necessary and proper corporate proceedings
required by counsel for the Purchaser, acting reasonably, shall be
taken for the transfer of the Offered Shares;
13.4.6.6 if the Purchaser fails at the Closing to pay for its
Offered Shares, provided that the Offering Shareholder has fulfilled
all of its obligations hereunder, then without prejudice to the
other rights of the Offering Shareholder, the purchase price for the
Offered Shares shall bear interest from the date of Closing until
paid in full at a rate of interest per annum equal to the Prime Rate
plus three percent (3%). Such interest shall be payable on demand;
13.4.6.7 at Closing, the Offering Shareholder shall deliver to the
Corporation signed resignations of all of its nominees as directors,
officers and employees of the Corporation unless waived by the
Corporation;
13.4.6.8 if the Offering Shareholder is bound by a guarantee whereby
such Offering Shareholder has guaranteed the payment of any debt or
liability of the Corporation or if the Offering Shareholder has
granted any advance to the Corporation, then the Purchaser shall use
all reasonable efforts to cause such guarantee to be released and
cancelled at Closing and/or such advance to be reimbursed at
Closing, failing which the Purchaser shall agree to indemnify and
hold the Offering Shareholder harmless from all claims, costs,
demands and actions suffered or incurred after the Closing resulting
from, arising out of, or relating to such guarantee or such
advances;
13.4.6.9 if any of the conditions set forth in this subsection
13.4.6 made for the exclusive benefit of the Purchaser are not
satisfied at the Closing, then the Purchaser may, at its option,
either:
13.4.6.9.1 refuse to proceed with the Closing, or
13.4.6.9.2 proceed with the Closing,
in either case without prejudice to its remedies and recourses
against the Offering Shareholder as a result of such condition not
being satisfied;
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13.4.6.10 however, if at Closing the Offered Shares being
transferred are not free and clear of all claims, liens and other
encumbrances whatsoever, the Purchaser may, without prejudice to any
other rights which it may have, purchase such Offered Shares subject
to such claims, liens and other encumbrances. In that event, the
Purchaser shall at the Closing assume all obligations and
liabilities with respect to such claims, liens and encumbrances and
the purchase price payable by the Purchaser for such Offered Shares
shall be satisfied, in whole or in part, as the case may be, by such
assumption. The amount so assumed shall reduce the purchase price
payable at Closing;
13.4.6.11 if the Offering Shareholder fails to complete the
transaction, then the amount which the Purchaser would otherwise be
required to pay to the Offering Shareholder at Closing may be
deposited by the Purchaser into an interest-bearing trust account in
the name of the Offering Shareholder at the bank branch used by the
Corporation. Upon making such deposit and giving the Offering
Shareholder notice thereof, the purchase of the Offering
Shareholder's Offered Shares by that Purchaser shall be deemed to
have been fully completed and all right, title, benefit and interest
in and to the Offered Shares be deemed to have been transferred and
assigned to and vested in the Purchaser. The Offering Shareholder
shall be entitled to receive the amount deposited in the trust
account upon satisfying the Offering Shareholder's obligations
pursuant to subsection 13.1;
13.4.6.12 the Offering Shareholder hereby irrevocably nominates,
constitutes and appoints each Purchaser as its true and lawful
mandatary and agent for, in the name of and on behalf of the
Offering Shareholder to execute and deliver in the name of the
Offering Shareholder all such instruments as may be necessary to
effectively transfer the Offered Shares being sold to the Purchaser.
The Offering Shareholder hereby ratifies and confirms, and agrees to
ratify and confirm, all that Purchaser may lawfully do or cause to
be done by virtue of such appointment and power of attorney;
13.4.6.13 it is recognized that serious and irreparable damage for
which monetary damages would not be an adequate remedy would result
to the Purchaser from the violation of the provisions of this
Section 13. Each party agrees that, in addition to any and all
remedies available to the Purchaser in the event of a violation of
such covenants, such Purchaser shall have the immediate remedy of
injunction or such other relief as may be decreed or issued by any
court of competent jurisdiction to enforce this Section 13.
13.5 Piggy Back - Investors. Provided that H Power owns more than 50% of the
issued and outstanding Shares, if H Power receives a TP Offer or makes a H Offer
pursuant to subsection 13.2, each Investor shall have the right, at such
Investor's option, in lieu of exercising options to purchase Offered Shares, to
require that all of the Shares held by such Investor be included in any
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sale to the TP Offeror or Third Party, together with the Offered Shares, on
terms and conditions which are identical to those offered by the TP Offeror to H
Power pursuant to the TP Offer or to those made pursuant to the H Offer, as the
case may be, and it shall be a condition precedent of the right of H Power to
sell any Offered Shares that the TP Offeror or Third Party purchase all the
Shares held by an Investor exercising the right granted in this subsection 13.5.
If an Investor wishes to exercise the right granted in this subsection 13.5,
then it shall do so by giving written notice thereof to H Power at any time
prior to the end of the expiration of the last offer period of H Power to sell
Offered Shares to the Investors. For greater certainty, the provisions of this
subsection 13.5 shall only apply if all of the Offered Shares are not purchased
by one or more of the Investors under subsection 13.2 and are sold to the TP
Offeror or the Third Party by H Power.
13.6 Piggy Back - Other Investors and H Power. Provided that Offering Investor
owns more than 50% of the issued and outstanding Shares, if the Offering
Investor receives a TP Offer or makes a I Offer pursuant to subsection 13.1,
each of the Other Investors and H Power shall have the right, at its option, in
lieu of exercising its option to purchase Offered Shares, to require that all of
the Shares held by it be included in any sale to the TP Offeror or Third Party,
together with the Offered Shares, on terms and conditions which are identical to
those offered by the TP Offeror to the Offering Investor pursuant to the TP
Offer or to those made pursuant to the I Offer, as the case may be, and it shall
be a condition precedent of the right of the Offering Investor to sell any
Offered Shares that the TP Offeror or Third Party purchase all the Shares held
by each of the Other Investors and H Power exercising the right granted in this
subsection 13.6. If any of the Other Investors or H Power wishes to exercise the
right granted in this subsection 13.6, then it shall do so by giving written
notice thereof to the Offering Investor at any time prior to the end of the
expiration of the offer period of the Offering Investor to sell Offered Shares
to each of the Other Investors and H Power. For greater certainty, the
provisions of this subsection 13.6 shall only apply if all of the Offered Shares
are not purchased by the Other Investors and/or H Power under subsection 13. 1
and are sold to the TP Offeror or the Third Party by the Offering Investor.
13.7 Corporation's Obligation. The Corporation shall record each transfer of
Shares; provided, however, that the Corporation shall refuse to record a
transfer of Shares made in contravention of this Agreement.
13.8 Offers Irrevocable. All Offers and TP Offers are irrevocable for the period
of time during which they are open for acceptance.
13.9 Share Certificates. The Corporation shall cause, and the Shareholders shall
vote their Shares to cause the Corporation to cause, all certificates for Shares
to be endorsed with the following inscription:
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"Ownership, alienation and encumbrance of the Shares represented by
this certificate are subject to the terms of the Unanimous
Shareholders Agreement of 3362469 Canada Inc. dated May 2, 1997, a
copy of which is on file at the registered office of 3362469 Canada
Inc."
13.10 Percentage held by Sofinov. The provisions of subsection 11.9 of this
Agreement shall apply mutatis mutandis in the event of the purchase by Sofinov
of any Offered Securities pursuant to subsections 13.1 and 13.2 hereof.
SECTION 14 - EXCHANGE RIGHTS
14.1 H Power hereby confirm that any Shares held at any time by an Investor
pursuant to this Agreement shall form part of the shares entitled to be
exchanged pursuant to the Stock Exchange Agreement at the exchange rate provided
in the Stock Exchange Agreement. Furthermore, in the event of a transfer by an
Investor of any of its Shares in conformity with this Agreement, H Power hereby
confirms that the transferee of such Shares shall benefit from those exchange
rights contemplated in the Stock Exchange Agreement at the exchange rate
provided in the Stock Exchange Agreement provided that such exchange rights
subsist at the time of the transfer.
SECTION 15 - FORCED LIQUIDATION
15.1 Unusual Event. The occurrence of any of the following events shall
constitute an unusual event (each an "Unusual Event"):
15.1.1 the institution of any proceeding for the liquidation, dissolution,
winding-up or other distribution of assets of H Power;
15.1.2 should either of H Power or the Corporation: (i) commit an act of
bankruptcy or become insolvent, (ii) make an assignment for the
benefit for its creditors, (iii) file or consent to the filing of a
petition in bankruptcy, a proposal, a notice of intention or
proceeding under the Bankruptcy and Insolvency Act (Canada) or the
United States Bankruptcy Code or otherwise take advantage of, or
consent to the filing of any proceeding under, any insolvency or
bankruptcy law, (iv) commence any proceeding relating to it or its
rights, assets or properties under any reorganization, arrangement,
readjustment, composition or liquidation law of any jurisdiction; or
should any proceeding of any type be instituted in any jurisdiction
in respect of the alleged insolvency or bankruptcy of either of
them;
15.1.3 should either of the Corporation or H Power cease to carry on its
business for a period of three (3) consecutive months;
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15.1.4 any event having a materially adverse impact upon the business of
the Corporation or H Power; and
15.1.5 any event having a materially adverse impact upon the ability of the
Corporation or H Power to carry on business in the ordinary course
including, without limitation, any event having a materially adverse
impact upon the Technology licensed pursuant to the License
Agreement which is necessary for the business of the Corporation.
15.2 Right to Liquidate. Upon the occurrence of an Unusual Event referred to in
paragraphs 15.1.1, 15.1.2 or 15.1.3, the Investors will be entitled, upon
written notice to H Power, to forthwith proceed with the winding-up, dissolution
or liquidation of the Corporation, the whole in accordance with Section 2 of the
Articles of Incorporation of the Corporation. Upon the occurrence of an Unusual
Event referred to in paragraphs 15.1.4 or 15.1.5, the Investors shall give
notice of such Unusual Event to H Power, setting forth in reasonable detail the
nature of such Unusual Event. H Power will have thirty (30) days from the date
of its receipt of the said notice to give the Investors notice (the "Contesting
Notice") that it contests the occurrence of such Unusual Event, in which event
the matter shall be definitively settled by arbitration in accordance with
subsection 19.1 hereof. In the event that (i) the arbitrator rules in favour of
the Investors or (ii) H Power fails to send the Contesting Notice to the
Investors within the said thirty (30) day period, then the Investors will be
entitled to forthwith proceed with the winding-up, dissolution or liquidation of
the Corporation, the whole in accordance with Section 2 of the Articles of
Incorporation of the Corporation. Upon such winding-up, dissolution or
liquidation of the Corporation, the License Agreement shall be terminated.
15.3 Deemed Consent. In the event of the winding-up, dissolution or liquidation
of the Corporation by the Investors in accordance with subsection 15.2 and
Section 2 of the Articles Incorporation of the Corporation, H Power, as the
holder of the Class B Common Shares (as well as any transferee of H Power), is
hereby deemed to have consented to such winding-up, dissolution or liquidation
of the Corporation and hereby irrevocably nominates, constitutes and appoints
each Investor as its true and lawful mandatary and agent for, in the name of and
on behalf of H Power (as well as any transferee of H Power) to execute and
deliver in the name of H Power (as well as any transferee of H Power) all such
instruments and resolutions as may be necessary to effectively wind-up, dissolve
or liquidate the Corporation. H Power (as well as any transferee of H Power)
hereby ratifies and confirms, and agrees to ratify and confirm, if required, all
that such Investor may lawfully do or cause to be done by virtue of such
appointment and power of attorney.
SECTION 16 - CONFIDENTIALITY
16.1 Confidentiality. Each of the Shareholders agrees to use, and to use its
best efforts to ensure that its authorized representatives use, the same degree
of care as such Shareholder uses to protect its own confidential information, to
keep confidential and not to make use of any Confidential Information in its
possession. Such Shareholder may disclose Confidential Information
<PAGE>
-29-
(i) to any shareholder, subsidiary or parent of such Shareholder for the purpose
of reporting on the activities of, or evaluating its investment in the
Corporation provided that prior to disclosure such shareholder, subsidiary or
parent agrees to be bound by the confidentiality provisions of this Section 16
and such other confidentiality provisions as may be requested by the Corporation
in its sole discretion; or (ii) to any TP Offeror, Third Party, Permitted
Transferee or Governmental Body for purposes related to the purchase or transfer
of such Shareholder's Shares pursuant to the provisions of Sections 12 or 13
hereof, provided that prior to disclosure such TP Offeror, Third Party,
Permitted Transferee or Governmental Body agrees to be bound by the
confidentiality provisions of this Section 16 and such other confidentiality
provisions as may be requested by the Corporation in its sole discretion.
16.2 Disclosure Required. Anything to the contrary herein notwithstanding,
disclosure of Confidential Information shall not be precluded if such disclosure
is in response to a valid order of a Governmental Body or is otherwise required
by law; provided, however, that the said Shareholders shall, if reasonably
possible, first have given notice thereof to the Corporation and shall have, as
appropriate:
16.2.1 fully cooperated in the Corporation's attempt, if any, to obtain a
"protective order" from the appropriate Governmental Body; or
16.2.2 attempted to classify such documents to prevent access by the
public, in accordance with the provisions of any law pertaining to
freedom of information.
16.3 Reasonableness of Covenants. The covenants set forth in subsections 16.1
and 16.2 are reasonable and valid in all respects and each Shareholder hereby
irrevocably agrees to waive (and irrevocably agrees not to raise) as a defense
any issue of reasonableness in any proceeding to enforce any such covenant.
SECTION 17 - FINANCIAL INFORMATION AND COVENANTS OF THE CORPORATION
17.1 Financial Information. The Corporation, at its costs, undertakes toward the
Shareholders to remit to the latter the following documents:
17.1.1 within one hundred and twenty (120) days after the end of each
fiscal year, a copy of the balance sheet of the Corporation as at
the end of such year, together with statements of earnings,
shareholders' equity, statement of changes in financial position and
cash flow of the Corporation for such year, setting forth in each
case in comparative form the corresponding figures for the preceding
fiscal year, all in reasonable detail and duly certified by the
Auditors. These financial statements shall be prepared in accordance
with Canadian generally accepted accounting principles applied on a
consistent basis;
<PAGE>
-30-
17.1.2 within thirty (30) days after the end of each of the first three (3)
fiscal quarters during each fiscal year, a balance sheet of the
Corporation as of the end of such fiscal quarter and statements of
earnings, shareholders' equity, statement of changes in financial
position and cash flow for such quarter and for the period from the
beginning of the then current fiscal year to the end of such
quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding period of the preceding
fiscal year, all in reasonable detail. The financial statements
delivered pursuant to this subsection need not be audited;
17.1.3 within thirty (30) days following the end of each month, complete
unaudited monthly financial statements, including the balance sheet,
the income statement and the statement of changes in financial
position as well as a comparison with the budgets established for
the same period, containing a detailed explanation of any
variations;
17.1.4 at or prior to the commencement of a fiscal year, an annual
operating budget, pro forma cash flow and pro forma income statement
for the Corporation;
17.1.5 promptly following the receipt thereof, any written report,
"management letter" and any other communication submitted to the
Corporation by its independent chartered accountants relating to the
business, prospects or financial condition of the Corporation;
17.1.6 within ninety (90) days of the end of each fiscal year of the
Corporation, a report prepared by the Auditors describing all
transactions between the Corporation and Persons not dealing at
Arm's Length with the Corporation during the preceding fiscal year;
17.1.7 within one hundred and eighty (180) days of the end of each fiscal
year of the Corporation, a copy of any tax return filed for such
fiscal year;
17.1.8 within thirty (30) days of the end of each month, a report prepared
by the controller of the Corporation detailing any payments due by
the Corporation to tax authorities for sales taxes, deduction at
source or for any other taxes;
17.1.9 within twenty (20) days of each Board or Shareholders meeting, a
copy of the minutes of such meeting; and
17.1.10 within a reasonable delay, any other reasonable information required
by a Shareholders.
17.2 Inspection by Shareholders. The Corporation shall permit each Shareholder,
at such Shareholder's expense, to visit and inspect the Corporation's
properties, to examine its books of
<PAGE>
-31-
accounts and records and to discuss the Corporation's affairs, finances and
accounts with its officers, all at such reasonable times as may be requested by
the Shareholder.
17.3 Compliance by Corporation. The Corporation hereby agrees to take all
necessary action in order to comply with this Agreement and to comply with all
applicable laws and regulations in respect of its corporate existence and the
conduct of its business including, without limitation, those laws and
regulations dealing with the protection of the environment, and further agrees
to obtain all permits, licenses and authorizations necessary for the conduct of
its business and the ownership of its properties.
17.4 Insurance. The Corporation hereby agrees to use its best efforts to
maintain in full force at all times adequate property insurance, business
interruption insurance and civil liability insurance, which insurance policies
shall be subject to the reasonable approval of the Board, and further agrees to
advise each of the Shareholders in writing of any loss or claim under such
insurance policies, immediately upon the occurrence of any loss or claim and
further agrees to advise each of the Shareholders in writing of any renewal of
such insurance with a copy of such renewed policy or non-renewal, as the case
may be.
SECTION 18 - NOTICES
18.1 Notices. All notices, requests, demands and other communications hereunder
shall be given in writing and shall be given by telecopier, or delivered by
hand, to the other party at the following addresses:
if to H Power: H POWER CORP.
60 Montgomery Street
Belleville, New Jersey
07109, U.S.A.
Attention: the President
Telecopier: (201) 450-9850
<PAGE>
-32-
if to Sofinov: SOFINOV SOCIETE FINANCIERE D'INNOVATION INC.
1981 McGill College Avenue
Montreal, Quebec
H3A 3C7
Attention: the President
Telecopier: (514) 847-2628
if to Innovatech: SOCIETE INNOVATECH DU GRAND MONTREAL
2020 University Avenue
Suite 1527
Montreal, Quebec
H3A 2A5
Attention: the President
Telecopier: (514) 864-4220
if to 9042-0175: 9042-0175 QUEBEC INC.
c/o Lapointe Rosenstein
1250 Rene-Levesque Blvd. West
Suite 1400
Montreal, Quebec
H3B 5E9
Attention: Claude Bergeron
Telecopier: (514) 925-9001
<PAGE>
-33-
if to the Corporation: 3362469 CANADA INC.
c/o Lapointe Rosenstein
1250 Rene-Levesque Blvd. West
Suite 1400
Montreal, Quebec
H3B 5E9
Attention: Claude Bergeron
Telecopier: (514) 925-9001
with a copy in all BROCK FENSTERSTOCK ET AL
cases to: 153 East 53rd Street
56th Floor
New York, NY
10022
Attention: David Robbins
Telecopier: (212) 371-5500
with a copy in all LAPOINTE ROSENSTEIN
cases to: 1250 Rene-Levesque Blvd. West
Suite 1400
Montreal, Quebec
H3B 5E9
Attention: Claude Bergeron
Telecopier: (514) 925-9001
or at such other address as the parties may have previously indicated to the
other parties in writing in conformity with the foregoing. Any such notice,
request, demand or other communication shall be deemed to have been received on
the date of delivery if delivered by hand, or the next Business Day immediately
following the date of transmission if sent by telecopier. The original copy of
any notice sent by telecopier shall be forwarded to the other party by
registered mail, receipt return requested.
<PAGE>
-34-
SECTION 19 - ARBITRATION
19.1 Arbitration. All disputes or controversies between the parties in respect
of the validity, interpretation or performance of the provisions of this
Agreement shall be definitively dealt with using the rules of conciliation and
arbitration of the International Chamber of Commerce, by one or more arbitrators
appointed in accordance with said rules, and to the exclusion of any courts
except for any provisional remedy including injunctive relief and seizure before
judgment which may be obtained from any court or tribunal, the whole in
accordance with said rules in force at the time of execution of this Agreement.
Any arbitration proceeding required pursuant to the terms thereof shall take
place in New York, New York and shall be conducted in both the English and
French language.
SECTION 20 - MISCELLANEOUS PROVISIONS
20.1 Press Release. Any press release or any public announcement, statement or
publicity with respect to the transaction contemplated in this Agreement shall
be made only with the prior consent of the Shareholders unless such release,
announcement, statement or publicity is required by law, in which case the
Shareholder required to make such release, announcement, statement or publicity
shall use its best efforts to obtain the approval of the other Shareholders to
the form, nature and extent of such disclosure, which approval shall not be
unreasonably withheld.
20.2 Further Documents. Each party upon the request of the others, shall do,
execute, acknowledge and deliver or cause to be done, executed, acknowledged or
delivered all such further acts, deeds, documents, assignments, transfers,
conveyances, powers of attorney and assurances as may be reasonably necessary or
desirable to effect complete consummation of the transactions contemplated by
this Agreement.
20.3 Successors and Assigns. This Agreement and the provisions hereof shall
enure to the benefit of and be binding upon the parties and their respective
successors and permitted assigns.
20.4 Transfer Contrary to this Agreement. Any purported transfer of Shares
contrary to the terms of this Agreement shall be null and void and have no legal
effect.
20.5 Time of the Essence. Time shall be of the essence of this Agreement.
20.6 Counterpart. No Person shall become a holder of any Shares without first
having executed a counterpart of this Agreement in accordance with Schedule
"20.6" annexed hereto. Each such counterpart so executed shall be deemed to be
an original and such counterparts together shall constitute one and the same
instrument.
<PAGE>
-35-
20.7 Originals. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same document.
20.8 Termination of Agreement. This Agreement shall remain in effect until
terminated by any party hereto by written notice upon the occurrence of any of
the following eventualities:
20.8.1 the bankruptcy or dissolution (whether voluntary or involuntary) of
the Corporation;
20.8.2 either Partner holds less than 2.5% of the issued and outstanding
Shares;
20.8.3 all issued and outstanding Shares are held by one Person only; or
20.8.4 by written agreement of all of the Shareholders.
20.9 Language. The parties hereto state their express wish that this version of
this Agreement as well as all documentation contemplated hereby or pertaining
hereto or to be executed in connection herewith be also drawn up in English; les
parties expriment leur desir explicite a l'effet que cette version de cette
convention de meme que tous documents envisages par les presentes ou y ayant
trait ou qui seront signes relativement aux presentes soient aussi rediges en
anglais.
IN WITNESS WHEREOF, the parties have signed at the place and on the
date first hereinabove mentioned.
H POWER CORP. SOFINOV SOCIETE FINANCIERE
D'INNOVATION INC.
Per: /s/ H. Frank Gibbard Per: /s/ Marcel Paquette
------------------------------- ------------------------------------
H. Frank Gibbard Marcel Paquette
Per: /s/ Denis Dionne
------------------------------------
Denis Dionne
<PAGE>
-36-
SOCIETE INNOVATECH DU GRAND 9042-0175 QUEBEC INC.
MONTREAL
Per: /s/ Bernard Coupal Per: /s/ Claude Bergeron
------------------------------- ------------------------------------
Bernard Coupal Claude Bergeron
3362469 CANADA INC.
Per: /s/ H. Frank Gibbard
-------------------------------
H. Frank Gibbard
<PAGE>
Shareholders Agreement
3362469 Canada Inc.
SCHEDULE "8"
BY-LAW 1997-1
1. Casting Vote. At no time and at no meeting whatsoever shall the Chairman or
President of the Corporation have any additional vote or any vote whatsoever in
addition to his ordinary vote as shareholder or as director, as the case may be,
and, more particularly, neither the Chairman nor President shall have a casting
vote in case of a tie.
2. Unanimous Shareholders Approval. As long as each Partner owns fifty percent
(50%) of the aggregate of the issued and outstanding Class A Common Shares and
Class B Common Shares of the Corporation, all resolutions and decisions of the
shareholders of the Corporation shall require unanimity. For the purposes
hereof, "Partner" means either: (i) the Sofinov Societe Financiere D'Innovation
Inc., Societe Innovatech Du Grand Montreal and 9042-0175 Quebec Inc.,
collectively (said parties being considered as one party) or (ii) H Power Corp.,
and "Partners" means both of them.
3. Matters Requiring Unanimous Shareholders Approval. Without limiting the
generality of the foregoing, as long as each Partner owns at least thirty-three
and one-third percent (33 1/3%) of the aggregate of the issued and outstanding
Class A Common Shares and Class B Common Shares of the Corporation, there shall
be no by-law , resolution or act of the shareholders of the Corporation, the
Board of Directors or officers of the Corporation having any of the following
objects or purposes unless favourably voted upon by all the shareholders of the
Corporation:
3.1 an increase or decrease in the number of directors of the
Corporation, except as provided for in the Shareholders Agreement
(the "Shareholders Agreement") dated May 2, 1997 among the Partners
and the Corporation;
3.2 the filing of Articles of Amendment by the Corporation for any
purpose including, without limitation, an increase or decrease or
alteration in the share capital of the Corporation or by the filing
of Articles of Amalgamation by the Corporation;
3.3 granting or repayment of any loan of a material amount to any
person, including, without limitation, shareholders, directors or
officers of the Corporation or persons Related (as defined in the
Income Tax Act (Canada)) or Affiliated (as defined in the Canada
Business Corporations Act) to shareholders, directors or officers or
the Corporation or investing any material amount in any such person;
3.4 guaranteeing any material obligations of any person in excess of
$1,000,000, including, without limitation, of shareholders,
directors or officers of the Corporation
<PAGE>
-2- Schedule 19.1
or persons Related or Affiliated to shareholders, directors or
officers of the Corporation;
3.5 the sale, issue or allotment of shares from the treasury of the
Corporation, or the granting of options allowing for the
subscription thereof, except as provided in the Shareholders
Agreement;
3.6 the purchase or sale of any material immoveable property for a price
in excess of $500,000 or any material intellectual property on
behalf of the Corporation;
3.7 an assignment under the Bankruptcy and Insolvency Act or a proposal
made thereunder, or recourse to any other measure designed for the
protection of insolvent debtors pursuant to any other legislation in
connection with insolvency or the judicial or voluntary winding-up
of the Corporation or the liquidation of the business or assets of
the Corporation, except as provided in Section 15 of the
Shareholders Agreement;
3.8 the entering into of any material loan agreement on behalf of the
Corporation, or the granting of any security in an amount in excess
of $250,000 by the Corporation on any of its movable or immovable
property;
3.9 the sale of the whole or a substantial part of the assets of the
Corporation or the granting of an option for same or the merger or
consolidation of the Corporation with or into another entity;
3.10 the conclusion of any material partnership or joint venture
agreement or the creation of a material subsidiary or acquisition of
all or any part of another business;
3.11 the declaration of dividends on any class of shares by the
Corporation;
3.12 the adoption, amendment, repeal or abrogation of any by-law of the
Corporation;
3.13 the change in the powers of the directors in general or any one of
them in particular;
3.14 the approval of the annual research and development budget of the
Corporation, the annual operating budget of the Corporation and the
annual capital budget of the Corporation, and any amendments
thereto. Should the shareholders of the Corporation refuse to
approve the operating budget or the capital budget for a given
fiscal year, the Corporation must conduct its business in conformity
with the budgets of the preceding fiscal year and the Corporation
may not incur capital expenses for the fiscal year then in progress
unless the above-mentioned budgets have been approved in accordance
with the present provisions;
<PAGE>
-3- Schedule 19.1
3.15 the removal or nomination of the auditors of the Corporation.
4. Decisions Requiring the Majority of Shareholders. Without limiting the
generality of the foregoing, in the event that a Partner owns less than
thirty-three and one-third percent (33 1/3%) of the aggregate of the issued and
outstanding Class A Common Shares and Class B Common Shares of the Corporation,
all resolutions and decisions of the shareholders of the Corporation shall only
require the approval of the shareholders representing more than fifty percent
(50%) of the aggregate of the issued and outstanding Class A Common Shares and
Class B Common Shares of the Corporation.
5. Transfer of Principal Office of the Corporation. So long as Societe
Innovatech Du Grand Montreal is a shareholder of the Corporation, any by-law,
resolution or act of the shareholders, directors or officers of the Corporation
having as an object or purpose the change or transfer of the principal office of
the Corporation outside the island of Montreal or the transfer of all or any
part of the business of the Corporation outside of the island of Montreal shall
only be valid if favourably voted upon at a meeting of the Board of Directors of
the Corporation, and ratified and confirmed by a resolution of the holders of
all the issued and outstanding Class A Common Shares and Class B Common Shares
of the Corporation.
6. Board or Shareholders Unable to Arrive at a Decision. If the Board of
Directors or the shareholders of the Corporation are unable to arrive at a
decision within their respective areas of competence or relating to the annual
marketing plan, the Corporation shall continue to conduct its business and
affairs in accordance with the most recent (i) resolutions of the Board of
Directors and the shareholders of the Corporation, (ii) approved annual budget
and (iii),the prior year's annual marketing plan shall be renewed mutatis
mutandis.
*** *** ***
<PAGE>
Shareholders Agreement
3362469 Canada Inc.
SCHEDULE "20.6"
THIS INSTRUMENT forms part of the Shareholders Agreement (the "Agreement")
made as of May 2, 1997 by and among H Power Corp., Sofinov Societe Financiere
D'Innovation Inc., Societe Innovatech du Grand Montreal, 9042-0175 Quebec Inc.
and 3362469 Canada Inc. which Agreement permits execution by counterpart. The
undersigned hereby acknowledges having received a copy of the said Agreement
(which is annexed hereto as Schedule "1") and, having read the said Agreement in
its entirety, hereby agrees that the terms and conditions of the said Agreement
shall be binding upon the undersigned (including, without limitation, the
obligations of confidentiality) as if the undersigned had been an original party
to the Agreement as a Shareholder (as such terms are defined in the Agreement)
and such terms and conditions shall enure to the benefit of and be binding upon
the undersigned, its successors and assigns.
IN WITNESS WHEREOF the undersigned has executed this instrument this _____
day of ______ [year]
[Shareholder]
per:_________________________________________
<PAGE>
Exhibit 10.20
STOCK EXCHANGE AGREEMENT MADE AND ENTERED INTO IN THE CITY AND
DISTRICT OF MONTREAL, ON THE 2ND DAY OF MAY, 1997
BY AND AMONG: H POWER CORP., a Delaware corporation, having its head office
and principal place of business in the City of Belleville,
State of New Jersey,
(hereinafter referred to as the "Company")
PARTY OF THE FIRST PART
AND: SOCIETE INNOVATECH DU GRAND MONTREAL, a body politic, duly
constituted according to An Act respecting Societe Innovatech
du Grand Montreal, R.S.Q., ch. S-17.2, having its head office
and principal place of business in the City of Montreal,
Province of Quebec,
(hereinafter referred to as "Innovatech")
PARTY OF THE SECOND PART
AND: SOFINOV SOCIETE FINANCIERE D'INNOVATION INC., a body politic,
duly incorporated according to the Companies Act (Quebec),
having its head office and principal place of business in the
City of Montreal, Province of Quebec,
(hereinafter referred to as "Sofinov")
PARTY OF THE THIRD PART
AND: 9042-0175 QUEBEC INC., a body politic, duly incorporated
according to the Companies Act (Quebec), having its head
office and principal place of business in the City of
Montreal, Province of Quebec,
(hereinafter referred to as "9042-0175")
PARTY OF THE FOURTH PART
SECTION 1 - PREAMBLE
1.1 WHEREAS concurrently with the execution of this Agreement (i) Innovatech,
Sofinov and 9042-0175 have subscribed for Class A Common shares in the capital
stock of 3362469
<PAGE>
Canada Inc. ("Canco") and (ii) the Company has subscribed for Class B Common
shares in the capital stock of Canco;
1.2 WHEREAS pursuant to Section 11 of the Shareholders Agreement (as defined
below), Innovatech, Sofinov, 9042-0175 and the Company may subscribe for
additional Class B Common shares in the capital stock of Canco;
1.3 WHEREAS the Company has agreed to grant to each of Innovatech, Sofinov and
9042-0175 the right to exchange their Class A Common and, if acquired, Class B
Common shares in the capital stock of Canco for shares of preferred stock in the
capital stock of the Company on the terms and conditions set out in this Stock
Exchange Agreement.
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
SECTION 2 - DEFINITIONS
2.1 Definitions. In this Agreement:
2.1.1 "Agreement" means this Stock Exchange Agreement and all instruments
supplemental hereto or in amendment or confirmation hereof; "herein",
"hereof", "hereto", "hereunder" and similar expressions mean and refer
to this Agreement and not to any particular Section, subsection or other
subdivision; "Section", "subsection" or other subdivision of this
Agreement means and refers to the specified Section, subsection or other
subdivision of this Agreement;
2.1.2 "Business Day" means any day, other than a Saturday or Sunday or a day
on which the principal commercial banks in the State of New Jersey or
the Province of Quebec are not open for business during normal banking
hours;
2.1.3 "Canco" has the meaning ascribed thereto in subsection 1.1;
2.1.4 "Canco Shares" means the Initial Canco Shares and the Subsequent Canco
Shares, collectively;
2.1.5 "Charges" means any security interest, hypothec, prior claim, lien,
charge, pledge, encumbrance, mortgage, adverse claim or title retention
agreement of any nature or kind whatsoever;
2.1.6 "Closing" means the closing of any exchange of any Canco Shares for
Investor Shares;
2.1.7 "Closing Date" means the date of each Closing;
-2-
<PAGE>
2.1.8 "Common Shares" means shares of the Company's common stock, having the
rights, privileges and preferences as set forth in the Amended and
Restated Articles of Incorporation of the Company dated May 2, 1997;
2.1.9 "dollar", "dollars" and the sign "$", unless otherwise indicated, each
mean lawful money of the United States of America;
2.1.10 "Duquesne Warrants" means the warrants currently held by Duquesne
Enterprises entitling such holder to purchase up to 200,000 shares of
the Company's common stock at any time up to December 31, 1997, at a
purchase price of $25 per share;
2.1.11 "Duquesne Exercise Period" means the period of time commencing on the
date hereof and ending ninety (90) days thereafter;
2.1.12 "Exchange Rate" means, at any time, the number of Investor Shares that
each Purchaser shall be entitled to receive for each Canco Share from
time to time pursuant to subsection 3.3;
2.1.13 "Exchange Right" has the meaning ascribed thereto in subsection 3.2;
2.1.14 "Initial Canco Shares" means in respect of any of the Purchasers, any
Class A Common shares in the capital stock of Canco held by such
Purchaser, including any Class " Common shares in the capital stock of
Canco issued to such Purchaser on the date hereof and any additional
Class A Common shares in the capital stock of Canco sold, assigned or
transferred to such Purchaser after the date hereof;
2.1.15 "Investor Shares" means shares of the Company's Series C Preferred
Stock, having the rights, privileges and preferences as set forth in the
Amended and Restated Articles of Incorporation of the Company dated May
2, 1997;
2.1.16 "Investors Rights Agreement" means the investors rights agreement of
even date among the Purchasers and the Company providing, inter alia,
for the obligation of the Company to register the Investor Shares of the
Purchasers, including those Investor Shares issuable to the Purchasers
upon the exercise of the Exchange Right;
2.1.17 "Notice of Exchange" has the meaning ascribed thereto in subsection 4.1;
2.1.18 "Person" is to be broadly interpreted and includes an individual, body
corporate, legal person, moral person, partnership, joint venture,
trust, association, incorporated organization, governmental authority or
any other entity recognized by law;
-3-
<PAGE>
2.1.19 "Purchasers" means Innovatech, Sofinov and 9042-0175 and all transferees
of Canco Shares of Innovatech, Sofinov and 9042-0175 (other than the
Company) in accordance with the Shareholders Agreement, collectively,
and "Purchaser" means any of them;
2.1.20 "SEC" means the United States Securities and Exchange Commission;
2.1.21 "SEC Documents" means the documents filed by the Company with the SEC at
any time;
2.1.22 "Securities Act" means the Securities Act of 1933 (United States), as
amended from time to time;
2.1.23 "Shareholders Agreement" means the shareholders agreement of even date
among the parties hereto and Canco setting forth the terms and
conditions which will govern the relationship of the shareholders of
Canco; and
2.1.24 "Subsequent Canco Shares" means the Class B Common shares in the capital
stock of Canco to be issued to any of the Purchasers pursuant to Section
11 of the Shareholders Agreement;
2.1.25 "US Subscription Agreement" means the subscription agreement of even
date between Sofinov and the Company setting forth the rights and
obligations of Sofinov with respect to its subscription for shares of
the Company's preferred stock.
SECTION 3 - AUTHORIZATION AND EXCHANGE OF CANCO SHARES
3.1 Authorization. Prior to the date hereof, the Company has authorized the
exchange and issuance, in accordance with the terms hereof, of up to 400,000
Investor Shares and 400,000 Common Shares issuable upon the conversion of such
Investor Shares.
3.2 Exchange of Canco Shares. Subject to the terms and conditions hereof, each
Purchaser shall have the right to exchange, at any time and from time to time,
all or part of its Canco Shares for Investor Shares at the Exchange Rate (the
"Exchange Right"). Notwithstanding the foregoing, in the event that any
Purchaser exercises its Exchange Right such that such Purchaser has exchanged
all of its Canco Shares, the Company shall be entitled, upon 30 Business Days'
written notice, to oblige the other Purchasers to exercise their Exchange Right
with respect to all of their remaining Canco Shares.
3.3 Exchange Rate. Subject to subsection 3.6, the Company shall issue to each
Purchaser upon delivery by such Purchaser of each Canco Share: (i) if such
exchange takes place at any time on or prior to May 2, 1998 and Duquesne
Enterprises has fully exercised the Duquesne Warrant during the Duquesne
Exercise Period, 1 Investor Share; (ii) if such exchange takes place at any time
on or prior to May 2, 1998 and Duquesne Enterprises has not fully exercised the
Duquesne Warrant during the Duquesne Exercise Period, 1.2 Investor Shares; and
(iii) if such exchange takes place at any time
-4-
<PAGE>
after May 2, 1998 but on or prior to May 2, 2001 (regardless of whether Duquesne
Enterprises has fully exercised the Duquesne Warrant during the Duquesne
Exercise Period), 1 Investor Share.
3.4 Expiry of Exchange Right. Notwithstanding the foregoing, the Exchange Right
shall become null and void if same is not exercised on or prior to May 2, 2001.
3.5 Deemed Issuance Date of Investor Shares. Upon the conversion into Common
Shares, in accordance with Section 6 of the Amended and Restated Articles of
Incorporation of the Company dated May 2, 1997, of any Investor Shares issued
upon the exchange of Canco Shares pursuant to subsection 3.2, the number of
Common Shares to be issued upon the conversion of such Investor Shares shall be
adjusted to take into account changes to and dilutive events in respect of the
Common Shares as contemplated in the Amended and Restated Articles of
Incorporation of the Company dated May 2, 1997 occurring from the date hereof
until the date such Investor Shares were issued.
3.6 Fractional Shares. No fractional Investor Shares shall be issued upon the
exchange of the Canco Shares pursuant to subsection 3.2. In calculating the
number of Investor Shares to be issued to any Purchaser upon such exchange, the
Company shall round down any fractional number of Investor Shares to the next
lowest whole number of Investor Shares.
SECTION 4 - EXCHANGE RIGHT
4.1 Closing. Each Closing shall be held at the offices of the Company in
Belleville, New Jersey, at 10:00 a.m., local time, ten (10) Business Days after
receipt by the Company of a properly completed and executed notice of exchange
in the form attached hereto as Schedule "4.1" (the "Notice of Exchange") on
behalf of any Purchaser or at such other time and place upon which the Company
and such Purchaser shall mutually agree.
4.2 Delivery. At each Closing, each Purchaser who has given a Notice of Exchange
shall surrender the certificate or certificates for the Canco Shares
contemplated therein duly endorsed. Thereupon, the Company shall issue and
deliver at such office to such Purchaser a certificate or certificates for the
number of Investor Shares to which such Purchaser is entitled pursuant to
subsection 3.3. Such exchange shall be deemed to have been made at the close of
business on the date of receipt by the Company of the Notice of Exchange and the
Purchaser entitled to receive Investor Shares issuable upon such exchange shall
be treated for all purposes as the record-holder of such Investor Shares on the
date of receipt by the Company of the Notice of Exchange.
4.3 Covenants of the Company Upon Closing. The Company hereby covenants and
agrees to cause all of the conditions hereinbelow set forth to be satisfied as
of the Closing Date, all of which conditions are agreed to be material and are
inserted for the exclusive benefit of such Purchaser, and may be waived in whole
or in part by such Purchaser, provided that any waiver to be effective must be
in writing and further provided that any such waiver by one Purchaser will be
deemed to apply to any other Purchaser exercising its Exchange Right as of such
Closing Date:
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4.3.1 the representations and warranties of the Company contained in this
Agreement shall be true and correct in all material respects as if made
at and as of the date of such Closing;
4.3.2 the Company shall have complied, in all material respects, with all its
covenants, obligations and agreements contained in this Agreement;
4.3.3 the Company shall have furnished to such Purchaser an opinion addressed
to it and dated the date of such Closing from United States counsel to
the Company, covering substantially the same matters as were covered in
the opinion furnished by such counsel to the Purchasers on the date
hereof;
4.3.4 the Company shall have furnished to such Purchaser an officer's
certificate certifying that the representations and warranties of the
Company contained in this Agreement are true and correct in all material
respects as if made at and as of the date of such Closing and confirming
that the Company has complied, in all material respects, with all its
covenants, obligations and agreements contained in this Agreement; and
4.3.5 the Company shall have delivered to such Purchaser all necessary
consents and approvals of all Persons required in order to consummate
the transactions contemplated by the exchange set forth in subsection
3.2 and this Section 4, including without limitation, the consent of any
lender of Canco.
4.4 Failure to Satisfy Covenants Upon Closing. In the event that any of the
covenants set forth in subsection 4.3 hereof shall not have been fulfilled
and/or performed as of the Closing Date, the Purchasers exercising their
Exchange Right as of such Closing Date, acting together, may, at their option,
either (i) advise the Company that they shall not proceed with the exchange of
its Canco Shares as contemplated in the Notice of Exchange; or (ii) proceed with
the exchange of such Canco Shares, in either case without prejudice to such
Purchasers' rights, recourses and remedies.
SECTION 5 - REPRESENTATIONS, WARRANTIES, ACKNOWLEDGMENTS AND COVENANTS OF THE
COMPANY
5.1 Representations and Warranties. The Company hereby represents and warrants
to each of the Purchasers, as of the date hereof, the following:
5.1.1 Organization, Good Standing and Qualification. The Company is duly
incorporated and organized, validly existing, and in good standing under
the laws of its jurisdiction of incorporation. The Company has all the
requisite power and authority to own, lease and operate its properties
and carry on its business as presently conducted. Neither the nature of
its business nor the location or character of any of its assets requires
the Company to be registered, licensed or otherwise qualified as an out
of state or foreign corporation or to be
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in good standing in any jurisdiction other than jurisdictions where it
is duly registered, licensed or otherwise qualified and in good standing
for such purpose being the jurisdictions described in Schedule 5.1.1
annexed hereto.
5.1.2 Corporate Power. The Company has all requisite legal and corporate power
and authority to execute and deliver this Agreement and to carry out and
perform its obligations under the terms of this Agreement. Without
limiting the generality of the foregoing, all approvals of the Company's
Board of Directors and shareholders necessary (i) for the authorization,
execution, delivery and performance of this Agreement by the Company,
(ii) for the authorization, issuance and delivery of the Investor Shares
pursuant to this Agreement and the Common Shares issuable upon the
conversion of such Preferred Shares and (iii) for the performance of all
of the Company's obligations hereunder has been obtained prior to the
execution hereof. This Agreement, when executed and delivered by the
Company, shall constitute a valid and binding obligation of the Company,
enforceable in accordance with its terms.
5.1.3 Reservation of shares. The Company has reserved up to 400,000 Investor
Shares for issuance hereunder and 400,000 Common Shares issuable upon
the conversion of such Investor Shares.
5.1.4 Registration Rights. Except as provided in Schedule 5.1.4 annexed
hereto, the Company is presently not under any obligation, and has not
granted any rights, to register any of the Company's presently
outstanding securities or any of its securities that may hereafter be
issued.
5.1.5 Offering Valid. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 6 hereof, the offer,
sale and issuance of the Investor Shares pursuant to this Agreement and
the Common Shares issuable upon the conversion of such Investor Shares
will be exempt from the registration requirements of the Securities Act
and all "blue" sky laws and will have been registered or qualified (or
are exempt from registration or qualification) under the registration,
permit or qualification requirements of all applicable securities laws.
5.1.6 Binding Agreement. This Agreement, when executed and delivered by the
Company, shall constitute a valid and binding obligation of the Company,
enforceable in accordance with its terms.
5.1.7 Issuance of Investor Shares and Common Shares. The issuance of Investor
Shares pursuant to this Agreement and the issuance of Common Shares
issuable upon the conversion of such Investor Shares does not and will
not be subject to any preemptive rights or rights of first refusal. When
issued in compliance with the provisions of this Agreement and the
Amended and Restated Articles of Incorporation of the Company dated May
2, 1997, as amended, the Investor Shares and the Common Shares issuable
upon the conversion of such Investor
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Shares will be validly issued, fully paid and non-assessable, and will
be free of all Charges and issued in compliance with all applicable
securities laws;
5.1.8 Consents. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body or any
Person is required for the consummation by the Company of the
transactions contemplated by this Agreement, except such consents,
approvals, authorizations, orders, registrations or qualifications which
have been obtained by the Company prior to the date hereof or which will
be obtained prior to an exchange, as applicable;
5.1.9 Compliance with Laws. The Company is not in violation, in any material
respect, of any law, ordinance, administrative or governmental rule or
regulation or court decree applicable to it, or is not in violation, in
any material respect, of any term or condition of, or has not failed to
obtain, any license, permit, franchise or other administrative or
governmental authorization necessary to the ownership of its property or
to the conduct of its business, which violation, noncompliance or
failure to obtain, individually or in the aggregate, will adversely
affect the consummation by the Company of the transactions contemplated
by this Agreement;
5.1.10 Compliance with Other Instruments. The execution and delivery of this
Agreement and the fulfillment of the terms hereof do not result in a
breach of, do not conflict with, and do not constitute a default under,
whether after notice or lapse of time of (i) any statute, rule or
regulation applicable to the Company; (ii) any court judgment, decree or
order binding the Company; or (iii) the constating documents and by-laws
of the Company.
5.1.11 Brokers or Finders. The Purchasers have not incurred and will not incur,
directly or indirectly, as a result of any action taken by the Company
any liability for any brokerage fees, finder's fees, or agents'
commissions or other similar charges in connection with this Agreement.
5.2 Representations and Warranties in the US Subscription Agreement. The Company
hereby agrees and confirms that the representations and warranties made by it in
favour of Sofinov pursuant to the US Subscription Agreement shall apply in
favour of each of the Purchasers as if made in this Agreement. To the extent
that any of such representations and warranties are incompatible with the
representations and warranties made by the Company in this Agreement, the
representations and warranties made by the Company in this Agreement shall
prevail. The Company hereby acknowledges and confirms that each of the
Purchasers is relying upon such representations and warranties in connection
herewith and would not have entered into this Agreement without such
representations and warranties. In addition, the Company hereby agrees and
confirms that the indemnity granted by it in favour of Sofinov pursuant to the
US Subscription Agreement shall apply in favour of each of the Purchasers as if
made in this Agreement.
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<PAGE>
5.3 Covenants of the Company. The Company hereby covenants as follows:
5.3.1 SEC Documents. As soon as practicable after the filing of any SEC
Documents, and in any event within twenty (20) days thereafter, the
Company will furnish each of the Purchasers with such SEC Documents;
5.3.2 Reservation of Stock. So long as any Canco Shares remain outstanding,
the Company will at all times reserve and keep available, solely for
issuance and delivery upon the exercise of the Exchange Right, all
Investor Shares issuable from time to time upon such exchange and all
Common Shares issuable upon the conversion of such Investor Shares;
5.3.3 Notice and Information Rights. The Company shall from the date hereof
deliver to each Purchaser such information and notices as the Company is
required to deliver to the holders of Common Shares of pursuant to the
Company's Amended and Restated Articles of Incorporation dated May 2,
1997, as amended, or otherwise;
5.3.4 Covenants Upon Closing. Without limiting the provisions of this
Agreement, the Company shall use its best efforts to fulfil the
covenants set forth in subsection 4.3 prior to any Closing.
SECTION 6 - REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS OF THE PURCHASERS
6.1 Representation and Warranties. Each Purchaser hereby, severally and not
jointly and severally, represents and warrants to the Company as follows:
6.1.1 Investment. It is acquiring the right to acquire the Investor Shares in
exchange for Canco Shares as provided in this Agreement for its own
account, for investment purposes, and not with a view towards, or for
sale in connection with, any distribution thereof other than to any of
the other Purchasers. It has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks
of acquiring the right to acquire the Investor Shares in exchange for
Canco Shares as provided in this Agreement, and has been afforded prior
to the date hereof the opportunity to ask questions of, and to receive
answers from, the Company and to obtain any additional information
necessary for it to make an informed investment decision with respect to
the acquisition of the right to acquire the Investor Shares in exchange
for Canco Shares as provided in this Agreement; provided, however, that
nothing in this paragraph shall be deemed to vitiate or limit
representations, warranties, covenants and indemnifications of the
Company contained in this Agreement.
(A) With the exception of 9042-0175, it is an "accredited investor"
within the meaning of Rule 501 under the Securities Act, and (B) by
reason of its business and financial experience, and the business and
financial experience of those persons retained by it to advise it with
respect to its acquisition of the right to acquire the Investor Shares
in exchange
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<PAGE>
for Canco Shares as provided in this Agreement, it together with such
advisors, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and
risks of such acquisition, is able to bear the economic risk of a
complete loss of the investments represented by such acquisition. It has
made its own investigation whether or not to acquire the right to
acquire the Investor Shares in exchange for Canco Shares as provided in
this Agreement and in making its decision to so acquire is not in any
way relying on the fact that any other person has decided to purchase
any Common Shares or to invest in the Company.
It has satisfied itself as to its compliance with and is to its
knowledge in compliance with the full observance of the laws of the
Province of Quebec in connection with the transactions contemplated by
this Agreement, including (A) the legal requirements for the acquisition
of the right to acquire the Investor Shares in exchange for Canco Shares
as provided in this Agreement, (B) any foreign exchange restrictions of
such jurisdictions applicable to such acquisition, (C) any governmental
consents of such jurisdictions or other consents that are required to be
obtained by it prior to such acquisition and consummation, and (D) the
income tax and other tax consequences, if any, which may be relevant to
the purchase, holding, redemption sale or transfer of Investor Shares
issuable in accordance with this Agreement. Its continued beneficial
ownership of the right to acquire the Investor Shares in exchange for
Canco Shares as provided in this Agreement will not violate any
applicable securities or other laws of the Province of Quebec.
6.1.2 Relations. It is not a "U.S. Person" as defined by Rule 902 of
Regulation S promulgated under the Securities Act.
6.1.3 No Public Market. Each Purchaser understands that no public market now
exists for any of the securities issued by the Company and that the
Company has made no assurances that a public market will ever exist for
the Company's securities.
6.1.4 Tide to Canco Shares. It is upon the date hereof and shall be upon each
Closing Date the lawful owner (both beneficially and of record) of its
Canco Shares. It has upon the date hereof and will have upon each
Closing Date good and marketable title to the Canco Shares and the
absolute right, power and capacity to transfer and deliver the Canco
Shares to the Company pursuant to this Agreement, free and clear of all
Charges.
6.1.5 Brokers or Finders. The Company has not incurred and will not incur,
directly or indirectly, as a result of any action taken by it any
brokerage fees, finder's fees, agents' commissions or other similar
charges in connection with this Agreement.
6.2 Acknowledgments. Each Purchaser hereby makes the following
acknowledgments:
6.2.1 Registration. It understands that the right to acquire the Investor
Shares as provided in this Agreement and the Common Shares issuable upon
the conversion of such Investor Shares
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<PAGE>
has not been, and, except to the extent provided in the Investors Rights
Agreement, will not be, registered under the Securities Act or
applicable state securities laws, and is being extended to the Purchaser
pursuant to specific exemptions from the registration provisions of the
Securities Act and such laws, the availability of which depends upon,
among other things, the bona fide nature of the investment intent and
the accuracy of its representations as expressed in paragraph 6.1.1. It
also understands that Rule 144 promulgated under the Securities Act,
which provides for certain limited resales of unregistered securities,
is not presently available with respect to its right to acquire the
Investor Shares as provided in this Agreement, the Investor Shares it
may acquire upon exercise of such right or the Common Shares issuable
upon the conversion of such Investor Shares.
SECTION 7 - GENERAL PROVISIONS
7.1 Governing Law. This Agreement shall be governed in all respects by the laws
of the State of New York as they are applied to agreements entered into in New
York between New York residents and performed entirely within New York.
7.2 Further Assurances. Each party upon the request of the others, shall do,
execute, acknowledge and deliver or cause to be done, executed, acknowledged or
delivered all such further acts, deeds, documents, assignments, transfers,
conveyances, powers of attorney and assurances as may be reasonably necessary or
desirable to effect complete consummation of the transactions contemplated by
this Agreement.
7.3 Successors and Assigns. The provisions hereof shall enure to the benefit of
and be binding upon the parties hereto and their respective successors, assigns,
heirs, executors and administrators. The parties hereto hereby confirm that each
transferee of any Canco Shares shall benefit from the Exchange Rights
contemplated herein provided that the transfer of such Canco Shares was made in
conformity with the Shareholders Agreement.
7.4 Arbitration. All disputes or controversies between the parties in respect of
the validity, interpretation or performance of the provisions of this Agreement
shall be definitively dealt with using the rules of conciliation and arbitration
of the International Chamber of Commerce, by one or more arbitrators appointed
in accordance with said rules, and to the exclusion of any courts, except for
any provisional remedy, including injunctive relief and seizure before judgment,
which may be obtained from any court or tribunal. Any arbitration proceeding
required pursuant to the terms hereof shall take place in New York, New York]
and shall be conducted in both the English and French language.
7.5 Notices. All offers, acceptances, rejections, notices, requests,
authorizations, permissions, directions, demands and other communications
hereunder shall be given in writing and shall be given by telecopier, or
delivered by hand, to the other parties at the following addresses:
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if to the Company: H POWER CORP.
60 Montgomery Street
Belleville, New Jersey
07109, U.S.A.
Attention: the President
Telecopier: (201) 450-9850
if to Sofinov: SOFINOV SOCIETE FINANCIERE D'INNOVATION INC.
1981 McGill College Avenue
Montreal, Quebec
H3A 3C7
Attention: the President
Telecopier: (514) 847-2628
if to Innovatech: SOCIETE INNOVATECH DU GRAND MONTREAL
2020 University Avenue
Suite 1527
Montreal, Quebec
H3A 2A5
Attention: President
Telecopier: (514) 864-4220
if to 9042-0175: 9042-0175 QUEBEC INC.
c/o Lapointe Rosenstein
1250 Rene-Levesque Blvd. West
Suite 1400
Montreal, Quebec
H3B 5E9
Attention: Me Claude Bergeron
Telecopier: (514) 925-9001
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<PAGE>
with a copy in all LAPOINTE ROSENSTEIN
cases to: 1250 Rene-Levesque Blvd. West
Suite 1400
Montreal, Quebec
H3B 5E9
Attention: Me Claude Bergeron
Telecopier: (514) 925-9001
with a copy in all BROCK FENSTERSTOCK ET AL
cases to: 153 East 53rd Street
56th Floor
New York, NY
10022
Telecopier: (212) 371-5500
or at such other address as the parties may have previously indicated to the
other parties in writing in conformity with the foregoing. Any such notice,
request, demand or other communication shall be deemed to have been received on
the date of delivery if delivered by hand, or the next Business Day immediately
following the date of transmission if sent by telecopier. The original copy of
any notice sent by telecopier shall be forwarded to the other parties by
registered mail, receipt return requested.
7.6 Time of the Essence. Time shall be of the essence in this Agreement.
7.7 Delays. When calculating the period of time within which or following which
any act is to be done or step taken pursuant to this Agreement, the day which is
the reference day in calculating such period shall be excluded. If the day on
which such delay expires is not a Business Day, then the delay shall be extended
to the next succeeding Business Day.
7.8 Entire Agreement: Amendment: This Agreement and the Shareholders Agreement
and the other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof, and no party shall be liable or bound to any other party in
any manner by any warranties, representations or covenants except as
specifically set forth herein, or therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, other than by a
written instrument signed by all the parties hereto.
7.9 Gender. Any reference in this Agreement to any gender shall include both
genders and the neutral, and words used herein importing the singular number
only shall include the plural and vice versa.
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<PAGE>
7.10 Headings. The division of this Agreement into Sections, subsections and
other subdivisions, and the insertion of headings are for convenience of
reference only and shall not affect or be utilized in the construction or
interpretation of this Agreement.
7.11 Waiver. Any waiver, permit, consent or approval of any kind or character on
the part of any party of any breach or default under this Agreement, or any
waiver on the part of any party of any provisions or conditions of this
Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to any party, shall be cumulative and
not alternative.
7.12 Preamble. The preamble hereof shall form an integral part of this
Agreement.
7.13 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same document.
7.14 Severability. In the event that any provision of this Agreement becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.
7.15 Language. The parties hereto state their express wish that this Agreement
as well as all documentation contemplated hereby or pertaining hereto or to be
executed in connection herewith be drawn up in English; les parties expriment
leur desir explicite a l'effet que cette convention de meme que tous documents
envisages par les presentes ou y ayant trait ou qui seront signes relativement
aux presentes soient rediaes en anglais.
IN WITNESS WHEREOF, the parties have signed at the place and on the date
first hereinabove mentioned.
SOFINOV SOCIETE FINANCIERE H POWER CORP.
D'INNOVATION INC.
Per: /s/ Marcel Paquette Per: /s/ H. Frank Gibbard
----------------------------- ---------------------
Marcel Paquette H. Frank Gibbard
Per: /s/ Denis Dionne
-----------------------------
Denis Dionne
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<PAGE>
SOCIETE INNOVATECH DU 9042-0175 QUEBEC INC.
GRAND MONTREAL
Per: /s/ Bernard Coupal Per: /s/ Claude Bergeron
------------------------------ -----------------------
Bernard Coupal Claude Bergeron
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<PAGE>
Stock Exchange Agreement
H Power Corp.
SCHEDULE 4.1
NOTICE OF EXCHANGE
In accordance with the terms of that certain Stock Exchange Agreement,
dated May 2, 1997, by and among H Power Corp. (the "Company") and the Purchasers
(as defined therein) (the "Stock Exchange Agreement"), notice is hereby given
pursuant to subsection 4.1 of the Stock Exchange Agreement that the undersigned
Purchaser elects to exchange _________ Canco Shares (as defined in the Stock
Exchange Agreement) held by such Purchaser on the date hereof, for the number of
Investor Shares (as defined in the Stock Exchange Agreement) calculated pursuant
to the relevant provisions of the Stock Exchange Agreement.
Date: ______________________, ___________.
PURCHASER
Per:____________________________________________________________
Print Name:_____________________________________________________
Title:__________________________________________________________
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Exhibit 10.21
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
This Amended and Restated Stockholders Agreement ("Agreement") is
made and entered into as of the 2nd day of May, 1997 by and among (i) H Power
Corp., a Delaware corporation (the "Company"), (ii) the holders of shares of the
Company's Common Stock identified on the signature page hereto (collectively,
the "Common Stockholders"), (iii) the holder of the Company's Series A
Convertible Preferred Stock identified on the signature page hereto (the "A
Stockholder"), (iv) the holder of the Company's Series B Convertible Preferred
Stock identified on the signature page hereto (the "B Stockholder"), and (v) the
holders of the Company's Series C Preferred Stock identified on the signature
page hereto. The A Stockholder, B Stockholder and C Stockholders are sometimes
hereinafter referred to as the "Preferred Stockholders"; the Common Stockholders
and the Preferred Stockholders are sometimes hereinafter referred to
collectively as the "Stockholders."
RECITALS:
WHEREAS, the Common Stockholders are the holders in the aggregate of
3,081,250 shares of common stock, $.001 par value, of the Company (the "Common
Stock"); and
WHEREAS, the A Stockholder is the holder in the aggregate of 200,000
shares of Series A Convertible Preferred Stock, $.001 par value, of the Company
(the "Series A Preferred Stock"); and
WHEREAS, the B Stockholder is the holder in the aggregate of 400,000
shares of Series B Convertible Preferred Stock, $.001 par value, of the Company
(the "Series B Preferred Stock"); and
WHEREAS, the C Stockholders are (a) the holders in the aggregate of
500,000 shares of Series C Convertible Preferred Stock, $.001 par value, of the
Company (the "Series C Preferred Stock") and (b) have the right to acquire up to
500,000 shares of Series C Preferred Stock pursuant to the Stock Exchange
Agreement dated as of the date hereof between the C Stockholders and the
Company; and
WHEREAS, the Stockholders desire to enter into this Agreement for
the purposes hereinafter set forth.
<PAGE>
AGREEMENT:
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is acknowledged, and intending to be legally bound hereby,
the parties hereby agree as follows:
1. Voting of Shares.
In any and all elections of directors of the Company (whether at a meeting
or by written consent in lieu of a meeting), each Stockholder shall vote or
cause to be voted all Outstanding Shares (as defined in Section 3 below) owned
by such Stockholder, or over which such Stockholder has voting control, and
otherwise use his or its best efforts, so as to fix the number of directors of
the Company at nine and to elect the following candidates to the Board of
Directors:
(i) One director designated by the A Stockholder;
(ii) One director designated by the B Stockholder;
(iii) One director designated by the C Stockholder;
(iv) Three directors designated by the Common Stockholders;
(v) The current President of the Company; provided, that if the
current President of the Company vacates the office for any reason whatsoever, a
replacement director shall be designated by agreement of the Preferred
Stockholders and the Common Stockholders, voting as separate classes; and
(vi) Two additional directors who shall be designated upon the
unanimous approval of each of the directors referred in (x) clauses (i), (ii)
and (iii) above and (y) a majority of the directors referred in clause (iv)
above.
2. Removal or Vacancy. If any of the directors designated pursuant to
Section 1 hereof is removed or vacates such position for any reason whatsoever,
such vacancy shall not be filled by the remaining members of the Board of
Directors, but the Stockholders shall consent in writing, or vote or cause to be
voted, all Outstanding Shares in favor of the election of a new designee in
compliance with Section 1, to replace such former designee as promptly as
practicable after the occurrence of such removal or vacancy.
3. Outstanding Shares. "Outstanding Shares" shall mean and include any and
all shares of capital stock of the Company by whatever name called, which
carrying voting rights and shall include any shares now owned or subsequently
acquired by a Stockholder, however acquired, including without limitation by
stock splits, stock dividends, recapitalizations and similar events.
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<PAGE>
4. Meeting. The Board of Directors of the Company shall meet either in
person or telephonically at least once every month for a period of 24 months
after the date hereof until the initiation of a firmly underwritten public
offering pursuant to an effective registration statement under the Securities
Exchange Act of 1933 covering the offer and sale of Common Stock for the account
of the Company (the "IPO"); thereafter, the Board of Directors, by the
affirmative vote or written consent of a majority of the directors, may alter
the frequency of the regularly scheduled meetings and may schedule meetings of
the Board of Directors at such times, and from time to time, as shall be deemed
to be necessary or advisable. The Company will reimburse each director of the
Company for all reasonable transportation and out-of-pocket expenses incurred by
such director in the attending of no more than four meetings a year of the Board
of Directors of the Company or any committees thereof or in carrying out any
business of the Company as authorized by the Board of Directors or any executive
officer of the Company. The Company acknowledges that, for the director who is
the nominee of the B Stockholder, transportation expenses (only Business Class
travel) to and from Asia shall be deemed reasonable. The Company shall pay each
Director that is not an employee of the Company, a subsidiary of the Company, or
the C Stockholders, a fee for his attendance at each meeting of the Board. The
fees payable to such Directors shall be determined by the Board. The Board of
Directors may conduct certain meetings telephonically but shall meet at least
four times per year in person.
5. Termination.
(a) This Agreement shall terminate in its entirety with respect to
the A Stockholder on the earlier of (i) the conversion of the Series A Preferred
Stock into Common Stock, (ii) the first date that the A Stockholder owns fewer
than 200,000 shares of Series A Preferred Stock or Common Stock, as adjusted for
stock splits and other similar changes (including such number of additional
shares of Common Stock, also as so adjusted, as may be issuable in the event
that the A Stockholder exercises the Series A Warrant (as defined below) in
full), or (iii) the redemption by the Company of all of the Series A Preferred
Stock from the A Stockholder. This Agreement shall also terminate as to the A
Stockholder upon the IPO, except that after such date the parties hereto shall
vote or cause to be voted all Outstanding Shares (as owned by such party or over
which it has control) to elect one member to the Company's Board designated by
the A Stockholder until March 25, 1999.
(b) This Agreement shall terminate in its entirety with respect to
the B Stockholder on the earlier of (i) the date falling two years from the IPO
that does not cause the conversion into Common Stock of a shares of Preferred
Stock outstanding, (ii) the redemption or conversion of all outstanding shares
of Preferred Stock, or (iii) the first date that the B Stockholder owns fewer
than 400,000 shares of Series B Preferred Stock or Common Stock, as adjusted for
stock splits and other similar changes (including such number of additional
shares of Common Stock, also as so adjusted, as may be issuable in the event
that the B Stockholder exercises the Series B Warrant (as defined below) in
full).
-3-
<PAGE>
(c) This Agreement shall terminate in its entirety with respect to
the C Stockholder on the earlier of (i) the conversion of the Series C Preferred
Stock into Common Stock, (ii) the first date that the C Stockholders
collectively own fewer than 500,000 shares of Series C Preferred Stock or Common
Stock, as adjusted for stock splits and other similar changes (including such
number of additional shares of Common Stock, also as so adjusted, as may be
issuable in the event that the C Stockholders exercise the Series C Warrant (as
defined below) in full), or (iii) the redemption by the Company of all of the
Series C Preferred Stock from the C Stockholders. This Agreement shall also
terminate as to the C Stockholders upon the IPO.
(d) In the event that this Agreement shall terminate in its entirety
pursuant to the provisions of paragraph (a) above, to the extent that the B
Stockholder holds any Outstanding Shares of Series B Preferred Stock, and this
Agreement has not also terminated pursuant to the provisions of paragraph (b)
above, the B Stockholder shall have the right to designate its nominee to fill
the vacancy on the Board of Directors left by the nominee of the A Stockholder.
In the event that this Agreement shall terminate in its entirety pursuant to the
provisions of paragraph (b) above, and this Agreement has not also terminated
pursuant to the provisions of paragraph (a) above, to the extent that the A
Stockholder holds any Outstanding Shares of Series A Preferred Stock, the A
Stockholder shall have the right to designate its nominee to fill the vacancy on
the Board of Directors left by the nominee of the B Stockholder. The "Series A
Warrant" refers to the warrant issued by the Company to the A Stockholder
pursuant to the Series A Purchase Agreement, the "Series B Warrant" refers to
the warrant issued by the Company to the B Stockholder pursuant to the Series B
Purchase Agreement and the Series C Warrant refers to the warrant issued by the
Company to the Series C Stockholder pursuant to the Series C Subscription
Agreement. Upon termination of this Agreement as to the A Stockholder or B
Stockholder or C Stockholder or any of them as provided in paragraph (a), (b),
(c) or (d) of this Section 5, the A Stockholder or the B Stockholder or the C
Stockholder, as the case may be, shall cause its designee immediately to resign
from the Board.
(e) This Agreement shall terminate in its entirety with respect to
the Stockholders upon the written agreement of (i) Common Stockholders holding a
majority of the shares of Common Stock represented hereunder and (ii) the
holders of 50% of each of the Series A Preferred Stock and Series C Preferred
Stock and the holders of 75% of the Series B Preferred Stock, with the Series A
Preferred Stock and Series B Preferred Stock and Series C Preferred Stock each
voting separately as a single class (with each shares of Preferred Stock voting
on an as converted basis).
6. Covenant of the Company. The Company agrees to use commercially
reasonable efforts to cause all future holders of more than 10% of its voting
securities to execute and deliver an agreement pursuant to which such holders
and their successors and assigns shall consent to and agree to be bound by the
provisions of this Agreement.
7. Transferees. All covenants and agreements in this Agreement by or on
behalf of any of the parties hereto will bind and inure to the benefit of the
respective transferees, heirs, executors, administrators, legal representatives,
successors and assigns of the parties hereto, whether so expressed or not.
-4-
<PAGE>
8. Agreement of Common Stockholders. The Common Stockholders hereby agree
not to sell any shares of capital of the Company owned or hereafter acquired by
the Common Stockholders (including shares of capital stock owned or hereafter
acquired by the Common. Stockholders' spouses, children and other family
members) in the IPO unless, (a) the price of securities sold in the TO is at
least $15.00 per share, or (b) the closing of the TO is after My 1, 1997.
9. General.
(a) Severability. The provisions of this Agreement are severable so
that the invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other term or provision of this
Agreement, which shall remain in full force and effect.
(b) Specific Performance. The parties acknowledge and agree that the
parties hereto would be irreparably damaged in the event any of the provisions
of this Agreement were not performed by the parties in accordance with their
specific terms or were otherwise breached. Accordingly, it is agreed that each
of the Company and the Stockholders shall be entitled to an injunction to
prevent breaches of this Agreement and to specifically enforce this Agreement
and the terms and provisions of this Agreement in any action instituted in any
court of the United States or any state thereof having subject matter
jurisdiction, in addition to any other remedy to which the parties may be
entitled at law or in equity. Each party consents to personal jurisdiction in
any such action brought in the Court of Chancery of the State of Delaware in and
for New Castle County, which shall be the exclusive and only proper forum for
adjudicating such a claim.
(c) Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York.
(d) Complete Agreement; Amendments. This Agreement constitutes the
full and complete agreement of the parties hereto with respect to the subject
matter hereof and supersedes all prior stockholders or similar agreements among
all or some of the parties hereto. No amendment, modification or termination of
any provision of this Agreement which affects the rights of all parties hereto
shall be valid unless in writing and signed by (i) the Company, (ii) the holders
of shares representing 50% of the outstanding Common Stock held by the Common
Stockholders, and (iii) the holders of shares representing 50% of each of the
Series A Preferred Stock and Series C Preferred Stock and seventy-five percent
75% of the Series B Preferred Stock, each taken as a separate class. Any party
may waive or agree to amendments relating to any provision of this Agreement
which affects or relates to such party's rights or obligation only without the
consent of the other parties.
(e) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one agreement binding on all the parties hereto.
-5-
<PAGE>
(f) Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified; (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient or, if not, then on the next
business day; (iii) five days after having been sent by registered or certified
mail, return receipt requested, postage prepaid; (iv) one day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written. verification of receipt. All communications shall be addressed to the
Company or to a Common Stockholder at the address set forth below:
H Power Corp.
60 Montgomery Street
Belleville, New Jersey 07109
Any notice required or permitted hereunder to an A Stockholder or B Stockholder
or C Stockholders shall be given to such Stockholders at such Stockholder
address for notice as last for appearing on the Company's records. The addresses
for notice may be changed by giving notice to the other parties pursuant to this
Section 9 (f).
(g) Enforcement. If any portion of this Agreement is determined to
be invalid or unenforceable, the remainder shall be valid and enforceable to the
maximum extent possible.
(h) Costs of Enforcement. If any party to this Agreement seeks to
enforce its rights under this Agreement by legal proceedings, the non-prevailing
party shall pay all costs and expenses incurred by the prevailing party,
including without limitation, all reasonable attorney fees.
(i) Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party, upon any breach, default or noncompliance
by another party under this Agreement shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of any similar breach, default or
noncompliance thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on any party's part of any breach, default or
noncompliance under this Agreement or any waiver on such party's part of any
provisions or conditions of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, by law, or otherwise afforded to any
party, shall be cumulative and not alternative.
(j) Amendments to Certificate. Each Stockholder shall vote or cause
to be voted all Outstanding Shares owned by such Stockholder, or over which such
Stockholder has voting control to amend the applicable provisions of the
Restated Certificate of Incorporation of the Company that may be necessary or
advisable to implement the terms of this Agreement resulting from the
termination of the rights of one or more classes of Stockholders and such class
-6-
<PAGE>
corresponding right to designate a nominee for election to the Board of
Directors in accordance with Section 5 of this Agreement.
-7-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the day and year first above written.
Company: H Power Corp.
By: /s/ H. Frank Gibbard
----------------------------------
Title:
-------------------------------
Address: 60 Montgomery Street
Belleville, New Jersey 07109
Common Stockholders: REVOCABLE 1992 TRUST FOR
ELISE ENTMAN
By: /s/ Gerald Entman
----------------------------------
Gerald Entman, Trustee
/s/ H. Scott Entman
-------------------------------------
H. Scott Entman
/s/ Brian k. Entman
-------------------------------------
Brian K. Entman
/s/ Frederick Entman
-------------------------------------
Frederick Entman
/s/ Cynthia Rothstein
-------------------------------------
Cynthia Rothstein
/s/ Allan Rothstein
-------------------------------------
Allan Rothstein
/s/ Steven Rothstein
-------------------------------------
-8-
<PAGE>
Steven Rothstein
/s/ Tammy Rothstein
-------------------------------------
Tammy Rothstein
/s/ Norman Rothstein
-------------------------------------
Norman Rothstein
-9-
<PAGE>
A Stockholder: DUQUESNE ENTERPRISES
By: /s/ Anthony Villioti
----------------------------------
Title:
----------------------------------
Address: One Northshore Center
Suite 100
12 Federal Street
Pittsburgh, PA 15212
B Stockholder: SINGAPORE TECHNOLOGIES
AUTOMOTIVE LTD.
By: /s/ Fong Saik Hay
----------------------------------
Title:
----------------------------------
Address: 5 Portsdown Road
Singapore 139296
-10-
<PAGE>
C Stockholder: SOFINOV SOCIETE FINANCIERE
D'INNOVATION INC.
By: /s/Denis Dionne
----------------------------------
Title:
Address:
By: /s/ Marcel Paquette
----------------------------------
Title:
Address:
SOCIETE INNOVATECH
DU GRAND MONTREAL
By: /s/ Bernard Coupal
----------------------------------
Title:
----------------------------------
Address:
90424 QUEBEC INC.
By: /s/ Claude Bergeron
----------------------------------
Title:
----------------------------------
Address:
-11-
<PAGE>
Exhibit 10.22
H Power/ADL Joint Venture Agreement
Joint Venture Agreement
THIS AGREEMENT (this "Agreement") is made as of December 18, 1998, between
H Power Corp., a Delaware corporation having its principal place of business at
60 Montgomery Street, Belleville NJ 07109, (hereinafter referred to as "H
Power") and Arthur D. Little, Inc. having executive offices at Acorn Park,
Cambridge, Massachusetts 02140 (hereinafter referred to as "ADL").
Throughout this Agreement, H Power and ADL may be referred to collectively
as the "Parties" and each individually as a "Party".
WHEREAS, H Power has acquired, developed, possesses and owns specialized,
novel, and unique techniques, inventions, practices, methodologies, knowledge,
skill, experience, data, formulae, computer programs and other information
relating to the design and manufacture of proton exchange membrane ("PEM") fuel
cells and to the design and manufacture of complete fuel cell operating systems,
including but not limited to hydrogen supply and delivery sub-systems,
temperature and water management sub-systems, control sub-system, and power
conditioning sub- systems, some of which have been reduced to patents, pending
patent applications or disclosure documents and others of which are deemed to be
proprietary know-how (all of which are hereinafter referred to as H Power's
Intellectual Property); and
WHEREAS, H Power has utilized and is continuing to utilize its
Intellectual Property to design, develop, integrate, assemble and produce fuel
cell operating systems to replace or supplement conventional power sources such
as batteries, diesel generators, internal combustion engines and central power
stations, in a broad base of products and for various applications; and
WHEREAS, ADL is a company specializing in areas ranging from product
development and technology assessment to process engineering and manufacturing
consulting; and
WHEREAS, ADL has developed expertise in fuel processors operating on a
variety of fuels, and
WHEREAS, the Parties desire to collaborate under the terms of this
Agreement to jointly study, design, develop, fabricate and demonstrate a
commercially viable System that incorporates a PEM fuel cell sub-system and a
propane fuel processor sub-system which supplies the hydrogen fuel to the PEM
sub-system; and
Page 1 of 11 Pages
<PAGE>
H Power/ADL Joint Venture Agreement
WHEREAS, the Parties believe that such Systems will meet the needs of
telecommunications systems for premium power and will establish a technology
base from which various other products will be created; and
WHEREAS, the Parties have been selected for participation in the Advanced
Technology program administered by tho National Institute of Standards and
Technology as a joint venture to conduct certain specified research and
development, and
WHEREAS, the Parties wish to enter into a joint venture agreement to
define their respective roles and responsibilities; and
WHEREAS, the Parties have selected H Power to serve as the Administrator
for the joint venture and wish to authorize, that organization to perform
certain functions, specifically including executing the NIST Cooperative
Agreement and thereby binding all the Parties to the terms and conditions of
that agreement;
NOW THEREFORE, in consideration of the foregoing recitals and the terms,
conditions and covenants contained herein, it is hereby agreed as follows:
1. Definitions
1.1 Administrator.
Administrator shall mean H Power Corp. and/or its appointed
representative.
1.2 Agreement.
Agreement shall mean this Joint Venture Agreement, as the same may
be amended from time to time hereafter.
1.3 Background Technology.
Background Technology shall mean technical information not generated
in the course of the NIST Program.
1.4 Government Use License.
Government Use License shall mean a nonexclusive, nontransferable,
irrevocable, paid-up license to practice or have practiced by or on
behalf of the United States throughout the world any Subject
Invention.
1.5 NIST.
NIST shall mean the National Institute of Standards and Technology.
Page 2 of 11 Pages
<PAGE>
H Power/ADL Joint Venture Agreement
1.6 NIST Cooperative Agreement.
NIST Cooperative Agreement shall mean the funding agreement entered
into between the Advanced Technology Program of NIST and the Parties
hereto (as executed by the Administrator) for the conduct of the
Research Program.
1.7 Patents.
Patents shall mean all patents and applications relating thereto
resulting from Subject Inventions.
1.8 Program or Research Program.
Program or Research Program shall mean the research and development
program set forth in the Proposal and included herein as Exhibit A.
1.9 Proposal.
Proposal shall mean the proposal submitted by the Parties to the
Advanced Technology Program, and which has been accepted by NIST for
funding.
1.10 Statement of Work.
Statement of Work shall mean the performance of activities as
specifically set forth in Section 1.3 (entitled "Technical
Approach") of the Proposal.
1.11 Subject Invention.
Subject Invention shall mean any invention conceived or first
reduced to practice in the course of the Program.
1.12 System.
System shall mean a PEM fuel cell sub-system integrated with a
propane fuel processor sub-system that will be utilized in
telecommunication applications.
1.13 Technology.
Technology shall mean all technical information generated in the
course of the Program.
2. Purpose of this Joint Venture
The limited purpose and the sole business of this Joint Venture shall be
to accomplish the objectives of the Program by performing research
directly and through the use of contracts, and to that end shall carry out
their responsibilities as set forth in the Program, the NIST Cooperative
Agreement, and the Statement of Work. The Joint Venture may engage in such
other activities related either directly or indirectly to the foregoing as
may be necessary
Page 3 of 11 Pages
<PAGE>
H Power/ADL Joint Venture Agreement
advisable or convenient to the promotion or conduct of the Parties'
businesses, but no other business shall be conducted by the Joint Venture
without the prior written consent of both of the Parties hereto.
3. Term of this Joint Venture
The term of the Joint Venture shall commence on and as at the date of this
Agreement and shall continue until the Parties' obligations as set forth
in this Agreement and the NIST Cooperative Agreement have been completed,
or until the NIST Cooperative Agreement has been terminated. An individual
Party may cease participation in the Program only in a manner consistent
with the NIST Cooperative Agreement.
4. Obligation of the Parties
4.1 Activities
The Parties shall use their best efforts to carry out the purposes
of this Agreement, as set forth in Paragraph 2, hereinabove.
4.2 Contributions
Each of the Parties agrees to contribute funds or in kind services
as follows:
Year One Year Two Total
---------- -------- -----
H Power $ 548,555 $933,628 $1,482,183
ADL $1,092,544 $642,722 $1,735,266
4.3 Responsibilities Of Each Of The Parties
The primary responsibilities of the Parties to this Agreement shall
be as follows:
H Power: H Power shall be responsible for the design,
development, fabrication and testing of the fuel
cell sub-system, the integration of the System and
the testing of the completed System.
ADL: ADL shall be responsible for the design,
development, fabrication and testing of the
propane fuel processor sub-system.
4.4 Cooperation Between Parties
The Parties shall cooperate fully with each other with respect to
their primary responsibilities.
Page 4 of 11 Pages
<PAGE>
H Power/ADL Joint Venture Agreement
4.5 Execution of Work
4.5.1 H Power shall design, develop, fabricate and test its PEM fuel
cell sub-system in its facilities at Belleville, NJ
4.5.2 ADL shall design, develop, fabricate and test its propane fuel
processor subsystem in its facilities.
4.5.3 H Power shall integrate, assemble and test completed System at
its place of business in Belleville, NJ.
5. Program Management
To promote consultation and cooperation among the Parties hereto a
committee shall be formed as follows:
5.1 A Joint Management Committee which shall consist of four
representatives of H Power and three representatives of ADL and
which will ordinarily meet once each month. Such meetings will be
held at the premises of H Power in Belleville, NJ, unless otherwise
agreed by the Parties hereto. The Chairman at the meetings of the
Joint Committee shall be the Chief Executive Officer of H Power.
5.2 At such meetings the Joint Management Committee shall consider and
advise upon and make recommendations to the Parties hereto on
matters of policy pertaining to prospective and actual cooperation
among the Parties hereto in the performance of this Agreement.
5.3 The representatives of the Parties shall be nominated by each of the
Parties hereto by notice in writing to the other Party hereto. A
Party, at anytime, may replace any and all of its said
representatives by such notice.
5.4 The Joint Management Committee shall direct the conduct of the
Program in all respects, through the Administrator.
5.5 The Administrator, who shall perform the day-to-day management and
administration of the Program in accordance with all legal and
regulatory requirements, including the NIST Cooperative Agreement,
shall be an H Power member of the Joint Management Committee.
6. Intellectual Property Rights
6.1 In accordance with the Advanced Technology Program (ATP) statute and
regulation, specifically 15 USC 278n(d)(11)(A) and 15 CFR
295.8(a)(1), title to inventions arising from assistance by the
Program will vest in H Power and ADL. Title to any such intellectual
property shall not be transferred or passed, except to a company
incorporated in the United States, until the expiration of the first
patent obtained in connection with the intellectual property.
Nothing in this paragraph shall be construed to prohibit the
licensing to any company of intellectual property rights arising
from assistance provided by this Program.
Page 5 of 11 Pages
<PAGE>
H Power/ADL Joint Venture Agreement
6.2 The United States may reserve a non-exclusive, nontransferable,
irrevocable paid-up license to practice or have practiced for, and
on behalf of the United States any such intellectual property, but
shall not, in the exercise of such license, publicly disclose
proprietary information related to the license.
6.3 Subject to sub-paragraphs 6.1 and 6.2, all intellectual property
rights relating to the PEM fuel cell sub-system shall become sole
and exclusive property of H Power and all intellectual property
rights relating to the propane fuel processor sub-system shall
become sole and exclusive property of ADL.
7. Confidentiality
Each of the Parties agrees that the Background Technology, the
intellectual property rights generated during the course of the Program
and the Proprietary Information of the other Party shall be covered by the
Bilateral Confidentiality Agreement executed by ADL, on January 30, 1996
and by H Power on February 2, 1996. The Parties hereto further agree to
extend the term of that agreement from three years from the last date of
its execution to three years from the expiration of this Joint Venture
Agreement. A copy of said Confidentiality Agreement is attached hereto as
Exhibit B.
8. Disputes
8.1 Any question, dispute or difference arising among the Parties hereto
and in particular, any matter which may affect their respective
obligations or liabilities to each other or any third party, shall
be resolved within the Joint Management Committee referred to in
Paragraph 5 hereinabove.
8.2 If in the event that these discussions fail to reach a mutually
acceptable conclusion within a reasonable period of time, then the
question, dispute, difference or matter shall be referred to the
respective Managing Directors/Chief Executive Officers of the
Parties hereto, or to such Directors as may be appointed to act on
their behalf, which Directors shall then be responsible for
considering and reaching a mutually acceptable decision on said
question, dispute, difference or matter.
8.3 No Party shall discontinue its efforts in pursuance of this
Agreement while any question, dispute, difference or matter is under
consideration by the Managing Directors/Chief Executive Officers of
the Parties hereto or during arbitration proceedings as provided
under this Clause.
8.4 If in the event that a decision cannot be mutually agreed then the
question, dispute, difference or matter shall be determined by
arbitration, in the city of Newark, New Jersey in accordance with
the Commercial Arbitration Rules of the American Arbitration
Association.
Page 6 of 11 Pages
<PAGE>
H Power/ADL Joint Venture Agreement
9. Insurance
Each Party shall obtain and maintain appropriate public liability and
casualty insurance, or adequate levels of self insurance, to insure
against any liability caused by that Party's obligations under this
Agreement and the NIST Cooperative Agreement.
10. Termination
Subject to the requirements of the NIST Cooperative Agreement, this
Agreement may be terminated by either Party upon sixty (60) days written
notice if the other Party hereto becomes controlled by any other company
or entity that is in direct competition with any of the other Parties.
11. Force Majeure
In the event that a Party is prevented or delayed from performing,
fulfilling or completing an obligation provided for in this Agreement as a
result of delays caused by strikes, lock-outs, unavailability of
materials, acts of God, acts of any national, state or local governmental
agency or authority or a foreign government, war, insurrection, rebellion,
riot, civil disorder, fire, explosion or the elements, provided that such
prevention or delay is not caused or due to any act or omission or
negligence of the Party claiming Force Majeure, then the time for
performance, fulfillment or completion shall be extended for a period not
exceeding the number of days by which the same was so delayed.
12. Costs and Expenses
Each Party shall bear its own costs and other related expenses incurred in
the performance of this Agreement and neither Party shall be liable for
any costs, expense, risk, obligation or liability related to or arising
out of the other's efforts and responsibilities under this Agreement.
13. Consequential Damages
Except as may be specifically provided for herein, neither Party shall be
liable to the other Party under this Agreement for any indirect,
incidental, special or consequential damages, however caused, whether in
contract, tort, strict liability, warranty or otherwise.
14. Limited Purpose Joint Venture
Nothing in this Agreement shall be deemed to constitute, create, give
effect to, or otherwise any type of permanent arrangement of any kind, and
the rights and obligations of the Parties hereto shall be limited to those
expressly set forth herein. Nothing herein shall be construed as providing
the sharing of profits or losses arising out of the efforts of any one of
the Parties except as may be provided for in any resultant sub-contract
agreed among the Parties. The cooperation of the Parties is for the
purpose of complementing their respective capabilities.
Page 7 of 11 Pages
<PAGE>
H Power/ADL Joint Venture Agreement
15. Notice
All notices, requests, demands or other communications which are required
or may be given pursuant to the terms of this Agreement should be in
writing and delivery shall be effective in all respects if delivered: (i)
by telefax and promptly confirmed by letter, (ii) personally, or (iii) by
registered or certified mail, postage prepaid, (or if overseas by postage
paid registered [if available] international air mail) as follows:
If to H Power If to ADL
------------- ---------
60 Montgomery Street 25 Acorn Park
Belleville, NJ 07109 Cambridge, MA 02140
U.S.A. U.S.A.
Telefax (973) 450-9850 Telefax (617) 498-7117
Attention CEO Attention General Counsel
Proof of transmission in the case of telefax shall be deemed to be proof
of receipt on the date and at the time of dispatch subject to a confirmed
answer back at the end of the transmission.
Notices hereunder shall be deemed to have been received by the receiving
Party if sent by telefax upon proof of receipt on the date and at the time
of dispatch as set out above, if delivered personally at time of receipt
and if sent by mail five working days after the notice mailed, as the case
may be, unless otherwise proved by the Party claiming non-receipt.
16. Scope
This Agreement embodies all the understandings and agreements of the
Parties and supersedes all prior and contemporaneous, oral or written
agreements or understandings relating to the matters referred to herein,
and neither of the Parties shall be bound by any definition, condition,
representation, warranty, promise or provision other than is expressly set
forth in this Agreement.
17. Modification
This Agreement may be amended or modified only by an instrument of equal
formality signed by duly authorized officers or representatives of the
respective Parties.
18. Severability
In the event any of the provisions of this Agreement, for any reason,
shall be declared invalid, such decision shall not affect the validity of
the remaining portion, which shall remain in full force and effect. The
Parties hereto agree to negotiate a substitution for the provisions held
invalid, illegal or unenforceable.
Page 8 of 11 Pages
<PAGE>
H Power/ADL Joint Venture Agreement
19. Effect of Waivers
Failure of either Party hereto to insist upon strict compliance with any
of the terms, covenants and conditions hereof shall not be deemed waiver
or relinquishment of any similar right or power hereunder at any
subsequent time or of any other provision hereof.
20. Governing Law and Venue
The validity, performance, construction, and effect of this Agreement will
be governed by the law of the State of New Jersey.
21. Binding Effect
This Agreement shall be binding upon the Parties hereto and their
respective executors, administrators, heirs, assigns and successors in
interest.
22. Survival of Contents
Notwithstanding anything else in this Agreement to the contrary, those
provisions of this Agreement which by their nature survive the termination
or expiration of this Agreement shall do so to the extent required thereby
for the full observation and performance by any or all of the Parties
hereto.
23. Assignment
Neither Party hereto may sell, assign, transfer or hypothecate any rights
or interests created under this Agreement or delegate any of its duties
without the prior written consent of the other. Any such assignment or
delegation of either Party hereunder without such consent shall be void.
Notwithstanding the foregoing, H Power, in its sole discretion, shall have
the right to assign this Agreement to an affiliate of H Power.
Notwithstanding the foregoing, ADL, in its sole discretion, shall have the
right to assign this Agreement to Epyx or any affiliate of ADL.
24. Indemnity
Each Party shall be responsible for any and all losses or damages arising
out of or incurred as a result of its own negligence. Each agrees to
indemnify and hold the other harmless from and with respect to any such
loss or damage including, without limitation, attorney's fees and costs.
25. No Broker or Finder
The Parties acknowledge that in negotiating and entering into this
Agreement, they have not been represented or assisted by any broker or
finder who may be entitled to compensation.
Page 9 of 11 Pages
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H Power/ADL Joint Venture Agreement
26. Attorney's Fees
If any legal action or any arbitration or other proceeding is brought for
the enforcement of this Agreement or because of an alleged dispute, breach
or default in connection with any of the provisions of this Agreement, the
successful or prevailing Party shall be entitled to recover reasonable
attorneys' fees incurred in this action or proceeding in addition to any
other relief to which he or it may be entitled.
27. Power of Attorney
By signing this Agreement, ADL grants to the Administrator a Power of
Attorney for the sole purpose of binding ADL to the terms and conditions
of the NIST Cooperative Agreement.
28. NIST Cooperative Agreement Precedence
Should there be any conflict between the terms and conditions of this
Agreement and the NIST Cooperative Agreement, the NIST Cooperative
Agreement shall take precedence.
29. Construction
The Recitals to this Agreement and all Exhibits, Schedules and Riders
executed by the Parties and attached hereto shall be deemed a part of this
Agreement. Any table of contents accompanying this Agreement and any
heading contained herein are for directory purposes only, do not
constitute a part of this Agreement, and shall not be employed in
interpreting this Agreement. Whenever the singular number is used in this
Agreement and when required by the context, the same shall include the
plural, and the masculine gender shall include the feminine and neuter
genders.
30. Index and Captions
The captions of the Clauses of this Agreement are solely for convenient
reference and shall not be deemed to affect the meaning or interpretation
of any paragraph hereof.
31. Cooperation Between the Parties
In entering into this Agreement the Parties hereto recognize that it is
impractical to make provision for every contingency that may arise in the
course of the observance or performance thereof. Accordingly the Parties
hereby declare it to be a cardinal principle of this Agreement and it to
be their common intention that this Agreement shall operate between them
with fairness and without detriment to the interests of any of them and if
in the course of the performance of this Agreement unfairness to a Party
hereto is disclosed or anticipated then the Parties hereto shall use their
best endeavors to agree upon such action as may be necessary and equitable
to remove the cause or causes of the same.
Page 10 of 11 Pages
<PAGE>
H Power/ADL Joint Venture Agreement
32. Additional Documentation
Upon the request of either Party, each Party shall execute and deliver
instruments, agreements, certificates and other documents as may be
reasonably required in order to implement any of the terms or provisions
of this Agreement.
33. Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, all of which shall constitute one
and the same Agreement.
34. Officers of the Parties
All the persons executing this Agreement are duly authorized officers of
the Parties hereto and execute this Agreement in accordance with the
authority vested in them by the by-laws and Board of Directors of their
respective corporations.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement.
For H POWER CORP. For ARTHUR D. LITTLE, INC
Signed: /s/ Arthur Kaufman Signed: /s/ Jeffrey M. Bentley
------------------------------- ------------------------------
Title: Vice President Title: Vice - President
------------------------------- ------------------------------
Date: Dec. 21, 1998 Date: 12/18/98
------------------------------- ------------------------------
Page 11 of 11 Pages
<PAGE>
Exhibit 10.23
MEMORANDUM OF AGREEMENT
BY AND AMONG: H POWER CORP., a Delaware corporation, having its head office
and principal place of business in the City of Belleville,
State of New Jersey.
(hereinafter referred to as "H Power")
PARTY OF THE FIRST PART
AND: SOCIETE INNOVATECH DU GRAND MONTREAL, a body politic duly
constituted according to An Act respecting Societe Innovatech
du Grand Montreal, R.S.Q., ch. S-17.2, having its head office
and principal place of business in the City of Montreal,
Province of Quebec, (hereinafter referred to as "Innovatech")
PARTY OF THE SECOND PART
AND: SOFINOV SOCIETE FINANCIERE D'INNOVATION INC., a body politic
and corporate, duly incorporated according to the Companies
Act (Quebec), having its head office and principal place of
business in the City of Montreal, Province of Quebec,
(hereinafter referred to as "Sofinov")
PARTY OF THE THIRD PART
AND: 9042-0175 QUEBEC INC., a body politic, duly incorporated
according to the Companies Act (Quebec), having its head
office and principal place of business in the City of
Montreal, Province of Quebec,
(hereinafter referred to as "9042-0175")
PARTY OF THE FOURTH PART
(Innovatech, Sofinov and 9042-0175 are hereinafter
collectively referred to as the "Investors")
<PAGE>
1. PREAMBLE
1.1 WHEREAS the parties hereto have previously executed a Stock Exchange
Agreement (the "Stock Exchange Agreement") made and entered into in the City and
District of Montreal on May 2, 1997, providing for the right of the Investors to
exchange all or part of the Canco Shares for Investor Shares at the Exchange
Rate (as such terms are defined in the Stock Exchange Agreement);
1.2 WHEREAS the Stock Exchange Agreement provides for the exchange by the
Investors of the Canco Shares for Investor Shares (as such terms are defined in
the Stock Exchange Agreement) at any time and from time to time provided that
the Exchange Right is exercised on or prior to May 2, 2001;
1.3 WHEREAS the Company intends to prepare an initial public offering of its
common stock;
1.4 WHEREAS the Investors have agreed to make certain commitments pursuant to
the terms hereof in the event of an initial public offering of common stock by
the Company.
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
2. INTERPRETATION
2.1 Definitions. In this Agreement, capitalized terms used in the present
Agreement and not otherwise defined herein shall have the meaning ascribed
thereto in the Stock Exchange Agreement.
2.2 Preamble. The preamble hereof shall from an integral part of this Agreement.
2.3 Governing Law. This Agreement shall be governed in all respects by the laws
of the State of New York as they are applied to agreements entered into in New
York between New York residents and performed entirely within New York.
3. AUTOMATIC EXERCISE OF EXCHANGE RIGHT
3.1 The Investors hereby agree that, notwithstanding the terms of the Stock
Exchange Agreement, immediately prior to the closing of an initial public
offering by the Company of its Common Shares (an "Offering"), the following
shall apply:
3.1.1 The Investors shall be automatically and irrevocably deemed to have
exercised their respective Exchange Rights in respect of all of the Canco
Shares;
3.1.2 The Investors shall each be automatically deemed to have properly
completed, executed and forwarded to the Company a Notice of Exchange in
respect of the Exchange Right for all of the Canco Shares; and
2
<PAGE>
3.1.3 Immediately following the issuance and delivery of the Share Certificates
representing the Investor Shares, the Investors shall be deemed to have
surrendered such shares certificates for the purposes of converting all of
the Investor Shares into Common Shares pursuant to, and in accordance
with, Section 6 of the Amended and Restated Articles of Incorporation of
the Company dated May 2, 1997, such that the Canco Shares previously held
by the Investors shall be deemed exchanged and converted automatically
into Common Shares issued in favour of the Investors for the number of
Common Shares to which each of the Investors is respectively entitled.
4. SUCCESSORS AND ASSIGNS
4.1 This Agreement shall inure to the benefit of and be binding upon its party
hereto and its heirs, administrators, successors and permitted assigns.
5. COUNTERPARTS
5.1 This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, and all such counterparts together shall constitute one and the same
instrument. This Agreement may be executed by any party hereto by facsimile
signature, which shall be deemed for all purposes to be an original.
6. LANGUAGE
6.1 The parties hereby acknowledge having required that this Agreement and all
notices, agreements or documents related hereto be drafted in English; les
parties reconnaissent avoir exige que cette convention, ainsi que tous avis,
entente ou document s'y rapportant soient rediges en anglais.
3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective duly authorized officers.
EXECUTED ON THIS 9th DAY OF FEBRUARY, 2000
H POWER CORP. SOCIETE INNOVATECH DU GRAND
MONTREAL
Per: /s/ Thomas Michael Per: /s/ Pierre Coupou
---------------------------- --------------------------------
SOFINOV SOCIETE FINANCIERE 9042-0175 QUEBEC INC.
D'INNOVATION INC.
Per: /s/ Ivan Roch Per: /s/ Laurent Verrault
---------------------------- --------------------------------
4
<PAGE>
Exhibit 10.24
H Power/TechMatics Agreement
AGREEMENT
This Agreement, made and entered into this 15th day of February, 1995 by
and between H Power Corp., a corporation organized and existing under the laws
of the State of Delaware, United States of America, having its principal place
of business at 60 Montgomery Street, Belleville, New Jersey 07109 (hereinafter
called "H Power") and TechMatics Inc., a corporation organized and existing
under the laws of the State of Delaware, United States of America, having its
principal place of business at 933 Motor Parkway, Hauppauge, New York 11788
(hereinafter called "TechMatics").
Witnesseth:
RECITALS
WHEREAS, H Power had cultivated initial interest in a fuel cell system
that can provide electric power to operate laptop computers for extended periods
with several major laptop computer manufacturers and with IBM in particular; and
WHEREAS, H Power requires advice and assistance in developing, designing
and fabricating a fuel cell system that is capable of providing the electric
power to operate a laptop computer and meets the specifications and requirements
as provided by IBM ("Laptop System"); and
WHEREAS, H Power and TechMatics have reviewed the specifications as
provided by IBM; and
WHEREAS, the Parties desire to enter into this Agreement to set forth the
terms and conditions under which TechMatics has agreed to cooperate with H Power
in developing the required Laptop System and such other products and systems
that the Parties may hereafter agree to mutually develop; and
WHEREAS, the Parties also desire to enter into this Agreement to establish
an arrangement whereby TechMatics will manufacture for H Power fuel cell systems
that are capable of providing the electric power to operate laptop computers,
cellular telephones and video cameras and such other products and systems to
which the Parties may hereafter agree;
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth below, H Power and TechMatics agree as
follows:
1. Services. TechMatics shall cooperate with H Power to develop, design,
integrate, and test a fuel cell system that is capable of providing the electric
power to operate a laptop computer and, in particular, meets the specifications
and requirements as provided by IBM. TechMatics' efforts in this regard are
hereinafter referred to as "Services." In the event that the parties hereafter
Page 1 of seven pages
<PAGE>
H Power/TechMatics Agreement
agree to mutually develop other products and systems, then TechMatics' efforts
with relation to those products and systems shall be deemed "Services."
2. Compensation for Services and Marketing. H Power shall pay TechMatics
fees based upon an approved hourly rate for its Services and marketing efforts
performed pursuant to this Agreement by TechMatics' employees. H Power shall
reimburse TechMatics for expenses incurred on H Power's behalf and approved by H
Power.
3. Payments, Invoicing and Statements of Services Performed. H Power shall
pay the amounts agreed to herein within thirty (30) days after receipt of
invoices which shall be furnished to H Power by TechMatics on a biweekly basis.
Said invoices shall detail the number of hours during the prior two weeks for
which Services were rendered as well as a description of the Services performed.
4. Confidential Information. The Parties hereby acknowledge that during
the performance of this Agreement one of the Parties may learn or receive
confidential information from the other Party. Each of the Parties hereby
confirms that all such information relating to the business of the other Party
will be kept confidential, except to the extent that such information is
required to be divulged to the other Party's clerical or support staff or
associates in order to enable the other Party to perform its obligations
hereunder. The Parties shall take appropriate measures to insure that their
staffs are competent and that they do not breach this Paragraph 4.
5. Independent Contractor. TechMatics is an independent contractor and
neither TechMatics nor TechMatics' staff is, or shall be deemed to be, employed
by H Power. H Power is hereby contracting with TechMatics for the Services
described herein. TechMatics is not required to perform the Services during a
fixed hourly or daily time. TechMatics hereby confirms to H Power that H Power
shall not be required to furnish or provide any training to TechMatics to enable
TechMatics to perform the Services hereunder. The Services shall be performed by
TechMatics or TechMatics' staff, and H Power shall not be required to hire,
supervise or pay any assistants to help TechMatics to perform the Services under
this Agreement. TechMatics shall not be required to devote TechMatics' full time
nor the full time of TechMatics' staff to the performance of the Services
required hereunder. It is acknowledged that TechMatics offers services to the
general public. Except to the extent that TechMatics' work must be performed on
or with H Power's computers or H Power's existing software, all materials used
in providing the Services shall be provided by TechMatics. H Power shall not
provide any insurance coverage of any kind for TechMatics or TechMatics' staff.
H Power shall not withhold any amount that would normally be withheld from an
employee's pay.
6. Termination of Services. TechMatics' Services hereunder cannot be
terminated or canceled by H Power short of completion of the Services agreed
upon, except for TechMatics' failure to perform its obligations as required
hereunder. Conversely, subject to H Power's obligation
Page 2 of seven pages
<PAGE>
H Power/TechMatics Agreement
to make full and timely payment(s) for TechMatics' Services hereunder,
TechMatics shall be obligated to complete the Services agreed upon.
7. Rights to Patens and Technologies. H Power shall have all technology
and patent rights with respect to all designs, materials and technologies
developed by H Power under this Agreement. TechMatics shall have all technology
and patent rights with respect to all designs, materials and technologies
developed by TechMatics under this Agreement. As of this date the Parties have
designated specific ownership rights as set forth in Exhibit A appended hereto.
TechMatics hereby grants H Power a world-wide exclusive paid-up license to make
and use all designs, materials and technologies developed under this Agreement
and owned by TechMatics. Notwithstanding the foregoing sentence, TechMatics may
use the designs, materials and technologies developed by it under this Agreement
for products other than fuel cell systems, in which event H Power shall be
entitled to a royalty to be determined. On the other hand, if H Power uses the
designs, materials and technologies developed by TechMatics under this Agreement
for systems and products not manufactured by TechMatics then TechMatics shall be
entitled to a royalty to be determined. In the event that TechMatics fails to
file an application for a patent covering TechMatics' technology that H Power
deems essential, then H Power, at its own expense, shall have the option to
pursue such filing in the name of TechMatics. If such be the case, TechMatics
shall cooperate with H Power by providing H Power the necessary information for
such filing. H Power grants to TechMatics the license to utilize its
technologies for the manufacture of systems as set forth in Paragraph 8
hereinbelow.
8. Manufacture of Specific Systems. TechMatics shall design, develop and
establish a high rate manufacturing facility to manufacture, for and on behalf
of H Power, Laptop Systems, fuel cell systems for cellular telephones and
commercial video cameras, and such other products and systems to which the
Parties may hereafter agree. Subject to TechMatics' ability to deliver systems
of quality on a reasonable basis to H Power, TechMatics shall have exclusive
manufacturing rights in the United States for the aforementioned systems. The
Parties contemplate that the initial facility shall be situated in Long Island,
New York. Manufacturing profits earned by TechMatics shall be determined
hereafter by the Parties hereto. Loans and investments, if any, made by H Power
to finance the establishment and operation of the plant facility shall be a
consideration in determining the manufacturing profit earned by TechMatics. In
the event H Power arranges with others to establish manufacturing facilities to
produce the aforementioned systems outside the United States, then, as
compensation for its efforts in the design, development and establishment of the
initial manufacturing facility, TechMatics shall be entitled to royalties (to be
then determined by the Parties) from said foreign manufacturing facilities.
9. Marketing of Laptop Systems. TechMatics shall provide personnel to
market the Laptop System on behalf of H Power. Said personnel are hereby
authorized by H Power to act on behalf of H Power for said purpose. Marketing
shall include direct contact with H Power's customer at all levels and, if
mutually agreed by the Parties hereto, participation in industry trade shows and
Page 3 of seven pages
<PAGE>
H Power/TechMatics Agreement
conferences. All Sales shall be in the name and for the benefit of H Power. Ho
Power shall provide TechMatics with technical sales support.
10. Parties' Representatives. Unless notified in writing to the contrary,
Bernard Rachowitz shall represent TechMatics and Arthur Kaufman shall represent
H Power during the performance of this Agreement with respect to the development
and design effort as defined herein.
11. Disputes. Any disputes that arise between the Parties with respect to
the performance of this Agreement shall be submitted to binding arbitration by
the American Arbitration Association, to be determined and resolved by said
association under its rules and procedures in effect at the time of submission
and the Parties hereby agree to share equally in the costs of said arbitration.
The final arbitration decision shall be enforceable through the courts of the
State of New Jersey. In the event that this arbitration provision is held
unenforceable by any court of competent jurisdiction, then this Agreement shall
be as binding and enforceable as if this Paragraph 11 were not a part hereof.
12. Taxes. Any and all taxes, except income taxes, imposed or assessed by
reason of this Agreement or its performance, including but not limited to sales
or use taxes, shall be paid by H Power. TechMatics shall be responsible for an
employee's share of any taxes or penalties assessed by reason of any claims that
TechMatics is an employee of H Power.
13. Liability. TechMatics warrants to H Power that the documentation,
analysis, data, programs and services to be delivered or rendered hereunder,
will be of the kind and quality designated and will be performed by qualified
personnel. In no event shall either Party be liable for special or consequential
damages, either by agreement or tort, whether or not the possibility of such
damages has been disclosed to the other Party in advance or could have been
reasonably foreseen by the other Party. Except for intentional malfeasance,
gross negligence or manufacturing defects, H Power shall indemnify and hold
TechMatics harmless from all claims by third parties arising out of the use of
any system in which TechMatics did not participate in the development.
14. Complete Agreement. This Agreement and any Schedules hereto constitute
the entire Agreement between Parties concerning the subject matter hereof. No
other agreements, representations, warranties or other matters, oral or written,
shall be deemed to bind the Parties hereto with respect to the subject matter
hereof. This Agreement may only be modified in writing signed by both Parties
hereto.
15. Applicable Law. TechMatics shall comply with all applicable laws in
performing Services but shall be held harmless for violation of any governmental
procurement regulation to which it may be subject but to which reference is not
made in Exhibit A. This Agreement shall be construed in accordance with the laws
of the State of New Jersey.
Page 4 of seven pages
<PAGE>
H Power/TechMatics Agreement
16. Scope of Agreement. If the scope of any of the provisions of this
Agreement is too broad in any respect whatsoever to permit enforcement to its
full extent, then such provisions shall be enforced to the maximum extent
permitted by law, and the Parties hereto consent and agree that such scope may
be judicially modified accordingly and that the whole of such provisions of this
Agreement shall not thereby fail, but that the scope of such provisions shall be
curtailed only to the extent necessary to conform to law.
17. Additional Services. Additional Services may be added to this
Agreement but only if in writing signed by both the Parties hereto.
18. Notices. All notices, requests, and demands given to or made upon the
Parties shall be in writing and shall be mailed properly addressed, postage
prepaid, registered or certified, or personally delivered to either Party. Such
notice shall be deemed received by the close of business on the date shown on
the certified or registered mail receipt, or when it is actually received,
whichever is sooner.
(i) Notices to H Power should be sent to:
Arthur Kaufman, President
H Power Corp.
60 Montgomery Street
Belleville, NJ 07109
(ii) Notices to TechMatics should be sent to:
Bernard Rachowitz, President
TechMatics Inc.
933 Motor Parkway
Hauppauge, NY 11788
19. Waiver. No term or provision hereof shall be deemed waived and no
breach excused unless such waiver or consent shall be in writing and signed by
the Party claimed to have waived or consented.
20. Assignment. This Agreement may not be assigned by either Party without
the prior written consent of the other Party. Except for the prohibition on
assignment contained in the preceding sentence, this Agreement shall be binding
upon and inure to the benefit of the heirs, successors and assigns of the
Parties hereto.
Page 5 of seven pages
<PAGE>
H Power/TechMatics Agreement
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the date first above written.
H Power Corp. TechMatics, Inc.
By: /s/ Arthur Kaufman By: /s/ Bernard Rachowitz
Arthur Kaufman, President Bernard Rachowitz, President
Page 6 of seven pages
<PAGE>
H Power/TechMatics Agreement
Exhibit A
Technology and Patent Rights
Technology and Patent Rights Ownership
--------------------------------------
Fuel Cell H Power
Cartridge design for metal hydrides TechMatics
Pressure regulator for metal hydrides TechMatics
Bellows design for chemical hydrides TechMatics
Valve design for hydrogen generator TechMatics
Motherboard Plenum Packaging Design TechMatics
Fan design and its assembly TechMatics
Page 7 of seven pages
<PAGE>
EXHIBIT 10.25
TERMINATION AGREEMENT
---------------------
TERMINATION AGREEMENT, made as of the 29th day of March, 2000 by and
between H POWER CORP., a Delaware corporation having its principal place of
business at 1373 Broad Street, Clifton, New Jersey 07013 (the "COMPANY"), and
NBG TECHNOLOGIES, INC., (formerly, "Techmatics Inc."), a Delaware corporation
having its principal place of business at 933 Motor Parkway, Hauppauge, New York
11788 ("NBG")
WITNESSETH:
-----------
WHEREAS, the Company and NBG are parties to an Agreement, dated February
15, 1995 (the "Agreement"), pursuant to which NBG provides certain research and
development consulting services to the Company and has received, among other
things, certain marketing, distribution and manufacturing rights; and
WHEREAS, the Company is contemplating an initial public offering of its
common stock (the "IPO"); and
WHEREAS, the Company and NBG deem it in their respective best interests to
terminate the Agreement.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. TERMINATION, Effective as of the date hereof, the Agreement and each
of the terms, provisions and covenants contained therein, and all other
agreements and understandings among the Company and NBG, whether written or
oral, be and the same hereby are terminated and of no further force or effect.
2 TERMINATION BENEFITS. Pursuant to this Termination Agreement, the
Company will provide NBG with the following benefits:
(a) $100,000 to be wired to NBG on or before March 29, 2000; and
(b) Cashless options to purchase 50,000 shares of the Company's common
stock, to be adjusted for any stock split or dividend resulting from
the final terms of the Company's potential IPO. All said options,
resulting from a stock split or dividend due to the Company's
potential IPO shall be exercisable at a price per share equal to the
underwriting price. Following the IPO, if there should be any changes
in the capitalization of the Company affecting in any manner the
number or kind of outstanding shares of common stock of the Company,
whether such changes have been occasioned by reorganization,
combination of shares, declaration of stock dividends or stock splits,
then the number and kind of shares then subject to the option and the
price to be paid therefore shall be appropriately adjusted by the
Company, provided, however, that in no event shall any such adjustment
result in the Company being required to sell or issue a fractional
share of stock. In the event that the Company is unable to complete
the presently contemplated IPO, NBG shall have the right to exercise
the aforementioned options either with respect to a subsequent IPO or
equity offering and the exercise price of the
<PAGE>
option will be the price per share equal to the underwriting price of
the next IPO or equity offering of the Company.
3. RELEASE OF CLAIMS. In consideration for the benefits offered herein,
each of the parties hereto agrees to fully and completely release and discharge
the other party and its directors, officers, employees and agents (collectively,
the "Released Parties") from any and all claims, causes of action and demands,
of any kind or nature whatsoever, arising at law or in equity, whether known or
unknown, that it has, ever has had, and ever in the future may have, against any
of them, arising up to and including the date both parties signs this
Termination Agreement. Except to enforce the provisions of this Termination
Agreement, each party agrees not to initiate any legal action, charge or
complaint seeking to recover damages against any of the Released Parties
relating to the matters covered or contemplated by this Termination Agreement or
that is based on events that took place prior to the date of execution hereof or
claims existing as of the date of execution hereof. In the event either party
asserts any such actions, charges or complaints in the future each party agrees
that the other party, in addition to any other remedies available at law or in
equity, shall be entitled to recover its costs and the attorneys fees incurred
by one or more of its Released Parties in defending such action, charge or
complaint.
4. MISCELLANEOUS PROVISIONS.
(a) Each of the Company and NBG represents and warrants that (A) it
has all requisite corporate power and authority to execute and
deliver this Termination Agreement and (B) all necessary action,
corporate or otherwise, required to have been taken by applicable
law, its respective charter documents or otherwise to authorize
(i) the approval, execution and delivery of this Termination
Agreement and (ii) the performance of its respective obligations
under this Termination Agreement has been taken.
(b) This Termination Agreement shall not be amended or modified
except by a written instrument signed by the Company and NBG.
(c) Any and all other previous or contemporaneous agreements,
understandings, representations and statements, oral or written,
between the parties relating to, among other things, research and
development consulting services and/or marketing, distribution
and manufacturing rights are hereby superseded and shall be of no
further force or effect.
(d) This Termination Agreement may be executed in counterparts, each
of which shall be deemed to be an original as against any party
whose signature appears thereon, and all of which shall together
constitute one and the same agreement. This Termination Agreement
shall become binding when one or more counterparts hereof,
individually or taken together, shall bear the signature of all
of the parties reflected hereon as the signatories.
(e) This Termination Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard
to the conflicts of laws principles thereof.
<PAGE>
(f) This Termination Agreement shall inure to the benefit of, be
enforceable by, and bind the parties hereto and their respective
successors and assigns. Except as specifically set forth or
referred to herein, nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any
person other than the parties hereto and their successors or
assigns any rights or remedies under or by reason of this
Termination Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Termination as of the day and year first above written.
H-POWER CORPORATION
By: /S/ William L. ZANG
---------------------------
William L. Zang
Chief Financial Officer
NBG TECHNOLOGIES, INC.
By: /S/ Bernard I. RACHOWITZ
---------------------------
Bernard I. Rachowitz
President
<PAGE>
Exhibit 10.26
H POWER CORP.
60 Montgomery Street
Belleville, NJ 07109
March 25, 1996
Duquesne Enterprises
Grant Building
Suite 2420
Pittsburgh, PA 15219
Gentlemen:
This letter shall serve to confirm that in consideration of your agreement
to issue purchase orders to H Power Corp., a Delaware corporation ("H Power"),
pursuant to the Distributor Agreement in substantially the form attached hereto
as Exhibit A (the "Agreement"), H Power agrees to grant to Duquesne Enterprises,
a Pennsylvania corporation, or to any of its parent, subsidiaries or affiliates,
at DE's discretion ("DE"), the exclusive right to distribute H Power stationary
power fuel cell systems in Pennsylvania, Ohio and West Virginia, pursuant to the
Agreement.
The terms and conditions of the exclusive distributorship granted to DE
shall be as set forth in the Agreement, including without limitation, the
following:
(i) H Power shall grant DE "most favored nation" pricing and
terms, including warranties, supplied to bona fide purchasers
in connection with all purchases of H Power stationary power
fuel cell systems by DE.
(ii) The exclusive rights to distribute H Power fuel cells shall be
subject to reasonable sales quotas to be agreed upon in good
faith by H Power and DE.
H Power and DE shall complete, execute and deliver the Agreement upon the
request of DE.
Please confirm your agreement with the foregoing by executing and
returning the enclosed counterpart original of this letter agreement, whereupon
this letter agreement shall be a binding agreement between H Power and DE.
<PAGE>
Intending to be legally bound hereby,
H Power Corp.
By: /s/ R. C. Cope
-------------------------------------
Title: President
----------------------------------
Accepted and agreed to,
with the intent to be legally bound,
this 25th day of March, 1996.
Duquesne Enterprises
By: /s/ Anthony Villiotti
-----------------------------
Title:
--------------------------
<PAGE>
Exhibit A
Intentionally Omitted
<PAGE>
Exhibit 10.27
Confidential Treatment. The portions of this exhibit that have been replaced
with "[*****]" have been filed separately with the Securities and Exchange
Commission and are the subject of an application for confidential treatment.
AMENDED AND RESTATED
FUEL CELL PRODUCT OPERATING AGREEMENT
BY AND AMONG
ECO FUEL CELLS, LLC, H POWER CORP. AND H POWER ENTERPRISES OF
CANADA, INC.
- --------------------------------------------------------------------------------
This Amended and Restated Fuel Cell Product Operating Agreement (this
"Agreement") is made this 9th day of March 2000, by and among ECO Fuel Cells,
LLC, a Delaware limited liability company, with its principal offices at 2201
Cooperative Way, Herndon, Virginia 20171-3025 ("ECO Fuel Cells"), H Power Corp.,
a Delaware corporation, with its principal offices at 1373 Broad Street,
Clifton, New Jersey 07013 and H Power Enterprises of Canada, Inc., a Canadian
corporation with its principal offices located in Montreal, Province of Quebec
(together with H Power Corp. "H Power"). ECO Fuel Cells and H Power are
individually referred to herein as "Party" and collectively as the "Parties".
WHEREAS: Energy Co-Opportunity, Inc. ("ECO") was formed on behalf of its member
rural electric cooperatives to provide them with assistance as they diversify
into new products and services;
WHEREAS: ECO and its member cooperatives wish to build on their long-standing
reputation for providing innovative energy solutions and reliable customer
services;
WHEREAS: ECO has formed ECO Fuel Cells as a wholly-owned subsidiary, to assist
ECO's members in creating new business opportunities in distributed power
generation provided by Fuel Cell Power Systems for Stationary Applications;
WHEREAS: H Power is a technological leader in commercializing low-power fuel
cell systems with a highly-skilled management and technical team and has been
developing high-power fuel cell systems for various uses, including stationary
power applications;
WHEREAS: ECO Fuel Cells and H Power Corp. entered into a Fuel Cell Product
Operating Agreement on July 29, 1999 (the "Operating Agreement") in order to
create a strategic, exclusive relationship in which ECO Fuel Cells agreed to
purchase, market and service H Power Corp's Fuel Cell Power Systems for
Stationary Applications in exchange for exclusive marketing, distribution and
servicing rights in all those areas in the United States now served by rural
electric cooperatives;
WHEREAS: The Parties modified and amended certain terms of the Operating
Agreement pursuant to an Addendum Agreement, dated as of August 25, 1999 (the
"Addendum Agreement," and together with the Operating Agreement, the "Prior
Agreements"); and
WHEREAS: The Parties desire to amend and restate the Prior Agreements as
hereinafter set forth.
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Now, therefore, in consideration of these premises and other good and valuable
consideration, the Parties hereby agree as follows:
ARTICLE 1. PURPOSE AND DEFINITIONS.
The purpose of this Agreement is to establish a close relationship
between, ECO, ECO Fuel Cells and H Power, whereby H Power will use its best
efforts to develop, design and manufacture Fuel Cell Power Systems for
Stationary Applications that meet ECO's Cooperative Members' reasonable
requirements ("Fuel Cell Products"); and ECO Fuel Cells will purchase those Fuel
Cell Products exclusively from H Power and market them through Licensed Members,
all in accordance with the terms of this Agreement.
For the purpose of this Agreement, "Fuel Cell Power System(s) for
Stationary Applications" shall mean fuel cell system(s) from 1kW to 25kW (of all
types except for direct methanol fuel cells), manufactured by H Power, that are
affixed and hard-wired to the premises or facility for the purpose of providing
primary or backup electric power for the premises or facility or their
appurtenances. Each Fuel Cell Power System for Stationary Applications shall be
ready for installation to customers' lines and shall contain all the electronic
and mechanical and other components required for normal operation, including if
necessary, but not limited to, the following: reformer, H2 purification unit, H2
storage unit, heat and water management system, batteries, controls and a power
management system; as well as all subsystems, components, sub- components, parts
and accessories for the Fuel Cell Power Systems.
Throughout this Agreement, "Cooperative Members" shall mean any rural
electric cooperative, and members of ECO's corporate family, including corporate
affiliates of both. For the purpose of this Agreement, "Licensed Members" shall
mean ECO's Cooperative Members that have been assigned exclusive Distribution
Rights to the Fuel Cell Products by ECO Fuel Cells, for their respective service
territories under Article 3.A. or 3.B.
ARTICLE 2. COOPERATION BETWEEN THE PARTIES.
In view of the purpose set forth above and because the Parties believe
that their individual strengths can create valuable synergies to achieve their
mutual goals, they believe that it is important to cooperate with each other in
the following areas:
A. INFORMATION SHARING. H Power will share with ECO Fuel Cells, market
and technical data on the Fuel Cell Products in test and in the
field, and ECO Fuel Cells will, and will require the Licensed
Members to share with H Power information they may receive or
develop with respect to field operation of the Fuel Cell Products.
In response to requests, H Power agrees to advise ECO Fuel Cells of
sales information, including volumes, types of units and purchasers
and information developed on competitors' products and strategies
and other information available to it that could assist ECO Fuel
Cells in marketing and servicing the Fuel Cell Products and in
training Licensed Members to market and
<PAGE>
service the Fuel Cell Products. Both Parties shall otherwise be
responsive to requests from the other for information pertinent to
the purposes of this Agreement.
B. FUEL CELL PRODUCTS THAT MEET COOPERATIVES' NEEDS. H Power recognizes
that it is important to meet the needs of the Licensed Members with
respect to quantity, quality, design, price, serviceability and
other standards for the Fuel Cell Products that are the subject of
this Agreement. To this end, the Parties agree to cooperate with
each other so as to enable H Power to develop, design and
manufacture Fuel Cell Products that meet these needs.
C. FIELD-TESTING. ECO Fuel Cells will use its best efforts: 1. to place
that number of Alpha and Beta Fuel Cell Product test units in the
field with the Licensed Members in various Territories as specified
in Schedule A, and 2. to arrange for the Licensed Members to monitor
Fuel Cell Product performance and otherwise assist H Power in field
testing the units in order to improve the Fuel Cell Products.
D. WAREHOUSING. ECO Fuel Cells will encourage the Licensed Members to
make available warehouse facilities for H Power's use in order to
facilitate the distribution of the Fuel Cell Products to ECO Fuel
Cells and the Licensed Members. Reasonable cost-based fees may be
negotiated by ECO Fuel Cells or Licensed Members for such services.
E. MARKETING, ADVERTISING, AND COMMUNICATION MATERIALS. ECO Fuel Cells
and H Power will work together in a spirit of cooperation to produce
effective marketing, advertising and communication materials with
respect to the Fuel Cell Products that are the subject of this
Agreement ("Marketing Materials"). Each Party will bear its own
Marketing Materials costs and will own the Marketing Materials for
which it pays. Each Party grants the other the right to use its
Marketing Materials.
ECO Fuel Cells and the Licensed Members shall be required to
prominently display in their Marketing Materials which refer to the
Fuel Cell Products the following phrase,"an H Power System", or such
other words or phrases to which the Parties may hereafter agree.
Additionally, H Power shall have the right to have its name, or the
same or similar words and phrases utilized in ECO's, ECO Fuel Cells'
and the Licensed Members' Marketing Materials, prominently displayed
on the Fuel Cell Products.
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ECO, ECO Fuel Cells and the Licensed Members shall have the right to
display their name in Marketing Materials and have such name affixed
on the Fuel Cell Products, provided that H Power's name is also
displayed per the immediately preceding paragraph.
F. TRAINING AND SERVICING. ECO Fuel Cells may provide information and
recommendations to H Power with respect to appropriate training for
Fuel Cell Product installers and service personnel, and H Power
agrees to consider all such information and recommendations
submitted to it.
G. PRODUCTS PROVIDED. H Power shall provide the following products and
services by the dates specified in Schedule A (as well as other
products specified there):
1. Fuel Cell Products that heat water in addition to generating
electricity; and
2. H Power shall develop Fuel Cell Products with the necessary
controls and other equipment to allow full integration and
interface with the electric transmission and distribution
grid, including delivering electric power into the grid.
H. ADDITIONAL COOPERATION. The Parties shall cooperate with each other
to execute such additional documents and take such additional
actions as are necessary to carry out the provisions of this
Agreement.
Article 3. Grant and Acceptance of Distribution Rights.
A. Exclusive Territory and Transfer of Distribution Rights.
1. GRANT AND ACCEPTANCE. H Power grants to ECO Fuel Cells and ECO
Fuel Cells accepts the exclusive right to sell, distribute,
lease, finance, service, and otherwise handle the Fuel Cell
Products ("Distribution Rights") in all the counties or part
thereof in the United States (including the District of
Columbia; and areas that are not a part of any county, such as
Arlington, VA) in which Cooperative Members provide were
providing energy services as of August 15, 1999 (including,
but not limited to electricity, natural gas, propane and other
fuels), as set forth in Schedule B ("Territory").
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2. EXCEPTIONS TO EXCLUSIVE TERRITORY. Notwithstanding anything to
the contrary herein:
a. TELECOMMUNICATIONS NATIONAL ACCOUNT SALES. H Power retains
the exclusive right to sell (but not for retail consumer
distribution) Fuel Cell Power Systems for Stationary
Applications to the national accounts of telecommunications
companies (including, but not limited to, Lucent and
Motorola), for systems that power telecommunications
equipment, either as the primary power source or as a backup
thereto. ECO Fuel Cells may, nevertheless, approach H Power
with specific proposals to sell to that market. In that event,
H Power has the right to refuse such sales, but H Powers'
approval for such sales will not be unreasonably withheld.
In any event, ECO Fuel Cells will be able to provide on an
exclusive basis, Fuel Cell Products to local
telecommunications companies that are not national accounts of
H Power.
b. INDIAN RESERVATIONS. ECO Fuel Cells and H Power shall both
have non-exclusive rights to sales of Fuel Cell Power Systems
for Stationary Applications on Indian reservations. These
sales shall not be subject to any payments for distribution
rights under Article 3.C.2. If, however, the Parties agree in
writing that ECO Fuel Cells can purchase exclusive territory
rights on Indian reservations, then such rights shall be
purchased subject to the payment provisions of Article 3.C.2.
3. ECO FUEL CELLS' ASSIGNMENT RIGHTS. It is ECO Fuel Cells'
intention to assign to Cooperative Members all or some of the
Distribution Rights granted herein. ECO Fuel Cells intends to
work with Cooperative Members to develop marketing
arrangements, which may result in several different
strategies. Therefore, to provide ECO Fuel Cells with the
necessary marketing and corporate structure flexibility, ECO
Fuel Cells shall have the right to assign, sell, license, or
otherwise transfer, all or any part of the Distribution Rights
to ECO, Licensed Members or to any other entity affiliated
with them. ECO Fuel Cells may also assign, sell, license, or
otherwise transfer such rights to a third party with the
consent of H Power, which consent shall not be unreasonably
withheld. All assignments of Distribution Rights by ECO Fuel
Cells shall be in writing and consistent with this Agreement.
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4. NON-COMPETITION.
a. H Power agrees that it will not sell the Fuel Cell Products
either directly or knowingly indirectly for use in the
Territory except to ECO Fuel Cells or to Licensed Members.
b. ECO Fuel Cells agrees that it will not sell the Fuel Cell
Products either directly or knowingly indirectly for use
outside the Territory; that it will not sell Fuel Cell Power
Systems (as Fuel Cell Power Systems are defined in Article 1.)
that compete with H Power's Fuel Cell Power Systems; that it
will not sell such Fuel Cell Power Systems (unless otherwise
agreed to by the Parties) in counties of Cooperative Members
to which no Distribution Rights have been assigned; and that
it will include the terms set forth in this paragraph in all
assignments of Distribution Rights to Cooperative Members.
c. In the event that ECO Fuel Cells or the Licensed Members
are able to purchase from third parties Fuel Cell Power
Systems for Stationary Applications that are: (1) comparable
or superior in quality and performance to H Power's Fuel Cell
Products; (2) at unit prices that are at least [*****] H
Power's unit prices; and (3) on terms and conditions that
otherwise are comparable to H Power's terms and conditions,
then ECO Fuel Cells shall so notify H Power in writing of such
event and if H Power does not, within 30 days after receipt of
said notice from ECO Fuel Cells, [*****], ECO Fuel Cells and
the Licensed Members may purchase those Fuel Cell Power
Systems for Stationary Applications from third parties and the
restrictions against selling fuel cells that compete with H
Power as set forth in paragraphs A. 4.a. and b. of this
Article 3. shall not apply. Thereafter, if ECO Fuel Cells and
the Licensed Members in total, [*****] from H Power during any
[*****] then the exclusive rights granted by Article 3.A.1.
shall terminate and all Territory under this Agreement shall
convert to non-exclusive, Other Territories status, as defined
in Article 3.B.
d. Notwithstanding anything to the contrary contained in this
Agreement (including all schedules, appendices and exhibits
hereto), subject only to H Power's compliance with its
covenants and agreements contained herein, ECO Fuel Cells will
purchase or will arrange to have Licensed Members
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<PAGE>
purchase not less than12,300 Fuel Cell Products as provided in
Article 4A below.
5. FAIR PRICING.
In no event shall ECO Fuel Cells or Licensed Members pay more
for any of H Power's Fuel Cell Power System(s) and services
under this Agreement than others pay for similar quantities or
levels of service.
B. Other Territories. In all counties in the United States not listed
in Schedule B (including the District of Columbia and areas that are
not a part of any county, such as Arlington, VA, "Unlisted Area"),
ECO Fuel Cells shall have a right of first refusal to purchase the
Distribution Rights for such county or counties or part thereof, at
prices and terms no less favorable than the best price and terms
offered by H Power to others. ECO Fuel Cells shall have fourteen
(14) calendars days from the day it receives written notice from H
Power that H Power has received a bona fide offer for an "Unlisted
Area", to match said bona fide offer. In the event ECO Fuel Cells
matches said offer, ECO Fuel Cells' rights (including assignment
rights) to those areas shall be exactly the same as if it were a
Territory as set forth in Article 3, paragraph A.
C. Payment. ECO Fuel Cells will make the following payments to H Power
for the Distribution Rights granted it by H Power:
1. Initial Payment. On the Effective Date of this Agreement, ECO
Fuel Cells will pay H Power two million, five hundred thousand
dollars ($2,500,000).
2. Payments Upon Assignment of Distribution Rights by ECO Fuel
Cells to ECO's Cooperative Members. ECO Fuel Cells intends to
assign its Distribution Rights to ECO's Cooperative Members on
a county by county basis (the District of Columbia and other
areas, e.g., Arlington, VA, that are not a part of any county
will be treated as a county for this purpose). All or part of
a county may be assigned. The Cooperative Member to which the
Distribution Rights have been assigned shall be deemed to be a
"Licensed Member". Within sixty (60) days of the closing of
each such assignment, ECO Fuel Cells will make a one time
payment of [*****] to H Power for each Occupied Housing unit
within each assigned county, or portion thereof, as reflected
in (a) the Census of Population and Housing, published by the
U.S. Bureau of the Census, or (b) if updated
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<PAGE>
census statistics are published by the U.S. Bureau of the
Census before a particular sale of Distribution Rights occurs,
then the latest statistics available for Occupied Housing
units in that area. Except that, within Schedule B
territories, the amount will be [*****] for each Occupied
Housing unit in any area in which ECO's Cooperative Members
were not providing electric service as of August 15, 1999. If
a portion of a county is purchased, the payment shall be the
greater amount of: (a) a reasonable determination by ECO Fuel
Cells and H Power of the percentage of the assigned county
being purchased and multiplying that percentage by the number
of Occupied Housing units in that county according to the
latest census data; or (b) the total number of the Licensed
Member's customers that receive electric, natural gas or
propane service in the area purchased (without any double
counting of any customer) as reflected in the books and
records of the Licensed Member as of the time of the
assignment. This number shall be verified in writing by the
independent auditors of the Licensed Member at its next
regular audit, and such writing shall be provided to H Power
and ECO Fuel Cells.
3. Expiration of Exclusive Territory Rights. ECO Fuel Cells shall
have three (3) years from the date that Fuel Cell Products are
first available in commercial quantities, to assign to a
Licensed Member the exclusive Distribution Rights for any
county or part thereof listed in Schedule B of this Agreement.
Any county or part thereof that has not been assigned by that
date shall no longer be exclusive Territory to ECO Fuel Cells,
but shall revert to the non-exclusive, right of first refusal
status of Other Territories, as defined in Article 3. B.
D. Other H Power Products. H Power, upon written application by ECO
Fuel Cells, will give favorable consideration to granting to ECO
Fuel Cells and its Licensed Members distribution rights to H Power
products or services other than Fuel Cell Power Systems for
Stationary Applications, on an individual product or service basis.
It shall be in H Power's sole discretion whether or not to grant
such rights. In the event rights are granted by H Power, than ECO
Fuel Cells or Licensed Members shall not pay more to H Power for
those products to which rights have been granted than others pay for
similar quantities or levels of those products or services.
E. Improvements. Any new or improved Fuel Cell Product, design,
concept, or other invention (in whole or part thereof) made or
developed by H Power, jointly by H Power with others, or jointly by
H Power and ECO Fuel Cells in the course
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<PAGE>
of creation, development, distribution or operation of the Fuel Cell
Products, will be promptly and completely disclosed to ECO Fuel
Cells by H Power. The foregoing sentence is intended to include
services and methods of operation. H Power will always make
available to ECO Fuel Cells, at no greater than the same cost made
available to any others, all improvements (in whole or part) to the
Fuel Cell Products, all improved Fuel Cell Products, any accessories
for the Fuel Cell Products, and any distribution or operational
improvements.
F. Training. H Power and ECO Fuel Cells will cooperate to develop a
standard program of training, to be held at H Power's expense at
mutually agreed upon, intervals and locations, Travel and living
expenses incurred by ECO Fuel Cells, and Licensed Members' personnel
attending training seminars shall be the full responsibility of ECO
Fuel Cells and the Licensed Members. The training seminars shall
cover the sale, care, maintenance and use of the Fuel Cell Products.
Extra training, beyond the standard program, shall be provided by H
Power on a consulting basis for an additional, reasonable charge.
Article 4. Fuel Cell Product Purchases.
A. Purchases. ECO Fuel Cells will purchase or will arrange to have
Licensed Members purchase not less than 12,300 Fuel Cell Products
from H Power for an aggregate purchase price of $81,180,000, in
accordance with the delivery schedule set forth in Schedule A. ECO
Fuel Cells shall confirm to H Power actual demand for commercial
units five months prior to commencement of commercial production by
H Power (which is anticipated to be approximately June 1, 2001). The
parties shall consult with one another and mutually agree to review
and update the delivery schedule with respect to budgetary
commercial units on a quarterly basis; provided however, that ECO
Fuel Cells shall request delivery and purchase the first 12,300
units no later than the later to occur of (1) December 30, 2003 or
(2) within 30 months of when the tenth commercial unit is shipped.
In making these purchases, H Power will offer pricing and terms to
ECO Fuel Cells and the Licensed Members which in the aggregate are
no less favorable than the best pricing and terms offered to any
other customer of H Power for similar quantities and levels of
service.
ECO Fuel Cells hereby covenants and agrees that during the term of
this Agreement it will use its best efforts to sell, distribute,
lease, finance, service, and otherwise handle the Fuel Cell Products
in its Territory and will require the Licensed Members to do the
same in their respective assigned territories.
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<PAGE>
ECO Fuel Cells shall use its best efforts to include in its
assignments of Distribution Rights to Cooperative Members some sales
quota arrangement, in order to encourage marketing activities.
B. Inspection.
1. During Alpha and Beta Fuel Cell Product Stages. During Alpha
and Beta Fuel Cell Products stages, such Fuel Products may be
shipped to ECO Fuel Cells or the Licensed Members in single
units or larger quantities. Purchasers shall have a reasonable
opportunity to inspect the Fuel Cell Products for compliance
with the standards in Schedule C. Therefore, once a Fuel Cell
Product is received, the purchaser will have thirty (30) days
in which to inspect the Fuel Cell Product for defects and to
notify H Power in writing of such defects.
2. Following Alpha and Beta Fuel Cell Products Stages. At such
time as any individual Fuel Cell Product has passed through
its Alpha and Beta stages and is commercialized, the purchaser
of such Fuel Cell Product will have seven (7) calendar days
from receipt in which to inspect the Fuel Cell Product for any
visible defects in the packaging for the units and to notify H
Power in writing of such defects.
3. Defects. If the Fuel Cell Product is damaged or otherwise does
not pass inspection and H Power has received written notice of
such fact within the time periods set forth in Subparagraphs
1. And 2. above, whichever may be applicable, then H Power
will have thirty (30) days to cure the problem at its own
expense (including shipping, servicing, parts, labor and all
other expenses). Notwithstanding the payment requirements as
set forth in Paragraph C, immediately hereinbelow, the
purchaser need not pay for a Fuel Cell Product that does not
pass inspection until the Fuel Cell Product is repaired,
replaced or shown to be operable by H Power to the purchaser's
reasonable satisfaction.
C. Payments for Fuel Cell Products.
1. During Alpha and Beta Fuel Cell Product States. During Alpha
and Beta stages, invoices submitted by H Power to ECO Fuel
Cells and the Licensed Members for Fuel Cell Products
purchased from H Power shall be paid within sixty (60) days of
the date of the invoices. Any invoices, or portions thereof,
not paid within this 60 day period are subject to interest
10
<PAGE>
at the rate of 1.5% per month. Should ECO or a Licensed Member
fail to pay any amounts due to H Power within the prescribed
sixty (60) days, and the failure is not cured within fifteen
(15) days after written notice of such failure, H Power may
commence collection procedures or judicial action, at law or
in equity, to collect such sums, damages, costs, liabilities
and expenses, including court costs and reasonable attorney's
fees.
2. Following Alpha and Beta Fuel Cell Product Stages. Following
the Alpha and Beta Fuel Cell Product stages, and when each
type of Fuel Cell Product is being produced on a commercial
basis, then invoices submitted by H Power to ECO Fuel Cells
and the Licensed Members for Fuel Cell Products purchased by
them shall be paid within thirty (30) days of the date of the
invoices. Any invoices, or portions thereof, not paid within
this 30-day period are subject to interest at the rate of 1.5%
per month. Should ECO Fuel Cells or Licensed Members fail to
pay any amounts due to H Power within the prescribed thirty
(30) days, and the failure is not cured within fifteen (15)
days after written notice of such failure, H Power may
commence collection procedures or judicial action, at law or
in equity, to collect such sums, damages, costs, liabilities
and expenses, including court costs and reasonable attorneys'
fees. In the event of two (2) or more consecutive failures to
make timely payments, or in the event of three failures in any
preceding twelve (12) month period, H Power shall have the
right to require the defaulting purchaser to prepay for all
other purchases made.
3. Royalty Payments. ECO Fuel Cells and the Licensed Members
shall be entitled to deduct from the per unit invoice price an
amount equal to the per unit royalty payment, if any, for
license of the [*****] U.S. Patent. Should the royalty
payments be a lump sum or upfront payment, the per unit
royalty shall be calculated based on projected sales for the
period of four years, or as the parties may otherwise agree.
4. Payments Due ECO Fuel Cells from H Power. The same payment
procedures outlined above shall apply for any payments that
are to be made by H Power to ECO Fuel Cells.
5. Failure to Deliver. If 1. H Power fails to deliver Fuel Cell
Products and services within the time specified in Schedule
A, Fuel Cell Products and Purchases; and 2. a purchase order
has been issued by ECO Fuel Cells or a Licensed Member and
accepted by H Power (which acceptance shall not be
unreasonably withheld); and
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3. failure to deliver is not cured to ECO Fuel Cells' satisfaction
within 30 days, then H Power shall pay, upon demand, to ECO Fuel
Cells a late fee of [*****], of the price of such late unit, not to
exceed [*****], in addition to any other damages.
Article 5. Fuel Cell Product Performance.
In order to maintain the excellent reputation rural electric cooperatives
have for quality and service to their customers/owners, it is essential that any
Fuel Cell Products H Power sells to ECO Fuel Cells or the Licensed Members meet
the performance standards contained in the attached Schedule C, Performance
Standards.
Article 6. Public Communications.
ECO Fuel Cells will have the right to review, in advance, published
materials (in any medium) prepared by H Power or at its direction, that are
distributed to the public by H Power, that discuss ECO, ECO Fuel Cells, ECO's
Cooperative Members, or the National Rural Utilities Cooperative Finance
Corporation (CFC). Once the language in such materials has been agreed to, such
approval will not be required for subsequent materials using similar language.
ECO Fuel Cells agrees to provide similar review and consent privileges to H
Power for materials it publishes discussing H Power.
Article 7. Term.
This Agreement will be effective on the date specified in the first
paragraph of the Agreement and will remain in effect for a period of ten (10)
years following the date that H Power's tenth commercial unit is shipped to ECO
Fuel Cells and/or its Licensed Members. ECO Fuel Cells shall have an option to
renew this Agreement with the same terms for an additional ten (10)-year term
provided it notifies H Power in writing that it is exercising its option to
renew at least eighteen (18) months prior to the expiration of the initial term.
Article 8. Intellectual Property.
A. Power's Trademarks, License and Literature.
1. H Power's Representations. H Power represents and warrants to
ECO Fuel Cells that to the best of its knowledge, neither the
Fuel Cell Products nor ECO Fuel Cells (in connection with
performing marketing, distribution, and services as authorized
by H Power and by this Agreement) infringes any patent,
copyright, any other party's trade secret,
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<PAGE>
and trademark of any person. H Power further represents and
warrants to ECO Fuel Cells, that to the best of its knowledge,
it is not using any unauthorized trade secrets or confidential
or proprietary information owned by any third party in
developing the Fuel Cell Products, or in assisting ECO Fuel
Cells in marketing, installing and servicing the Fuel Cell
Products, unless the trade secrets and confidential
information had been previously developed by H Power on its
own accord. H Power further represents and warrants that
neither H Power nor any company or individual performing
services or developing the Fuel Cell Products is under any
obligation to assign or give any development work done to any
third party. H Power further warrants that it shall have in
force valid assignment agreements with any of its employees or
subcontractors who may perform services or development of the
Fuel Cell Products.
After the Beta version and after the first commercial version
of Fuel Cell Products are produced, H Power shall obtain an
opinion of counsel as to whether they infringe any
intellectual property rights. ECO shall receive a copy of such
opinion letter. If infringement is suggested, H Power shall
cure. Such opinion shall be in sufficient detail that H Power
could rely on it to avoid a charge of willful infringement.
2. License of Required Intellectual Property. H Power hereby
grants to ECO Fuel Cells and the Licensed Members the right to
utilize, reproduce and distribute H Power literature relating
to the marketing, use and maintenance of the Fuel Cell
Products. Such literature may include, but not be limited to,
training manuals, maintenance manuals, Fuel Cell Product use
instructions, and warranties. All technical and other
proprietary information furnished to ECO Fuel Cells and the
Licensed Members shall be utilized solely for the purposes of
the Distribution Rights granted in this Agreement and not for
any other purposes.
To the extent that any other intellectual property rights of H
Power are needed for ECO Fuel Cells, the Licensed Members, or
their subcontractors to market, install and service Fuel Cell
Products or carry out the intent of any part of the Agreement,
H Power grants to all of them a non-exclusive license in the
intellectual property to be used solely for the purposes of
this Agreement.
ECO Fuel Cells' Trademark Rights. ECO Fuel Cells will have
the right to determine and own a name, logo, and other marks
("Marks") under which the Fuel
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<PAGE>
Cell Products will be sold, assigned, licensed, or otherwise
distributed to Licensed Members and others in the territories
to which ECO Fuel Cells has or may obtain Distribution Rights
under this Agreement. ECO Fuel Cells may obtain trademark
protection for its Marks and will notify H Power at least
thirty (30) days prior to placing any mark in commerce or
filing for any trade or service mark protection.
Article 9. Manufacturer's Indemnification and Hold Harmless.
H Power will indemnify, defend, hold harmless ECO, ECO Fuel Cells, and
Licensed Members for any loss, liability, damages, demands, cost, judgment,
award, expense, or claims, including reasonable attorney fees, which may at any
time be suffered or incurred by ECO Fuel Cells, or Licensed Members arising out
of the sale, resale, use, operation or failure to operate, repair, maintenance,
exportation, importation, promotion and distribution of the Fuel Cell Products
and accessories, or arising out of the use of marketing and promotional material
prepared by H Power, designations, names, brands, insignia, or trademarks which
identify the Fuel Cell Products, accessories or components thereof, or by reason
of or in consequence of defects or design flaws in the Fuel Cell Products or
accessories, or arising out of any claim of infringement of intellectual
property rights or misappropriation of proprietary rights, or arising out of any
claim for damages in connection with the use by anyone of any Fuel Cell Product
or accessory except not the extent that any such claim is based upon the alleged
gross negligence, including the unauthorized warranties, of ECO, ECO Fuel Cells,
Licensed Members, or their distributors, subcontractors or sublicensees. In the
event royalty damage, or punitive damage payments are payable to [*****], its
assignee or licensee on account of U.S. Patent [*****], such payments will be
borne exclusively by H Power.
Article 10. Environmental Liabilities.
A. As used in this Agreement, "hazardous material" means: (1) any
chemical, substance, material, mixture, contaminant or pollutant,
now or hereafter defined as a "hazardous substance" under the
Comprehensive Environmental Response, Compensation and Liability
Act, as amended from time to time, and all regulations thereunder,
as amended from time to time; (2) petroleum, crude oil, or any
fraction thereof; (3) any pollutant, contaminant, special waste or
toxic substance now or hereinafter listed, defined by or subject to
regulation under any federal, state or local statute, ordinance,
rule, regulation, standard, policy, guidance, permit, order,
administrative or judicial decision or pronouncement, previously,
currently, or hereafter in effect, as amended from time to time,
pertaining to health, safety, or the environment, including without
limitation,
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natural resources, environmental regulation, contamination,
pollution, cleanup, or disclosure.
B. H Power hereby releases and discharges ECO, ECO Fuel Cells and all
its successors, representatives, assigns, customers and all Licensed
Members from all claims, which H Power has or may have in the future
against ECO Fuel Cells or a Licensed member arising from or relating
in any way to the treatment, storage, disposal, handling, spillage,
leakage or presence in any form in soils, surface waters,
groundwaters, air, or property, of any wastes or "hazardous
materials," unless such actions are caused by the willful conduct of
ECO Fuel Cells or its Licensed Members.
C. H Power agrees to indemnify, hold harmless, and defend ECO, ECO Fuel
Cells and their successors, representatives, subrogees, assigns,
customers and all Licensed Members from any liability, claim, demand
cause of action, suit, loss, damage, injury, expense, cost,
settlement or judgment of any kind or nature including but not
limited to demands, fines, remediations, or penalties asserted by
any governmental entity, as a result of the treatment, storage,
disposal, handling, spillage, leakage, or presence in any form in
soils, surface waters, groundwater, air, or property, of any wastes
or "hazardous materials" directly caused by Fuel Cell Products or
operations, unless such actions are caused by the willful conduct of
ECO Fuel Cells or its Licensed Members.
Article 11. General Representatives, Warranties and Covenants.
A. Performance and Merchantability. H Power warrants that the Fuel Cell
Products will be built in a workmanlike manner and that the Fuel
Cell Products will perform according to Performance Standards in
Schedule C. H Power will correct any errors or discrepancies in the
Fuel Cell Products that are identified by ECO Fuel Cells, the
Licensed members or by H Power as soon as possible after ECO Fuel
Cells or a Licensed Member informs H Power of any breach of this
warranty. H Power expressly warrants that the Fuel Cell Products are
merchantable and fit for the particular purpose for which they are
designed, and these warranties will be extended to the end users of
the Fuel Cell Products. H Power further warrants that the Fuel Cell
Products have been designed by H Power without reliance on ECO, ECO
Fuel Cells or Licensed Members and are provided to ECO, ECO Fuel
Cells and Licensed Members with appropriate warnings and
instructions.
15
<PAGE>
B. Authority. Each Party represents and warrants to the other that it
has provided truthful answers to due diligence questions and has all
requisite power and authority: 1. to execute, deliver and perform
this Agreement and all agreements, documents and instruments
executed and delivered by each in connection with it; and that it
has no conflicting arrangements or agreements with any other party;
2. to own, lease or operate its property and assets; and 3. to carry
on its business as presently conducted.
C. Liabilities. Each Party represents to the other that to the best of
its knowledge, there is no outstanding or threatened judgment,
litigation or proceeding of any type involving or affecting the
transactions described in this Agreement, except as previously
disclosed in writing to the other Party on or before Closing.
D. Legal Compliance. Each Party shall comply with all governmental
(whether international, federal, state, municipal, or otherwise)
statutes, laws, rules, regulations, ordinances, codes, directives
and orders or any such governmental agency, body, or court
applicable to it, including, but not limited to, environmental,
worker safety, codes and standards, and hazardous materials.
E. Audit. Each Party at its own expense, shall have the right to audit
the other's books and records at reasonable times and places, for
information that is directly related to the subject matter of this
Agreement.
Article 12. Insurance.
H Power agrees to maintain the following minimum levels of insurance:
personal liability: $2,000,000; property liability: $1,000,000; directors and
officers liability: $2,000,000; product liability: $10,000,000 and shall include
ECO and ECO Fuel Cells as named insures. H Power shall provide ECO Fuel Cells at
closing with copies of the applicable policies covering these lines and written
proof from carriers that such policies are in force. ECO and ECO Fuel Cells
agree to carry appropriate insurance at levels that are acceptable to H Power.
Article 13. Confidentiality.
The Parties shall hold in confidence all provisions of this Agreement and
all information provided by either Party to the other in connection with it. The
Parties agree that all information related to this Agreement, not otherwise
known to the public, is confidential and proprietary and is not to be disclosed
to third persons (other than to affiliates, officers, directors, employees and
agents of the Parties, each of whom is bound by this provision) without the
prior written consent of the other Party, except:
16
<PAGE>
A. At the written direction of the other Party;
1. To the extent necessary to comply with law or valid order of a court
of competent jurisdiction, in which event the party shall notify the
other Party as promptly as practicable (and, if possible, prior to
making any disclosure) and shall seek confidential treatment of the
information;
2. As part of its normal reporting or review procedures to its parent
company, Board of Directors, its auditors and its attorneys who
agree to be bound by this provision;
3. In order to enforce any rights pursuant to this Agreement;
4. To obtain appropriate insurance, provided the insurance company
agrees in writing to be bound by this provision;
5. To obtain financing, provided that any person or entity providing
financing agrees in writing to be bound by this provision.
All provisions in this Agreement relating to the confidentiality of information
shall survive the termination, expiration, cancellation or rescission of this
Agreement for a period of five (5) years thereafter.
Article 14. Arbitration.
The Parties agree that any and all controversies or claims arising out of
or relating to this Agreement, or any alleged breach hereof, may be resolved by
binding arbitration as prescribed herein, if both Parties agree. In that event,
the Parties will mutually agree upon one or more arbitrator(s), not to exceed
three, who will conduct the arbitration under the then current rules of the
American Arbitration Association ("AAA"), unless otherwise provided herein. The
arbitrator(s) will be selected in accordance with AAA procedures from a list of
qualified arbitrators maintained by AAA. The arbitration will be conducted in
Washington, D.C. and all expedited procedures prescribed under AAA rules will
apply. Unless the Parties otherwise agree, the proceedings will be completed
within forty-five (45) days of the Parties' receipt of notice of arbitration.
Each Party will bear its own costs and attorney's fees and disbursements; and
shall share equally the costs of the arbitrators.
Article 15. Termination.
Either Party may terminate this Agreement under the following
circumstances:
17
<PAGE>
A. If the other Party hereto shall become bankrupt or insolvent or
shall file any debtor relief proceedings, or if there shall be filed
in Court against the other Party legal proceedings in bankruptcy or
insolvency or reorganization or for the appointment of a receiver or
trustee of all or a portion of such other Party's property, or if
the other Party makes an assignment for the benefit of creditors or
petitions for or enters into an agreement for debtor relief, the
other Party immediately shall notify the Party; and if such
proceedings are not dismissed within a period of one hundred and
fifty (150) days after the institution thereof. Any warranties and
guarantees made to the terminating Party shall still survive such
termination.
H Power Corp. acknowledges and agrees that ECO Fuel Cells has
assigned all of its right, title and interest in and to the
Agreement to the National Rural Utilities Cooperative Finance
Corporation ("CFC"), and that upon the occurrence of an event of
default under the Agreement by ECO Fuel Cells, CFC shall have the
right, but not the obligation, to exercise and perform all of the
rights and obligations of ECO Fuel Cells under the Agreement.
B. Except for failure to perform due to force majeure events, in the
event that the other Party breaches any other material term or
condition of this Agreement and fails to cure such breach within
sixty (60) days after receipt of written notice of the breach from
the non-breaching Party, the non-breaching Party may terminate this
Agreement upon sixty (60) days' advance written notice. In the event
that either Party terminates, CFC shall immediately be notified in
writing by the terminating Party.
Article 16. Other.
A. Notices. All notices or other documents that are required by this
Agreement shall be in writing, and shall be personally served upon
the parties entitled thereto or mailed, postage prepaid, by
certified or registered mail, or sent via established and reliable
courier or overnight service (e.g., FedEx), or by FAX or other
electronic or telecommunications transmission in written form (with
telecommunications confirmation of receipt in a clearly legible
copy) to the recipient's business addressed to such person at the
address specified in this Agreement, or address later specified by
written notice by and to the Parties. Any notice or other
communication by this method shall be deemed given at the time of
sending or certification, except for a notice changing a Party's
address which shall be deemed given at the time of receipt.
18
<PAGE>
B. Governing Law. This Agreement, including any arbitration, shall be
governed, construed, and interpreted in accordance with the internal
laws of the Commonwealth of Virginia (without giving effect to
principles of conflicts of law).
C. Waiver. Any waiver by either Party of a breach of this Agreement
shall not operate as a waiver of any other provision. The failure of
a Party to insist upon strict adherence to any term of this
Agreement shall not be considered a waiver or deprive that Party of
the right thereafter to insist on strict adherence to that term or
any other term of the Agreement. Any waiver must be in writing.
D. Severability. Nothing contained in this Agreement shall be construed
to require the commission of any act contrary to law, and wherever
there is any conflict between any provision of this Agreement and
any law, such law shall prevail; provided however, that in the event
of any such conflict, the provisions of this Agreement shall be
curtailed and limited only to the extent necessary to permit
compliance with the minimum legal requirement, and no other
provisions shall be affected thereby and all other provisions shall
continue in full force and effect.
E. Taxes. Each Party is solely and entirely responsible for payment of
any and all taxes (including, but not limited to, income, real
property, personal property and gross receipts taxes) and
contributions to government programs, that are applicable or related
to the systems, operations, facilities and/or customers of such
Party.
F. Party's Relationship. Neither Party by this Agreement makes the
other Party its legal representative or agent, and neither Party has
the right to obligate the other Party in any manner with respect to
any third parties, except as specifically described herein.
G. Force Majeure. Any failure of delay of performance shall not be
deemed a breach of this Agreement if it results from any acts of
God, civil disorders, insurrections, riots, or wars, Year 2000
failures, weather, fire, flood, national emergencies declared after
the date of this Agreement, government order or regulation,
blockade, embargo, strike, work stoppage or similar causes beyond
the reasonable control of the Parties.
H. Integration of Agreement Provisions. All Schedules and any other
attachments to this Agreement are incorporated as part of this
Agreement; and the Agreement supercedes all previous understandings,
commitments and representations,
19
<PAGE>
whether oral, written or other, concerning the subject matter. Each
Party acknowledges that the other Party has not made any
representations other than those provided in this Agreement.
I. Customs Duties. H. Power will be responsible for any customs
documentation, labeling, processing, duties, charges, and taxes
related to the importation of goods by H Power into the U.S. market
in connection with this Agreement.
J. Modification. This Agreement may be modified only by a written
instrument signed by the Parties.
20
<PAGE>
IN WITNESS WHEREOF, the undersigned hereby execute this Agreement.
Attest: ECO FUEL CELLS, LLC
By:__________________________ By: /s/ John McSweeney
----------------------------------
Title: President and Chief Executive
Officer
-------------------------------
Attest: H POWER CORP.
By:__________________________ By: /s/ H. Frank Gibbard
----------------------------------
Title: Chief Executive Officer
-------------------------------
Attest: H POWER ENTERPRISES OF CANADA, INC.
By:___________________________ By: /s/ H. Frank Gibbard
----------------------------------
Title: President
-------------------------------
<PAGE>
Schedule A, Fuel Cell Products and Purchases
Alpha & Beta Units
<TABLE>
<CAPTION>
Shipment Date Alpha Units ECO Alpha Units ECO Beta Units ECO
X-Factory Mtl Product Type Propane Purchases Natural Gas Purchases Propane Purchases
- ---------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C>
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
-------------------------------------------------------------------
[*****] [*****] [*****] [*****] [*****] [*****]
===================================================================
<CAPTION>
Shipment Date Beta Units ECO Total Total ECO Price
X-Factory Mtl Product Type Natural Gas Purchases Units Purchases USD
- -------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C>
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****] [*****]
-------------------------------
[*****] [*****] [*****] [*****]
===============================
<CAPTION>
Shipment Date $ ECO
X-Factory Mtl Product Type Purchases
- --------------------------------------------------------------------------------
<C> <S> <C> <C>
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] [*****]
<CAPTION>
Commercial Units
Units
Shipment Date Propane and/or Price
X-Factory Mtl Product Type Natural Gas USD
- --------------------------------------------------------------- -----------------------------------------
<C> <S> <C> <C> <C> <C>
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****] [*****] [*****]
--------------------
[*****] [*****] [*****]
====================
<CAPTION>
Shipment Date $ ECO
X-Factory Mtl Product Type Purchases
- ---------------------------------------------------------------
<C> <S> <C> <C>
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] Residential Co-Generation Unit [*****] [*****] [*****]
[*****] [*****]
</TABLE>
- --------------------------------------------------------------------------------
Confidential
<PAGE>
Schedule B, Part I
Counties in Which Rural Electric Cooperatives
Provide Electric Service
Any county in which rural electric cooperatives provide electric service as of
August 15, 1999, but which is inadvertently not included on this list, shall be
deemed to be included.
<TABLE>
<CAPTION>
REANUM REC Name COUNTY FIPS CNTY NAME
- ------ -------- ----------- ---------
<S> <C> <C> <C>
AK002 Matanuska Electric Assn., Inc. 02020 ANCHORAGE
AK002 Matanuska Electric Assn., Inc. 02170 MATANUSKA SUSITNA
AK003 Kodiak Electric Assn., Inc. 02150 KODIAK ISLAND
AK005 Homer Electric Assn., Inc. 02122 KENAI PENINSULA
AK006 Golden Valley Electric Assn., Inc. 02090 FAIRBANKS NORTH STAR
AK006 Golden Valley Electric Assn., Inc. 02290 YUKON KOYUKUK
AK008 Chugach Electric Assn., Inc. 02020 ANCHORAGE
AK008 Chugach Electric Assn., Inc. 02122 KENAI PENINSULA
AK010 Naknek Electric Assn., Inc. 02060 BRISTOL BAY
AK011 Metlakatla Power & Light 02201 PRINCE O WALES-OUTER
AK013 Kotzebue Electric Assn., Inc. 02140 KOBUK
AK018 Copper Valley Electric Assn., Inc. 02261 VALDEZ CORDOVA
AK026 Nushagak Electric Co-op, Inc. 02070 DILLINGHAM
AK027 Alaska Village Electric Co-op, Inc. 02010 ALEUTIAN ISLANDS
AK027 Alaska Village Electric Co-op, Inc. 02050 BETHEL
AK027 Alaska Village Electric Co-op, Inc. 02070 DILLINGHAM
AK027 Alaska Village Electric Co-op, Inc. 02140 KOBUK
AK027 Alaska Village Electric Co-op, Inc. 02150 KODIAK ISLAND
AK027 Alaska Village Electric Co-op, Inc. 02180 NOME
AK027 Alaska Village Electric Co-op, Inc. 02270 WADE HAMPTON
AK027 Alaska Village Electric Co-op, Inc. 02290 YUKON KOYUKUK
AK028 Tlingit-Haida Electrical Authority 02201 PRINCE O WALES-OUTER
AK028 Tlingit-Haida Electrical Authority 02230 SKAGWAY YAKUTAT ANGO
AK028 Tlingit-Haida Electrical Authority 02280 WRANGELL PETERSBURG
AK030 Cordova Electric Cooperative 02261 VALDEZ CORDOVA
AL009 Clarke-Washington EMC 01003 BALDWIN
AL009 Clarke-Washington EMC 01025 CLARKE
AL009 Clarke-Washington EMC 01099 MONROE
AL009 Clarke-Washington EMC 01129 WASHINGTON
AL009 Clarke-Washington EMC 01131 WILCOX
AL018 Cullman Electric Cooperative 01043 CULLMAN
AL018 Cullman Electric Cooperative 01079 LAWRENCE
AL018 Cullman Electric Cooperative 01103 MORGAN
AL018 Cullman Electric Cooperative 01133 WINSTON
AL019 City of Athens Light & Water 01083 LIMESTONE
AL020 Baldwin County EMC 01003 BALDWIN
AL020 Baldwin County EMC 01099 MONROE
AL021 Cherokee Electric Co-op 01015 CALHOUN
AL021 Cherokee Electric Co-op 01019 CHEROKEE
AL021 Cherokee Electric Co-op 01049 DE KALB
1
<PAGE>
AL021 Cherokee Electric Co-op 01055 ETOWAH
AL021 Cherokee Electric Co-op 01095 MARSHALL
AL022 Pioneer Electric Cooperative 01013 BUTLER
AL022 Pioneer Electric Cooperative 01035 CONECUH
AL022 Pioneer Electric Cooperative 01039 COVINGTON
AL022 Pioneer Electric Cooperative 01041 CRENSHAW
AL022 Pioneer Electric Cooperative 01047 DALLAS
AL022 Pioneer Electric Cooperative 01085 LOWNDES
AL022 Pioneer Electric Cooperative 01099 MONROE
AL022 Pioneer Electric Cooperative 01131 WILCOX
AL023 South Alabama Electric Co-op 01011 BULLOCK
AL023 South Alabama Electric Co-op 01013 BUTLER
AL023 South Alabama Electric Co-op 01031 COFFEE
AL023 South Alabama Electric Co-op 01041 CRENSHAW
AL023 South Alabama Electric Co-op 01101 MONTGOMERY
AL023 South Alabama Electric Co-op 01109 PIKE
AL025 Dixie Electric Co-op 01011 BULLOCK
AL025 Dixie Electric Co-op 01081 LEE
AL025 Dixie Electric Co-op 01085 LOWNDES
AL025 Dixie Electric Co-op 01087 MACON
AL025 Dixie Electric Co-op 01101 MONTGOMERY
AL025 Dixie Electric Co-op 01109 PIKE
AL025 Dixie Electric Co-op 01123 TALLAPOOSA
AL026 Pea River Electric Co-op 01005 BARBOUR
AL026 Pea River Electric Co-op 01045 DALE
AL026 Pea River Electric Co-op 01067 HENRY
AL027 Southern Pine Electric Co-op 01003 BALDWIN
AL027 Southern Pine Electric Co-op 01035 CONECUH
AL027 Southern Pine Electric Co-op 01039 COVINGTON
AL027 Southern Pine Electric Co-op 01053 ESCAMBIA
AL027 Southern Pine Electric Co-op 01099 MONROE
AL028 Tallapoosa River Electric Co-op 01005 BARBOUR
AL028 Tallapoosa River Electric Co-op 01017 CHAMBERS
AL028 Tallapoosa River Electric Co-op 01027 CLAY
AL028 Tallapoosa River Electric Co-op 01081 LEE
AL028 Tallapoosa River Electric Co-op 01111 RANDOLPH
AL028 Tallapoosa River Electric Co-op 01113 RUSSELL
AL028 Tallapoosa River Electric Co-op 01123 TALLAPOOSA
AL029 Black Warrior EMC 01023 CHOCTAW
AL029 Black Warrior EMC 01025 CLARKE
AL029 Black Warrior EMC 01047 DALLAS
AL029 Black Warrior EMC 01063 GREENE
AL029 Black Warrior EMC 01065 HALE
AL029 Black Warrior EMC 01091 MARENGO
AL029 Black Warrior EMC 01105 PERRY
AL029 Black Warrior EMC 01107 PICKENS
AL029 Black Warrior EMC 01119 SUMTER
AL029 Black Warrior EMC 01125 TUSCALOOSA
AL029 Black Warrior EMC 01129 WASHINGTON
AL029 Black Warrior EMC 01131 WILCOX
AL030 Central Alabama Electric Co-op 01001 AUTAUGA
AL030 Central Alabama Electric Co-op 01021 CHILTON
2
<PAGE>
AL030 Central Alabama Electric Co-op 01037 COOSA
AL030 Central Alabama Electric Co-op 01051 ELMORE
AL032 Wiregrass Electric Co-op, Inc. 01031 COFFEE
AL032 Wiregrass Electric Co-op, Inc. 01039 COVINGTON
AL032 Wiregrass Electric Co-op, Inc. 01045 DALE
AL032 Wiregrass Electric Co-op, Inc. 01061 GENEVA
AL032 Wiregrass Electric Co-op, Inc. 01069 HOUSTON
AL033 Coosa Valley Electric Co-op, Inc. 01015 CALHOUN
AL033 Coosa Valley Electric Co-op, Inc. 01027 CLAY
AL033 Coosa Valley Electric Co-op, Inc. 01055 ETOWAH
AL033 Coosa Valley Electric Co-op, Inc. 01115 SAINT CLAIR
AL033 Coosa Valley Electric Co-op, Inc. 01117 SHELBY
AL033 Coosa Valley Electric Co-op, Inc. 01121 TALLADEGA
AL035 North Alabama Electric Co-op 01071 JACKSON
AL035 North Alabama Electric Co-op 01095 MARSHALL
AL036 Sand Mountain Electric Co-op 01049 DE KALB
AL036 Sand Mountain Electric Co-op 01071 JACKSON
AL036 Sand Mountain Electric Co-op 01095 MARSHALL
AL037 Joe Wheeler EMC 01079 LAWRENCE
AL037 Joe Wheeler EMC 01103 MORGAN
AL039 Tombigbee Electric Co-op, Inc. 01057 FAYETTE
AL039 Tombigbee Electric Co-op, Inc. 01075 LAMAR
AL039 Tombigbee Electric Co-op, Inc. 01093 MARION
AL044 Covington Electric Co-op 01031 COFFEE
AL044 Covington Electric Co-op 01039 COVINGTON
AL044 Covington Electric Co-op 01041 CRENSHAW
AL044 Covington Electric Co-op 01045 DALE
AL044 Covington Electric Co-op 01053 ESCAMBIA
AL044 Covington Electric Co-op 01061 GENEVA
AL046 Franklin Electric Co-op, Inc. 01033 COLBERT
AL046 Franklin Electric Co-op, Inc. 01059 FRANKLIN
AL046 Franklin Electric Co-op, Inc. 01079 LAWRENCE
AL047 Arab Electric Cooperative, Inc. 01043 CULLMAN
AL047 Arab Electric Cooperative, Inc. 01095 MARSHALL
AL047 Arab Electric Cooperative, Inc. 01103 MORGAN
AL048 City of Florence Rural Elec. 01077 LAUDERDALE
AR009 Craighead Electric Co-op Corp. 05031 CRAIGHEAD
AR009 Craighead Electric Co-op Corp. 05035 CRITTENDEN
AR009 Craighead Electric Co-op Corp. 05055 GREENE
AR009 Craighead Electric Co-op Corp. 05063 INDEPENDENCE
AR009 Craighead Electric Co-op Corp. 05075 LAWRENCE
AR009 Craighead Electric Co-op Corp. 05111 POINSETT
AR009 Craighead Electric Co-op Corp. 05121 RANDOLPH
AR009 Craighead Electric Co-op Corp. 05135 SHARP
AR010 First Electric Co-op Corp. 05023 CLEBURNE
AR010 First Electric Co-op Corp. 05029 CONWAY
AR010 First Electric Co-op Corp. 05045 FAULKNER
AR010 First Electric Co-op Corp. 05051 GARLAND
AR010 First Electric Co-op Corp. 05053 GRANT
AR010 First Electric Co-op Corp. 05063 INDEPENDENCE
AR010 First Electric Co-op Corp. 05085 LONOKE
AR010 First Electric Co-op Corp. 05105 PERRY
3
<PAGE>
AR010 First Electric Co-op Corp. 05117 PRAIRIE
AR010 First Electric Co-op Corp. 05119 PULASKI
AR010 First Electric Co-op Corp. 05125 SALINE
AR010 First Electric Co-op Corp. 05137 STONE
AR010 First Electric Co-op Corp. 05145 WHITE
AR010 First Electric Co-op Corp. 05149 YELL
AR011 Farmers Electric Co-op Corp. 05063 INDEPENDENCE
AR011 Farmers Electric Co-op Corp. 05067 JACKSON
AR011 Farmers Electric Co-op Corp. 05111 POINSETT
AR011 Farmers Electric Co-op Corp. 05145 WHITE
AR011 Farmers Electric Co-op Corp. 05147 WOODRUFF
AR012 Southwest Arkansas Elec. Co-op Corp 05027 COLUMBIA
AR012 Southwest Arkansas Elec. Co-op Corp 05057 HEMPSTEAD
AR012 Southwest Arkansas Elec. Co-op Corp 05061 HOWARD
AR012 Southwest Arkansas Elec. Co-op Corp 05073 LAFAYETTE
AR012 Southwest Arkansas Elec. Co-op Corp 05081 LITTLE RIVER
AR012 Southwest Arkansas Elec. Co-op Corp 05091 MILLER
AR012 Southwest Arkansas Elec. Co-op Corp 05113 POLK
AR012 Southwest Arkansas Elec. Co-op Corp 05133 SEVIER
AR012 Southwest Arkansas Elec. Co-op Corp 40089 MCCURTAIN
AR012 Southwest Arkansas Elec. Co-op Corp 48037 BOWIE
AR013 Arkansas Valley Elec. Co-op Corp. 05033 CRAWFORD
AR013 Arkansas Valley Elec. Co-op Corp. 05047 FRANKLIN
AR013 Arkansas Valley Elec. Co-op Corp. 05071 JOHNSON
AR013 Arkansas Valley Elec. Co-op Corp. 05083 LOGAN
AR013 Arkansas Valley Elec. Co-op Corp. 05087 MADISON
AR013 Arkansas Valley Elec. Co-op Corp. 05101 NEWTON
AR013 Arkansas Valley Elec. Co-op Corp. 05115 POPE
AR013 Arkansas Valley Elec. Co-op Corp. 05127 SCOTT
AR013 Arkansas Valley Elec. Co-op Corp. 05131 SEBASTIAN
AR013 Arkansas Valley Elec. Co-op Corp. 05149 YELL
AR013 Arkansas Valley Elec. Co-op Corp. 40001 ADAIR
AR013 Arkansas Valley Elec. Co-op Corp. 40079 LEFLORE
AR013 Arkansas Valley Elec. Co-op Corp. 40135 SEQUOYAH
AR015 Woodruff Electric Co-op Corp. 05037 CROSS
AR015 Woodruff Electric Co-op Corp. 05077 LEE
AR015 Woodruff Electric Co-op Corp. 05095 MONROE
AR015 Woodruff Electric Co-op Corp. 05107 PHILLIPS
AR015 Woodruff Electric Co-op Corp. 05117 PRAIRIE
AR015 Woodruff Electric Co-op Corp. 05123 SAINT FRANCIS
AR015 Woodruff Electric Co-op Corp. 05147 WOODRUFF
AR018 Carroll Electric Co-op Corp. 05007 BENTON
AR018 Carroll Electric Co-op Corp. 05009 BOONE
AR018 Carroll Electric Co-op Corp. 05015 CARROLL
AR018 Carroll Electric Co-op Corp. 05087 MADISON
AR018 Carroll Electric Co-op Corp. 05101 NEWTON
AR018 Carroll Electric Co-op Corp. 05115 POPE
AR018 Carroll Electric Co-op Corp. 05143 WASHINGTON
AR018 Carroll Electric Co-op Corp. 29009 BARRY
AR018 Carroll Electric Co-op Corp. 29209 STONE
AR018 Carroll Electric Co-op Corp. 29213 TANEY
AR021 C & L Electric Co-op Corp. 05011 BRADLEY
4
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AR021 C & L Electric Co-op Corp. 05025 CLEVELAND
AR021 C & L Electric Co-op Corp. 05039 DALLAS
AR021 C & L Electric Co-op Corp. 05041 DESHA
AR021 C & L Electric Co-op Corp. 05043 DREW
AR021 C & L Electric Co-op Corp. 05053 GRANT
AR021 C & L Electric Co-op Corp. 05069 JEFFERSON
AR021 C & L Electric Co-op Corp. 05079 LINCOLN
AR022 Clay County Electric Co-op Corp. 05021 CLAY
AR022 Clay County Electric Co-op Corp. 05055 GREENE
AR022 Clay County Electric Co-op Corp. 05121 RANDOLPH
AR022 Clay County Electric Co-op Corp. 29023 BUTLER
AR022 Clay County Electric Co-op Corp. 29149 OREGON
AR022 Clay County Electric Co-op Corp. 29181 RIPLEY
AR023 Mississippi County Elec. Co-op 05093 MISSISSIPPI
AR024 Ozarks Electric Co-op Corp. 05007 BENTON
AR024 Ozarks Electric Co-op Corp. 05033 CRAWFORD
AR024 Ozarks Electric Co-op Corp. 05047 FRANKLIN
AR024 Ozarks Electric Co-op Corp. 05087 MADISON
AR024 Ozarks Electric Co-op Corp. 05143 WASHINGTON
AR024 Ozarks Electric Co-op Corp. 40001 ADAIR
AR024 Ozarks Electric Co-op Corp. 40021 CHEROKEE
AR024 Ozarks Electric Co-op Corp. 40041 DELAWARE
AR026 North Arkansas Electric Co-op, Inc. 05005 BAXTER
AR026 North Arkansas Electric Co-op, Inc. 05049 FULTON
AR026 North Arkansas Electric Co-op, Inc. 05065 IZARD
AR026 North Arkansas Electric Co-op, Inc. 05089 MARION
AR026 North Arkansas Electric Co-op, Inc. 05135 SHARP
AR026 North Arkansas Electric Co-op, Inc. 05137 STONE
AR027 Ouachita Electric Co-op Corp. 05011 BRADLEY
AR027 Ouachita Electric Co-op Corp. 05013 CALHOUN
AR027 Ouachita Electric Co-op Corp. 05039 DALLAS
AR027 Ouachita Electric Co-op Corp. 05099 NEVADA
AR027 Ouachita Electric Co-op Corp. 05103 OUACHITA
AR028 Petit Jean Electric Co-op 05023 CLEBURNE
AR028 Petit Jean Electric Co-op 05029 CONWAY
AR028 Petit Jean Electric Co-op 05045 FAULKNER
AR028 Petit Jean Electric Co-op 05089 MARION
AR028 Petit Jean Electric Co-op 05101 NEWTON
AR028 Petit Jean Electric Co-op 05115 POPE
AR028 Petit Jean Electric Co-op 05129 SEARCY
AR028 Petit Jean Electric Co-op 05137 STONE
AR028 Petit Jean Electric Co-op 05141 VAN BUREN
AR029 South Central Arkansas Elec. Co-op 05019 CLARK
AR029 South Central Arkansas Elec. Co-op 05039 DALLAS
AR029 South Central Arkansas Elec. Co-op 05057 HEMPSTEAD
AR029 South Central Arkansas Elec. Co-op 05059 HOT SPRING
AR029 South Central Arkansas Elec. Co-op 05061 HOWARD
AR029 South Central Arkansas Elec. Co-op 05097 MONTGOMERY
AR029 South Central Arkansas Elec. Co-op 05099 NEVADA
AR029 South Central Arkansas Elec. Co-op 05109 PIKE
AR030 Riceland Electric Cooperative 05001 ARKANSAS
AR030 Riceland Electric Cooperative 05069 JEFFERSON
5
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AR030 Riceland Electric Cooperative 05085 LONOKE
AR030 Riceland Electric Cooperative 05095 MONROE
AR030 Riceland Electric Cooperative 05117 PRAIRIE
AR031 Ashley-Chicot Electric Co-op, Inc. 05003 ASHLEY
AR031 Ashley-Chicot Electric Co-op, Inc. 05017 CHICOT
AR031 Ashley-Chicot Electric Co-op, Inc. 05043 DREW
AR031 Ashley-Chicot Electric Co-op, Inc. 22067 MOREHOUSE
AR033 Rich Mountain Electric Co-op, Inc. 05061 HOWARD
AR033 Rich Mountain Electric Co-op, Inc. 05097 MONTGOMERY
AR033 Rich Mountain Electric Co-op, Inc. 05113 POLK
AR033 Rich Mountain Electric Co-op, Inc. 05133 SEVIER
AR033 Rich Mountain Electric Co-op, Inc. 40079 LEFLORE
AR033 Rich Mountain Electric Co-op, Inc. 40089 MCCURTAIN
AZ013 Navopache Electric Co-op, Inc. 04001 APACHE
AZ013 Navopache Electric Co-op, Inc. 04007 GILA
AZ013 Navopache Electric Co-op, Inc. 04011 GREENLEE
AZ013 Navopache Electric Co-op, Inc. 04017 NAVAJO
AZ013 Navopache Electric Co-op, Inc. 35003 CATRON
AZ014 Sulphur Springs Valley Elec. Co-op 04003 COCHISE
AZ014 Sulphur Springs Valley Elec. Co-op 04009 GRAHAM
AZ014 Sulphur Springs Valley Elec. Co-op 04019 PIMA
AZ014 Sulphur Springs Valley Elec. Co-op 04023 SANTA CRUZ
AZ017 Graham County Electric Co-op, Inc. 04009 GRAHAM
AZ020 Trico Electric Co-op, Inc. 04019 PIMA
AZ020 Trico Electric Co-op, Inc. 04021 PINAL
AZ020 Trico Electric Co-op, Inc. 04023 SANTA CRUZ
AZ022 Mohave Electric Co-op, Inc. 04005 COCONINO
AZ022 Mohave Electric Co-op, Inc. 04015 MOHAVE
AZ022 Mohave Electric Co-op, Inc. 04025 YAVAPAI
AZ023 Duncan Valley Electric Co-op, Inc. 04009 GRAHAM
AZ023 Duncan Valley Electric Co-op, Inc. 04011 GREENLEE
AZ023 Duncan Valley Electric Co-op, Inc. 35017 GRANT
AZ023 Duncan Valley Electric Co-op, Inc. 35023 HIDALGO
AZ026 Wellton-Mohawk Irr. & Drainage 04027 YUMA
AZ027 Navajo Tribal Utility Authority 04001 APACHE
AZ027 Navajo Tribal Utility Authority 04005 COCONINO
AZ027 Navajo Tribal Utility Authority 04017 NAVAJO
AZ027 Navajo Tribal Utility Authority 35031 MCKINLEY
AZ027 Navajo Tribal Utility Authority 35045 SAN JUAN
AZ029 Electrical District #2 04021 PINAL
AZ030 Tohono O'odham Utility Authority 04013 MARICOPA
AZ030 Tohono O'odham Utility Authority 04019 PIMA
AZ030 Tohono O'odham Utility Authority 04021 PINAL
CA006 Surprise Valley Electrification 06035 LASSEN
CA006 Surprise Valley Electrification 06049 MODOC
CA006 Surprise Valley Electrification 32031 WASHOE
CA006 Surprise Valley Electrification 41037 LAKE
CA016 Plumas-Sierra Rural Electric Co-op 06035 LASSEN
CA016 Plumas-Sierra Rural Electric Co-op 06063 PLUMAS
CA016 Plumas-Sierra Rural Electric Co-op 06091 SIERRA
CA016 Plumas-Sierra Rural Electric Co-op 32031 WASHOE
CA041 Anza Electric Co-op, Inc. 06065 RIVERSIDE
6
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CA044 Truckee-Donner PUD 06057 NEVADA
CA044 Truckee-Donner PUD 06061 PLACER
CO007 Grand Valley Rural Power Lines 08029 DELTA
CO007 Grand Valley Rural Power Lines 08045 GARFIELD
CO007 Grand Valley Rural Power Lines 08077 MESA
CO014 San Luis Valley REC, Inc. 08003 ALAMOSA
CO014 San Luis Valley REC, Inc. 08021 CONEJOS
CO014 San Luis Valley REC, Inc. 08023 COSTILLA
CO014 San Luis Valley REC, Inc. 08053 HINSDALE
CO014 San Luis Valley REC, Inc. 08079 MINERAL
CO014 San Luis Valley REC, Inc. 08105 RIO GRANDE
CO014 San Luis Valley REC, Inc. 08109 SAGUACHE
CO015 Morgan County REA 08001 ADAMS
CO015 Morgan County REA 08005 ARAPAHOE
CO015 Morgan County REA 08075 LOGAN
CO015 Morgan County REA 08087 MORGAN
CO015 Morgan County REA 08121 WASHINGTON
CO015 Morgan County REA 08123 WELD
CO016 Intermountain REA 08001 ADAMS
CO016 Intermountain REA 08005 ARAPAHOE
CO016 Intermountain REA 08019 CLEAR CREEK
CO016 Intermountain REA 08035 DOUGLAS
CO016 Intermountain REA 08039 ELBERT
CO016 Intermountain REA 08041 EL PASO
CO016 Intermountain REA 08043 FREMONT
CO016 Intermountain REA 08059 JEFFERSON
CO016 Intermountain REA 08093 PARK
CO016 Intermountain REA 08119 TELLER
CO017 Southeast Colorado Power Assn. 08009 BACA
CO017 Southeast Colorado Power Assn. 08011 BENT
CO017 Southeast Colorado Power Assn. 08017 CHEYENNE
CO017 Southeast Colorado Power Assn. 08025 CROWLEY
CO017 Southeast Colorado Power Assn. 08041 EL PASO
CO017 Southeast Colorado Power Assn. 08061 KIOWA
CO017 Southeast Colorado Power Assn. 08071 LAS ANIMAS
CO017 Southeast Colorado Power Assn. 08073 LINCOLN
CO017 Southeast Colorado Power Assn. 08089 OTERO
CO017 Southeast Colorado Power Assn. 08099 PROWERS
CO017 Southeast Colorado Power Assn. 08101 PUEBLO
CO018 Gunnison County Electric Assn. 08051 GUNNISON
CO018 Gunnison County Electric Assn. 08053 HINSDALE
CO018 Gunnison County Electric Assn. 08109 SAGUACHE
CO020 Delta-Montrose Electric Assn. 08029 DELTA
CO020 Delta-Montrose Electric Assn. 08051 GUNNISON
CO020 Delta-Montrose Electric Assn. 08085 MONTROSE
CO022 United Power, Inc. 08001 ADAMS
CO022 United Power, Inc. 08013 BOULDER
CO022 United Power, Inc. 08047 GILPIN
CO022 United Power, Inc. 08059 JEFFERSON
CO022 United Power, Inc. 08123 WELD
CO025 San Isabel Electric Assn. 08023 COSTILLA
CO025 San Isabel Electric Assn. 08027 CUSTER
7
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CO025 San Isabel Electric Assn. 08043 FREMONT
CO025 San Isabel Electric Assn. 08055 HUERFANO
CO025 San Isabel Electric Assn. 08071 LAS ANIMAS
CO025 San Isabel Electric Assn. 08089 OTERO
CO025 San Isabel Electric Assn. 08101 PUEBLO
CO026 San Miguel Power Assn., Inc. 08033 DOLORES
CO026 San Miguel Power Assn., Inc. 08077 MESA
CO026 San Miguel Power Assn., Inc. 08085 MONTROSE
CO026 San Miguel Power Assn., Inc. 08091 OURAY
CO026 San Miguel Power Assn., Inc. 08111 SAN JUAN
CO026 San Miguel Power Assn., Inc. 08113 SAN MIGUEL
CO029 Highline Electric Association 08075 LOGAN
CO029 Highline Electric Association 08087 MORGAN
CO029 Highline Electric Association 08095 PHILLIPS
CO029 Highline Electric Association 08115 SEDGWICK
CO029 Highline Electric Association 08121 WASHINGTON
CO029 Highline Electric Association 08123 WELD
CO029 Highline Electric Association 08125 YUMA
CO029 Highline Electric Association 31029 CHASE
CO029 Highline Electric Association 31049 DEUEL
CO029 Highline Electric Association 31057 DUNDY
CO029 Highline Electric Association 31135 PERKINS
CO031 Poudre Valley REA, Inc. 08013 BOULDER
CO031 Poudre Valley REA, Inc. 08069 LARIMER
CO031 Poudre Valley REA, Inc. 08123 WELD
CO032 La Plata Electric Assn., Inc. 08007 ARCHULETA
CO032 La Plata Electric Assn., Inc. 08053 HINSDALE
CO032 La Plata Electric Assn., Inc. 08067 LA PLATA
CO032 La Plata Electric Assn., Inc. 08079 MINERAL
CO032 La Plata Electric Assn., Inc. 08111 SAN JUAN
CO032 La Plata Electric Assn., Inc. 35039 RIO ARRIBA
CO033 Empire Electric Assn., Inc. 08033 DOLORES
CO033 Empire Electric Assn., Inc. 08083 MONTEZUMA
CO033 Empire Electric Assn., Inc. 08113 SAN MIGUEL
CO033 Empire Electric Assn., Inc. 49037 SAN JUAN
CO034 Holy Cross Electric Assn., Inc. 08037 EAGLE
CO034 Holy Cross Electric Assn., Inc. 08045 GARFIELD
CO034 Holy Cross Electric Assn., Inc. 08051 GUNNISON
CO034 Holy Cross Electric Assn., Inc. 08097 PITKIN
CO035 Sangre De Cristo Electric Assn. 08015 CHAFFEE
CO035 Sangre De Cristo Electric Assn. 08027 CUSTER
CO035 Sangre De Cristo Electric Assn. 08043 FREMONT
CO035 Sangre De Cristo Electric Assn. 08065 LAKE
CO035 Sangre De Cristo Electric Assn. 08109 SAGUACHE
CO036 Yampa Valley Electric Assn., Inc. 08037 EAGLE
CO036 Yampa Valley Electric Assn., Inc. 08049 GRAND
CO036 Yampa Valley Electric Assn., Inc. 08081 MOFFAT
CO036 Yampa Valley Electric Assn., Inc. 08103 RIO BLANCO
CO036 Yampa Valley Electric Assn., Inc. 08107 ROUTT
CO036 Yampa Valley Electric Assn., Inc. 56007 CARBON
CO037 Mountain View Electric Assn., Inc. 08005 ARAPAHOE
8
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CO037 Mountain View Electric Assn., Inc. 08035 DOUGLAS
CO037 Mountain View Electric Assn., Inc. 08039 ELBERT
CO037 Mountain View Electric Assn., Inc. 08041 EL PASO
CO037 Mountain View Electric Assn., Inc. 08073 LINCOLN
CO037 Mountain View Electric Assn., Inc. 08101 PUEBLO
CO037 Mountain View Electric Assn., Inc. 08121 WASHINGTON
CO038 Y. W. Electric Assn., Inc. 08063 KIT CARSON
CO038 Y. W. Electric Assn., Inc. 08121 WASHINGTON
CO038 Y. W. Electric Assn., Inc. 08125 YUMA
CO039 K. C. Electric Association 08017 CHEYENNE
CO039 K. C. Electric Association 08063 KIT CARSON
CO039 K. C. Electric Association 08073 LINCOLN
CO040 White River Electric Assn., Inc. 08045 GARFIELD
CO040 White River Electric Assn., Inc. 08081 MOFFAT
CO040 White River Electric Assn., Inc. 08103 RIO BLANCO
CO042 Mountain Parks Electric, Inc. 08049 GRAND
CO042 Mountain Parks Electric, Inc. 08057 JACKSON
CO042 Mountain Parks Electric, Inc. 08069 LARIMER
CO042 Mountain Parks Electric, Inc. 08107 ROUTT
CO042 Mountain Parks Electric, Inc. 08117 SUMMIT
DE002 Delaware Electric Co-op, Inc. 10001 KENT
DE002 Delaware Electric Co-op, Inc. 10005 SUSSEX
FL014 Clay Electric Co-op, Inc. 12001 ALACHUA
FL014 Clay Electric Co-op, Inc. 12003 BAKER
FL014 Clay Electric Co-op, Inc. 12007 BRADFORD
FL014 Clay Electric Co-op, Inc. 12019 CLAY
FL014 Clay Electric Co-op, Inc. 12023 COLUMBIA
FL014 Clay Electric Co-op, Inc. 12031 DUVAL
FL014 Clay Electric Co-op, Inc. 12069 LAKE
FL014 Clay Electric Co-op, Inc. 12075 LEVY
FL014 Clay Electric Co-op, Inc. 12083 MARION
FL014 Clay Electric Co-op, Inc. 12107 PUTNAM
FL014 Clay Electric Co-op, Inc. 12125 UNION
FL014 Clay Electric Co-op, Inc. 12127 VOLUSIA
FL015 Suwannee Valley Electric Co-op 12023 COLUMBIA
FL015 Suwannee Valley Electric Co-op 12047 HAMILTON
FL015 Suwannee Valley Electric Co-op 12067 LAFAYETTE
FL015 Suwannee Valley Electric Co-op 12121 SUWANNEE
FL016 Sumter Electric Co-op, Inc. 12017 CITRUS
FL016 Sumter Electric Co-op, Inc. 12053 HERNANDO
FL016 Sumter Electric Co-op, Inc. 12069 LAKE
FL016 Sumter Electric Co-op, Inc. 12075 LEVY
FL016 Sumter Electric Co-op, Inc. 12083 MARION
FL016 Sumter Electric Co-op, Inc. 12101 PASCO
FL016 Sumter Electric Co-op, Inc. 12119 SUMTER
FL017 West Florida Electric Co-op Assn. 12013 CALHOUN
FL017 West Florida Electric Co-op Assn. 12059 HOLMES
FL017 West Florida Electric Co-op Assn. 12063 JACKSON
FL017 West Florida Electric Co-op Assn. 12133 WASHINGTON
FL022 Escambia River Electric Co-op, Inc. 12033 ESCAMBIA
FL022 Escambia River Electric Co-op, Inc. 12113 SANTA ROSA
FL023 Central Florida Electric Co-op 12001 ALACHUA
FL023 Central Florida Electric Co-op 12017 CITRUS
9
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FL023 Central Florida Electric Co-op 12029 DIXIE
FL023 Central Florida Electric Co-op 12041 GILCHRIST
FL023 Central Florida Electric Co-op 12075 LEVY
FL024 Florida Keys Electric Co-op Assn. 12087 MONROE
FL026 Peace River Electric Co-op, Inc. 12009 BREVARD
FL026 Peace River Electric Co-op, Inc. 12027 DE SOTO
FL026 Peace River Electric Co-op, Inc. 12049 HARDEE
FL026 Peace River Electric Co-op, Inc. 12055 HIGHLANDS
FL026 Peace River Electric Co-op, Inc. 12057 HILLSBOROUGH
FL026 Peace River Electric Co-op, Inc. 12061 INDIAN RIVER
FL026 Peace River Electric Co-op, Inc. 12081 MANATEE
FL026 Peace River Electric Co-op, Inc. 12097 OSCEOLA
FL026 Peace River Electric Co-op, Inc. 12105 POLK
FL026 Peace River Electric Co-op, Inc. 12115 SARASOTA
FL028 Tri-County Electric Co-op, Inc. 12029 DIXIE
FL028 Tri-County Electric Co-op, Inc. 12065 JEFFERSON
FL028 Tri-County Electric Co-op, Inc. 12067 LAFAYETTE
FL028 Tri-County Electric Co-op, Inc. 12079 MADISON
FL028 Tri-County Electric Co-op, Inc. 12123 TAYLOR
FL029 Talquin Electric Co-op, Inc. 12039 GADSEN
FL029 Talquin Electric Co-op, Inc. 12073 LEON
FL029 Talquin Electric Co-op, Inc. 12077 LIBERTY
FL029 Talquin Electric Co-op, Inc. 12129 WAKULLA
FL030 Choctawhatchee Electric Co-op, Inc. 12059 HOLMES
FL030 Choctawhatchee Electric Co-op, Inc. 12091 OKALOOSA
FL030 Choctawhatchee Electric Co-op, Inc. 12113 SANTA ROSA
FL030 Choctawhatchee Electric Co-op, Inc. 12131 WALTON
FL033 Withlacoochee River Electric Co-op 12017 CITRUS
FL033 Withlacoochee River Electric Co-op 12053 HERNANDO
FL033 Withlacoochee River Electric Co-op 12101 PASCO
FL033 Withlacoochee River Electric Co-op 12105 POLK
FL033 Withlacoochee River Electric Co-op 12119 SUMTER
FL034 Gulf Coast Electric Co-op, Inc. 12005 BAY
FL034 Gulf Coast Electric Co-op, Inc. 12013 CALHOUN
FL034 Gulf Coast Electric Co-op, Inc. 12045 GULF
FL034 Gulf Coast Electric Co-op, Inc. 12063 JACKSON
FL034 Gulf Coast Electric Co-op, Inc. 12131 WALTON
FL034 Gulf Coast Electric Co-op, Inc. 12133 WASHINGTON
FL035 Glades Electric Co-op, Inc. 12021 COLLIER
FL035 Glades Electric Co-op, Inc. 12043 GLADES
FL035 Glades Electric Co-op, Inc. 12051 HENDRY
FL035 Glades Electric Co-op, Inc. 12055 HIGHLANDS
FL035 Glades Electric Co-op, Inc. 12093 OKEECHOBEE
GA007 North Georgia EMC 13047 CATOOSA
GA007 North Georgia EMC 13055 CHATTOOGA
GA007 North Georgia EMC 13115 FLOYD
GA007 North Georgia EMC 13129 GORDON
GA007 North Georgia EMC 13213 MURRAY
GA007 North Georgia EMC 13295 WALKER
GA007 North Georgia EMC 13313 WHITFIELD
GA008 Rayle EMC 13059 CLARKE
GA008 Rayle EMC 13133 GREENE
10
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GA008 Rayle EMC 13141 HANCOCK
GA008 Rayle EMC 13181 LINCOLN
GA008 Rayle EMC 13195 MADISON
GA008 Rayle EMC 13211 MORGAN
GA008 Rayle EMC 13219 OCONEE
GA008 Rayle EMC 13221 OGLETHORPE
GA008 Rayle EMC 13265 TALIAFERRO
GA008 Rayle EMC 13317 WILKES
GA017 Planters EMC 13031 BULLOCH
GA017 Planters EMC 13033 BURKE
GA017 Planters EMC 13103 EFFINGHAM
GA017 Planters EMC 13107 EMANUEL
GA017 Planters EMC 13165 JENKINS
GA017 Planters EMC 13245 RICHMOND
GA017 Planters EMC 13251 SCREVEN
GA020 Troup Electric Membership Corp. 01017 CHAMBERS
GA020 Troup Electric Membership Corp. 13077 COWETA
GA020 Troup Electric Membership Corp. 13145 HARRIS
GA020 Troup Electric Membership Corp. 13149 HEARD
GA020 Troup Electric Membership Corp. 13199 MERIWETHER
GA020 Troup Electric Membership Corp. 13215 MUSCOGEE
GA020 Troup Electric Membership Corp. 13285 TROUP
GA022 Colquitt EMC 13019 BERRIEN
GA022 Colquitt EMC 13027 BROOKS
GA022 Colquitt EMC 13071 COLQUITT
GA022 Colquitt EMC 13075 COOK
GA022 Colquitt EMC 13185 LOWNDES
GA022 Colquitt EMC 13277 TIFT
GA022 Colquitt EMC 13321 WORTH
GA031 Upson County EMC 13079 CRAWFORD
GA031 Upson County EMC 13199 MERIWETHER
GA031 Upson County EMC 13231 PIKE
GA031 Upson County EMC 13263 TALBOT
GA031 Upson County EMC 13269 TAYLOR
GA031 Upson County EMC 13293 UPSON
GA034 Carroll EMC 13045 CARROLL
GA034 Carroll EMC 13143 HARALSON
GA034 Carroll EMC 13149 HEARD
GA034 Carroll EMC 13223 PAULDING
GA034 Carroll EMC 13233 POLK
GA034 Carroll EMC 13285 TROUP
GA035 Walton EMC 13013 BARROW
GA035 Walton EMC 13059 CLARKE
GA035 Walton EMC 13089 DEKALB
GA035 Walton EMC 13133 GREENE
GA035 Walton EMC 13135 GWINNETT
GA035 Walton EMC 13211 MORGAN
GA035 Walton EMC 13217 NEWTON
GA035 Walton EMC 13219 OCONEE
GA035 Walton EMC 13247 ROCKDALE
GA035 Walton EMC 13297 WALTON
GA037 GreyStone Power Corporation 13015 BARTOW
11
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GA037 GreyStone Power Corporation 13045 CARROLL
GA037 GreyStone Power Corporation 13067 COBB
GA037 GreyStone Power Corporation 13097 DOUGLAS
GA037 GreyStone Power Corporation 13113 FAYETTE
GA037 GreyStone Power Corporation 13121 FULTON
GA037 GreyStone Power Corporation 13223 PAULDING
GA039 Hart EMC 13011 BANKS
GA039 Hart EMC 13105 ELBERT
GA039 Hart EMC 13119 FRANKLIN
GA039 Hart EMC 13147 HART
GA039 Hart EMC 13195 MADISON
GA039 Hart EMC 13257 STEPHENS
GA042 Altamaha EMC 13107 EMANUEL
GA042 Altamaha EMC 13167 JOHNSON
GA042 Altamaha EMC 13175 LAURENS
GA042 Altamaha EMC 13209 MONTGOMERY
GA042 Altamaha EMC 13267 TATTNALL
GA042 Altamaha EMC 13279 TOOMBS
GA042 Altamaha EMC 13283 TREUTLEN
GA045 Sumter EMC 13053 CHATTAHOOCHEE
GA045 Sumter EMC 13095 DOUGHERTY
GA045 Sumter EMC 13177 LEE
GA045 Sumter EMC 13197 MARION
GA045 Sumter EMC 13239 QUITMAN
GA045 Sumter EMC 13243 RANDOLPH
GA045 Sumter EMC 13249 SCHLEY
GA045 Sumter EMC 13259 STEWART
GA045 Sumter EMC 13261 SUMTER
GA045 Sumter EMC 13273 TERRELL
GA045 Sumter EMC 13307 WEBSTER
GA051 Snapping Shoals EMC 13035 BUTTS
GA051 Snapping Shoals EMC 13089 DEKALB
GA051 Snapping Shoals EMC 13151 HENRY
GA051 Snapping Shoals EMC 13159 JASPER
GA051 Snapping Shoals EMC 13211 MORGAN
GA051 Snapping Shoals EMC 13217 NEWTON
GA051 Snapping Shoals EMC 13247 ROCKDALE
GA051 Snapping Shoals EMC 13297 WALTON
GA058 Central Georgia EMC 13021 BIBB
GA058 Central Georgia EMC 13035 BUTTS
GA058 Central Georgia EMC 13063 CLAYTON
GA058 Central Georgia EMC 13113 FAYETTE
GA058 Central Georgia EMC 13151 HENRY
GA058 Central Georgia EMC 13159 JASPER
GA058 Central Georgia EMC 13169 JONES
GA058 Central Georgia EMC 13171 LAMAR
GA058 Central Georgia EMC 13207 MONROE
GA058 Central Georgia EMC 13211 MORGAN
GA058 Central Georgia EMC 13217 NEWTON
GA058 Central Georgia EMC 13231 PIKE
GA058 Central Georgia EMC 13237 PUTNAM
GA058 Central Georgia EMC 13255 SPALDING
12
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GA065 Irwin EMC 13017 BEN HILL
GA065 Irwin EMC 13019 BERRIEN
GA065 Irwin EMC 13069 COFFEE
GA065 Irwin EMC 13155 IRWIN
GA065 Irwin EMC 13277 TIFT
GA065 Irwin EMC 13287 TURNER
GA065 Irwin EMC 13315 WILCOX
GA065 Irwin EMC 13321 WORTH
GA066 Flint EMC 13021 BIBB
GA066 Flint EMC 13053 CHATTAHOOCHEE
GA066 Flint EMC 13079 CRAWFORD
GA066 Flint EMC 13093 DOOLY
GA066 Flint EMC 13145 HARRIS
GA066 Flint EMC 13153 HOUSTON
GA066 Flint EMC 13193 MACON
GA066 Flint EMC 13197 MARION
GA066 Flint EMC 13215 MUSCOGEE
GA066 Flint EMC 13225 PEACH
GA066 Flint EMC 13249 SCHLEY
GA066 Flint EMC 13261 SUMTER
GA066 Flint EMC 13263 TALBOT
GA066 Flint EMC 13269 TAYLOR
GA066 Flint EMC 13293 UPSON
GA067 Satilla REMC 13001 APPLING
GA067 Satilla REMC 13003 ATKINSON
GA067 Satilla REMC 13005 BACON
GA067 Satilla REMC 13025 BRANTLEY
GA067 Satilla REMC 13069 COFFEE
GA067 Satilla REMC 13161 JEFF DAVIS
GA067 Satilla REMC 13229 PIERCE
GA067 Satilla REMC 13299 WARE
GA067 Satilla REMC 13305 WAYNE
GA068 Grady EMC 13027 BROOKS
GA068 Grady EMC 13071 COLQUITT
GA068 Grady EMC 13087 DECATUR
GA068 Grady EMC 13131 GRADY
GA068 Grady EMC 13205 MITCHELL
GA068 Grady EMC 13275 THOMAS
GA069 Washington EMC 13009 BALDWIN
GA069 Washington EMC 13107 EMANUEL
GA069 Washington EMC 13125 GLASCOCK
GA069 Washington EMC 13141 HANCOCK
GA069 Washington EMC 13167 JOHNSON
GA069 Washington EMC 13175 LAURENS
GA069 Washington EMC 13301 WARREN
GA069 Washington EMC 13303 WASHINGTON
GA070 Mitchell EMC 13007 BAKER
GA070 Mitchell EMC 13037 CALHOUN
GA070 Mitchell EMC 13071 COLQUITT
GA070 Mitchell EMC 13087 DECATUR
GA070 Mitchell EMC 13095 DOUGHERTY
GA070 Mitchell EMC 13099 EARLY
13
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GA070 Mitchell EMC 13131 GRADY
GA070 Mitchell EMC 13177 LEE
GA070 Mitchell EMC 13201 MILLER
GA070 Mitchell EMC 13205 MITCHELL
GA070 Mitchell EMC 13277 TIFT
GA070 Mitchell EMC 13287 TURNER
GA070 Mitchell EMC 13321 WORTH
GA073 Ocmulgee EMC 13023 BLECKLEY
GA073 Ocmulgee EMC 13091 DODGE
GA073 Ocmulgee EMC 13175 LAURENS
GA073 Ocmulgee EMC 13235 PULASKI
GA073 Ocmulgee EMC 13271 TELFAIR
GA074 Jefferson EMC 13033 BURKE
GA074 Jefferson EMC 13073 COLUMBIA
GA074 Jefferson EMC 13107 EMANUEL
GA074 Jefferson EMC 13125 GLASCOCK
GA074 Jefferson EMC 13163 JEFFERSON
GA074 Jefferson EMC 13165 JENKINS
GA074 Jefferson EMC 13167 JOHNSON
GA074 Jefferson EMC 13189 MCDUFFIE
GA074 Jefferson EMC 13245 RICHMOND
GA074 Jefferson EMC 13301 WARREN
GA074 Jefferson EMC 13303 WASHINGTON
GA075 Lamar EMC 13021 BIBB
GA075 Lamar EMC 13077 COWETA
GA075 Lamar EMC 13079 CRAWFORD
GA075 Lamar EMC 13171 LAMAR
GA075 Lamar EMC 13199 MERIWETHER
GA075 Lamar EMC 13207 MONROE
GA075 Lamar EMC 13231 PIKE
GA075 Lamar EMC 13255 SPALDING
GA075 Lamar EMC 13293 UPSON
GA077 Sawnee EMC 13057 CHEROKEE
GA077 Sawnee EMC 13085 DAWSON
GA077 Sawnee EMC 13117 FORSYTH
GA077 Sawnee EMC 13121 FULTON
GA077 Sawnee EMC 13135 GWINNETT
GA077 Sawnee EMC 13139 HALL
GA077 Sawnee EMC 13187 LUMPKIN
GA078 Habersham EMC 13137 HABERSHAM
GA078 Habersham EMC 13139 HALL
GA078 Habersham EMC 13187 LUMPKIN
GA078 Habersham EMC 13241 RABUN
GA078 Habersham EMC 13257 STEPHENS
GA078 Habersham EMC 13311 WHITE
GA081 Blue Ridge Mountain EMC 13111 FANNIN
GA081 Blue Ridge Mountain EMC 13123 GILMER
GA081 Blue Ridge Mountain EMC 13281 TOWNS
GA081 Blue Ridge Mountain EMC 13291 UNION
GA081 Blue Ridge Mountain EMC 37039 CHEROKEE
GA081 Blue Ridge Mountain EMC 37043 CLAY
GA083 Jackson EMC 13011 BANKS
14
<PAGE>
GA083 Jackson EMC 13013 BARROW
GA083 Jackson EMC 13059 CLARKE
GA083 Jackson EMC 13119 FRANKLIN
GA083 Jackson EMC 13135 GWINNETT
GA083 Jackson EMC 13139 HALL
GA083 Jackson EMC 13157 JACKSON
GA083 Jackson EMC 13187 LUMPKIN
GA083 Jackson EMC 13195 MADISON
GA083 Jackson EMC 13221 OGLETHORPE
GA084 Cobb EMC 13015 BARTOW
GA084 Cobb EMC 13057 CHEROKEE
GA084 Cobb EMC 13067 COBB
GA084 Cobb EMC 13121 FULTON
GA084 Cobb EMC 13223 PAULDING
GA086 Three Notch EMC 13007 BAKER
GA086 Three Notch EMC 13061 CLAY
GA086 Three Notch EMC 13087 DECATUR
GA086 Three Notch EMC 13099 EARLY
GA086 Three Notch EMC 13201 MILLER
GA086 Three Notch EMC 13253 SEMINOLE
GA087 Canoochee EMC 13029 BRYAN
GA087 Canoochee EMC 13031 BULLOCH
GA087 Canoochee EMC 13051 CHATHAM
GA087 Canoochee EMC 13107 EMANUEL
GA087 Canoochee EMC 13109 EVANS
GA087 Canoochee EMC 13179 LIBERTY
GA087 Canoochee EMC 13183 LONG
GA087 Canoochee EMC 13267 TATTNALL
GA087 Canoochee EMC 13279 TOOMBS
GA088 Little Ocmulgee EMC 13091 DODGE
GA088 Little Ocmulgee EMC 13175 LAURENS
GA088 Little Ocmulgee EMC 13209 MONTGOMERY
GA088 Little Ocmulgee EMC 13271 TELFAIR
GA088 Little Ocmulgee EMC 13309 WHEELER
GA090 Excelsior EMC 13029 BRYAN
GA090 Excelsior EMC 13031 BULLOCH
GA090 Excelsior EMC 13043 CANDLER
GA090 Excelsior EMC 13103 EFFINGHAM
GA090 Excelsior EMC 13107 EMANUEL
GA090 Excelsior EMC 13109 EVANS
GA090 Excelsior EMC 13165 JENKINS
GA090 Excelsior EMC 13267 TATTNALL
GA091 Oconee EMC 13009 BALDWIN
GA091 Oconee EMC 13021 BIBB
GA091 Oconee EMC 13023 BLECKLEY
GA091 Oconee EMC 13091 DODGE
GA091 Oconee EMC 13175 LAURENS
GA091 Oconee EMC 13289 TWIGGS
GA091 Oconee EMC 13319 WILKINSON
GA092 Okefenoke REMC 12003 BAKER
GA092 Okefenoke REMC 12031 DUVAL
GA092 Okefenoke REMC 12089 NASSAU
15
<PAGE>
GA092 Okefenoke REMC 13025 BRANTLEY
GA092 Okefenoke REMC 13039 CAMDEN
GA092 Okefenoke REMC 13049 CHARLTON
GA092 Okefenoke REMC 13127 GLYNN
GA092 Okefenoke REMC 13299 WARE
GA092 Okefenoke REMC 13305 WAYNE
GA094 Tri-County EMC 13009 BALDWIN
GA094 Tri-County EMC 13021 BIBB
GA094 Tri-County EMC 13159 JASPER
GA094 Tri-County EMC 13169 JONES
GA094 Tri-County EMC 13211 MORGAN
GA094 Tri-County EMC 13237 PUTNAM
GA094 Tri-County EMC 13289 TWIGGS
GA094 Tri-County EMC 13319 WILKINSON
GA095 Slash Pine EMC 13019 BERRIEN
GA095 Slash Pine EMC 13049 CHARLTON
GA095 Slash Pine EMC 13065 CLINCH
GA095 Slash Pine EMC 13101 ECHOLS
GA095 Slash Pine EMC 13173 LANIER
GA095 Slash Pine EMC 13185 LOWNDES
GA095 Slash Pine EMC 13299 WARE
GA096 Amicalola EMC 13015 BARTOW
GA096 Amicalola EMC 13057 CHEROKEE
GA096 Amicalola EMC 13085 DAWSON
GA096 Amicalola EMC 13111 FANNIN
GA096 Amicalola EMC 13117 FORSYTH
GA096 Amicalola EMC 13123 GILMER
GA096 Amicalola EMC 13129 GORDON
GA096 Amicalola EMC 13187 LUMPKIN
GA096 Amicalola EMC 13213 MURRAY
GA096 Amicalola EMC 13227 PICKENS
GA097 Middle Georgia EMC 13017 BEN HILL
GA097 Middle Georgia EMC 13093 DOOLY
GA097 Middle Georgia EMC 13153 HOUSTON
GA097 Middle Georgia EMC 13193 MACON
GA097 Middle Georgia EMC 13235 PULASKI
GA097 Middle Georgia EMC 13287 TURNER
GA097 Middle Georgia EMC 13315 WILCOX
GA098 Pataula EMC 13037 CALHOUN
GA098 Pataula EMC 13061 CLAY
GA098 Pataula EMC 13239 QUITMAN
GA098 Pataula EMC 13243 RANDOLPH
GA098 Pataula EMC 13259 STEWART
GA099 Coastal EMC 13029 BRYAN
GA099 Coastal EMC 13179 LIBERTY
GA099 Coastal EMC 13183 LONG
GA099 Coastal EMC 13191 MCINTOSH
GA103 Coweta-Fayette EMC 13063 CLAYTON
GA103 Coweta-Fayette EMC 13077 COWETA
GA103 Coweta-Fayette EMC 13113 FAYETTE
GA103 Coweta-Fayette EMC 13121 FULTON
GA103 Coweta-Fayette EMC 13149 HEARD
16
<PAGE>
GA103 Coweta-Fayette EMC 13199 MERIWETHER
GA103 Coweta-Fayette EMC 13255 SPALDING
GA103 Coweta-Fayette EMC 13285 TROUP
GA108 Tri-State EMC 13111 FANNIN
GA108 Tri-State EMC 37039 CHEROKEE
GA108 Tri-State EMC 47139 POLK
IA002 Sioux Electric Cooperative Assn. 19119 LYON
IA002 Sioux Electric Cooperative Assn. 19149 PLYMOUTH
IA002 Sioux Electric Cooperative Assn. 19167 SIOUX
IA003 Plymouth Electric Co-op Assn. 19035 CHEROKEE
IA003 Plymouth Electric Co-op Assn. 19141 O BRIEN
IA003 Plymouth Electric Co-op Assn. 19149 PLYMOUTH
IA003 Plymouth Electric Co-op Assn. 19167 SIOUX
IA003 Plymouth Electric Co-op Assn. 19193 WOODBURY
IA005 Glidden REC 19009 AUDUBON
IA005 Glidden REC 19025 CALHOUN
IA005 Glidden REC 19027 CARROLL
IA005 Glidden REC 19073 GREENE
IA005 Glidden REC 19077 GUTHRIE
IA005 Glidden REC 19161 SAC
IA007 Marshall County REC 19099 JASPER
IA007 Marshall County REC 19127 MARSHALL
IA007 Marshall County REC 19153 POLK
IA007 Marshall County REC 19169 STORY
IA007 Marshall County REC 19171 TAMA
IA009 Eastern Iowa Light & Power Co-op 19031 CEDAR
IA009 Eastern Iowa Light & Power Co-op 19045 CLINTON
IA009 Eastern Iowa Light & Power Co-op 19057 DES MOINES
IA009 Eastern Iowa Light & Power Co-op 19087 HENRY
IA009 Eastern Iowa Light & Power Co-op 19097 JACKSON
IA009 Eastern Iowa Light & Power Co-op 19103 JOHNSON
IA009 Eastern Iowa Light & Power Co-op 19105 JONES
IA009 Eastern Iowa Light & Power Co-op 19113 LINN
IA009 Eastern Iowa Light & Power Co-op 19115 LOUISA
IA009 Eastern Iowa Light & Power Co-op 19139 MUSCATINE
IA009 Eastern Iowa Light & Power Co-op 19163 SCOTT
IA009 Eastern Iowa Light & Power Co-op 19183 WASHINGTON
IA014 Humboldt County REC 19081 HANCOCK
IA014 Humboldt County REC 19091 HUMBOLDT
IA014 Humboldt County REC 19109 KOSSUTH
IA014 Humboldt County REC 19151 POCAHONTAS
IA014 Humboldt County REC 19187 WEBSTER
IA014 Humboldt County REC 19197 WRIGHT
IA015 Harrison County REC 19047 CRAWFORD
IA015 Harrison County REC 19085 HARRISON
IA015 Harrison County REC 19133 MONONA
IA015 Harrison County REC 19155 POTTAWATTAMIE
IA015 Harrison County REC 19165 SHELBY
IA016 Monona County REC 19047 CRAWFORD
IA016 Monona County REC 19085 HARRISON
IA016 Monona County REC 19133 MONONA
IA016 Monona County REC 19193 WOODBURY
17
<PAGE>
IA018 Boone Valley Electric Co-op 19081 HANCOCK
IA018 Boone Valley Electric Co-op 19091 HUMBOLDT
IA018 Boone Valley Electric Co-op 19197 WRIGHT
IA019 Adams County Co-op Electric Co. 19001 ADAIR
IA019 Adams County Co-op Electric Co. 19003 ADAMS
IA019 Adams County Co-op Electric Co. 19029 CASS
IA019 Adams County Co-op Electric Co. 19137 MONTGOMERY
IA019 Adams County Co-op Electric Co. 19173 TAYLOR
IA019 Adams County Co-op Electric Co. 19175 UNION
IA021 Guthrie County RECA 19001 ADAIR
IA021 Guthrie County RECA 19009 AUDUBON
IA021 Guthrie County RECA 19029 CASS
IA021 Guthrie County RECA 19049 DALLAS
IA021 Guthrie County RECA 19073 GREENE
IA021 Guthrie County RECA 19077 GUTHRIE
IA023 South Crawford REC 19009 AUDUBON
IA023 South Crawford REC 19027 CARROLL
IA023 South Crawford REC 19047 CRAWFORD
IA023 South Crawford REC 19093 IDA
IA023 South Crawford REC 19161 SAC
IA023 South Crawford REC 19165 SHELBY
IA026 Nishnabotna Valley REC 19009 AUDUBON
IA026 Nishnabotna Valley REC 19029 CASS
IA026 Nishnabotna Valley REC 19047 CRAWFORD
IA026 Nishnabotna Valley REC 19085 HARRISON
IA026 Nishnabotna Valley REC 19155 POTTAWATTAMIE
IA026 Nishnabotna Valley REC 19165 SHELBY
IA030 Franklin REC 19023 BUTLER
IA030 Franklin REC 19033 CERRO GORDO
IA030 Franklin REC 19067 FLOYD
IA030 Franklin REC 19069 FRANKLIN
IA030 Franklin REC 19083 HARDIN
IA030 Franklin REC 19197 WRIGHT
IA031 Grundy County REC 19013 BLACK HAWK
IA031 Grundy County REC 19023 BUTLER
IA031 Grundy County REC 19075 GRUNDY
IA031 Grundy County REC 19083 HARDIN
IA031 Grundy County REC 19127 MARSHALL
IA031 Grundy County REC 19171 TAMA
IA032 Butler County REC 19017 BREMER
IA032 Butler County REC 19023 BUTLER
IA032 Butler County REC 19037 CHICKASAW
IA032 Butler County REC 19067 FLOYD
IA033 Calhoun County Electric Co-op Assn. 19025 CALHOUN
IA033 Calhoun County Electric Co-op Assn. 19073 GREENE
IA033 Calhoun County Electric Co-op Assn. 19151 POCAHONTAS
IA033 Calhoun County Electric Co-op Assn. 19161 SAC
IA033 Calhoun County Electric Co-op Assn. 19187 WEBSTER
IA034 Maquoketa Valley REC 19019 BUCHANAN
IA034 Maquoketa Valley REC 19031 CEDAR
IA034 Maquoketa Valley REC 19043 CLAYTON
IA034 Maquoketa Valley REC 19045 CLINTON
18
<PAGE>
IA034 Maquoketa Valley REC 19055 DELAWARE
IA034 Maquoketa Valley REC 19061 DUBUQUE
IA034 Maquoketa Valley REC 19097 JACKSON
IA034 Maquoketa Valley REC 19105 JONES
IA034 Maquoketa Valley REC 19113 LINN
IA036 Wright County REC 19069 FRANKLIN
IA036 Wright County REC 19079 HAMILTON
IA036 Wright County REC 19081 HANCOCK
IA036 Wright County REC 19083 HARDIN
IA036 Wright County REC 19091 HUMBOLDT
IA036 Wright County REC 19187 WEBSTER
IA036 Wright County REC 19197 WRIGHT
IA039 Benton County Electric Co-op Assn. 19011 BENTON
IA039 Benton County Electric Co-op Assn. 19013 BLACK HAWK
IA039 Benton County Electric Co-op Assn. 19019 BUCHANAN
IA039 Benton County Electric Co-op Assn. 19095 IOWA
IA039 Benton County Electric Co-op Assn. 19103 JOHNSON
IA039 Benton County Electric Co-op Assn. 19113 LINN
IA039 Benton County Electric Co-op Assn. 19171 TAMA
IA040 Pella Co-op Electric Assn. 19099 JASPER
IA040 Pella Co-op Electric Assn. 19123 MAHASKA
IA040 Pella Co-op Electric Assn. 19125 MARION
IA040 Pella Co-op Electric Assn. 19157 POWESHIEK
IA040 Pella Co-op Electric Assn. 19181 WARREN
IA041 Hancock County REC 19033 CERRO GORDO
IA041 Hancock County REC 19081 HANCOCK
IA041 Hancock County REC 19109 KOSSUTH
IA041 Hancock County REC 19189 WINNEBAGO
IA041 Hancock County REC 19195 WORTH
IA041 Hancock County REC 19197 WRIGHT
IA043 Greene County Rural Electric 19015 BOONE
IA043 Greene County Rural Electric 19049 DALLAS
IA043 Greene County Rural Electric 19073 GREENE
IA043 Greene County Rural Electric 19077 GUTHRIE
IA043 Greene County Rural Electric 19079 HAMILTON
IA043 Greene County Rural Electric 19153 POLK
IA043 Greene County Rural Electric 19169 STORY
IA043 Greene County Rural Electric 19187 WEBSTER
IA049 Hardin County Rural Electric 19069 FRANKLIN
IA049 Hardin County Rural Electric 19075 GRUNDY
IA049 Hardin County Rural Electric 19079 HAMILTON
IA049 Hardin County Rural Electric 19083 HARDIN
IA049 Hardin County Rural Electric 19127 MARSHALL
IA049 Hardin County Rural Electric 19169 STORY
IA050 Lyon REC 19119 LYON
IA050 Lyon REC 19143 OSCEOLA
IA050 Lyon REC 19167 SIOUX
IA051 Winnebago RECA 19081 HANCOCK
IA051 Winnebago RECA 19109 KOSSUTH
IA051 Winnebago RECA 19189 WINNEBAGO
IA051 Winnebago RECA 19195 WORTH
IA051 Winnebago RECA 27043 FARIBAULT
IA051 Winnebago RECA 27047 FREEBORN
19
<PAGE>
IA052 Hawkeye Tri-County REC 19005 ALLAMAKEE
IA052 Hawkeye Tri-County REC 19037 CHICKASAW
IA052 Hawkeye Tri-County REC 19065 FAYETTE
IA052 Hawkeye Tri-County REC 19089 HOWARD
IA052 Hawkeye Tri-County REC 19131 MITCHELL
IA052 Hawkeye Tri-County REC 19191 WINNESHIEK
IA053 Linn County REC 19011 BENTON
IA053 Linn County REC 19031 CEDAR
IA053 Linn County REC 19095 IOWA
IA053 Linn County REC 19103 JOHNSON
IA053 Linn County REC 19105 JONES
IA053 Linn County REC 19113 LINN
IA055 O'Brien County Rural Electric 19035 CHEROKEE
IA055 O'Brien County Rural Electric 19041 CLAY
IA055 O'Brien County Rural Electric 19141 O BRIEN
IA055 O'Brien County Rural Electric 19143 OSCEOLA
IA055 O'Brien County Rural Electric 19149 PLYMOUTH
IA055 O'Brien County Rural Electric 19167 SIOUX
IA056 T.I.P. Rural Electric Co-op 19011 BENTON
IA056 T.I.P. Rural Electric Co-op 19095 IOWA
IA056 T.I.P. Rural Electric Co-op 19101 JEFFERSON
IA056 T.I.P. Rural Electric Co-op 19103 JOHNSON
IA056 T.I.P. Rural Electric Co-op 19107 KEOKUK
IA056 T.I.P. Rural Electric Co-op 19123 MAHASKA
IA056 T.I.P. Rural Electric Co-op 19157 POWESHIEK
IA056 T.I.P. Rural Electric Co-op 19171 TAMA
IA056 T.I.P. Rural Electric Co-op 19179 WAPELLO
IA056 T.I.P. Rural Electric Co-op 19183 WASHINGTON
IA057 Cedar Valley Electric Co-op 19033 CERRO GORDO
IA057 Cedar Valley Electric Co-op 19037 CHICKASAW
IA057 Cedar Valley Electric Co-op 19067 FLOYD
IA057 Cedar Valley Electric Co-op 19089 HOWARD
IA057 Cedar Valley Electric Co-op 19131 MITCHELL
IA057 Cedar Valley Electric Co-op 19195 WORTH
IA057 Cedar Valley Electric Co-op 27099 FREEBORN
IA057 Cedar Valley Electric Co-op 27099 MOWER
IA059 Woodbury County RECA 19035 CHEROKEE
IA059 Woodbury County RECA 19093 IDA
IA059 Woodbury County RECA 19133 MONONA
IA059 Woodbury County RECA 19149 PLYMOUTH
IA059 Woodbury County RECA 19193 WOODBURY
IA062 Ida County REC 19035 CHEROKEE
IA062 Ida County REC 19047 CRAWFORD
IA062 Ida County REC 19093 IDA
IA062 Ida County REC 19161 SAC
IA062 Ida County REC 19193 WOODBURY
IA067 Sac County REC 19021 BUENA VISTA
IA067 Sac County REC 19025 CALHOUN
IA067 Sac County REC 19047 CRAWFORD
IA067 Sac County REC 19093 IDA
IA067 Sac County REC 19161 SAC
20
<PAGE>
IA069 S.E. Iowa Co-op Electric Assn. 19051 DAVIS
IA069 S.E. Iowa Co-op Electric Assn. 19057 DES MOINES
IA069 S.E. Iowa Co-op Electric Assn. 19087 HENRY
IA069 S.E. Iowa Co-op Electric Assn. 19101 JEFFERSON
IA069 S.E. Iowa Co-op Electric Assn. 19107 KEOKUK
IA069 S.E. Iowa Co-op Electric Assn. 19111 LEE
IA069 S.E. Iowa Co-op Electric Assn. 19115 LOUISA
IA069 S.E. Iowa Co-op Electric Assn. 19177 VAN BUREN
IA069 S.E. Iowa Co-op Electric Assn. 19179 WAPELLO
IA069 S.E. Iowa Co-op Electric Assn. 19183 WASHINGTON
IA070 Osceola Electric Co-op, Inc. 19059 DICKINSON
IA070 Osceola Electric Co-op, Inc. 19119 LYON
IA070 Osceola Electric Co-op, Inc. 19141 O BRIEN
IA070 Osceola Electric Co-op, Inc. 19143 OSCEOLA
IA071 Buchanan County RECC 19011 BENTON
IA071 Buchanan County RECC 19013 BLACK HAWK
IA071 Buchanan County RECC 19017 BREMER
IA071 Buchanan County RECC 19019 BUCHANAN
IA071 Buchanan County RECC 19043 CLAYTON
IA071 Buchanan County RECC 19055 DELAWARE
IA071 Buchanan County RECC 19065 FAYETTE
IA071 Buchanan County RECC 19113 LINN
IA073 Farmers Electric Co-op, Inc. 19001 ADAIR
IA073 Farmers Electric Co-op, Inc. 19009 AUDUBON
IA073 Farmers Electric Co-op, Inc. 19029 CASS
IA073 Farmers Electric Co-op, Inc. 19077 GUTHRIE
IA073 Farmers Electric Co-op, Inc. 19121 MADISON
IA073 Farmers Electric Co-op, Inc. 19175 UNION
IA074 Allamakee-Clayton Elec. Co-op, Inc. 19005 ALLAMAKEE
IA074 Allamakee-Clayton Elec. Co-op, Inc. 19017 BREMER
IA074 Allamakee-Clayton Elec. Co-op, Inc. 19037 CHICKASAW
IA074 Allamakee-Clayton Elec. Co-op, Inc. 19043 CLAYTON
IA074 Allamakee-Clayton Elec. Co-op, Inc. 19061 DUBUQUE
IA074 Allamakee-Clayton Elec. Co-op, Inc. 19065 FAYETTE
IA074 Allamakee-Clayton Elec. Co-op, Inc. 19191 WINNESHIEK
IA075 Nyman Electric Co-op, Inc. 19003 ADAMS
IA075 Nyman Electric Co-op, Inc. 19029 CASS
IA075 Nyman Electric Co-op, Inc. 19071 FREMONT
IA075 Nyman Electric Co-op, Inc. 19129 MILLS
IA075 Nyman Electric Co-op, Inc. 19137 MONTGOMERY
IA075 Nyman Electric Co-op, Inc. 19145 PAGE
IA075 Nyman Electric Co-op, Inc. 19173 TAYLOR
IA077 Southern Iowa Electric Co-op, Inc. 19007 APPANOOSE
IA077 Southern Iowa Electric Co-op, Inc. 19051 DAVIS
IA077 Southern Iowa Electric Co-op, Inc. 19177 VAN BUREN
IA077 Southern Iowa Electric Co-op, Inc. 19179 WAPELLO
IA079 Clarke Electric Co-op, Inc. 19039 CLARKE
IA079 Clarke Electric Co-op, Inc. 19053 DECATUR
IA079 Clarke Electric Co-op, Inc. 19117 LUCAS
IA079 Clarke Electric Co-op, Inc. 19121 MADISON
IA079 Clarke Electric Co-op, Inc. 19159 RINGGOLD
IA079 Clarke Electric Co-op, Inc. 19175 UNION
21
<PAGE>
IA079 Clarke Electric Co-op, Inc. 19181 WARREN
IA079 Clarke Electric Co-op, Inc. 19185 WAYNE
IA080 Rideta Electric Co-op, Inc. 19053 DECATUR
IA080 Rideta Electric Co-op, Inc. 19159 RINGGOLD
IA080 Rideta Electric Co-op, Inc. 19173 TAYLOR
IA080 Rideta Electric Co-op, Inc. 19175 UNION
IA082 Chariton Valley Electric Co-op 19007 APPANOOSE
IA082 Chariton Valley Electric Co-op 19117 LUCAS
IA082 Chariton Valley Electric Co-op 19125 MARION
IA082 Chariton Valley Electric Co-op 19135 MONROE
IA082 Chariton Valley Electric Co-op 19179 WAPELLO
IA082 Chariton Valley Electric Co-op 19185 WAYNE
IA092 Iowa Lakes Electric Cooperative 19035 CHEROKEE
IA092 Iowa Lakes Electric Cooperative 19093 IDA
IA092 Iowa Lakes Electric Cooperative 19141 O BRIEN
IA092 Iowa Lakes Electric Cooperative 19149 PLYMOUTH
IA092 Iowa Lakes Electric Cooperative 19021 BUENA VISTA
IA092 Iowa Lakes Electric Cooperative 19041 CLAY
IA092 Iowa Lakes Electric Cooperative 19059 DICKINSON
IA092 Iowa Lakes Electric Cooperative 19063 EMMET
IA092 Iowa Lakes Electric Cooperative 19109 KOSSUTH
IA092 Iowa Lakes Electric Cooperative 19143 OSCEOLA
IA092 Iowa Lakes Electric Cooperative 19147 PALO ALTO
IA092 Iowa Lakes Electric Cooperative 19151 POCAHONTAS
IA092 Iowa Lakes Electric Cooperative 19161 SAC
IA092 Iowa Lakes Electric Cooperative 27043 FARIBAULT
IA092 Iowa Lakes Electric Cooperative 27063 JACKSON
IA092 Iowa Lakes Electric Cooperative 27091 MARTIN
ID004 Northern Lights, Inc. 16017 BONNER
ID004 Northern Lights, Inc. 16021 BOUNDARY
ID004 Northern Lights, Inc. 16055 KOOTENAI
ID004 Northern Lights, Inc. 30053 LINCOLN
ID004 Northern Lights, Inc. 30089 SANDERS
ID004 Northern Lights, Inc. 53051 PEND OREILLE
ID010 Clearwater Power Company 16009 BENEWAH
ID010 Clearwater Power Company 16035 CLEARWATER
ID010 Clearwater Power Company 16049 IDAHO
ID010 Clearwater Power Company 16057 LATAH
ID010 Clearwater Power Company 16061 LEWIS
ID010 Clearwater Power Company 16069 NEZ PERCE
ID010 Clearwater Power Company 16079 SHOSHONE
ID010 Clearwater Power Company 41063 WALLOWA
ID010 Clearwater Power Company 53003 ASOTIN
ID010 Clearwater Power Company 53023 GARFIELD
ID010 Clearwater Power Company 53075 WHITMAN
ID011 Kootenai Electric Co-op, Inc. 16009 BENEWAH
ID011 Kootenai Electric Co-op, Inc. 16017 BONNER
ID011 Kootenai Electric Co-op, Inc. 16055 KOOTENAI
ID011 Kootenai Electric Co-op, Inc. 53063 SPOKANE
ID015 Idaho County Light & Power Co-op 16049 IDAHO
ID015 Idaho County Light & Power Co-op 16061 LEWIS
ID016 Raft River REC, Inc. 16031 CASSIA
22
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ID016 Raft River REC, Inc. 16071 ONEIDA
ID016 Raft River REC, Inc. 16077 POWER
ID016 Raft River REC, Inc. 32007 ELKO
ID016 Raft River REC, Inc. 49003 BOX ELDER
ID017 Fall River REC, Inc. 16043 FREMONT
ID017 Fall River REC, Inc. 16051 JEFFERSON
ID017 Fall River REC, Inc. 16065 MADISON
ID017 Fall River REC, Inc. 16081 TETON
ID017 Fall River REC, Inc. 30031 GALLATIN
ID017 Fall River REC, Inc. 56039 TETON
ID019 Lost River Electric Co-op, Inc. 16013 BLAINE
ID019 Lost River Electric Co-op, Inc. 16023 BUTTE
ID019 Lost River Electric Co-op, Inc. 16037 CUSTER
ID021 Prairie Power Cooperative 16025 CAMAS
ID021 Prairie Power Cooperative 16039 ELMORE
ID023 Salmon River Electric Co-op, Inc. 16013 BLAINE
ID023 Salmon River Electric Co-op, Inc. 16037 CUSTER
ID023 Salmon River Electric Co-op, Inc. 16059 LEMHI
IL002 Wayne-White Counties Electric Co-op 17025 CLAY
IL002 Wayne-White Counties Electric Co-op 17047 EDWARDS
IL002 Wayne-White Counties Electric Co-op 17055 FRANKLIN
IL002 Wayne-White Counties Electric Co-op 17059 GALLATIN
IL002 Wayne-White Counties Electric Co-op 17065 HAMILTON
IL002 Wayne-White Counties Electric Co-op 17081 JEFFERSON
IL002 Wayne-White Counties Electric Co-op 17121 MARION
IL002 Wayne-White Counties Electric Co-op 17159 RICHLAND
IL002 Wayne-White Counties Electric Co-op 17185 WABASH
IL002 Wayne-White Counties Electric Co-op 17191 WAYNE
IL002 Wayne-White Counties Electric Co-op 17193 WHITE
IL007 Farmers Mutual Electric Company 17073 HENRY
IL007 Farmers Mutual Electric Company 17195 WHITESIDE
IL008 Coles-Moultrie Electric Co-op 17023 CLARK
IL008 Coles-Moultrie Electric Co-op 17029 COLES
IL008 Coles-Moultrie Electric Co-op 17035 CUMBERLAND
IL008 Coles-Moultrie Electric Co-op 17041 DOUGLAS
IL008 Coles-Moultrie Electric Co-op 17045 EDGAR
IL008 Coles-Moultrie Electric Co-op 17139 MOULTRIE
IL008 Coles-Moultrie Electric Co-op 17147 PIATT
IL008 Coles-Moultrie Electric Co-op 17173 SHELBY
IL012 Illinois Valley Electric Co-op 17011 BUREAU
IL012 Illinois Valley Electric Co-op 17073 HENRY
IL012 Illinois Valley Electric Co-op 17093 KENDALL
IL012 Illinois Valley Electric Co-op 17095 KNOX
IL012 Illinois Valley Electric Co-op 17099 LA SALLE
IL012 Illinois Valley Electric Co-op 17123 MARSHALL
IL012 Illinois Valley Electric Co-op 17155 PUTNAM
IL012 Illinois Valley Electric Co-op 17175 STARK
IL018 Illinois Rural Electric Co. 17001 ADAMS
IL018 Illinois Rural Electric Co. 17009 BROWN
IL018 Illinois Rural Electric Co. 17013 CALHOUN
IL018 Illinois Rural Electric Co. 17017 CASS
IL018 Illinois Rural Electric Co. 17061 GREENE
23
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IL018 Illinois Rural Electric Co. 17083 JERSEY
IL018 Illinois Rural Electric Co. 17117 MACOUPIN
IL018 Illinois Rural Electric Co. 17137 MORGAN
IL018 Illinois Rural Electric Co. 17149 PIKE
IL018 Illinois Rural Electric Co. 17171 SCOTT
IL021 Menard Electric Co-op 17017 CASS
IL021 Menard Electric Co-op 17107 LOGAN
IL021 Menard Electric Co-op 17115 MACON
IL021 Menard Electric Co-op 17125 MASON
IL021 Menard Electric Co-op 17129 MENARD
IL021 Menard Electric Co-op 17137 MORGAN
IL021 Menard Electric Co-op 17167 SANGAMON
IL021 Menard Electric Co-op 17179 TAZEWELL
IL023 Rural Electric Convenience Co-op 17021 CHRISTIAN
IL023 Rural Electric Convenience Co-op 17117 MACOUPIN
IL023 Rural Electric Convenience Co-op 17135 MONTGOMERY
IL023 Rural Electric Convenience Co-op 17137 MORGAN
IL023 Rural Electric Convenience Co-op 17167 SANGAMON
IL027 Edgar Electric Co-op Assn. 17023 CLARK
IL027 Edgar Electric Co-op Assn. 17029 COLES
IL027 Edgar Electric Co-op Assn. 17041 DOUGLAS
IL027 Edgar Electric Co-op Assn. 17045 EDGAR
IL027 Edgar Electric Co-op Assn. 17183 VERMILLION
IL030 Adams Electrical Co-operative 17001 ADAMS
IL030 Adams Electrical Co-operative 17009 BROWN
IL030 Adams Electrical Co-operative 17067 HANCOCK
IL030 Adams Electrical Co-operative 17109 MC DONOUGH
IL030 Adams Electrical Co-operative 17149 PIKE
IL030 Adams Electrical Co-operative 17169 SCHUYLER
IL031 Monroe County Electric Co-operative 17133 MONROE
IL031 Monroe County Electric Co-operative 17157 RANDOLPH
IL031 Monroe County Electric Co-operative 17163 ST CLAIR
IL032 McDonough Power Co-op 17057 FULTON
IL032 McDonough Power Co-op 17067 HANCOCK
IL032 McDonough Power Co-op 17071 HENDERSON
IL032 McDonough Power Co-op 17095 KNOX
IL032 McDonough Power Co-op 17109 MC DONOUGH
IL032 McDonough Power Co-op 17169 SCHUYLER
IL032 McDonough Power Co-op 17187 WARREN
IL033 Western Illinois Electrical Coop. 17001 ADAMS
IL033 Western Illinois Electrical Coop. 17067 HANCOCK
IL033 Western Illinois Electrical Coop. 17071 HENDERSON
IL033 Western Illinois Electrical Coop. 17109 MC DONOUGH
IL034 Egyptian Electric Co-op Assn. 17077 JACKSON
IL034 Egyptian Electric Co-op Assn. 17133 MONROE
IL034 Egyptian Electric Co-op Assn. 17145 PERRY
IL034 Egyptian Electric Co-op Assn. 17157 RANDOLPH
IL034 Egyptian Electric Co-op Assn. 17163 ST CLAIR
IL034 Egyptian Electric Co-op Assn. 17189 WASHINGTON
IL034 Egyptian Electric Co-op Assn. 17199 WILLIAMSON
IL037 Southeastern Illinois Elec. Co-op 17055 FRANKLIN
IL037 Southeastern Illinois Elec. Co-op 17059 GALLATIN
24
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IL037 Southeastern Illinois Elec. Co-op 17065 HAMILTON
IL037 Southeastern Illinois Elec. Co-op 17069 HARDIN
IL037 Southeastern Illinois Elec. Co-op 17081 JEFFERSON
IL037 Southeastern Illinois Elec. Co-op 17087 JOHNSON
IL037 Southeastern Illinois Elec. Co-op 17127 MASSAC
IL037 Southeastern Illinois Elec. Co-op 17151 POPE
IL037 Southeastern Illinois Elec. Co-op 17165 SALINE
IL037 Southeastern Illinois Elec. Co-op 17193 WHITE
IL037 Southeastern Illinois Elec. Co-op 17199 WILLIAMSON
IL038 Corn Belt Electric Co-op, Inc. 17019 CHAMPAIGN
IL038 Corn Belt Electric Co-op, Inc. 17039 DE WITT
IL038 Corn Belt Electric Co-op, Inc. 17053 FORD
IL038 Corn Belt Electric Co-op, Inc. 17105 LIVINGSTON
IL038 Corn Belt Electric Co-op, Inc. 17107 LOGAN
IL038 Corn Belt Electric Co-op, Inc. 17113 MC LEAN
IL038 Corn Belt Electric Co-op, Inc. 17115 MACON
IL038 Corn Belt Electric Co-op, Inc. 17147 PIATT
IL038 Corn Belt Electric Co-op, Inc. 17179 TAZEWELL
IL038 Corn Belt Electric Co-op, Inc. 17203 WOODFORD
IL039 Spoon River Electric Co-op, Inc. 17057 FULTON
IL039 Spoon River Electric Co-op, Inc. 17095 KNOX
IL039 Spoon River Electric Co-op, Inc. 17143 PEORIA
IL039 Spoon River Electric Co-op, Inc. 17169 SCHUYLER
IL040 M.J.M. Electric Co-op, Inc. 17005 BOND
IL040 M.J.M. Electric Co-op, Inc. 17051 FAYETTE
IL040 M.J.M. Electric Co-op, Inc. 17061 GREENE
IL040 M.J.M. Electric Co-op, Inc. 17083 JERSEY
IL040 M.J.M. Electric Co-op, Inc. 17117 MACOUPIN
IL040 M.J.M. Electric Co-op, Inc. 17119 MADISON
IL040 M.J.M. Electric Co-op, Inc. 17135 MONTGOMERY
IL041 Tri-County Electric Co-op, Inc. 17081 JEFFERSON
IL041 Tri-County Electric Co-op, Inc. 17121 MARION
IL041 Tri-County Electric Co-op, Inc. 17189 WASHINGTON
IL043 Southern Illinois Electric Co-op 17003 ALEXANDER
IL043 Southern Illinois Electric Co-op 17077 JACKSON
IL043 Southern Illinois Electric Co-op 17087 JOHNSON
IL043 Southern Illinois Electric Co-op 17127 MASSAC
IL043 Southern Illinois Electric Co-op 17151 POPE
IL043 Southern Illinois Electric Co-op 17153 PULASKI
IL043 Southern Illinois Electric Co-op 17181 UNION
IL043 Southern Illinois Electric Co-op 17199 WILLIAMSON
IL044 Jo-Carroll Electric Co-op, Inc. 17015 CARROLL
IL044 Jo-Carroll Electric Co-op, Inc. 17085 JO DAVIESS
IL044 Jo-Carroll Electric Co-op, Inc. 17195 WHITESIDE
IL045 Clinton County Electric Co-op, Inc. 17027 CLINTON
IL045 Clinton County Electric Co-op, Inc. 17051 FAYETTE
IL045 Clinton County Electric Co-op, Inc. 17119 MADISON
IL045 Clinton County Electric Co-op, Inc. 17121 MARION
IL045 Clinton County Electric Co-op, Inc. 17163 ST CLAIR
IL045 Clinton County Electric Co-op, Inc. 17189 WASHINGTON
IL046 Southwestern Electric Co-op, Inc. 17005 BOND
25
<PAGE>
IL046 Southwestern Electric Co-op, Inc. 17027 CLINTON
IL046 Southwestern Electric Co-op, Inc. 17049 EFFINGHAM
IL046 Southwestern Electric Co-op, Inc. 17051 FAYETTE
IL046 Southwestern Electric Co-op, Inc. 17117 MACOUPIN
IL046 Southwestern Electric Co-op, Inc. 17119 MADISON
IL046 Southwestern Electric Co-op, Inc. 17121 MARION
IL046 Southwestern Electric Co-op, Inc. 17135 MONTGOMERY
IL046 Southwestern Electric Co-op, Inc. 17163 ST CLAIR
IL046 Southwestern Electric Co-op, Inc. 17173 SHELBY
IL048 Clay Electric Co-op, Inc. 17025 CLAY
IL048 Clay Electric Co-op, Inc. 17049 EFFINGHAM
IL048 Clay Electric Co-op, Inc. 17051 FAYETTE
IL048 Clay Electric Co-op, Inc. 17079 JASPER
IL048 Clay Electric Co-op, Inc. 17121 MARION
IL048 Clay Electric Co-op, Inc. 17159 RICHLAND
IL048 Clay Electric Co-op, Inc. 17191 WAYNE
IL054 Eastern Illini Electric Co-op 17019 CHAMPAIGN
IL054 Eastern Illini Electric Co-op 17041 DOUGLAS
IL054 Eastern Illini Electric Co-op 17045 EDGAR
IL054 Eastern Illini Electric Co-op 17053 FORD
IL054 Eastern Illini Electric Co-op 17075 IROQUOIS
IL054 Eastern Illini Electric Co-op 17105 LIVINGSTON
IL054 Eastern Illini Electric Co-op 17113 MC LEAN
IL054 Eastern Illini Electric Co-op 17139 MOULTRIE
IL054 Eastern Illini Electric Co-op 17147 PIATT
IL054 Eastern Illini Electric Co-op 17183 VERMILLION
IN001 Util. Dist. of Western Indiana REMC 18021 CLAY
IN001 Util. Dist. of Western Indiana REMC 18027 DAVIESS
IN001 Util. Dist. of Western Indiana REMC 18055 GREENE
IN001 Util. Dist. of Western Indiana REMC 18083 KNOX
IN001 Util. Dist. of Western Indiana REMC 18093 LAWRENCE
IN001 Util. Dist. of Western Indiana REMC 18101 MARTIN
IN001 Util. Dist. of Western Indiana REMC 18105 MONROE
IN001 Util. Dist. of Western Indiana REMC 18119 OWEN
IN001 Util. Dist. of Western Indiana REMC 18133 PUTNAM
IN001 Util. Dist. of Western Indiana REMC 18153 SULLIVAN
IN001 Util. Dist. of Western Indiana REMC 18167 VIGO
IN006 Boone County REMC 18011 BOONE
IN006 Boone County REMC 18023 CLINTON
IN006 Boone County REMC 18057 HAMILTON
IN006 Boone County REMC 18063 HENDRICKS
IN006 Boone County REMC 18097 MARION
IN006 Boone County REMC 18107 MONTGOMERY
IN007 Northeastern REMC 18003 ALLEN
IN007 Northeastern REMC 18069 HUNTINGTON
IN007 Northeastern REMC 18085 KOSCIUSKO
IN007 Northeastern REMC 18113 NOBLE
IN007 Northeastern REMC 18169 WABASH
IN007 Northeastern REMC 18183 WHITLEY
IN008 Wabash County REMC 18053 GRANT
IN008 Wabash County REMC 18069 HUNTINGTON
IN008 Wabash County REMC 18085 KOSCIUSKO
IN008 Wabash County REMC 18103 MIAMI
26
<PAGE>
IN008 Wabash County REMC 18169 WABASH
IN008 Wabash County REMC 18183 WHITLEY
IN009 Marshall County REMC 18039 ELKHART
IN009 Marshall County REMC 18049 FULTON
IN009 Marshall County REMC 18085 KOSCIUSKO
IN009 Marshall County REMC 18099 MARSHALL
IN009 Marshall County REMC 18141 ST. JOSEPH
IN009 Marshall County REMC 18149 STARKE
IN011 Warren County REMC 17075 IROQUOIS
IN011 Warren County REMC 17183 VERMILLION
IN011 Warren County REMC 18007 BENTON
IN011 Warren County REMC 18157 TIPPECANOE
IN011 Warren County REMC 18165 VERMILLION
IN011 Warren County REMC 18171 WARREN
IN011 Warren County REMC 18181 WHITE
IN014 Shelby County REMC 18005 BARTHOLOMEW
IN014 Shelby County REMC 18145 SHELBY
IN014 Shelby County REMC 21041 CARROLL
IN014 Shelby County REMC 21073 FRANKLIN
IN014 Shelby County REMC 21103 HENRY
IN014 Shelby County REMC 21185 OLDHAM
IN014 Shelby County REMC 21215 SPENCER
IN014 Shelby County REMC 21223 TRIMBLE
IN015 Fayette-Union County REMC 18029 DEARBORN
IN015 Fayette-Union County REMC 18041 FAYETTE
IN015 Fayette-Union County REMC 18047 FRANKLIN
IN015 Fayette-Union County REMC 18161 UNION
IN018 Rush County REMC 18031 DECATUR
IN018 Rush County REMC 18041 FAYETTE
IN018 Rush County REMC 18047 FRANKLIN
IN018 Rush County REMC 18059 HANCOCK
IN018 Rush County REMC 18065 HENRY
IN018 Rush County REMC 18139 RUSH
IN021 Bartholomew County REMC 18005 BARTHOLOMEW
IN021 Bartholomew County REMC 18031 DECATUR
IN021 Bartholomew County REMC 18071 JACKSON
IN021 Bartholomew County REMC 18079 JENNINGS
IN024 Carroll County REMC 18015 CARROLL
IN024 Carroll County REMC 18017 CASS
IN024 Carroll County REMC 18023 CLINTON
IN024 Carroll County REMC 18067 HOWARD
IN024 Carroll County REMC 18157 TIPPECANOE
IN024 Carroll County REMC 18181 WHITE
IN026 Daviess-Martin County REMC 18027 DAVIESS
IN026 Daviess-Martin County REMC 18093 LAWRENCE
IN026 Daviess-Martin County REMC 18101 MARTIN
IN027 Decatur County REMC 18005 BARTHOLOMEW
IN027 Decatur County REMC 18031 DECATUR
IN027 Decatur County REMC 18047 FRANKLIN
IN027 Decatur County REMC 18079 JENNINGS
IN027 Decatur County REMC 18137 RIPLEY
IN027 Decatur County REMC 18139 RUSH
27
<PAGE>
IN029 Fulton County REMC 18017 CASS
IN029 Fulton County REMC 18049 FULTON
IN029 Fulton County REMC 18085 KOSCIUSKO
IN029 Fulton County REMC 18099 MARSHALL
IN029 Fulton County REMC 18103 MIAMI
IN029 Fulton County REMC 18131 PULASKI
IN032 Central Indiana Power 18057 HAMILTON
IN032 Central Indiana Power 18059 HANCOCK
IN032 Central Indiana Power 18095 MADISON
IN032 Central Indiana Power 18139 RUSH
IN033 Hendricks County REMC 18063 HENDRICKS
IN033 Hendricks County REMC 18097 MARION
IN033 Hendricks County REMC 18107 MONTGOMERY
IN033 Hendricks County REMC 18109 MORGAN
IN033 Hendricks County REMC 18133 PUTNAM
IN035 Jasper County REMC 18073 JASPER
IN035 Jasper County REMC 18111 NEWTON
IN035 Jasper County REMC 18127 PORTER
IN035 Jasper County REMC 18131 PULASKI
IN035 Jasper County REMC 18149 STARKE
IN035 Jasper County REMC 18181 WHITE
IN037 Jay County REMC 18001 ADAMS
IN037 Jay County REMC 18009 BLACKFORD
IN037 Jay County REMC 18035 DELAWARE
IN037 Jay County REMC 18075 JAY
IN037 Jay County REMC 18135 RANDOLPH
IN037 Jay County REMC 18179 WELLS
IN038 Johnson County REMC 18029 BROWN
IN038 Johnson County REMC 18031 JOHNSON
IN038 Johnson County REMC 18047 MORGAN
IN038 Johnson County REMC 18137 SHELBY
IN040 Knox County REMC 18051 GIBSON
IN040 Knox County REMC 18055 GREENE
IN040 Knox County REMC 18083 KNOX
IN040 Knox County REMC 18125 PIKE
IN040 Knox County REMC 18129 POSEY
IN040 Knox County REMC 18153 SULLIVAN
IN041 LaGrange County REMC 18039 ELKHART
IN041 LaGrange County REMC 18087 LAGRANGE
IN041 LaGrange County REMC 18113 NOBLE
IN041 LaGrange County REMC 18151 STEUBEN
IN042 Parke County REMC 18021 CLAY
IN042 Parke County REMC 18045 FOUNTAIN
IN042 Parke County REMC 18107 MONTGOMERY
IN042 Parke County REMC 18121 PARKE
IN042 Parke County REMC 18133 PUTNAM
IN042 Parke County REMC 18167 VIGO
IN046 Miami-Cass County REMC 18017 CASS
IN046 Miami-Cass County REMC 18103 MIAMI
IN046 Miami-Cass County REMC 18169 WABASH
IN047 Orange County REMC 18025 CRAWFORD
IN047 Orange County REMC 18093 LAWRENCE
28
<PAGE>
IN047 Orange County REMC 18101 MARTIN
IN047 Orange County REMC 18117 ORANGE
IN047 Orange County REMC 18175 WASHINGTON
IN052 Southeastern Indiana REMC 18029 DEARBORN
IN052 Southeastern Indiana REMC 18047 FRANKLIN
IN052 Southeastern Indiana REMC 18077 JEFFERSON
IN052 Southeastern Indiana REMC 18079 JENNINGS
IN052 Southeastern Indiana REMC 18115 OHIO
IN052 Southeastern Indiana REMC 18137 RIPLEY
IN052 Southeastern Indiana REMC 18155 SWITZERLAND
IN053 Steuben County REMC 18033 DEKALB
IN053 Steuben County REMC 18087 LAGRANGE
IN053 Steuben County REMC 18151 STEUBEN
IN055 Tipmont REMC 18007 BENTON
IN055 Tipmont REMC 18011 BOONE
IN055 Tipmont REMC 18015 CARROLL
IN055 Tipmont REMC 18023 CLINTON
IN055 Tipmont REMC 18045 FOUNTAIN
IN055 Tipmont REMC 18107 MONTGOMERY
IN055 Tipmont REMC 18157 TIPPECANOE
IN055 Tipmont REMC 18181 WHITE
IN059 Wayne County REMC 18041 FAYETTE
IN059 Wayne County REMC 18135 RANDOLPH
IN059 Wayne County REMC 18161 UNION
IN059 Wayne County REMC 18177 WAYNE
IN060 South Central Indiana REMC 18013 BROWN
IN060 South Central Indiana REMC 18021 CLAY
IN060 South Central Indiana REMC 18071 JACKSON
IN060 South Central Indiana REMC 18081 JOHNSON
IN060 South Central Indiana REMC 18105 MONROE
IN060 South Central Indiana REMC 18109 MORGAN
IN060 South Central Indiana REMC 18119 OWEN
IN060 South Central Indiana REMC 18133 PUTNAM
IN070 White County REMC 18007 BENTON
IN070 White County REMC 18015 CARROLL
IN070 White County REMC 18017 CASS
IN070 White County REMC 18073 JASPER
IN070 White County REMC 18131 PULASKI
IN070 White County REMC 18157 TIPPECANOE
IN070 White County REMC 18181 WHITE
IN072 Clark County REMC 18019 CLARK
IN072 Clark County REMC 18043 FLOYD
IN072 Clark County REMC 18077 JEFFERSON
IN072 Clark County REMC 18143 SCOTT
IN072 Clark County REMC 18175 WASHINGTON
IN080 Noble REMC 18003 ALLEN
IN080 Noble REMC 18033 DEKALB
IN080 Noble REMC 18039 ELKHART
IN080 Noble REMC 18085 KOSCIUSKO
IN080 Noble REMC 18087 LAGRANGE
IN080 Noble REMC 18113 NOBLE
IN080 Noble REMC 18151 STEUBEN
29
<PAGE>
IN080 Noble REMC 18183 WHITLEY
IN081 Sullivan County REMC 18021 CLAY
IN081 Sullivan County REMC 18055 GREENE
IN081 Sullivan County REMC 18083 KNOX
IN081 Sullivan County REMC 18153 SULLIVAN
IN081 Sullivan County REMC 18167 VIGO
IN083 Dubois REC, Inc. 18025 CRAWFORD
IN083 Dubois REC, Inc. 18037 DUBOIS
IN083 Dubois REC, Inc. 18101 MARTIN
IN083 Dubois REC, Inc. 18117 ORANGE
IN083 Dubois REC, Inc. 18123 PERRY
IN083 Dubois REC, Inc. 18125 PIKE
IN087 Kankakee Valley REMC 18089 LAKE
IN087 Kankakee Valley REMC 18091 LAPORTE
IN087 Kankakee Valley REMC 18099 MARSHALL
IN087 Kankakee Valley REMC 18127 PORTER
IN087 Kankakee Valley REMC 18131 PULASKI
IN087 Kankakee Valley REMC 18141 ST. JOSEPH
IN087 Kankakee Valley REMC 18149 STARKE
IN088 Kosciusko County REMC 18049 FULTON
IN088 Kosciusko County REMC 18085 KOSCIUSKO
IN088 Kosciusko County REMC 18169 WABASH
IN088 Kosciusko County REMC 18183 WHITLEY
IN089 Harrison County REMC 18019 CLARK
IN089 Harrison County REMC 18025 CRAWFORD
IN089 Harrison County REMC 18043 FLOYD
IN089 Harrison County REMC 18061 HARRISON
IN089 Harrison County REMC 18175 WASHINGTON
IN092 Jackson County REMC 18005 BARTHOLOMEW
IN092 Jackson County REMC 18013 BROWN
IN092 Jackson County REMC 18019 CLARK
IN092 Jackson County REMC 18071 JACKSON
IN092 Jackson County REMC 18077 JEFFERSON
IN092 Jackson County REMC 18079 JENNINGS
IN092 Jackson County REMC 18093 LAWRENCE
IN092 Jackson County REMC 18105 MONROE
IN092 Jackson County REMC 18143 SCOTT
IN092 Jackson County REMC 18175 WASHINGTON
IN099 Southern Indiana REC, Inc. 18037 DUBOIS
IN099 Southern Indiana REC, Inc. 18123 PERRY
IN099 Southern Indiana REC, Inc. 18147 SPENCER
IN099 Southern Indiana REC, Inc. 18173 WARRICK
IN100 Newton County REMC 18007 BENTON
IN100 Newton County REMC 18073 JASPER
IN100 Newton County REMC 18111 NEWTON
IN108 United REMC 18001 ADAMS
IN108 United REMC 18003 ALLEN
IN108 United REMC 18053 GRANT
IN108 United REMC 18069 HUNTINGTON
IN108 United REMC 18169 WABASH
IN108 United REMC 18179 WELLS
IN108 United REMC 18183 WHITLEY
30
<PAGE>
KS007 Jewell-Mitchell Co-op Electric Co. 20029 CLOUD
KS007 Jewell-Mitchell Co-op Electric Co. 20089 JEWELL
KS007 Jewell-Mitchell Co-op Electric Co. 20105 LINCOLN
KS007 Jewell-Mitchell Co-op Electric Co. 20123 MITCHELL
KS007 Jewell-Mitchell Co-op Electric Co. 20141 OSBORNE
KS007 Jewell-Mitchell Co-op Electric Co. 20143 OTTAWA
KS007 Jewell-Mitchell Co-op Electric Co. 20147 PHILLIPS
KS007 Jewell-Mitchell Co-op Electric Co. 20157 REPUBLIC
KS007 Jewell-Mitchell Co-op Electric Co. 20165 RUSH
KS007 Jewell-Mitchell Co-op Electric Co. 20167 RUSSELL
KS007 Jewell-Mitchell Co-op Electric Co. 20183 SMITH
KS008 United Electric Cooperative, Inc. 20001 ALLEN
KS008 United Electric Cooperative, Inc. 20003 ANDERSON
KS008 United Electric Cooperative, Inc. 20011 BOURBON
KS008 United Electric Cooperative, Inc. 20031 COFFEY
KS008 United Electric Cooperative, Inc. 20037 CRAWFORD
KS008 United Electric Cooperative, Inc. 20107 LINN
KS008 United Electric Cooperative, Inc. 20121 MIAMI
KS008 United Electric Cooperative, Inc. 20133 NEOSHO
KS008 United Electric Cooperative, Inc. 20205 WILSON
KS008 United Electric Cooperative, Inc. 20207 WOODSON
KS013 Brown-Atchison Electric Co-op Assn. 20005 ATCHISON
KS013 Brown-Atchison Electric Co-op Assn. 20013 BROWN
KS013 Brown-Atchison Electric Co-op Assn. 20043 DONIPHAN
KS013 Brown-Atchison Electric Co-op Assn. 20085 JACKSON
KS013 Brown-Atchison Electric Co-op Assn. 20087 JEFFERSON
KS013 Brown-Atchison Electric Co-op Assn. 20131 NEMAHA
KS014 Sumner-Cowley Electric Co-op, Inc. 20015 BUTLER
KS014 Sumner-Cowley Electric Co-op, Inc. 20035 COWLEY
KS014 Sumner-Cowley Electric Co-op, Inc. 20077 HARPER
KS014 Sumner-Cowley Electric Co-op, Inc. 20095 KINGMAN
KS014 Sumner-Cowley Electric Co-op, Inc. 20173 SEDGWICK
KS014 Sumner-Cowley Electric Co-op, Inc. 20191 SUMNER
KS015 DS&O Rural Electric Co-op Assn. 20027 CLAY
KS015 DS&O Rural Electric Co-op Assn. 20029 CLOUD
KS015 DS&O Rural Electric Co-op Assn. 20041 DICKINSON
KS015 DS&O Rural Electric Co-op Assn. 20061 GEARY
KS015 DS&O Rural Electric Co-op Assn. 20113 MCPHERSON
KS015 DS&O Rural Electric Co-op Assn. 20115 MARION
KS015 DS&O Rural Electric Co-op Assn. 20127 MORRIS
KS015 DS&O Rural Electric Co-op Assn. 20143 OTTAWA
KS015 DS&O Rural Electric Co-op Assn. 20169 SALINE
KS018 Sedgwick County Electric Co-op 20079 HARVEY
KS018 Sedgwick County Electric Co-op 20095 KINGMAN
KS018 Sedgwick County Electric Co-op 20155 RENO
KS018 Sedgwick County Electric Co-op 20173 SEDGWICK
KS018 Sedgwick County Electric Co-op 20191 SUMNER
KS019 Butler RECA, Inc. 20015 BUTLER
KS019 Butler RECA, Inc. 20017 CHASE
KS019 Butler RECA, Inc. 20035 COWLEY
KS019 Butler RECA, Inc. 20073 GREENWOOD
KS019 Butler RECA, Inc. 20079 HARVEY
31
<PAGE>
KS019 Butler RECA, Inc. 20115 MARION
KS019 Butler RECA, Inc. 20173 SEDGWICK
KS021 Kaw Valley Elec. Co-op, Inc. 20045 DOUGLAS
KS021 Kaw Valley Elec. Co-op, Inc. 20085 JACKSON
KS021 Kaw Valley Elec. Co-op, Inc. 20139 OSAGE
KS021 Kaw Valley Elec. Co-op, Inc. 20149 POTTAWATOMIE
KS021 Kaw Valley Elec. Co-op, Inc. 20177 SHAWNEE
KS021 Kaw Valley Elec. Co-op, Inc. 20197 WABAUNSEE
KS022 Doniphan Electric Co-op Assn., Inc. 20005 ATCHISON
KS022 Doniphan Electric Co-op Assn., Inc. 20013 BROWN
KS022 Doniphan Electric Co-op Assn., Inc. 20043 DONIPHAN
KS024 C.& W. Rural Electric Co-op Assn. 20027 CLAY
KS024 C.& W. Rural Electric Co-op Assn. 20029 CLOUD
KS024 C.& W. Rural Electric Co-op Assn. 20041 DICKINSON
KS024 C.& W. Rural Electric Co-op Assn. 20061 GEARY
KS024 C.& W. Rural Electric Co-op Assn. 20117 MARSHALL
KS024 C.& W. Rural Electric Co-op Assn. 20143 OTTAWA
KS024 C.& W. Rural Electric Co-op Assn. 20161 RILEY
KS024 C.& W. Rural Electric Co-op Assn. 20201 WASHINGTON
KS027 Flint Hills RECA, Inc. 20017 CHASE
KS027 Flint Hills RECA, Inc. 20041 DICKINSON
KS027 Flint Hills RECA, Inc. 20061 GEARY
KS027 Flint Hills RECA, Inc. 20079 HARVEY
KS027 Flint Hills RECA, Inc. 20111 LYON
KS027 Flint Hills RECA, Inc. 20113 MCPHERSON
KS027 Flint Hills RECA, Inc. 20115 MARION
KS027 Flint Hills RECA, Inc. 20127 MORRIS
KS027 Flint Hills RECA, Inc. 20161 RILEY
KS027 Flint Hills RECA, Inc. 20197 WABAUNSEE
KS028 Prairie Land Electric Co-op 20039 DECATUR
KS028 Prairie Land Electric Co-op 20065 GRAHAM
KS028 Prairie Land Electric Co-op 20137 NORTON
KS028 Prairie Land Electric Co-op 20141 OSBORNE
KS028 Prairie Land Electric Co-op 20147 PHILLIPS
KS028 Prairie Land Electric Co-op 20163 ROOKS
KS028 Prairie Land Electric Co-op 20179 SHERIDAN
KS028 Prairie Land Electric Co-op 20183 SMITH
KS029 N.C.K. Electric Co-op, Inc. 20027 CLAY
KS029 N.C.K. Electric Co-op, Inc. 20029 CLOUD
KS029 N.C.K. Electric Co-op, Inc. 20089 JEWELL
KS029 N.C.K. Electric Co-op, Inc. 20157 REPUBLIC
KS029 N.C.K. Electric Co-op, Inc. 20201 WASHINGTON
KS030 Nemaha-Marshall Electric Co-op 20085 JACKSON
KS030 Nemaha-Marshall Electric Co-op 20117 MARSHALL
KS030 Nemaha-Marshall Electric Co-op 20131 NEMAHA
KS030 Nemaha-Marshall Electric Co-op 20149 POTTAWATOMIE
KS030 Nemaha-Marshall Electric Co-op 20201 WASHINGTON
KS031 Sekan Electric Co-op Assn., Inc. 20001 ALLEN
KS031 Sekan Electric Co-op Assn., Inc. 20003 ANDERSON
KS031 Sekan Electric Co-op Assn., Inc. 20011 BOURBON
KS031 Sekan Electric Co-op Assn., Inc. 20021 CHEROKEE
KS031 Sekan Electric Co-op Assn., Inc. 20037 CRAWFORD
32
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KS031 Sekan Electric Co-op Assn., Inc. 20099 LABETTE
KS031 Sekan Electric Co-op Assn., Inc. 20107 LINN
KS031 Sekan Electric Co-op Assn., Inc. 20133 NEOSHO
KS032 Ark Valley Electric Co-op Assn. 20009 BARTON
KS032 Ark Valley Electric Co-op Assn. 20053 ELLSWORTH
KS032 Ark Valley Electric Co-op Assn. 20079 HARVEY
KS032 Ark Valley Electric Co-op Assn. 20095 KINGMAN
KS032 Ark Valley Electric Co-op Assn. 20113 MCPHERSON
KS032 Ark Valley Electric Co-op Assn. 20155 RENO
KS032 Ark Valley Electric Co-op Assn. 20159 RICE
KS032 Ark Valley Electric Co-op Assn. 20169 SALINE
KS032 Ark Valley Electric Co-op Assn. 20185 STAFFORD
KS033 Ninnescah RECA, Inc. 20007 BARBER
KS033 Ninnescah RECA, Inc. 20033 COMANCHE
KS033 Ninnescah RECA, Inc. 20047 EDWARDS
KS033 Ninnescah RECA, Inc. 20077 HARPER
KS033 Ninnescah RECA, Inc. 20095 KINGMAN
KS033 Ninnescah RECA, Inc. 20097 KIOWA
KS033 Ninnescah RECA, Inc. 20145 PAWNEE
KS033 Ninnescah RECA, Inc. 20151 PRATT
KS033 Ninnescah RECA, Inc. 20155 RENO
KS033 Ninnescah RECA, Inc. 20185 STAFFORD
KS037 The Smoky Valley EC 20053 ELLSWORTH
KS037 The Smoky Valley EC 20113 MCPHERSON
KS037 The Smoky Valley EC 20159 RICE
KS037 The Smoky Valley EC 20169 SALINE
KS038 Caney Valley Electric Co-op Assn. 20015 BUTLER
KS038 Caney Valley Electric Co-op Assn. 20019 CHAUTAUQUA
KS038 Caney Valley Electric Co-op Assn. 20035 COWLEY
KS038 Caney Valley Electric Co-op Assn. 20049 ELK
KS038 Caney Valley Electric Co-op Assn. 20125 MONTGOMERY
KS039 PR&W Electric Co-op Assn. 20061 GEARY
KS039 PR&W Electric Co-op Assn. 20085 JACKSON
KS039 PR&W Electric Co-op Assn. 20149 POTTAWATOMIE
KS039 PR&W Electric Co-op Assn. 20161 RILEY
KS039 PR&W Electric Co-op Assn. 20197 WABAUNSEE
KS040 Leavenworth-Jefferson Elec. Co-op 20005 ATCHISON
KS040 Leavenworth-Jefferson Elec. Co-op 20045 DOUGLAS
KS040 Leavenworth-Jefferson Elec. Co-op 20085 JACKSON
KS040 Leavenworth-Jefferson Elec. Co-op 20087 JEFFERSON
KS040 Leavenworth-Jefferson Elec. Co-op 20103 LEAVENWORTH
KS041 Radiant Electric Co-op, Inc. 20049 ELK
KS041 Radiant Electric Co-op, Inc. 20073 GREENWOOD
KS041 Radiant Electric Co-op, Inc. 20099 LABETTE
KS041 Radiant Electric Co-op, Inc. 20125 MONTGOMERY
KS041 Radiant Electric Co-op, Inc. 20133 NEOSHO
KS041 Radiant Electric Co-op, Inc. 20205 WILSON
KS041 Radiant Electric Co-op, Inc. 20207 WOODSON
KS042 Lane-Scott Electric Co-op, Inc. 20055 FINNEY
KS042 Lane-Scott Electric Co-op, Inc. 20063 GOVE
KS042 Lane-Scott Electric Co-op, Inc. 20083 HODGEMAN
KS042 Lane-Scott Electric Co-op, Inc. 20101 LANE
33
<PAGE>
KS042 Lane-Scott Electric Co-op, Inc. 20109 LOGAN
KS042 Lane-Scott Electric Co-op, Inc. 20135 NESS
KS042 Lane-Scott Electric Co-op, Inc. 20171 SCOTT
KS044 Pioneer Electric Co-op 20055 FINNEY
KS044 Pioneer Electric Co-op 20067 GRANT
KS044 Pioneer Electric Co-op 20069 GRAY
KS044 Pioneer Electric Co-op 20075 HAMILTON
KS044 Pioneer Electric Co-op 20081 HASKELL
KS044 Pioneer Electric Co-op 20093 KEARNY
KS044 Pioneer Electric Co-op 20129 MORTON
KS044 Pioneer Electric Co-op 20175 SEWARD
KS044 Pioneer Electric Co-op 20187 STANTON
KS044 Pioneer Electric Co-op 20189 STEVENS
KS045 Smoky Hill Electric Co-op Assn. 20009 BARTON
KS045 Smoky Hill Electric Co-op Assn. 20053 ELLSWORTH
KS045 Smoky Hill Electric Co-op Assn. 20105 LINCOLN
KS045 Smoky Hill Electric Co-op Assn. 20141 OSBORNE
KS045 Smoky Hill Electric Co-op Assn. 20143 OTTAWA
KS045 Smoky Hill Electric Co-op Assn. 20167 RUSSELL
KS045 Smoky Hill Electric Co-op Assn. 20169 SALINE
KS046 C.M.S. Electric Co-op, Inc. 20007 BARBER
KS046 C.M.S. Electric Co-op, Inc. 20025 CLARK
KS046 C.M.S. Electric Co-op, Inc. 20033 COMANCHE
KS046 C.M.S. Electric Co-op, Inc. 20057 FORD
KS046 C.M.S. Electric Co-op, Inc. 20069 GRAY
KS046 C.M.S. Electric Co-op, Inc. 20081 HASKELL
KS046 C.M.S. Electric Co-op, Inc. 20097 KIOWA
KS046 C.M.S. Electric Co-op, Inc. 20119 MEADE
KS046 C.M.S. Electric Co-op, Inc. 20175 SEWARD
KS046 C.M.S. Electric Co-op, Inc. 20189 STEVENS
KS047 Western Co-op Electric Assn., Inc. 20051 ELLIS
KS047 Western Co-op Electric Assn., Inc. 20063 GOVE
KS047 Western Co-op Electric Assn., Inc. 20065 GRAHAM
KS047 Western Co-op Electric Assn., Inc. 20135 NESS
KS047 Western Co-op Electric Assn., Inc. 20163 ROOKS
KS047 Western Co-op Electric Assn., Inc. 20165 RUSH
KS047 Western Co-op Electric Assn., Inc. 20179 SHERIDAN
KS047 Western Co-op Electric Assn., Inc. 20195 TREGO
KS048 Victory Electric Co-op Assn., Inc. 20025 CLARK
KS048 Victory Electric Co-op Assn., Inc. 20047 EDWARDS
KS048 Victory Electric Co-op Assn., Inc. 20055 FINNEY
KS048 Victory Electric Co-op Assn., Inc. 20057 FORD
KS048 Victory Electric Co-op Assn., Inc. 20069 GRAY
KS048 Victory Electric Co-op Assn., Inc. 20081 HASKELL
KS048 Victory Electric Co-op Assn., Inc. 20083 HODGEMAN
KS048 Victory Electric Co-op Assn., Inc. 20097 KIOWA
KS048 Victory Electric Co-op Assn., Inc. 20119 MEADE
KS049 Northwest Kansas Elec. Co-op Assn. 20023 CHEYENNE
KS049 Northwest Kansas Elec. Co-op Assn. 20039 DECATUR
KS049 Northwest Kansas Elec. Co-op Assn. 20153 RAWLINS
KS049 Northwest Kansas Elec. Co-op Assn. 20181 SHERMAN
KS049 Northwest Kansas Elec. Co-op Assn. 20193 THOMAS
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KS050 Twin Valley Electric Co-op 20021 CHEROKEE
KS050 Twin Valley Electric Co-op 20099 LABETTE
KS050 Twin Valley Electric Co-op 20125 MONTGOMERY
KS050 Twin Valley Electric Co-op 20133 NEOSHO
KS051 Wheatland Electric Co-op, Inc. 08061 KIOWA
KS051 Wheatland Electric Co-op, Inc. 20055 FINNEY
KS051 Wheatland Electric Co-op, Inc. 20069 GRAY
KS051 Wheatland Electric Co-op, Inc. 20071 GREELEY
KS051 Wheatland Electric Co-op, Inc. 20075 HAMILTON
KS051 Wheatland Electric Co-op, Inc. 20093 KEARNY
KS051 Wheatland Electric Co-op, Inc. 20109 LOGAN
KS051 Wheatland Electric Co-op, Inc. 20171 SCOTT
KS051 Wheatland Electric Co-op, Inc. 20175 SEWARD
KS051 Wheatland Electric Co-op, Inc. 20199 WALLACE
KS051 Wheatland Electric Co-op, Inc. 20203 WICHITA
KS055 Midwest Energy, Inc. 20023 CHEYENNE
KS055 Midwest Energy, Inc. 20109 LOGAN
KS055 Midwest Energy, Inc. 20153 RAWLINS
KS055 Midwest Energy, Inc. 20179 SHERIDAN
KS055 Midwest Energy, Inc. 20181 SHERMAN
KS055 Midwest Energy, Inc. 20193 THOMAS
KS055 Midwest Energy, Inc. 20199 WALLACE
KS055 Midwest Energy, Inc. 20009 BARTON
KS055 Midwest Energy, Inc. 20047 EDWARDS
KS055 Midwest Energy, Inc. 20083 HODGEMAN
KS055 Midwest Energy, Inc. 20135 NESS
KS055 Midwest Energy, Inc. 20145 PAWNEE
KS055 Midwest Energy, Inc. 20165 RUSH
KS055 Midwest Energy, Inc. 20167 RUSSELL
KS055 Midwest Energy, Inc. 20185 STAFFORD
KS056 Lyon-Coffey Electric Co-op 20017 CHASE
KS056 Lyon-Coffey Electric Co-op 20111 LYON
KS056 Lyon-Coffey Electric Co-op 20139 OSAGE
KS056 Lyon-Coffey Electric Co-op 20197 WABAUNSEE
KS056 Lyon-Coffey Electric Co-op 20003 ANDERSON
KS056 Lyon-Coffey Electric Co-op 20031 COFFEY
KS056 Lyon-Coffey Electric Co-op 20059 FRANKLIN
KS056 Lyon-Coffey Electric Co-op 20073 GREENWOOD
KS056 Lyon-Coffey Electric Co-op 20207 WOODSON
KY003 Jackson County RECC 21051 CLAY
KY003 Jackson County RECC 21065 ESTILL
KY003 Jackson County RECC 21109 JACKSON
KY003 Jackson County RECC 21125 LAUREL
KY003 Jackson County RECC 21129 LEE
KY003 Jackson County RECC 21131 LESLIE
KY003 Jackson County RECC 21137 LINCOLN
KY003 Jackson County RECC 21151 MADISON
KY003 Jackson County RECC 21189 OWSLEY
KY003 Jackson County RECC 21197 POWELL
KY003 Jackson County RECC 21203 ROCKCASTLE
KY003 Jackson County RECC 21237 WOLFE
KY018 Meade County RECC 21027 BRECKINRIDGE
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KY018 Meade County RECC 21085 GRAYSON
KY018 Meade County RECC 21091 HANCOCK
KY018 Meade County RECC 21093 HARDIN
KY018 Meade County RECC 21163 MEADE
KY018 Meade County RECC 21183 OHIO
KY020 Jackson Purchase Elec. Co-op Corp. 21007 BALLARD
KY020 Jackson Purchase Elec. Co-op Corp. 21039 CARLISLE
KY020 Jackson Purchase Elec. Co-op Corp. 21083 GRAVES
KY020 Jackson Purchase Elec. Co-op Corp. 21139 LIVINGSTON
KY020 Jackson Purchase Elec. Co-op Corp. 21145 MCCRACKEN
KY020 Jackson Purchase Elec. Co-op Corp. 21157 MARSHALL
KY021 Salt River Electric Co-op Corp. 21005 ANDERSON
KY021 Salt River Electric Co-op Corp. 21029 BULLITT
KY021 Salt River Electric Co-op Corp. 21111 JEFFERSON
KY021 Salt River Electric Co-op Corp. 21123 LARUE
KY021 Salt River Electric Co-op Corp. 21155 MARION
KY021 Salt River Electric Co-op Corp. 21167 MERCER
KY021 Salt River Electric Co-op Corp. 21179 NELSON
KY021 Salt River Electric Co-op Corp. 21211 SHELBY
KY021 Salt River Electric Co-op Corp. 21215 SPENCER
KY021 Salt River Electric Co-op Corp. 21229 WASHINGTON
KY023 Taylor County RECC 21001 ADAIR
KY023 Taylor County RECC 21045 CASEY
KY023 Taylor County RECC 21087 GREEN
KY023 Taylor County RECC 21217 TAYLOR
KY026 Pennyrile RECC 21031 BUTLER
KY026 Pennyrile RECC 21033 CALDWELL
KY026 Pennyrile RECC 21047 CHRISTIAN
KY026 Pennyrile RECC 21141 LOGAN
KY026 Pennyrile RECC 21143 LYON
KY026 Pennyrile RECC 21177 MUHLENBERG
KY026 Pennyrile RECC 21213 SIMPSON
KY026 Pennyrile RECC 21219 TODD
KY026 Pennyrile RECC 21221 TRIGG
KY027 Inter-County RECC 21021 BOYLE
KY027 Inter-County RECC 21045 CASEY
KY027 Inter-County RECC 21079 GERRARD
KY027 Inter-County RECC 21123 LARUE
KY027 Inter-County RECC 21137 LINCOLN
KY027 Inter-County RECC 21151 MADISON
KY027 Inter-County RECC 21155 MARION
KY027 Inter-County RECC 21167 MERCER
KY027 Inter-County RECC 21179 NELSON
KY027 Inter-County RECC 21203 ROCKCASTLE
KY027 Inter-County RECC 21217 TAYLOR
KY027 Inter-County RECC 21229 WASHINGTON
KY030 Shelby RECC 21005 ANDERSON
KY030 Shelby RECC 21041 CARROLL
KY030 Shelby RECC 21073 FRANKLIN
KY030 Shelby RECC 21103 HENRY
KY030 Shelby RECC 21185 OLDHAM
KY030 Shelby RECC 21187 OWEN
36
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KY030 Shelby RECC 21211 SHELBY
KY030 Shelby RECC 21215 SPENCER
KY030 Shelby RECC 21223 TRIMBLE
KY033 Green River Electric Corp. 21059 DAVIESS
KY033 Green River Electric Corp. 21091 HANCOCK
KY033 Green River Electric Corp. 21101 HENDERSON
KY033 Green River Electric Corp. 21107 HOPKINS
KY033 Green River Electric Corp. 21149 MCLEAN
KY033 Green River Electric Corp. 21177 MUHLENBERG
KY033 Green River Electric Corp. 21183 OHIO
KY033 Green River Electric Corp. 21233 WEBSTER
KY034 Farmers RECC 21001 ADAIR
KY034 Farmers RECC 21009 BARREN
KY034 Farmers RECC 21061 EDMONSON
KY034 Farmers RECC 21085 GRAYSON
KY034 Farmers RECC 21087 GREEN
KY034 Farmers RECC 21099 HART
KY034 Farmers RECC 21123 LARUE
KY034 Farmers RECC 21169 METCALFE
KY035 Warren RECC 21009 BARREN
KY035 Warren RECC 21031 BUTLER
KY035 Warren RECC 21061 EDMONSON
KY035 Warren RECC 21085 GRAYSON
KY035 Warren RECC 21141 LOGAN
KY035 Warren RECC 21183 OHIO
KY035 Warren RECC 21213 SIMPSON
KY035 Warren RECC 21227 WARREN
KY037 Owen Electric Cooperative, Inc. 21015 BOONE
KY037 Owen Electric Cooperative, Inc. 21037 CAMPBELL
KY037 Owen Electric Cooperative, Inc. 21041 CARROLL
KY037 Owen Electric Cooperative, Inc. 21077 GALLATIN
KY037 Owen Electric Cooperative, Inc. 21081 GRANT
KY037 Owen Electric Cooperative, Inc. 21117 KENTON
KY037 Owen Electric Cooperative, Inc. 21187 OWEN
KY037 Owen Electric Cooperative, Inc. 21191 PENDLETON
KY037 Owen Electric Cooperative, Inc. 21209 SCOTT
KY038 Hickman-Fulton Counties RECC 21039 CARLISLE
KY038 Hickman-Fulton Counties RECC 21075 FULTON
KY038 Hickman-Fulton Counties RECC 21083 GRAVES
KY038 Hickman-Fulton Counties RECC 21105 HICKMAN
KY038 Hickman-Fulton Counties RECC 47095 LAKE
KY038 Hickman-Fulton Counties RECC 47131 OBION
KY040 Blue Grass RECC 21067 FAYETTE
KY040 Blue Grass RECC 21079 GERRARD
KY040 Blue Grass RECC 21109 JACKSON
KY040 Blue Grass RECC 21113 JESSAMINE
KY040 Blue Grass RECC 21151 MADISON
KY040 Blue Grass RECC 21239 WOODFORD
KY045 Fox Creek RECC 21005 ANDERSON
KY045 Fox Creek RECC 21073 FRANKLIN
KY045 Fox Creek RECC 21103 HENRY
KY045 Fox Creek RECC 21113 JESSAMINE
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KY045 Fox Creek RECC 21167 MERCER
KY045 Fox Creek RECC 21211 SHELBY
KY045 Fox Creek RECC 21215 SPENCER
KY045 Fox Creek RECC 21229 WASHINGTON
KY045 Fox Creek RECC 21239 WOODFORD
KY046 Harrison County RECC 21017 BOURBON
KY046 Harrison County RECC 21023 BRACKEN
KY046 Harrison County RECC 21081 GRANT
KY046 Harrison County RECC 21097 HARRISON
KY046 Harrison County RECC 21181 NICHOLAS
KY046 Harrison County RECC 21191 PENDLETON
KY046 Harrison County RECC 21201 ROBERTSON
KY046 Harrison County RECC 21209 SCOTT
KY049 Clark RECC 21011 BATH
KY049 Clark RECC 21017 BOURBON
KY049 Clark RECC 21049 CLARK
KY049 Clark RECC 21065 ESTILL
KY049 Clark RECC 21067 FAYETTE
KY049 Clark RECC 21151 MADISON
KY049 Clark RECC 21165 MENIFEE
KY049 Clark RECC 21173 MONTGOMERY
KY049 Clark RECC 21175 MORGAN
KY049 Clark RECC 21197 POWELL
KY049 Clark RECC 21205 ROWAN
KY049 Clark RECC 21237 WOLFE
KY050 West Kentucky RECC 21035 CALLOWAY
KY050 West Kentucky RECC 21039 CARLISLE
KY050 West Kentucky RECC 21083 GRAVES
KY050 West Kentucky RECC 21105 HICKMAN
KY050 West Kentucky RECC 21139 LIVINGSTON
KY050 West Kentucky RECC 21157 MARSHALL
KY051 Nolin RECC 21027 BRECKINRIDGE
KY051 Nolin RECC 21029 BULLITT
KY051 Nolin RECC 21085 GRAYSON
KY051 Nolin RECC 21087 GREEN
KY051 Nolin RECC 21093 HARDIN
KY051 Nolin RECC 21099 HART
KY051 Nolin RECC 21123 LARUE
KY051 Nolin RECC 21163 MEADE
KY051 Nolin RECC 21217 TAYLOR
KY052 Fleming-Mason RECC 21011 BATH
KY052 Fleming-Mason RECC 21023 BRACKEN
KY052 Fleming-Mason RECC 21069 FLEMING
KY052 Fleming-Mason RECC 21135 LEWIS
KY052 Fleming-Mason RECC 21161 MASON
KY052 Fleming-Mason RECC 21181 NICHOLAS
KY052 Fleming-Mason RECC 21201 ROBERTSON
KY052 Fleming-Mason RECC 21205 ROWAN
KY054 South Kentucky RECC 21001 ADAIR
KY054 South Kentucky RECC 21045 CASEY
KY054 South Kentucky RECC 21053 CLINTON
KY054 South Kentucky RECC 21057 CUMBERLAND
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KY054 South Kentucky RECC 21125 LAUREL
KY054 South Kentucky RECC 21137 LINCOLN
KY054 South Kentucky RECC 21147 MCCREARY
KY054 South Kentucky RECC 21199 PULASKI
KY054 South Kentucky RECC 21203 ROCKCASTLE
KY054 South Kentucky RECC 21207 RUSSELL
KY054 South Kentucky RECC 21231 WAYNE
KY054 South Kentucky RECC 47137 PICKETT
KY054 South Kentucky RECC 47151 SCOTT
KY055 Henderson Union Electric Co-op 21033 CALDWELL
KY055 Henderson Union Electric Co-op 21055 CRITTENDEN
KY055 Henderson Union Electric Co-op 21101 HENDERSON
KY055 Henderson Union Electric Co-op 21107 HOPKINS
KY055 Henderson Union Electric Co-op 21143 LYON
KY055 Henderson Union Electric Co-op 21225 UNION
KY055 Henderson Union Electric Co-op 21233 WEBSTER
KY056 Licking Valley RECC 21025 BREATHITT
KY056 Licking Valley RECC 21129 LEE
KY056 Licking Valley RECC 21153 MAGOFFIN
KY056 Licking Valley RECC 21165 MENIFEE
KY056 Licking Valley RECC 21175 MORGAN
KY056 Licking Valley RECC 21237 WOLFE
KY057 Cumberland Valley RECC 21013 BELL
KY057 Cumberland Valley RECC 21095 HARLAN
KY057 Cumberland Valley RECC 21121 KNOX
KY057 Cumberland Valley RECC 21125 LAUREL
KY057 Cumberland Valley RECC 21131 LESLIE
KY057 Cumberland Valley RECC 21133 LETCHER
KY057 Cumberland Valley RECC 21147 MCCREARY
KY057 Cumberland Valley RECC 21235 WHITLEY
KY058 Big Sandy RECC 21025 BREATHITT
KY058 Big Sandy RECC 21071 FLOYD
KY058 Big Sandy RECC 21115 JOHNSON
KY058 Big Sandy RECC 21119 KNOTT
KY058 Big Sandy RECC 21127 LAWRENCE
KY058 Big Sandy RECC 21153 MAGOFFIN
KY058 Big Sandy RECC 21159 MARTIN
KY058 Big Sandy RECC 21175 MORGAN
KY061 Grayson RECC 21043 CARTER
KY061 Grayson RECC 21063 ELLIOTT
KY061 Grayson RECC 21089 GREENUP
KY061 Grayson RECC 21127 LAWRENCE
KY061 Grayson RECC 21135 LEWIS
KY061 Grayson RECC 21205 ROWAN
LA006 Teche Electric Co-op, Inc. 22045 IBERIA
LA006 Teche Electric Co-op, Inc. 22099 SAINT MARTIN
LA006 Teche Electric Co-op, Inc. 22101 SAINT MARY
LA007 Valley EMC 22017 CADDO
LA007 Valley EMC 22031 DESOTO
LA007 Valley EMC 22043 GRANT
LA007 Valley EMC 22069 NATCHITOCHES
LA007 Valley EMC 22081 RED RIVER
39
<PAGE>
LA007 Valley EMC 22085 SABINE
LA007 Valley EMC 22115 VERNON
LA007 Valley EMC 22127 WINN
LA008 South Louisiana Electric Co-op 22007 ASSUMPTION
LA008 South Louisiana Electric Co-op 22057 LAFOURCHE
LA008 South Louisiana Electric Co-op 22099 SAINT MARTIN
LA008 South Louisiana Electric Co-op 22101 SAINT MARY
LA008 South Louisiana Electric Co-op 22109 TERREBONNE
LA009 Southwest Louisiana EMC 22001 ACADIA
LA009 Southwest Louisiana EMC 22009 AVOYELLES
LA009 Southwest Louisiana EMC 22039 EVANGELINE
LA009 Southwest Louisiana EMC 22045 IBERIA
LA009 Southwest Louisiana EMC 22055 LAFAYETTE
LA009 Southwest Louisiana EMC 22097 SAINT LANDRY
LA009 Southwest Louisiana EMC 22099 SAINT MARTIN
LA009 Southwest Louisiana EMC 22113 VERMILION
LA010 Washington-St. Tammany Elec. Co-op 22103 SAINT TAMMANY
LA010 Washington-St. Tammany Elec. Co-op 22105 TANGIPAHOA
LA010 Washington-St. Tammany Elec. Co-op 22117 WASHINGTON
LA011 Bossier REMC 22013 BIENVILLE
LA011 Bossier REMC 22015 BOSSIER
LA011 Bossier REMC 22081 RED RIVER
LA011 Bossier REMC 22119 WEBSTER
LA012 Northeast Louisiana Power Co-op 22035 EAST CARROLL
LA012 Northeast Louisiana Power Co-op 22041 FRANKLIN
LA012 Northeast Louisiana Power Co-op 22065 MADISON
LA012 Northeast Louisiana Power Co-op 22067 MOREHOUSE
LA012 Northeast Louisiana Power Co-op 22083 RICHLAND
LA012 Northeast Louisiana Power Co-op 22107 TENSAS
LA012 Northeast Louisiana Power Co-op 22123 WEST CARROLL
LA013 DEMCO 22005 ASCENSION
LA013 DEMCO 22033 EAST BATON ROUGE
LA013 DEMCO 22037 EAST FELICIANA
LA013 DEMCO 22063 LIVINGSTON
LA013 DEMCO 22091 SAINT HELENA
LA013 DEMCO 22105 TANGIPAHOA
LA013 DEMCO 22125 WEST FELICIANA
LA015 Pointe Coupee EMC 22047 IBERVILLE
LA015 Pointe Coupee EMC 22077 POINTE COUPEE
LA015 Pointe Coupee EMC 22121 WEST BATON ROUGE
LA017 Claiborne Electric Co-op, Inc. 22013 BIENVILLE
LA017 Claiborne Electric Co-op, Inc. 22027 CLAIBORNE
LA017 Claiborne Electric Co-op, Inc. 22061 LINCOLN
LA017 Claiborne Electric Co-op, Inc. 22073 OUACHITA
LA017 Claiborne Electric Co-op, Inc. 22111 UNION
LA017 Claiborne Electric Co-op, Inc. 22119 WEBSTER
LA019 Jefferson Davis Electric Co-op 22003 ALLEN
LA019 Jefferson Davis Electric Co-op 22019 CALCASIEU
LA019 Jefferson Davis Electric Co-op 22023 CAMERON
LA019 Jefferson Davis Electric Co-op 22053 JEFFERSON DAVIS
LA019 Jefferson Davis Electric Co-op 22113 VERMILION
LA020 Concordia Electric Co-op, Inc. 22021 CALDWELL
40
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LA020 Concordia Electric Co-op, Inc. 22025 CATAHOULA
LA020 Concordia Electric Co-op, Inc. 22029 CONCORDIA
LA020 Concordia Electric Co-op, Inc. 22041 FRANKLIN
LA020 Concordia Electric Co-op, Inc. 22043 GRANT
LA020 Concordia Electric Co-op, Inc. 22059 LASALLE
LA020 Concordia Electric Co-op, Inc. 22079 RAPIDES
LA020 Concordia Electric Co-op, Inc. 22107 TENSAS
LA026 Louisiana Rural Electric Corp. 22001 ACADIA
LA026 Louisiana Rural Electric Corp. 22003 ALLEN
LA026 Louisiana Rural Electric Corp. 22009 AVOYELLES
LA026 Louisiana Rural Electric Corp. 22011 BEAUREGARD
LA026 Louisiana Rural Electric Corp. 22019 CALCASIEU
LA026 Louisiana Rural Electric Corp. 22031 DESOTO
LA026 Louisiana Rural Electric Corp. 22039 EVANGELINE
LA026 Louisiana Rural Electric Corp. 22043 GRANT
LA026 Louisiana Rural Electric Corp. 22045 IBERIA
LA026 Louisiana Rural Electric Corp. 22079 RAPIDES
LA026 Louisiana Rural Electric Corp. 22081 RED RIVER
LA026 Louisiana Rural Electric Corp. 22085 SABINE
LA026 Louisiana Rural Electric Corp. 22097 SAINT LANDRY
LA026 Louisiana Rural Electric Corp. 22099 SAINT MARTIN
LA026 Louisiana Rural Electric Corp. 22101 SAINT MARY
LA026 Louisiana Rural Electric Corp. 22103 SAINT TAMMANY
LA026 Louisiana Rural Electric Corp. 22115 VERNON
LA026 Louisiana Rural Electric Corp. 22117 WASHINGTON
MD004 Southern Maryland Electric Co-op 24009 CALVERT
MD004 Southern Maryland Electric Co-op 24017 CHARLES
MD004 Southern Maryland Electric Co-op 24033 PRINCE GEORGES
MD004 Southern Maryland Electric Co-op 24037 ST MARYS
MD007 Choptank Electric Co-op, Inc. 24011 CAROLINE
MD007 Choptank Electric Co-op, Inc. 24015 CECIL
MD007 Choptank Electric Co-op, Inc. 24019 DORCHESTER
MD007 Choptank Electric Co-op, Inc. 24029 KENT
MD007 Choptank Electric Co-op, Inc. 24035 QUEEN ANNES
MD007 Choptank Electric Co-op, Inc. 24039 SOMERSET
MD007 Choptank Electric Co-op, Inc. 24041 TALBOT
MD007 Choptank Electric Co-op, Inc. 24045 WICOMICO
MD007 Choptank Electric Co-op, Inc. 24047 WORCESTER
ME012 Eastern Maine Electric Co-op, Inc. 23003 AROOSTOOK
ME012 Eastern Maine Electric Co-op, Inc. 23019 PENOBSCOT
ME012 Eastern Maine Electric Co-op, Inc. 23029 WASHINGTON
ME013 Union River Electric Co-op, Inc. 23009 HANCOCK
ME013 Union River Electric Co-op, Inc. 23019 PENOBSCOT
ME016 Swan's Island Electric Co-op 23009 HANCOCK
ME019 Fox Islands Electric Co-op 23013 KNOX
MI005 Southeastern Michigan REC, Inc. 26091 LENAWEE
MI005 Southeastern Michigan REC, Inc. 39051 FULTON
MI005 Southeastern Michigan REC, Inc. 39171 WILLIAMS
MI020 Alger-Delta Co-op Electric Assn. 26003 ALGER
MI020 Alger-Delta Co-op Electric Assn. 26041 DELTA
MI020 Alger-Delta Co-op Electric Assn. 26103 MARQUETTE
MI020 Alger-Delta Co-op Electric Assn. 26109 MENOMINEE
41
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MI020 Alger-Delta Co-op Electric Assn. 26153 SCHOOLCRAFT
MI026 Tri-County Electric Co-op 26015 BARRY
MI026 Tri-County Electric Co-op 26035 CLARE
MI026 Tri-County Electric Co-op 26037 CLINTON
MI026 Tri-County Electric Co-op 26045 EATON
MI026 Tri-County Electric Co-op 26057 GRATIOT
MI026 Tri-County Electric Co-op 26065 INGHAM
MI026 Tri-County Electric Co-op 26067 IONIA
MI026 Tri-County Electric Co-op 26073 ISABELLA
MI026 Tri-County Electric Co-op 26075 JACKSON
MI026 Tri-County Electric Co-op 26107 MECOSTA
MI026 Tri-County Electric Co-op 26117 MONTCALM
MI026 Tri-County Electric Co-op 26133 OSCEOLA
MI026 Tri-County Electric Co-op 26145 SAGINAW
MI028 Presque Isle Electric & Gas Co-op 26001 ALCONA
MI028 Presque Isle Electric & Gas Co-op 26007 ALPENA
MI028 Presque Isle Electric & Gas Co-op 26031 CHEBOYGAN
MI028 Presque Isle Electric & Gas Co-op 26047 EMMET
MI028 Presque Isle Electric & Gas Co-op 26097 MACKINAC
MI028 Presque Isle Electric & Gas Co-op 26119 MONTMORENCY
MI028 Presque Isle Electric & Gas Co-op 26135 OSCODA
MI028 Presque Isle Electric & Gas Co-op 26137 OTSEGO
MI028 Presque Isle Electric & Gas Co-op 26141 PRESQUE ISLE
MI029 Ontonagon County REA 26013 BARAGA
MI029 Ontonagon County REA 26061 HOUGHTON
MI029 Ontonagon County REA 26083 KEWEENAW
MI029 Ontonagon County REA 26131 ONTONAGON
MI033 Top O'Michigan Rural Elec. Co. 26009 ANTRIM
MI033 Top O'Michigan Rural Elec. Co. 26029 CHARLEVOIX
MI033 Top O'Michigan Rural Elec. Co. 26031 CHEBOYGAN
MI033 Top O'Michigan Rural Elec. Co. 26039 CRAWFORD
MI033 Top O'Michigan Rural Elec. Co. 26047 EMMET
MI033 Top O'Michigan Rural Elec. Co. 26055 GRAND TRAVERSE
MI033 Top O'Michigan Rural Elec. Co. 26079 KALKASKA
MI033 Top O'Michigan Rural Elec. Co. 26113 MISSAUKEE
MI033 Top O'Michigan Rural Elec. Co. 26119 MONTMORENCY
MI033 Top O'Michigan Rural Elec. Co. 26135 OSCODA
MI033 Top O'Michigan Rural Elec. Co. 26137 OTSEGO
MI033 Top O'Michigan Rural Elec. Co. 26165 WEXFORD
MI037 Thumb Electric Co-op, Inc. 26063 HURON
MI037 Thumb Electric Co-op, Inc. 26151 SANILAC
MI037 Thumb Electric Co-op, Inc. 26157 TUSCOLA
MI040 O & A Electric Co-op, Inc. 26005 ALLEGAN
MI040 O & A Electric Co-op, Inc. 26015 BARRY
MI040 O & A Electric Co-op, Inc. 26035 CLARE
MI040 O & A Electric Co-op, Inc. 26081 KENT
MI040 O & A Electric Co-op, Inc. 26085 LAKE
MI040 O & A Electric Co-op, Inc. 26107 MECOSTA
MI040 O & A Electric Co-op, Inc. 26113 MISSAUKEE
MI040 O & A Electric Co-op, Inc. 26117 MONTCALM
MI040 O & A Electric Co-op, Inc. 26121 MUSKEGON
MI040 O & A Electric Co-op, Inc. 26123 NEWAYGO
42
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MI040 O & A Electric Co-op, Inc. 26133 OSCEOLA
MI040 O & A Electric Co-op, Inc. 26139 OTTAWA
MI040 O & A Electric Co-op, Inc. 26165 WEXFORD
MI041 Oceana Electric Co-op 26105 MASON
MI041 Oceana Electric Co-op 26121 MUSKEGON
MI041 Oceana Electric Co-op 26123 NEWAYGO
MI041 Oceana Electric Co-op 26127 OCEANA
MI042 Western Michigan Electric Co-op 26085 LAKE
MI042 Western Michigan Electric Co-op 26101 MANISTEE
MI042 Western Michigan Electric Co-op 26105 MASON
MI042 Western Michigan Electric Co-op 26123 NEWAYGO
MI042 Western Michigan Electric Co-op 26127 OCEANA
MI043 Cloverland Electric Co-op 26033 CHIPPEWA
MI043 Cloverland Electric Co-op 26095 LUCE
MI043 Cloverland Electric Co-op 26097 MACKINAC
MI043 Cloverland Electric Co-op 26153 SCHOOLCRAFT
MI044 Cherryland Electric Cooperative 26019 BENZIE
MI044 Cherryland Electric Cooperative 26055 GRAND TRAVERSE
MI044 Cherryland Electric Cooperative 26079 KALKASKA
MI044 Cherryland Electric Cooperative 26089 LEELANAU
MI044 Cherryland Electric Cooperative 26101 MANISTEE
MI044 Cherryland Electric Cooperative 26165 WEXFORD
MI045 Fruit Belt Electric Co-op 18039 ELKHART
MI045 Fruit Belt Electric Co-op 18141 ST. JOSEPH
MI045 Fruit Belt Electric Co-op 26021 BERRIEN
MI045 Fruit Belt Electric Co-op 26027 CASS
MI045 Fruit Belt Electric Co-op 26077 KALAMAZOO
MI045 Fruit Belt Electric Co-op 26149 ST JOSEPH
MI045 Fruit Belt Electric Co-op 26159 VAN BUREN
MN001 East Central Electric Assn. 27009 BENTON
MN001 East Central Electric Assn. 27025 CHISAGO
MN001 East Central Electric Assn. 27059 ISANTI
MN001 East Central Electric Assn. 27065 KANABEC
MN001 East Central Electric Assn. 27095 MILLE LACS
MN001 East Central Electric Assn. 27097 MORRISON
MN001 East Central Electric Assn. 27115 PINE
MN001 East Central Electric Assn. 27141 SHERBURNE
MN001 East Central Electric Assn. 27163 WASHINGTON
MN003 Meeker Co-op Light & Power Assn. 27067 KANDIYOHI
MN003 Meeker Co-op Light & Power Assn. 27085 MCLEOD
MN003 Meeker Co-op Light & Power Assn. 27093 MEEKER
MN003 Meeker Co-op Light & Power Assn. 27129 RENVILLE
MN003 Meeker Co-op Light & Power Assn. 27145 STEARNS
MN003 Meeker Co-op Light & Power Assn. 27171 WRIGHT
MN004 Co-op Light & Power Association 27075 LAKE
MN004 Co-op Light & Power Association 27137 ST. LOUIS
MN009 Goodhue County Co-op Electric Assn. 27037 DAKOTA
MN009 Goodhue County Co-op Electric Assn. 27039 DODGE
MN009 Goodhue County Co-op Electric Assn. 27049 GOODHUE
MN009 Goodhue County Co-op Electric Assn. 27109 OLMSTED
MN009 Goodhue County Co-op Electric Assn. 27131 RICE
MN009 Goodhue County Co-op Electric Assn. 27157 WABASHA
43
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MN010 Carlton County Co-op Power Assn. 27001 AITKIN
MN010 Carlton County Co-op Power Assn. 27017 CARLTON
MN010 Carlton County Co-op Power Assn. 27061 ITASCA
MN010 Carlton County Co-op Power Assn. 27115 PINE
MN010 Carlton County Co-op Power Assn. 27137 ST. LOUIS
MN012 Northern Electric Co-op Assn. 27061 ITASCA
MN012 Northern Electric Co-op Assn. 27071 KOOCHICHING
MN012 Northern Electric Co-op Assn. 27075 LAKE
MN012 Northern Electric Co-op Assn. 27137 ST. LOUIS
MN018 Runestone Electric Assn. 27041 DOUGLAS
MN018 Runestone Electric Assn. 27051 GRANT
MN018 Runestone Electric Assn. 27111 OTTER TAIL
MN018 Runestone Electric Assn. 27121 POPE
MN018 Runestone Electric Assn. 27145 STEARNS
MN018 Runestone Electric Assn. 27149 STEVENS
MN018 Runestone Electric Assn. 27153 TODD
MN025 McLeod Co-op Power Assn. 27019 CARVER
MN025 McLeod Co-op Power Assn. 27067 KANDIYOHI
MN025 McLeod Co-op Power Assn. 27085 MCLEOD
MN025 McLeod Co-op Power Assn. 27093 MEEKER
MN025 McLeod Co-op Power Assn. 27129 RENVILLE
MN025 McLeod Co-op Power Assn. 27143 SIBLEY
MN025 McLeod Co-op Power Assn. 27171 WRIGHT
MN032 Tri-County Electric Co-op 19005 ALLAMAKEE
MN032 Tri-County Electric Co-op 19089 HOWARD
MN032 Tri-County Electric Co-op 19191 WINNESHIEK
MN032 Tri-County Electric Co-op 27045 FILLMORE
MN032 Tri-County Electric Co-op 27055 HOUSTON
MN032 Tri-County Electric Co-op 27099 MOWER
MN032 Tri-County Electric Co-op 27109 OLMSTED
MN032 Tri-County Electric Co-op 27169 WINONA
MN034 Stearns Co-op Electric Assn. 27041 DOUGLAS
MN034 Stearns Co-op Electric Assn. 27067 KANDIYOHI
MN034 Stearns Co-op Electric Assn. 27097 MORRISON
MN034 Stearns Co-op Electric Assn. 27121 POPE
MN034 Stearns Co-op Electric Assn. 27145 STEARNS
MN034 Stearns Co-op Electric Assn. 27153 TODD
MN035 Brown County REA 27013 BLUE EARTH
MN035 Brown County REA 27015 BROWN
MN035 Brown County REA 27033 COTTONWOOD
MN035 Brown County REA 27103 NICOLLET
MN035 Brown County REA 27127 REDWOOD
MN035 Brown County REA 27129 RENVILLE
MN035 Brown County REA 27143 SIBLEY
MN035 Brown County REA 27165 WATONWAN
MN037 Federated REA 19059 DICKINSON
MN037 Federated REA 19063 EMMET
MN037 Federated REA 19109 KOSSUTH
MN037 Federated REA 27033 COTTONWOOD
MN037 Federated REA 27043 FARIBAULT
MN037 Federated REA 27063 JACKSON
MN037 Federated REA 27091 MARTIN
44
<PAGE>
MN037 Federated REA 27101 MURRAY
MN037 Federated REA 27105 NOBLES
MN037 Federated REA 27143 SIBLEY
MN037 Federated REA 27165 WATONWAN
MN039 Minn. Valley Co-op L.& P. Assn. 27023 CHIPPEWA
MN039 Minn. Valley Co-op L.& P. Assn. 27073 LAC QUI PARLE
MN039 Minn. Valley Co-op L.& P. Assn. 27081 LINCOLN
MN039 Minn. Valley Co-op L.& P. Assn. 27083 LYON
MN039 Minn. Valley Co-op L.& P. Assn. 27127 REDWOOD
MN039 Minn. Valley Co-op L.& P. Assn. 27129 RENVILLE
MN039 Minn. Valley Co-op L.& P. Assn. 27151 SWIFT
MN039 Minn. Valley Co-op L.& P. Assn. 27173 YELLOW MEDICINE
MN048 Anoka Electric Co-op 27003 ANOKA
MN048 Anoka Electric Co-op 27025 CHISAGO
MN048 Anoka Electric Co-op 27053 HENNEPIN
MN048 Anoka Electric Co-op 27059 ISANTI
MN048 Anoka Electric Co-op 27095 MILLE LACS
MN048 Anoka Electric Co-op 27123 RAMSEY
MN048 Anoka Electric Co-op 27141 SHERBURNE
MN048 Anoka Electric Co-op 27163 WASHINGTON
MN053 Steele-Waseca Co-op Electric 27013 BLUE EARTH
MN053 Steele-Waseca Co-op Electric 27039 DODGE
MN053 Steele-Waseca Co-op Electric 27043 FARIBAULT
MN053 Steele-Waseca Co-op Electric 27047 FREEBORN
MN053 Steele-Waseca Co-op Electric 27049 GOODHUE
MN053 Steele-Waseca Co-op Electric 27079 LESUEUR
MN053 Steele-Waseca Co-op Electric 27131 RICE
MN053 Steele-Waseca Co-op Electric 27147 STEELE
MN053 Steele-Waseca Co-op Electric 27161 WASECA
MN055 South Central Electric Assn. 27013 BLUE EARTH
MN055 South Central Electric Assn. 27015 BROWN
MN055 South Central Electric Assn. 27033 COTTONWOOD
MN055 South Central Electric Assn. 27063 JACKSON
MN055 South Central Electric Assn. 27091 MARTIN
MN055 South Central Electric Assn. 27101 MURRAY
MN055 South Central Electric Assn. 27127 REDWOOD
MN055 South Central Electric Assn. 27165 WATONWAN
MN056 Crow Wing Co-op Power & Light Co. 27021 CASS
MN056 Crow Wing Co-op Power & Light Co. 27035 CROW WING
MN056 Crow Wing Co-op Power & Light Co. 27097 MORRISON
MN057 Lake Region Co-op Electrical Assn. 27005 BECKER
MN057 Lake Region Co-op Electrical Assn. 27027 CLAY
MN057 Lake Region Co-op Electrical Assn. 27041 DOUGLAS
MN057 Lake Region Co-op Electrical Assn. 27051 GRANT
MN057 Lake Region Co-op Electrical Assn. 27111 OTTER TAIL
MN057 Lake Region Co-op Electrical Assn. 27153 TODD
MN057 Lake Region Co-op Electrical Assn. 27159 WADENA
MN057 Lake Region Co-op Electrical Assn. 27167 WILKIN
MN058 Kandiyohi Co-op Elec. Power Assn. 27023 CHIPPEWA
MN058 Kandiyohi Co-op Elec. Power Assn. 27067 KANDIYOHI
MN058 Kandiyohi Co-op Elec. Power Assn. 27145 STEARNS
MN058 Kandiyohi Co-op Elec. Power Assn. 27151 SWIFT
45
<PAGE>
MN059 People's Co-op Power Assn. 27039 DODGE
MN059 People's Co-op Power Assn. 27045 FILLMORE
MN059 People's Co-op Power Assn. 27099 MOWER
MN059 People's Co-op Power Assn. 27109 OLMSTED
MN059 People's Co-op Power Assn. 27157 WABASHA
MN059 People's Co-op Power Assn. 27169 WINONA
MN060 Redwood Electric Co-op 27015 BROWN
MN060 Redwood Electric Co-op 27083 LYON
MN060 Redwood Electric Co-op 27101 MURRAY
MN060 Redwood Electric Co-op 27127 REDWOOD
MN061 Freeborn-Mower Electric Co-op 19195 WORTH
MN061 Freeborn-Mower Electric Co-op 27039 DODGE
MN061 Freeborn-Mower Electric Co-op 27043 FARIBAULT
MN061 Freeborn-Mower Electric Co-op 27045 FILLMORE
MN061 Freeborn-Mower Electric Co-op 27047 FREEBORN
MN061 Freeborn-Mower Electric Co-op 27099 MOWER
MN061 Freeborn-Mower Electric Co-op 27147 STEELE
MN062 Wright-Hennepin Co-op Elec. Assn. 27019 CARVER
MN062 Wright-Hennepin Co-op Elec. Assn. 27053 HENNEPIN
MN062 Wright-Hennepin Co-op Elec. Assn. 27085 MCLEOD
MN062 Wright-Hennepin Co-op Elec. Assn. 27093 MEEKER
MN062 Wright-Hennepin Co-op Elec. Assn. 27141 SHERBURNE
MN062 Wright-Hennepin Co-op Elec. Assn. 27145 STEARNS
MN062 Wright-Hennepin Co-op Elec. Assn. 27171 WRIGHT
MN063 Minnesota Valley Electric Co-op 27013 BLUE EARTH
MN063 Minnesota Valley Electric Co-op 27019 CARVER
MN063 Minnesota Valley Electric Co-op 27037 DAKOTA
MN063 Minnesota Valley Electric Co-op 27053 HENNEPIN
MN063 Minnesota Valley Electric Co-op 27079 LESUEUR
MN063 Minnesota Valley Electric Co-op 27131 RICE
MN063 Minnesota Valley Electric Co-op 27139 SCOTT
MN063 Minnesota Valley Electric Co-op 27143 SIBLEY
MN063 Minnesota Valley Electric Co-op 27161 WASECA
MN065 Dakota Electric Association 27037 DAKOTA
MN065 Dakota Electric Association 27049 GOODHUE
MN065 Dakota Electric Association 27131 RICE
MN065 Dakota Electric Association 27139 SCOTT
MN066 Nobles Cooperative Electric 19119 LYON
MN066 Nobles Cooperative Electric 19143 OSCEOLA
MN066 Nobles Cooperative Electric 27033 COTTONWOOD
MN066 Nobles Cooperative Electric 27063 JACKSON
MN066 Nobles Cooperative Electric 27081 LINCOLN
MN066 Nobles Cooperative Electric 27083 LYON
MN066 Nobles Cooperative Electric 27101 MURRAY
MN066 Nobles Cooperative Electric 27105 NOBLES
MN066 Nobles Cooperative Electric 27117 PIPESTONE
MN066 Nobles Cooperative Electric 27127 REDWOOD
MN066 Nobles Cooperative Electric 27133 ROCK
MN072 Renville-Sibley Co-op Power Assn. 27023 CHIPPEWA
MN072 Renville-Sibley Co-op Power Assn. 27067 KANDIYOHI
MN072 Renville-Sibley Co-op Power Assn. 27103 NICOLLET
MN072 Renville-Sibley Co-op Power Assn. 27127 REDWOOD
46
<PAGE>
MN072 Renville-Sibley Co-op Power Assn. 27129 RENVILLE
MN072 Renville-Sibley Co-op Power Assn. 27143 SIBLEY
MN073 Southwestern Minnesota Co-op Elec. 19119 LYON
MN073 Southwestern Minnesota Co-op Elec. 27081 LINCOLN
MN073 Southwestern Minnesota Co-op Elec. 27101 MURRAY
MN073 Southwestern Minnesota Co-op Elec. 27105 NOBLES
MN073 Southwestern Minnesota Co-op Elec. 27117 PIPESTONE
MN073 Southwestern Minnesota Co-op Elec. 27133 ROCK
MN073 Southwestern Minnesota Co-op Elec. 46101 MOODY
MN074 Red River Valley Co-op Power Assn. 27027 CLAY
MN074 Red River Valley Co-op Power Assn. 27107 NORMAN
MN074 Red River Valley Co-op Power Assn. 27119 POLK
MN075 Red Lake Electric Co-op, Inc. 27007 BELTRAMI
MN075 Red Lake Electric Co-op, Inc. 27029 CLEARWATER
MN075 Red Lake Electric Co-op, Inc. 27089 MARSHALL
MN075 Red Lake Electric Co-op, Inc. 27113 PENNINGTON
MN075 Red Lake Electric Co-op, Inc. 27119 POLK
MN075 Red Lake Electric Co-op, Inc. 27125 RED LAKE
MN079 Agralite Cooperative 27011 BIG STONE
MN079 Agralite Cooperative 27023 CHIPPEWA
MN079 Agralite Cooperative 27067 KANDIYOHI
MN079 Agralite Cooperative 27121 POPE
MN079 Agralite Cooperative 27149 STEVENS
MN079 Agralite Cooperative 27151 SWIFT
MN080 Lyon-Lincoln Electric Co-op, Inc. 27081 LINCOLN
MN080 Lyon-Lincoln Electric Co-op, Inc. 27083 LYON
MN080 Lyon-Lincoln Electric Co-op, Inc. 27101 MURRAY
MN080 Lyon-Lincoln Electric Co-op, Inc. 27117 PIPESTONE
MN080 Lyon-Lincoln Electric Co-op, Inc. 27173 YELLOW MEDICINE
MN081 Mille Lacs Electric Co-op 27001 AITKIN
MN081 Mille Lacs Electric Co-op 27035 CROW WING
MN081 Mille Lacs Electric Co-op 27095 MILLE LACS
MN082 Wild Rice Electric Co-op, Inc. 27005 BECKER
MN082 Wild Rice Electric Co-op, Inc. 27027 CLAY
MN082 Wild Rice Electric Co-op, Inc. 27029 CLEARWATER
MN082 Wild Rice Electric Co-op, Inc. 27087 MAHNOMEN
MN082 Wild Rice Electric Co-op, Inc. 27107 NORMAN
MN082 Wild Rice Electric Co-op, Inc. 27119 POLK
MN083 Itasca-Mantrap Co-op Elec. Assn. 27005 BECKER
MN083 Itasca-Mantrap Co-op Elec. Assn. 27021 CASS
MN083 Itasca-Mantrap Co-op Elec. Assn. 27057 HUBBARD
MN083 Itasca-Mantrap Co-op Elec. Assn. 27159 WADENA
MN084 Traverse Electric Co-op, Inc. 27011 BIG STONE
MN084 Traverse Electric Co-op, Inc. 27051 GRANT
MN084 Traverse Electric Co-op, Inc. 27149 STEVENS
MN084 Traverse Electric Co-op, Inc. 27155 TRAVERSE
MN084 Traverse Electric Co-op, Inc. 27167 WILKIN
MN084 Traverse Electric Co-op, Inc. 38077 RICHLAND
MN084 Traverse Electric Co-op, Inc. 46091 MARSHALL
MN084 Traverse Electric Co-op, Inc. 46109 ROBERTS
MN085 Todd-Wadena Electric Co-op 27005 BECKER
MN085 Todd-Wadena Electric Co-op 27021 CASS
47
<PAGE>
MN085 Todd-Wadena Electric Co-op 27041 DOUGLAS
MN085 Todd-Wadena Electric Co-op 27057 HUBBARD
MN085 Todd-Wadena Electric Co-op 27097 MORRISON
MN085 Todd-Wadena Electric Co-op 27111 OTTER TAIL
MN085 Todd-Wadena Electric Co-op 27153 TODD
MN085 Todd-Wadena Electric Co-op 27159 WADENA
MN087 P.K.M. Electric Co-op, Inc. 27069 KITTSON
MN087 P.K.M. Electric Co-op, Inc. 27089 MARSHALL
MN087 P.K.M. Electric Co-op, Inc. 27119 POLK
MN089 North Pine Electric Co-op, Inc. 27001 AITKIN
MN089 North Pine Electric Co-op, Inc. 27065 KANABEC
MN089 North Pine Electric Co-op, Inc. 27095 MILLE LACS
MN089 North Pine Electric Co-op, Inc. 27115 PINE
MN092 Dairyland Electric Co-op, Inc. 27001 AITKIN
MN092 Dairyland Electric Co-op, Inc. 27021 CASS
MN092 Dairyland Electric Co-op, Inc. 27061 ITASCA
MN092 Dairyland Electric Co-op, Inc. 27137 ST. LOUIS
MN094 North Itasca Electric Co-op 27007 BELTRAMI
MN094 North Itasca Electric Co-op 27061 ITASCA
MN094 North Itasca Electric Co-op 27071 KOOCHICHING
MN095 North Star Electric Co-op, Inc. 27071 KOOCHICHING
MN095 North Star Electric Co-op, Inc. 27077 LAKE OF THE WOODS
MN095 North Star Electric Co-op, Inc. 27135 ROSEAU
MN095 North Star Electric Co-op, Inc. 27137 ST. LOUIS
MN096 Beltrami Electric Co-op, Inc. 27007 BELTRAMI
MN096 Beltrami Electric Co-op, Inc. 27021 CASS
MN096 Beltrami Electric Co-op, Inc. 27029 CLEARWATER
MN096 Beltrami Electric Co-op, Inc. 27057 HUBBARD
MN096 Beltrami Electric Co-op, Inc. 27061 ITASCA
MN096 Beltrami Electric Co-op, Inc. 27071 KOOCHICHING
MN097 Roseau Electric Co-op, Inc. 27007 BELTRAMI
MN097 Roseau Electric Co-op, Inc. 27077 LAKE OF THE WOODS
MN097 Roseau Electric Co-op, Inc. 27089 MARSHALL
MN097 Roseau Electric Co-op, Inc. 27135 ROSEAU
MN101 Clearwater-Polk Electric Co-op 27007 BELTRAMI
MN101 Clearwater-Polk Electric Co-op 27029 CLEARWATER
MN101 Clearwater-Polk Electric Co-op 27057 HUBBARD
MN101 Clearwater-Polk Electric Co-op 27119 POLK
MN104 Arrowhead Electric Co-op, Inc. 27031 COOK
MN104 Arrowhead Electric Co-op, Inc. 27075 LAKE
MN108 Frost-BENCO-Wells Elec. Assn. 27013 BLUE EARTH
MN108 Frost-BENCO-Wells Elec. Assn. 27043 FARIBAULT
MN108 Frost-BENCO-Wells Elec. Assn. 27079 LESUEUR
MN108 Frost-BENCO-Wells Elec. Assn. 27103 NICOLLET
MN108 Frost-BENCO-Wells Elec. Assn. 27143 SIBLEY
MO012 Pemiscot-Dunklin Electric Co-op 29069 DUNKLIN
MO012 Pemiscot-Dunklin Electric Co-op 29143 NEW MADRID
MO012 Pemiscot-Dunklin Electric Co-op 29155 PEMISCOT
MO018 Intercounty Electric Co-op Assn. 29055 CRAWFORD
MO018 Intercounty Electric Co-op Assn. 29065 DENT
MO018 Intercounty Electric Co-op Assn. 29073 GASCONADE
MO018 Intercounty Electric Co-op Assn. 29125 MARIES
48
<PAGE>
MO018 Intercounty Electric Co-op Assn. 29161 PHELPS
MO018 Intercounty Electric Co-op Assn. 29169 PULASKI
MO018 Intercounty Electric Co-op Assn. 29203 SHANNON
MO018 Intercounty Electric Co-op Assn. 29215 TEXAS
MO018 Intercounty Electric Co-op Assn. 29229 WRIGHT
MO019 Boone Electric Co-op 29007 AUDRAIN
MO019 Boone Electric Co-op 29019 BOONE
MO019 Boone Electric Co-op 29027 CALLAWAY
MO019 Boone Electric Co-op 29137 MONROE
MO019 Boone Electric Co-op 29175 RANDOLPH
MO020 Missouri REC 29111 LEWIS
MO020 Missouri REC 29127 MARION
MO020 Missouri REC 29137 MONROE
MO020 Missouri REC 29173 RALLS
MO020 Missouri REC 29205 SHELBY
MO022 Howard Electric Co-op 29019 BOONE
MO022 Howard Electric Co-op 29041 CHARITON
MO022 Howard Electric Co-op 29089 HOWARD
MO022 Howard Electric Co-op 29175 RANDOLPH
MO023 Lewis County RECA 29001 ADAIR
MO023 Lewis County RECA 29045 CLARK
MO023 Lewis County RECA 29103 KNOX
MO023 Lewis County RECA 29111 LEWIS
MO023 Lewis County RECA 29127 MARION
MO023 Lewis County RECA 29199 SCOTLAND
MO023 Lewis County RECA 29205 SHELBY
MO024 Callaway Electric Co-op 29007 AUDRAIN
MO024 Callaway Electric Co-op 29019 BOONE
MO024 Callaway Electric Co-op 29027 CALLAWAY
MO024 Callaway Electric Co-op 29139 MONTGOMERY
MO024 Callaway Electric Co-op 29219 WARREN
MO026 Ralls County Electric Co-op 29007 AUDRAIN
MO026 Ralls County Electric Co-op 29127 MARION
MO026 Ralls County Electric Co-op 29137 MONROE
MO026 Ralls County Electric Co-op 29163 PIKE
MO026 Ralls County Electric Co-op 29173 RALLS
MO027 Northwest Missouri Electric Co-op 29003 ANDREW
MO027 Northwest Missouri Electric Co-op 29021 BUCHANAN
MO027 Northwest Missouri Electric Co-op 29049 CLINTON
MO027 Northwest Missouri Electric Co-op 29063 DE KALB
MO027 Northwest Missouri Electric Co-op 29075 GENTRY
MO027 Northwest Missouri Electric Co-op 29087 HOLT
MO027 Northwest Missouri Electric Co-op 29147 NODAWAY
MO028 Barton County Electric Co-op 29011 BARTON
MO028 Barton County Electric Co-op 29039 CEDAR
MO028 Barton County Electric Co-op 29057 DADE
MO028 Barton County Electric Co-op 29097 JASPER
MO028 Barton County Electric Co-op 29217 VERNON
MO030 Ozark Electric Co-op 29009 BARRY
MO030 Ozark Electric Co-op 29043 CHRISTIAN
MO030 Ozark Electric Co-op 29057 DADE
MO030 Ozark Electric Co-op 29077 GREENE
49
<PAGE>
MO030 Ozark Electric Co-op 29097 JASPER
MO030 Ozark Electric Co-op 29109 LAWRENCE
MO030 Ozark Electric Co-op 29145 NEWTON
MO030 Ozark Electric Co-op 29167 POLK
MO030 Ozark Electric Co-op 29209 STONE
MO031 Scott-New Madrid-Miss. Elec. Co-op 29017 BOLLINGER
MO031 Scott-New Madrid-Miss. Elec. Co-op 29031 CAPE GIRARDEAU
MO031 Scott-New Madrid-Miss. Elec. Co-op 29133 MISSISSIPPI
MO031 Scott-New Madrid-Miss. Elec. Co-op 29143 NEW MADRID
MO031 Scott-New Madrid-Miss. Elec. Co-op 29201 SCOTT
MO031 Scott-New Madrid-Miss. Elec. Co-op 29207 STODDARD
MO032 Atchison-Holt Electric Co-op 19071 FREMONT
MO032 Atchison-Holt Electric Co-op 19145 PAGE
MO032 Atchison-Holt Electric Co-op 29005 ATCHISON
MO032 Atchison-Holt Electric Co-op 29087 HOLT
MO032 Atchison-Holt Electric Co-op 29147 NODAWAY
MO033 Ozark Border Electric Co-op 29017 BOLLINGER
MO033 Ozark Border Electric Co-op 29023 BUTLER
MO033 Ozark Border Electric Co-op 29035 CARTER
MO033 Ozark Border Electric Co-op 29069 DUNKLIN
MO033 Ozark Border Electric Co-op 29143 NEW MADRID
MO033 Ozark Border Electric Co-op 29149 OREGON
MO033 Ozark Border Electric Co-op 29179 REYNOLDS
MO033 Ozark Border Electric Co-op 29181 RIPLEY
MO033 Ozark Border Electric Co-op 29203 SHANNON
MO033 Ozark Border Electric Co-op 29207 STODDARD
MO033 Ozark Border Electric Co-op 29223 WAYNE
MO034 Macon Electric Co-op 29001 ADAIR
MO034 Macon Electric Co-op 29041 CHARITON
MO034 Macon Electric Co-op 29103 KNOX
MO034 Macon Electric Co-op 29115 LINN
MO034 Macon Electric Co-op 29121 MACON
MO034 Macon Electric Co-op 29137 MONROE
MO034 Macon Electric Co-op 29175 RANDOLPH
MO034 Macon Electric Co-op 29205 SHELBY
MO034 Macon Electric Co-op 29211 SULLIVAN
MO035 Tri-County Electric Co-op Assn. 29001 ADAIR
MO035 Tri-County Electric Co-op Assn. 29121 MACON
MO035 Tri-County Electric Co-op Assn. 29171 PUTNAM
MO035 Tri-County Electric Co-op Assn. 29197 SCHUYLER
MO035 Tri-County Electric Co-op Assn. 29199 SCOTLAND
MO035 Tri-County Electric Co-op Assn. 29211 SULLIVAN
MO036 Consolidated Electric Co-op 29007 AUDRAIN
MO036 Consolidated Electric Co-op 29019 BOONE
MO036 Consolidated Electric Co-op 29027 CALLAWAY
MO036 Consolidated Electric Co-op 29113 LINCOLN
MO036 Consolidated Electric Co-op 29137 MONROE
MO036 Consolidated Electric Co-op 29139 MONTGOMERY
MO036 Consolidated Electric Co-op 29163 PIKE
MO036 Consolidated Electric Co-op 29173 RALLS
MO037 Osage Valley Electric Co-op Assn. 29013 BATES
MO037 Osage Valley Electric Co-op Assn. 29015 BENTON
50
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MO037 Osage Valley Electric Co-op Assn. 29037 CASS
MO037 Osage Valley Electric Co-op Assn. 29083 HENRY
MO037 Osage Valley Electric Co-op Assn. 29095 JACKSON
MO037 Osage Valley Electric Co-op Assn. 29101 JOHNSON
MO037 Osage Valley Electric Co-op Assn. 29159 PETTIS
MO037 Osage Valley Electric Co-op Assn. 29217 VERNON
MO038 Black River Electric Co-op 29017 BOLLINGER
MO038 Black River Electric Co-op 29031 CAPE GIRARDEAU
MO038 Black River Electric Co-op 29065 DENT
MO038 Black River Electric Co-op 29093 IRON
MO038 Black River Electric Co-op 29123 MADISON
MO038 Black River Electric Co-op 29179 REYNOLDS
MO038 Black River Electric Co-op 29187 ST FRANCOIS
MO038 Black River Electric Co-op 29203 SHANNON
MO038 Black River Electric Co-op 29221 WASHINGTON
MO038 Black River Electric Co-op 29223 WAYNE
MO040 Central Missouri Electric Co-op 29015 BENTON
MO040 Central Missouri Electric Co-op 29159 PETTIS
MO040 Central Missouri Electric Co-op 29195 SALINE
MO041 Platte-Clay Electric Co-op, Inc. 29021 BUCHANAN
MO041 Platte-Clay Electric Co-op, Inc. 29025 CALDWELL
MO041 Platte-Clay Electric Co-op, Inc. 29047 CLAY
MO041 Platte-Clay Electric Co-op, Inc. 29049 CLINTON
MO041 Platte-Clay Electric Co-op, Inc. 29165 PLATTE
MO041 Platte-Clay Electric Co-op, Inc. 29177 RAY
MO042 Farmers Electric Co-op, Inc. 29025 CALDWELL
MO042 Farmers Electric Co-op, Inc. 29033 CARROLL
MO042 Farmers Electric Co-op, Inc. 29041 CHARITON
MO042 Farmers Electric Co-op, Inc. 29049 CLINTON
MO042 Farmers Electric Co-op, Inc. 29061 DAVIESS
MO042 Farmers Electric Co-op, Inc. 29063 DE KALB
MO042 Farmers Electric Co-op, Inc. 29115 LINN
MO042 Farmers Electric Co-op, Inc. 29117 LIVINGSTON
MO042 Farmers Electric Co-op, Inc. 29177 RAY
MO043 Laclede Electric Co-op 29029 CAMDEN
MO043 Laclede Electric Co-op 29059 DALLAS
MO043 Laclede Electric Co-op 29105 LACLEDE
MO043 Laclede Electric Co-op 29169 PULASKI
MO043 Laclede Electric Co-op 29225 WEBSTER
MO043 Laclede Electric Co-op 29229 WRIGHT
MO044 Grundy Electric Co-op, Inc. 19053 DECATUR
MO044 Grundy Electric Co-op, Inc. 19159 RINGGOLD
MO044 Grundy Electric Co-op, Inc. 19185 WAYNE
MO044 Grundy Electric Co-op, Inc. 29061 DAVIESS
MO044 Grundy Electric Co-op, Inc. 29075 GENTRY
MO044 Grundy Electric Co-op, Inc. 29079 GRUNDY
MO044 Grundy Electric Co-op, Inc. 29081 HARRISON
MO044 Grundy Electric Co-op, Inc. 29115 LINN
MO044 Grundy Electric Co-op, Inc. 29117 LIVINGSTON
MO044 Grundy Electric Co-op, Inc. 29129 MERCER
MO044 Grundy Electric Co-op, Inc. 29171 PUTNAM
MO044 Grundy Electric Co-op, Inc. 29211 SULLIVAN
51
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MO045 Three Rivers Electric Co-op 29051 COLE
MO045 Three Rivers Electric Co-op 29071 FRANKLIN
MO045 Three Rivers Electric Co-op 29073 GASCONADE
MO045 Three Rivers Electric Co-op 29125 MARIES
MO045 Three Rivers Electric Co-op 29131 MILLER
MO045 Three Rivers Electric Co-op 29135 MONITEAU
MO045 Three Rivers Electric Co-op 29151 OSAGE
MO046 White River Valley Elec. Co-op 29043 CHRISTIAN
MO046 White River Valley Elec. Co-op 29067 DOUGLAS
MO046 White River Valley Elec. Co-op 29153 OZARK
MO046 White River Valley Elec. Co-op 29209 STONE
MO046 White River Valley Elec. Co-op 29213 TANEY
MO047 Co-Mo Electric Co-op, Inc. 29015 BENTON
MO047 Co-Mo Electric Co-op, Inc. 29029 CAMDEN
MO047 Co-Mo Electric Co-op, Inc. 29051 COLE
MO047 Co-Mo Electric Co-op, Inc. 29053 COOPER
MO047 Co-Mo Electric Co-op, Inc. 29131 MILLER
MO047 Co-Mo Electric Co-op, Inc. 29135 MONITEAU
MO047 Co-Mo Electric Co-op, Inc. 29141 MORGAN
MO047 Co-Mo Electric Co-op, Inc. 29159 PETTIS
MO047 Co-Mo Electric Co-op, Inc. 29195 SALINE
MO048 New-Mac Electric Co-op, Inc. 29009 BARRY
MO048 New-Mac Electric Co-op, Inc. 29097 JASPER
MO048 New-Mac Electric Co-op, Inc. 29109 LAWRENCE
MO048 New-Mac Electric Co-op, Inc. 29119 MCDONALD
MO048 New-Mac Electric Co-op, Inc. 29145 NEWTON
MO049 Howell-Oregon Electric Co-op, Inc. 29067 DOUGLAS
MO049 Howell-Oregon Electric Co-op, Inc. 29091 HOWELL
MO049 Howell-Oregon Electric Co-op, Inc. 29149 OREGON
MO049 Howell-Oregon Electric Co-op, Inc. 29153 OZARK
MO049 Howell-Oregon Electric Co-op, Inc. 29203 SHANNON
MO049 Howell-Oregon Electric Co-op, Inc. 29215 TEXAS
MO050 West Central Electric Co-op, Inc. 29037 CASS
MO050 West Central Electric Co-op, Inc. 29083 HENRY
MO050 West Central Electric Co-op, Inc. 29095 JACKSON
MO050 West Central Electric Co-op, Inc. 29101 JOHNSON
MO050 West Central Electric Co-op, Inc. 29107 LAFAYETTE
MO050 West Central Electric Co-op, Inc. 29159 PETTIS
MO051 Nodaway-Worth Electric Co-op, Inc. 19145 PAGE
MO051 Nodaway-Worth Electric Co-op, Inc. 19159 RINGGOLD
MO051 Nodaway-Worth Electric Co-op, Inc. 19173 TAYLOR
MO051 Nodaway-Worth Electric Co-op, Inc. 29005 ATCHISON
MO051 Nodaway-Worth Electric Co-op, Inc. 29075 GENTRY
MO051 Nodaway-Worth Electric Co-op, Inc. 29081 HARRISON
MO051 Nodaway-Worth Electric Co-op, Inc. 29087 HOLT
MO051 Nodaway-Worth Electric Co-op, Inc. 29147 NODAWAY
MO051 Nodaway-Worth Electric Co-op, Inc. 29227 WORTH
MO053 Southwest Electric Co-op 29015 BENTON
MO053 Southwest Electric Co-op 29029 CAMDEN
MO053 Southwest Electric Co-op 29039 CEDAR
MO053 Southwest Electric Co-op 29057 DADE
MO053 Southwest Electric Co-op 29059 DALLAS
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MO053 Southwest Electric Co-op 29077 GREENE
MO053 Southwest Electric Co-op 29085 HICKORY
MO053 Southwest Electric Co-op 29105 LACLEDE
MO053 Southwest Electric Co-op 29167 POLK
MO053 Southwest Electric Co-op 29185 ST CLAIR
MO053 Southwest Electric Co-op 29225 WEBSTER
MO054 Crawford Electric Co-op, Inc. 29055 CRAWFORD
MO054 Crawford Electric Co-op, Inc. 29065 DENT
MO054 Crawford Electric Co-op, Inc. 29071 FRANKLIN
MO054 Crawford Electric Co-op, Inc. 29073 GASCONADE
MO054 Crawford Electric Co-op, Inc. 29099 JEFFERSON
MO054 Crawford Electric Co-op, Inc. 29221 WASHINGTON
MO055 Sac-Osage Electric Co-op, Inc. 29011 BARTON
MO055 Sac-Osage Electric Co-op, Inc. 29015 BENTON
MO055 Sac-Osage Electric Co-op, Inc. 29039 CEDAR
MO055 Sac-Osage Electric Co-op, Inc. 29057 DADE
MO055 Sac-Osage Electric Co-op, Inc. 29083 HENRY
MO055 Sac-Osage Electric Co-op, Inc. 29085 HICKORY
MO055 Sac-Osage Electric Co-op, Inc. 29167 POLK
MO055 Sac-Osage Electric Co-op, Inc. 29185 ST CLAIR
MO055 Sac-Osage Electric Co-op, Inc. 29217 VERNON
MO056 North Central Missouri Elec. Co-op 29115 LINN
MO056 North Central Missouri Elec. Co-op 29171 PUTNAM
MO056 North Central Missouri Elec. Co-op 29211 SULLIVAN
MO058 Citizens Electric Corp. 29031 CAPE GIRARDEAU
MO058 Citizens Electric Corp. 29157 PERRY
MO058 Citizens Electric Corp. 29186 SAINTE GENEVIEVE
MO058 Citizens Electric Corp. 29187 ST FRANCOIS
MO066 Webster Electric Co-op 29043 CHRISTIAN
MO066 Webster Electric Co-op 29059 DALLAS
MO066 Webster Electric Co-op 29067 DOUGLAS
MO066 Webster Electric Co-op 29077 GREENE
MO066 Webster Electric Co-op 29105 LACLEDE
MO066 Webster Electric Co-op 29225 WEBSTER
MO066 Webster Electric Co-op 29229 WRIGHT
MO067 Se-Ma-No Electric Co-op 29067 DOUGLAS
MO067 Se-Ma-No Electric Co-op 29215 TEXAS
MO067 Se-Ma-No Electric Co-op 29225 WEBSTER
MO067 Se-Ma-No Electric Co-op 29229 WRIGHT
MO068 Gascosage Electric Co-op 29125 MARIES
MO068 Gascosage Electric Co-op 29131 MILLER
MO068 Gascosage Electric Co-op 29161 PHELPS
MO068 Gascosage Electric Co-op 29169 PULASKI
MO069 Barry Electric Co-op 29009 BARRY
MO069 Barry Electric Co-op 29119 MCDONALD
MS001 Monroe County EPA 01075 LAMAR
MS001 Monroe County EPA 28057 ITAWAMBA
MS001 Monroe County EPA 28087 LOWNDES
MS001 Monroe County EPA 28095 MONROE
MS020 Yazoo Valley Electric Power Assn. 28051 HOLMES
MS020 Yazoo Valley Electric Power Assn. 28053 HUMPHREYS
MS020 Yazoo Valley Electric Power Assn. 28055 ISSAQUENA
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MS020 Yazoo Valley Electric Power Assn. 28125 SHARKEY
MS020 Yazoo Valley Electric Power Assn. 28149 WARREN
MS020 Yazoo Valley Electric Power Assn. 28163 YAZOO
MS021 Coahoma Electric Power Assn. 28011 BOLIVAR
MS021 Coahoma Electric Power Assn. 28027 COAHOMA
MS021 Coahoma Electric Power Assn. 28033 DESOTO
MS021 Coahoma Electric Power Assn. 28119 QUITMAN
MS021 Coahoma Electric Power Assn. 28133 SUNFLOWER
MS021 Coahoma Electric Power Assn. 28135 TALLAHATCHIE
MS021 Coahoma Electric Power Assn. 28143 TUNICA
MS022 Central Electric Power Assn. 28007 ATTALA
MS022 Central Electric Power Assn. 28069 KEMPER
MS022 Central Electric Power Assn. 28079 LEAKE
MS022 Central Electric Power Assn. 28099 NESHOBA
MS022 Central Electric Power Assn. 28101 NEWTON
MS022 Central Electric Power Assn. 28121 RANKIN
MS022 Central Electric Power Assn. 28123 SCOTT
MS023 Southwest Mississippi EPA 28001 ADAMS
MS023 Southwest Mississippi EPA 28005 AMITE
MS023 Southwest Mississippi EPA 28021 CLAIBORNE
MS023 Southwest Mississippi EPA 28029 COPIAH
MS023 Southwest Mississippi EPA 28037 FRANKLIN
MS023 Southwest Mississippi EPA 28049 HINDS
MS023 Southwest Mississippi EPA 28063 JEFFERSON
MS023 Southwest Mississippi EPA 28085 LINCOLN
MS023 Southwest Mississippi EPA 28157 WILKINSON
MS024 North East Mississippi EPA 28071 LAFAYETTE
MS024 North East Mississippi EPA 28093 MARSHALL
MS024 North East Mississippi EPA 28115 PONTOTOC
MS024 North East Mississippi EPA 28145 UNION
MS026 Tallahatchie Valley EPA 28013 CALHOUN
MS026 Tallahatchie Valley EPA 28043 GRENADA
MS026 Tallahatchie Valley EPA 28071 LAFAYETTE
MS026 Tallahatchie Valley EPA 28107 PANOLA
MS026 Tallahatchie Valley EPA 28119 QUITMAN
MS026 Tallahatchie Valley EPA 28135 TALLAHATCHIE
MS026 Tallahatchie Valley EPA 28137 TATE
MS026 Tallahatchie Valley EPA 28143 TUNICA
MS026 Tallahatchie Valley EPA 28161 YALOBUSHA
MS028 Coast Electric Power Assn. 28045 HANCOCK
MS028 Coast Electric Power Assn. 28047 HARRISON
MS028 Coast Electric Power Assn. 28109 PEARL RIVER
MS029 Four County Electric Power Assn. 28017 CHICKASAW
MS029 Four County Electric Power Assn. 28019 CHOCTAW
MS029 Four County Electric Power Assn. 28025 CLAY
MS029 Four County Electric Power Assn. 28087 LOWNDES
MS029 Four County Electric Power Assn. 28095 MONROE
MS029 Four County Electric Power Assn. 28103 NOXUBEE
MS029 Four County Electric Power Assn. 28105 OKTIBBEHA
MS029 Four County Electric Power Assn. 28155 WEBSTER
MS030 Dixie Electric Power Assn. 28023 CLARKE
MS030 Dixie Electric Power Assn. 28031 COVINGTON
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MS030 Dixie Electric Power Assn. 28035 FORREST
MS030 Dixie Electric Power Assn. 28061 JASPER
MS030 Dixie Electric Power Assn. 28067 JONES
MS030 Dixie Electric Power Assn. 28111 PERRY
MS030 Dixie Electric Power Assn. 28153 WAYNE
MS031 Twin County Electric Power Assn. 28053 HUMPHREYS
MS031 Twin County Electric Power Assn. 28055 ISSAQUENA
MS031 Twin County Electric Power Assn. 28083 LEFLORE
MS031 Twin County Electric Power Assn. 28125 SHARKEY
MS031 Twin County Electric Power Assn. 28133 SUNFLOWER
MS031 Twin County Electric Power Assn. 28149 WARREN
MS031 Twin County Electric Power Assn. 28151 WASHINGTON
MS034 Delta Electric Power Assn. 28007 ATTALA
MS034 Delta Electric Power Assn. 28011 BOLIVAR
MS034 Delta Electric Power Assn. 28015 CARROLL
MS034 Delta Electric Power Assn. 28019 CHOCTAW
MS034 Delta Electric Power Assn. 28043 GRENADA
MS034 Delta Electric Power Assn. 28051 HOLMES
MS034 Delta Electric Power Assn. 28053 HUMPHREYS
MS034 Delta Electric Power Assn. 28083 LEFLORE
MS034 Delta Electric Power Assn. 28097 MONTGOMERY
MS034 Delta Electric Power Assn. 28133 SUNFLOWER
MS034 Delta Electric Power Assn. 28135 TALLAHATCHIE
MS034 Delta Electric Power Assn. 28151 WASHINGTON
MS034 Delta Electric Power Assn. 28155 WEBSTER
MS036 Pearl River Valley Elec. Power Assn 28031 COVINGTON
MS036 Pearl River Valley Elec. Power Assn 28035 FORREST
MS036 Pearl River Valley Elec. Power Assn 28039 GEORGE
MS036 Pearl River Valley Elec. Power Assn 28059 JACKSON
MS036 Pearl River Valley Elec. Power Assn 28065 JEFFERSON DAVIS
MS036 Pearl River Valley Elec. Power Assn 28073 LAMAR
MS036 Pearl River Valley Elec. Power Assn 28077 LAWRENCE
MS036 Pearl River Valley Elec. Power Assn 28091 MARION
MS036 Pearl River Valley Elec. Power Assn 28109 PEARL RIVER
MS036 Pearl River Valley Elec. Power Assn 28111 PERRY
MS036 Pearl River Valley Elec. Power Assn 28131 STONE
MS036 Pearl River Valley Elec. Power Assn 28147 WALTHALL
MS039 Singing River Elec. Power Assn. 28039 GEORGE
MS039 Singing River Elec. Power Assn. 28041 GREENE
MS039 Singing River Elec. Power Assn. 28047 HARRISON
MS039 Singing River Elec. Power Assn. 28059 JACKSON
MS039 Singing River Elec. Power Assn. 28111 PERRY
MS039 Singing River Elec. Power Assn. 28131 STONE
MS039 Singing River Elec. Power Assn. 28153 WAYNE
MS040 Southern Pine Elec. Power Assn. 28023 CLARKE
MS040 Southern Pine Elec. Power Assn. 28029 COPIAH
MS040 Southern Pine Elec. Power Assn. 28031 COVINGTON
MS040 Southern Pine Elec. Power Assn. 28035 FORREST
MS040 Southern Pine Elec. Power Assn. 28061 JASPER
MS040 Southern Pine Elec. Power Assn. 28065 JEFFERSON DAVIS
MS040 Southern Pine Elec. Power Assn. 28067 JONES
MS040 Southern Pine Elec. Power Assn. 28073 LAMAR
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MS040 Southern Pine Elec. Power Assn. 28077 LAWRENCE
MS040 Southern Pine Elec. Power Assn. 28085 LINCOLN
MS040 Southern Pine Elec. Power Assn. 28101 NEWTON
MS040 Southern Pine Elec. Power Assn. 28121 RANKIN
MS040 Southern Pine Elec. Power Assn. 28123 SCOTT
MS040 Southern Pine Elec. Power Assn. 28127 SIMPSON
MS040 Southern Pine Elec. Power Assn. 28129 SMITH
MS041 Magnolia Electric Power Assn. 28005 AMITE
MS041 Magnolia Electric Power Assn. 28037 FRANKLIN
MS041 Magnolia Electric Power Assn. 28077 LAWRENCE
MS041 Magnolia Electric Power Assn. 28085 LINCOLN
MS041 Magnolia Electric Power Assn. 28091 MARION
MS041 Magnolia Electric Power Assn. 28113 PIKE
MS041 Magnolia Electric Power Assn. 28147 WALTHALL
MS043 Tishomingo County EPA 28003 ALCORN
MS043 Tishomingo County EPA 28057 ITAWAMBA
MS043 Tishomingo County EPA 28117 PRENTISS
MS043 Tishomingo County EPA 28141 TISHOMINGO
MS045 East Mississippi EPA 28007 ATTALA
MS045 East Mississippi EPA 28023 CLARKE
MS045 East Mississippi EPA 28061 JASPER
MS045 East Mississippi EPA 28069 KEMPER
MS045 East Mississippi EPA 28075 LAUDERDALE
MS045 East Mississippi EPA 28099 NESHOBA
MS045 East Mississippi EPA 28101 NEWTON
MS045 East Mississippi EPA 28103 NOXUBEE
MS045 East Mississippi EPA 28153 WAYNE
MS045 East Mississippi EPA 28159 WINSTON
MS048 North Central Mississippi EPA 28033 DESOTO
MS048 North Central Mississippi EPA 28071 LAFAYETTE
MS048 North Central Mississippi EPA 28093 MARSHALL
MS048 North Central Mississippi EPA 28137 TATE
MS049 Tombigbee EPA 28017 CHICKASAW
MS049 Tombigbee EPA 28057 ITAWAMBA
MS049 Tombigbee EPA 28081 LEE
MS049 Tombigbee EPA 28095 MONROE
MS049 Tombigbee EPA 28115 PONTOTOC
MS049 Tombigbee EPA 28117 PRENTISS
MS049 Tombigbee EPA 28145 UNION
MS050 Natchez Trace Electric Power 28013 CALHOUN
MS050 Natchez Trace Electric Power 28017 CHICKASAW
MS050 Natchez Trace Electric Power 28025 CLAY
MS050 Natchez Trace Electric Power 28043 GRENADA
MS050 Natchez Trace Electric Power 28115 PONTOTOC
MS050 Natchez Trace Electric Power 28155 WEBSTER
MS050 Natchez Trace Electric Power 28161 YALOBUSHA
MS057 City of Okolona Electric Dept. 28017 CHICKASAW
MS057 City of Okolona Electric Dept. 28025 CLAY
MS057 City of Okolona Electric Dept. 28081 LEE
MS057 City of Okolona Electric Dept. 28095 MONROE
MT001 Ravalli County Electric Co-op, Inc. 30081 RAVALLI
MT002 Sun River Electric Co-op, Inc. 30013 CASCADE
56
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MT002 Sun River Electric Co-op, Inc. 30015 CHOUTEAU
MT002 Sun River Electric Co-op, Inc. 30045 JUDITH BASIN
MT002 Sun River Electric Co-op, Inc. 30049 LEWIS AND CLARK
MT002 Sun River Electric Co-op, Inc. 30051 LIBERTY
MT002 Sun River Electric Co-op, Inc. 30073 PONDERA
MT002 Sun River Electric Co-op, Inc. 30099 TETON
MT002 Sun River Electric Co-op, Inc. 30101 TOOLE
MT005 Lower Yellowstone REA, Inc. 30021 DAWSON
MT005 Lower Yellowstone REA, Inc. 30083 RICHLAND
MT005 Lower Yellowstone REA, Inc. 30085 ROOSEVELT
MT005 Lower Yellowstone REA, Inc. 38053 MCKENZIE
MT005 Lower Yellowstone REA, Inc. 38105 WILLIAMS
MT009 Yellowstone Valley Electric Co-op 30003 BIG HORN
MT009 Yellowstone Valley Electric Co-op 30009 CARBON
MT009 Yellowstone Valley Electric Co-op 30065 MUSSELSHELL
MT009 Yellowstone Valley Electric Co-op 30095 STILLWATER
MT009 Yellowstone Valley Electric Co-op 30103 TREASURE
MT009 Yellowstone Valley Electric Co-op 30111 YELLOWSTONE
MT010 Vigilante Electric Co-op, Inc. 16033 CLARK
MT010 Vigilante Electric Co-op, Inc. 30001 BEAVERHEAD
MT010 Vigilante Electric Co-op, Inc. 30007 BROADWATER
MT010 Vigilante Electric Co-op, Inc. 30023 DEERLODGE
MT010 Vigilante Electric Co-op, Inc. 30031 GALLATIN
MT010 Vigilante Electric Co-op, Inc. 30043 JEFFERSON
MT010 Vigilante Electric Co-op, Inc. 30049 LEWIS AND CLARK
MT010 Vigilante Electric Co-op, Inc. 30057 MADISON
MT010 Vigilante Electric Co-op, Inc. 30059 MEAGHER
MT010 Vigilante Electric Co-op, Inc. 30093 SILVER BOW
MT012 Missoula Electric Co-op, Inc. 16035 CLEARWATER
MT012 Missoula Electric Co-op, Inc. 16049 IDAHO
MT012 Missoula Electric Co-op, Inc. 30039 GRANITE
MT012 Missoula Electric Co-op, Inc. 30047 LAKE
MT012 Missoula Electric Co-op, Inc. 30061 MINERAL
MT012 Missoula Electric Co-op, Inc. 30063 MISSOULA
MT012 Missoula Electric Co-op, Inc. 30077 POWELL
MT012 Missoula Electric Co-op, Inc. 30081 RAVALLI
MT013 Flathead Electric Co-op, Inc. 30029 FLATHEAD
MT013 Flathead Electric Co-op, Inc. 30047 LAKE
MT013 Flathead Electric Co-op, Inc. 30053 LINCOLN
MT013 Flathead Electric Co-op, Inc. 30089 SANDERS
MT015 Fergus Electric Co-op, Inc. 30013 CASCADE
MT015 Fergus Electric Co-op, Inc. 30015 CHOUTEAU
MT015 Fergus Electric Co-op, Inc. 30027 FERGUS
MT015 Fergus Electric Co-op, Inc. 30037 GOLDEN VALLEY
MT015 Fergus Electric Co-op, Inc. 30045 JUDITH BASIN
MT015 Fergus Electric Co-op, Inc. 30059 MEAGHER
MT015 Fergus Electric Co-op, Inc. 30065 MUSSELSHELL
MT015 Fergus Electric Co-op, Inc. 30069 PETROLEUM
MT015 Fergus Electric Co-op, Inc. 30095 STILLWATER
MT015 Fergus Electric Co-op, Inc. 30103 TREASURE
MT015 Fergus Electric Co-op, Inc. 30107 WHEATLAND
MT015 Fergus Electric Co-op, Inc. 30111 YELLOWSTONE
57
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MT016 Park Electric Co-op, Inc. 30031 GALLATIN
MT016 Park Electric Co-op, Inc. 30059 MEAGHER
MT016 Park Electric Co-op, Inc. 30067 PARK
MT016 Park Electric Co-op, Inc. 30097 SWEET GRASS
MT017 Mid-Yellowstone Electric Co-op 30003 BIG HORN
MT017 Mid-Yellowstone Electric Co-op 30017 CUSTER
MT017 Mid-Yellowstone Electric Co-op 30087 ROSEBUD
MT017 Mid-Yellowstone Electric Co-op 30103 TREASURE
MT019 Beartooth Electric Co-op, Inc. 30009 CARBON
MT019 Beartooth Electric Co-op, Inc. 30095 STILLWATER
MT019 Beartooth Electric Co-op, Inc. 30097 SWEET GRASS
MT019 Beartooth Electric Co-op, Inc. 56029 PARK
MT021 Big Horn County Electric Co-op 30003 BIG HORN
MT021 Big Horn County Electric Co-op 56033 SHERIDAN
MT024 Big Flat Electric Co-op, Inc. 30005 BLAINE
MT024 Big Flat Electric Co-op, Inc. 30071 PHILLIPS
MT024 Big Flat Electric Co-op, Inc. 30105 VALLEY
MT025 Sheridan Electric Co-op, Inc. 30019 DANIELS
MT025 Sheridan Electric Co-op, Inc. 30085 ROOSEVELT
MT025 Sheridan Electric Co-op, Inc. 30091 SHERIDAN
MT025 Sheridan Electric Co-op, Inc. 38023 DIVIDE
MT026 Northern Electric Co-op, Inc. 30019 DANIELS
MT026 Northern Electric Co-op, Inc. 30085 ROOSEVELT
MT026 Northern Electric Co-op, Inc. 30105 VALLEY
MT027 Valley Electric Co-op, Inc. 30055 MCCONE
MT027 Valley Electric Co-op, Inc. 30071 PHILLIPS
MT027 Valley Electric Co-op, Inc. 30085 ROOSEVELT
MT027 Valley Electric Co-op, Inc. 30105 VALLEY
MT028 McCone Electric Co-op, Inc. 30017 CUSTER
MT028 McCone Electric Co-op, Inc. 30021 DAWSON
MT028 McCone Electric Co-op, Inc. 30033 GARFIELD
MT028 McCone Electric Co-op, Inc. 30055 MCCONE
MT028 McCone Electric Co-op, Inc. 30069 PETROLEUM
MT028 McCone Electric Co-op, Inc. 30079 PRAIRIE
MT028 McCone Electric Co-op, Inc. 30083 RICHLAND
MT028 McCone Electric Co-op, Inc. 30085 ROOSEVELT
MT028 McCone Electric Co-op, Inc. 30087 ROSEBUD
MT029 Goldenwest Electric Co-op, Inc. 30021 DAWSON
MT029 Goldenwest Electric Co-op, Inc. 30025 FALLON
MT029 Goldenwest Electric Co-op, Inc. 30109 WIBAUX
MT029 Goldenwest Electric Co-op, Inc. 38033 GOLDEN VALLEY
MT029 Goldenwest Electric Co-op, Inc. 38087 SLOPE
MT030 Glacier Electric Co-op, Inc. 30029 FLATHEAD
MT030 Glacier Electric Co-op, Inc. 30035 GLACIER
MT030 Glacier Electric Co-op, Inc. 30073 PONDERA
MT030 Glacier Electric Co-op, Inc. 30101 TOOLE
MT031 Marias River Electric Co-op, Inc. 30051 LIBERTY
MT031 Marias River Electric Co-op, Inc. 30073 PONDERA
MT031 Marias River Electric Co-op, Inc. 30101 TOOLE
MT032 Hill County Electric Co-op, Inc. 30005 BLAINE
MT032 Hill County Electric Co-op, Inc. 30015 CHOUTEAU
MT032 Hill County Electric Co-op, Inc. 30027 FERGUS
58
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MT032 Hill County Electric Co-op, Inc. 30041 HILL
MT032 Hill County Electric Co-op, Inc. 30051 LIBERTY
MT033 Tongue River Electric Co-op, Inc. 30003 BIG HORN
MT033 Tongue River Electric Co-op, Inc. 30011 CARTER
MT033 Tongue River Electric Co-op, Inc. 30017 CUSTER
MT033 Tongue River Electric Co-op, Inc. 30021 DAWSON
MT033 Tongue River Electric Co-op, Inc. 30025 FALLON
MT033 Tongue River Electric Co-op, Inc. 30075 POWDER RIVER
MT033 Tongue River Electric Co-op, Inc. 30079 PRAIRIE
MT033 Tongue River Electric Co-op, Inc. 30087 ROSEBUD
MT034 Southeast Electric Co-op, Inc. 30011 CARTER
MT034 Southeast Electric Co-op, Inc. 30017 CUSTER
MT034 Southeast Electric Co-op, Inc. 30025 FALLON
MT034 Southeast Electric Co-op, Inc. 30075 POWDER RIVER
MT034 Southeast Electric Co-op, Inc. 46063 HARDING
MT034 Southeast Electric Co-op, Inc. 56011 CROOK
MT036 Lincoln Electric Co-op, Inc. 30029 FLATHEAD
MT036 Lincoln Electric Co-op, Inc. 30053 LINCOLN
NC010 Haywood EMC 13241 RABUN
NC010 Haywood EMC 37021 BUNCOMBE
NC010 Haywood EMC 37087 HAYWOOD
NC010 Haywood EMC 37099 JACKSON
NC010 Haywood EMC 37113 MACON
NC010 Haywood EMC 37175 TRANSYLVANIA
NC010 Haywood EMC 45073 OCONEE
NC014 Pitt & Greene EMC 37065 EDGECOMBE
NC014 Pitt & Greene EMC 37079 GREENE
NC014 Pitt & Greene EMC 37107 LENOIR
NC014 Pitt & Greene EMC 37147 PITT
NC014 Pitt & Greene EMC 37191 WAYNE
NC014 Pitt & Greene EMC 37195 WILSON
NC016 Edgecombe-Martin County EMC 37013 BEAUFORT
NC016 Edgecombe-Martin County EMC 37015 BERTIE
NC016 Edgecombe-Martin County EMC 37065 EDGECOMBE
NC016 Edgecombe-Martin County EMC 37083 HALIFAX
NC016 Edgecombe-Martin County EMC 37117 MARTIN
NC016 Edgecombe-Martin County EMC 37127 NASH
NC016 Edgecombe-Martin County EMC 37147 PITT
NC016 Edgecombe-Martin County EMC 37195 WILSON
NC021 Four County EMC 37017 BLADEN
NC021 Four County EMC 37047 COLUMBUS
NC021 Four County EMC 37061 DUPLIN
NC021 Four County EMC 37133 ONSLOW
NC021 Four County EMC 37141 PENDER
NC021 Four County EMC 37163 SAMPSON
NC023 Blue Ridge EMC 37003 ALEXANDER
NC023 Blue Ridge EMC 37005 ALLEGHANY
NC023 Blue Ridge EMC 37009 ASHE
NC023 Blue Ridge EMC 37011 AVERY
NC023 Blue Ridge EMC 37027 CALDWELL
NC023 Blue Ridge EMC 37189 WATAUGA
NC023 Blue Ridge EMC 37193 WILKES
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NC025 Rutherford EMC 37023 BURKE
NC025 Rutherford EMC 37027 CALDWELL
NC025 Rutherford EMC 37035 CATAWBA
NC025 Rutherford EMC 37045 CLEVELAND
NC025 Rutherford EMC 37071 GASTON
NC025 Rutherford EMC 37109 LINCOLN
NC025 Rutherford EMC 37111 MCDOWELL
NC025 Rutherford EMC 37121 MITCHELL
NC025 Rutherford EMC 37149 POLK
NC025 Rutherford EMC 37161 RUTHERFORD
NC031 Roanoke Electric Co-op 37015 BERTIE
NC031 Roanoke Electric Co-op 37041 CHOWAN
NC031 Roanoke Electric Co-op 37073 GATES
NC031 Roanoke Electric Co-op 37083 HALIFAX
NC031 Roanoke Electric Co-op 37091 HERTFORD
NC031 Roanoke Electric Co-op 37131 NORTHAMPTON
NC031 Roanoke Electric Co-op 37143 PERQUIMANS
NC032 Piedmont EMC 37001 ALAMANCE
NC032 Piedmont EMC 37033 CASWELL
NC032 Piedmont EMC 37037 CHATHAM
NC032 Piedmont EMC 37063 DURHAM
NC032 Piedmont EMC 37077 GRANVILLE
NC032 Piedmont EMC 37135 ORANGE
NC032 Piedmont EMC 37145 PERSON
NC033 Halifax EMC 37083 HALIFAX
NC033 Halifax EMC 37117 MARTIN
NC033 Halifax EMC 37127 NASH
NC033 Halifax EMC 37185 WARREN
NC034 Pee Dee EMC 37007 ANSON
NC034 Pee Dee EMC 37123 MONTGOMERY
NC034 Pee Dee EMC 37125 MOORE
NC034 Pee Dee EMC 37153 RICHMOND
NC034 Pee Dee EMC 37165 SCOTLAND
NC034 Pee Dee EMC 37167 STANLY
NC034 Pee Dee EMC 37179 UNION
NC035 Davidson EMC 37057 DAVIDSON
NC035 Davidson EMC 37059 DAVIE
NC035 Davidson EMC 37067 FORSYTH
NC035 Davidson EMC 37081 GUILFORD
NC035 Davidson EMC 37123 MONTGOMERY
NC035 Davidson EMC 37151 RANDOLPH
NC035 Davidson EMC 37157 ROCKINGHAM
NC035 Davidson EMC 37169 STOKES
NC036 Randolph EMC 37001 ALAMANCE
NC036 Randolph EMC 37037 CHATHAM
NC036 Randolph EMC 37123 MONTGOMERY
NC036 Randolph EMC 37125 MOORE
NC036 Randolph EMC 37151 RANDOLPH
NC038 Harkers Island EMC 37031 CARTERET
NC039 Union EMC 37025 CABARRUS
NC039 Union EMC 37119 MECKLENBURG
NC039 Union EMC 37159 ROWAN
60
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NC039 Union EMC 37167 STANLY
NC039 Union EMC 37179 UNION
NC040 Brunswick EMC 37017 BLADEN
NC040 Brunswick EMC 37019 BRUNSWICK
NC040 Brunswick EMC 37047 COLUMBUS
NC040 Brunswick EMC 37155 ROBESON
NC043 Jones-Onslow EMC 37049 CRAVEN
NC043 Jones-Onslow EMC 37061 DUPLIN
NC043 Jones-Onslow EMC 37103 JONES
NC043 Jones-Onslow EMC 37107 LENOIR
NC043 Jones-Onslow EMC 37133 ONSLOW
NC043 Jones-Onslow EMC 37141 PENDER
NC046 French Broad EMC 37021 BUNCOMBE
NC046 French Broad EMC 37115 MADISON
NC046 French Broad EMC 37121 MITCHELL
NC046 French Broad EMC 37199 YANCEY
NC046 French Broad EMC 47029 COCKE
NC046 French Broad EMC 47171 UNICOI
NC047 Wake EMC 37063 DURHAM
NC047 Wake EMC 37069 FRANKLIN
NC047 Wake EMC 37077 GRANVILLE
NC047 Wake EMC 37101 JOHNSTON
NC047 Wake EMC 37127 NASH
NC047 Wake EMC 37181 VANCE
NC047 Wake EMC 37183 WAKE
NC049 Surry-Yadkin EMC 37067 FORSYTH
NC049 Surry-Yadkin EMC 37169 STOKES
NC049 Surry-Yadkin EMC 37171 SURRY
NC049 Surry-Yadkin EMC 37193 WILKES
NC049 Surry-Yadkin EMC 37197 YADKIN
NC050 Tri-County EMC 37061 DUPLIN
NC050 Tri-County EMC 37101 JOHNSTON
NC050 Tri-County EMC 37103 JONES
NC050 Tri-County EMC 37107 LENOIR
NC050 Tri-County EMC 37163 SAMPSON
NC050 Tri-County EMC 37191 WAYNE
NC050 Tri-County EMC 37195 WILSON
NC051 Lumbee River EMC 37051 CUMBERLAND
NC051 Lumbee River EMC 37093 HOKE
NC051 Lumbee River EMC 37155 ROBESON
NC051 Lumbee River EMC 37165 SCOTLAND
NC052 South River EMC 37017 BLADEN
NC052 South River EMC 37051 CUMBERLAND
NC052 South River EMC 37085 HARNETT
NC052 South River EMC 37101 JOHNSTON
NC052 South River EMC 37163 SAMPSON
NC055 Carteret-Craven Electric Co-op 37031 CARTERET
NC055 Carteret-Craven Electric Co-op 37049 CRAVEN
NC055 Carteret-Craven Electric Co-op 37103 JONES
NC055 Carteret-Craven Electric Co-op 37133 ONSLOW
NC058 Central EMC 37037 CHATHAM
NC058 Central EMC 37085 HARNETT
61
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NC058 Central EMC 37105 LEE
NC058 Central EMC 37125 MOORE
NC058 Central EMC 37151 RANDOLPH
NC059 Tideland EMC 37013 BEAUFORT
NC059 Tideland EMC 37049 CRAVEN
NC059 Tideland EMC 37055 DARE
NC059 Tideland EMC 37095 HYDE
NC059 Tideland EMC 37137 PAMLICO
NC059 Tideland EMC 37187 WASHINGTON
NC064 Cape Hatteras Electric Co-op 37055 DARE
NC066 Albemarle EMC 37029 CAMDEN
NC066 Albemarle EMC 37041 CHOWAN
NC066 Albemarle EMC 37053 CURRITUCK
NC066 Albemarle EMC 37139 PASQUOTANK
NC066 Albemarle EMC 37143 PERQUIMANS
NC068 Crescent EMC 37003 ALEXANDER
NC068 Crescent EMC 37025 CABARRUS
NC068 Crescent EMC 37035 CATAWBA
NC068 Crescent EMC 37059 DAVIE
NC068 Crescent EMC 37071 GASTON
NC068 Crescent EMC 37097 IREDELL
NC068 Crescent EMC 37109 LINCOLN
NC068 Crescent EMC 37119 MECKLENBURG
NC068 Crescent EMC 37159 ROWAN
NC068 Crescent EMC 37193 WILKES
NC068 Crescent EMC 37197 YADKIN
ND008 Baker Electric Co-op, Inc. 38005 BENSON
ND008 Baker Electric Co-op, Inc. 38069 PIERCE
ND008 Baker Electric Co-op, Inc. 38071 RAMSEY
ND008 Baker Electric Co-op, Inc. 38079 ROLETTE
ND008 Baker Electric Co-op, Inc. 38095 TOWNER
ND008 Baker Electric Co-op, Inc. 38103 WELLS
ND011 Cass County Electric Co-op, Inc. 38003 BARNES
ND011 Cass County Electric Co-op, Inc. 38017 CASS
ND011 Cass County Electric Co-op, Inc. 38045 LAMOURE
ND011 Cass County Electric Co-op, Inc. 38073 RANSOM
ND011 Cass County Electric Co-op, Inc. 38077 RICHLAND
ND011 Cass County Electric Co-op, Inc. 38081 SARGENT
ND011 Cass County Electric Co-op, Inc. 38097 TRAILL
ND013 Tri-County Electric Co-op, Inc. 38003 BARNES
ND013 Tri-County Electric Co-op, Inc. 38005 BENSON
ND013 Tri-County Electric Co-op, Inc. 38027 EDDY
ND013 Tri-County Electric Co-op, Inc. 38031 FOSTER
ND013 Tri-County Electric Co-op, Inc. 38039 GRIGGS
ND013 Tri-County Electric Co-op, Inc. 38043 KIDDER
ND013 Tri-County Electric Co-op, Inc. 38093 STUTSMAN
ND013 Tri-County Electric Co-op, Inc. 38103 WELLS
ND017 Verendrye Electric Co-op, Inc. 38009 BOTTINEAU
ND017 Verendrye Electric Co-op, Inc. 38049 MCHENRY
ND017 Verendrye Electric Co-op, Inc. 38055 MCLEAN
ND017 Verendrye Electric Co-op, Inc. 38069 PIERCE
ND017 Verendrye Electric Co-op, Inc. 38075 RENVILLE
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ND017 Verendrye Electric Co-op, Inc. 38083 SHERIDAN
ND017 Verendrye Electric Co-op, Inc. 38101 WARD
ND017 Verendrye Electric Co-op, Inc. 38103 WELLS
ND019 Nodak Electric Co-op, Inc. 38019 CAVALIER
ND019 Nodak Electric Co-op, Inc. 38035 GRAND FORKS
ND019 Nodak Electric Co-op, Inc. 38063 NELSON
ND019 Nodak Electric Co-op, Inc. 38067 PEMBINA
ND019 Nodak Electric Co-op, Inc. 38071 RAMSEY
ND019 Nodak Electric Co-op, Inc. 38091 STEELE
ND019 Nodak Electric Co-op, Inc. 38097 TRAILL
ND019 Nodak Electric Co-op, Inc. 38099 WALSH
ND021 R.S.R. Electric Co-op, Inc. 38073 RANSOM
ND021 R.S.R. Electric Co-op, Inc. 38077 RICHLAND
ND021 R.S.R. Electric Co-op, Inc. 38081 SARGENT
ND022 North Central Electric Co-op, Inc. 38009 BOTTINEAU
ND022 North Central Electric Co-op, Inc. 38049 MCHENRY
ND022 North Central Electric Co-op, Inc. 38069 PIERCE
ND022 North Central Electric Co-op, Inc. 38075 RENVILLE
ND022 North Central Electric Co-op, Inc. 38079 ROLETTE
ND025 Mor-Gran-Sou Electric Co-op, Inc. 38037 GRANT
ND025 Mor-Gran-Sou Electric Co-op, Inc. 38059 MORTON
ND025 Mor-Gran-Sou Electric Co-op, Inc. 38085 SIOUX
ND026 James Valley Electric Co-op, Inc. 38021 DICKEY
ND026 James Valley Electric Co-op, Inc. 38045 LAMOURE
ND026 James Valley Electric Co-op, Inc. 38047 LOGAN
ND026 James Valley Electric Co-op, Inc. 38051 MCINTOSH
ND026 James Valley Electric Co-op, Inc. 38093 STUTSMAN
ND027 KEM Electric Co-op, Inc. 38015 BURLEIGH
ND027 KEM Electric Co-op, Inc. 38029 EMMONS
ND027 KEM Electric Co-op, Inc. 38043 KIDDER
ND027 KEM Electric Co-op, Inc. 38047 LOGAN
ND027 KEM Electric Co-op, Inc. 38051 MCINTOSH
ND028 Mountrail-Williams Electric Co-op 38013 BURKE
ND028 Mountrail-Williams Electric Co-op 38023 DIVIDE
ND028 Mountrail-Williams Electric Co-op 38061 MOUNTRAIL
ND028 Mountrail-Williams Electric Co-op 38105 WILLIAMS
ND029 McKenzie Electric Co-op, Inc. 30083 RICHLAND
ND029 McKenzie Electric Co-op, Inc. 30109 WIBAUX
ND029 McKenzie Electric Co-op, Inc. 38007 BILLINGS
ND029 McKenzie Electric Co-op, Inc. 38025 DUNN
ND029 McKenzie Electric Co-op, Inc. 38033 GOLDEN VALLEY
ND029 McKenzie Electric Co-op, Inc. 38053 MCKENZIE
ND030 Sheyenne Valley Electric Co-op 38005 BENSON
ND030 Sheyenne Valley Electric Co-op 38027 EDDY
ND030 Sheyenne Valley Electric Co-op 38035 GRAND FORKS
ND030 Sheyenne Valley Electric Co-op 38039 GRIGGS
ND030 Sheyenne Valley Electric Co-op 38063 NELSON
ND030 Sheyenne Valley Electric Co-op 38071 RAMSEY
ND030 Sheyenne Valley Electric Co-op 38091 STEELE
ND031 Burke-Divide Electric Co-op, Inc. 38013 BURKE
ND031 Burke-Divide Electric Co-op, Inc. 38023 DIVIDE
ND031 Burke-Divide Electric Co-op, Inc. 38061 MOUNTRAIL
63
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ND031 Burke-Divide Electric Co-op, Inc. 38075 RENVILLE
ND031 Burke-Divide Electric Co-op, Inc. 38101 WARD
ND032 Oliver-Mercer Electric Co-op, Inc. 38057 MERCER
ND032 Oliver-Mercer Electric Co-op, Inc. 38065 OLIVER
ND033 West Plains Electric Co-op, Inc. 38007 BILLINGS
ND033 West Plains Electric Co-op, Inc. 38025 DUNN
ND033 West Plains Electric Co-op, Inc. 38033 GOLDEN VALLEY
ND033 West Plains Electric Co-op, Inc. 38089 STARK
ND034 Slope Electric Co-op, Inc. 38001 ADAMS
ND034 Slope Electric Co-op, Inc. 38011 BOWMAN
ND034 Slope Electric Co-op, Inc. 38041 HETTINGER
ND034 Slope Electric Co-op, Inc. 38087 SLOPE
ND035 Capital Electric Co-op, Inc. 38015 BURLEIGH
ND035 Capital Electric Co-op, Inc. 38029 EMMONS
ND035 Capital Electric Co-op, Inc. 38043 KIDDER
ND035 Capital Electric Co-op, Inc. 38055 MCLEAN
ND035 Capital Electric Co-op, Inc. 38083 SHERIDAN
ND036 Mountrail Electric Co-op 38013 BURKE
ND036 Mountrail Electric Co-op 38055 MCLEAN
ND036 Mountrail Electric Co-op 38061 MOUNTRAIL
ND036 Mountrail Electric Co-op 38101 WARD
ND036 Mountrail Electric Co-op 38105 WILLIAMS
ND037 McLean Electric Co-op, Inc. 38055 MCLEAN
ND038 Cavalier REC, Inc. 38019 CAVALIER
ND038 Cavalier REC, Inc. 38071 RAMSEY
NE003 Chimney Rock PPD 31007 BANNER
NE003 Chimney Rock PPD 31013 BOX BUTTE
NE003 Chimney Rock PPD 31123 MORRILL
NE003 Chimney Rock PPD 31157 SCOTTS BLUFF
NE003 Chimney Rock PPD 31165 SIOUX
NE004 Polk County RPPD 31023 BUTLER
NE004 Polk County RPPD 31081 HAMILTON
NE004 Polk County RPPD 31121 MERRICK
NE004 Polk County RPPD 31125 NANCE
NE004 Polk County RPPD 31143 POLK
NE004 Polk County RPPD 31185 YORK
NE051 Burt County PPD 31021 BURT
NE051 Burt County PPD 31037 COLFAX
NE051 Burt County PPD 31043 DAKOTA
NE051 Burt County PPD 31053 DODGE
NE051 Burt County PPD 31173 THURSTON
NE051 Burt County PPD 31177 WASHINGTON
NE059 Butler County RPPD 31023 BUTLER
NE059 Butler County RPPD 31109 LANCASTER
NE059 Butler County RPPD 31141 PLATTE
NE059 Butler County RPPD 31143 POLK
NE059 Butler County RPPD 31155 SAUNDERS
NE059 Butler County RPPD 31159 SEWARD
NE062 Seward County RPPD 31159 SEWARD
NE063 Stanton County PPD 31037 COLFAX
NE063 Stanton County PPD 31039 CUMING
NE063 Stanton County PPD 31119 MADISON
64
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NE063 Stanton County PPD 31167 STANTON
NE063 Stanton County PPD 31179 WAYNE
NE065 Wayne County PPD 31027 CEDAR
NE065 Wayne County PPD 31051 DIXON
NE065 Wayne County PPD 31107 KNOX
NE065 Wayne County PPD 31139 PIERCE
NE065 Wayne County PPD 31167 STANTON
NE065 Wayne County PPD 31173 THURSTON
NE065 Wayne County PPD 31179 WAYNE
NE066 Northeast Nebraska RPPD 31043 DAKOTA
NE066 Northeast Nebraska RPPD 31051 DIXON
NE066 Northeast Nebraska RPPD 31173 THURSTON
NE077 Norris PPD 31067 GAGE
NE077 Norris PPD 31095 JEFFERSON
NE077 Norris PPD 31109 LANCASTER
NE077 Norris PPD 31151 SALINE
NE077 Norris PPD 31169 THAYER
NE078 Dawson County PPD 31001 ADAMS
NE078 Dawson County PPD 31019 BUFFALO
NE078 Dawson County PPD 31041 CUSTER
NE078 Dawson County PPD 31047 DAWSON
NE078 Dawson County PPD 31063 FRONTIER
NE078 Dawson County PPD 31073 GOSPER
NE078 Dawson County PPD 31079 HALL
NE078 Dawson County PPD 31111 LINCOLN
NE078 Dawson County PPD 31137 PHELPS
NE078 Dawson County PPD 31163 SHERMAN
NE084 Panhandle REMA 31005 ARTHUR
NE084 Panhandle REMA 31013 BOX BUTTE
NE084 Panhandle REMA 31031 CHERRY
NE084 Panhandle REMA 31045 DAWES
NE084 Panhandle REMA 31069 GARDEN
NE084 Panhandle REMA 31075 GRANT
NE084 Panhandle REMA 31091 HOOKER
NE084 Panhandle REMA 31117 MCPHERSON
NE084 Panhandle REMA 31123 MORRILL
NE084 Panhandle REMA 31161 SHERIDAN
NE084 Panhandle REMA 31165 SIOUX
NE085 North Central PPD 31003 ANTELOPE
NE085 North Central PPD 31089 HOLT
NE085 North Central PPD 31107 KNOX
NE085 North Central PPD 31139 PIERCE
NE088 Midwest EMC 31029 CHASE
NE088 Midwest EMC 31085 HAYES
NE088 Midwest EMC 31101 KEITH
NE088 Midwest EMC 31111 LINCOLN
NE088 Midwest EMC 31135 PERKINS
NE097 KBR Rural Public Power District 31017 BROWN
NE097 KBR Rural Public Power District 31031 CHERRY
NE097 KBR Rural Public Power District 31103 KEYA PAHA
NE097 KBR Rural Public Power District 31115 LOUP
NE097 KBR Rural Public Power District 31149 ROCK
65
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NE098 Twin Valleys PPD 31063 FRONTIER
NE098 Twin Valleys PPD 31065 FURNAS
NE098 Twin Valleys PPD 31073 GOSPER
NE098 Twin Valleys PPD 31083 HARLAN
NE098 Twin Valleys PPD 31137 PHELPS
NE098 Twin Valleys PPD 31145 RED WILLOW
NE100 Wheat Belt PPD 31005 ARTHUR
NE100 Wheat Belt PPD 31033 CHEYENNE
NE100 Wheat Belt PPD 31049 DEUEL
NE100 Wheat Belt PPD 31069 GARDEN
NE100 Wheat Belt PPD 31101 KEITH
NE100 Wheat Belt PPD 31123 MORRILL
NH004 New Hampshire Electric Cooperative 33001 BELKNAP
NH004 New Hampshire Electric Cooperative 33003 CARROLL
NH004 New Hampshire Electric Cooperative 33005 CHESHIRE
NH004 New Hampshire Electric Cooperative 33007 COOS
NH004 New Hampshire Electric Cooperative 33009 GRAFTON
NH004 New Hampshire Electric Cooperative 33013 MERRIMACK
NH004 New Hampshire Electric Cooperative 33015 ROCKINGHAM
NH004 New Hampshire Electric Cooperative 33017 STRAFFORD
NH004 New Hampshire Electric Cooperative 33019 SULLIVAN
NJ006 Sussex REC 34037 SUSSEX
NJ006 Sussex REC 36071 CRANGE
NM004 Central Valley Electric Co-op, Inc. 35005 CHAVES
NM004 Central Valley Electric Co-op, Inc. 35015 EDDY
NM004 Central Valley Electric Co-op, Inc. 35025 LEA
NM008 Roosevelt County Electric Co-op 35005 CHAVES
NM008 Roosevelt County Electric Co-op 35009 CURRY
NM008 Roosevelt County Electric Co-op 35011 DE BACA
NM008 Roosevelt County Electric Co-op 35041 ROOSEVELT
NM009 Farmers Electric Co-op, Inc. 35009 CURRY
NM009 Farmers Electric Co-op, Inc. 35011 DE BACA
NM009 Farmers Electric Co-op, Inc. 35019 GUADALUPE
NM009 Farmers Electric Co-op, Inc. 35021 HARDING
NM009 Farmers Electric Co-op, Inc. 35037 QUAY
NM009 Farmers Electric Co-op, Inc. 35041 ROOSEVELT
NM009 Farmers Electric Co-op, Inc. 35047 SAN MIGUEL
NM011 Kit Carson Electric Co-op, Inc. 35007 COLFAX
NM011 Kit Carson Electric Co-op, Inc. 35039 RIO ARRIBA
NM011 Kit Carson Electric Co-op, Inc. 35055 TAOS
NM012 Otero County Electric Co-op, Inc. 35005 CHAVES
NM012 Otero County Electric Co-op, Inc. 35027 LINCOLN
NM012 Otero County Electric Co-op, Inc. 35035 OTERO
NM014 Mora-San Miguel Electric Co-op 35019 GUADALUPE
NM014 Mora-San Miguel Electric Co-op 35033 MORA
NM014 Mora-San Miguel Electric Co-op 35047 SAN MIGUEL
NM014 Mora-San Miguel Electric Co-op 35049 SANTA FE
NM015 Northern Rio Arriba Elec. Co-op 35039 RIO ARRIBA
NM017 Sierra Electric Co-op 35003 CATRON
NM017 Sierra Electric Co-op 35029 LUNA
NM017 Sierra Electric Co-op 35051 SIERRA
NM017 Sierra Electric Co-op 35053 SOCORRO
66
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NM019 Springer Electric Co-op, Inc. 08071 LAS ANIMAS
NM019 Springer Electric Co-op, Inc. 35007 COLFAX
NM019 Springer Electric Co-op, Inc. 35021 HARDING
NM019 Springer Electric Co-op, Inc. 35033 MORA
NM019 Springer Electric Co-op, Inc. 35047 SAN MIGUEL
NM019 Springer Electric Co-op, Inc. 35059 UNION
NM020 Socorro Electric Co-op, Inc. 35003 CATRON
NM020 Socorro Electric Co-op, Inc. 35006 CIBOLA
NM020 Socorro Electric Co-op, Inc. 35053 SOCORRO
NM020 Socorro Electric Co-op, Inc. 35061 VALENCIA
NM021 Central New Mexico Elec. Co-op 35001 BERNALILLO
NM021 Central New Mexico Elec. Co-op 35005 CHAVES
NM021 Central New Mexico Elec. Co-op 35011 DE BACA
NM021 Central New Mexico Elec. Co-op 35019 GUADALUPE
NM021 Central New Mexico Elec. Co-op 35027 LINCOLN
NM021 Central New Mexico Elec. Co-op 35047 SAN MIGUEL
NM021 Central New Mexico Elec. Co-op 35049 SANTA FE
NM021 Central New Mexico Elec. Co-op 35053 SOCORRO
NM021 Central New Mexico Elec. Co-op 35057 TORRANCE
NM022 Continental Divide Electric Co-op 04001 APACHE
NM022 Continental Divide Electric Co-op 35001 BERNALILLO
NM022 Continental Divide Electric Co-op 35006 CIBOLA
NM022 Continental Divide Electric Co-op 35031 MCKINLEY
NM022 Continental Divide Electric Co-op 35043 SANDOVAL
NM022 Continental Divide Electric Co-op 35061 VALENCIA
NM023 Lea County Electric Co-op, Inc. 35005 CHAVES
NM023 Lea County Electric Co-op, Inc. 35015 EDDY
NM023 Lea County Electric Co-op, Inc. 35025 LEA
NM023 Lea County Electric Co-op, Inc. 48079 COCHRAN
NM023 Lea County Electric Co-op, Inc. 48165 GAINES
NM023 Lea County Electric Co-op, Inc. 48501 YOAKUM
NM025 Columbus Electric Co-op, Inc. 04003 COCHISE
NM025 Columbus Electric Co-op, Inc. 35017 GRANT
NM025 Columbus Electric Co-op, Inc. 35023 HIDALGO
NM025 Columbus Electric Co-op, Inc. 35029 LUNA
NM026 Southwestern Electric Co-op, Inc. 35021 HARDING
NM026 Southwestern Electric Co-op, Inc. 35037 QUAY
NM026 Southwestern Electric Co-op, Inc. 35059 UNION
NM026 Southwestern Electric Co-op, Inc. 40025 CIMARRON
NM026 Southwestern Electric Co-op, Inc. 48111 DALLAM
NM026 Southwestern Electric Co-op, Inc. 48205 HARTLEY
NM028 Jemez Mountains Electric Co-op 35031 MCKINLEY
NM028 Jemez Mountains Electric Co-op 35039 RIO ARRIBA
NM028 Jemez Mountains Electric Co-op 35043 SANDOVAL
NM028 Jemez Mountains Electric Co-op 35045 SAN JUAN
NM028 Jemez Mountains Electric Co-op 35049 SANTA FE
NV003 Alamo Power District No. 3 32017 LINCOLN
NV004 Overton Power District No. 5 32003 CLARK
NV015 Wells REC 32007 ELKO
NV015 Wells REC 32011 EUREKA
NV015 Wells REC 49045 TOOELE
NV017 Lincoln Co. Power District No.1 32017 LINCOLN
67
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NV018 Valley Electric Association 06051 MONO
NV018 Valley Electric Association 32003 CLARK
NV018 Valley Electric Association 32009 ESMERALDA
NV018 Valley Electric Association 32021 MINERAL
NV018 Valley Electric Association 32023 NYE
NV019 Mt. Wheeler Power, Inc. 32007 ELKO
NV019 Mt. Wheeler Power, Inc. 32011 EUREKA
NV019 Mt. Wheeler Power, Inc. 32023 NYE
NV019 Mt. Wheeler Power, Inc. 32033 WHITE PINE
NV019 Mt. Wheeler Power, Inc. 49023 JUAB
NV019 Mt. Wheeler Power, Inc. 49027 MILLARD
NV019 Mt. Wheeler Power, Inc. 49045 TOOELE
NY019 Otsego Electric Co-op, Inc. 36017 CHENANGO
NY019 Otsego Electric Co-op, Inc. 36043 HERKIMER
NY019 Otsego Electric Co-op, Inc. 36053 MADISON
NY019 Otsego Electric Co-op, Inc. 36077 OTSEGO
NY020 Delaware County Electric Co-op 36017 CHENANGO
NY020 Delaware County Electric Co-op 36025 DELAWARE
NY020 Delaware County Electric Co-op 36077 OTSEGO
NY020 Delaware County Electric Co-op 36095 SCHOHARIE
NY021 Steuben REC, Inc. 36009 CATTARAUGUS
NY021 Steuben REC, Inc. 36013 CHAUTAUQUA
NY021 Steuben REC, Inc. 36097 SCHUYLER
NY021 Steuben REC, Inc. 36101 STEUBEN
NY024 Oneida-Madison Electric Co-op, Inc. 36053 MADISON
NY024 Oneida-Madison Electric Co-op, Inc. 36065 ONEIDA
OH001 Pioneer REC, Inc. 39011 AUGLAIZE
OH001 Pioneer REC, Inc. 39021 CHAMPAIGN
OH001 Pioneer REC, Inc. 39023 CLARK
OH001 Pioneer REC, Inc. 39037 DARKE
OH001 Pioneer REC, Inc. 39091 LOGAN
OH001 Pioneer REC, Inc. 39097 MADISON
OH001 Pioneer REC, Inc. 39107 MERCER
OH001 Pioneer REC, Inc. 39109 MIAMI
OH001 Pioneer REC, Inc. 39113 MONTGOMERY
OH001 Pioneer REC, Inc. 39149 SHELBY
OH001 Pioneer REC, Inc. 39159 UNION
OH024 Delaware REC, Inc. 39041 DELAWARE
OH024 Delaware REC, Inc. 39049 FRANKLIN
OH024 Delaware REC, Inc. 39083 KNOX
OH024 Delaware REC, Inc. 39089 LICKING
OH024 Delaware REC, Inc. 39101 MARION
OH024 Delaware REC, Inc. 39117 MORROW
OH024 Delaware REC, Inc. 39159 UNION
OH030 Marion REC, Inc. 39033 CRAWFORD
OH030 Marion REC, Inc. 39065 HARDIN
OH030 Marion REC, Inc. 39101 MARION
OH030 Marion REC, Inc. 39117 MORROW
OH030 Marion REC, Inc. 39159 UNION
OH030 Marion REC, Inc. 39175 WYANDOT
OH031 Holmes-Wayne Electric Co-op, Inc. 39005 ASHLAND
68
<PAGE>
OH031 Holmes-Wayne Electric Co-op, Inc. 39031 COSHOCTON
OH031 Holmes-Wayne Electric Co-op, Inc. 39075 HOLMES
OH031 Holmes-Wayne Electric Co-op, Inc. 39083 KNOX
OH031 Holmes-Wayne Electric Co-op, Inc. 39157 TUSCARAWAS
OH031 Holmes-Wayne Electric Co-op, Inc. 39169 WAYNE
OH032 Belmont Electric Co-op, Inc. 39013 BELMONT
OH032 Belmont Electric Co-op, Inc. 39067 HARRISON
OH032 Belmont Electric Co-op, Inc. 39081 JEFFERSON
OH032 Belmont Electric Co-op, Inc. 39111 MONROE
OH032 Belmont Electric Co-op, Inc. 39121 NOBLE
OH033 Midwest Electric, Inc. 39003 ALLEN
OH033 Midwest Electric, Inc. 39011 AUGLAIZE
OH033 Midwest Electric, Inc. 39037 DARKE
OH033 Midwest Electric, Inc. 39107 MERCER
OH033 Midwest Electric, Inc. 39137 PUTNAM
OH033 Midwest Electric, Inc. 39149 SHELBY
OH033 Midwest Electric, Inc. 39161 VAN WERT
OH039 Paulding-Putnam Electric Co-op 18001 ADAMS
OH039 Paulding-Putnam Electric Co-op 18003 ALLEN
OH039 Paulding-Putnam Electric Co-op 39003 ALLEN
OH039 Paulding-Putnam Electric Co-op 39039 DEFIANCE
OH039 Paulding-Putnam Electric Co-op 39125 PAULDING
OH039 Paulding-Putnam Electric Co-op 39137 PUTNAM
OH039 Paulding-Putnam Electric Co-op 39161 VAN WERT
OH041 Licking Rural Electrification, Inc. 39005 ASHLAND
OH041 Licking Rural Electrification, Inc. 39031 COSHOCTON
OH041 Licking Rural Electrification, Inc. 39041 DELAWARE
OH041 Licking Rural Electrification, Inc. 39049 FRANKLIN
OH041 Licking Rural Electrification, Inc. 39083 KNOX
OH041 Licking Rural Electrification, Inc. 39089 LICKING
OH041 Licking Rural Electrification, Inc. 39119 MUSKINGUM
OH041 Licking Rural Electrification, Inc. 39127 PERRY
OH041 Licking Rural Electrification, Inc. 39139 RICHLAND
OH042 Darke REC, Inc. 39037 DARKE
OH042 Darke REC, Inc. 39107 MERCER
OH042 Darke REC, Inc. 39135 PREBLE
OH050 Union REC, Inc. 39021 CHAMPAIGN
OH050 Union REC, Inc. 39041 DELAWARE
OH050 Union REC, Inc. 39065 HARDIN
OH050 Union REC, Inc. 39091 LOGAN
OH050 Union REC, Inc. 39101 MARION
OH050 Union REC, Inc. 39159 UNION
OH055 Frontier Power Company 39031 COSHOCTON
OH055 Frontier Power Company 39059 GUERNSEY
OH055 Frontier Power Company 39075 HOLMES
OH055 Frontier Power Company 39083 KNOX
OH055 Frontier Power Company 39089 LICKING
OH055 Frontier Power Company 39119 MUSKINGUM
OH055 Frontier Power Company 39157 TUSCARAWAS
OH056 Lorain-Medina REC, Inc. 39005 ASHLAND
OH056 Lorain-Medina REC, Inc. 39077 HURON
OH056 Lorain-Medina REC, Inc. 39093 LORAIN
69
<PAGE>
OH056 Lorain-Medina REC, Inc. 39103 MEDINA
OH056 Lorain-Medina REC, Inc. 39169 WAYNE
OH059 Consolidated Electric Cooperative 39041 DELAWARE
OH059 Consolidated Electric Cooperative 39083 KNOX
OH059 Consolidated Electric Cooperative 39117 MORROW
OH059 Consolidated Electric Cooperative 39139 RICHLAND
OH060 North Central Electric Co-op, Inc. 39033 CRAWFORD
OH060 North Central Electric Co-op, Inc. 39063 HANCOCK
OH060 North Central Electric Co-op, Inc. 39077 HURON
OH060 North Central Electric Co-op, Inc. 39139 RICHLAND
OH060 North Central Electric Co-op, Inc. 39143 SANDUSKY
OH060 North Central Electric Co-op, Inc. 39147 SENECA
OH060 North Central Electric Co-op, Inc. 39173 WOOD
OH060 North Central Electric Co-op, Inc. 39175 WYANDOT
OH065 South Central Power Company 39001 ADAMS
OH065 South Central Power Company 39015 BROWN
OH065 South Central Power Company 39025 CLERMONT
OH065 South Central Power Company 39027 CLINTON
OH065 South Central Power Company 39045 FAIRFIELD
OH065 South Central Power Company 39047 FAYETTE
OH065 South Central Power Company 39049 FRANKLIN
OH065 South Central Power Company 39071 HIGHLAND
OH065 South Central Power Company 39073 HOCKING
OH065 South Central Power Company 39089 LICKING
OH065 South Central Power Company 39097 MADISON
OH065 South Central Power Company 39119 MUSKINGUM
OH065 South Central Power Company 39127 PERRY
OH065 South Central Power Company 39129 PICKAWAY
OH065 South Central Power Company 39131 PIKE
OH065 South Central Power Company 39141 ROSS
OH065 South Central Power Company 39145 SCIOTO
OH065 South Central Power Company 39163 VINTON
OH068 Tricounty REC, Inc. 39051 FULTON
OH068 Tricounty REC, Inc. 39069 HENRY
OH068 Tricounty REC, Inc. 39095 LUCAS
OH068 Tricounty REC, Inc. 39137 PUTNAM
OH068 Tricounty REC, Inc. 39173 WOOD
OH071 Logan Co. Co-op Pwr. & Light Assn. 39021 CHAMPAIGN
OH071 Logan Co. Co-op Pwr. & Light Assn. 39065 HARDIN
OH071 Logan Co. Co-op Pwr. & Light Assn. 39091 LOGAN
OH071 Logan Co. Co-op Pwr. & Light Assn. 39149 SHELBY
OH074 Butler REC, Inc. 39017 BUTLER
OH074 Butler REC, Inc. 39061 HAMILTON
OH074 Butler REC, Inc. 39113 MONTGOMERY
OH074 Butler REC, Inc. 39135 PREBLE
OH075 North Western Electric Co-op, Inc. 39039 DEFIANCE
OH075 North Western Electric Co-op, Inc. 39069 HENRY
OH075 North Western Electric Co-op, Inc. 39125 PAULDING
OH075 North Western Electric Co-op, Inc. 39171 WILLIAMS
OH083 Firelands Electric Co-op, Inc. 39005 ASHLAND
OH083 Firelands Electric Co-op, Inc. 39077 HURON
OH083 Firelands Electric Co-op, Inc. 39093 LORAIN
70
<PAGE>
OH083 Firelands Electric Co-op, Inc. 39139 RICHLAND
OH084 Carroll Electric Co-op, Inc. 39019 CARROLL
OH084 Carroll Electric Co-op, Inc. 39029 COLUMBIANA
OH084 Carroll Electric Co-op, Inc. 39067 HARRISON
OH084 Carroll Electric Co-op, Inc. 39081 JEFFERSON
OH084 Carroll Electric Co-op, Inc. 39151 STARK
OH084 Carroll Electric Co-op, Inc. 39157 TUSCARAWAS
OH085 United Rural Electric, Inc. 39003 ALLEN
OH085 United Rural Electric, Inc. 39011 AUGLAIZE
OH085 United Rural Electric, Inc. 39063 HANCOCK
OH085 United Rural Electric, Inc. 39065 HARDIN
OH085 United Rural Electric, Inc. 39091 LOGAN
OH085 United Rural Electric, Inc. 39101 MARION
OH085 United Rural Electric, Inc. 39159 UNION
OH085 United Rural Electric, Inc. 39175 WYANDOT
OH086 Guernsey-Muskingum Electric Co-op 39031 COSHOCTON
OH086 Guernsey-Muskingum Electric Co-op 39059 GUERNSEY
OH086 Guernsey-Muskingum Electric Co-op 39067 HARRISON
OH086 Guernsey-Muskingum Electric Co-op 39089 LICKING
OH086 Guernsey-Muskingum Electric Co-op 39115 MORGAN
OH086 Guernsey-Muskingum Electric Co-op 39119 MUSKINGUM
OH086 Guernsey-Muskingum Electric Co-op 39121 NOBLE
OH086 Guernsey-Muskingum Electric Co-op 39127 PERRY
OH086 Guernsey-Muskingum Electric Co-op 39157 TUSCARAWAS
OH087 Hancock-Wood Electric Co-op, Inc. 39003 ALLEN
OH087 Hancock-Wood Electric Co-op, Inc. 39043 ERIE
OH087 Hancock-Wood Electric Co-op, Inc. 39063 HANCOCK
OH087 Hancock-Wood Electric Co-op, Inc. 39065 HARDIN
OH087 Hancock-Wood Electric Co-op, Inc. 39069 HENRY
OH087 Hancock-Wood Electric Co-op, Inc. 39137 PUTNAM
OH087 Hancock-Wood Electric Co-op, Inc. 39143 SANDUSKY
OH087 Hancock-Wood Electric Co-op, Inc. 39147 SENECA
OH087 Hancock-Wood Electric Co-op, Inc. 39173 WOOD
OH087 Hancock-Wood Electric Co-op, Inc. 39175 WYANDOT
OH088 Buckeye REC, Inc. 39009 ATHENS
OH088 Buckeye REC, Inc. 39053 GALLIA
OH088 Buckeye REC, Inc. 39079 JACKSON
OH088 Buckeye REC, Inc. 39087 LAWRENCE
OH088 Buckeye REC, Inc. 39105 MEIGS
OH088 Buckeye REC, Inc. 39131 PIKE
OH088 Buckeye REC, Inc. 39141 ROSS
OH088 Buckeye REC, Inc. 39145 SCIOTO
OH088 Buckeye REC, Inc. 39163 VINTON
OH093 Washington Electric Co-op, Inc. 39009 ATHENS
OH093 Washington Electric Co-op, Inc. 39059 GUERNSEY
OH093 Washington Electric Co-op, Inc. 39111 MONROE
OH093 Washington Electric Co-op, Inc. 39115 MORGAN
OH093 Washington Electric Co-op, Inc. 39121 NOBLE
OH093 Washington Electric Co-op, Inc. 39167 WASHINGTON
OH094 Adams REC, Inc. 39001 ADAMS
OH094 Adams REC, Inc. 39015 BROWN
OH094 Adams REC, Inc. 39071 HIGHLAND
71
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OH094 Adams REC, Inc. 39131 PIKE
OH094 Adams REC, Inc. 39145 SCIOTO
OK001 Cimarron Electric Co-op 40011 BLAINE
OK001 Cimarron Electric Co-op 40017 CANADIAN
OK001 Cimarron Electric Co-op 40039 CUSTER
OK001 Cimarron Electric Co-op 40043 DEWEY
OK001 Cimarron Electric Co-op 40047 GARFIELD
OK001 Cimarron Electric Co-op 40073 KINGFISHER
OK001 Cimarron Electric Co-op 40083 LOGAN
OK001 Cimarron Electric Co-op 40093 MAJOR
OK001 Cimarron Electric Co-op 40109 OKLAHOMA
OK002 Kay Electric Cooperative 40047 GARFIELD
OK002 Kay Electric Cooperative 40053 GRANT
OK002 Kay Electric Cooperative 40071 KAY
OK002 Kay Electric Cooperative 40103 NOBLE
OK002 Kay Electric Cooperative 40113 OSAGE
OK006 Caddo Electric Co-op 40011 BLAINE
OK006 Caddo Electric Co-op 40015 CADDO
OK006 Caddo Electric Co-op 40017 CANADIAN
OK006 Caddo Electric Co-op 40031 COMANCHE
OK006 Caddo Electric Co-op 40039 CUSTER
OK006 Caddo Electric Co-op 40051 GRADY
OK006 Caddo Electric Co-op 40075 KIOWA
OK006 Caddo Electric Co-op 40149 WASHITA
OK010 Oklahoma Electric Co-op 40015 CADDO
OK010 Oklahoma Electric Co-op 40017 CANADIAN
OK010 Oklahoma Electric Co-op 40027 CLEVELAND
OK010 Oklahoma Electric Co-op 40051 GRADY
OK010 Oklahoma Electric Co-op 40087 MCCLAIN
OK010 Oklahoma Electric Co-op 40109 OKLAHOMA
OK010 Oklahoma Electric Co-op 40125 POTTAWATOMIE
OK012 Alfalfa Electric Cooperative, Inc. 20007 BARBER
OK012 Alfalfa Electric Cooperative, Inc. 20077 HARPER
OK012 Alfalfa Electric Cooperative, Inc. 40003 ALFALFA
OK012 Alfalfa Electric Cooperative, Inc. 40047 GARFIELD
OK012 Alfalfa Electric Cooperative, Inc. 40053 GRANT
OK012 Alfalfa Electric Cooperative, Inc. 40093 MAJOR
OK012 Alfalfa Electric Cooperative, Inc. 40151 WOODS
OK014 Red River Valley REA 40019 CARTER
OK014 Red River Valley REA 40067 JEFFERSON
OK014 Red River Valley REA 40069 JOHNSTON
OK014 Red River Valley REA 40085 LOVE
OK014 Red River Valley REA 40095 MARSHALL
OK015 Southwest Rural Electric Assn. 40031 COMANCHE
OK015 Southwest Rural Electric Assn. 40055 GREER
OK015 Southwest Rural Electric Assn. 40065 JACKSON
OK015 Southwest Rural Electric Assn. 40075 KIOWA
OK015 Southwest Rural Electric Assn. 40141 TILLMAN
OK015 Southwest Rural Electric Assn. 48009 ARCHER
OK015 Southwest Rural Electric Assn. 48023 BAYLOR
OK015 Southwest Rural Electric Assn. 48155 FOARD
OK015 Southwest Rural Electric Assn. 48197 HARDEMAN
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OK015 Southwest Rural Electric Assn. 48485 WICHITA
OK015 Southwest Rural Electric Assn. 48487 WILBARGER
OK018 Northfork Electric Cooperative 40009 BECKHAM
OK018 Northfork Electric Cooperative 40039 CUSTER
OK018 Northfork Electric Cooperative 40043 DEWEY
OK018 Northfork Electric Cooperative 40055 GREER
OK018 Northfork Electric Cooperative 40057 HARMON
OK018 Northfork Electric Cooperative 40075 KIOWA
OK018 Northfork Electric Cooperative 40129 ROGER MILLS
OK018 Northfork Electric Cooperative 40149 WASHITA
OK018 Northfork Electric Cooperative 48211 HEMPHILL
OK018 Northfork Electric Cooperative 48483 WHEELER
OK019 Northeast Oklahoma Electric Co-op 40035 CRAIG
OK019 Northeast Oklahoma Electric Co-op 40041 DELAWARE
OK019 Northeast Oklahoma Electric Co-op 40097 MAYES
OK019 Northeast Oklahoma Electric Co-op 40115 OTTAWA
OK019 Northeast Oklahoma Electric Co-op 40131 ROGERS
OK020 Rural Electric Cooperative, Inc. 40019 CARTER
OK020 Rural Electric Cooperative, Inc. 40031 COMANCHE
OK020 Rural Electric Cooperative, Inc. 40049 GARVIN
OK020 Rural Electric Cooperative, Inc. 40051 GRADY
OK020 Rural Electric Cooperative, Inc. 40087 MCCLAIN
OK020 Rural Electric Cooperative, Inc. 40137 STEPHENS
OK021 Kiwash Electric Co-op, Inc. 40011 BLAINE
OK021 Kiwash Electric Co-op, Inc. 40039 CUSTER
OK021 Kiwash Electric Co-op, Inc. 40043 DEWEY
OK021 Kiwash Electric Co-op, Inc. 40075 KIOWA
OK021 Kiwash Electric Co-op, Inc. 40129 ROGER MILLS
OK021 Kiwash Electric Co-op, Inc. 40149 WASHITA
OK022 Cotton Electric Co-op 40015 CADDO
OK022 Cotton Electric Co-op 40019 CARTER
OK022 Cotton Electric Co-op 40031 COMANCHE
OK022 Cotton Electric Co-op 40033 COTTON
OK022 Cotton Electric Co-op 40051 GRADY
OK022 Cotton Electric Co-op 40067 JEFFERSON
OK022 Cotton Electric Co-op 40137 STEPHENS
OK022 Cotton Electric Co-op 40141 TILLMAN
OK023 East Central Oklahoma Elec. Co-op 40037 CREEK
OK023 East Central Oklahoma Elec. Co-op 40091 MCINTOSH
OK023 East Central Oklahoma Elec. Co-op 40101 MUSKOGEE
OK023 East Central Oklahoma Elec. Co-op 40107 OKFUSKEE
OK023 East Central Oklahoma Elec. Co-op 40111 OKMULGEE
OK023 East Central Oklahoma Elec. Co-op 40143 TULSA
OK023 East Central Oklahoma Elec. Co-op 40145 WAGONER
OK024 Central REC 40047 GARFIELD
OK024 Central REC 40081 LINCOLN
OK024 Central REC 40083 LOGAN
OK024 Central REC 40103 NOBLE
OK024 Central REC 40109 OKLAHOMA
OK024 Central REC 40117 PAWNEE
OK024 Central REC 40119 PAYNE
OK025 Verdigris Valley Electric Co-op 40105 NOWATA
73
<PAGE>
OK025 Verdigris Valley Electric Co-op 40113 OSAGE
OK025 Verdigris Valley Electric Co-op 40131 ROGERS
OK025 Verdigris Valley Electric Co-op 40143 TULSA
OK025 Verdigris Valley Electric Co-op 40147 WASHINGTON
OK026 Harmon Electric Assn., Inc. 40009 BECKHAM
OK026 Harmon Electric Assn., Inc. 40055 GREER
OK026 Harmon Electric Assn., Inc. 40057 HARMON
OK026 Harmon Electric Assn., Inc. 40065 JACKSON
OK026 Harmon Electric Assn., Inc. 40075 KIOWA
OK026 Harmon Electric Assn., Inc. 48075 CHILDRESS
OK026 Harmon Electric Assn., Inc. 48197 HARDEMAN
OK027 Southeastern Electric Co-op, Inc. 40005 ATOKA
OK027 Southeastern Electric Co-op, Inc. 40013 BRYAN
OK027 Southeastern Electric Co-op, Inc. 40023 CHOCTAW
OK027 Southeastern Electric Co-op, Inc. 40029 COAL
OK027 Southeastern Electric Co-op, Inc. 40069 JOHNSTON
OK028 Indian Electric Co-op, Inc. 40037 CREEK
OK028 Indian Electric Co-op, Inc. 40071 KAY
OK028 Indian Electric Co-op, Inc. 40103 NOBLE
OK028 Indian Electric Co-op, Inc. 40113 OSAGE
OK028 Indian Electric Co-op, Inc. 40117 PAWNEE
OK028 Indian Electric Co-op, Inc. 40119 PAYNE
OK028 Indian Electric Co-op, Inc. 40143 TULSA
OK029 Canadian Valley Electric Co-op 40063 HUGHES
OK029 Canadian Valley Electric Co-op 40081 LINCOLN
OK029 Canadian Valley Electric Co-op 40091 MCINTOSH
OK029 Canadian Valley Electric Co-op 40107 OKFUSKEE
OK029 Canadian Valley Electric Co-op 40109 OKLAHOMA
OK029 Canadian Valley Electric Co-op 40125 POTTAWATOMIE
OK029 Canadian Valley Electric Co-op 40133 SEMINOLE
OK030 Choctaw Electric Co-op, Inc. 40005 ATOKA
OK030 Choctaw Electric Co-op, Inc. 40013 BRYAN
OK030 Choctaw Electric Co-op, Inc. 40023 CHOCTAW
OK030 Choctaw Electric Co-op, Inc. 40079 LEFLORE
OK030 Choctaw Electric Co-op, Inc. 40089 MCCURTAIN
OK030 Choctaw Electric Co-op, Inc. 40127 PUSHMATAHA
OK031 Northwestern Electric Co-op, Inc. 40007 BEAVER
OK031 Northwestern Electric Co-op, Inc. 40043 DEWEY
OK031 Northwestern Electric Co-op, Inc. 40045 ELLIS
OK031 Northwestern Electric Co-op, Inc. 40059 HARPER
OK031 Northwestern Electric Co-op, Inc. 40093 MAJOR
OK031 Northwestern Electric Co-op, Inc. 40151 WOODS
OK031 Northwestern Electric Co-op, Inc. 40153 WOODWARD
OK033 Kiamichi Electric Co-op, Inc. 40005 ATOKA
OK033 Kiamichi Electric Co-op, Inc. 40077 LATIMER
OK033 Kiamichi Electric Co-op, Inc. 40079 LEFLORE
OK033 Kiamichi Electric Co-op, Inc. 40121 PITTSBURG
OK033 Kiamichi Electric Co-op, Inc. 40127 PUSHMATAHA
OK034 Tri-County Electric Co-op, Inc. 08009 BACA
OK034 Tri-County Electric Co-op, Inc. 20129 MORTON
OK034 Tri-County Electric Co-op, Inc. 20175 SEWARD
OK034 Tri-County Electric Co-op, Inc. 35059 UNION
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OK034 Tri-County Electric Co-op, Inc. 40007 BEAVER
OK034 Tri-County Electric Co-op, Inc. 40025 CIMARRON
OK034 Tri-County Electric Co-op, Inc. 40139 TEXAS
OK034 Tri-County Electric Co-op, Inc. 48111 DALLAM
OK034 Tri-County Electric Co-op, Inc. 48421 SHERMAN
OK035 Cookson Hills Electric Co-op, Inc. 40001 ADAIR
OK035 Cookson Hills Electric Co-op, Inc. 40021 CHEROKEE
OK035 Cookson Hills Electric Co-op, Inc. 40061 HASKELL
OK035 Cookson Hills Electric Co-op, Inc. 40077 LATIMER
OK035 Cookson Hills Electric Co-op, Inc. 40079 LEFLORE
OK035 Cookson Hills Electric Co-op, Inc. 40101 MUSKOGEE
OK035 Cookson Hills Electric Co-op, Inc. 40121 PITTSBURG
OK035 Cookson Hills Electric Co-op, Inc. 40135 SEQUOYAH
OK037 Lake Region Electric Co-op, Inc. 40001 ADAIR
OK037 Lake Region Electric Co-op, Inc. 40021 CHEROKEE
OK037 Lake Region Electric Co-op, Inc. 40041 DELAWARE
OK037 Lake Region Electric Co-op, Inc. 40097 MAYES
OK037 Lake Region Electric Co-op, Inc. 40101 MUSKOGEE
OK037 Lake Region Electric Co-op, Inc. 40131 ROGERS
OK037 Lake Region Electric Co-op, Inc. 40135 SEQUOYAH
OK037 Lake Region Electric Co-op, Inc. 40145 WAGONER
OK040 Mannford Public Works Auth. 40037 CREEK
OR002 Blachly-Lane Co. Co-op Elec. Assn. 41039 LANE
OR004 Consumers Power, Inc. 41003 BENTON
OR004 Consumers Power, Inc. 41039 LANE
OR004 Consumers Power, Inc. 41041 LINCOLN
OR004 Consumers Power, Inc. 41043 LINN
OR004 Consumers Power, Inc. 41047 MARION
OR004 Consumers Power, Inc. 41053 POLK
OR014 Umatilla Electric Co-op Assn. 41049 MORROW
OR014 Umatilla Electric Co-op Assn. 41059 UMATILLA
OR014 Umatilla Electric Co-op Assn. 41061 UNION
OR017 Douglas Electric Co-op, Inc. 41019 DOUGLAS
OR017 Douglas Electric Co-op, Inc. 41039 LANE
OR018 Lane Electric Co-op 41039 LANE
OR021 Coos-Curry Electric Co-op, Inc. 41011 COOS
OR021 Coos-Curry Electric Co-op, Inc. 41015 CURRY
OR021 Coos-Curry Electric Co-op, Inc. 41019 DOUGLAS
OR024 Tillamook P.U.D. 41007 CLATSOP
OR024 Tillamook P.U.D. 41057 TILLAMOOK
OR024 Tillamook P.U.D. 41071 YAMHILL
OR025 Central Electric Co-op, Inc. 41013 CROOK
OR025 Central Electric Co-op, Inc. 41017 DESCHUTES
OR025 Central Electric Co-op, Inc. 41023 GRANT
OR025 Central Electric Co-op, Inc. 41031 JEFFERSON
OR025 Central Electric Co-op, Inc. 41043 LINN
OR025 Central Electric Co-op, Inc. 41065 WASCO
OR026 Wasco Electric Co-op, Inc. 41021 GILLIAM
OR026 Wasco Electric Co-op, Inc. 41031 JEFFERSON
OR026 Wasco Electric Co-op, Inc. 41055 SHERMAN
OR026 Wasco Electric Co-op, Inc. 41065 WASCO
OR026 Wasco Electric Co-op, Inc. 41069 WHEELER
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OR029 Columbia Basin Electric Co-op 41021 GILLIAM
OR029 Columbia Basin Electric Co-op 41049 MORROW
OR029 Columbia Basin Electric Co-op 41055 SHERMAN
OR029 Columbia Basin Electric Co-op 41059 UMATILLA
OR029 Columbia Basin Electric Co-op 41069 WHEELER
OR032 West Oregon Electric Co-op, Inc. 41007 CLATSOP
OR032 West Oregon Electric Co-op, Inc. 41009 COLUMBIA
OR032 West Oregon Electric Co-op, Inc. 41067 WASHINGTON
OR032 West Oregon Electric Co-op, Inc. 41071 YAMHILL
OR037 Columbia Power Co-op Association 41023 GRANT
OR037 Columbia Power Co-op Association 41059 UMATILLA
OR037 Columbia Power Co-op Association 41069 WHEELER
OR039 Midstate Electric Co-op, Inc. 41017 DESCHUTES
OR039 Midstate Electric Co-op, Inc. 41035 KLAMATH
OR039 Midstate Electric Co-op, Inc. 41037 LAKE
OR041 Harney Electric Co-op, Inc. 32013 HUMBOLDT
OR041 Harney Electric Co-op, Inc. 41013 CROOK
OR041 Harney Electric Co-op, Inc. 41025 HARNEY
OR041 Harney Electric Co-op, Inc. 41037 LAKE
OR041 Harney Electric Co-op, Inc. 41045 MALHEUR
PA004 Northwestern RECA, Inc. 42039 CRAWFORD
PA004 Northwestern RECA, Inc. 42049 ERIE
PA004 Northwestern RECA, Inc. 42085 MERCER
PA004 Northwestern RECA, Inc. 42121 VENANGO
PA004 Northwestern RECA, Inc. 42123 WARREN
PA006 Southwest Central RECC 42005 ARMSTRONG
PA006 Southwest Central RECC 42013 BLAIR
PA006 Southwest Central RECC 42021 CAMBRIA
PA006 Southwest Central RECC 42033 CLEARFIELD
PA006 Southwest Central RECC 42063 INDIANA
PA006 Southwest Central RECC 42065 JEFFERSON
PA006 Southwest Central RECC 42129 WESTMORELAND
PA012 Sullivan County REC, Inc. 42015 BRADFORD
PA012 Sullivan County REC, Inc. 42081 LYCOMING
PA012 Sullivan County REC, Inc. 42113 SULLIVAN
PA013 Tri-County REC, Inc. 42015 BRADFORD
PA013 Tri-County REC, Inc. 42023 CAMERON
PA013 Tri-County REC, Inc. 42035 CLINTON
PA013 Tri-County REC, Inc. 42081 LYCOMING
PA013 Tri-County REC, Inc. 42083 MCKEAN
PA013 Tri-County REC, Inc. 42105 POTTER
PA013 Tri-County REC, Inc. 42117 TIOGA
PA015 Claverack Rural Electric Co-op 42015 BRADFORD
PA015 Claverack Rural Electric Co-op 42069 LACKAWANNA
PA015 Claverack Rural Electric Co-op 42079 LUZERNE
PA015 Claverack Rural Electric Co-op 42081 LYCOMING
PA015 Claverack Rural Electric Co-op 42113 SULLIVAN
PA015 Claverack Rural Electric Co-op 42115 SUSQUEHANNA
PA015 Claverack Rural Electric Co-op 42117 TIOGA
PA015 Claverack Rural Electric Co-op 42131 WYOMING
PA017 Central Electric Co-op, Inc. 42003 ALLEGHENY
PA017 Central Electric Co-op, Inc. 42005 ARMSTRONG
76
<PAGE>
PA017 Central Electric Co-op, Inc. 42019 BUTLER
PA017 Central Electric Co-op, Inc. 42031 CLARION
PA017 Central Electric Co-op, Inc. 42053 FOREST
PA017 Central Electric Co-op, Inc. 42085 MERCER
PA017 Central Electric Co-op, Inc. 42121 VENANGO
PA019 Warren Electric Co-op, Inc. 42039 CRAWFORD
PA019 Warren Electric Co-op, Inc. 42049 ERIE
PA019 Warren Electric Co-op, Inc. 42053 FOREST
PA019 Warren Electric Co-op, Inc. 42121 VENANGO
PA019 Warren Electric Co-op, Inc. 42123 WARREN
PA020 Valley REC, Inc. 42009 BEDFORD
PA020 Valley REC, Inc. 42013 BLAIR
PA020 Valley REC, Inc. 42055 FRANKLIN
PA020 Valley REC, Inc. 42057 FULTON
PA020 Valley REC, Inc. 42061 HUNTINGDON
PA020 Valley REC, Inc. 42067 JUNIATA
PA020 Valley REC, Inc. 42087 MIFFLIN
PA021 Somerset REC, Inc. 24023 GARRETT
PA021 Somerset REC, Inc. 42009 BEDFORD
PA021 Somerset REC, Inc. 42051 FAYETTE
PA021 Somerset REC, Inc. 42111 SOMERSET
PA021 Somerset REC, Inc. 42129 WESTMORELAND
PA024 Bedford REC, Inc. 42009 BEDFORD
PA024 Bedford REC, Inc. 42057 FULTON
PA024 Bedford REC, Inc. 42111 SOMERSET
PA025 Adams Electric Co-op, Inc. 42001 ADAMS
PA025 Adams Electric Co-op, Inc. 42041 CUMBERLAND
PA025 Adams Electric Co-op, Inc. 42055 FRANKLIN
PA025 Adams Electric Co-op, Inc. 42133 YORK
PA028 United Electric Cooperative, Inc. 42005 ARMSTRONG
PA028 United Electric Cooperative, Inc. 42021 CAMBRIA
PA028 United Electric Cooperative, Inc. 42027 CENTRE
PA028 United Electric Cooperative, Inc. 42031 CLARION
PA028 United Electric Cooperative, Inc. 42033 CLEARFIELD
PA028 United Electric Cooperative, Inc. 42035 CLINTON
PA028 United Electric Cooperative, Inc. 42047 ELK
PA028 United Electric Cooperative, Inc. 42053 FOREST
PA028 United Electric Cooperative, Inc. 42063 INDIANA
PA028 United Electric Cooperative, Inc. 42065 JEFFERSON
SC014 Aiken Electric Co-op, Inc. 45003 AIKEN
SC014 Aiken Electric Co-op, Inc. 45011 BARNWELL
SC014 Aiken Electric Co-op, Inc. 45017 CALHOUN
SC014 Aiken Electric Co-op, Inc. 45037 EDGEFIELD
SC014 Aiken Electric Co-op, Inc. 45047 GREENWOOD
SC014 Aiken Electric Co-op, Inc. 45063 LEXINGTON
SC014 Aiken Electric Co-op, Inc. 45065 MCCORMICK
SC014 Aiken Electric Co-op, Inc. 45075 ORANGEBURG
SC014 Aiken Electric Co-op, Inc. 45081 SALUDA
SC019 Laurens Electric Co-op, Inc. 45001 ABBEVILLE
SC019 Laurens Electric Co-op, Inc. 45007 ANDERSON
SC019 Laurens Electric Co-op, Inc. 45045 GREENVILLE
SC019 Laurens Electric Co-op, Inc. 45059 LAURENS
77
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SC019 Laurens Electric Co-op, Inc. 45071 NEWBERRY
SC019 Laurens Electric Co-op, Inc. 45083 SPARTANBURG
SC019 Laurens Electric Co-op, Inc. 45087 UNION
SC021 Lynches River Electric Co-op, Inc. 45025 CHESTERFIELD
SC021 Lynches River Electric Co-op, Inc. 45055 KERSHAW
SC021 Lynches River Electric Co-op, Inc. 45057 LANCASTER
SC022 Fairfield Electric Co-op, Inc. 45023 CHESTER
SC022 Fairfield Electric Co-op, Inc. 45039 FAIRFIELD
SC022 Fairfield Electric Co-op, Inc. 45055 KERSHAW
SC022 Fairfield Electric Co-op, Inc. 45079 RICHLAND
SC022 Fairfield Electric Co-op, Inc. 45091 YORK
SC023 Edisto Electric Co-op, Inc. 45005 ALLENDALE
SC023 Edisto Electric Co-op, Inc. 45009 BAMBERG
SC023 Edisto Electric Co-op, Inc. 45011 BARNWELL
SC023 Edisto Electric Co-op, Inc. 45015 BERKELEY
SC023 Edisto Electric Co-op, Inc. 45029 COLLETON
SC023 Edisto Electric Co-op, Inc. 45035 DORCHESTER
SC023 Edisto Electric Co-op, Inc. 45049 HAMPTON
SC023 Edisto Electric Co-op, Inc. 45075 ORANGEBURG
SC025 Berkeley Electric Co-op, Inc. 45015 BERKELEY
SC025 Berkeley Electric Co-op, Inc. 45019 CHARLESTON
SC025 Berkeley Electric Co-op, Inc. 45035 DORCHESTER
SC026 Pee Dee Electric Co-op, Inc. 45025 CHESTERFIELD
SC026 Pee Dee Electric Co-op, Inc. 45031 DARLINGTON
SC026 Pee Dee Electric Co-op, Inc. 45033 DILLON
SC026 Pee Dee Electric Co-op, Inc. 45041 FLORENCE
SC026 Pee Dee Electric Co-op, Inc. 45061 LEE
SC026 Pee Dee Electric Co-op, Inc. 45067 MARION
SC027 Marlboro Electric Co-op, Inc. 45033 DILLON
SC027 Marlboro Electric Co-op, Inc. 45069 MARLBORO
SC028 Santee Electric Co-op, Inc. 45027 CLARENDON
SC028 Santee Electric Co-op, Inc. 45041 FLORENCE
SC028 Santee Electric Co-op, Inc. 45043 GEORGETOWN
SC028 Santee Electric Co-op, Inc. 45089 WILLIAMSBURG
SC029 Black River Electric Co-op, Inc. 45027 CLARENDON
SC029 Black River Electric Co-op, Inc. 45055 KERSHAW
SC029 Black River Electric Co-op, Inc. 45061 LEE
SC029 Black River Electric Co-op, Inc. 45085 SUMTER
SC030 Coastal Electric Co-op, Inc. 45009 BAMBERG
SC030 Coastal Electric Co-op, Inc. 45029 COLLETON
SC031 Horry Electric Co-op, Inc. 45051 HORRY
SC032 Tri-County Electric Co-op, Inc. 45017 CALHOUN
SC032 Tri-County Electric Co-op, Inc. 45055 KERSHAW
SC032 Tri-County Electric Co-op, Inc. 45063 LEXINGTON
SC032 Tri-County Electric Co-op, Inc. 45075 ORANGEBURG
SC032 Tri-County Electric Co-op, Inc. 45079 RICHLAND
SC032 Tri-County Electric Co-op, Inc. 45085 SUMTER
SC033 Broad River Electric Co-op, Inc. 37045 CLEVELAND
SC033 Broad River Electric Co-op, Inc. 37149 POLK
SC033 Broad River Electric Co-op, Inc. 37161 RUTHERFORD
SC033 Broad River Electric Co-op, Inc. 45021 CHEROKEE
SC033 Broad River Electric Co-op, Inc. 45071 NEWBERRY
78
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SC033 Broad River Electric Co-op, Inc. 45083 SPARTANBURG
SC033 Broad River Electric Co-op, Inc. 45087 UNION
SC034 Newberry Electric Co-op, Inc. 45039 FAIRFIELD
SC034 Newberry Electric Co-op, Inc. 45059 LAURENS
SC034 Newberry Electric Co-op, Inc. 45063 LEXINGTON
SC034 Newberry Electric Co-op, Inc. 45071 NEWBERRY
SC035 Little River Electric Co-op, Inc. 45001 ABBEVILLE
SC035 Little River Electric Co-op, Inc. 45007 ANDERSON
SC035 Little River Electric Co-op, Inc. 45047 GREENWOOD
SC035 Little River Electric Co-op, Inc. 45065 MCCORMICK
SC037 Mid-Carolina Electric Co-op, Inc. 45003 AIKEN
SC037 Mid-Carolina Electric Co-op, Inc. 45063 LEXINGTON
SC037 Mid-Carolina Electric Co-op, Inc. 45071 NEWBERRY
SC037 Mid-Carolina Electric Co-op, Inc. 45079 RICHLAND
SC037 Mid-Carolina Electric Co-op, Inc. 45081 SALUDA
SC038 Blue Ridge Electric Co-op, Inc. 45007 ANDERSON
SC038 Blue Ridge Electric Co-op, Inc. 45045 GREENVILLE
SC038 Blue Ridge Electric Co-op, Inc. 45073 OCONEE
SC038 Blue Ridge Electric Co-op, Inc. 45077 PICKENS
SC038 Blue Ridge Electric Co-op, Inc. 45083 SPARTANBURG
SC040 Palmetto Electric Co-op, Inc. 45005 ALLENDALE
SC040 Palmetto Electric Co-op, Inc. 45013 BEAUFORT
SC040 Palmetto Electric Co-op, Inc. 45049 HAMPTON
SC040 Palmetto Electric Co-op, Inc. 45053 JASPER
SC041 York Electric Co-op, Inc. 45021 CHEROKEE
SC041 York Electric Co-op, Inc. 45023 CHESTER
SC041 York Electric Co-op, Inc. 45057 LANCASTER
SC041 York Electric Co-op, Inc. 45091 YORK
SD003 Clay-Union Electric Corp. 46027 CLAY
SD003 Clay-Union Electric Corp. 46083 LINCOLN
SD003 Clay-Union Electric Corp. 46125 TURNER
SD003 Clay-Union Electric Corp. 46127 UNION
SD003 Clay-Union Electric Corp. 46135 YANKTON
SD006 Union County Electric Co-op, Inc. 46127 UNION
SD007 Lincoln-Union Electric Co. 46027 CLAY
SD007 Lincoln-Union Electric Co. 46083 LINCOLN
SD007 Lincoln-Union Electric Co. 46099 MINNEHAHA
SD007 Lincoln-Union Electric Co. 46125 TURNER
SD007 Lincoln-Union Electric Co. 46127 UNION
SD011 West River Electric Assn., Inc. 46055 HAAKON
SD011 West River Electric Assn., Inc. 46071 JACKSON
SD011 West River Electric Assn., Inc. 46093 MEADE
SD011 West River Electric Assn., Inc. 46103 PENNINGTON
SD011 West River Electric Assn., Inc. 46113 SHANNON
SD011 West River Electric Assn., Inc. 46131 WASHABAUGH
SD011 West River Electric Assn., Inc. 46137 ZIEBACH
SD012 Sioux Valley-Southwestern Electric Co-op 46011 BROOKINGS
SD012 Sioux Valley-Southwestern Electric Co-op 46077 KINGSBURY
SD012 Sioux Valley-Southwestern Electric Co-op 46079 LAKE
SD012 Sioux Valley-Southwestern Electric Co-op 46087 MC COOK
SD012 Sioux Valley-Southwestern Electric Co-op 46099 MINNEHAHA
SD012 Sioux Valley-Southwestern Electric Co-op 46101 MOODY
79
<PAGE>
SD012 Sioux Valley-Southwestern Electric Co-op 46125 TURNER
SD013 Black Hills Electric Co-op, Inc. 46033 CUSTER
SD013 Black Hills Electric Co-op, Inc. 46047 FALL RIVER
SD013 Black Hills Electric Co-op, Inc. 46081 LAWRENCE
SD013 Black Hills Electric Co-op, Inc. 46093 MEADE
SD013 Black Hills Electric Co-op, Inc. 46103 PENNINGTON
SD013 Black Hills Electric Co-op, Inc. 46113 SHANNON
SD015 Butte Electric Co-op, Inc. 46019 BUTTE
SD015 Butte Electric Co-op, Inc. 46081 LAWRENCE
SD015 Butte Electric Co-op, Inc. 46093 MEADE
SD016 Whetstone Valley Electric Co-op 46029 CODINGTON
SD016 Whetstone Valley Electric Co-op 46039 DEUEL
SD016 Whetstone Valley Electric Co-op 46051 GRANT
SD016 Whetstone Valley Electric Co-op 46109 ROBERTS
SD017 H-D Electric Co-op, Inc. 27073 LAC QUI PARLE
SD017 H-D Electric Co-op, Inc. 27081 LINCOLN
SD017 H-D Electric Co-op, Inc. 27173 YELLOW MEDICINE
SD017 H-D Electric Co-op, Inc. 46011 BROOKINGS
SD017 H-D Electric Co-op, Inc. 46025 CLARK
SD017 H-D Electric Co-op, Inc. 46029 CODINGTON
SD017 H-D Electric Co-op, Inc. 46039 DEUEL
SD017 H-D Electric Co-op, Inc. 46051 GRANT
SD017 H-D Electric Co-op, Inc. 46057 HAMLIN
SD018 Codington-Clark Electric Co-op 46005 BEADLE
SD018 Codington-Clark Electric Co-op 46025 CLARK
SD018 Codington-Clark Electric Co-op 46029 CODINGTON
SD018 Codington-Clark Electric Co-op 46037 DAY
SD018 Codington-Clark Electric Co-op 46039 DEUEL
SD018 Codington-Clark Electric Co-op 46051 GRANT
SD018 Codington-Clark Electric Co-op 46057 HAMLIN
SD018 Codington-Clark Electric Co-op 46077 KINGSBURY
SD018 Codington-Clark Electric Co-op 46115 SPINK
SD019 Turner-Hutchinson Electric Co-op 46067 HUTCHINSON
SD019 Turner-Hutchinson Electric Co-op 46125 TURNER
SD019 Turner-Hutchinson Electric Co-op 46135 YANKTON
SD020 Lake Region Electric Assn., Inc. 46013 BROWN
SD020 Lake Region Electric Assn., Inc. 46025 CLARK
SD020 Lake Region Electric Assn., Inc. 46037 DAY
SD020 Lake Region Electric Assn., Inc. 46051 GRANT
SD020 Lake Region Electric Assn., Inc. 46091 MARSHALL
SD020 Lake Region Electric Assn., Inc. 46109 ROBERTS
SD020 Lake Region Electric Assn., Inc. 46115 SPINK
SD021 Northern Electric Co-op, Inc. 38021 DICKEY
SD021 Northern Electric Co-op, Inc. 46013 BROWN
SD021 Northern Electric Co-op, Inc. 46037 DAY
SD021 Northern Electric Co-op, Inc. 46045 EDMUNDS
SD021 Northern Electric Co-op, Inc. 46049 FAULK
SD021 Northern Electric Co-op, Inc. 46089 MCPHERSON
SD021 Northern Electric Co-op, Inc. 46091 MARSHALL
SD021 Northern Electric Co-op, Inc. 46115 SPINK
SD023 Intercounty Electric Assn., Inc. 46035 DAVISON
SD023 Intercounty Electric Assn., Inc. 46061 HANSON
80
<PAGE>
SD023 Intercounty Electric Assn., Inc. 46097 MINER
SD023 Intercounty Electric Assn., Inc. 46111 SANBORN
SD025 Tri-County Electric Assn., Inc. 46003 AURORA
SD025 Tri-County Electric Assn., Inc. 46015 BRULE
SD025 Tri-County Electric Assn., Inc. 46017 BUFFALO
SD025 Tri-County Electric Assn., Inc. 46073 JERAULD
SD026 Rosebud Electric Co-op, Inc. 46053 GREGORY
SD026 Rosebud Electric Co-op, Inc. 46085 LYMAN
SD026 Rosebud Electric Co-op, Inc. 46095 MELLETTE
SD026 Rosebud Electric Co-op, Inc. 46123 TRIPP
SD027 Bon Homme Yankton Electric Assn. 46009 BON HOMME
SD027 Bon Homme Yankton Electric Assn. 46067 HUTCHINSON
SD027 Bon Homme Yankton Electric Assn. 46125 TURNER
SD027 Bon Homme Yankton Electric Assn. 46135 YANKTON
SD028 McCook Electric Co-op, Inc. 46061 HANSON
SD028 McCook Electric Co-op, Inc. 46067 HUTCHINSON
SD028 McCook Electric Co-op, Inc. 46079 LAKE
SD028 McCook Electric Co-op, Inc. 46087 MC COOK
SD028 McCook Electric Co-op, Inc. 46097 MINER
SD028 McCook Electric Co-op, Inc. 46099 MINNEHAHA
SD028 McCook Electric Co-op, Inc. 46125 TURNER
SD029 Ree Electric Cooperative, Inc. 46059 HAND
SD029 Ree Electric Cooperative, Inc. 46069 HYDE
SD030 Kingsbury Electric Co-op, Inc. 46005 BEADLE
SD030 Kingsbury Electric Co-op, Inc. 46011 BROOKINGS
SD030 Kingsbury Electric Co-op, Inc. 46025 CLARK
SD030 Kingsbury Electric Co-op, Inc. 46057 HAMLIN
SD030 Kingsbury Electric Co-op, Inc. 46077 KINGSBURY
SD031 Cam-Wal Electric Co-op, Inc. 46021 CAMPBELL
SD031 Cam-Wal Electric Co-op, Inc. 46045 EDMUNDS
SD031 Cam-Wal Electric Co-op, Inc. 46049 FAULK
SD031 Cam-Wal Electric Co-op, Inc. 46089 MCPHERSON
SD031 Cam-Wal Electric Co-op, Inc. 46107 POTTER
SD031 Cam-Wal Electric Co-op, Inc. 46119 SULLY
SD031 Cam-Wal Electric Co-op, Inc. 46129 WALWORTH
SD032 Charles Mix Electric Assn., Inc. 46009 BON HOMME
SD032 Charles Mix Electric Assn., Inc. 46015 BRULE
SD032 Charles Mix Electric Assn., Inc. 46023 CHARLES MIX
SD032 Charles Mix Electric Assn., Inc. 46043 DOUGLAS
SD033 Beadle Electric Cooperative 46005 BEADLE
SD033 Beadle Electric Cooperative 46059 HAND
SD033 Beadle Electric Cooperative 46077 KINGSBURY
SD033 Beadle Electric Cooperative 46097 MINER
SD033 Beadle Electric Cooperative 46111 SANBORN
SD033 Beadle Electric Cooperative 46115 SPINK
SD034 Spink Electric Co-op, Inc. 46005 BEADLE
SD034 Spink Electric Co-op, Inc. 46025 CLARK
SD034 Spink Electric Co-op, Inc. 46049 FAULK
SD034 Spink Electric Co-op, Inc. 46115 SPINK
SD035 Lacreek Electric Assn., Inc. 31031 CHERRY
SD035 Lacreek Electric Assn., Inc. 46007 BENNETT
SD035 Lacreek Electric Assn., Inc. 46071 JACKSON
81
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SD035 Lacreek Electric Assn., Inc. 46095 MELLETTE
SD035 Lacreek Electric Assn., Inc. 46113 SHANNON
SD035 Lacreek Electric Assn., Inc. 46121 TODD
SD036 F.E.M. Electric Assn., Inc. 46013 BROWN
SD036 F.E.M. Electric Assn., Inc. 46045 EDMUNDS
SD036 F.E.M. Electric Assn., Inc. 46049 FAULK
SD036 F.E.M. Electric Assn., Inc. 46089 MCPHERSON
SD036 F.E.M. Electric Assn., Inc. 46107 POTTER
SD036 F.E.M. Electric Assn., Inc. 46115 SPINK
SD036 F.E.M. Electric Assn., Inc. 46129 WALWORTH
SD037 Oahe Electric Co-op, Inc. 46065 HUGHES
SD037 Oahe Electric Co-op, Inc. 46107 POTTER
SD037 Oahe Electric Co-op, Inc. 46119 SULLY
SD038 Moreau Grand Electric Co-op, Inc. 46031 CORSON
SD038 Moreau Grand Electric Co-op, Inc. 46041 DEWEY
SD038 Moreau Grand Electric Co-op, Inc. 46093 MEADE
SD038 Moreau Grand Electric Co-op, Inc. 46105 PERKINS
SD038 Moreau Grand Electric Co-op, Inc. 46137 ZIEBACH
SD039 Douglas Electric Co-op, Inc. 46003 AURORA
SD039 Douglas Electric Co-op, Inc. 46023 CHARLES MIX
SD039 Douglas Electric Co-op, Inc. 46035 DAVISON
SD039 Douglas Electric Co-op, Inc. 46043 DOUGLAS
SD039 Douglas Electric Co-op, Inc. 46067 HUTCHINSON
SD040 Grand Electric Co-op, Inc. 30011 CARTER
SD040 Grand Electric Co-op, Inc. 46019 BUTTE
SD040 Grand Electric Co-op, Inc. 46031 CORSON
SD040 Grand Electric Co-op, Inc. 46063 HARDING
SD040 Grand Electric Co-op, Inc. 46093 MEADE
SD040 Grand Electric Co-op, Inc. 46105 PERKINS
SD040 Grand Electric Co-op, Inc. 46137 ZIEBACH
SD041 Cherry-Todd Electric Co-op, Inc. 31031 CHERRY
SD041 Cherry-Todd Electric Co-op, Inc. 31103 KEYA PAHA
SD041 Cherry-Todd Electric Co-op, Inc. 46095 MELLETTE
SD041 Cherry-Todd Electric Co-op, Inc. 46121 TODD
SD042 West Central Electric Co-op, Inc. 46055 HAAKON
SD042 West Central Electric Co-op, Inc. 46071 JACKSON
SD042 West Central Electric Co-op, Inc. 46075 JONES
SD042 West Central Electric Co-op, Inc. 46085 LYMAN
SD042 West Central Electric Co-op, Inc. 46095 MELLETTE
SD042 West Central Electric Co-op, Inc. 46117 STANLEY
TN001 Volunteer Electric Co-op 47007 BLEDSOE
TN001 Volunteer Electric Co-op 47011 BRADLEY
TN001 Volunteer Electric Co-op 47035 CUMBERLAND
TN001 Volunteer Electric Co-op 47049 FENTRESS
TN001 Volunteer Electric Co-op 47065 HAMILTON
TN001 Volunteer Electric Co-op 47107 MCMINN
TN001 Volunteer Electric Co-op 47121 MEIGS
TN001 Volunteer Electric Co-op 47133 OVERTON
TN001 Volunteer Electric Co-op 47137 PICKETT
TN001 Volunteer Electric Co-op 47139 POLK
TN001 Volunteer Electric Co-op 47141 PUTNAM
TN001 Volunteer Electric Co-op 47143 RHEA
82
<PAGE>
TN001 Volunteer Electric Co-op 47145 ROANE
TN001 Volunteer Electric Co-op 47151 SCOTT
TN001 Volunteer Electric Co-op 47185 WHITE
TN009 Tri-County EMC 21001 ADAIR
TN009 Tri-County EMC 21003 ALLEN
TN009 Tri-County EMC 21009 BARREN
TN009 Tri-County EMC 21053 CLINTON
TN009 Tri-County EMC 21057 CUMBERLAND
TN009 Tri-County EMC 21169 METCALFE
TN009 Tri-County EMC 21171 MONROE
TN009 Tri-County EMC 21227 WARREN
TN009 Tri-County EMC 47027 CLAY
TN009 Tri-County EMC 47087 JACKSON
TN009 Tri-County EMC 47111 MACON
TN009 Tri-County EMC 47133 OVERTON
TN009 Tri-County EMC 47159 SMITH
TN009 Tri-County EMC 47165 SUMNER
TN009 Tri-County EMC 47169 TROUSDALE
TN016 Southwest Tennessee EMC 47023 CHESTER
TN016 Southwest Tennessee EMC 47033 CROCKETT
TN016 Southwest Tennessee EMC 47047 FAYETTE
TN016 Southwest Tennessee EMC 47069 HARDEMAN
TN016 Southwest Tennessee EMC 47075 HAYWOOD
TN016 Southwest Tennessee EMC 47077 HENDERSON
TN016 Southwest Tennessee EMC 47097 LAUDERDALE
TN016 Southwest Tennessee EMC 47113 MADISON
TN016 Southwest Tennessee EMC 47167 TIPTON
TN017 Bolivar Electric Dept 28009 BENTON
TN017 Bolivar Electric Dept 47023 CHESTER
TN017 Bolivar Electric Dept 47047 FAYETTE
TN017 Bolivar Electric Dept 47069 HARDEMAN
TN017 Bolivar Electric Dept 47113 MADISON
TN019 Middle Tennessee EMC 47015 CANNON
TN019 Middle Tennessee EMC 47041 DE KALB
TN019 Middle Tennessee EMC 47119 MAURY
TN019 Middle Tennessee EMC 47149 RUTHERFORD
TN019 Middle Tennessee EMC 47159 SMITH
TN019 Middle Tennessee EMC 47169 TROUSDALE
TN019 Middle Tennessee EMC 47187 WILLIAMSON
TN019 Middle Tennessee EMC 47189 WILSON
TN020 Gibson EMC 47033 CROCKETT
TN020 Gibson EMC 47045 DYER
TN020 Gibson EMC 47053 GIBSON
TN020 Gibson EMC 47075 HAYWOOD
TN020 Gibson EMC 47095 LAKE
TN020 Gibson EMC 47097 LAUDERDALE
TN020 Gibson EMC 47113 MADISON
TN020 Gibson EMC 47131 OBION
TN020 Gibson EMC 47183 WEAKLEY
TN021 Duck River EMC 47003 BEDFORD
TN021 Duck River EMC 47031 COFFEE
TN021 Duck River EMC 47051 FRANKLIN
83
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TN021 Duck River EMC 47055 GILES
TN021 Duck River EMC 47061 GRUNDY
TN021 Duck River EMC 47099 LAWRENCE
TN021 Duck River EMC 47101 LEWIS
TN021 Duck River EMC 47103 LINCOLN
TN021 Duck River EMC 47115 MARION
TN021 Duck River EMC 47117 MARSHALL
TN021 Duck River EMC 47119 MAURY
TN021 Duck River EMC 47127 MOORE
TN021 Duck River EMC 47149 RUTHERFORD
TN021 Duck River EMC 47187 WILLIAMSON
TN023 City of Dickson 47021 CHEATHAM
TN023 City of Dickson 47043 DICKSON
TN023 City of Dickson 47081 HICKMAN
TN023 City of Dickson 47083 HOUSTON
TN023 City of Dickson 47125 MONTGOMERY
TN024 Cumberland EMC 21047 CHRISTIAN
TN024 Cumberland EMC 21141 LOGAN
TN024 Cumberland EMC 21213 SIMPSON
TN024 Cumberland EMC 21219 TODD
TN024 Cumberland EMC 21221 TRIGG
TN024 Cumberland EMC 47021 CHEATHAM
TN024 Cumberland EMC 47043 DICKSON
TN024 Cumberland EMC 47083 HOUSTON
TN024 Cumberland EMC 47125 MONTGOMERY
TN024 Cumberland EMC 47147 ROBERTSON
TN024 Cumberland EMC 47161 STEWART
TN024 Cumberland EMC 47165 SUMNER
TN025 Upper Cumberland EMC 47027 CLAY
TN025 Upper Cumberland EMC 47041 DE KALB
TN025 Upper Cumberland EMC 47087 JACKSON
TN025 Upper Cumberland EMC 47111 MACON
TN025 Upper Cumberland EMC 47133 OVERTON
TN025 Upper Cumberland EMC 47137 PICKETT
TN025 Upper Cumberland EMC 47141 PUTNAM
TN025 Upper Cumberland EMC 47159 SMITH
TN025 Upper Cumberland EMC 47185 WHITE
TN025 Upper Cumberland EMC 47189 WILSON
TN026 Fort Loudoun Electric Co-op 47009 BLOUNT
TN026 Fort Loudoun Electric Co-op 47105 LOUDON
TN026 Fort Loudoun Electric Co-op 47123 MONROE
TN031 Pickwick Electric Co-op 28003 ALCORN
TN031 Pickwick Electric Co-op 28141 TISHOMINGO
TN031 Pickwick Electric Co-op 47023 CHESTER
TN031 Pickwick Electric Co-op 47069 HARDEMAN
TN031 Pickwick Electric Co-op 47071 HARDIN
TN031 Pickwick Electric Co-op 47109 MCNAIRY
TN032 Meriwether Lewis Electric Co-op 47081 HICKMAN
TN032 Meriwether Lewis Electric Co-op 47083 HOUSTON
TN032 Meriwether Lewis Electric Co-op 47085 HUMPHREYS
TN032 Meriwether Lewis Electric Co-op 47101 LEWIS
TN032 Meriwether Lewis Electric Co-op 47135 PERRY
84
<PAGE>
TN034 Tennessee Valley Electric Co-op 47071 HARDIN
TN034 Tennessee Valley Electric Co-op 47181 WAYNE
TN035 Sequachee Valley Electric Co-op 47007 BLEDSOE
TN035 Sequachee Valley Electric Co-op 47031 COFFEE
TN035 Sequachee Valley Electric Co-op 47061 GRUNDY
TN035 Sequachee Valley Electric Co-op 47065 HAMILTON
TN035 Sequachee Valley Electric Co-op 47115 MARION
TN035 Sequachee Valley Electric Co-op 47143 RHEA
TN035 Sequachee Valley Electric Co-op 47153 SEQUATCHIE
TN035 Sequachee Valley Electric Co-op 47175 VAN BUREN
TN036 Plateau Electric Co-op 47129 MORGAN
TN036 Plateau Electric Co-op 47151 SCOTT
TN037 Holston Electric Co-op, Inc. 47029 COCKE
TN037 Holston Electric Co-op, Inc. 47059 GREENE
TN037 Holston Electric Co-op, Inc. 47063 HAMBLEN
TN037 Holston Electric Co-op, Inc. 47073 HAWKINS
TN037 Holston Electric Co-op, Inc. 47089 JEFFERSON
TN038 Appalachian Electric Co-op 47009 BLOUNT
TN038 Appalachian Electric Co-op 47057 GRAINGER
TN038 Appalachian Electric Co-op 47063 HAMBLEN
TN038 Appalachian Electric Co-op 47089 JEFFERSON
TN038 Appalachian Electric Co-op 47155 SEVIER
TN045 LaFollette Utilities 47013 CAMPBELL
TN045 LaFollette Utilities 47025 CLAIBORNE
TN045 LaFollette Utilities 47173 UNION
TN046 Caney Fork Electric Co-op, Inc. 47015 CANNON
TN046 Caney Fork Electric Co-op, Inc. 47031 COFFEE
TN046 Caney Fork Electric Co-op, Inc. 47041 DE KALB
TN046 Caney Fork Electric Co-op, Inc. 47061 GRUNDY
TN046 Caney Fork Electric Co-op, Inc. 47141 PUTNAM
TN046 Caney Fork Electric Co-op, Inc. 47175 VAN BUREN
TN046 Caney Fork Electric Co-op, Inc. 47177 WARREN
TN046 Caney Fork Electric Co-op, Inc. 47185 WHITE
TN048 Forked Deer Electric Co-op, Inc. 47033 CROCKETT
TN048 Forked Deer Electric Co-op, Inc. 47045 DYER
TN048 Forked Deer Electric Co-op, Inc. 47075 HAYWOOD
TN048 Forked Deer Electric Co-op, Inc. 47097 LAUDERDALE
TN048 Forked Deer Electric Co-op, Inc. 47131 OBION
TN049 Chickasaw Electric Co-op 28093 MARSHALL
TN049 Chickasaw Electric Co-op 47047 FAYETTE
TN049 Chickasaw Electric Co-op 47069 HARDEMAN
TN049 Chickasaw Electric Co-op 47075 HAYWOOD
TN051 Mountain Electric Co-op 37011 AVERY
TN051 Mountain Electric Co-op 37023 BURKE
TN051 Mountain Electric Co-op 37189 WATAUGA
TN051 Mountain Electric Co-op 47019 CARTER
TN051 Mountain Electric Co-op 47091 JOHNSON
TN051 Mountain Electric Co-op 47171 UNICOI
TN060 Fayetteville Electric System 47051 FRANKLIN
TN060 Fayetteville Electric System 47055 GILES
TN060 Fayetteville Electric System 47103 LINCOLN
TN060 Fayetteville Electric System 47117 MARSHALL
85
<PAGE>
TX007 Bartlett Electric Co-op, Inc. 48027 BELL
TX007 Bartlett Electric Co-op, Inc. 48051 BURLESON
TX007 Bartlett Electric Co-op, Inc. 48331 MILAM
TX007 Bartlett Electric Co-op, Inc. 48491 WILLIAMSON
TX011 Kaufman County Electric Co-op, Inc. 48113 DALLAS
TX011 Kaufman County Electric Co-op, Inc. 48213 HENDERSON
TX011 Kaufman County Electric Co-op, Inc. 48231 HUNT
TX011 Kaufman County Electric Co-op, Inc. 48257 KAUFMAN
TX011 Kaufman County Electric Co-op, Inc. 48467 VAN ZANDT
TX021 Belfalls Electric Co-op, Inc. 48027 BELL
TX021 Belfalls Electric Co-op, Inc. 48145 FALLS
TX021 Belfalls Electric Co-op, Inc. 48331 MILAM
TX023 McCulloch Electric Co-op, Inc. 48049 BROWN
TX023 McCulloch Electric Co-op, Inc. 48083 COLEMAN
TX023 McCulloch Electric Co-op, Inc. 48095 CONCHO
TX023 McCulloch Electric Co-op, Inc. 48307 MCCULLOCH
TX023 McCulloch Electric Co-op, Inc. 48319 MASON
TX023 McCulloch Electric Co-op, Inc. 48327 MENARD
TX023 McCulloch Electric Co-op, Inc. 48333 MILLS
TX023 McCulloch Electric Co-op, Inc. 48411 SAN SABA
TX023 McCulloch Electric Co-op, Inc. 48451 TOM GREEN
TX030 Upshur RECC 48063 CAMP
TX030 Upshur RECC 48067 CASS
TX030 Upshur RECC 48183 GREGG
TX030 Upshur RECC 48203 HARRISON
TX030 Upshur RECC 48315 MARION
TX030 Upshur RECC 48343 MORRIS
TX030 Upshur RECC 48401 RUSK
TX030 Upshur RECC 48423 SMITH
TX030 Upshur RECC 48459 UPSHUR
TX030 Upshur RECC 48499 WOOD
TX038 Hill County Electric Co-op, Inc. 48113 DALLAS
TX038 Hill County Electric Co-op, Inc. 48139 ELLIS
TX038 Hill County Electric Co-op, Inc. 48217 HILL
TX038 Hill County Electric Co-op, Inc. 48251 JOHNSON
TX038 Hill County Electric Co-op, Inc. 48309 MCLEAN
TX040 Bowie-Cass Electric Co-op, Inc. 48037 BOWIE
TX040 Bowie-Cass Electric Co-op, Inc. 48067 CASS
TX040 Bowie-Cass Electric Co-op, Inc. 48159 FRANKLIN
TX040 Bowie-Cass Electric Co-op, Inc. 48343 MORRIS
TX040 Bowie-Cass Electric Co-op, Inc. 48387 RED RIVER
TX040 Bowie-Cass Electric Co-op, Inc. 48449 TITUS
TX041 Panola-Harrison Electric Co-op 22017 CADDO
TX041 Panola-Harrison Electric Co-op 22031 DESOTO
TX041 Panola-Harrison Electric Co-op 48203 HARRISON
TX041 Panola-Harrison Electric Co-op 48365 PANOLA
TX044 Hunt-Collin Electric Cooperative 48085 COLLIN
TX044 Hunt-Collin Electric Cooperative 48231 HUNT
TX048 Magic Valley Electric Co-op, Inc. 48061 CAMERON
TX048 Magic Valley Electric Co-op, Inc. 48215 HIDALGO
TX048 Magic Valley Electric Co-op, Inc. 48261 KENEDY
TX048 Magic Valley Electric Co-op, Inc. 48427 STARR
86
<PAGE>
TX048 Magic Valley Electric Co-op, Inc. 48489 WILLACY
TX049 Denton County Electric Co-op, Inc. 48085 COLLIN
TX049 Denton County Electric Co-op, Inc. 48097 COOKE
TX049 Denton County Electric Co-op, Inc. 48121 DENTON
TX049 Denton County Electric Co-op, Inc. 48181 GRAYSON
TX049 Denton County Electric Co-op, Inc. 48439 TARRANT
TX049 Denton County Electric Co-op, Inc. 48497 WISE
TX050 Grayson-Collin Electric Co-op, Inc. 48085 COLLIN
TX050 Grayson-Collin Electric Co-op, Inc. 48097 COOKE
TX050 Grayson-Collin Electric Co-op, Inc. 48147 FANNIN
TX050 Grayson-Collin Electric Co-op, Inc. 48181 GRAYSON
TX052 Fannin County Electric Co-op, Inc. 48085 COLLIN
TX052 Fannin County Electric Co-op, Inc. 48147 FANNIN
TX052 Fannin County Electric Co-op, Inc. 48181 GRAYSON
TX052 Fannin County Electric Co-op, Inc. 48231 HUNT
TX052 Fannin County Electric Co-op, Inc. 48277 LAMAR
TX053 McLennan County Electric Co-op 48027 BELL
TX053 McLennan County Electric Co-op 48035 BOSQUE
TX053 McLennan County Electric Co-op 48099 CORYELL
TX053 McLennan County Electric Co-op 48145 FALLS
TX053 McLennan County Electric Co-op 48193 HAMILTON
TX053 McLennan County Electric Co-op 48309 MCLEAN
TX054 Wood County Electric Co-op, Inc. 48063 CAMP
TX054 Wood County Electric Co-op, Inc. 48159 FRANKLIN
TX054 Wood County Electric Co-op, Inc. 48223 HOPKINS
TX054 Wood County Electric Co-op, Inc. 48379 RAINS
TX054 Wood County Electric Co-op, Inc. 48423 SMITH
TX054 Wood County Electric Co-op, Inc. 48449 TITUS
TX054 Wood County Electric Co-op, Inc. 48459 UPSHUR
TX054 Wood County Electric Co-op, Inc. 48467 VAN ZANDT
TX054 Wood County Electric Co-op, Inc. 48499 WOOD
TX055 Lighthouse Electric Co-op, Inc. 48045 BRISCOE
TX055 Lighthouse Electric Co-op, Inc. 48075 CHILDRESS
TX055 Lighthouse Electric Co-op, Inc. 48087 COLLINGSWORTH
TX055 Lighthouse Electric Co-op, Inc. 48101 COTTLE
TX055 Lighthouse Electric Co-op, Inc. 48107 CROSBY
TX055 Lighthouse Electric Co-op, Inc. 48125 DICKENS
TX055 Lighthouse Electric Co-op, Inc. 48129 DONLEY
TX055 Lighthouse Electric Co-op, Inc. 48153 FLOYD
TX055 Lighthouse Electric Co-op, Inc. 48189 HALE
TX055 Lighthouse Electric Co-op, Inc. 48191 HALL
TX055 Lighthouse Electric Co-op, Inc. 48345 MOTLEY
TX055 Lighthouse Electric Co-op, Inc. 48437 SWISHER
TX056 South Plains Electric Co-op, Inc. 48107 CROSBY
TX056 South Plains Electric Co-op, Inc. 48153 FLOYD
TX056 South Plains Electric Co-op, Inc. 48169 GARZA
TX056 South Plains Electric Co-op, Inc. 48189 HALE
TX056 South Plains Electric Co-op, Inc. 48219 HOCKLEY
TX056 South Plains Electric Co-op, Inc. 48279 LAMB
TX056 South Plains Electric Co-op, Inc. 48303 LUBBOCK
TX056 South Plains Electric Co-op, Inc. 48305 LYNN
TX058 Fayette Electric Co-op, Inc. 48015 AUSTIN
87
<PAGE>
TX058 Fayette Electric Co-op, Inc. 48021 BASTROP
TX058 Fayette Electric Co-op, Inc. 48089 COLORADO
TX058 Fayette Electric Co-op, Inc. 48149 FAYETTE
TX058 Fayette Electric Co-op, Inc. 48177 GONZALES
TX058 Fayette Electric Co-op, Inc. 48285 LAVACA
TX058 Fayette Electric Co-op, Inc. 48287 LEE
TX058 Fayette Electric Co-op, Inc. 48477 WASHINGTON
TX059 Lamb County Electric Co-op, Inc. 48017 BAILEY
TX059 Lamb County Electric Co-op, Inc. 48069 CASTRO
TX059 Lamb County Electric Co-op, Inc. 48079 COCHRAN
TX059 Lamb County Electric Co-op, Inc. 48189 HALE
TX059 Lamb County Electric Co-op, Inc. 48219 HOCKLEY
TX059 Lamb County Electric Co-op, Inc. 48279 LAMB
TX060 Lyntegar Electric Co-op, Inc. 48003 ANDREWS
TX060 Lyntegar Electric Co-op, Inc. 48033 BORDEN
TX060 Lyntegar Electric Co-op, Inc. 48115 DAWSON
TX060 Lyntegar Electric Co-op, Inc. 48165 GAINES
TX060 Lyntegar Electric Co-op, Inc. 48169 GARZA
TX060 Lyntegar Electric Co-op, Inc. 48219 HOCKLEY
TX060 Lyntegar Electric Co-op, Inc. 48303 LUBBOCK
TX060 Lyntegar Electric Co-op, Inc. 48305 LYNN
TX060 Lyntegar Electric Co-op, Inc. 48317 MARTIN
TX060 Lyntegar Electric Co-op, Inc. 48445 TERRY
TX060 Lyntegar Electric Co-op, Inc. 48501 YOAKUM
TX061 Coleman County Electric Co-op, Inc. 48049 BROWN
TX061 Coleman County Electric Co-op, Inc. 48059 CALLAHAN
TX061 Coleman County Electric Co-op, Inc. 48081 COKE
TX061 Coleman County Electric Co-op, Inc. 48083 COLEMAN
TX061 Coleman County Electric Co-op, Inc. 48095 CONCHO
TX061 Coleman County Electric Co-op, Inc. 48399 RUNNELS
TX061 Coleman County Electric Co-op, Inc. 48441 TAYLOR
TX061 Coleman County Electric Co-op, Inc. 48451 TOM GREEN
TX062 Bailey County Electric Co-op, Inc. 48017 BAILEY
TX062 Bailey County Electric Co-op, Inc. 48069 CASTRO
TX062 Bailey County Electric Co-op, Inc. 48079 COCHRAN
TX062 Bailey County Electric Co-op, Inc. 48279 LAMB
TX062 Bailey County Electric Co-op, Inc. 48369 PARMER
TX063 Navarro County Electric Co-op, Inc. 48139 ELLIS
TX063 Navarro County Electric Co-op, Inc. 48161 FREESTONE
TX063 Navarro County Electric Co-op, Inc. 48217 HILL
TX063 Navarro County Electric Co-op, Inc. 48293 LIMESTONE
TX063 Navarro County Electric Co-op, Inc. 48349 NAVARRO
TX064 Deep East Texas Elec. Co-op, Inc. 48241 JASPER
TX064 Deep East Texas Elec. Co-op, Inc. 48347 NACOGDOCHES
TX064 Deep East Texas Elec. Co-op, Inc. 48351 NEWTON
TX064 Deep East Texas Elec. Co-op, Inc. 48365 PANOLA
TX064 Deep East Texas Elec. Co-op, Inc. 48401 RUSK
TX064 Deep East Texas Elec. Co-op, Inc. 48403 SABINE
TX064 Deep East Texas Elec. Co-op, Inc. 48405 SAN AUGUSTINE
TX064 Deep East Texas Elec. Co-op, Inc. 48419 SHELBY
TX065 Rusk County Electric Co-op, Inc. 48183 GREGG
TX065 Rusk County Electric Co-op, Inc. 48347 NACOGDOCHES
88
<PAGE>
TX065 Rusk County Electric Co-op, Inc. 48365 PANOLA
TX065 Rusk County Electric Co-op, Inc. 48401 RUSK
TX065 Rusk County Electric Co-op, Inc. 48419 SHELBY
TX067 Farmers Electric Co-op, Inc. 48085 COLLIN
TX067 Farmers Electric Co-op, Inc. 48113 DALLAS
TX067 Farmers Electric Co-op, Inc. 48119 DELTA
TX067 Farmers Electric Co-op, Inc. 48147 FANNIN
TX067 Farmers Electric Co-op, Inc. 48159 FRANKLIN
TX067 Farmers Electric Co-op, Inc. 48223 HOPKINS
TX067 Farmers Electric Co-op, Inc. 48231 HUNT
TX067 Farmers Electric Co-op, Inc. 48257 KAUFMAN
TX067 Farmers Electric Co-op, Inc. 48379 RAINS
TX067 Farmers Electric Co-op, Inc. 48397 ROCKWALL
TX067 Farmers Electric Co-op, Inc. 48467 VAN ZANDT
TX067 Farmers Electric Co-op, Inc. 48499 WOOD
TX068 Cooke County Electric Co-op Assn. 48097 COOKE
TX068 Cooke County Electric Co-op Assn. 48121 DENTON
TX068 Cooke County Electric Co-op Assn. 48181 GRAYSON
TX068 Cooke County Electric Co-op Assn. 48337 MONTAGUE
TX068 Cooke County Electric Co-op Assn. 48497 WISE
TX069 Erath County Electric Co-op Assn. 48035 BOSQUE
TX069 Erath County Electric Co-op Assn. 48093 COMANCHE
TX069 Erath County Electric Co-op Assn. 48099 CORYELL
TX069 Erath County Electric Co-op Assn. 48133 EASTLAND
TX069 Erath County Electric Co-op Assn. 48143 ERATH
TX069 Erath County Electric Co-op Assn. 48193 HAMILTON
TX069 Erath County Electric Co-op Assn. 48221 HOOD
TX069 Erath County Electric Co-op Assn. 48363 PALO PINTO
TX069 Erath County Electric Co-op Assn. 48425 SOMERVELL
TX069 Erath County Electric Co-op Assn. 48429 STEPHENS
TX069 Erath County Electric Co-op Assn. 48503 YOUNG
TX070 Hamilton County Elec. Co-op Assn. 48093 COMANCHE
TX070 Hamilton County Elec. Co-op Assn. 48099 CORYELL
TX070 Hamilton County Elec. Co-op Assn. 48193 HAMILTON
TX070 Hamilton County Elec. Co-op Assn. 48281 LAMPASAS
TX070 Hamilton County Elec. Co-op Assn. 48299 LLANO
TX070 Hamilton County Elec. Co-op Assn. 48333 MILLS
TX070 Hamilton County Elec. Co-op Assn. 48411 SAN SABA
TX071 J.A.C. Electric Co-op Inc. 48009 ARCHER
TX071 J.A.C. Electric Co-op Inc. 48077 CLAY
TX071 J.A.C. Electric Co-op Inc. 48237 JACK
TX071 J.A.C. Electric Co-op Inc. 48337 MONTAGUE
TX072 Lamar County Electric Co-op Assn. 48119 DELTA
TX072 Lamar County Electric Co-op Assn. 48147 FANNIN
TX072 Lamar County Electric Co-op Assn. 48277 LAMAR
TX072 Lamar County Electric Co-op Assn. 48387 RED RIVER
TX075 Wharton County Electric Co-op, Inc. 48089 COLORADO
TX075 Wharton County Electric Co-op, Inc. 48239 JACKSON
TX075 Wharton County Electric Co-op, Inc. 48321 MATAGORDA
TX075 Wharton County Electric Co-op, Inc. 48481 WHARTON
TX077 Johnson County Electric Co-op Assn. 48035 BOSQUE
TX077 Johnson County Electric Co-op Assn. 48139 ELLIS
89
<PAGE>
TX077 Johnson County Electric Co-op Assn. 48221 HOOD
TX077 Johnson County Electric Co-op Assn. 48251 JOHNSON
TX077 Johnson County Electric Co-op Assn. 48367 PARKER
TX077 Johnson County Electric Co-op Assn. 48425 SOMERVELL
TX077 Johnson County Electric Co-op Assn. 48439 TARRANT
TX078 Cherokee County Elec. Co-op Assn. 48073 CHEROKEE
TX078 Cherokee County Elec. Co-op Assn. 48347 NACOGDOCHES
TX078 Cherokee County Elec. Co-op Assn. 48401 RUSK
TX078 Cherokee County Elec. Co-op Assn. 48423 SMITH
TX080 Greenbelt Electric Co-op, Inc. 48011 ARMSTRONG
TX080 Greenbelt Electric Co-op, Inc. 48075 CHILDRESS
TX080 Greenbelt Electric Co-op, Inc. 48087 COLLINGSWORTH
TX080 Greenbelt Electric Co-op, Inc. 48129 DONLEY
TX080 Greenbelt Electric Co-op, Inc. 48179 GRAY
TX080 Greenbelt Electric Co-op, Inc. 48211 HEMPHILL
TX080 Greenbelt Electric Co-op, Inc. 48381 RANDALL
TX080 Greenbelt Electric Co-op, Inc. 48393 ROBERTS
TX080 Greenbelt Electric Co-op, Inc. 48483 WHEELER
TX083 Midwest Electric Co-op, Inc. 48033 BORDEN
TX083 Midwest Electric Co-op, Inc. 48151 FISHER
TX083 Midwest Electric Co-op, Inc. 48169 GARZA
TX083 Midwest Electric Co-op, Inc. 48253 JONES
TX083 Midwest Electric Co-op, Inc. 48263 KENT
TX083 Midwest Electric Co-op, Inc. 48335 MITCHELL
TX083 Midwest Electric Co-op, Inc. 48353 NOLAN
TX083 Midwest Electric Co-op, Inc. 48415 SCURRY
TX083 Midwest Electric Co-op, Inc. 48433 STONEWALL
TX085 Wise Electric Co-op, Inc. 48077 CLAY
TX085 Wise Electric Co-op, Inc. 48097 COOKE
TX085 Wise Electric Co-op, Inc. 48121 DENTON
TX085 Wise Electric Co-op, Inc. 48237 JACK
TX085 Wise Electric Co-op, Inc. 48337 MONTAGUE
TX085 Wise Electric Co-op, Inc. 48367 PARKER
TX085 Wise Electric Co-op, Inc. 48497 WISE
TX086 Comanche County Elec. Co-op Assn. 48049 BROWN
TX086 Comanche County Elec. Co-op Assn. 48059 CALLAHAN
TX086 Comanche County Elec. Co-op Assn. 48093 COMANCHE
TX086 Comanche County Elec. Co-op Assn. 48133 EASTLAND
TX086 Comanche County Elec. Co-op Assn. 48333 MILLS
TX086 Comanche County Elec. Co-op Assn. 48417 SHACKELFORD
TX086 Comanche County Elec. Co-op Assn. 48429 STEPHENS
TX087 Karnes Electric Co-op, Inc. 48013 ATASCOSA
TX087 Karnes Electric Co-op, Inc. 48025 BEE
TX087 Karnes Electric Co-op, Inc. 48029 BEXAR
TX087 Karnes Electric Co-op, Inc. 48123 DE WITT
TX087 Karnes Electric Co-op, Inc. 48163 FRIO
TX087 Karnes Electric Co-op, Inc. 48175 GOLIAD
TX087 Karnes Electric Co-op, Inc. 48255 KARNES
TX087 Karnes Electric Co-op, Inc. 48283 LA SALLE
TX087 Karnes Electric Co-op, Inc. 48297 LIVE OAK
TX087 Karnes Electric Co-op, Inc. 48311 MCMULLEN
TX087 Karnes Electric Co-op, Inc. 48325 MEDINA
90
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TX087 Karnes Electric Co-op, Inc. 48493 WILSON
TX088 Nueces Electric Co-op, Inc. 48131 DUVAL
TX088 Nueces Electric Co-op, Inc. 48249 JIM WELLS
TX088 Nueces Electric Co-op, Inc. 48261 KENEDY
TX088 Nueces Electric Co-op, Inc. 48273 KLEBERG
TX088 Nueces Electric Co-op, Inc. 48297 LIVE OAK
TX088 Nueces Electric Co-op, Inc. 48311 MCMULLEN
TX088 Nueces Electric Co-op, Inc. 48355 NUECES
TX089 Houston County Electric Co-op, Inc. 48001 ANDERSON
TX089 Houston County Electric Co-op, Inc. 48005 ANGELINA
TX089 Houston County Electric Co-op, Inc. 48073 CHEROKEE
TX089 Houston County Electric Co-op, Inc. 48161 FREESTONE
TX089 Houston County Electric Co-op, Inc. 48225 HOUSTON
TX089 Houston County Electric Co-op, Inc. 48289 LEON
TX089 Houston County Electric Co-op, Inc. 48313 MADISON
TX089 Houston County Electric Co-op, Inc. 48455 TRINITY
TX089 Houston County Electric Co-op, Inc. 48471 WALKER
TX091 San Patricio Electric Co-op, Inc. 48007 ARANSAS
TX091 San Patricio Electric Co-op, Inc. 48025 BEE
TX091 San Patricio Electric Co-op, Inc. 48175 GOLIAD
TX091 San Patricio Electric Co-op, Inc. 48249 JIM WELLS
TX091 San Patricio Electric Co-op, Inc. 48297 LIVE OAK
TX091 San Patricio Electric Co-op, Inc. 48311 MCMULLEN
TX091 San Patricio Electric Co-op, Inc. 48355 NUECES
TX091 San Patricio Electric Co-op, Inc. 48391 REFUGIO
TX091 San Patricio Electric Co-op, Inc. 48409 SAN PATRICIO
TX093 DeWitt Electric Cooperative Inc. 48123 DE WITT
TX093 DeWitt Electric Cooperative Inc. 48175 GOLIAD
TX093 DeWitt Electric Cooperative Inc. 48177 GONZALES
TX093 DeWitt Electric Cooperative Inc. 48239 JACKSON
TX093 DeWitt Electric Cooperative Inc. 48255 KARNES
TX093 DeWitt Electric Cooperative Inc. 48285 LAVACA
TX093 DeWitt Electric Cooperative Inc. 48469 VICTORIA
TX095 Medina Electric Co-op, Inc. 48013 ATASCOSA
TX095 Medina Electric Co-op, Inc. 48047 BROOKS
TX095 Medina Electric Co-op, Inc. 48127 DIMMIT
TX095 Medina Electric Co-op, Inc. 48131 DUVAL
TX095 Medina Electric Co-op, Inc. 48137 EDWARDS
TX095 Medina Electric Co-op, Inc. 48163 FRIO
TX095 Medina Electric Co-op, Inc. 48247 JIM HOGG
TX095 Medina Electric Co-op, Inc. 48271 KINNEY
TX095 Medina Electric Co-op, Inc. 48283 LA SALLE
TX095 Medina Electric Co-op, Inc. 48311 MCMULLEN
TX095 Medina Electric Co-op, Inc. 48325 MEDINA
TX095 Medina Electric Co-op, Inc. 48385 REAL
TX095 Medina Electric Co-op, Inc. 48427 STARR
TX095 Medina Electric Co-op, Inc. 48463 UVALDE
TX095 Medina Electric Co-op, Inc. 48479 WEBB
TX095 Medina Electric Co-op, Inc. 48505 ZAPATA
TX095 Medina Electric Co-op, Inc. 48507 ZAVALA
TX096 Victoria Electric Co-op, Inc. 48057 CALHOUN
TX096 Victoria Electric Co-op, Inc. 48123 DE WITT
91
<PAGE>
TX096 Victoria Electric Co-op, Inc. 48175 GOLIAD
TX096 Victoria Electric Co-op, Inc. 48239 JACKSON
TX096 Victoria Electric Co-op, Inc. 48391 REFUGIO
TX096 Victoria Electric Co-op, Inc. 48469 VICTORIA
TX097 Gate City Electric Co-op, Inc. 48075 CHILDRESS
TX097 Gate City Electric Co-op, Inc. 48101 COTTLE
TX097 Gate City Electric Co-op, Inc. 48125 DICKENS
TX097 Gate City Electric Co-op, Inc. 48155 FOARD
TX097 Gate City Electric Co-op, Inc. 48191 HALL
TX097 Gate City Electric Co-op, Inc. 48197 HARDEMAN
TX097 Gate City Electric Co-op, Inc. 48269 KING
TX097 Gate City Electric Co-op, Inc. 48345 MOTLEY
TX099 Stamford Electric Co-op, Inc. 48151 FISHER
TX099 Stamford Electric Co-op, Inc. 48207 HASKELL
TX099 Stamford Electric Co-op, Inc. 48253 JONES
TX099 Stamford Electric Co-op, Inc. 48417 SHACKELFORD
TX099 Stamford Electric Co-op, Inc. 48433 STONEWALL
TX099 Stamford Electric Co-op, Inc. 48447 THROCKMORTON
TX101 Tri-County Electric Co-op, Inc. 48121 DENTON
TX101 Tri-County Electric Co-op, Inc. 48221 HOOD
TX101 Tri-County Electric Co-op, Inc. 48237 JACK
TX101 Tri-County Electric Co-op, Inc. 48363 PALO PINTO
TX101 Tri-County Electric Co-op, Inc. 48367 PARKER
TX101 Tri-County Electric Co-op, Inc. 48439 TARRANT
TX101 Tri-County Electric Co-op, Inc. 48497 WISE
TX102 Jackson Electric Co-op, Inc. 48039 BRAZORIA
TX102 Jackson Electric Co-op, Inc. 48057 CALHOUN
TX102 Jackson Electric Co-op, Inc. 48239 JACKSON
TX102 Jackson Electric Co-op, Inc. 48285 LAVACA
TX102 Jackson Electric Co-op, Inc. 48321 MATAGORDA
TX103 Sam Houston Electric Co-op, Inc. 48005 ANGELINA
TX103 Sam Houston Electric Co-op, Inc. 48199 HARDIN
TX103 Sam Houston Electric Co-op, Inc. 48241 JASPER
TX103 Sam Houston Electric Co-op, Inc. 48291 LIBERTY
TX103 Sam Houston Electric Co-op, Inc. 48339 MONTGOMERY
TX103 Sam Houston Electric Co-op, Inc. 48373 POLK
TX103 Sam Houston Electric Co-op, Inc. 48407 SAN JACINTO
TX103 Sam Houston Electric Co-op, Inc. 48455 TRINITY
TX103 Sam Houston Electric Co-op, Inc. 48457 TYLER
TX103 Sam Houston Electric Co-op, Inc. 48471 WALKER
TX104 Lone Wolf Electric Cooperative 48033 BORDEN
TX104 Lone Wolf Electric Cooperative 48151 FISHER
TX104 Lone Wolf Electric Cooperative 48227 HOWARD
TX104 Lone Wolf Electric Cooperative 48335 MITCHELL
TX104 Lone Wolf Electric Cooperative 48353 NOLAN
TX104 Lone Wolf Electric Cooperative 48415 SCURRY
TX106 Taylor Electric Co-op, Inc. 48059 CALLAHAN
TX106 Taylor Electric Co-op, Inc. 48081 COKE
TX106 Taylor Electric Co-op, Inc. 48083 COLEMAN
TX106 Taylor Electric Co-op, Inc. 48133 EASTLAND
TX106 Taylor Electric Co-op, Inc. 48151 FISHER
TX106 Taylor Electric Co-op, Inc. 48253 JONES
92
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TX106 Taylor Electric Co-op, Inc. 48353 NOLAN
TX106 Taylor Electric Co-op, Inc. 48399 RUNNELS
TX106 Taylor Electric Co-op, Inc. 48417 SHACKELFORD
TX106 Taylor Electric Co-op, Inc. 48441 TAYLOR
TX108 Swisher Electric Co-op, Inc. 48011 ARMSTRONG
TX108 Swisher Electric Co-op, Inc. 48045 BRISCOE
TX108 Swisher Electric Co-op, Inc. 48069 CASTRO
TX108 Swisher Electric Co-op, Inc. 48189 HALE
TX108 Swisher Electric Co-op, Inc. 48381 RANDALL
TX108 Swisher Electric Co-op, Inc. 48437 SWISHER
TX113 Dickens Electric Co-op, Inc. 48107 CROSBY
TX113 Dickens Electric Co-op, Inc. 48125 DICKENS
TX113 Dickens Electric Co-op, Inc. 48169 GARZA
TX113 Dickens Electric Co-op, Inc. 48263 KENT
TX113 Dickens Electric Co-op, Inc. 48269 KING
TX113 Dickens Electric Co-op, Inc. 48345 MOTLEY
TX113 Dickens Electric Co-op, Inc. 48433 STONEWALL
TX114 Concho Valley Electric Co-op, Inc. 48081 COKE
TX114 Concho Valley Electric Co-op, Inc. 48095 CONCHO
TX114 Concho Valley Electric Co-op, Inc. 48173 GLASSCOCK
TX114 Concho Valley Electric Co-op, Inc. 48235 IRION
TX114 Concho Valley Electric Co-op, Inc. 48335 MITCHELL
TX114 Concho Valley Electric Co-op, Inc. 48353 NOLAN
TX114 Concho Valley Electric Co-op, Inc. 48383 REAGAN
TX114 Concho Valley Electric Co-op, Inc. 48399 RUNNELS
TX114 Concho Valley Electric Co-op, Inc. 48413 SCHLEICHER
TX114 Concho Valley Electric Co-op, Inc. 48431 STERLING
TX114 Concho Valley Electric Co-op, Inc. 48451 TOM GREEN
TX115 Mid-South Electric Co-op Assn. 48041 BRAZOS
TX115 Mid-South Electric Co-op Assn. 48185 GRIMES
TX115 Mid-South Electric Co-op Assn. 48313 MADISON
TX115 Mid-South Electric Co-op Assn. 48339 MONTGOMERY
TX115 Mid-South Electric Co-op Assn. 48471 WALKER
TX115 Mid-South Electric Co-op Assn. 48473 WALLER
TX118 New Era Electric Co-op, Inc. 48001 ANDERSON
TX118 New Era Electric Co-op, Inc. 48213 HENDERSON
TX118 New Era Electric Co-op, Inc. 48467 VAN ZANDT
TX119 Kimble Electric Co-op, Inc. 48137 EDWARDS
TX119 Kimble Electric Co-op, Inc. 48265 KERR
TX119 Kimble Electric Co-op, Inc. 48267 KIMBLE
TX119 Kimble Electric Co-op, Inc. 48271 KINNEY
TX119 Kimble Electric Co-op, Inc. 48319 MASON
TX119 Kimble Electric Co-op, Inc. 48327 MENARD
TX119 Kimble Electric Co-op, Inc. 48385 REAL
TX119 Kimble Electric Co-op, Inc. 48413 SCHLEICHER
TX119 Kimble Electric Co-op, Inc. 48435 SUTTON
TX122 Navasota Valley Electric Co-op 48041 BRAZOS
TX122 Navasota Valley Electric Co-op 48145 FALLS
TX122 Navasota Valley Electric Co-op 48161 FREESTONE
TX122 Navasota Valley Electric Co-op 48217 HILL
TX122 Navasota Valley Electric Co-op 48289 LEON
TX122 Navasota Valley Electric Co-op 48293 LIMESTONE
93
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TX122 Navasota Valley Electric Co-op 48309 MCLEAN
TX122 Navasota Valley Electric Co-op 48313 MADISON
TX122 Navasota Valley Electric Co-op 48395 ROBERTSON
TX123 B-K Electric Co-op, Inc. 48009 ARCHER
TX123 B-K Electric Co-op, Inc. 48023 BAYLOR
TX123 B-K Electric Co-op, Inc. 48155 FOARD
TX123 B-K Electric Co-op, Inc. 48207 HASKELL
TX123 B-K Electric Co-op, Inc. 48269 KING
TX123 B-K Electric Co-op, Inc. 48275 KNOX
TX123 B-K Electric Co-op, Inc. 48433 STONEWALL
TX123 B-K Electric Co-op, Inc. 48447 THROCKMORTON
TX123 B-K Electric Co-op, Inc. 48487 WILBARGER
TX124 Southwest Texas Elec. Co-op, Inc. 48095 CONCHO
TX124 Southwest Texas Elec. Co-op, Inc. 48105 CROCKETT
TX124 Southwest Texas Elec. Co-op, Inc. 48137 EDWARDS
TX124 Southwest Texas Elec. Co-op, Inc. 48235 IRION
TX124 Southwest Texas Elec. Co-op, Inc. 48327 MENARD
TX124 Southwest Texas Elec. Co-op, Inc. 48371 PECOS
TX124 Southwest Texas Elec. Co-op, Inc. 48383 REAGAN
TX124 Southwest Texas Elec. Co-op, Inc. 48413 SCHLEICHER
TX124 Southwest Texas Elec. Co-op, Inc. 48435 SUTTON
TX124 Southwest Texas Elec. Co-op, Inc. 48443 TERRELL
TX124 Southwest Texas Elec. Co-op, Inc. 48451 TOM GREEN
TX124 Southwest Texas Elec. Co-op, Inc. 48461 UPTON
TX124 Southwest Texas Elec. Co-op, Inc. 48465 VAL VERDE
TX125 Jasper-Newton Electric Co-op, Inc. 48005 ANGELINA
TX125 Jasper-Newton Electric Co-op, Inc. 48241 JASPER
TX125 Jasper-Newton Electric Co-op, Inc. 48351 NEWTON
TX125 Jasper-Newton Electric Co-op, Inc. 48361 ORANGE
TX125 Jasper-Newton Electric Co-op, Inc. 48403 SABINE
TX135 North Plains Electric Co-op, Inc. 48195 HANSFORD
TX135 North Plains Electric Co-op, Inc. 48211 HEMPHILL
TX135 North Plains Electric Co-op, Inc. 48233 HUTCHINSON
TX135 North Plains Electric Co-op, Inc. 48295 LIPSCOMB
TX135 North Plains Electric Co-op, Inc. 48357 OCHILTREE
TX135 North Plains Electric Co-op, Inc. 48393 ROBERTS
TX135 North Plains Electric Co-op, Inc. 48483 WHEELER
TX144 Rio Grande Electric Co-op, Inc. 35015 EDDY
TX144 Rio Grande Electric Co-op, Inc. 35035 OTERO
TX144 Rio Grande Electric Co-op, Inc. 48043 BREWSTER
TX144 Rio Grande Electric Co-op, Inc. 48105 CROCKETT
TX144 Rio Grande Electric Co-op, Inc. 48109 CULBERSON
TX144 Rio Grande Electric Co-op, Inc. 48127 DIMMIT
TX144 Rio Grande Electric Co-op, Inc. 48137 EDWARDS
TX144 Rio Grande Electric Co-op, Inc. 48141 EL PASO
TX144 Rio Grande Electric Co-op, Inc. 48229 HUDSPETH
TX144 Rio Grande Electric Co-op, Inc. 48243 JEFF DAVIS
TX144 Rio Grande Electric Co-op, Inc. 48271 KINNEY
TX144 Rio Grande Electric Co-op, Inc. 48323 MAVERICK
TX144 Rio Grande Electric Co-op, Inc. 48371 PECOS
TX144 Rio Grande Electric Co-op, Inc. 48377 PRESIDIO
TX144 Rio Grande Electric Co-op, Inc. 48389 REEVES
94
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TX144 Rio Grande Electric Co-op, Inc. 48443 TERRELL
TX144 Rio Grande Electric Co-op, Inc. 48463 UVALDE
TX144 Rio Grande Electric Co-op, Inc. 48465 VAL VERDE
TX144 Rio Grande Electric Co-op, Inc. 48479 WEBB
TX144 Rio Grande Electric Co-op, Inc. 48507 ZAVALA
TX145 Rita Blanca Electric Co-op, Inc. 48111 DALLAM
TX145 Rita Blanca Electric Co-op, Inc. 48195 HANSFORD
TX145 Rita Blanca Electric Co-op, Inc. 48205 HARTLEY
TX145 Rita Blanca Electric Co-op, Inc. 48233 HUTCHINSON
TX145 Rita Blanca Electric Co-op, Inc. 48341 MOORE
TX145 Rita Blanca Electric Co-op, Inc. 48359 OLDHAM
TX145 Rita Blanca Electric Co-op, Inc. 48375 POTTER
TX145 Rita Blanca Electric Co-op, Inc. 48421 SHERMAN
TX149 Central Texas Electric Co-op, Inc. 48031 BLANCO
TX149 Central Texas Electric Co-op, Inc. 48171 GILLESPIE
TX149 Central Texas Electric Co-op, Inc. 48259 KENDALL
TX149 Central Texas Electric Co-op, Inc. 48265 KERR
TX149 Central Texas Electric Co-op, Inc. 48267 KIMBLE
TX149 Central Texas Electric Co-op, Inc. 48299 LLANO
TX149 Central Texas Electric Co-op, Inc. 48307 MCCULLOCH
TX149 Central Texas Electric Co-op, Inc. 48319 MASON
TX149 Central Texas Electric Co-op, Inc. 48327 MENARD
TX149 Central Texas Electric Co-op, Inc. 48385 REAL
TX149 Central Texas Electric Co-op, Inc. 48411 SAN SABA
UT006 GarKane Power Association, Inc. 04005 COCONINO
UT006 GarKane Power Association, Inc. 04015 MOHAVE
UT006 GarKane Power Association, Inc. 49017 GARFIELD
UT006 GarKane Power Association, Inc. 49021 IRON
UT006 GarKane Power Association, Inc. 49025 KANE
UT006 GarKane Power Association, Inc. 49031 PIUTE
UT006 GarKane Power Association, Inc. 49041 SEVIER
UT006 GarKane Power Association, Inc. 49053 WASHINGTON
UT006 GarKane Power Association, Inc. 49055 WAYNE
UT008 Moon Lake Electric Assn., Inc. 08045 GARFIELD
UT008 Moon Lake Electric Assn., Inc. 08081 MOFFAT
UT008 Moon Lake Electric Assn., Inc. 08103 RIO BLANCO
UT008 Moon Lake Electric Assn., Inc. 49009 DAGGETT
UT008 Moon Lake Electric Assn., Inc. 49013 DUCHESNE
UT008 Moon Lake Electric Assn., Inc. 49047 UINTAH
UT008 Moon Lake Electric Assn., Inc. 49051 WASATCH
UT011 Flowell Electric Association, Inc. 49027 MILLARD
UT020 Dixie-Escalante Rural Elec. Assn. 04015 MOHAVE
UT020 Dixie-Escalante Rural Elec. Assn. 49021 IRON
UT020 Dixie-Escalante Rural Elec. Assn. 49053 WASHINGTON
VA002 Craig-Botetourt Electric Co-op 51005 ALLEGHANY
VA002 Craig-Botetourt Electric Co-op 51023 BOTETOURT
VA002 Craig-Botetourt Electric Co-op 51045 CRAIG
VA002 Craig-Botetourt Electric Co-op 51071 GILES
VA002 Craig-Botetourt Electric Co-op 51121 MONTGOMERY
VA002 Craig-Botetourt Electric Co-op 51161 ROANOKE
VA002 Craig-Botetourt Electric Co-op 54063 MONROE
VA011 Shenandoah Valley Elec. Co-op, Inc. 51015 AUGUSTA
95
<PAGE>
VA011 Shenandoah Valley Elec. Co-op, Inc. 51165 ROCKINGHAM
VA011 Shenandoah Valley Elec. Co-op, Inc. 51171 SHENANDOAH
VA011 Shenandoah Valley Elec. Co-op, Inc. 54031 HARDY
VA027 Southside Electric Co-op 51007 AMELIA
VA027 Southside Electric Co-op 51011 APPOMATTOX
VA027 Southside Electric Co-op 51019 BEDFORD
VA027 Southside Electric Co-op 51025 BRUNSWICK
VA027 Southside Electric Co-op 51029 BUCKINGHAM
VA027 Southside Electric Co-op 51031 CAMPBELL
VA027 Southside Electric Co-op 51037 CHARLOTTE
VA027 Southside Electric Co-op 51041 CHESTERFIELD
VA027 Southside Electric Co-op 51049 CUMBERLAND
VA027 Southside Electric Co-op 51053 DINWIDDIE
VA027 Southside Electric Co-op 51083 HALIFAX
VA027 Southside Electric Co-op 51111 LUNENBURG
VA027 Southside Electric Co-op 51117 MECKLENBURG
VA027 Southside Electric Co-op 51135 NOTTOWAY
VA027 Southside Electric Co-op 51143 PITTSYLVANIA
VA027 Southside Electric Co-op 51145 POWHATAN
VA027 Southside Electric Co-op 51147 PRINCE EDWARD
VA027 Southside Electric Co-op 51149 PRINCE GEORGE
VA027 Southside Electric Co-op 51183 SUSSEX
VA028 Northern Neck Electric Co-op 51099 KING GEORGE
VA028 Northern Neck Electric Co-op 51103 LANCASTER
VA028 Northern Neck Electric Co-op 51133 NORTHUMBERLAND
VA028 Northern Neck Electric Co-op 51159 RICHMOND
VA028 Northern Neck Electric Co-op 51179 STAFFORD
VA028 Northern Neck Electric Co-op 51193 WESTMORELAND
VA029 Central Virginia Electric Co-op 51003 ALBEMARLE
VA029 Central Virginia Electric Co-op 51009 AMHERST
VA029 Central Virginia Electric Co-op 51011 APPOMATTOX
VA029 Central Virginia Electric Co-op 51015 AUGUSTA
VA029 Central Virginia Electric Co-op 51029 BUCKINGHAM
VA029 Central Virginia Electric Co-op 51031 CAMPBELL
VA029 Central Virginia Electric Co-op 51049 CUMBERLAND
VA029 Central Virginia Electric Co-op 51065 FLUVANNA
VA029 Central Virginia Electric Co-op 51075 GOOCHLAND
VA029 Central Virginia Electric Co-op 51079 GREENE
VA029 Central Virginia Electric Co-op 51109 LOUISA
VA029 Central Virginia Electric Co-op 51125 NELSON
VA029 Central Virginia Electric Co-op 51137 ORANGE
VA029 Central Virginia Electric Co-op 51147 PRINCE EDWARD
VA030 BARC Electric Cooperative 51005 ALLEGHANY
VA030 BARC Electric Cooperative 51015 AUGUSTA
VA030 BARC Electric Cooperative 51017 BATH
VA030 BARC Electric Cooperative 51091 HIGHLAND
VA030 BARC Electric Cooperative 51163 ROCKBRIDGE
VA031 Mecklenburg Electric Co-op 51025 BRUNSWICK
VA031 Mecklenburg Electric Co-op 51037 CHARLOTTE
VA031 Mecklenburg Electric Co-op 51081 GREENSVILLE
VA031 Mecklenburg Electric Co-op 51083 HALIFAX
VA031 Mecklenburg Electric Co-op 51111 LUNENBURG
96
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VA031 Mecklenburg Electric Co-op 51117 MECKLENBURG
VA031 Mecklenburg Electric Co-op 51143 PITTSYLVANIA
VA031 Mecklenburg Electric Co-op 51175 SOUTHAMPTON
VA031 Mecklenburg Electric Co-op 51183 SUSSEX
VA034 Powell Valley Electric Co-op 47025 CLAIBORNE
VA034 Powell Valley Electric Co-op 47057 GRAINGER
VA034 Powell Valley Electric Co-op 47067 HANCOCK
VA034 Powell Valley Electric Co-op 47073 HAWKINS
VA034 Powell Valley Electric Co-op 47173 UNION
VA034 Powell Valley Electric Co-op 51105 LEE
VA034 Powell Valley Electric Co-op 51169 SCOTT
VA034 Powell Valley Electric Co-op 51195 WISE
VA036 Prince George Electric Co-op 51053 DINWIDDIE
VA036 Prince George Electric Co-op 51093 ISLE OF WIGHT
VA036 Prince George Electric Co-op 51149 PRINCE GEORGE
VA036 Prince George Electric Co-op 51175 SOUTHAMPTON
VA036 Prince George Electric Co-op 51181 SURRY
VA036 Prince George Electric Co-op 51183 SUSSEX
VA037 Community Electric Co-op 51093 ISLE OF WIGHT
VA037 Community Electric Co-op 51175 SOUTHAMPTON
VA037 Community Electric Co-op 51181 SURRY
VA037 Community Electric Co-op 51183 SUSSEX
VA037 Community Electric Co-op 51800 SUFFOLK CITY
VA039 A & N Electric Cooperative 24039 SOMERSET
VA039 A & N Electric Cooperative 51001 ACCOMACK
VA039 A & N Electric Cooperative 51131 NORTHAMPTON
VA054 Rappahannock Electric Co-op 51003 ALBEMARLE
VA054 Rappahannock Electric Co-op 51033 CAROLINE
VA054 Rappahannock Electric Co-op 51047 CULPEPER
VA054 Rappahannock Electric Co-op 51057 ESSEX
VA054 Rappahannock Electric Co-op 51061 FAUQUIER
VA054 Rappahannock Electric Co-op 51075 GOOCHLAND
VA054 Rappahannock Electric Co-op 51079 GREENE
VA054 Rappahannock Electric Co-op 51085 HANOVER
VA054 Rappahannock Electric Co-op 51097 KING AND QUEEN
VA054 Rappahannock Electric Co-op 51101 KING WILLIAM
VA054 Rappahannock Electric Co-op 51109 LOUISA
VA054 Rappahannock Electric Co-op 51113 MADISON
VA054 Rappahannock Electric Co-op 51137 ORANGE
VA054 Rappahannock Electric Co-op 51157 RAPPAHANNOCK
VA054 Rappahannock Electric Co-op 51177 SPOTSYLVANIA
VA054 Rappahannock Electric Co-op 51179 STAFFORD
VA055 Northern Virginia Electric Co-op 51043 CLARKE
VA055 Northern Virginia Electric Co-op 51059 FAIRFAX
VA055 Northern Virginia Electric Co-op 51061 FAUQUIER
VA055 Northern Virginia Electric Co-op 51107 LOUDOUN
VA055 Northern Virginia Electric Co-op 51153 PRINCE WILLIAM
VA055 Northern Virginia Electric Co-op 51179 STAFFORD
VT007 Vermont Electric Co-op, Inc. 25011 FRANKLIN
VT007 Vermont Electric Co-op, Inc. 50001 ADDISON
VT007 Vermont Electric Co-op, Inc. 50003 BENNINGTON
VT007 Vermont Electric Co-op, Inc. 50007 CHITTENDEN
97
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VT007 Vermont Electric Co-op, Inc. 50011 FRANKLIN
VT007 Vermont Electric Co-op, Inc. 50015 LAMOILLE
VT007 Vermont Electric Co-op, Inc. 50019 ORLEANS
VT007 Vermont Electric Co-op, Inc. 50025 WINDHAM
VT008 Washington Electric Co-op, Inc. 50005 CALEDONIA
VT008 Washington Electric Co-op, Inc. 50017 ORANGE
VT008 Washington Electric Co-op, Inc. 50019 ORLEANS
VT008 Washington Electric Co-op, Inc. 50023 WASHINGTON
WA008 Benton REA 53005 BENTON
WA008 Benton REA 53041 LEWIS
WA008 Benton REA 53077 YAKIMA
WA009 Orcas Power & Light Company 53055 SAN JUAN
WA014 Tanner Electric 53033 KING
WA014 Tanner Electric 53053 PIERCE
WA017 PUD No. 1 of Klickitat County 53005 BENTON
WA017 PUD No. 1 of Klickitat County 53039 KLICKITAT
WA017 PUD No. 1 of Klickitat County 53059 SKAMANIA
WA017 PUD No. 1 of Klickitat County 53077 YAKIMA
WA020 Columbia REA, Inc. 41059 UMATILLA
WA020 Columbia REA, Inc. 53013 COLUMBIA
WA020 Columbia REA, Inc. 53071 WALLA WALLA
WA028 PUD No. 1 Kittitas County 53037 KITTITAS
WA032 Okanogan County Elec. Co-op 53047 OKANOGAN
WA036 Big Bend Electric Co-op, Inc. 53001 ADAMS
WA036 Big Bend Electric Co-op, Inc. 53021 FRANKLIN
WA036 Big Bend Electric Co-op, Inc. 53043 LINCOLN
WA036 Big Bend Electric Co-op, Inc. 53075 WHITMAN
WA037 Lincoln Electric Co-op, Inc. 53001 ADAMS
WA037 Lincoln Electric Co-op, Inc. 53043 LINCOLN
WA039 Nespelem Valley Elec. Co-op 53017 DOUGLAS
WA039 Nespelem Valley Elec. Co-op 53019 FERRY
WA039 Nespelem Valley Elec. Co-op 53025 GRANT
WA039 Nespelem Valley Elec. Co-op 53047 OKANOGAN
WA046 PUD No. 1 of Ferry County 53019 FERRY
WA046 PUD No. 1 of Ferry County 53047 OKANOGAN
WA047 PUC No. 1 Douglas County 53017 DOUGLAS
WA047 PUC No. 1 Douglas County 53025 GRANT
WA048 PUD No. 1 Mason County 53031 JEFFERSON
WA048 PUD No. 1 Mason County 53045 MASON
WI014 Oconto Electric Co-op 55075 MARINETTE
WI014 Oconto Electric Co-op 55078 MENOMINEE
WI014 Oconto Electric Co-op 55083 OCONTO
WI014 Oconto Electric Co-op 55115 SHAWANO
WI016 Head of the Lakes Electric Co-op 27017 CARLTON
WI016 Head of the Lakes Electric Co-op 27115 PINE
WI016 Head of the Lakes Electric Co-op 55013 BURNETT
WI016 Head of the Lakes Electric Co-op 55031 DOUGLAS
WI016 Head of the Lakes Electric Co-op 55129 WASHBURN
WI019 Chippewa Valley Electric Co-op 55005 BARRON
WI019 Chippewa Valley Electric Co-op 55017 CHIPPEWA
WI019 Chippewa Valley Electric Co-op 55033 DUNN
WI019 Chippewa Valley Electric Co-op 55107 RUSK
98
<PAGE>
WI019 Chippewa Valley Electric Co-op 55119 TAYLOR
WI021 Taylor Electric Cooperative 55019 CLARK
WI021 Taylor Electric Cooperative 55069 LINCOLN
WI021 Taylor Electric Cooperative 55073 MARATHON
WI021 Taylor Electric Cooperative 55119 TAYLOR
WI025 Oakdale Electric Co-op 55053 JACKSON
WI025 Oakdale Electric Co-op 55057 JUNEAU
WI025 Oakdale Electric Co-op 55081 MONROE
WI025 Oakdale Electric Co-op 55141 WOOD
WI027 Buffalo Electric Cooperative 55011 BUFFALO
WI027 Buffalo Electric Cooperative 55091 PEPIN
WI027 Buffalo Electric Cooperative 55121 TREMPEALEAU
WI029 Clark Electric Co-op 55017 CHIPPEWA
WI029 Clark Electric Co-op 55019 CLARK
WI029 Clark Electric Co-op 55053 JACKSON
WI029 Clark Electric Co-op 55073 MARATHON
WI029 Clark Electric Co-op 55119 TAYLOR
WI029 Clark Electric Co-op 55141 WOOD
WI032 Pierce-Pepin Electric Co-op 55011 BUFFALO
WI032 Pierce-Pepin Electric Co-op 55091 PEPIN
WI032 Pierce-Pepin Electric Co-op 55093 PIERCE
WI032 Pierce-Pepin Electric Co-op 55109 ST CROIX
WI035 Richland Electric Co-op 55023 CRAWFORD
WI035 Richland Electric Co-op 55103 RICHLAND
WI035 Richland Electric Co-op 55111 SAUK
WI035 Richland Electric Co-op 55123 VERNON
WI037 Trempealeau Electric Co-op 55011 BUFFALO
WI037 Trempealeau Electric Co-op 55035 EAU CLAIRE
WI037 Trempealeau Electric Co-op 55053 JACKSON
WI037 Trempealeau Electric Co-op 55063 LA CROSSE
WI037 Trempealeau Electric Co-op 55121 TREMPEALEAU
WI038 Rock County Electric Co-op Assn. 17007 BOONE
WI038 Rock County Electric Co-op Assn. 17201 WINNEBAGO
WI038 Rock County Electric Co-op Assn. 55025 DANE
WI038 Rock County Electric Co-op Assn. 55045 GREEN
WI038 Rock County Electric Co-op Assn. 55105 ROCK
WI038 Rock County Electric Co-op Assn. 55127 WALWORTH
WI040 Barron Electric Cooperative 55005 BARRON
WI040 Barron Electric Cooperative 55013 BURNETT
WI040 Barron Electric Cooperative 55017 CHIPPEWA
WI040 Barron Electric Cooperative 55033 DUNN
WI040 Barron Electric Cooperative 55095 POLK
WI040 Barron Electric Cooperative 55107 RUSK
WI040 Barron Electric Cooperative 55113 SAWYER
WI040 Barron Electric Cooperative 55129 WASHBURN
WI041 Vernon Electric Co-op 55023 CRAWFORD
WI041 Vernon Electric Co-op 55057 JUNEAU
WI041 Vernon Electric Co-op 55063 LA CROSSE
WI041 Vernon Electric Co-op 55081 MONROE
WI041 Vernon Electric Co-op 55103 RICHLAND
WI041 Vernon Electric Co-op 55111 SAUK
WI041 Vernon Electric Co-op 55123 VERNON
99
<PAGE>
WI043 Grant-Lafayette Electric Co-op 55043 GRANT
WI043 Grant-Lafayette Electric Co-op 55065 LAFAYETTE
WI043 Grant-Lafayette Electric Co-op 17085 JO DAVIESS
WI043 Grant-Lafayette Electric Co-op 55045 GREEN
WI043 Grant-Lafayette Electric Co-op 55049 IOWA
WI043 Grant-Lafayette Electric Co-op 55065 LAFAYETTE
WI047 Jackson Electric Co-op 55019 CLARK
WI047 Jackson Electric Co-op 55035 EAU CLAIRE
WI047 Jackson Electric Co-op 55053 JACKSON
WI047 Jackson Electric Co-op 55063 LA CROSSE
WI047 Jackson Electric Co-op 55081 MONROE
WI047 Jackson Electric Co-op 55121 TREMPEALEAU
WI049 Dunn County Electric Co-op 55005 BARRON
WI049 Dunn County Electric Co-op 55017 CHIPPEWA
WI049 Dunn County Electric Co-op 55033 DUNN
WI049 Dunn County Electric Co-op 55091 PEPIN
WI049 Dunn County Electric Co-op 55093 PIERCE
WI049 Dunn County Electric Co-op 55109 ST CROIX
WI051 St. Croix Electric Co-op 55033 DUNN
WI051 St. Croix Electric Co-op 55093 PIERCE
WI051 St. Croix Electric Co-op 55095 POLK
WI051 St. Croix Electric Co-op 55109 ST CROIX
WI052 Crawford Electric Co-op 55023 CRAWFORD
WI052 Crawford Electric Co-op 55103 RICHLAND
WI052 Crawford Electric Co-op 55123 VERNON
WI053 Eau Claire Electric Co-op 55011 BUFFALO
WI053 Eau Claire Electric Co-op 55017 CHIPPEWA
WI053 Eau Claire Electric Co-op 55033 DUNN
WI053 Eau Claire Electric Co-op 55035 EAU CLAIRE
WI053 Eau Claire Electric Co-op 55053 JACKSON
WI053 Eau Claire Electric Co-op 55091 PEPIN
WI053 Eau Claire Electric Co-op 55121 TREMPEALEAU
WI054 Polk-Burnett Electric Co-op 55005 BARRON
WI054 Polk-Burnett Electric Co-op 55013 BURNETT
WI054 Polk-Burnett Electric Co-op 55033 DUNN
WI054 Polk-Burnett Electric Co-op 55095 POLK
WI054 Polk-Burnett Electric Co-op 55109 ST CROIX
WI054 Polk-Burnett Electric Co-op 55129 WASHBURN
WI057 Jump River Electric Co-op 55005 BARRON
WI057 Jump River Electric Co-op 55017 CHIPPEWA
WI057 Jump River Electric Co-op 55099 PRICE
WI057 Jump River Electric Co-op 55107 RUSK
WI057 Jump River Electric Co-op 55113 SAWYER
WI057 Jump River Electric Co-op 55119 TAYLOR
WI058 Price Electric Co-op, Inc. 55003 ASHLAND
WI058 Price Electric Co-op, Inc. 55051 IRON
WI058 Price Electric Co-op, Inc. 55069 LINCOLN
WI058 Price Electric Co-op, Inc. 55085 ONEIDA
WI058 Price Electric Co-op, Inc. 55099 PRICE
WI058 Price Electric Co-op, Inc. 55107 RUSK
WI058 Price Electric Co-op, Inc. 55113 SAWYER
WI058 Price Electric Co-op, Inc. 55119 TAYLOR
100
<PAGE>
WI058 Price Electric Co-op, Inc. 55125 VILAS
WI059 Washington Island Elec. Co-op, Inc. 55029 DOOR
WI060 Waushara Electric Co-op 55001 ADAMS
WI060 Waushara Electric Co-op 55047 GREEN LAKE
WI060 Waushara Electric Co-op 55077 MARQUETTE
WI060 Waushara Electric Co-op 55097 PORTAGE
WI060 Waushara Electric Co-op 55135 WAUPACA
WI060 Waushara Electric Co-op 55137 WAUSHARA
WI060 Waushara Electric Co-op 55141 WOOD
WI063 Bayfield Electric Co-op, Inc. 26053 GOGEBIC
WI063 Bayfield Electric Co-op, Inc. 55003 ASHLAND
WI063 Bayfield Electric Co-op, Inc. 55007 BAYFIELD
WI063 Bayfield Electric Co-op, Inc. 55031 DOUGLAS
WI063 Bayfield Electric Co-op, Inc. 55051 IRON
WI063 Bayfield Electric Co-op, Inc. 55113 SAWYER
WI063 Bayfield Electric Co-op, Inc. 55125 VILAS
WI066 Central Wisconsin Electric Co-op 55073 MARATHON
WI066 Central Wisconsin Electric Co-op 55097 PORTAGE
WI066 Central Wisconsin Electric Co-op 55115 SHAWANO
WI066 Central Wisconsin Electric Co-op 55135 WAUPACA
WV010 Harrison REA, Inc. 54001 BARBOUR
WV010 Harrison REA, Inc. 54017 DODDRIDGE
WV010 Harrison REA, Inc. 54033 HARRISON
WV010 Harrison REA, Inc. 54041 LEWIS
WV010 Harrison REA, Inc. 54049 MARION
WV010 Harrison REA, Inc. 54091 TAYLOR
WV010 Harrison REA, Inc. 54097 UPSHUR
WY003 Riverton Valley Electric Assn. 56013 FREMONT
WY005 Big Horn REC 30003 BIG HORN
WY005 Big Horn REC 30009 CARBON
WY005 Big Horn REC 56003 BIG HORN
WY005 Big Horn REC 56019 JOHNSON
WY005 Big Horn REC 56029 PARK
WY005 Big Horn REC 56033 SHERIDAN
WY005 Big Horn REC 56043 WASHAKIE
WY006 Wyrulec Company 31007 BANNER
WY006 Wyrulec Company 31157 SCOTTS BLUFF
WY006 Wyrulec Company 56015 GOSHEN
WY006 Wyrulec Company 56021 LARAMIE
WY006 Wyrulec Company 56031 PLATTE
WY009 Bridger Valley Electric Assn., Inc. 49009 DAGGETT
WY009 Bridger Valley Electric Assn., Inc. 49043 SUMMIT
WY009 Bridger Valley Electric Assn., Inc. 56023 LINCOLN
WY009 Bridger Valley Electric Assn., Inc. 56037 SWEETWATER
WY009 Bridger Valley Electric Assn., Inc. 56041 UINTA
WY010 Wheatland REA 56001 ALBANY
WY010 Wheatland REA 56015 GOSHEN
WY010 Wheatland REA 56021 LARAMIE
WY010 Wheatland REA 56031 PLATTE
WY011 Lower Valley Power & Light, Inc. 16019 BONNEVILLE
WY011 Lower Valley Power & Light, Inc. 16029 CARIBOU
WY011 Lower Valley Power & Light, Inc. 56023 LINCOLN
101
<PAGE>
WY011 Lower Valley Power & Light, Inc. 56035 SUBLETTE
WY011 Lower Valley Power & Light, Inc. 56039 TETON
WY012 Garland Light & Power Co. 56003 BIG HORN
WY012 Garland Light & Power Co. 56029 PARK
WY014 Rural Electric Company, Inc. 08069 LARIMER
WY014 Rural Electric Company, Inc. 08075 LOGAN
WY014 Rural Electric Company, Inc. 08123 WELD
WY014 Rural Electric Company, Inc. 31007 BANNER
WY014 Rural Electric Company, Inc. 31033 CHEYENNE
WY014 Rural Electric Company, Inc. 31105 KIMBALL
WY014 Rural Electric Company, Inc. 31123 MORRILL
WY014 Rural Electric Company, Inc. 56001 ALBANY
WY014 Rural Electric Company, Inc. 56021 LARAMIE
WY016 Hot Springs REA, Inc. 56003 BIG HORN
WY016 Hot Springs REA, Inc. 56007 CARBON
WY016 Hot Springs REA, Inc. 56013 FREMONT
WY016 Hot Springs REA, Inc. 56017 HOT SPRINGS
WY016 Hot Springs REA, Inc. 56025 NATRONA
WY016 Hot Springs REA, Inc. 56029 PARK
WY016 Hot Springs REA, Inc. 56043 WASHAKIE
WY021 Carbon Power & Light, Inc. 56001 ALBANY
WY021 Carbon Power & Light, Inc. 56007 CARBON
WY022 Niobrara Electric Assn., Inc. 31045 DAWES
WY022 Niobrara Electric Assn., Inc. 31165 SIOUX
WY022 Niobrara Electric Assn., Inc. 46047 FALL RIVER
WY022 Niobrara Electric Assn., Inc. 56009 CONVERSE
WY022 Niobrara Electric Assn., Inc. 56015 GOSHEN
WY022 Niobrara Electric Assn., Inc. 56027 NIOBRARA
WY022 Niobrara Electric Assn., Inc. 56031 PLATTE
WY022 Niobrara Electric Assn., Inc. 56045 WESTON
WY024 Sheridan-Johnson REA 30003 BIG HORN
WY024 Sheridan-Johnson REA 56005 CAMPBELL
WY024 Sheridan-Johnson REA 56019 JOHNSON
WY024 Sheridan-Johnson REA 56033 SHERIDAN
WY025 Powder River Energy Corporation 56005 CAMPBELL
WY025 Powder River Energy Corporation 56011 CROOK
WY025 Powder River Energy Corporation 56045 WESTON
</TABLE>
102
<PAGE>
<PAGE>
SCHEDULE B, PART II
PROPANE AND NATURAL GAS COUNTIES
SERVED BY COOPERATIVES
This is a list of additional propane and natural gas counties served by
rural electric cooperatives outside of their electric service area as of the
date of this Schedule (August 15, 1999). Any county in which such service is
provided as of that date, but is inadvertently not listed, shall be deemed to be
incuded.
PROPANE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
REANUM REC Name ELECTRIC CNTY NAME ALREADY LISTED ON PROPANE CNTY NAME
SCHEDULE B, PART I
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
AL033 Coosa Valley Electric Co-op, Inc. CALHOUN CLEBURNE
AL033 Coosa Valley Electric Co-op, Inc. CLAY
AL033 Coosa Valley Electric Co-op, Inc. ETOWAH
AL033 Coosa Valley Electric Co-op, Inc. SAINT CLAIR
AL033 Coosa Valley Electric Co-op, Inc. SHELBY
AL033 Coosa Valley Electric Co-op, Inc. TALLADEGA
ID010 Clearwater Power Company BENEWAH PIERCE
ID010 Clearwater Power Company CLEARWATER
ID010 Clearwater Power Company IDAHO
ID010 Clearwater Power Company LATAH
ID010 Clearwater Power Company LEWIS
ID010 Clearwater Power Company NEZ PERCE
ID010 Clearwater Power Company SHOSHONE
ID010 Clearwater Power Company WALLOWA
ID010 Clearwater Power Company ASOTIN
ID010 Clearwater Power Company GARFIELD
ID010 Clearwater Power Company WHITMAN
ID015 Idaho County Light & Power Co-op IDAHO ADAMS
ID015 Idaho County Light & Power Co-op LEWIS
IL027 Edgar Electric Co-op Assn. CLARK CRAWFORD
IL027 Edgar Electric Co-op Assn. COLES LAWRENCE
IL027 Edgar Electric Co-op Assn. DOUGLAS
IL027 Edgar Electric Co-op Assn. EDGAR
IL027 Edgar Electric Co-op Assn. VERMILLION
KY035 Warren RECC BARREN ALLEN
KY035 Warren RECC BUTLER
KY035 Warren RECC EDMONSON
KY035 Warren RECC GRAYSON
KY035 Warren RECC LOGAN
KY035 Warren RECC OHIO
KY035 Warren RECC SIMPSON
KY035 Warren RECC WARREN
MI041 Oceana Electric Co-op MASON ROSCOMMON
MI041 Oceana Electric Co-op MUSKEGON
MI041 Oceana Electric Co-op NEWAYGO
MI041 Oceana Electric Co-op OCEANA
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
REANUM REC Name ELECTRIC CNTY NAME ALREADY LISTED ON PROPANE CNTY NAME
SCHEDULE B, PART I
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
OH087 Hancock-Wood Electric Co-op, Inc. ALLEN OTTAWA
OH087 Hancock-Wood Electric Co-op, Inc. ERIE
OH087 Hancock-Wood Electric Co-op, Inc. HANCOCK
OH087 Hancock-Wood Electric Co-op, Inc. HARDIN
OH087 Hancock-Wood Electric Co-op, Inc. HENRY
OH087 Hancock-Wood Electric Co-op, Inc. PUTNAM
OH087 Hancock-Wood Electric Co-op, Inc. SANDUSKY
OH087 Hancock-Wood Electric Co-op, Inc. SENECA
OH087 Hancock-Wood Electric Co-op, Inc. WOOD
OH087 Hancock-Wood Electric Co-op, Inc. WYANDOT
PA025 Adams Electric Co-op, Inc. ADAMS LANCASTER
PA025 Adams Electric Co-op, Inc. CUMBERLAND DOLPHIN
PA025 Adams Electric Co-op, Inc. FRANKLIN LEBANON
PA025 Adams Electric Co-op, Inc. YORK HARFORD (MD)
BALTIMORE CNTY (MD)
CARROLL (MD)
FREDERICK (MD)
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
NATURAL GAS
- ---------------------------------------------------------------------------------------------------------------------------
REANUM REC Name ELECTRIC CNTY NAME ALREADY LISTED ON PROPANE CNTY NAME
SCHEDULE B, PART I
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
CO022 United Power, Inc. ADAMS NEBRASKA COUNTIES
CO022 United Power, Inc. BOULDER BLAINE
CO022 United Power, Inc. GILPIN BOONE
CO022 United Power, Inc. JEFFERSON BOYD
CO022 United Power, Inc. WELD CASS
CLAY
DOUGLAS
DUNDEE
FILLMORE
FRANKLIN
GARFIELD
GREELEY
HITCHCOCK
HOWARD
JOHNSON
KEARNEY
KIMBALL
LOGAN
NEMAHA
NUCKOLLS
OTOE
PAWNEE
RICHARDSON
SARPY
THOMAS
VALLEY
WEBSTER
WHEELER
IL038 Corn Belt Electric Co-op, Inc. CHAMPAIGN COOK
IL038 Corn Belt Electric Co-op, Inc. DE WITT DUPAGE
IL038 Corn Belt Electric Co-op, Inc. FORD LAKE
IL038 Corn Belt Electric Co-op, Inc. LIVINGSTON KANE
IL038 Corn Belt Electric Co-op, Inc. LOGAN WILL
IL038 Corn Belt Electric Co-op, Inc. MC LEAN DEKALB
IL038 Corn Belt Electric Co-op, Inc. MACON WINNEBAGO
IL038 Corn Belt Electric Co-op, Inc. PIATT KANKAKEE
IL038 Corn Belt Electric Co-op, Inc. TAZEWELL MCHENRY
IL038 Corn Belt Electric Co-op, Inc. WOODFORD STEPHENSON
VA055 Northern Virginia Electric Co-op CLARKE ARLINGTON
VA055 Northern Virginia Electric Co-op FAIRFAX ANNE ARUNDEL (MD)
VA055 Northern Virginia Electric Co-op FAUQUIER BALTIMORE
VA055 Northern Virginia Electric Co-op LOUDOUN BALTIMORE CITY
VA055 Northern Virginia Electric Co-op PRINCE WILLIAM HOWARD
VA055 Northern Virginia Electric Co-op STAFFORD MONTGOMERY
</TABLE>
<PAGE>
SCHEDULE C
PERFORMANCE STANDARDS FOR
ALPHA, BETA AND RESIDENTIAL COGENERATION UNIT (RCU)
(COMMERCIAL UNITS ALSO SHALL MEET OR EXCEED THESE STANDARDS)
1. TYPICAL SPECIFICATIONS
- --------------------------------------------------------------------------------
PARAMETER VALUE
- --------------------------------------------------------------------------------
Unit rating [*****] net, [*****] (1 hour)
Optional : Up to [*****] (one hour)
- --------------------------------------------------------------------------------
Fuel to electricity [*****] (Beta), [*****] (Alpha)
efficiency
- --------------------------------------------------------------------------------
Fuel input Natural gas @ 1,000 Btu/ft3
---------------------------
[*****] fuel to electricity efficiency
[*****] Fuel to electricity efficiency
Propane @ 21,670 Btu/lb
-----------------------
[*****] fuel to electricity efficiency
[*****] fuel to electricity efficiency
(Propane at 4.22 lb/Gal.)
- --------------------------------------------------------------------------------
AC OUTPUT CHARACTERISTICS
- --------------------------------------------------------------------------------
Nominal voltage, frequency 120/240 VAC, 60 Hz
AC output waveform Sinewave, 34 to 52 steps per cycle
Voltage regulation +/- 2%
Total harmonic distorsion 3 to 5% (stand alone operation)
Frequency regulation +/- 0.04% (crystal regulated)
Power factor [*****]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Unit overall efficiency [*****] (Alpha) to [*****] (Beta)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Thermal energy available [*****] at [*****] unit overall efficiency and
for recuperation [*****] fuel to electricity efficiency
[*****] at [*****] unit overall efficiency and
[*****] fuel to electricity efficiency
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPACE AND WATER HEATER
OPTION
- --------------------------------------------------------------------------------
Thermal energy temperature Hot water @ 140 (degrees) F
- --------------------------------------------------------------------------------
Space and water heating [*****] (sizing will depend on
local climate conditions)
- --------------------------------------------------------------------------------
Water tank capacity [*****] US Gal.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Space heating [*****] optional higher capacities available
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Confidential Page 1
<PAGE>
2. Codes and Standards
Units shall comply with the following codes and standards
o A.G.A./CGA, UL Listing
o IEEE 929
o IEEE P1547
o UL 1741
o NFPA 853
o ASME PTC-50
o IEEE 519
o ANSI Z21.83
3. Grid Compatibility
The power conditioning module is based on a cooperative effort being
carried out with [*****]. These inverters are specifically designed for
connecting an electric generating system to a utility grid with a battery
storage system.
For applications including the selling of the fuel cell's electricity back
to the grid, the [*****] includes code which allows this to happen both
safely and efficiently. Operating mode of the [*****] include:
Utility Interactive Mode:
Operating as a [*****] delivers to the grid power from the fuel cell above
that necessary to raise the batteries to their programmed float voltage. A
grid usage timer can be set to allow selling of electricity to the utility
only during prescribed hours. Sell-back current is adjustable. (Utility
inter-tie must have approval of local utility company).
Power Mode:
The inverter is connected to the grid and to the fuel cell. If the fuel
cell fails, then power is switched to the grid. After fuel cell power
returns, power is switched back to fuel cell system.
Battery Charging Mode:
If the batteries are low, a low-battery set point triggers the
battery-charging mode from the fuel cell.
- --------------------------------------------------------------------------------
Confidential Page 2
<PAGE>
Peak Load-Shaving Mode:
The [*****] be programmed so that during a programmable
time of the day (peak periods), power is delivered to the grid from the
batteries.
[*****] Specifications
--------------------------------------------------------------------
Parameter Value
--------------------------------------------------------------------
AC output voltage (RMS) 120/240 VAC
--------------------------------------------------------------------
Nominal frequency 60 Hz
--------------------------------------------------------------------
Continuous power @ [*****]
25(Degree)C
--------------------------------------------------------------------
Efficiency (peak) [*****]
--------------------------------------------------------------------
All the [*****] include the following protective systems. These systems
are used to protect the inverter/operator/utility personnel from hazardous
conditions. The standard protection is as follows:
[*****]
o Grid shorted : Normally, when the utility fails, the inverter
momentarily tries to power the entire
neighborhood. This protective system operates in
less than four milliseconds.
o Grid open : The inverter senses when there is no current being
delivered to the grid and disconnects. This
protective system may require up to one second to
respond.
o Islanding : This occurrs when the grid has failed and the
"neigborhood" that the inverter is powering
requires the same amount of power that the
inverter can supply. This balanced condition is
often called "islanding". The inverter monitors
the utility grid and waits for it to rise a couple
of volts before it begins to invert again. This is
done on each cycle when SELL mode is activated.
o Over/Under Since the inverter is locked onto the frequency of
Frequency : the islanded utility grid, the frequency of the
system will drift out of regulation in a short
- --------------------------------------------------------------------------------
Confidential Page 3
<PAGE>
amount of time during an islanding condition. The
inverter will shut off and disconnect after the
frequency exceeds +/- 1 hertz of the nominal
frequency.
o Over/Under Since the inverter does not regulate the voltage
Voltage : of the utility grid while selling power into it,
the AC voltage will drift out of regulation in
short amount of time during an islanding
condition. The inverter will shut off and
disconnect after the voltage exceeds +/- 10% of
the nominal AC voltage.
4. Installation, Start-up and Training
Units are factory tested before shipping and ready for connections.
o Installation & Start Up:
- Included on site initial setting, start-up and commissioning
as necessary, by HPEC, anywhere in the US
- Inside installation, option available for outside installation
o Technical assistance :
- continuous phone assistance (regular hours, working days).
- one on site visit during Alpha and Beta test period.
Units are installed parallel to the grid. In the case of failure during
the testing period, the customer will not suffer from a loss of power
because power is then drawn from the grid. A local technician under H
Power guidance or a H Power technician can then start with
troubleshooting.
o Training :
- On site, two days during commissioning period
- One or two days seminar at a central location up to 3
times/year
o Manuals : Installation, Operation and Maintenance manuals
included, RS-232 interfacing and fault diagnostics
provided.
o Remote monitoring : Included in Alpha units.
- --------------------------------------------------------------------------------
Confidential Page 4
<PAGE>
5. Safety Features :
o Hydrogen leak detectors that shut-off RCU and close gas valves.
o Natural Gas or propane leak detector with interlocks.
o Shut-off valve device on fuel line
o Automatic shut-off system [*****].
o Automatic shut-off system [*****].
o Vent blockage detector with interlocks
o [*****] Therefore it already includes standard safety features as
required locally and nationally (relief valves, high temperature
limits, flame detection, etc.).
- --------------------------------------------------------------------------------
Confidential Page 5
<PAGE>
Exhibit 10.28
AGREEMENT
This Agreement is made on this 20th day of August 1999, between H Power
Enterprises of Canada, Inc., a Canadian corporation ("HPEC"), and H Power Corp.,
a Delaware corporation, with its principal offices at 60 Montgomery Street,
Belleville, NJ 07109 ("H Power").
Whereas, HPEC and H Power entered into a Technology Licensing Agreement
and a Stock Exchange Agreement, both dated May 2, 1997, setting forth terms and
conditions relating to HPEC's exclusive marketing rights; and
Whereas, Section 3.2 of the Technology Licensing Agreement provides that
HPEC has exclusive rights to market, promote, advertise, sell, service,
distribute and merchandise (the "Exclusive Rights") certain stationary power
fuel cell technology (the "Fuel Cell Technology") in Canada, and at such time as
certain of HPEC's investors exercise their exchange rights under the Stock
Exchange Agreement, to Canada, North America and Central America; and
Whereas, H Power has entered into a licensing agreement (the "Licensing
Agreement") with ECO Fuel Cells LLC, A Delaware limited liability company ("ECO
LLC") effective as of the date hereof; and
Whereas, the arrangement with ECO LLC is twofold, being comprised of a
substantial equity investment in H Power and an exclusive distributorship to
market H Power's fuel cell stationary power systems within all the counties in
the United States presently served by ECO LLC's members; and
Whereas, the terms of the Licensing Agreement conflict with HPEC's
Exclusive Rights under the Technology Licensing Agreement; and
Whereas, HPEC has agreed to waive its exclusive rights under the
Technology Licensing Agreement and to cooperate with H Power to consummate the
Licensing Agreement.
Now, Therefore, in consideration of these premises and other good and
valuable consideration, including the sum of $1.00 paid to HPEC by H Power, the
receipt of which is hereby acknowledged, the Parties hereby agree as follows:
1. HPEC hereby relinquishes all of its Exclusive Rights to North America
under the terms of the Technology Licensing Agreement, whether now in
existence or in the future acquired upon the exercise of certain exchange
rights under the Technology Licensing Agreement, but only to the extent
that they infringe on the rights granted to ECO LLC by H Power under the
Operating Agreement.
2. This Agreement embodies all the understandings and agreements of the
Parties and supersedes all prior and contemporaneous, oral or written
agreements or understandings relating to the matters referred to herein.
<PAGE>
3. This Agreement may be amended or modified only by an instrument of equal
formality signed by duly authorized officers or representatives of the
respective Parties hereto.
4. The validity, performance, construction and effect of this Agreement will
be governed by the law of the State of New Jersey. This Agreement shall be
binding upon the Parties hereto and their respective executors,
administrators, heirs, assigns and successors in interest.
5. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, all of which shall constitute one
and the same Agreement.
IN WITNESS WHEREOF, H Power has caused this Agreement to be signed by its
corporate officer thereunto duly authorized, and HPEC by H. Frank Gibbard, its
President, as authorized by HPEC's Board of Directors at a meeting on July 27,
1999.
H POWER CORP. H POWER ENTERPRISES OF CANADA, INC.
By: /s/ H. Frank Gibbard By: /s/ H. Frank Gibbard
------------------------------ ----------------------------------
Its: Its:
----------------------------- ----------------------------------
<PAGE>
Exhibit 10.29
TECHNOLOGY LICENSING AGREEMENT MADE AND ENTERED INTO IN THE CITY AND DISTRICT OF
MONTREAL, ON THE 2ND DAY OF MAY, 1997
BY AND BETWEEN: H POWER CORP., a Delaware corporation, having its head office
and principal place of business in the City of Belleville,
State of New Jersey,
(hereinafter referred to as the "Licensor")
PARTY OF THE FIRST PART
AND: 3362469 CANADA INC., a body politic and corporate, duly
incorporated according to the Canada Business Corporations
Act, having its head office and principal place of business in
the City of Montreal, Province of Quebec,
(hereinafter referred to as the "Licensee")
PARTY OF THE SECOND PART
SECTION 1 - PREAMBLE
1.1 WHEREAS Licensor and the Investors (as hereinafter defined) have each
subscribed for shares in the capital stock of the Licensee;
1.2 WHEREAS Licensor has acquired, developed and possesses certain intellectual
property rights to specialized, novel and unique techniques, inventions,
practices, knowledge, know-how, skill, experience and other proprietary
information relating to fuel cells and hydrogen generating systems;
1.3 WHEREAS Licensee wishes to acquire rights to use the intellectual property
of the Licensor that is relevant and necessary for the operation of the proposed
business of Licensee;
1.4 WHEREAS Licensor has agreed to grant to Licensee a license to Licensor's
relevant intellectual property as Licensor's capital contribution to Licensee.
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
SECTION 2 - DEFINITIONS
2.1 Definitions. In this Agreement:
2.1.1 "Art" has the meaning ascribed thereto in paragraph 8.3.3;
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2.1.2 "Asset Sale" has the meaning ascribed thereto in subsection 6.4;
2.1.3 "Common Shares" means shares of Licensor's common stock, having the
rights, privileges and preferences as set forth in the Amended and
Restated Articles of Incorporation of Licensor dated May 2, 1997;
2.1.4 "Confidential Information" means all concepts, methods, procedures,
inventions, know-how, secrets, data and other information, whether in
written, printed, electronic, unrecorded or any other form whatsoever,
and whether known now or developed throughout the duration of this
Agreement and which relates in any way to the confidential information
of the Disclosing Party, including the technical knowledge, processes,
methods, know-how, copyrights, industrial designs, circuits designs and
use and manufacture thereof, and all communications and documentation
relevant thereto, or which relates in any way to the business of the
Disclosing Party, except for information that the Receiving Party can
reasonably demonstrate:
2.1.4.1 is in the public domain (provided that information in the public
domain has not or does not come into the public domain as the result of
disclosure by the Receiving Party);
2.1.4.2 is known to the Receiving Party prior to disclosure by the
Disclosing Party; or
2.1.4.3 has become available to the Receiving Party on a
non-confidential basis from a source other than the Disclosing Party;
2.1.5 "Disclosing Party" has the meaning ascribed thereto at subsection 9.1;
2.1.6 "Equipment" means any machinery or equipment developed or patented by
the Licensor using the Technology to be used in order to manufacture the
Products;
2.1.7 "Event of Default" has the meaning ascribed thereto at subsection 6.3;
2.1.8 "Exchange Right" has the meaning ascribed thereto in the Stock Exchange
Agreement;
2.1.9 "Expiry Date" means May 2, 2001;
2.1.10 "Fairness Committee" has the meaning ascribed thereto in subsection
14.1;
2.1.11 "Fuel Cell" means a device that uses the electrochemical reaction of a
fuel (including but not limited to hydrogen) and oxidants (including but
not limited to oxygen) to produce electrical energy;
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2.1.12 "Fuel Cell Based System" means a system, comprised of a number of
components (such as Fuel Cell, fuel processor, Fuel Cell system
controller and power conditioner), that provides electric power either
to operate a product or for such other purpose for which the system is
designed. Different Fuel Cell Based Systems may be required for
different products and purposes;
2.1.13 "Intellectual Property Based on Patentable Inventions" shall include new
discoveries as well as improvements, developments and betterments
relating to existing Fuel Cell Based System technologies for which
patent applications have been filed, patents have been issued
(including, without limitation, the Patents) or protection is afforded
by other similar statutory rights;
2.1.14 "Investors" means Societe Innovatech du Grand Montreal, Sofinov Societe
Financiere d'Innovation Inc. and 9042-0175 Quebec Inc.;
2.1.15 "Licensee's Intellectual Property" has the meaning ascribed thereto at
subsection 5.2;
2.1.16 "Licensor Improvements" has the meaning ascribed thereto at subsection
5.1 hereof;
2.1.17 "Patents" means the patents and patent applications set forth in
Schedule 2.1.17 attached hereto and all improvements, modifications,
additions, developments and alterations thereto, including, without
limitation, Licensor Improvements, made by the Licensor or by any
licensee of Licensor for which Licensor may have the right to grant
licenses, as well as all other patents relating to the Technology which
may hereafter be issued to or acquired by Licensor or for which Licensor
may have the right to grant licenses;
2.1.18 "Person" means an individual, partnership, joint venture, trustee,
trust, corporation, division of a corporation, unincorporated
organization or other entity or a government, state or agency or
political subdivision thereof, and pronouns have a similarly extended
meaning;
2.1.19 "Products" means Fuel Cell Based Systems that can provide electric power
of 2kW or more for use as on-site, stationary power sources;
2.1.20 "Proprietary Information and Data" means all improvements, developments,
betterments, information and data relating to Fuel Cell Based Systems
that are patentable or not patentable, including: formulae, designs,
compilations, devices, methods, techniques, processes, arrangements,
drawings, data calculations, configurations and reports that derive
independent economic values, actual or potential, from not being
generally known to, and not being reasonably ascertainable by, third
Persons and are the subject of efforts that are reasonable under the
circumstances to maintain their secrecy;
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2.1.21 "Purchaser" has the meaning ascribed thereto in subsection 6.4;
2.1.22 "Receiving Party" has the meaning ascribed thereto at paragraph 9.1.2;
2.1.23 "Representatives" has the meaning ascribed thereto at subsection 9.2;
2.1.24 "Stock Exchange Agreement" means the stock exchange agreement entered
into on the date hereof among the Licensor, Societe Innovatech du Grand
Montreal and Sofinov Societe Financiere d'Innovation Inc.;
2.1.25 "Share Sale" has the meaning ascribed thereto in subsection 6.4;
2.1.26 "Technology" means Licensor's Intellectual Property Based on Patentable
Inventions and Licensor's Proprietary Information and Data relating to
Fuel Cells and Fuel Cell Based Systems, as exist on the date hereof and
as may be improved, developed or bettered by Licensor hereafter;
2.1.27 "Technical Information" means all data and information, whether
proprietary or not, that is relevant and necessary for: the design, and
production of the Products, the manufacture of all the components of the
Products, the integration, incorporation and assembly of all components
of the Products, and the marketing, sale, servicing and maintenance of
the Products, as may now be or hereafter become the sole property of the
Licensor, including such things as: designs, drawings, models, prints,
photographs, production techniques, processes and methods, engineering,
performance and production specifications, and technical reports;
2.1.28 "Term" has the meaning ascribed thereto in subsection 6.1 hereof;
2.1.29 "Territory" has the meaning ascribed thereto in subsection 3.2 hereof;
2.1.30 "Trade Marks" means all trade marks listed in Schedule 2.1.30 annexed
hereto and all trademarks, whether or not registered, that Licensor may
own or have the right to use anywhere in the Territory in relation to
Products.
SECTION 3 - GRANT OF LICENSE
3.1 Grant of License. Subject to the terms and conditions hereof, Licensor
hereby grants to Licensee, the latter hereby accepting,
3.1.1 the non-exclusive and fully paid right and license to use the Technology
that is relevant and necessary to conduct research and development
activities in connection with the design, development and production of
Products,
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3.1.2 the non-exclusive and fully paid right and license to use the Equipment
and Technology that is relevant and necessary for the manufacture,
integration, incorporation and assembly of all the components of the
Products,
3.1.3 the exclusive and fully paid right and license (excluding even Licensor)
to use the Technology and the Trade Marks that are relevant and
necessary for the marketing, promotion, advertising, sale, servicing,
distribution and merchandising of the Products,
all within the Territory and not elsewhere.
3.2 Territory. For the purposes hereof, "Territory" means Canada provided,
however, that in the event that the Exchange Right is fully exercised by each of
the holders of Class A common shares of Licensee on or prior to 5:00 pm.
(Montreal time) on the Expiry Date, "Territory" shall be deemed to mean South
America, Central America and North America (excluding, for the purposes of
paragraph 3.1.3 hereof only, the States of Ohio, West Virginia and Pennsylvania
and such other states as may be mutually agreed upon by Licensee and Licensor).
3.3 Sublicenses. Licensee shall not grant manufacturing sublicenses hereunder,
except upon such terms and conditions as may be acceptable to Licensor, in its
sole discretion. Licensee shall be entitled to sublicense its right and license
to market, promote, advertise, sell, service, distribute and merchandise
Products throughout the Territory, subject to Licensor's prior written approval,
which approval shall not be unreasonably withheld or delayed, it being
understood that whenever Licensor shall not have disapproved of any such
proposed sublicensee within thirty (30) days following Licensor's receipt of a
written notice from Licensee in connection therewith, Licensor shall be deemed
to have approved such sublicensee.
3.4 Exclusivity. Provided Licensee is not in default hereunder, Licensor shall
not market, promote, advertise, sell, service, distribute or merchandise
Products or products which are similar to the Products anywhere in the
Territory, or grant to others the rights and license to perform any of the
activities referred to in paragraph 3.1.3 hereof anywhere in the Territory.
Moreover, Licensor hereby covenants and agrees that in the event that Licensor
proposes to grant to any Person (other than Licensee), at any time between the
date hereof and the earlier of the Expiry Date or the date upon which the
Exchange Right is fully exercised by each of the holders of Class A common
shares of Licensee, the rights and license to perform any of the activities
referred to in paragraph 3.1.3 hereof anywhere in South America, Central America
or North America (other than the States of Ohio, West Virginia and Pennsylvania
and such other states as may be mutually agreed upon by Licensee and Licensor),
(i) same shall be subject to Sofinov Societe Financiere d'Innovation Inc.'s
prior written approval, which approval shall not be unreasonably withheld or
delayed, it being understood that whenever Sofinov Societe Financiere
d'Innovation Inc. shall not have disapproved of any such proposed Person within
thirty (30) days following Sofinov Societe Financiere d'Innovation Inc.'s
receipt of a written notice from Licensor in connection therewith, Sofinov
Societe Financiere d'Innovation Inc. shall be deemed to have approved such
Person, (ii) same shall be on
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commercially reasonable terms and (iii) Licensor will cause such Person, if
approved as aforesaid, to acknowledge and agree that (x) any such rights or
license so granted by Licensor will be terminated immediately as of the date
upon which the Exchange Right is fully exercised by each of the holders of Class
A common shares of Licensee or (y) upon exercise of the Exchange Right as
described above, the Licensee will be substituted for the Licensor in such
arrangement and will fully succeed in the rights and obligations of Licensor
thereunder.
3.5 Referrals. Licensee shall refer to Licensor all inquiries concerning
Products received from anywhere in the world other than for sales in the
Territory. Licensor shall refer to Licensee all inquiries concerning Products
received from anywhere in the world for sales in the Territory.
3.6 Purchase of Products. Notwithstanding the rights granted by Licensor to
Licensee pursuant to paragraph 3.1.2 hereof, Licensee shall be entitled to
purchase Products from Licensor or any licensee of Licensor on terms and
conditions which are at least as favourable as those offered to comparably or
similarly situated customers of Licensor.
SECTION 4 - LICENSOR'S OBLIGATIONS
4.1 Licensor's Initial Obligations. Following the execution of this Agreement,
Licensor shall make available to Licensee Technology and Technical Information
that is relevant and necessary for Licensee to be able to benefit from the
rights and licenses granted to it pursuant to this Agreement.
4.2 Licensor's Future Obligations. From time to time, Licensor shall make
available to Licensee all additional Technology and Technical Information that
is relevant and necessary for Licensee to be able to benefit from the rights and
licenses granted to it pursuant to this Agreement, including Licensor
Improvements.
SECTION 5 - DEVELOPMENTS AND IMPROVEMENTS
5.1 Improvements by Licensor. The parties hereby agree that should any
improvements, modifications, developments, additions and alterations be made to
the Technology, Equipment or Products by or on behalf of Licensor, its agents,
employees, consultants or representatives at any time (the "Licensor
Improvements"), then they shall be the exclusive property of Licensor. Licensor
shall promptly furnish Licensee with complete details of all Licensor
Improvements in sufficient detail to make use of them for the purposes provided
for in this Agreement. All Licensor Improvements shall be deemed licensed to
Licensee hereunder without any compensation therefor and shall be deemed to form
part of the Technology for the purposes of this Agreement.
5.2 Improvements by Licensee. The parties hereby agree that any improvements,
modifications, developments, additions and alterations made to the Technology,
Equipment or Products by or on behalf of Licensee, its agents, employees,
consultants or representatives at any time shall be the exclusive property of
Licensee (the "Licensee's Intellectual Property"). Licensee
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shall promptly farmish Licensor with complete details of all Licensee's
Intellectual Property in sufficient detail to enable Licensor to make use of it
to the same. extent as Licensee and, subject to subsection 5.3 hereof, to
sublicense their use to Licensor's other licensees. All Licensee's Intellectual
Property shall be licensed to Licensor for the Territory without any
compensation therefor. Licensor shall cooperate fully with and assist Licensee
in obtaining patents, copyrights, industrial designs and other intellectual
property registration with respect to Licensee's Intellectual Property.
5.3 Limitation on Rights of Licensor to Licensee's Intellectual Property.
Notwithstanding subsection 5.2 hereof, Licensor shall not be entitled to make
Licensee's Intellectual Property available to any licensee of Licensor unless
such licensee has permitted its improvements to the Technology, Equipment and
Products to be made available to Licensee under the same terms and conditions
pursuant to which Licensor has permitted its improvements to the Technology,
Equipment and Products to be made available to Licensee hereunder. In addition,
Licensor and Licensee will negotiate, in good faith, Licensee's share of any
license fee or other compensation payable to Licensor by Licensor's other
licensees in connection with Licensee's Intellectual Property.
SECTION 6 - TERM AND EVENT OF DEFAULT
6.1 Term. Subject to the terms and conditions hereof, the initial term of this
Agreement shall be twenty-five (25) years, with Licensee having the option to
renew this Agreement for additional successive terms of twenty-five (25) years
each (the initial term and any renewal term being hereinafter collectively
referred to as the "Term").
6.2 Termination of Agreement. If an Event of Default occurs with respect to
either party, the non-defaulting party shall have the right to terminate this
Agreement immediately upon written notice to the defaulting party.
Notwithstanding the foregoing but subject to subsection 6.4 hereof, Licensor
shall not be entitled to terminate this Agreement without the written consent of
Sofinov for so long as (i) Licensor owns all of the issued and outstanding
voting shares of Licensee, (ii) Sofinov owns at least 250,000 of the issued and
outstanding voting shares of Licensor (on an as-converted basis) and (iii)
Licensor, in good faith, determines that the business conducted by Licensee is
commercially viable and competitive in the marketplace.
6.3 Definition of Event of Default. As used herein, "Event of Default" means,
with respect to either party, the occurrence of any of the following events:
6.3.1 such party commits an act of bankruptcy, makes an assignment for the
benefit of its creditors or otherwise takes advantage of or shelter
under any legislation for the protection of debtors; or
6.3.2 such party is declared bankrupt or a receiver is appointed in respect of
such party or a substantial portion of its property and such action is
not reversed or stayed within 90 days; or
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6.3.3 such party is dissolved, liquidated or wound-up; or
6.3.4 such party fails to perform any of its material obligations under the
provisions of this Agreement and such default is not remedied within
thirty (30) days of receipt of a written notice to that effect received
from the other party.
6.4 Sale of Assets or Shares of Licensee. Notwithstanding any provision of this
Agreement, in the event that (a) Licensee sells all its assets to any Person
(the "Purchaser") (the "Asset Sale"), or (b) the majority of the issued and
outstanding voting shares of Licensee are sold to any Person other than any of
the Investors or Licensor (the "Share Sale"), Licensor may terminate this
Agreement only if the Licensor provides the Purchaser or Licensee (in the event
of a Share Sale) at the time of such Asset Sale or Share Sale, subject to the
Purchaser's or Licensee's acceptance, a new technology licensing agreement
identical to this Agreement, with the exception that such new agreement shall
provide (i) for the payment to Licensor of royalties on net sales of Products at
a reasonable royalty, such royalty to be determined in accordance with the then
applicable industry standards and United States law; and (ii) for a term equal
to the unexpired portion of the Term. In the event that Licensor does not
provide the Purchaser or Licensee (in the event of a Share Sale) with such new
agreement as provided for herein, then this Agreement shall continue in full
force and effect in favour of the Purchaser or Licensee (in the event of a Share
Sale).
SECTION 7 - EFFECT OF TERMINATION OR EXPIRATION OF THE TERM
7.1 Effect of Termination. Upon the termination of this Agreement for any reason
whatsoever or the expiration of the term of this Agreement:
7.1.1 all rights of the parties hereunder shall cease immediately;
7.1.2 amounts owing by one party to the other shall immediately become due and
payable;
7.1.3 subject to paragraph 7.1.4 hereof, each party shall forthwith deliver to
the other party all forms, documents and materials relating to Products
which are the property of such other party without retaining any copy
thereof, and Licensee shall forthwith deliver to Licensor all
promotional and advertising materials, instruction sheets, documents and
other items bearing any of the Trade Marks, unless a new technology
licensing agreement is entered into as provided for in subsection 6.4
hereof;
7.1.4 Licensee shall have the right to distribute and sell its remaining
inventory of Products and raw materials, in the ordinary course of
business and pursuant to instructions received from Licensor, unless a
new technology licensing agreement is entered into as provided for in
subsection 6.4 hereof.
The parties agree to sign all documents and do all things as may be
necessary to give effect to the foregoing provisions.
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7.2 Surviving provisions. Termination of this Agreement for any reason
whatsoever or the expiration of the term of this Agreement shall not release any
party from any of its obligations which remain unfulfilled at such time or
release any party from those obligations which survive such termination or
expiration.
SECTION 8 - TRADE MARKS
8.1 Rights and Ownership in Trade Marks. Neither this Agreement nor the
operations of Licensee hereunder shall in any way give or be deemed to give
Licensee any interest in the Trade Marks, except for its right and license to
use the Trade Marks, in accordance with the terms hereof. Licensee agrees that
each of the Trade Marks and the goodwill symbolized thereby is the sole and
exclusive property of Licensor and nothing in this Agreement shall prohibit or
curtail in any manner Licensor's right to use, directly or indirectly, the Trade
Marks.
8.2 No action by Licensee. Licensee agrees that it has no power or right to and
shall not during the term of this Agreement or thereafter take any action which
might invalidate the Trade Marks or impair any rights of Licensor therein or
create any rights adverse to those of Licensor therein or attempt to register
the Trade Marks anywhere in the Territory.
8.3 Use of Trade Marks
8.3.1 Licensee agrees that it will use the Trade Marks only in connection with
the Products and label, package and advertise the Products only in such
manner as to preserve at all times all rights of Licensor in the Trade
Marks;
8.3.2 Licensor shall provide to Licensee from time to time information
regarding the use of the Trade Marks, including the typeface,
configuration and orientation of the Trade Marks, specifications and
restrictions on the size, colour and backgrounds for the Trade Marks,
and Licensee shall use the Trade Marks only in the manner so specified;
8.3.3 Licensee shall submit all original mechanical art (the "Art") for all
labels, packaging, advertisements, promotional materials and other
materials used in connection with the sale of the Products which bear
any Trade Mark to Licensor for approval prior to the use of the Art,
which approval shall not be unreasonably withheld or unduly delayed. In
the event that Licensor does not notify Licensee in writing of its
disapproval of same within thirty (30) days of its receipt of the Art,
the Art shall be deemed to be approved by Licensor;
8.3.4 Licensee shall not change or modify any party of the Art without the
written approval of Licensor, which approval shall not be unreasonably
withheld or unduly delayed. In the event that Licensor does not advise
Licensee in writing that it disapproves of such change or modification
within ten (10) days of receipt thereof, Licensor shall be deemed to
have accepted such change or modification;
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8.3.5 Licensee shall forward to Licensor, at Licensee's expense, such
representative samples of the labels, packaging, advertisements and
promotional and other materials used in connection with the sale of the
Products in which any of the Trade Marks appear once a year or at such
other times as Licensor may reasonably request, in order to verify that
the Trade Marks are being used in accordance with the terms of this
Agreement;
8.3.6 Each label package, advertisement, item or promotional or other material
used in connection with the sale of the Products which bears t any Trade
Mark shall contain the following legend:
"[the particular Trade Marks used]"(R) are Trade Marks
of H Power Corp. and are used by [Licensee's Name] under
License."
or such other legend, inscriptions and markings thereon as Licensor may
request;
8.3.7 Licensee shall not use the Trade Marks or any similar mark, name or logo
to identify its business or any product (other than Products) that
Licensee manufactures or sells;
8.3.8 Licensee shall use the Trade Marks only as depicted in their respective
registrations or applications for registration or as prescribed by
Licensor.
8.4 Delivery of Documents. Licensee shall execute and deliver such documents,
applications and other writings and do such things as may be requested by
Licensor in order to confirm Licensor's ownership of the Trade Marks, maintain
the validity of same and obtain, maintain or renew any registration thereof. The
expenses to confirm Licensor's ownership of the Trade Marks shall be borne by
Licensor. The expenses to maintain the validity of the Trade Marks and to
obtain, maintain or renew any registration thereof shall be borne in the manner
provided for in subsections 11. 1 and 11.2 hereof. Failure to obtain or maintain
registration of any of the Trade Marks anywhere in the Territory shall not
constitute a breach of the terms hereof by Licensor.
SECTION 9 - CONFIDENTIAL INFORMATION
9.1 Confidential Information. Each party hereby acknowledges that it may
receive Confidential Information from the other party (the "Disclosing
Party"). Each party hereby acknowledges, accepts and agrees that:
9.1.1 the Confidential Information designated as such in the manner provided
for in this Section 9 is nonpublic and confidential and shall at all
times remain the property of the Disclosing Party;
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9.1.2 the disclosure by the Disclosing Party of the Confidential Information
to the other party (the "Receiving Party") is for the sole purpose of
enabling it to carry out its obligations under the terms of this
Agreement; and
9.1.3 the Receiving Party shall not assert, directly or indirectly, any right
with respect to the Confidential Information which may impair or be
adverse to the Disclosing Party's ownership thereof.
9.2 Obligations of parties. Each party shall keep the Confidential Information,
and the fact that the Confidential Information has been provided, confidential
at all times (regardless of the extent or duration of the relationship of the
parties and regardless of whether such Confidential Information was disclosed
before or after the date of this Agreement) and shall not disclose such
Confidential Information, in whole or in part, to any person other than to its
agents, employees and other authorized representatives (collectively herein
referred to as the "Representatives") who need to know such information in
connection with the performance of its obligations under the terms of this
Agreement, without the prior written consent of the Disclosing Party. Each party
shall inform its Representatives of the confidential nature of the Confidential
Information and shall require such Representatives to keep such information
confidential. Each party shall be fully responsible for any breach of this
Agreement by its Representatives. Each party shall exercise careful judgment to
minimize the number of its Representatives who have access to the other party's
Confidential Information and to limit them to individuals reasonably known to be
trustworthy and of sound judgment. Nothing herein shall be deemed to impair
Licensor's right to disclose the Confidential Information of Licensee to its
other licensees, subject to appropriate safeguards and the said licensees
signing confidentiality agreements, and provided further that Licensor has the
right to disclose the confidential information of such other licensee to
Licensee.
9.3 Property of Confidential Information. Any Confidential Information disclosed
by the Disclosing Party shall remain the sole and exclusive property of the
Disclosing Party.
9.4 Information disclosed prior to this Agreement. Any Confidential Information
supplied to the Receiving Party by the Disclosing Party prior to the execution
of this Agreement shall be considered in the same manner and be subject to the
same treatment as the Confidential Information made available after the
execution of this Agreement.
9.5 Breach of Confidentiality. In the event of a material breach of the
undertakings of either party under this Section 9, money damages may be
inadequate and the Disclosing Party shall be entitled to seek injunctive relief
and specific performance. Such remedy shall not be deemed to be the exclusive
remedy for any such breach but shall be in addition to all other remedies
available at law. The Disclosing Party shall be entitled to reasonable legal
fees (including reasonable attorney's fees and expenses) and other costs
reasonably incurred to remedy any and all material breaches by the Receiving
Party of this Agreement.
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9.6 Transfer of Confidential Information. All confidential information finished
hereunder shall either be in writing, plainly marked "Confidential Information"
or, if disclosed by demonstration or orally, shall be designated as confidential
and shall be confirmed in writing to the Receiving Party within thirty (30)
days, the writing to be clearly marked "Confidential Information" and setting
forth the information so disclosed with such sufficient specificity to clearly
establish the content and scope of what is deemed Confidential Information.
SECTION 10 - REPRESENTATIONS, WARRANTIES AND COVENANTS
10.1 Representations of Licensor. Licensor hereby represents, warrants and
covenants:
10.1.1 that it is duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation;
10.1.2 that it has the necessary corporate power and authority to execute this
Agreement and to perform its obligations hereunder. The execution of
this Agreement by Licensor and the performance by Licensor of its
obligations hereunder have been duly authorized by all necessary action
on its part and do not require any action, consent or approval of, any
registration with, or notification to any Person, or any action or
consent under any laws to which Licensor is subject;
10.1.3 that Schedule 10. 1.3 annexed hereto contains a true and complete list
and copy of all Patents, which have not been opposed or held
unenforceable and which are in full force and effect;
10.1.4 that as of the date hereof there are no Trade Marks;
10.1.5 that it is the sole owner of all the Technology;
10.1.6 that the registrable Technology has been duly registered with, filed in
or issued by, as the case may be, the appropriate authorities and such
registrations, patent pendings, filing and issuances remain in full
force and effect;
10.1.7 that, on the date hereof and for the duration of the term of this
Agreement, the Technology is and will be, and the Trade Marks will be,
free and clear of any hypothecs, charges, liens or encumbrances, except
for (i) the liens described in Schedule 10.1.7, all of the holders of
such liens having taken cognizance of this Agreement and agreed to be
bound by the provisions hereof in the event that any of them realizes on
its security and (ii) subsequent security granted in favour of any
lender of Licensor, provided that such secured lender takes cognizance
of this Agreement and agrees to be bound by the provisions hereof in the
event that it realizes on its security;
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10.1.8 that it has not granted any options, licenses or other rights to the
Technology or the Trade Marks to any Person except as set forth in
Schedule 10.1.8 attached hereto;
10.1.9 that the Technology is sufficient to enable Licensee to exercise all of
the licenses and rights granted to it hereunder;
10.1.10 that the execution, delivery and performance of this Agreement, the
granting of the rights and license provided herein and the consummation
of the transactions contemplated hereby will not, in any material
respect, breach, violate or conflict with any instrument, agreement or
undertaking, written or oral, governing the Technology or Trade Marks,
including, without limitation, that certain agreement dated May 16, 1995
between Licensor and Aerojet-General Corporation, and will not cause the
forfeiture or termination or give rise to a right of forfeiture or
termination of Licensor's rights to the Technology or Trade Marks or in
any way impair the right of Licensor to bring any action for the
infringement of the Technology or Trade Marks or any part thereof;
10.1.11 that on the date hereof, the Technology and the Trade Marks do not, to
the best of Licensor's Knowledge, infringe any rights of any Person;
10.1.12 that there are no pending or threatened proceedings, litigation or other
adverse claims affecting, or with respect to, the Technology, the Trade
Marks or any part thereof and, to the best of Licensor's knowledge, no
Person is infringing or threatening to infringe the Technology or the
Trade Marks;
10.1.13 that all its Representatives, officers and directors other than those
Representatives who are not privy to any of Licensor's confidential
information are bound by confidentiality, non-competition and assignment
of intellectual property agreements, and such agreements do not confer
on any such Person any rights to the Technology or Trade Marks;
10.1.14 that it has not received any offer from any Person for the purchase of
any part of its assets or shares;
10.1.15 that, to the best of its knowledge, there are no other facts or
circumstances which, if known by Licensee, would dissuade Licensee from
entering into this Agreement or any other agreements entered into
between Licensor and Licensee on the date hereof.
10.2 Representations of Licensee. Licensee hereby represents, warrants and
covenants:
10.2.1 that it has all the rights and power to enter into this Agreement;
10.2.2 that the undersigned officer has full authority to execute this
Agreement;
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10.2.3 that this Agreement does not violate the terms of any other agreement to
which Licensee is subject or to which Licensee is bound;
10.2.4 that it will market, promote, advertise, sell, service, distribute and
merchandise the Products to the best of its ability using commercially
acceptable standards.
SECTION 11 - COSTS, VALIDITY AND INFRINGEMENT OF TECHNOLOGY AND TRADE MARKS
11.1 Validity of Patents and Trade Marks. Licensor will maintain the validity of
the Patents and the Trade Marks by paying all required fees and other costs
associated with maintaining the validity of the Patents and the Trade Marks in
the Territory. Similarly, Licensee will maintain the validity of all patents and
trade marks, if any, issued or registered in respect of Licensee's Improvements
by paying all required fees and other costs associated with maintaining the
validity of such patents and the trade marks in the Territory.
11.2 Notice of infringement . Each party shall promptly notify the other party
in writing of any infringement or threatened infringement by a third party of
the Technology or Trade Marks or the Licensee's Intellectual Property, including
without limitation, any actual or intended common law passing-off, as well as
any action to invalidate or revoke the Technology, the Trade Marks or the
Licensee's Intellectual Property which may come to its attention, including
without limitation, any third party claim that any of the Trade Marks causes
deception or confusion with or infringes upon its trade marks, service marks or
other property rights in any manner.
11.3 Proceedings. The parties shall inform each other of each infringement or
violation of the Technology, the Trade Marks or the Licensee's Intellectual
Property. Whenever the owner of the Technology, the Trade Marks or the
Licensee's Intellectual Property concludes that proceedings should be taken with
respect to any such infringement or violation of its rights, the owner of such
intellectual property shall promptly and diligently prosecute same at its cost
and expense and shall be entitled to all recoveries and awards therefrom. If
such owner advises the other party that it does not intend to participate in any
such proceedings, the other party shall be free to prosecute same and shall pay
all costs and expenses related thereto and be entitled to all recoveries and
awards therefrom. The parties shall at all times fully cooperate in the
prosecution of all such proceedings.
11.4 One party institutes proceedings. It is understood that the party that did
not institute suit or action shall render all reasonable assistance to the party
that did institute suit or action, including, but not limited to, executing all
documents as may be reasonably requested by the party that did institute such
suit or action, and providing all necessary documentation evidencing the
infringement that such party has in its possession or may acquire thereafter.
11.5 Licensee's proceedings. In the event that Licensee initiates any and all
lawsuits involving or relating to the Technology or the Trade Marks, it shall do
so in good faith and to the best of its ability.
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11.6 Licensor's proceedings. In the event that Licensor initiates any and all
lawsuits involving or relating to the Licensee's Intellectual Property, it shall
do so in good faith and to the best of its ability.
11.7 Ownership of Technology and Trade Marks. Licensee shall not contest the
ownership or validity of the Technology or Trade Marks, whether directly or
indirectly, at any time during the term of this Agreement or at any time
thereafter.
11.8 Ownership of Licensee's Intellectual Property. Licensor shall not contest
the ownership or validity of the Licensee's Intellectual Property, whether
directly or indirectly, at any time during the term of this Agreement or at any
time thereafter.
SECTION 12 - INSURANCE AND INDEMNIFICATION
12.1 Indemnification of Licensee. Licensor shall indemnify and save and hold
Licensee harmless from and against any debts, liabilities, claims, actions,
causes of action, suits, damages, losses, costs and expenses, including damage
to property and reasonable attorneys' fees and expenses, which Licensee is or
may become liable for or be compelled to pay as a result or by reason of (i) any
breach or default by Licensor or its directors, officers, servants, agents or
employees in connection with Licensor's performance under the terms of this
Agreement, or (ii) any defects in the Technology or Trade Marks that prevent or
limit Licensee from fully exercising all of the rights and licenses granted to
it pursuant to this Agreement, or (iii) any proceeding of a third party claiming
that the use of all or any part of the Technology or Trade Marks by Licensee
constitutes an infringement of its rights provided that the Licensor is not in
breach or default pursuant to Section 10 hereof. In the event that a decision in
favour of a third party is rendered pursuant to any claim by such third party
that the use of all or any part of the Technology or Trade Marks by Licensee
constitutes an infringement of its rights and that Licensor loses its ownership
of all or any part of the Technology or Trade Marks or its right to grant rights
and licenses relating to the Technology or Trade Marks, Licensor shall deploy
its best efforts to ensure that Licensee obtains any license which is necessary
for the manufacturing and marketing of Products from such third party.
12.2 Indemnification of Licensor. Licensee shall indemnify and save and hold
Licensor harmless from and against any debts, liabilities, claims, actions,
causes of actions, suits, damages, losses, costs and expenses, including, damage
to property and reasonable attorneys' fees and expenses, which Licensor is or
may become liable for or be compelled to pay (i) as a result or by reason of any
breach or default of Licensee or its directors, officers, servants, agents or
employees in connection with Licensee's performance under the terms of this
Agreement, or (ii) arising or resulting in any way from the use of the
Technology and Trade Marks, subject to the provisions of subsection 11.1 hereof.
12.3 Insurance. Each of the parties hereto hereby agrees that, once either of
them commences manufacturing Products, it shall maintain comprehensive general
public liability insurance, including blanket contractual liability and personal
injury liability endorsements, against claims for product
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liability and such other claims as are contemplated herein. Such insurances
shall be for an amount which is reasonable given the nature of such party's
operations, and shall be written with a reputable insurer.
SECTION 13 - SALE OF TECHNOLOGY
13.1 Sale of Technology. Licensor hereby agrees and undertakes not to assign,
sell or alienate to any Person all or any part of the Technology or Trade Marks
unless such Person agrees to be bound by this Agreement.
SECTION 14 - FAIRNESS COMMITTEE AND ARBITRATION
14.1 Fairness Committee. In the event of any dispute, controversy or
disagreement between the parties arising out of or in relation to the validity,
interpretation or performance of the provisions of this Agreement, the parties
shall first meet and try in good faith to resolve their differences. In the
event they are unable to meet within ten (10) days of either party requesting a
meeting or are unable to resolve their differences within ten (10) days of their
meeting, then the parties shall forthwith appoint a fairness committee
("Fairness Committee") comprised of three representatives of each of Licensor
and Licensee (provided that the three representatives of Licensee shall be
chosen by the Investors only) who shall meet together in an effort to resolve
their differences.
14.2 Arbitration. In the event that the parties are unable to appoint a Fairness
Committee within five (5) days of either party requesting same or the Fairness
Committee is unable to meeting within five (5) days of its creation or the
Fairness Committee is unable to resolve any dispute through negotiation as set
forth in subsection 14.1 within ten (10) days of its meeting, then such dispute
shall be definitively dealt with using the rules of conciliation and arbitration
of the International Chamber of Commerce, by one or more arbitrators appointed
in accordance with said rules, and to the exclusion of any courts, except for
injunctive relief and any provisional remedy, including seizure before judgment,
which may be obtained from any court or tribunal having jurisdiction. Any
arbitration proceeding required pursuant to the terms thereof shall take place
in New York, New York and shall be conducted in both the English and French
language. The cost of the arbitration shall be borne in the manner provided for
in the arbitration award.
SECTION 15 - MISCELLANEOUS PROVISIONS
15.1 Notices. All notices, requests, demands and other communications hereunder
shall be given in writing and shall be given by telecopier, or delivered by
hand, to the other party at the following addresses:
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if to the Licensee 3362469 CANADA INC.
c/o Lapointe Rosenstein
1250 Rene-Levesque Blvd. West
Suite 1400
Montreal, Quebec
H3B 5E9
Attention: Claude Bergeron
Telecopier: (514) 925-9001
if to the Licensor: H POWER CORP.
60 Montgomery Street
Belleville, New Jersey
07109, U.S.A.
Attention: the President
Telecopier: (201) 844-8439
with a copy in
all cases to: SOFINOV SOCIETE FINANCIERE D'INNOVATION INC.
1981 McGill College Avenue
Montreal, Quebec
H3A 3C7
Attention: the President
Telecopier: (514) 847-2628
SOCIETE INNOVATECH DU GRAND MONTREAL
2020 University Avenue
Suite 1527
Montreal, Quebec
H3A 2A5
Attention: President and Chief Executive Officer
Telecopier: (514) 864-4220
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9042-0175 QUEBEC INC.
c/o Lapointe Rosenstein
1250 Rene-Levesque Blvd. West
Suite 1400
Montreal, Quebec
H3B 5E9
Attention: Claude Bergeron
Telecopier: (514) 925-9001
with a copy in
all cases to: LAPOINTE ROSENSTEIN
1250 Rene-Levesque Blvd. West
Suite 1400
Montreal, Quebec
H3B 5E9
Attention: Claude Bergeron
Telecopier: (514) 925-9001
BROCK FENSTERSTOCK ET AL
153 East 53rd Street
56th Floor
New York, NY 10022
Attention: David Robbins
Telecopier: (212) 371-5500
or at such other address as each party may have previously indicated to the
other party in writing in conformity with the foregoing. Any such notice,
request, demand or other communication shall be deemed to have been received on
the date of delivery if delivered by hand, or the next business day immediately
following the date of transmission if sent by telecopier. The original copy of
any notice sent by telecopier shall be forwarded to the other party by
registered mail, receipt return requested.
15.2 Further Documents. The parties undertake to execute and deliver such
documents and do such things as may be necessary or advisable to give full
effect to the terms of this Agreement.
15.3 Gender. Any reference in this Agreement to any gender shall include both
genders and the neutral, and words used herein importing the singular number
only shall include the plural and vice versa.
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15.4 Headings. The division of this Agreement into Sections, subsections and
other subdivisions, and the insertion of headings are for convenience of
reference only and shall not affect or be utilized in the construction or
interpretation of this Agreement.
15.5 Severability. Any Section, subsection or other subdivision of this
Agreement or any other provision of this Agreement which is, or becomes,
illegal, invalid or unenforceable shall be severed therefrom and shall be
ineffective to the extent of such illegality, invalidity or unenforceability and
shall not affect or impair the remaining provisions hereof, which provisions
shall be severed from an illegal or unenforceable Section, subsection or other
subdivision of this Agreement or any other provisions of this Agreement.
15.6 Entire Agreement. This Agreement together with any other instruments to be
delivered pursuant hereto, constitute the entire agreement among the parties
pertaining to the subject matter hereof and supersede all prior agreements,
understandings, negotiations, and discussions, whether oral or written, between
the parties.
15.7 Amendments. No amendment of this Agreement shall be binding unless
otherwise expressly provided in an instrument duly executed by each party
hereto.
15.8 Waiver. Except as otherwise provided in this Agreement, no waiver of any of
the provisions of this Agreement shall be deemed to constitute a waiver of any
other provisions (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided in an instrument duly
executed by the parties.
15.9 Delays. When calculating the period of time within which or following which
any act is to be done or step taken pursuant to this Agreement, the day which is
the reference day in calculating such period shall be excluded. If the day on
which such delay expires is not a business day, then the delay shall be extended
to the next succeeding business day.
15.10 Preamble. The preamble hereof shall form an integral part of this
Agreement.
15.11 Governing Law. This Agreement shall be governed in all respects by the
laws of the State of New York as they are applied to agreements entered into in
New York between New York residents and performed entirely within New York.
15.12 Separate entities. This is an agreement between separate entities and
neither is the agent or servant of or possesses the power to obligate the other.
This Agreement shall not be construed so as to constitute Licensor and Licensee
partners or joint venturers or so as to create any other form of legal
association which imposes liability upon either party for the acts or omissions
of the other party.
15.13 Successors and assigns. This Agreement and the provisions hereof shall
enure to the benefit of and be binding upon the parties and their respective
successors and permitted assigns. Any
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party shall not assign any of its rights, title and interest in and to this
Agreement without the other party's prior written consent, which consent shall
not be unreasonably withheld or delayed.
15.14 Currency and conversion rate. All amounts due hereunder shall be paid in
the lawful currency of the United States of America, at the address designated
by either party from time to time. If any amounts are expressed in a foreign
currency, such amount shall be converted at the noon rate as reported by the
Royal Bank of Canada for the conversion of such foreign currencies into U.S.
dollars on the due date of such amounts.
15.15 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same document.
15.16 Language. The parties hereto state their express wish that this Agreement
as well as all documentation contemplated hereby or pertaining hereto or to be
executed in connection herewith be drawn up in English; les parties expriment
leur desir explicite a l'effet que cette convention de meme que tous documents
envisages par les presentes ou y ayant trait ou qui seront signes relativement
aux presentes soient rediges en anglais.
IN WITNESS WHEREOF, the parties have signed at the place and on the date
first hereinabove mentioned.
H POWER CORP. 3362469 CANADA INC.
Per: /s/ H. Frank Gibbard Per: /s/ Marcel Paquette
----------------------------- ------------------------------------
H. Frank Gibbard, President Marcel Paquette, Chairman of the
Board and Secretary
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Exhibit 10.30
FIRST AMENDMENT TO
TECHNOLOGY LICENSING AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into as of this 20th day of
August, 1999, by and between H Power Corp., a Delaware corporation ("H Power")
and H Power Enterprises of Canada, Inc., a Canadian corporation ("HPEC"). H
Power and HPEC are individually referred to as a "Party" and collectively as the
"Parties".
WHEREAS, on May 2, 1997, the Parties entered into a Technology Licensing
Agreement (the "Technology Licensing Agreement") under which H Power granted
HPEC certain rights with respect to use of technology, intellectual property,
equipment and other products relating to fuel cells and fuel cell systems
(collectively the "Fuel Cell Technology"); and
WHEREAS, H Power has entered into a Fuel Cell Product Operating Agreement
(the "Operating Agreement") of even date herewith with ECO Fuel Cells, LLC, a
Delaware limited liability company ("ECO LLC"); and
WHEREAS, the terms of the Operating Agreement require that ECO LLC have
access to the Fuel Cell Technology, including any improvements to the Fuel Cell
Technology now existing or in the future developed by HPEC during the term of
the Technology Licensing Agreement; and
WHEREAS, the Parties desire to amend the terms of the Technology Licensing
Agreement to ensure ECO LLC's unimpeded access to and use of the Fuel Cell
Technology.
NOW, THEREFORE, the Parties hereby agree as follows:
1. Section 3.2 of the Technology Licensing Agreement is hereby amended to
provide as follows:
For the purposes hereof, "Territory" means Canada, provided,
however, that in the event that the Exchange Right is fully
exercised by each of the holders of Class A common shares of
Licensee on or prior to 5:00 pm (Montreal time) on the Expiry Date,
"Territory" shall be deemed to mean South America, Central America
and North America (excluding, for the purposes of paragraph 3.1.3
hereof only, the States of Ohio, West Virginia and Pennsylvania,
unless Licensor obtains a waiver from Duquesne Enterprises, Inc.
relinquishing its exclusive rights to these three states under the
terms of that certain Distributor Agreement dated as of May 22, 1996
between Licensor and Duquesne Enterprises, Inc., in which case this
exclusion shall no longer apply).
<PAGE>
2. Section 5.2 of the Technology Licensing Agreement is hereby amended to
provide as follows:
The parties hereby agree that any improvements, modifications,
developments, additions and alternations made to the Technology,
Equipment or Products by or on behalf of Licensee, its agents,
employees, consultants or representatives at ant time shall be the
exclusive property of Licensee (the "Licensee's Intellectual
Property"). Licensee shall promptly furnish Licensor will complete
details of all Licensee's Intellectual Property, whether now
existing or in the future developed, in sufficient detail to enable
Licensor to make use of Licensee's Intellectual Property and,
subject to subsection 5.3 hereof, to sublicense Licensee's
Intellectual Property to Licensor's other licensees. All Licensee's
Intellectual Property, whether now existing or in the future
developed, and regardless of whether disclosed herein, shall be
licensed to Licensor for the Territory without any compensation
therefor. Licensor shall cooperative fully with and assist Licensee
in obtaining patents, copyrights, industrial designed and other
intellectual property registration with respect to Licensee's
Intellectual Property Rights.
IN WITNESS WHEREOF, the Parties hereby execute this Agreement as of the
date first above written.
H POWER CORP.
By: /s/ H. Frank Gibbard
Its: CEO
H POWER ENTERPRISES OF CANADA, INC,
By: /s/ H. Frank Gibbard
Its: President
<PAGE>
Exhibit 10.31
CONFIDENTIAL TREATMENT
The portions of this exhibit that have been replaced with "[*****]" have been
filed separately with the Securities and Exchange Commission and are the
subject of our application for confidential treatment.
DEVELOPMENT AND LICENSE AGREEMENT dated as of the 17th day of August, 1998
BY AND BETWEEN: H. POWER ENTERPRISES OF CANADA INC., a corporation duly
incorporated pursuant to the Canada Business Corporations Act,
with a principal place of business at 1069 Begin Street,
St-Laurent, Quebec, H4R IV8,
("HPEC")
AND: HARVEST ENERGY TECHNOLOGY INC., a California corporation, with
a principal place of business at 9253 Glenoaks Boulevard, Sun
Valley, California 91352,
("HET")
WITNESSETH:
WHEREAS HET owns or has exclusive rights to certain intellectual property
rights, including proprietary information and know-how, relating to HET
Technology (as defined below) which can be applied to the design and development
of fuel processors; and
WHEREAS HPEC designs, develops, manufactures and markets Fuel Cell Stacks
(as defined below) and develops and supplies fuel cell systems; and
WHEREAS HPEC desires procurement of fuel processing technology in order to
profit from commercialization of residential energy modules; and
WHEREAS HET desires to license fuel processing technology to a capable
fuel stack development and manufacturing company in order to profit from
commercialization of residential energy modules; and
WHEREAS HPEC has an interest in developing, using and selling a fuel
processor to provide hydrogen to a 1-10 kW fuel cell utilizing HET Technology,
for use with a Fuel Cell Stack in a Fuel Cell System (as defined below), and HET
is willing to develop a prototype of such a fuel processor pursuant to the terms
of this Agreement; and
WHEREAS HET wishes to grant to HPEC, and HPEC desires to obtain, the
exclusive worldwide license to manufacture, produce, market, promote, advertise,
sell, lease, distribute and merchandise the fuel processor developed by HET
hereunder utilizing HET Technology.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:
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Confidential
<PAGE>
SECTION 1 - DEFINITIONS
For the purpose of this Agreement, the following words and phrases shall
have the meanings set forth below:
1.1 "Acceptance Tests" shall mean such tests as are described in Appendix B
hereto and paragraph 2.9.1 hereof.
1.2 "Affiliate" means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with such Person. For purposes hereof,
the term "control" (including, with its correlative meanings, the terms
"controlled by" and "under common control with"), with respect to any Person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person (whether through the
ownership of voting securities, by contract or otherwise); provided, that in
each event in which any Person owns directly or indirectly more than 50% of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation or more than 50% of the securities having
ordinary voting power for the election of directors or other governing body of a
corporation or more than 50% of the ownership interest of any other Person, such
Person shall be deemed to control such corporation or other Person.
1.3 "Arising Know-How" means any and all technology, manufacturing and other
know-how, technical information, inventions, discoveries, methods,
specifications and trade secrets owned or Controlled pursuant to subsection 10.2
hereof relating to any research, development or manufacture of the Processor,
which are generated during the course of, arise out of or result from
performance of any Work hereunder.
1.4 "Arising Patent Rights" means all Patents which issue at any time from
applications filed worldwide pursuant to subsection 10.3 claiming inventions
necessary or useful to the development, manufacture or use of the Processor,
which are generated during the course of, arise out of or result from
performance of any Work hereunder.
1.5 "Arising Technology" means, collectively, Arising Know-How and Arising
Patent Rights with respect thereto.
1.6 "Confidential Information" means any and all information (in any and every
form and media) not generally known in the relevant trade or industry, which was
obtained from any party or any Affiliate thereof in connection with this
Agreement or the respective rights and obligations of the parties hereunder,
including, without limitation, (a) information relating to trade secrets of such
party or any Affiliate thereof, (b) information relating to existing or
contemplated products, services, technology, designs, processes, formulae,
research and development (in any and all stages) of such party or any Affiliate
thereof, (c) information relating to any Fuel Cell Stack, any Processor or any
Fuel Cell System, and (d) information relating to business plans, methods of
doing business, sales
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or marketing methods, customer lists, customer usages and/or requirements and
supplier information of such party or any Affiliate thereof, except that
"Confidential Information" shall not include any information which (i) at the
time of disclosure, is generally known to the public, (ii) after disclosure,
becomes part of the public knowledge (by publication or otherwise) other than by
breach of this Agreement by the receiving party, (iii) the receiving party can
verify by written documentation was in its possession at the time of disclosure
and which was not obtained, directly or indirectly, from the other party or any
Affiliate thereof, (iv) the receiving party can verify by written documentation
results from research and development by the receiving party or any Affiliate
thereof independent of disclosures by the other party or any Affiliate thereof
or (v) the receiving party can prove was obtained from any Person who had the
legal right to disclose such information, provided that such information was not
obtained to the knowledge of the receiving party or any Affiliate thereof by
such Person, directly or indirectly, from the other party or any Affiliate
thereof on a confidential basis.
1.7 "Contract Price" means the total amount to be paid by HPEC to HET for
performance of the Work which shall be a fixed price of US $194,000.00.
1.8 "Control" means possession of the ability to grant a license or sublicense
as provided for herein without violating the terms of any agreement with, or the
rights of, any third Person.
1.9 "Due Date" means the date which is 12 months following the date hereof.
1.10 "Field" means any and all fuel processors providing hydrogen using the
combination of processes described in the Work for stationary fuel cell systems
in the 1-10 kW range operating on propane, natural gas or other carbonaceous
fuel for residential, commercial, remote and back-up power applications.
1.11 "Final Acceptance" means the acceptance of the prototype Processor by HPEC
upon the completion of all Work to HPEC's satisfaction and receipt from HET of a
true and correct Final Acceptance Certificate, and the release and waiver by
HPEC of all claims against HET relating to the performance of the Work, except
those claims arising from or consisting of (a) unsettled claims (including,
without limitation, claims of HPEC or any subcontractor), (b) claims for breach
of any warranty or guarantee set forth in this Agreement, (c) HET's continuing
obligations under this Agreement, (d) liens or other title exceptions respecting
the Processor or any portion thereof, (e) any material breach by HET (whether by
an employee, representative or subcontractor) of any of the terms of this
Agreement or (f) all rights of HPEC under Sections 4, 8, 9 and 10 hereof, all of
which claims and rights shall survive such acceptance of the prototype
Processor.
1.12 "Final Acceptance Certificate" shall mean a duly completed and executed
certificate, substantially in the form of Appendix F hereto.
1.13 "Final Acceptance Date" shall mean the date on which Final Acceptance
occurs in accordance with the provisions of subsection 2.9 hereof.
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1.14 "Final Test Report" shall mean HET's written report describing the results
and procedures of the Acceptance Tests in detail sufficient to HPEC.
1.15 "Final Specifications" shall mean HET's written report specifying: (i)
HET's recommended mechanical design (geometrical dimensions) for a Processor in
the 1 to 10 kW range, (ii) the types of catalysts to be used, (iii) the
parts-per million of carbon-monoxide in the hydrogen from the Processor and (iv)
the conditions under which the Processor is to be operated, the whole in detail
sufficient to HPEC. Attached to such report shall be a letter from each of the
manufacturers of the types of catalysts referred to in such report pursuant to
which such manufacturers shall consent to the use by HPEC of such catalysts for
the purposes of testing the prototype Processor;
1.16 "Fuel Cell Stack" shall mean any Proton Exchange Membrane (PEM) fuel cell
stack developed or marketed by HPEC or any Affiliate thereof, as more fully
described in the Specifications.
1.17 "Fuel Cell System" means any fuel cell system in the Field which utilizes
the Processor.
1.18 "HET Background Know-How" means any and all technology, manufacturing and
other know-how, technical information, inventions, discoveries, methods,
specifications and trade secrets owned or Controlled at any time prior to this
agreement by HET relating to any research, development or manufacture of the
Processor (the whole as more fully described in Appendix E), but shall in no
event include any HPEC Background Know-How.
1.19 "HET Background Patent Rights" means all Patents (i) which have been issued
to HET as of the date of this Agreement, (ii) which issue at any time from
applications pending as of the date of this Agreement or subsequently filed
worldwide, now owned or Controlled, by or on behalf of HET or any of its
successors or Affiliates, claiming inventions necessary or useful to the
development, manufacture or use of the Processor, but shall in no event include
any HPEC Background Patent Rights, or (iii) which issue at any time from
invention disclosures filed as of the date of this Agreement with the Law
Offices of William W. Haefliger located at 201 South Lake Avenue, Suite 512,
Pasadena, CA 91101.
1.20 "HET Background Technology" means, collectively, HET Background Know-How
and HET Background Patent Rights with respect thereto.
1.21 "HPEC Background Know-How" means any and all technology, manufacturing and
other know-how, technical information, inventions, discoveries, methods,
specifications and trade secrets owned or Controlled at any time prior to this
Agreement by HPEC relating to any research, development or manufacture of the
Processor (the whole as more fully described in Appendix H), but shall in no
event include any HET Background Know-How.
1.22 "HPEC Background Patent Rights" means all Patents (i) which have been
issued to HPEC as of the date of this Agreement, or (ii) which issue at any time
from applications pending as of the
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date of this Agreement or subsequently filed worldwide, now owned or Controlled,
by or on behalf of HPEC or any of its successors or Affiliates, claiming
inventions necessary or useful to the development, manufacture or use of the
Processor, but shall in no event include any HET Background Patent Rights.
1.23 "HPEC Background Technology" means, collectively, HPEC Background Know-How
and HPEC Background Patent Rights with respect thereto.
1.24 "Patent" means (i) unexpired letters patent (including inventor's
certificates) which have not been held invalid or unenforceable by a court of
competent jurisdiction from which no appeal can be taken or has been taken
within the required time period, including without limitation any substitution,
extension, registration, confirmation, reissued, re-examination, renewal or any
like filing thereof, and (ii) pending applications for letters patent, including
without limitation any continuation, division or continuation-in-part thereof
and any provisional applications.
1.25 "Person" means any individual, estate, trust, corporation, partnership,
joint venture, association, firm or company, or governmental body, agency or
official, or any other entity.
1.26 "Payment Schedule" means the schedule of payments of the Contract Price by
HPEC to HET appended hereto as Appendix G.
1.27 "Processor" means fuel processor to be developed by HET to provide hydrogen
for a 1-10 kW fuel cell in accordance with the Specifications and this
Agreement.
1.28 "Specifications" means the specifications for development of the Processor,
as set forth in Appendix A hereto.
1.29 "Subcontractor" means any contractor, constructor, supplier or vendor of
equipment, material, supplies or services to HET or any subcontractor thereto as
provided in subsection 2.11 hereof.
1.30 "Technical Representative" means the representative of HPEC with whom HET
shall communicate and to whom HET shall report with respect to all matters
contemplated by this Agreement, which representative shall initially be Mr.
Marten Ternan, who may be replaced from time to time upon HPEC giving HET
written notice of each such replacement.
1.31 "Work" means all obligations, duties and responsibilities assigned to or
undertaken by HET pursuant to this Agreement, except in its capacity as
licensor, including the furnishing of all equipment, supplies and material and
the provision of all development, design, engineering, procurement (including
transportation), performance testing and other services to be performed by HET
in accordance with the intent of the Specifications and all other terms of this
Agreement, the whole as more fully defined in Appendix D.
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1.32 "Work Schedule" means the schedule for the development of the prototype
Processor and performance of the Work hereunder, as set forth in Appendix C
hereto.
SECTION 2 - DEVELOPMENT OF PROCESSOR
2.1 Development. HET shall develop, design, engineer, procure, construct and
test a prototype Processor, in accordance with the Specifications. All Work to
be performed by HET hereunder shall be sufficient, complete and adequate in all
respects necessary to enable the prototype Processor to meet the Acceptance
Tests.
2.2 Work Schedule. HET shall perform the Work hereunder in accordance with the
Work Schedule. HET shall promptly notify HPEC in writing at any time that HET
has reason to believe that the Work Schedule will not be met and will specify in
said notice the corrective action planned by HET.
2.3 Revisions to Specifications. Either party may propose changes to minimum
criteria and other specifications in the Specifications provided that the
Specifications shall only be amended by agreement of the parties in writing.
2.4 Costs. All Costs incurred by HET in the performance of the Work hereunder,
including all labour, equipment, materials and other goods and services, shall
be the sole responsibility of HET.
2.5 Reports
2.5.1 Monthly Reports. Within 10 days of the end of each month following the
date hereof, HET shall prepare and submit to HPEC's Technical
Representative a report summarizing all activities during the previous
month toward accomplishing Processor objectives. Said report shall include
the status of all Work tasks, the current projection for their completion,
and a discussion of problems and potential problems that may require
action by HPEC.
2.5.2 Catalyst Data. HET is to provide catalyst evaluation data to HPEC and to
obtain HPEC's agreement with HET's recommendation for the type of catalyst
to be used in the Prototype.
2.5.3 Final Report. Within three weeks of the Final Acceptance Date, HET shall
prepare and submit to HPEC's Technical Representative a final report
summarizing the findings, conclusions, technology developments, and other
technical information obtained through the Work, including the design,
development of the prototype Processor. Information relative to predicted
performance shall also be included in the final report.
2.6 Engineering Drawings. HPEC's Technical Representative shall be provided with
a copy of all engineering plans, specifications and drawings for the Processor.
All engineering plans, specifications and drawings for the Processor are the
property of HET.
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2.7 HPEC's Right to Inspect. HPEC or any authorized representative of HPEC shall
have the right at all reasonable times to inspect the Work and to observe the
Acceptance Tests. HET shall make arrangements and provide access for such
inspection and observation of such tests. HET shall promptly correct any part of
the Work which is defective or not in accordance with this Agreement. Any such
inspection of any part of the Work shall in no way affect HET's obligations to
furnish a Processor and perform the Work in accordance with the intent of the
Specifications and all other terms of this Agreement.
2.8 Taxes. HET shall pay all taxes for the Work, including all equipment, goods
and services supplied hereunder.
2.9 Final Acceptance.
2.9.1 Acceptance Tests. At such time as HET deems appropriate in accordance with
the Work Schedule, HET shall notify HPECs Technical Representative of its
intention to commence Acceptance Tests in accordance with Appendix B
hereto. Such notice shall be given at least 15 business days prior to
HET's planned commencement of testing and HPEC's representatives shall
have the option to witness the Acceptance Tests. The cost of all such
testing, including, without limitation, the cost for HET'S personnel and
equipment involved in such testing, shall be borne solely by HET except
HPEC's personnel costs. Completion of such testing shall occur when each
of the following requirements has been fulfilled in the opinion of HPEC:
2.9.1.1 each element of the prototype Processor is able to perform in
accordance with its design requirements in conformity with the intent of
the Specifications;
2.9.1.2 each component of the Acceptance Tests has been performed
concurrently (unless otherwise mutually agreed upon), and the indicated
results achieved in accordance with the criteria specified in Appendix B
hereto;
2.9.1.3 all Work shall be completed and all such Work shall have been
performed in accordance with the terms of this Agreement; and
2.9.1.4 HET shall have provided HPEC with the Final Specifications.
2.9.2 Notice of Completion and Acceptance. Once HET has completed the testing
and has performed all of the requirements in accordance with paragraph
2.9.1 hereof HET shall submit the Final Test Report to HPEC's Technical
Representative. Within 15 business days following receipt of the Final
Test Report, HPEC shall provide the Final Acceptance Certificate (Appendix
F) to HET, indicating that HET has fulfilled the requirements of this
Agreement sufficiently to successfully complete the Acceptance Tests in
accordance with the terms of paragraph 2.9.1 hereof. Such notice shall
constitute Final Acceptance.
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2.9.3 Custody of Processor, etc. Upon the Final Acceptance Date, (i) HET shall
deliver, relinquish and grant to HPEC full and exclusive custody of the
prototype Processor, including responsibility for maintenance, operation
and insurance, at which time all risk of loss shall pass to HPEC, (ii)
HPEC shall advance to HET, prior to HET's being required to release the
prototype Processor to HPEC, the cost for the shipping of same to HPEC and
(iii) the license contained in subsection 4.1 hereof shall become
effective. It is expressly understood and agreed by the parties that
nothing contained in this subsection 2.9 shall in any way modify or alter
HET's obligations under Section 12 hereof. HET shall have no further
obligations with respect to the prototype Processor after HPEC has signed
the Final Acceptance Certificate and the prototype Processor has been
received by HPEC.
2.10 No Obligation to Commercialize. It is understood and agreed by the parties
hereto that the Processor to be developed and delivered by HET hereunder is a
prototype only and that HPEC shall have no obligation to HET or any other Person
to further develop or commercialize the Processor after Final Acceptance thereof
hereunder, except as provided in subsection 4.5 hereof.
2.11 Subcontracts. Subject to the terms and conditions of this Agreement, HET
shall have the right to have any of the Work accomplished by Subcontractors
pursuant to written subcontracts between HET and such Subcontractors (which
written subcontracts shall contain clauses pursuant to which, inter alia, such
Subcontractors take cognizance of and agree to be bound by the provisions of
Sections 9 and 10 of this Agreement). Subject to the foregoing, HET shall be
solely responsible for the engagement and management of Subcontractors in the
performance of the Work. No contractual relationship shall be deemed to exist
between HPEC and any Subcontractor with respect to the Work to be performed
hereunder. No Subcontractor is intended to be or shall be deemed a third-party
beneficiary of this Agreement.
SECTION 3 - CONTRACT PRICE
3.1 Contract Price. HET agrees to perform the Work for the Contract Price, in
accordance with Appendix G. The first instalment of Contract Price, in the
amount of $30,000, shall be paid to HET within 30 days after the date hereof.
The balance of the Contract Price shall be payable in monthly instalments in
accordance with the Payment Schedule, each such payment to be made within 30
days after receipt by HPEC of an invoice from HET therefor. Each such invoice
may include the full amount specified in the Payment Schedule upon the
completion of each task completed thereunder, except to the extent that all or a
portion of such amount is disputed for good reason, in which case (a) HET shall
continue to perform the Work and (b) the disputed portion shall not be paid
until the dispute is resolved. Within 30 days following the receipt of the
prototype Processor at HPEC, HPEC shall pay to HET any amount remaining to be
paid to HET under this Agreement, provided that HPEC may withhold a reasonable
and necessary portion of the Contract Price to reflect items which have not been
completed by HET. No payment made hereunder shall be considered as approval or
acceptance of any Work. All payments shall be subject to correction or
adjustment in subsequent progress reviews and payments.
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SECTION 4 - LICENSE GRANT
4.1 Grant. Upon the terms and subject to the conditions herein stated, and
effective at such time as is provided in paragraph 2.9.3 hereof, HET hereby
grants to HPEC an exclusive, worldwide license under the HET Background Patent
Rights, HET Background Know-How, Arising Know-How and Arising Patent Rights to
manufacture, produce, market, promote, advertise, sell, lease, distribute and
merchandise the Processor, and Fuel Cell Systems incorporating the Processor,
utilizing HET Background Technology and Arising Technology for the term of this
Agreement.
4.2 Sublicenses. HPEC shall have the right to enter into sublicensing agreements
with respect to any of the rights, privileges and licenses granted hereunder,
subject to the terms and conditions hereof. Such sublicenses (a) shall not
become effective unless and until the license granted in subsection 4. 1 hereof
becomes effective, and (b) shall terminate upon the termination of this
Agreement.
4.3 HET Restrictions. During the term of this Agreement, HET shall not
manufacture, produce, market, promote, advertise, sell, lease, distribute or
merchandise the Processor or Fuel Cell Systems incorporating the Processor
anywhere in the world for commercial purposes, or grant to others the right and
license to perform any of the foregoing activities anywhere in the world, except
that HET has the right to manufacture the Processor for the purpose of
development and testing, including development under projects that may be funded
by various federal, state and local government agencies or research institutes.
Notwithstanding the foregoing, HET shall be entitled to manufacture the
Processor for other purposes upon written authorization from HPEC. HET shall
refer to HPEC all inquiries concerning the Processor or Fuel Cell Systems
incorporating the Processor received from anywhere in the world.
4.4 Information and Assistance. At all times during the term of the license
granted in subsection 4.1 hereof, HET shall: (i) make available to HPEC all
relevant information relating to the machinery and equipment used in the
manufacture and production of the Processor; (ii) collaborate with and assist
HPEC in the design and testing of the Processor and Fuel Cell Systems
incorporating the Processor; (iii) provide HPEC from time to time with
information and specifications relating to raw materials required to manufacture
and produce the Processor and Fuel Cell Systems incorporating the Processor; and
(iv) provide HPEC with reasonable assistance in transferring the HET Background
Know-How, together with the expertise required to use the HET Background Know-
How, to HPEC.
4.5 Loss of Exclusivity. By no later than December 31, 2001, HPEC will provide
HET a list describing the current location of all Processors that have been
constructed using HET Background Technology and Arising Technology.
Notwithstanding the provisions of subsection 4.1 hereof, in the event that HPEC
fails to construct or have constructed a minimum of [*****] Processors using
HET Background Technology or Arising Technology prior to December 31, 2001,
or fails to provide said list to HET describing the current location of a
minimum of [*****] Processors, HET shall have the right, within sixty (60)
days of December 31, 2001, to advise HPEC in writing of the termination of the
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rights of exclusivity granted by HET to HPEC pursuant to subsection 4.1 and
thereafter HET shall be free to itself make use of or to license to others to
make use of the HET Background Technology and Arising Technology.
Notwithstanding the foregoing, HPEC shall be entitled to retain rights to
exclusivity until December 31, 2002 by making a cash payment to HET of $100,000
within sixty (60) days following such notification by HET, in which event HET
shall not be entitled to so terminate the rights of exclusivity granted by it to
HPEC pursuant to subsection 4.1 hereof. Furthermore, notwithstanding the
provisions of subsection 4. 1 hereof, in the event that HPEC fails to construct
or have constructed a minimum of [*****] Processors using HET Background
Technology or Arising Technology prior to December 31, 2002, or fails to
provide a list to HET describing the current location of a minimum of [*****]
Processors, HET shall have the right, within sixty (60) days of December 31,
2002, to advise HPEC in writing of the termination of the rights of
exclusivity granted by HET to HPEC pursuant to subsection 4.1 and thereafter
HET shall be free to itself make use of or to license to others to make use
of the HET Background Technology and Arising Technology. Notwithstanding the
foregoing, HPEC shall be entitled to retain rights to exclusivity until
December 31, 2003 by making a cash payment to HET of $100,000 within sixty
(60) days following such notification by HET, in which event HET shall not be
entitled to so terminate the rights of exclusivity granted by it to HPEC
pursuant to subsection 4.1 hereof.
Notwithstanding the provisions of subsection 4.1 hereof, in the event that
the aggregate annual royalties paid pursuant to Section 5 hereof are less than:
(i) $30,000 for the 2004 calendar year; (ii) $50,000 for the 2005 calendar year;
(iii) $75,000 for the 2006 calendar year; and (iv) $100,000 for each calendar
year after 2006, then, in each such case, HET shall have the right, within sixty
(60) days of the end of each such calendar year, as applicable, to advise HPEC
in writing of the termination of the rights of exclusivity granted by HET to
HPEC pursuant to subsection 4.1 and thereafter HET shall be free to itself make
use of or to license to others to make use of the HET Background Technology and
Arising Technology. For purposes of clarity, HPEC shall be entitled to
supplement, through a cash payment to HET, any shortfall in royalties paid in
each such calendar year, as applicable, (provided that such supplement, together
with the royalties actually paid to HET during such calendar year, are not less
than the applicable minimum aggregate amount of annual royalties payable during
such year), in which event HET shall not be entitled to so terminate the rights
of exclusivity granted by it to HPEC pursuant to subsection 4.1 hereof.
SECTION 5 - PAYMENT OF ROYALTIES, ACCOUNTING FOR ROYALTIES, RECORDS, ETC.
5.1 Royalties. As consideration for the entering into of this Agreement by HET
and for the rights and license granted to HPEC under subsection 4.1 hereof, HPEC
shall pay to HET royalties in the amount of US $[*****] per Processor
(including any HET Processors incorporated into any Fuel Cell Systems) sold
by HPEC or any Affiliate or sublicensee thereof prior to January 1, 2004.
Thereafter, such royalty payment will escalate in future years at a rate
defined by the ratio of the U.S. Consumer Price Index in the year 2004 to
the U.S. Consumer Price Index in the year during which such royalties are due.
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5.2 Payment. Royalties payable hereunder shall be paid within 30 days after the
end of each calendar quarter, based on the quantity of Processors (including
Processors incorporated into any Fuel Cell Systems) sold by HPEC and its
Affiliates and sublicensees during the preceding calendar quarter. Such payments
shall be accompanied by a statement setting forth such sales quantities.
5.3 Foreign Currency; Withholding. All payments of royalties shall be made in
U.S. Dollars. HPEC shall withhold from all payments due to HET hereunder any
amount which is legally required to be withheld and paid to the appropriate
Canadian (provincial and/or federal) fiscal authority. Whenever any such amount
is withheld, HPEC shall deliver to HET a statement disclosing the amount
withheld, a copy of the withholding tax form, the date of payment thereof and
the royalty with respect to which such amount was paid. It is understood that
the current withholding rate is 10%.
5.4 Records. HPEC shall keep for five years complete and accurate records of the
quantity of Processors (including Processors incorporated into any Fuel Cell
Systems) sold by HPEC and its Affiliates and sublicensees in sufficient detail
to allow the royalties payable by HPEC to be accurately determined. HET shall
have the right for a period of one year after receiving any report or statement
with respect to royalties due and payable hereunder by HPEC to appoint an
independent accounting firm to inspect and audit the relevant records of HPEC
and its Affiliates to verify such report or statement. HPEC and its Affiliates
shall make their records available for inspection and audit by such independent
accounting firm during regular business hours at such place or places where such
records are customarily kept, upon reasonable notice to HPEC and without further
interfering with the conduct of HPEC's business, to the extent reasonably
necessary to verify the accuracy of the reports and payments required hereunder.
The cost of any such inspection and audit shall be paid by HET, unless such
inspection and audit discloses for any calendar quarter examined that there
shall have been a negative discrepancy of greater than 5% between the royalties
payable hereunder by HPEC and the royalties actually paid by HPEC with respect
to such calendar quarter, in which case HPEC shall be responsible for the
payment of the entire cost of such inspection and audit as full and final
recourse of HET for such understatement of royalties.
SECTION 6 - TITLE AND RISK OF LOSS
6.1 Clear Title. HET warrants and guarantees that legal title to and ownership
of the prototype Processor hardware shall pass to HPEC, free and clear of any
and all liens, claims, hypothecs, security interests or other encumbrances, upon
the delivery of the Processor to HPEC, except as provided for regarding royalty
payment obligations as described in Section 5.
6.2 Risk of Loss. HET shall assume risk of loss of any equipment, materials or
supplies or any other Work completed until the Final Acceptance Date or such
time as this Agreement is terminated, whichever date is earlier. All equipment,
materials or supplies not yet incorporated into the Processor shall be stored in
secured areas. HET shall bear the responsibility of preserving, safeguarding and
maintaining such equipment, materials or supplies and any other Work completed.
Any equipment,
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materials and supplies or any Work lost, damaged stolen or impaired before the
Final Acceptance Date shall be replaced promptly by HET at its own expense.
SECTION 7 - REPRESENTATIONS AND WARRANTEES
7.1 By HPEC. HPEC hereby represents and warrants to HET that (a) HPEC has full
legal right, power and authority to execute, deliver and perform its obligations
under this Agreement, (b) the execution, delivery and performance by HPEC of
this Agreement do not contravene or constitute a default under any provision of
applicable law or its articles or by-laws (or equivalent documents) or of any
agreement, judgment, injunction, order, decree or other instrument binding upon
HPEC, (c) all licenses, consents, authorizations and approvals, if any, required
for the execution, delivery and performance by HPEC of this Agreement have been
obtained and are in full force and effect and all conditions thereof have been
complied with, and no other action by or with respect to, or filing with, any
governmental authority of any other Person is required in connection with this
execution, delivery and performance by HPEC of this Agreement, and (e) this
Agreement constitutes a valid and binding agreement of HPEC, enforceable against
HPEC in accordance with its terms.
7.2 By HET. HET hereby represents and warrants to HPEC that (a) HET has full
legal right, power and authority to execute, deliver and perform its obligations
under this Agreement, (b) the execution, delivery and performance by HET of this
Agreement do not contravene or constitute a default under any provision of
applicable law or of its articles of incorporation or by-laws (or equivalent
documents) or of any agreement, judgment, injunction, order, decree or other
instrument binding upon HET, (c) subject to subsection 7.3 below, all licenses,
consents, authorizations and approvals required for the execution, delivery and
performance by HET of this Agreement have been obtained and are in full force
and effect and all conditions thereof have been complied with, and no other
action by or with respect to, or filing with, any governmental authority or any
other Person is required in connection with the execution, delivery and
performance by HET of this Agreement, (d) it has full experience and proper
qualifications to perform the Work, to construct the prototype Processor and to
evaluate the need for and obtain all approvals, certificates, permits and
licenses, governmental or otherwise, for the construction and operation of the
prototype Processor, (e) it has not granted any right or license to any third
party to use the HET Background Technology in connection with the manufacturing,
production, advertising, promotion, marketing, distribution, sale, rental and
merchandising of the Processor or Fuel Cell Systems incorporating the Processor
anywhere in the world and there is no outstanding right or license granted by
HET which would in any way conflict with the right and license granted to HPEC
in subsection 4.1 hereof, (f) there are no lawsuits, pending or threatened,
relating to the HET Background Technology, and to the best of HET's knowledge
there are no claims or demands of whatsoever nature with respect to or in any
manner affecting same, (g) it has not received any notice that the right and
license granted in subsection 4.1 hereof infringe upon or conflict with any
proprietary right belonging to any third party, and (h) this Agreement
constitutes a valid and binding agreement of HET, enforceable against HET in
accordance with its terms. Notwithstanding the provisions of clause (c) above,
all licenses, consents, authorizations and approvals required for the
(including, without limitation, licenses from third parties such as catalyst
manufacturers)
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7.3 Exceptions. Notwithstanding subsection 7.2 above, all licenses (including,
without limitation, licenses from third parties such as catalyst manufacturers),
consents, authorizations and approvals required for the delivery and testing of
the prototype Processor will be obtained by HET, and no other action by or with
respect to, or filing with, any governmental authority or any other Person is
required in connection with the delivery and testing of the Processor. In
addition, HET hereby undertakes to use its best efforts to assist HPEC in
obtaining any such licenses (including, without limitation, licenses from third
parties such as catalyst manufacturers), consents, authorizations and approvals.
7.4 Survival of Representations and Warranties. The representations and
warranties contained herein shall survive the execution, delivery and
performance of this Agreement by the parties, notwithstanding any investigation
at any time made by or on behalf of any party or parties.
SECTION 8 - INFRINGEMENT AND INDEMNIFICATION
8.1 Infringement Claims. Each party shall promptly advise the other party of any
infringements or suspected infringements of any HET Background Technology or
HPEC Background Technology of which such party becomes aware, and (a) HPEC shall
cooperate with and assist HET in any action undertaken by HET for the defense of
infringement of any HET Background Technology and (b) HET shall cooperate with
and assist HPEC in any action undertaken by HPEC for the defense of infringement
of any HPEC Background Technology. In such case, HET, in the case of HET
Background Technology, or HPEC, in the case of HPEC Background Technology, shall
retain the right to elect, in its sole discretion, which remedies to adopt. In
the event that HET advises HPEC that it shall not participate in any proceedings
relating to the defense of infringement of any HET Background Technology, HPEC
may prosecute same and shall pay all costs and expenses related thereto and
shall be entitled to all recoveries and awards therefrom. HET shall, however, be
entitled to join in any such proceedings at any time. The parties shall at all
times fully cooperate in the prosecution of all such proceedings.
8.2 Indemnification.
8.2.1 Indemnification by HPEC. HPEC hereby agrees that it shall be responsible
for, indemnify, hold harmless and defend HET, HET's Affiliates and their
respective directors, officers, managing members, shareholders, partners,
attorneys, accountants, agents, employees and consultants and their heirs,
successors and assigns (collectively, the "HET Indemnitees") from and
against any and all claims, demands, losses, liabilities, damages, costs
and expenses (including the cost of settlement, reasonable legal and
accounting fees and any other expenses for investigating or defending any
actions or threatened actions) (collectively "Losses") suffered or
incurred by any HET Indemnitee arising out of, relating to, resulting from
or in connection with (a) any actual or alleged injury or death of any
Person or damage to any property caused or claimed to be caused by any
Fuel Cell System, provided that such injury, death or damage is not
related to HET Background Technology or the Work performed hereunder, (b)
except to the extent indemnified against by HET pursuant to
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Section 8.2.2 hereof, any claim that the manufacture, sale or use of any
Fuel Cell System by such party infringes or violates the patent or other
rights of any other Person, (c) the breach of any representation or
warranty made by HPEC herein, (d) the default by HPEC in the performance
or observance of any of its obligations to be performed or observed
hereunder, and (e) any action, suit or other proceeding, or compromise,
settlement or judgment, relating to any of the foregoing matters with
respect to which HET Indemnitees are entitled to indemnification
hereunder. The foregoing shall not apply to the extent that such Losses
are due to the wilful misconduct or negligence of any HET Indemnitees, as
finally determined by a court of competent jurisdiction.
8.2.2 Indemnification by HET. HET hereby agrees that it shall be responsible
for, indemnify, hold harmless and defend HPEC, HPEC's Affiliates and their
respective directors, officers, managing members, shareholders, partners,
attorneys, accountants, agents, employees and consultants and their heirs,
successors and assigns (collectively, the "HPEC Indemnitees") from and
against any and all Losses suffered or incurred by any HPEC Indemnitee
arising out of, relating to, resulting from or in connection with (a) any
actual or alleged injury or death of any Person or damage to any property
caused or claimed to be caused by any Fuel Cell System and related to HET
Background Technology or the Work performed hereunder, (b) any claim that
the manufacture, sale or use of any Fuel Cell System by such party
infringes or violates the patent or other rights of any other Person by
reason of the use of HET Background Technology, (c) the breach of any
representation or warranty made by HET herein, (d) the default by HET in
the performance or observance of any of its obligations to be performed or
observed hereunder, and (e) any action, suit or other proceeding, or
compromise, settlement or judgment, relating to any of the foregoing
matters with respect to which HPEC Indemnitees are entitled to
indemnification hereunder. The foregoing shall not apply to the extent
that such Losses are due to the wilful misconduct or negligence of any
HPEC Indemnities, as finally determined by a court of competent
jurisdiction. Notwithstanding the foregoing, the aggregate amount that HET
shall be recoverable from HET pursuant to this paragraph 8.2.2 shall be
equal to the greater of (i) $50,000 and (ii) 50% of the aggregate
royalties paid to HET pursuant to Section 5 hereof or, in the event of any
Loss attributable to the infringement or violation of the patent or other
rights of any other Person where HET was aware that such infringement was
occurring and failed to disclose same to HPEC forthwith, 100% of the
aggregate royalties paid to HET pursuant to Section 5 hereof. In addition,
HET shall not be responsible for any Loss suffered as a result of any
infringement or violation of the patent or other rights of any other
Person unless such infringement occurs in Canada, the United States, or
any other territory in which HET has caused to be registered or filed, in
accordance with applicable law, HET Background Technology and Arising
Technology. Notwithstanding the foregoing, immediately upon either party
becoming aware that any HET Background Technology infringes or violates
the patent or other rights of any other Person (i) such party shall so
advise the other party; (ii) HPEC shall not contest that validity of the
patents or other rights of such other Persons without the consent of HET;
(iii) HET shall pay for any design changes that are required to
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modify the Processor design; and (iv) HPEC shall pay for all costs of
changing the HPEC manufacturing plant to produce the modified Processor
design.
8.2.3 Notice of Claims. In the event that a claim is made pursuant to Section
8.2.1 or 8.2.2 above against any party which seeks indemnification
hereunder (the "Indemnitee"), the Indemnitee agrees to promptly notify the
other party (the "Indemnitor") of such claim or action and, in the case of
any claim by a third Person against the Indemnitee, the Indemnitor may, at
its option, elect to assume control of the defense of such claim or
action; provided that (a) the Indemnitee shall be entitled to participate
therein (through counsel of its own choosing) at the Indemnitee's sole
cost and expense, and (b) the Indemnitor shall not settle or compromise
any such claim or action without the prior written consent of the
Indemnitee, unless such settlement or compromise includes a general
release of the Indemnitee and all of the other HET Indemnitees or HPEC
Indemnitees, as the case may be, from any and all liability with respect
thereto.
SECTION 9 - CONFIDENTIALITY
9.1 The parties each recognize that the Confidential Information of the other
party and any and all Affiliates thereof constitutes valuable confidential and
proprietary information. Accordingly, the parties each agree that they and their
respective Affiliates shall hold in confidence all Confidential Information of
the other party (including this Agreement and the terms hereof) and not use the
same for any purpose other than as set forth in this Agreement nor disclose the
same to any other Person except to the extent that it is necessary for such
party to enforce its rights under this Agreement or if required by law or any
governmental authority (including, without limitation, any stock exchange upon
which such party's shares or other equity securities may be traded); provided
that if any party shall be required by law to disclose any such Confidential
Information to any other Person, such party shall give prompt written notice
thereof to the other party and shall minimize such disclosure to the amount
required. In connection therewith, each party shall apprise all such persons of
the obligations contained herein prior to the disclosure to them of any part of
the other party's Confidential Information. The parties hereby further covenant
and agree that they shall do all such things as are necessary to preserve the
secrecy and confidentiality of the other's Confidential Information and no
copies, extracts or reproductions of any part of the other's Confidential
Information shall be made except for use by the persons contemplated herein.
Each party hereby covenants and agrees to deliver to the other, upon demand, an
acknowledgment by each person designated by such party, acting reasonably,
confirming that it has reviewed the provisions of this Section 9 and agrees to
be bound thereby. Notwithstanding the foregoing, either party may disclose
Confidential Information of the other (a) to such party's attorneys,
accountants and other professional advisors under an obligation of
confidentiality to such party, (b) to such party's banks or other
financial institutions for the purpose of raising capital or borrowing money
or maintaining compliance with agreements, arrangements and understandings
relating thereto, and (c) to any Person who proposes to purchase or otherwise
succeed (by merger, operation of law or otherwise) to all of such party's
right, title and interest in, to and under this Agreement, if such Person
agrees to maintain the confidentiality of such Confidential Information
pursuant to a written agreement. The standard
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of care required to be observed hereunder shall be not less than the degree of
care which each party or Affiliate thereof uses to protect its own information
of a confidential nature.
SECTION 10 - INTELLECTUAL PROPERTY; IMPROVEMENTS
10.1 Rights to Proprietary Technology. Neither party shall through this
Agreement obtain any rights to the other party's proprietary technology except
for such rights as are expressly granted or allocated under this Agreement.
10.2 From the date of signing this Agreement to 24 months thereafter, any and
all patents relating to the Processor that arise from this Work shall be jointly
owned by HPEC and HET and shall be subject to the license grant and royalty
requirements described in Section 4 and Section 5. Notwithstanding subsection 4.
1, if HET and HPEC elect to share equally the cost of patent filing, prosecution
and maintenance for any patent filed during this period, then HET shall be
deemed to have been granted a royalty-free, exclusive, worldwide license to use,
market, manufacture, sell or sublicense all such arising patents and
intellectual property, other than for use in the Field. In the event that HET
elects not to share in the costs of patent filing, prosecution and maintenance
for any patent filed during this period, then HET shall pay a royalty to HPEC of
[*****] of the manufactured cost of the item, component, or process so covered
by the patent for the exclusive right to use, market, manufacture, sell or
sublicense all such arising patents and intellectual property, other than for
use in the Field. In case of termination of this Agreement as described in
Section 15, HET shall have the option to purchase HPEC's ownership rights in
and to any and all arising patents relating to the Processor by making a lump
sum payment equal to HPEC's share of the patent costs at the date of
termination.
10.3 Improvements and Filing, Prosecution and Maintenance - 24 months after this
Agreement is signed both HET and HPEC shall be entitled to file and prosecute
patent applications related to and maintain patents issued on and/or obtain
copyrights, industrial designs, trademarks and other intellectual property
registration with respect to any invention, discovery, addition, improvement or
development (including, without limitation, data, formulas or research results)
generated in the course of, or arising out of or resulting from, the Work.
Each party shall be the owner of the patent rights and intellectual property
described above. Nevertheless, HET shall offer HPEC the first right of refusal
to acquire the patent rights and intellectual property pertaining to the Field,
and HPEC shall offer HET the first right of refusal to acquire the patent rights
and intellectual property outside the Field.
10.4 HPEC shall give HET the first right of refusal to provide design and
engineering of the second generation fuel processor.
10.5 HET shall provide technological development services for reasonable fees
when so requested by HPEC.
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SECTION 11 - LIMITATIONS ON LIABILITY
11.1 No Warranties. Except as expressly set forth in Sections 7 and 12 hereof,
neither party makes any representations or warranties as to any matter
whatsoever. EACH PARTY HEREBY DISCLAIMS ANY AND ALL OTHER REPRESENTATIONS AND
WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROCESSOR, THE FUEL CELL
STACKS, THE FUEL CELL SYSTEMS, THE HET BACKGROUND TECHNOLOGY AND THE HPEC
BACKGROUND TECHNOLOGY.
11.2 Limitations of Liability. UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE
LIABLE TO THE OTHER PARTY OR ANY OTHER PERSON FOR ANY LOSS OF PROFITS OR
SPECIAL, CONSEQUENTIAL OR INDIRECT DAMAGES OF ANY KIND WHATSOEVER.
11.3 Force Majeure. No party shall be liable for failure or delay in performing
any of its obligations hereunder if such failure or delay is occasioned by
compliance with any governmental regulation, request or order, or by
circumstances beyond the reasonable control of the party so failing or delaying,
including, without limitation, Acts of God, war, insurrection, fire, flood,
accident, labour strikes, work stoppage or slowdown (whether or not such labour
event is within the reasonable control of the parties), or inability to obtain
raw materials, supplies, power or equipment necessary to enable such party to
perform its obligations hereunder. Each party shall (a) promptly notify the
other party in writing of any such event of force majeure, the expected duration
thereof and its anticipated effect on the ability of such party to perform its
obligations hereunder, and (b) make reasonable efforts to remedy any such event
of force majeure. Notwithstanding the foregoing, each party shall be entitled to
terminate this Agreement upon written notice in the event that any such event of
force majeure lasts for more than 90 days.
SECTION 12 - WARRANTY AND GUARANTY
12.1 Scope and Term - Prototype. HET warrants that the Work shall be (i)
performed with the degree of skill and care that is required by good and sound
procedures and practices and in conformity with generally accepted standards or
as otherwise specified in this Agreement, and (ii) designed in accordance with
the terms of this Agreement and generally accepted standards and practices.
Without limiting the generality of the foregoing, all workmanship shall be of
first-class quality. Without limiting the generality of subsection 11.1, HET
hereby specifically disclaims any representation or warranty that the Processor
will meet any particular codes or standards that may be required by applicable
law of any commercial products offered to the general public. Notwithstanding
the preceding sentence, HET hereby represents and warrants that, provided that
the prototype Processor is operated under the conditions set forth in the Final
Specifications, the prototype Processor will have sufficient interlocks, burner
monitoring systems, pressure safety valves and other features as are necessary
for the safe operation of the prototype Processor. Lastly, HET hereby represents
and warrants that the use by HPEC, for purposes of testing the prototype
Processor, of the catalysts described in the Final Specifications shall not
infringe upon the rights of any third party, including, without limitation, any
manufacturer of such catalysts.
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12.2 Scope and Term - License. HET further warrants that provided that, any
Processor that is manufactured in accordance with, and is operated under the
conditions set forth in the Final Specifications, such Processor will perform as
required by the Specifications when using fresh catalyst. This warranty shall
remain in force during the entire period that the license contained in
subsection 4.1 remains in effect.
12.3 Remedy. If the warranty set forth in Section 12.2 hereof is breached, and
provided that HPEC notifies HET of such breach within a reasonable time from the
day HPEC becomes aware of such breach, no additional royalty payments, in
accordance with Section 5. 1, will be made by HPEC to HET and no license will be
conferred to HPEC by HET and HPEC shall be entitled to terminate this Agreement
in accordance with subsection 15.3 hereof.
12.4 HET's Obligation to Repair, Replace or Buy-Down. In the event the
Acceptance Tests results deviate from those which are acceptable to HPEC then
HET shall be obligated to reschedule up to two Acceptance Tests at its own cost
and expense, excluding the costs for HPEC personnel, within two months after the
conclusion of the first attempt to pass the Acceptance Tests, and shall
diligently continue to use its best efforts to repair, redesign or modify the
Processor or any piece of equipment or part thereof at its sole cost and expense
in order to satisfy the Acceptance Tests. If after the second such rescheduled
test the test results remain unacceptable to HPEC, then, at any time thereafter,
HPEC may require HET to continue to repair, redesign or modify the Processor or
any piece of equipment or part thereof at its sole cost and expense in order to
satisfy the Acceptance Tests until such time as HET achieves results which are
acceptable to HPEC. If the Final Acceptance Date shall not have occurred by the
"Due Date" for reasons other than force majeure, then the prototype shall be
delivered to HPEC in its totality including all parts, equipment, and
instruments. As its sole remedy, HPEC may retain the 15% contract withholding,
or $29,100. If HPEC does not notify HET in writing that HET has fulfilled the
requirements of this Agreement by the Due Date, and elects to withhold the final
15% payment, and fails to pay HET the full fixed contract price of $194,000
within 30 days after delivery of the prototype by HET to HPEC, then HPEC or HET
shall be entitled to terminate this Agreement in accordance with subsection 15.3
hereof.
SECTION 13 - INSURANCE
13.1 HET's Insurance. HET shall, prior to the start of the Work, procure and
thereafter maintain throughout the term of this Agreement and for a period of
three years thereafter, at its own expense, the following insurance with
reputable insurers acceptable to HPEC, acting reasonably:
(a) Worker's Compensation Insurance as required by applicable law covering
employees of HET engaged in the performance of the Work;
(b) $2,000,000 General Aggregate;
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(c) $2,000,000 Completed Operations;
(d) $1,000,000 Non-Owned and Hired-Auto.
SECTION 14 - NON-USE OF NAMES
14.1 Neither party shall use the name of the other party or the name of any
Affiliates or employees of such party, nor any adaptation thereof, in any
advertising, promotional or sales literature without prior written consent
obtained from such other party in each case (which consent shall not be
unreasonably withheld or delayed).
SECTION 15 - TERM AND TERMINATION
15.1 Term. This Agreement shall be effective from the date of its execution by
the parties and, unless sooner terminated in accordance with the provisions of
this Section 15, shall continue until 20 years from the date of this Agreement.
Thereafter, HPEC shall have the option to renew the rights and licenses granted
hereunder for an additional term of 20 years, provided that HPEC shall have
given HET written notice of its exercise of its option to renew not less than 6
months prior to the expiration of the term hereof.
15.2 Events of Default. Each party shall have the right to terminate this
Agreement upon the occurrence of any of the following events (each, an "Event of
Default") with respect to the other party (the "Defaulting Party"): (a) a decree
or order shall have been entered by a court of competent jurisdiction adjudging
the Defaulting Party bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, readjustment, arrangement, composition or
similar relief for the Defaulting Party under any bankruptcy law or any other
similar applicable statute, law or regulation, or a decree or offer of a court
of competent jurisdiction shall have been entered for the appointment of a
receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the
Defaulting Party or a substantial part of its property, or for the winding up or
liquidation of its affairs; (b) the Defaulting Party shall institute proceedings
to be adjudicated a voluntary bankrupt, or shall consent to the filing of a
bankruptcy petition against it, or shall file a petition or answer or consent
seeking reorganization, readjustment, arrangement, composition, liquidation or
similar relief under any bankruptcy law or any other similar applicable statute,
law or regulation, or shall consent to the appointment of a receiver or
liquidator or trustee or assignee in bankruptcy or insolvency of it or of a
substantial part of its property, or shall make an assignment for the benefit of
creditors, or shall be unable to pay its debts generally as they become due; or
(c) the Defaulting Party shall commit a material breach of the terms of this
Agreement (other than a breach of Section 12.4) and the same and all of its
effects shall not be remedied within 30 days after written notice thereof is
given by the other party to the Defaulting party.
15.3 Termination. Each party may terminate this Agreement upon the occurrence of
any Event of Default by giving written notice thereof to the other party, which
notice shall specifically identify the reason(s) for such termination.
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15.4 Event of Default Prior to Final Acceptance Date. In the event that an Event
of Default occurs prior to the Final Acceptance Date with respect to which HET
is the Defaulting Party, HPEC shall have the right, at HPEC's sole option and
without prejudice to any other right or remedy which it may have, to either: (a)
finish the Work or cause the Work or any part thereof to be finished by whatever
method it may deem expedient, provided that it shall mitigate its damages and
expenses, in which event the royalty payable by HPEC pursuant to subsection 5.1
shall be reduced from US $[*****] to US $[*****] per Processor (including any
Processors incorporated into any Fuel Cell Systems) sold by HPEC or any
Affiliate or sublicensee thereof or (b) terminate this Agreement in accordance
with subsection 15.3 hereof,
15.5 Consequences of Termination. Subject to subsection 15.4 hereinabove, upon
the termination of this Agreement, all rights, privileges and licenses granted
by HET to HPEC hereunder shall revert to HET. The termination of this Agreement
for any reason shall be without prejudice to (a) the rights and obligations of
the parties pursuant to Sections 8, 9, 10, 12 and 14 hereof, and (b) any other
remedies as may now or hereafter be available to any party, whether under this
Agreement or otherwise. Upon the termination of this Agreement (a) HPEC and its
sublicensees and Affiliates shall immediately discontinue the manufacture,
production, marketing, promotion, advertisement, sale, leasing, distribution and
merchandising of the Processor, and (b) each party and its Affiliates shall
immediately cease the use of, and shall return all copies of all Confidential
Information obtained from the other party or any Affiliate thereof.
SECTION 16 - MISCELLANEOUS
16.1 Notices. All payments, notices, reports and/or other communications to be
given by any party hereto to any other party hereto or referred to herein shall
be in writing and may be given by personal delivery or registered mail, postage
prepaid, or may be sent by messenger or by telecopier to the following addresses
and telecopier numbers:
In the case of HPEC: Marten Ternan
Technical Representative
1069 rue Begin
St-Laurent, Quebec
H4R IV8
CANADA
Telephone: (514) 956-8932 ext. 240
Telecopier: (514) 956-5426
E-mail: [email protected]
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In the case of HET: David W. Warren
Harvest Energy Technology, Inc.
9253 Glenoaks Boulevard
Sun Valley, CA 91352
Telephone: (818) 767-3157
Telecopier: (818) 767-0246
E-mail: dwarren@link. online. net
Any such payment, notice, report and/or other communication sent by registered
mail shall be deemed to have been received on the third (3rd) business day
following the date on which it was mailed or if sent by messenger, personal
delivery or telecopier shall be deemed to have been received on the date of its
delivery or transmission if received prior to 12:00 P.M. on a business day,
otherwise it shall be deemed to have been received on the next business day. The
parties hereto may, from time to time, change any address for receipt of
payments, notices, reports and/or other communications hereunder by written
notice in accordance with the foregoing provisions.
16.2 Arbitration. Any dispute, controversy or claim as to performance of the
Work or Acceptance Tests, as well as any dispute, controversy or claim arising
out of or relating to this Agreement, its validity, construction or
enforceability or the breach of any of the terms or provisions hereof shall be
definitively dealt with using the rules of conciliation and arbitration of the
International Chamber of Commerce, by one arbitrator appointed in accordance
with said rules, and to the exclusion of any courts except for any provisional
remedy including injunctive relief and seizure before judgment which may be
obtained from any court or tribunal, the whole in accordance with said rules in
force at the time of execution of this Agreement. Any arbitration proceeding
required pursuant to the terms thereof shall take place in Los Angeles,
California and shall be conducted in the English language.
16.3 Amendments, etc. This Agreement may not be amended or modified, nor may any
right or remedy of any party be waived, unless the same is in writing and signed
by such party or a duly authorized representative of such party. The waiver by
any party of the breach of any term or provision hereof by any other party shall
not be construed as a waiver of any other subsequent breach.
16.4 No Waiver; Remedies. No failure or delay by any party in exercising any of
its rights or remedies hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or remedy preclude any other or
further exercise thereof or the exercise of any other right or remedy. The
rights and remedies of the parties provided in this Agreement are cumulative and
not exclusive of any rights or remedies provided by law.
16.5 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective heirs, legal representatives,
successors and permitted assigns: provided that, except as expressly provided
herein, neither party may assign or otherwise transfer this
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Agreement or any of its rights, duties or obligations hereunder without the
prior written consent of the other party.
16.6 Relationship of Parties. HPEC and HET are not (and nothing in this
Agreement shall be construed to constitute them) partners, joint venturers,
agents, representatives or employees of the other party, nor shall anything in
this Agreement be construed to create any relationships between them other than
that of an independent contractor. Neither party shall have any responsibility
or liability for the actions of the other party except as specifically provided
herein. Neither party shall have any right or authority to bind or obligate the
other party in any manner or make any representation or warranty on behalf of
the other party.
16.7 Expenses. Unless otherwise provided herein, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party which shall have incurred the same and the other party
shall have no liability relating thereto.
16.8 Entire Agreement. This Agreement constitutes the entire agreement between
the parties and supersedes all prior proposals, communications, representations
and agreements, whether oral or written, with respect to the subject matter
hereof.
16.9 Severability. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability, without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions
hereof in any other jurisdiction.
16.10 Counterparts. This Agreement may be signed in any number of counterparts,
each of which shall be deemed an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
16.11 Headings. The heading used in this Agreement are for convenience of
reference only and shall not affect the meaning or construction of this
Agreement.
16.12 Governing Law. This Agreement, including the performance and
enforceability hereof, shall be governed by and construed in accordance with the
laws of the State of New Jersey applicable therein, without reference to choice
of law doctrine. Each party hereby submits itself for the sole purpose of this
Agreement and any controversy arising hereunder to the jurisdiction of the
courts located in the State of New Jersey and any courts of appeal therefrom,
and waives any objection (on the grounds of lack of jurisdiction, or forum non
conveniens or otherwise) to the exercise of such jurisdiction over it by any
such courts.
16.13 Language. The parties hereto acknowledge having required that this
Agreement and all notices, documents and agreements related hereto be drafted in
English; les parties aux presentes
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reconnaissent avoir exige que la presente convention ainsi que tous les avis,
documents et conventions s'y rapportant soient rediges en anglais.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written below.
H POWER ENTERPRISES OF CANADA INC.
By: /s/ Jean-Guy Chouinard
--------------------------------------
Jean-Guy Chouinard
General Manager
HARVEST ENERGY TECHNOLOGY, INC.
By: /s/ David W. Warren
--------------------------------------
David W. Warren
President
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APPENDIX A
SPECIFICATIONS
Feedstock: Commercial grade LPG (Liquified Petroleum
Gas -principal component = propane)
Fuel Processor Capacity: net 50 SCFH hydrogen delivered (equivalent to 2 Kw @
45% stack efficiency)
Hydrogen quality: less than [*****] CO
Steam Generation: self sufficient
Water recovery: partial
Control: manual
Operation: continuous, attended
Packaging: less than 40 cubic foot
Upon delivery of the prototype Processor, HET shall specify the processing
conditions at which the 50 SCFH of hydrogen are to be delivered. As a minimum,
for each reaction (steam reforming, water gas shift, preferential oxidation,
etc., the following are to be specified by HET: temperature, pressure, space
velocity [(volume of liquid propane + water) / (hour -volume of catalyst) or
other appropriate units], steam/propane molar ratio, Catalyst manufacturer,
catalyst identification or number, etc.
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APPENDIX B
ACCEPTANCE TESTS
Gross delivery of 66 SCFH hydrogen (equivalent to a net delivery of 50 SCFH
hydrogen) containing less than the amount of carbon monoxide that is agreed to,
in accordance with paragraph 2.5.2, at a minimum hydrogen efficiency of 60% (LHV
gross H2/LHV feed + fuel) will be required. Notwithstanding the above, HET use
its best effort to achieve a [*****] ppm carbon monoxide specification and
HPEC will accept the result of HET's best efforts. The total gas flow rate
will be measured using a wet test meter or calibrated equivalent. The
hydrogen content of the gas will be measured by a gas chromatograph or an
equivalent instrument. The carbon monoxide content will be measured by an
infra-red analyzer or an equivalent instrument. All measuring instruments are
to be calibrated by Harvest Technology. A standard calibration test and will
be performed for each instrument will be performed in the presence of HPEC's
technical representative. HPEC's technical representative will approve the
specific tests that are chosen to be the standard calibration tests.
If at any time the Processor does not meet any of the aforementioned
specifications, HPEC may still elect at its discretion to accept the Processor
by notifying HET in writing that HET has fulfilled the requirements of this
Agreement and such notice shall constitute Final Acceptance.
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APPENDIX C
WORK SCHEDULE
================================================================================
Task Number Completion Date
(number of months after signing contract)
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1 3
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2 4
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3 5
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4 6
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5 7
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6 7
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APPENDIX D
WORK
The following statement of work describes the tasks that are to be performed.
Task 1 - Process design ($30,000).
(to be completed 3 months after signing of this contract)
This task will prepare the basic design package for the fuel processor, and will
produce the following deliverables:
1A. Process Flow Diagram
A conceptual flow sheet for the LPG Fuel Processor is shown in the figure.
1B. Heat and Material Balances
1C. Equipment and Catalyst Specifications
Equipment specifications shall be prepared for all of the major equipment items.
The specifications of all the equipment, catalyst, and materials used to
construct the fuel processor shall be included. This will include written
documentation of safe procedures for start-up, operation, and shut-down of the
fuel processor. All relevant documentation related to occupational health and
safety will be included.
Item No. Description
V-1 LPG Tank
V-2 Activated Carbon Fitter
V-3 Demineralizer
Internal packing (ion-exchange resin?)
R-1 Steam Reformer
Annular, helical, or tubular catalyst space Radiant fiber burner
with burner flame monitoring system Convective heat transfer
surface
R-2 HTS Reactor
Packed bed reactor with heat transfer shroud. During normal
operation air is used for cooling. During start-up, steam is
used for heating.
High temperature shift (HTS) catalyst
R-3 LTS Reactor
Packed bed reactor with flue gas
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heat shroud
LTS catalyst
R-4 Selective Oxidation Reactor
Air cooled heat exchange tubes
Selective oxidation catalyst
B-1 Steam Generator
Internal heat exchange coils
AC-1 Cooler/Condenser
Tube bank
P-1 BFW Pump
F-2 Air fan
Task 2 - Optimize Gas Conditioner for 2 kW PEM Fuel Cell ($20,000)
(to be completed 4 months after the signing of the contract)
This task will incorporate selective oxidation technology to condition gases for
low-temperature PEM fuel cells, and will produce the following deliverables:
2A Design PEM fuel cell gas conditioning system based on economic and
technical assessment of catalyst cost and performance data base. The
catalyst cost and the performance data base will be provided to H Power.
2B The gas condition will be fabricated as part of the 2 kW fuel processor.
Task 3 - Detailed Engineering ($40,000 - 2 months)
(to be completed 5 months after the signing of the contract)
This task will perform the detailed engineering needed to construct the fuel
processor including the development of the relevant engineering documents.
3A Piping and Instrumentation Diagrams
3B Control Logic Diagram
A description of the process control strategy will be provided. It will include
a description of the fail safe procedures for burner operation with its
interlocks.
3C Equipment Fabrication Sketches
3D Vendor Data Summary
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This will include a list of all the items, components, etc. used to
construct the fuel processor. Supplier information shall be provided for each
entry on the list, including supplier's name, address, telephone number, price
paid by HET, and if possible an estimate of its price for purchases in large
quantities.
Task 4 -Procurement, Fabrication, Installation and Development Testing ($80,000)
(to be completed 6 months after the signing of the contract)
This task will procure, fabricate, install, and perform system development tests
needed to prove out breadboard fuel processor design. The following will be
delivered:
4A Fuel processor physical unit per specifications of Appendix A.
Task 5 - Testing ($24,000)
(to be completed 7 months after the signing of the contract)
This task will operate the fuel processor at design conditions to verify
hydrogen efficiency, capacity and product gas quality using mass and energy
balances, and gas chromatograph and CO analyser measurements. The following will
be delivered:
5A Summary of a test report on verification test results.
Task 6 - Delivery (fuel processor shipping costs)
A functional 2 Kw LPG (propane) fuel processor that can be integrated with a PEM
cell stack will be delivered to HPEC in Montreal.
TOTALS 194,000 US$ plus fuel processor shipping costs, 7 months
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APPENDIX E
HET Background Technology
HET owns the following intellectual property
1. Expertise in the design of fuel processing systems that provide maximum
system efficiency when integrated with Proton Exchange Membrane (PEM) fuel
cells. This expertise encompasses proprietary knowledge relating to:
a. Use of steam reforming technology to general synthesis gases having net
hydrogen product quantities in the rage of 50-250 SCFH that is sufficient to
operate PEM fuel cells having net electric power outputs in the range of 1-10
kW.
b. Use of selective oxidation technology to reduce the carbon monoxide
concentrations of said synthesis gases to [*****] ppm or less.
c. Use of system integration technology that enables efficient thermal
integration of PEM fuel cells with fuel processors for grid connect and non-grid
connect residential electric power applications. Specifically, this includes
proprietary knowledge relating to technology that allows PEM fuel cells to
achieve high gross electric-generation efficiencies and high co-generation heat
recovery potential.
d. Methods to automate steam reforming processes to allow unattended
operation as required by fuel cell electric power generation applications.
e. Methods of design, material selection, and fabrication that minimize
fuel processor cost for high-volume manufacture.
f. Use of selective hydrogen-permeable membranes to purify hydrogen-rich
feed streams for PEM fuel cell applications.
2. Expertise in the design, fabrication and control of high-temperature
endothermic, steam reforming, reactors for the conversion of fuels such as
LPG, natural gas, and gasoline to hydrogen-rich synthesis gas. This
expertise encompasses proprietary knowledge relating to:
a. Use of radiant burners to provide uniform heat flux, high thermal
efficiency, and compact design for small endothermic reactors generating 50-250
SCFH of net hydrogen product.
b. Methods to operate and control radiant burners using fuels having
widely varying heating value as required for PEM fuel cell applications.
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c. Use of catalyst-packed reactor tubes to promote reaction between steam
and fuel to produce hydrogen. Specifically, this includes expertise relating to
the design of said tubes and their physical relation to said radiant burners,
the selection of the catalyst type, vendor, physical size, and method of
packing.
d. Use of convective heat transfer methods to recover heat from flue gases
in order to maximize the thermal efficiency of endothermic, steam reforming,
reactors.
e. Use of design and control methods to avoid loss of catalyst performance
during automated start-up, idle and normal electric power generating operating
states due to catalyst poisoning, condensation, coking and overheating.
3. Expertise in the design and control of selective oxidations reactors to
reduce the carbon monoxide concentration of hydrogen-rich synthesis gases
to less than 10-50 ppm. HET possesses proprietary knowledge relating to
selective catalytic oxidation technology that has relevance to PEM fuel
cell applications including:
a. Knowledge relating to selection of catalyst type and vendor.
b. Commercial relation with catalyst vendors.
c. Knowledge relating to optimum operating conditions of selective
oxidation reactor, including temperature, humidity, space velocity, and oxygen
stoichiometry.
d. Methods of reactor design and exothermic heat removal.
e. Methods to integrate selective oxidation reactor with fuel processing
systems to maximize overall system efficiency.
4. Expertise in the design of cost-effective control systems to allow
operation of base- loaded residential electric power generators. HET
possesses unique expertise in the design of cost- effective control
systems for PEM fuel cell power plants in the 2-10 kW range, including
methods for control of feed, fuel and air during start-up, idle and normal
operation. This includes development arrangements with OEM vendors for
blowers, control valves, actuators, heat exchangers and catalyst.
5. The following invention disclosure documents on file at the Law Offices of
William W. Haefliger, Patent Attorney, located at 201 South Lake Avenue,
Suite 512, Pasadena, CA 91101: (i) the invention disclosure entitled,
"Compact Endothermic Catalyst Reaction Apparatus," Docket No. 11879; and
(ii) the invention disclosure entitled, "Integrated Selective Oxidation
Reactor Apparatus and Process," Docket No. 11880.
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APPENDIX F
FINAL ACCEPTANCE CERTIFICATE
This certificate attests to the fact that H Power has accepted the Fuel
Processor
__________________________________ ____________________________________
Marten Ternan, for H Power Date
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APPENDIX G
PAYMENT SCHEDULE
First instalment $30,000
Subsequent instalments will be paid monthly in accordance with invoices
submitted to H Power by Harvest. H Power's Technical Representative will inspect
each monthly report submitted by Harvest, to verify that the work performed is
commensurate with the amount of the invoice. A sum of 15% of each monthly
invoice will be withheld by H Power. The amounts withheld will be paid to
Harvest upon final acceptance and delivery of the Fuel Processor to H Power.
HPEC will pay a 1% penalty for each month that the invoice in question is past
due. The due date for each invoice will be 30 days after the date on which the
HPECs Technical Representative approves the HET monthly progress report that
corresponds with such invoice. Within 3 days of receipt of both the invoice and
the progress report, the HPEC Technical Representative will inform HET if the
amount of the invoice does not correspond to the amount of completed Work that
the progress report has claimed.
33
<PAGE>
APPENDIX H
HPEC BACKGROUND TECHNOLOGY
HPEC owns the following intellectual property:
HPEC has established both technical competence and a knowledge base (know-how)
in fuel processing reaction and separation technology that applies to the
manufacture of hydrogen for use in Polymer Electrolyte Membrane Fuel Cells
(PEMFC). This expertise spans the domains of process equipment, process
operating conditions, catalyst performance, and catalyst deactivation. Specific
examples of HPEC expertise that are pertinent to this Agreement are the
following:
1. Desulphurization - Removal of sulphur compounds used as odorants in
carbonaceous fuels such as natural gas. These technologies include the use
of oxides fr stoichiometric reactions; i.e., iron oxides, metallic oxides
supported on activated carbon, and ZnO; disposable nickel hydrogenation
catalysts; and molybdenum catalysts supported on alumina that are promoted
with either nickel or cobalt.
2. Steam reforming - The reaction of steam with carbonaceous fuels to produce
hydrogen and carbon monoxide. The following technologies are included:
Shifts in equilibrium as a function of process operating variables, such
as temperature and pressure. Heat flux densities that are acceptable for
the transfer of the exothermic heat from combustion reactions to provide
the endothermic heat requirement of the steam reforming reaction.
Combustion processes pertaining to flame length, Nox production, and
numerical simulation of these reactions in a confined environment.
Materials technology pertaining to temperature ranges which cause
metallurgical limitations. Heat transfer technology for the internal
exchange of heat energy between entering and leaving process streams. Mass
transfer technology governing the diffusion of the reaction species to
catalyst sites. Catalyst technology pertaining to; catalyst compositions
which enhance the surface concentration of the most desirable species on
the catalyst surface; catalyst promoters that inhibit sintering of
metallic catalyst components at reaction conditions; catalyst
effectiveness factors; regimes of steam to carbon ratio required to avoid
coke deposition on the catalyst. Technologies to minimize undesirable
reaction including; hydrocarbon cracking at temperatures greater than
600-700 C depending on hydrocarbon type; mechanical degradation of
catalysts caused by coke formation; and the Boudouard reaction which
results in carbon formation.
3. The water-gas shift reaction - which is a reaction between the carbon
monoxide formed in steam reforming and water to form hydrogen and carbon
dioxide. The following technologies are included : Shifts in equilibrium
as a function of process operating variables, such as temperature and
pressure, including the use of the high temperature shift reaction with
Fe-Cr oxide catalysts and the low temperature shift reaction with ZnCu
oxide catalysts, to maximize hydrogen production and eliminate as much
carbon monoxide as possible.
34
<PAGE>
Technologies to avoid oil carbonization on catalysts. Technologies to
avoid carbon deposition via the Boudouart reaction. Catalyst technology
that permits process operation in the presence of small quantities of
sulphur.
4. Gas absorption processes for the removal of carbon dioxide. This
technology includes: Acid gas scrubbing processes which cycle a solvent
such as an amine between gas absorption and solvent regeneration towers.
Design expertise in selection of the appropriate number of plates for the
separation required, and selection of the appropriate tower diameter
having suitable liquid and vapour loads at each plate to avoid weeping and
blowing.
5. Gas absorption processes for the removal of carbon dioxide. This
technology includes: Design technology for the selection of the
appropriate number of transfer units based on break through curves.
Operating technologies that include either a pressure swing mode or a
thermal swing mode. Materials technologies which include selection of
appropriate adsorbents such as zeolites.
6. Methanation processes to convert small quantities of carbon monoxide and
carbon dioxide gases that have not been removed from the hydrogen into to
methane. This technology includes: Heat transfer technology to control
temperature increases from the exothermic reactions. Catalyst technologies
for reduction and stabilization. Technologies to minimize both the
formation of carbonyls and of carbon via the Boudouart reaction.
7. Preferential oxidation processes to selectively convert small quantities
of carbon monoxide that have not been removed during the water gas shift
reaction into carbon dioxide. This technology includes : Catalyst
technology that encompasses the traditional Pt/[gamma]A1^20^3 catalyst;
other catalysts such as Ru/[gamma]A1^20^3, which provide greater carbon
monoxide conversion rates but also large methanation rates; the Au/Fe^20^3
catalyst which can operate at 80 C while producing rates which are similar
to those on Pt/[gamma]A1^20^3.
35
<PAGE>
[Purchase Order related to development project]
36
<PAGE>
STATEMENT OF WORK
CONCEPTUAL DESIGN OF A 120 SCFH
HET/HPEC NATURAL GAS FUEL PROCESSOR
Harvest Energy Technology Inc. will provide a conceptual design for a HET/HPEC
Natural Gas Fuel Processor that will include the design information specified
below. The HET/HPEC Fuel Processor will be one that corresponds to the
Development and License Agreement between H Power Enterprises of Canada Inc. and
Harvest Energy Technology Inc. that was dated August 17, 1998. The Fuel
Processor will have the capacity to produce 120 SCFH of hydrogen.
Task 1: Preparation of a Process Flow Diagram
Deliverable: A process flow diagram that includes all the process vessels and
equipment contained in the fuel processor will be prepared. Each process vessel
and equipment item will be numbered. Lines indicating the flow of fluids and/or
solids (flow streams) between the process vessels will be shown. Each flow
stream will be numbered.
Task 2: Calculation of Heat and Material Balances
Deliverable: A table will be prepared providing a column for each process flow
stream. For each process flow stream the following will be given (in one of the
rows), the total mass flow rate, the percent composition of each flow stream
(hydrogen, carbon dioxide, carbon monoxide, water, methane, etc.), the
temperature, the pressure and the enthalpy content.
Task 3: Preliminary Equipment List and Process Equipment Sketches
Deliverables: A list of all the equipment items including an estimate of their
capacity (e.g., volume, throughput). Appropriate sketches of the process
equipment.
Task 4: Preliminary Piping and Instrument Diagram
Deliverable: A preliminary piping and instrument diagram.
Task 5: Conceptual Equipment Layout - Preliminary Plot Plan and Elevations
Deliverables: Diagrams showing the plan view and elevations of the equipment
including the estimated dimensions.
Task 6: Conceptual Control System - Preliminary Logic Diagram
Deliverables: A brief written description of the concepts on which the control
system will be designed and a preliminary control logic diagram.
37
<PAGE>
Exhibit 10.32
November 18, 1999
H POWER CORPORATION
50 Montgomery Street
Belleville, New Jersey
07109
Attention: Dr. H. Frank Gibbard, President and CEO
Dear Dr. Gibbard:
It is the purpose of this letter to memorialize the undertaking that has
recently been agreed to by H Power Corporation ("HPC") to advance a sum of money
to AvantCell Technologies Inc. ("ACT") with a view to the participation by HPC
in a joint development program relating to the commercialization of the
composite bipolar plate technology (the "Technology") that has been developed
and is owned by ACT. In addition, it is the purpose of this letter to confirm
the intent of ACT to (a) give to HPC an option to purchase shares in the capital
stock of ACT; and (b) to set forward the terms and conditions under which a
license arrangement would be entered into between ACT and HPC whereby HPC would
be granted certain exclusive rights to the Technology.
Accordingly in consideration of the sum of One Hundred Thousand Dollars
U.S. Funds (US $100,000.00) ("Option Price") and other good and valuable
consideration ACT will forthwith upon the receipt of the Option Price grant to
HPC an irrevocable option (the "Option") exercisable at any time up to 5:00 p.m.
on June 30, 2000 to purchase such a number of common shares of the capital stock
of ACT as would give to HPC an equity interest in ACT of 4.348% (the shares that
would be so issued shall hereinafter be referred to as the "Option Shares"). The
Option shall be exercisable at any time up to and including, but not after 5:00
p.m. June 30, 2000 by delivering by either FedEx or UPS a written notice signed
by you addressed to the undersigned in my capacity as President of ACT
exercising the Option and if the Option is so exercised ACT shall issue to HPC
the Option Shares at the price hereinafter mentioned. The said sale shall be
closed on the fifth (5th) business day following the date of exercising of the
Option (or such earlier date as we may agree) either at the offices of Gross,
Pinsky, 2 Place Alexis Nihon, Suite 1000, 3500 de Maisonneuve Boulevard West,
Montreal, Quebec or at the offices of ACT where and when payment of the said
purchase price for the Option Shares shall be made in full as hereinafter
provided.
In the event that this Option is so exercised the price for the Option
Shares shall be Five Hundred Thousand Dollars U.S. Funds (US $500,000.00) and
such price shall be satisfied by the Option Price and as to the balance by the
delivery to ACT by banker's draft or certified cheque of
1
<PAGE>
the sum of Four Hundred Thousand Dollars U.S. Funds (US $400,000.00) at which
time share certificates evidencing the ownership of HPC of the Option Shares
shall be delivered to the designated representatives of HPC.
In consideration of the Option Price and in consideration of HPC's
agreement to participate in a program with ACT for the aforementioned purposes
and provided that HPC exercises the Option and purchases the Option Shares ACT
hereby grants to HPC an option (the "Technology Option") to acquire an exclusive
license for a period of two (2) years and only for the primary and stationary
power source market to purchase from ACT fuel cells incorporating the jointly
developed bipolar plates or to purchase such plates for use in fuel cells of
HPC's own manufacture. The whole as will be more fully set out in the form of a
license agreement (the "License Agreement") which HPC and ACT hereby undertake
to negotiate in good faith by no later than September 1, 2000.
The period of two (2) years in the License Agreement will commence on the
date that the ACT bipolar plates are first incorporated in a delivered fuel cell
system. The License Agreement will contain the usual and customary clauses and
conditions and will be based on commercial terms which must be profitable for
ACT as well as advantageous to HPC.
As further consideration ACT agrees that it will not for a period of two
(2) years following the purchase of the Option Shares by HPC sell any part of
the assets or capital stock of ACT without first giving HPC a right of first
refusal to purchase on such equal terms as ACT may be prepared to sell to third
parties any of the assets or shares of ACT. HPC shall have twenty-one (21) days
in which it may exercise such right of first refusal.
It is understood that nothing contained in this letter is intended to
amend, negate or contravene those confidential information and non-disclosure
agreements presently in effect between BondFace Technology Inc. and HPC, which
shall remain and continue in full force and effect.
If HPC does not purchase the Option Shares on or prior to 5:00 p.m. June
30, 2000 this Option and any and all undertakings by ACT in this letter shall
forthwith terminate and the Option Price provided shall be retained by ACT and
neither HPC nor ACT shall be under any further obligations the one to the other
in respect to this letter.
As previously indicated all sums referred to herein are in U.S. Funds.
Time shall be of the essence hereof.
2
<PAGE>
The foregoing shall be governed by and construed in accordance with the
laws of New Jersey.
If the foregoing meets with your approval kindly so indicate by signing
and returning a replica of this letter which is enclosed for that purpose. I
would ask that you return this letter on or before December 15, 1999 after which
date if not so accepted the offer herein contained shall no longer be valid.
Yours very truly,
AVANTCELL TECHNOLOGIES INC.
Per: /s/ Anthony Keeler
-------------------------
Anthony Keeler
President and CEO
AGREED AND ACCEPTED
H POWER CORPORATION
Per: /s/ H. Frank Gibbard
-------------------------
H. Frank Gibbard
President and CEO
3
<PAGE>
Exhibit 10.33
AMENDING AGREEMENT ENTERED INTO ON THIS 11 DAY OF JANUARY, 2000
BY AND BETWEEN: H POWER CORP., a corporation duly
incorporated according to law, herein acting
and represented by H. Frank Gibbard its
President and CEO, duly authorized as he so
declares
(hereinafter referred to as "HPC")
AND: AVANTCELL TECHNOLOGIES INC., a
corporation duly incorporated according to
law, herein acting and represented by
Anthony Keeler, its President and CEO, duly
authorized as he so declares
(hereinafter referred to as "ACT")
WHEREAS the parties hereto have signed a letter agreement dated November 18,
1999 (the "Letter Agreement"), pursuant to which they have agreed in principle
as to certain matters with respect to a joint development program, an option in
favour of HPC to acquire shares in the capital stock of ACT and a license
agreement relating to composite bipolar plate technology;
WHEREAS the parties hereto have agreed to amend the Letter Agreement pursuant to
the terms and conditions set forth in the present Amending Agreement;
NOW THEREFORE, IN CONSIDERATION OF THE RESPECTIVE COVENANTS AND AGREEMENTS
HEREIN CONTAINED AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT OF
WHICH IS HEREBY ACKNOWLEDGED BY EACH OF THE PARTIES HERETO, THE PARTIES HERETO
COVENANT AND AGREE AS FOLLOWS:
1. DEFINED TERMS
1.1 Capitalized terms used in this Amending Agreement and not otherwise defined
herein have the meaning specified in the Letter Agreement.
2. AMENDMENTS TO THE LETTER AGREEMENT
2.1 The phrase "a period of two (2) years" with respect to the executive license
in the second full paragraph of page 2 and with respect to the commencement of
the License Agreement in the third full paragraph of page 2 of the Letter
Agreement, is hereby amended in both places to read "a period of ten (10)
years".
<PAGE>
-2-
2.2 The phrase "a period of two (2) years" in the fourth full paragraph of page
2 of the Letter Agreement with respect to a right of first refusal in favour of
HPC is hereby amended to read "a period of ten (10) years".
3. CONFIRMATION
3.1 Except as expressly provided for in this Amending Agreement, the provisions
of the Letter Agreement are expressly confirmed in all respects and shall
continue in full force and effect.
4. GOVERNING LAW
4.1 This Amending Agreement shall be governed by an interpreted and enforced in
accordance with the laws of New Jersey.
5. COUNTERPARTS
5.1 This Amending Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, and all such counterparts together shall constitute one and the same
instrument. This Amending Agreement may be executed by any party hereto by
facsimile signature, which shall be deemed for all purposes to be an original.
IN WITNESS WHEREOF, the parties have caused this Amending Agreement to be
executed by their respective duly authorized officers.
EXECUTED ON THE DATE FIRST HEREINABOVE MENTIONED.
H POWER ENTERPRISES
Per: /s/ Frank Gibbard
- ------------------------ --------------------------------
Witness Frank Gibbard, President & CEO
AVANTCELL TECHNOLOGIES INC.
Per: /s/ Anthony Keeler
- ------------------------ --------------------------------
Witness Anthony Keeler, President & CEO
<PAGE>
Exhibit 10.34
H Power Corp.
Employee Non Disclosure Agreement
EMPLOYEE'S AGREEMENT RE:
INVENTIONS, CONFIDENTIAL INFORMATION
AND COVENANT NOT TO COMPETE
This Agreement Creates Important Obligations Which Are Binding.
Please Read It In Full Before You Sign It.
I recognize that H Power Corp. (the "Company") is engaged in a continuous
program of research, development and distribution of fuel cells, fuel cell power
systems, products integrating fuel cells or fuel cell systems, and related
technologies, systems and products. I understand that it is part of my
responsibility as an employee to assist the Company in such endeavors.
I recognize the importance of protecting the Company's rights to
inventions, discoveries, ideas and confidential information, and any similar or
related rights.
Therefore, in consideration of my employment by the Company and the
compensation received by me from the Company from time to time, I agree to the
following terms:
1. DEFINITIONS
For the purposes of this Agreement:
(a) The term "Company's Confidential Information" includes any of the
following:
(i) all trade secrets or secret information, whether of technical
or business nature, belonging to the Company (or information
belonging to third parties which the Company shall be under
obligation to keep secret) which I may acquire or develop in
the course of my employment;
(ii) the Company's business methods and practices;
(iii) compilations of data or information concerning the Company's
business, including but not limited to:
(A) financial information whether related to the Company
generally, or to particular products, services,
geographic areas, or time periods;
(B) supply and service information, such as goods and
services suppliers' names or addresses, terms of supply
or service contracts or of particular transactions;
Page 1 of 8 Pages
<PAGE>
H Power Corp.
Employee Non Disclosure Agreement
(C) marketing information, such as details about past,
present or proposed marketing programs by or on behalf
of the Company, sales forecasts or results of marketing
efforts or information about impending transactions;
(D) personnel information, such as compensation or other
terms of employment, employee lists, training methods or
other employee information;
(iv) the names of the Company's customers, the nature of the
Company's relationships with these customers, and the business
of the Company's customers;
(v) any other information not generally known to the public
including information about the Company's operations, plans,
personnel, products or services which, if misused or
disclosed, could have a reasonable possibility of adversely
affecting the business of the Company.
(b) The term "Inventions" means all discoveries, developments, designs,
improvements, inventions, formulae, processes, techniques, computer
programs, strategies, and data, whether or not patentable under
patent, copyright or similar statutes.
2. NON-DISCLOSURE OF COMPANY'S CONFIDENTIAL INFORMATION
At all times during and subsequent to my employment, I agree to keep in
strictest confidence and trust the Company's Confidential Information that
is disclosed to me or to which I have access. I will take all reasonable
action, that the Company deems necessary or appropriate to prevent
unauthorized use or disclosure of or to protect the Company's interests in
the Company's Confidential Information. I will not use or disclose the
Company's Confidential Information without the written consent of the
Company, except as may be necessary in the ordinary course of performing
my duties for the Company. However, I shall not be required to treat as
confidential any of the Company's Confidential Information which:
(i) was in my possession or was known to me prior to receipt from
the Company, or
(ii) is or becomes public knowledge without my fault, or
(iii) is or becomes lawfully available to me from a source other
than the Company.
Page 2 of 8 Pages
<PAGE>
H Power Corp.
Employee Non Disclosure Agreement
3. SURRENDER OF CONFIDENTIAL INFORMATION
Upon termination of my employment with the Company, for whatever reason, I
will promptly surrender to the Company all copies, in whatever form, of
the Company's Confidential Information in my possession, custody or
control, and I will not take with me any of the Company's Confidential
Information that is embodied in a tangible medium of expression.
4. ASSIGNMENT OF RIGHTS TO COMPANY'S CONFIDENTIAL INFORMATION
I hereby assign to the Company any rights I now have or may hereafter
acquire in the Company's Confidential Information.
5. EMPLOYEE INVENTIONS
(a) Disclosure and Ownership of Inventions
(i) During my service as an employee of the Company and for a
period of six (6) months thereafter, I will promptly and fully
disclose to the Company (and to any persons designated by it)
all Inventions generated, made, conceived or reduced to
practice or learned by me, either alone or jointly with
others, which, in any way, result from or is suggested by any
work which I may do for or on behalf of the Company; or relate
to or are useful in the business of the Company; or result
from the use of premises or property owned, leased, licensed,
or contracted for by the Company. The Company shall have all
rights to such Inventions, whether they are patentable or not.
(ii) I understand that the Company will have no rights pursuant to
this Agreement in any Invention of mine made during the term
of my employment by the Company if such Invention has not
arisen out of or by reason of my work with the Company, and
does not relate to the business or operations of the Company,
although I agree to inform the Company of any such Invention.
(b) Assignment of Inventions
I agree that my services on behalf of the Company are works made for
hire and all Inventions specified in Paragraph 5(a)(i) shall be the
sole property of the Company and its assigns, and the Company and
its assigns shall be the sole owner of all patents, copyrights,
trademarks, trade secrets, and other rights and protections in
connection therewith. I hereby assign to the Company any and all
rights I now have or may hereafter acquire in such Inventions. I
further agree, as to all such Inventions,
Page 3 of 8 Pages
<PAGE>
H Power Corp.
Employee Non Disclosure Agreement
to assist the Company in every proper way (but at the Company's
expense) to obtain, and from time to time enforce, patents,
copyrights, trademarks, trade secrets, and other rights and
protections relating to said Inventions in any and all countries,
and to that end I will execute all documents for use in applying for
and obtaining such patents, copyrights, trademarks, trade secrets
and other rights and protections on, and enforcing, such Inventions,
as the Company may desire, together with any assignments thereof to
the Company or persons designated by it.
My obligation to assist the Company in obtaining and enforcing
patents, copyrights, trademarks, trade secrets, and other rights and
protections relating to such Inventions in any and all countries
shall continue beyond the termination of my employment by the
Company, but the Company shall compensate me at a reasonable rate
after my termination for time actually spent by me, at the Company's
request, on such assistance. In the event the Company is unable,
after reasonable effort, to secure my signature on any document or
documents needed to apply for or prosecute any patent, copyright,
trademark, trade secret, or other right or protection relating to an
Invention whether because of my physical or mental capacity or for
any other reason whatsoever, I hereby irrevocably designate and
appoint the Company its duly authorized officers and agents as my
agent coupled with an interest and attorney-in- fact, to act for and
in my behalf and stead to execute and file any such application or
applications and to do all other lawfully permitted acts to further
the prosecution and issuance of patents, copyrights, trademarks,
trade secrets, or similar rights or protections thereon with the
same legal force and effect as if executed by me.
(c) Previous Inventions
As a matter of record, I have identified in Exhibit A, attached
hereto, all Inventions that have been generated or conceived or
first reduced to practice or learned by me, alone or jointly with
others, prior to my employment by the Company, which I desire to
remove from the operation of this Agreement. I represent and warrant
that such list is complete. If I do not attach a list hereto, I
represent that I have made no such Inventions at the time of signing
this Agreement.
6. LIMITATION ON OTHER ACTIVITIES AND COMPETITION
(a) During Employment
I agree that while I am employed by the Company I will not, without
the Company's express written consent, engage in any consulting,
employment or business that is competitive with the Company. In
furtherance and not in limitation of the generality of the preceding
sentence, I shall not, for myself or on behalf of any person or
Page 4 of 8 Pages
<PAGE>
H Power Corp.
Employee Non Disclosure Agreement
organization, directly or indirectly, compete with the Company in
the development, manufacture, sale, solicitation or servicing of any
then existing product of, or service or business engaged in by, the
Company, or any other product of, or service or business engaged in,
or under development by, the Company.
(b) After Termination of Employment
If I have had significant contact with customers of the Company
while employed by the Company, or if I have been materially involved
in the design, development or implementation of the Company's
present or planned major products or services, then I agree that the
provisions of Paragraph 6(a) hereinabove shall be expanded to
prohibit my competing with the Company for twelve (12) months
following the termination of my employment.
7. NO CONFLICTING OBLIGATIONS
(a) During Employment
I represent and warrant to the Company that I have no interest or
obligation which is inconsistent with or in conflict with this
Agreement, or which would prevent, limit or impair my performance of
any part of this Agreement. I agree to notify the Company
immediately if any such interest or obligation arises.
(b) After Termination of Employment
For twelve (12) months following the termination of my employment by
the Company, I agree that if I accept employment, whether as a
consultant, employee, director, trustee or otherwise, with any
person or organization, or engage in any type of activity on my
behalf or on behalf of any person or organization that is in any way
related to the products, services or business of the Company, I
shall notify the Company in writing, within thirty (30) days
thereof, of the character of each such activity, and of the name and
address of each such person or organization by which I am so
employed.
8. CONFIDENTIALITY OF PREVIOUS EMPLOYERS
I represent that my performance of all the terms of this Agreement does
not and will not breach any agreement to keep in confidence proprietary
information acquired by me in confidence or in trust prior to the
execution of this Agreement. I have not entered into, and I agree that I
will not enter into, any agreement, either written or oral, in conflict
with this Agreement.
Page 5 of 8 Pages
<PAGE>
H Power Corp.
Employee Non Disclosure Agreement
I represent that I have not brought and will not bring with me to the
Company, or use in the performance of my responsibilities at the Company,
any materials or documents of a present or former employer or client that
are not generally available to the public, unless I have obtained express
written authorization from the present or former employer or client for
their possession and use.
I also understand that at no time during my service to the Company am I to
breach any obligation of confidentiality that I have to present or former
employers or clients, and I agree that I shall fulfill all such
obligations to present or former employers and clients during my service
to the Company.
9. ENFORCEMENT
I agree that in the event of a breach or threatened breach of the
provisions of this Agreement, the Company's remedies at law would be
inadequate, and the Company shall be entitled to an injunction to enforce
such provisions (without any bond or other security being required), but
nothing herein shall be construed to preclude the Company from pursuing
any remedy at law or in equity for any breach or threatened breach.
10. CITIZENSHIP/ALIENAGE
I assert that I am a citizen or national of the United States, or an alien
lawfully admitted for permanent residence, or an alien who is authorized
under a work permit or by the Attorney General of the United States to be
hired, recruited or referred for employment with the Company.
11. MISCELLANEOUS
(a) Successors
The rights and obligations under this Agreement shall survive the
termination of my service to the Company in any capacity and shall
inure to the benefit of and shall be binding upon: (i) my heirs and
personal representatives, and (ii) the successors and assigns of the
Company.
(b) Governing Law
The laws of the State of New Jersey shall govern all questions
relative to interpretation and construction of this Agreement and to
its performance.
Page 6 of 8 Pages
<PAGE>
H Power Corp.
Employee Non Disclosure Agreement
(c) Severability.
If any provision of this Agreement is wholly or partially
unenforceable for any reason, such unenforceability shall not affect
the enforceability of the balance of this Agreement, and all
provisions of this Agreement shall, if alternative interpretations
are applicable, be construed so as to preserve the enforceability
hereof.
(d) Waiver.
The Company's waiver of any default by me shall not constitute a
waiver of its rights under this Agreement with respect to any
subsequent default by me.
I HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO ITS TERMS.
---------------------------
EMPLOYEE
---------------------------
Address
---------------------------
Date
ACCEPTED AS A CONDITION OF EMPLOYMENT
H POWER CORP.
BY:
---------------------------
Date
Page 7 of 8 Pages
<PAGE>
H Power Corp.
Employee Non Disclosure Agreement
EXHIBIT A
The following is a complete list of all Inventions relative to the subject
matter of my service as an employee of H Power Corp. (the "Company") that have
been generated or conceived or first reduced by practice or learned by me, alone
or jointly with others, prior to my employment by the Company.
LIST OF INVENTIONS
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
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[ ] Additional sheets attached.
-----------------------------
Employee
Page 8 of 8 Pages
<PAGE>
Exhibit 10.35
INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT is made as of ___________, 2000
between H Power Corp., a Delaware corporation ("H Power"), and _____________
(collectively with such person's heirs, executors, administrators and other
personal representatives, the "Indemnitee"), an officer or director of H Power.
WHEREAS, the Board of Directors has concluded that H Power's
executive officers and directors should be provided with reasonable and
appropriate protection against inordinate risks in order to ensure that the most
capable persons will be attracted to such positions; and, therefore, has
determined to contractually obligate itself to indemnify in a reasonable and
adequate manner its officers and directors, and to assume for itself liability
for expenses and damages in connection with claims lodged against such persons
as a result of their service to H Power;
WHEREAS, applicable law empowers corporations to indemnify a person
who serves as a director, officer, employee or agent of a corporation or a
person who serves at the request of a corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust, or
other enterprise; and
WHEREAS, the parties believe it appropriate to memorialize and
reaffirm H Power's indemnification obligations to Indemnitee and, in addition,
to set forth the agreements contained herein.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties agree as follows:
1. Indemnification. Indemnitee shall be indemnified and held
harmless by H Power against any judgments, penalties, fines, amounts paid in
settlement and Expenses (as hereinafter defined) incurred in connection with any
actual or threatened Proceeding (as hereinafter defined) to the fullest extent
permitted by H Power's Certificate of Incorporation (the "Certificate"), by-laws
("By-Laws") and the General Corporation Law of the State of Delaware ("Delaware
Law") as in effect on the date hereof and to such greater extent as Delaware Law
may hereafter from time to time permit. In addition, H Power agrees to advance
to Indemnitee Expenses incurred in connection with the foregoing. "Proceeding"
includes, without limitation, any action, suit, arbitration, alternate dispute
resolution mechanism, investigation, administrative hearing or any other actual,
threatened or contemplated proceeding, whether civil, criminal, administrative
or investigative, whether by a third party, by or in the right of H Power or by
Indemnitee to enforce any rights under this Agreement or otherwise against H
Power or its affiliates.
2. Interim Expenses. Expenses incurred by Indemnitee in defending
any Proceeding for which Indemnitee may be entitled to indemnification hereunder
shall be paid by H
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Power in advance of the final disposition of such Proceeding upon receipt of an
undertaking by or on behalf of Indemnitee to repay such amount if it shall
ultimately be determined that he or she is not entitled to be indemnified by H
Power hereunder. "Expenses" means all attorneys' fees and expenses, retainers,
court costs, transcript costs, duplicating costs, fees of experts, fees of
witnesses, travel expenses, printing and binding costs, telephone charges,
postage and delivery fees, service fees, all other costs and expenses
customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating or being or preparing to be a witness in a
Proceeding, and per diem payments to Indemnitee in an amount equal to the last
annual salary payable under any employment agreement between H Power and
Indemnitee divided by 365 for each day spent by Indemnitee in connection with
prosecuting, defending, preparing to prosecute or defend, investigating or being
or preparing to be a witness in a Proceeding.
3. Exceptions to Indemnifications. Notwithstanding the foregoing, no
indemnity pursuant to Sections 1 or 2 shall be paid by H Power:
(a) on account of any suit in which judgment is rendered
against Indemnitee for an accounting of profits made from the purchase or sale
by Indemnitee of securities of H Power pursuant to the provisions of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any federal, state or local statutory law;
(b) on account of Indemnitee's conduct which is finally
adjudged to have been knowingly fraudulent or deliberately dishonest, or to
constitute willful misconduct;
(c) on account of Indemnitee's conduct which is finally
adjudged to have constituted a breach of Indemnitee's duty of loyalty to H Power
or resulted in any personal profit or advantage to which Indemnitee was not
legally entitled;
(d) for which payment is actually made to Indemnitee under a
valid and collectible insurance policy or under a valid and enforceable
indemnity clause, bylaw or agreement, except in respect of any excess beyond
payment under such insurance policy, indemnity clause, bylaw or agreement;
(e) if a final decision by a court having jurisdiction in the
matter shall determine that such indemnification is not lawful; or
(f) in connection with any Proceeding (or part thereof)
initiated by Indemnitee, or any Proceeding by Indemnitee against H Power or its
directors, officers, employees or other indemnitees, unless (i) such
indemnification is expressly required to be made by law, (ii) the Proceeding was
authorized by the Board of Directors of H Power, (iii) such indemnification is
provided by H Power, in its sole discretion, pursuant to the powers vested in H
Power under applicable law, or (iv) the Proceeding is initiated pursuant to
Section 4 hereof.
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4. Failure to Indemnify.
(a) If a claim under this Agreement, under any statute, or
under any provision of the Certificate or By-Laws providing for indemnification,
is not paid in full by H Power within 45 days after a written request for
payment thereof has first been received by H Power, Indemnitee may, but need
not, at any time thereafter bring an action against H Power to recover the
unpaid amount of the claim and, if successful in whole or in part, Indemnitee
shall also be entitled to be indemnified by H Power for Indemnitee's reasonable
expenses, including attorneys' fees, actually and necessarily incurred in
connection with successfully establishing the right to indemnification, in whole
or in part, in any such action.
(b) It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in connection with any
Proceeding in advance of its final disposition) that Indemnitee has not met the
standards of conduct which make it permissible under the General Corporation Law
of the State of Delaware for H Power to indemnify Indemnitee for the amount
claimed, but the burden of proving such defense shall be on H Power and
Indemnitee shall be entitled to receive interim payments of Expenses pursuant to
Section 2 unless and until such defense may be finally adjudicated by court
order or judgment from which no further right of appeal exists.
5. Certain Agreements of Indemnitee.
(a) Indemnitee agrees to do all things reasonably requested by
the Board of Directors of H Power to enable H Power to coordinate Indemnitee's
defense with, if applicable, H Power's defense, provided, however, that
Indemnitee shall not be required to take any action that would in any way
prejudice his or her defense or waive any defense or position available to him
or her in connection with any action;
(b) Indemnitee agrees to do all things reasonably requested by
the Board of Directors of H Power to subrogate to H Power any rights of recovery
(including rights to insurance or indemnification from persons other than H
Power) which Indemnitee may have with respect to any action;
(c) Indemnitee agrees to be represented in any action by a law
firm mutually acceptable to H Power and Indemnitee; and
(d) Indemnitee agrees to cooperate with H Power and its
counsel and maintain any confidences revealed to him or her by H Power in
connection with H Power's defense of any action. H Power agrees to cooperate
with Indemnitee and his or her counsel and maintain any confidences revealed to
it by Indemnitee in connection with Indemnitee's defense of any action.
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6. Successors. This Agreement establishes contract rights which
shall be binding upon, and shall inure to the benefit of, the successors,
assigns, heirs and legal representatives of the parties hereto.
7. Contract Rights Not Exclusive. The contract rights conferred by
this Agreement shall be in addition to, but not exclusive of, any other right
which Indemnitee may have or may hereafter acquire under any statute, provision
of the Certificate or By-Laws, agreement, vote of stockholders or disinterested
directors or otherwise.
8. Indemnitee's Obligations. Indemnitee shall promptly advise H
Power in writing of the institution of any Proceeding that is or may be subject
to this Agreement and generally keep H Power informed of, and consult with H
Power with respect to, the status of any such Proceeding.
9. Severability. Should any provision or Section of this Agreement,
or any clause hereof, be held to be invalid, illegal or unenforceable, in whole
or in part, the remaining provisions, clauses and Sections of this Agreement
shall remain fully enforceable and binding on the parties.
10. Choice of Law. The validity, interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the State of
Delaware, regardless of the laws that might otherwise govern under principles of
conflicts of laws applicable thereto.
11. Continuation of Indemnification. The indemnification under this
Agreement shall continue as to Indemnitee even though he or she may have ceased
to be a director, officer, employee and/or agent of H Power. H Power
acknowledges that, in providing services to H Power, Indemnitee is relying on
this Agreement. Accordingly, H Power agrees that its obligations hereunder will
survive (i) any actual or purported termination of this Agreement by H Power or
its successors or assigns whether by operation of law or otherwise, (ii) any
change in H Power's Certificate or By- Laws and (iii) termination of the
Indemnitee's services to H Power (whether such services were terminated by H
Power or the Indemnitee), whether or not a claim is made or an action or
Proceeding is threatened or commenced before or after the actual or purported
termination of this Agreement or termination of Indemnitee's services.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and signed as of the day and year first above written.
- ---------------------------------------------
H POWER CORP.
By:
------------------------------------------
<PAGE>
Exhibit 10.36
LEASE
THIS AGREEMENT, entered into this 8th day of August 1991 between Montbell
Associates, having its principal office at 40 Warren Street, Paterson, New
Jersey 07524, hereinafter referred to as Landlord; and H-Power Corp., 21
Lackawana Place, Bloomfield, NJ 070003; hereinafter referred to as the Tenant.
WITNESSETH:
That the Landlord hereby demises unto the Tenant and the Tenant hereby
hires and takes from Landlord for the term and on the rental hereinafter
specified, the premises in the City of Belleville, County of Essex, State of New
Jersey, commonly known as 60 Montgomery Street (1st Floor).
TO HAVE AND TO HOLD the Leased Premises, approximately 7,500 square feet,
unto Tenant, its successors and assigns, for the term of five (5) years,
commencing on the 1st day of September, 1991 (the "Commencement Date"), and end
at 8:00 pm, Eastern Standard Time, July 31, 1996 after said commencement, unless
this Lease shall be sooner terminated as hereinafter provided.
The term, Leased Premises, shall be defined as that section of the
building shown on Exhibit "A", which represents 4.75% of the total rentable
space of the complex of which the Leased Premises is a part.
1 ANNUAL RENT:
(a) Tenant agrees to pay to Landlord an annual rental as set forth in
Schedule "A". Said rent to be paid in equal monthly installments in advance on
the first day of each and every month.
(b) If Tenant moves into or takes possession of the Leased Premises prior
to the Commencement Date, It shall not pay a pro rata portion of the rent from
such time to the Commencement Date, the actual Commencement Date being unchanged
from that set forth above, provided Tenant shall provide Landlord with the first
month's rent and a certificate of insurance as set forth in Section 8 hereof.
2 TAXES:
(a) The Landlord agrees to pay the real estate taxes assessed against the
property for the calender year 1992, that being considered base period taxes. A
copy of the most recent tax bill is attached hereto.
(b) The parties agree that the Tenant shall pay all increases in the real
estate taxes assessed in excess of said base period. Landlord shall furnish
Tenant with a copy of the tax bill for proof of increase. The increase shall
then be due and payable as taxes are due and payable.
(c) Landlord and Tenant agree that Tenant's total share of the real estate
taxes shall be based on the Tenant's pro rata share of occupancy. Tenant's pro
rata share of occupancy is 4.75%.
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(d) Tenant further agrees to pay all other taxes levied against the Leased
Premises, special assessments, water and sewer charges and other charges levied
against the land and buildings which comprise the Leased Premises.
3 USE OF PREMISES:
Tenant shall use the Lease Premises for the development and manufacture of
fuel cell systems plus hydrogen generation, clean up and storage systems and for
no other purpose other than that connected with Its business.
4 MAINTENANCE AND OPERATION OF LEASED PREMISES:
Except as provided in section (f) below, Tenant agrees that Tenant, at its
expense will:
(a) Pay for all water, gas, fuel, and electricity used or consumed by It
in the Leased Premises directly to the public utility providing the same and
maintain in good working order all plumbing, electrical, heating, ventilating
and air conditioning systems. Landlord represents that all said utilities are
separately metered.
(b) The Tenant agrees to observe and comply with all laws, ordinances,
rules and regulations of the Federal, state, county and municipal authorities
applicable to the business to be conducted by the Tenant in the Leased Premises,
including the making of structural and non-structural alterations due to the
Tenant's occupancy. If any of such laws, ordinances, rules and regulations shall
require structural changes which would have been necessary irrespective of the
nature of the tenancy, then in such event, the same shall be complied with by
the Landlord. Tenant agrees not to do or permit to be done at any time during
the Term anything in the Leased Premises, or keep anything therein, which will
increase the rate of fire insurance premiums on the improvements or any part
thereof, or on the property kept therein, above the present rate.
(c) Operate and maintain in good condition the buildings and building
equipment installed on the Leased Premises by Landlord, making all necessary
interior repairs thereto, and repainting when necessary except as provided in
section 8, if the necessity therefor is caused by fire or other casualty.
(d) Replace all glass in windows and doors which may be broken or cracked
subsequent to the commencement of this Lease.
(e) Keep sidewalks, parking lots and driveways abutting the Leased
Premises in good and safe repair and free and clean from ice, snow and debris
within a ten (10) foot radius of the building.
(f) Landlord agrees to maintain and repair the roof and structural
portions of the building. Landlord shall commence such repairs as It deems
reasonably necessary within three (3) days written notice by Tenant that said
repairs are needed.
If such damage is the result of the negligence or willfull and wanton
misconduct of the Tenant, Landlord shall make such repairs as It deems
reasonably necessary and Tenant shall reimburse Landlord for Its time and
material to make such repairs.
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5 TENANT'S EQUIPMENT AND FIXTURES:
(a) Tenant at Its expense shall have the right to install, maintain, and
remove in, on or about the Leased Premises all such equipment, furniture and
fixtures as It deems necessary or desirable in connection with the operation of
Its business in the Leased Premises, all of which shall remain the property of
Tenant. Tenant shall pay the cost of repairing any damage to the building on the
Leased Premises occasioned by any such removal of Tenant's equipment by Tenant.
(b) If the Tenant shall not have removed all such equipment, furniture and
fixtures installed by It in the Leased Premises at the termination of this Lease
for any cause, Landlord shall have the right to remove the same and store the
same, and Tenant upon written demand shall pay to Landlord Its cost of removal,
restoration of any damage done to the building in connection therewith and
charges for storage. If Tenant shall not take delivery of the same and pay such
costs, including storage costs, for the period of 15 days after any such
expiration or other termination of this Lease, then Landlord may sell the same
at public or private sale and apply the net proceeds of said sale to its
aforesaid costs, including reasonable attorneys' fees paying over to Tenant any
net proceeds remaining after payment of same.
6 INTERIOR ALTERATIONS BY TENANT AND LANDLORD'S ALTERATIONS:
Tenant, at Its expense, may make alterations and additions to the interior
of the Leased Premises which It deems necessary or desirable in connection with
the operation of Its business therein; provided however, that no changes shall
be made in the electric, plumbing, air conditioning or heating systems which
will cause an overloading of such systems or of the sewage outlets to the city
sewers or septic or other sanitary system installed on the Leased Premises or
necessitate any additions to the heating system. All such alterations shall be
made in accordance with the requirements of the building code of the
municipality in which the Leased Premises are located and other governmental
authorities having jurisdiction and, to the extent applicable, with the
regulations of the Board of Fire Underwriters. Tenant shall not permit any
mechanics' or other liens to stand against the property of which the Leased
Premises is a part for work or material furnished to Tenant, provided that
Tenant shall not be in default pursuant to this provision so long as It is
contesting the validity thereof by appropriate legal action diligently pursued
and an appropriate surety bond is posted.
Nothing herein contained shall be construed as a consent on the part of
the Landlord to subject the Landlord's property to liability under the
mechanic's lien law of the State of New Jersey, or any lien law or any lien or
charge whatsoever.
No structural changes shall be made by Tenant without the written consent
of the Landlord, which consent shall not be unreasonably withheld. Landlord
hereby approves of attached plan detailing Tenant's proposed improvements.
7 ASSIGNMENT:
The Tenant shall not sublet the Leased Premises or any portion thereof, or
assign this Lease without the prior written consent of the Landlord, which
consent shall not be unreasonably withheld.
In the event that the Landlord shall consent to an assignment or
subletting or an assignment or subletting shall take place because the Landlord
has not consented within 15 days, then all rents
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in excess of those payments due from Tenant to Landlord pursuant to this Lease
shall be paid to Landlord as Additional Rent. On demand, any assignee or
subtenant shall make payments directly to Landlord.
8 FIRE AND OTHER CASUALTIES:
(a) Tenant at Its expense, throughout the term of this Lease and for the
mutual benefit of the Landlord and Tenant, shall maintain general liability
insurance against claims for bodily injury or death and property damage
occurring upon, in or about the Leased Premises, affording protection to a limit
of not less than $1,000,000.00 Combined Single Limit Per Accident or Occurrence.
(b) The insurance provided for in this section shall be affected under
valid and enforceable policies issued by insurers of recognized responsibility
and acceptable to Landlord and Landlord's mortgagee, and such policies shall
name Landlord and Tenant as the assureds as their respective interests may
appear. The Landlord shall be named as an additional insured under all insurance
policies required herein.
(c) Tenant shall furnish Landlord, upon written request from Landlord,
from time to time certificates evidencing the policies of insurance required by
It pursuant to this section and shall deliver certified copies of such policies
to Landlord's mortgagee if required by it.
(d) If the Leased Premises is totally destroyed by fire or other casualty
or is damaged by fire or other casualty to the extent of 50% or more, this Lease
at the Landlord's or Tenant's option shall terminate; in the event of such
termination, Tenant shall have six (6) months to procure other reasonably
suitable quarters and any unearned rent paid or credited in advance shall be
refunded. If so terminated, Landlord shall be entitled to the insurance proceeds
collectible by reason of such damage or destruction. If not so terminated, then
the Landlord forthwith and with due diligence shall repair and restore such
buildings to their condition immediately prior to such damage and the rent shall
be abated proportionately during the period of restoration.
(e) The Tenant shall reimburse Landlord for the amount any increase in
premiums over base year 1991 (at its pro rata share of 4.75%) for fire, extended
coverage, and Landlord's liability coverage including flood insurance, if any,
consistent with its current insurance policy covering the complex of which the
Leased Premises is a part, and which is attached hereto as an exhibit.
9 UNAVAILABILITY OF FIRE INSURANCE:
If, because of Tenant's occupancy, it shall be impossible to obtain fire
insurance on the buildings and improvements on the Leased Premises in an amount
and in the form and in fire insurance companies licensed in the State of New
Jersey, then after providing Tenant with written notice that such insurance is
unattainable, Tenant shall have fifteen (15) days to procure such insurance
policy's reasonably acceptable to the Landlord. In the event Tenant fails to
obtain such insurance within said 15 day term the Landlord may, if Landlord so
elects, at any time thereafter, terminate Lease and the term thereof on giving
the Tenant thirty (30) days written notice of Landlord's intention to do so,
and, upon giving such notice, this Lease and the Term thereof shall terminate
and come to an end.
If any of the policies of insurance that are provided to be obtained and
maintained by Tenant or Landlord cannot be obtained and/or kept in force because
of Tenant's use of the Leased Premises,
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and Tenant shall fail to commence to cure, remedy and correct the condition
which makes it impossible to obtain and keep in force said policies within
thirty (30) days after written notice given by Landlord to Tenant, and Tenant
fails, neglects or refuses to proceed diligently to cure such condition,
Landlord may terminate this Lease by giving at least thirty (30) days notice of
such termination to Tenant, and this Lease shall terminate at the expiration of
said thirty (30) days with the same force and affect as if that were the
original expiration date thereof, and Tenant shall be and remain liable to
Landlord for all damages and losses suffered by it in the same manner as if this
Lease were terminated for any other default of Tenant. In lieu of exercising
such right of termination, Landlord may, at its option, obtain such policies at
regular or increased rates and pay the premiums thereof and Tenant shall
reimburse Landlord for the amount of such premium upon demand, and if not paid,
the amount thereof, together with interest at two (2%) percent per month, shall
be added to the amount of the next month's rent as additional rent.
If, due to the Tenant's use of the Leased premises, the insurance rates
are increased on the entire building, contents and liability, the Tenant shall
reimburse the increased cost to the Landlord and other tenants for their
increased cost. Landlord, on request of Tenant, shall provide the Tenant with
any insurance documentation which pertains to rate changes.
10 NON-LIABILITY OF LANDLORD LANDLORD INDEMNITY:
(a) The Landlord shall not be responsible for the loss of or damage to
property for any cause whatsoever including, but not limited to, water damage,
or injury to persons, including Tenant, occurring in or about the Leased
Premises by reason of any existing or future condition, defect, matter or thing
in the Leased Premises or for the acts, Commissions or negligence of other
persons or tenants in and about the Leased Premises. The Tenant agrees to
indemnify and save the Landlord harmless from all claims and liability for loss
of or damage to property, or injuries to persons occurring in or about the
Leased Premises due to the negligent acts or Commissions of Tenant, Its
servants, agents, employees or invitees. Tenant's obligations pursuant to this
Section 10(a) shall be satisfied provided that it obtains insurance as set forth
in Section 8.
11 SURRENDER:
At the expiration or termination of this Lease, Tenant shall surrender
immediate possession of the Leased Premises, together with all alterations,
improvements and additions thereto made by Tenant as permitted hereby, to
Landlord in broom clean and as good condition as when delivered, reasonable wear
and tear excepted. Provided Landlord delivers notice to Tenant thirty (30) days
prior to expiration of the term, Tenant shall remove, in a good and workmanlike
manner, any alterations, improvements or additions.
12 HOLDING OVER:
Any holding over by Tenant after the expiration of the Term of this Lease
shall not operate except by written agreement to extend or renew this Lease or
to imply or create a new Lease, but in such case, Landlord's rights shall be
limited to either immediate termination of Tenant's occupancy or the treatment
of the Tenant's occupancy as a month-to-month tenancy, then the Tenant shall pay
fixed monthly rental of DOUBLE the Lease rental charged during the final month
of the Lease in addition to other charges set forth in this Lease only if the
Tenant remains without the written
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consent of the Landlord and only if such holding over jeopardizes the Landlord's
ability to procure another Tenant.
13 QUIET ENJOYMENT:
Landlord agrees that the Tenant, upon paying the rent and keeping the
agreements of this Lease on Its part to be kept and performed, shall have
peaceable and uninterrupted possession of the Leased Premises during the term of
this Lease.
14 REMEDIES ON DEFAULT:
This Lease and the term thereof are subject to limitation that if at any
time during such term any one or more of the following events (herein called an
"Event of Default") shall occur:
(a) If Tenant makes an assignment for the benefit of creditors; or
(b) If a decree or other order by a court having jurisdiction shall have
been entered adjucating the Tenant a bankrupt or insolvent, or approving a
properly filed petition seeking, under the Federal Bankruptcy Laws or any other
similar applicable Federal or State Law, the reorganization of Tenant or the
composition, extension or arrangement of the liabilities of Tenant, and such
decree or order continues undischarged for thirty days; or if a decree or order
by the court for the appointment of a receiver or trustee or assignee in
bankruptcy or insolvency of Tenant or of substantially all of Its properties
shall have been entered and such decree or other order shall have remained in
force undischarged for ninety days; or
(c) If Tenant institutes proceedings for a decree or order of the kind
mentioned in subsection (b) or files a consent to any such decree mentioned in
subsection (b); or if Tenant admits in writing to Its inability to pay Its debts
as they become due; or
(d) If Tenant assigns, mortgages or encumbers this Lease, except with the
prior written consent of the Landlord, or sublets the whole or any portion
thereof, except as permitted pursuant to the provisions of this Lease, or if
this Lease shall be transferred or pass to any person, firm or corporation by
operation of law;
(e) If Tenant fails to pay any installment of rent by the fifteenth day
after receipt of written notice from the Landlord; or
(f) If Tenant fails to Pay any other sum required to be paid by Tenant
hereunder and such failure shall continue for the period of five days after
receipt of notice from the Landlord; or
(g) If Tenant fails to perform or observe any other requirements of this
Lease not hereinbefore in this section specifically referred to and such failure
continues for forty five days after receipt of notice thereof from Landlord and
if Tenant fails to commence the performance or observance of such other
requirement within said forty five days and to diligently proceed therewith;
then, upon the happening of any one or more of such Events of Default,
Landlord, at its election, without demand or notice and without declaring said
term ended, if it so elects, may re-enter the Leased Premises, either with or
without occupying the same again and may repossess and enjoy the Leased
Premises, without the termination of said term (if Landlord elects not to
terminate
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the same) or such reentry working a forfeiture of the rents to be paid by Tenant
or the agreements to be performed by Tenant during the balance of the term of
this Lease. The commencement of a proceeding or suit in forcible entry and
detainer, or in ejectment, or other action of recovery of possession of the
Leased Premises after default by Tenant, Landlord shall relet the Leased
Premises at the highest rental reasonably obtainable, the Tenant shall remain
liable for and pay to the Landlord for the remainder of the term of this Lease,
upon each rent day specified for the payment of the monthly installments of the
fixed annual rent, the difference between the rent collected by Landlord for
reletting the Leased Premises, after deducting therefrom expenses of preparing
Leased Premises for renting, brokerage commissions and legal fees in connection
therewith, and the fixed annual rent hereinabove reserved for the balance of the
term of this Lease or at the option of the Landlord the rent due for the
remainder of the term together with all expenses and commissions incurred by
Landlord.
15 SUBORDINATE TO MORTGAGES AND DEEDS OF TRUST:
This Lease is subject and is hereby subordinated to all present and future
mortgages, deeds of trust or encumbrances affecting the Leased Premises. The
Tenant agrees to execute such instruments which may be deemed necessary or
desirable by the Landlord to further affect the subordination of this Lease to
any such mortgage, deed of trust or encumbrance. Landlord covenants that it
shall not permit any default under said mortgage and that in the event of such
default, Tenant shall have the right to cure the same and deduct the cost of
curing such default from the rent due hereunder.
16 NET LEASE:
This is a "Net" Lease and the Landlord shall not be required to provide
any services or maintenance contracts do any act in connection with the Leased
Premises, except as expressly provided herein including but not limited to
furnishing heat, water and power and Landlord shall not be liable for any
failure of any supply or electric current or of any service by any utility, nor
for injury or damage to person (including death) or property caused by or
resulting from steam, gas, electricity, water, rain or snow which may be or leak
from any part of the Leased Premises, or from any pipes, appliances or plumbing
works of the same, or from interference with light or other appurtenances,
hereditaments or easements, however caused, and the rent reserved hereunder
shall be paid to Landlord without any claim on the part of the Tenant for
dimunition or abatement except as expressly provided herein, and the fact that
the Tenants use and occupancy of the Leased Premises shall be disturbed or
prevented from any cause whatsoever shall not in any way suspend, abate or
reduce the rentals to be paid hereunder.
17 CONDEMNATION OR EMINENT DOMAIN:
If the entire property or any substantial part thereof wherein the Leased
Premises are located shall be taken by public or quasi-public authority under
any power of eminent domain or condemnation, or in the event of a conveyance in
lieu thereof, this Lease shall terminate upon the actual possession by the
condemning authority and the Tenant may pursue Its own claim against the
condemning authority so long as said claim does not interfere with the
Landlord's award.
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18 RENT SECURITY:
To secure the covenants and promises of the Tenant contained herein the
Tenant herewith deposits (on signing of this Lease) the sum of $5,625.00 said
sum shall be returned to the Tenant at the expiration of the term hereof,
without interest, provided the Tenant has performed in accordance with the terms
hereof. In the event repairs are necessary, beyond ordinary wear and tear, then
said sum or a portion thereof, may be used by the Landlord to make such repairs
and the balance remaining shall be returned to the Tenant provided that Landlord
shall not otherwise be obligated to make such repairs as otherwise set forth in
Section 4(b) of this Lease. The security deposited herein shall not be
mortgaged, assigned or encumbered by the Tenant without the written consent of
the Landlord. If Landlord applies any part of said sum to cure any default of
Tenant, Tenant shall, upon demand, deposit with Landlord the amount so applied
so that the Landlord may have the full deposit on hand at all times during the
term of the Lease provided that Landlord gives reasonable written notice to the
Tenant. Tenant hereby waives any future law or laws which may require the
Landlord to segregate the aforementioned security or pay interest on said
security deposit. In addition to the security deposit upon signing of this
agreement the Tenant deposits with the Landlord a sum equal to the first month's
rent which shall be held by the Landlord and shall be applied toward the rent to
be paid in accordance with this Lease.
19 NOTICES:
All notices hereunder shall be in writing and sent by hand or fax
confirmed by United States certified mail, postage prepaid:
(a) If to Landlord at 40 Warren Street, Paterson, New Jersey 07524
(b) If to Tenant at the Leased Premises, or in either case, at such other
address as either party by written notice to the other party shall furnish.
20 SIGNS:
No signs shall be affixed to or placed upon any exterior part of the
Leased Premises by Tenant, except in such manner and of such size, design and
color as shall be in conformity with all applicable laws and approved in advance
by Landlord in writing, which consent shall not be unreasonably withheld or
delayed.
21 INTEREST ON DEFAULT:
(a) In the event Tenant fails to make any payment of Rent ten (10) days
after written notice that it is due, or fails within ten (10) days after notice,
to take any other action required of it under this Lease, TIME BEING OF THE
ESSENCE, which action is then taken by Landlord, Tenant shall pay to Landlord as
Additional Rent the greater of (i) 5% of the amount of Rent or monies expended
by Landlord to cure any such default of the Tenant, or (ii) $500.00, which sum
is deemed reasonable by the parties to compensate the Landlord for additional
costs and not as a penalty.
(b) In the event the Tenant fails to pay Rent when due, or fails, after
notice, to take any action required of It under this Lease, which action is then
taken by Landlord, Tenant shall pay to Landlord interests at the rate of two
(2%) per cent per month, or the then highest amount allowed by law, on Rent or
monies expended by the Landlord to cure any default of the Tenant, said interest
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to run from the date same becomes due from Tenant until the date of payment. No
interest shall be due provided Rent is paid on or before the tenth day after it
is due.
22 FINANCIAL STATEMENTS:
After the first anniversary of the commencement date of the term, Tenant
shall, if required by Landlord's mortgagee or any future mortgagee, or
prospective purchaser, submit, without cost to the Landlord, Tenant's financial
statement. Tenant shall also, without cost to Landlord, submit to any
prospective mortgagee or purchaser such statements as it may have, as and when
required by Landlord or Landlord's mortgagee, or prospective mortgagee or
prospective purchaser.
23 RESERVATION OF TITLE:
Tenant may not consent to the reservation of any title to property by any
conditional vendor to any property which may be affixed to the Leased Premises
so as to become a part thereof (excluding trade fixtures and trade machinery and
equipment used in Tenant's business), wholly or in any portion, without material
injury to the Leased Premises. Landlord hereby states that the reservation of
any such title by any conditional vendor or similar party shall be null and
void.
24 CERTIFICATE OF OCCUPANCY:
If required, Landlord shall obtain a Certificate of Occupancy permitting
the use of the Leased Premises by Tenant in accordance with the terms of this
Lease, provided that Tenant shall cooperate fully with the Landlord in obtaining
said Certificate of Occupancy.
25 LANDLORD'S COVENANTS AND REPRESENTATIONS:
Landlord covenants, represents and warrants that:
(a) Landlord has title to the Leased Premises and has the full right and
power to execute and perform this Lease and to grant the estate demised herein,
and that Tenant, on payment of the rent herein reserved and performing the
covenants and agreements hereof, shall peaceably and quietly have, hold and
enjoy the Leased Premises and all rights, appurtenances and privileges belonging
or in anywise appertaining thereto during the Lease term without molestation or
hindrances of any persons whomsoever.
(b) The Leased Premises complies with all zoning requirements and is free
of any known building fire or other violations.
(c) At the commencement of the term, the Leased Premises will be in a good
state of repair, and all heating, ventilating and air-conditioning systems, as
well as plumbing and electrical systems, shall be in good working order.
(d) Landlord agrees to perform improvements as per Schedule "B" prior to
the commencement of the term.
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26 LEASE PROVISIONS NOT EXCLUSIVE:
The rights and remedies of the Landlord contained in this Lease are not
intended to be exclusive but as additional to all other rights and remedies the
Landlord would otherwise have by law.
27 DELIVERY OF LEASE:
No rights are to conferred upon the Tenant except that Tenant shall have
the right to store equipment within the Leased Premises until this Lease has
been signed by the Landlord and an executed copy of the Lease has been delivered
to the Tenant.
28 ENTIRE AGREEMENT:
This Lease contains all agreements between the parties hereto. No
representatives or agent of Landlord or Tenant's authorized to make any
representations or alter or modify this Lease or any of the options in this
Lease contained and provided for in any way. Any additions, alterations,
changes, or modifications to or in this Lease or any agreements hereafter made
or conditions created, to be binding upon the parties hereto, must be in writing
and signed by said parties, and it is agreed that none of the provisions of this
Lease, including this provision, can be waived, except by writing duly signed by
the parties hereto.
29 RIGHT TO INSPECT AND EXHIBIT:
The Landlord, or its agent, shall have the right to enter the Leased
Premises at reasonable hours, given reasonable notice to the Tenant in the day,
and at night in the case of an emergency, to examine the same, or to make such
repairs, additions or alterations as it shall deem necessary for safety,
preservation or restoration of the improvements, or the safety or convenience of
the occupants or users thereof (there being no obligation however, unless
expressly set forth herein, on the part of the Landlord to make any such
repairs, additions or alterations), or to exhibit the same to prospective
purchasers, and to put upon the Leased Premises a suitable "For Sale" or "To
Let" sign for six (6) months prior to the end of this Lease. For six (6) months
prior to the expiration of the Term, the Landlord, or its agents, may similarly
exhibit the Leased Premises to prospective tenants.
30 BENEFITS OF LEASE:
This Lease shall be binding upon and inure to the benefit of the parties
hereto, their successors and assigns, subject however, as to Tenant to the
provisions of Section 7 of this Lease.
31 TABLE OF CONTENTS AND CAPTIONS:
The Table of Contents and Captions in this Lease are inserted only as a
matter of convenience and in no way to define, amplify, limit or describe the
scope or intent of this Lease, or the terms, conditions and provisions hereof,
nor as affecting the meaning of the text of any article or section hereof in any
way.
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32 ACCORD AND SATISFACTION:
No payment by Tenant or receipt by Landlord of lesser amount than the rent
stipulated in this Lease shall be deemed to be other than on account of the
earliest stipulated rent, nor shall any endorsement or statement on any check or
any letter accompanying any check or payment as rent to be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
the Landlord's right to recover the balance of such rent or pursue any other
remedy provided in this Lease or by law.
33 CONSENTS TO DEFAULTS:
No consent or waiver, express or implied, by the Landlord, to or of any
breach or default in the performance by the Tenant of Tenant's obligations
hereunder shall be deemed or construed to be a consent or waiver to or of any
other breach or default in performance by Tenant hereunder. Failure on the part
of the Landlord to complain of any act or failure to act of the Tenant or to
declare the Tenant in default, irrespective of how long such act or failure
continues, shall not constitute a waiver by the Landlord or its rights
hereunder.
34 DATE OF POSSESSION: OMITTED BY INTENTION
35 MUTUAL WAIVER OF SUBROGATION:
It is covenanted and agreed by and between the Parties hereto that the
Tenant shall relieve the Landlord of all liability or loss or damage to the
Tenant's property, whether real or personal, caused by fire and/or perils
covered in a standard form fire insurance policy with extended coverage, due to
any acts of commission or ommission of Landlord; and Landlord shall relieve the
Tenant of all liability for loss or damage to Landlord's property, whether real
or personal, caused by fire and/or the perils covered in a standard form fire
insurance policy with extended coverage due to any acts of commission or
ommission of Tenant.
36 ENVIRONMENTAL LAWS:
(a) If Tenant receives any notice ("Notice") of the happening of any event
involving the use, spill, discharge or clean-up of any hazardous or toxic
substances or waste, or any oil or pesticide on or about the Leased Premises or
into the sewer and/or waste treatment system operated by the Landlord or any
utility (any such event is hereinafter referred to as a "Hazardous Discharge")
from any person or entity, including the New Jersey Department of Environmental
Protection ("DEP") and Environmental Protection Agency ("EPA"), which Notice is
caused by Tenant's occupancy of the Leased Premises (or any assignee or
sub-tenants use of the Leased Premises), then the Tenant shall give immediate
written notice of same to Landlord, detailing all relevant facts and
circumstances. Tenant's SIC number is __________.
(b) Without limitation to the forgoing, the Landlord shall have the
option, but shall not be obligated, to exercise any of its rights as provided
herein immediately upon Tenant's failure to comply in full with any of the terms
of this Section or Landlord's receipt of any notice from any person or entity
asserting the happening of a Hazardous Discharge and Landlord may take such
action as it deems necessary or advisable to remedy. Tenant's failure to
clean-up, remove or minimize the impact of any such Hazardous Discharge, and all
costs and expenses incurred by the
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Landlord in the exercise of any such rights shall be paid to the Landlord by
Tenant, on demand, all as additional rent.
(c) The occurrence of any of the following events shall constitute an
Event of Default under this Lease:
1. If the Landlord receives its first of a Hazardous Discharge other than
from the Tenant, and the Landlord does not receive a notice (which may be given
in oral or written form, provided same is following with all due dispatch by
written notice given by certified mail, return receipt requested) of such
Hazardous Discharge from Tenant within seventy-two (72) hours of the time Tenant
received said first notice from any governmental agency having jurisdiction.
2. If the DEP, EPA or any other state or federal agency asserts or creates
a first lien upon any or all of the Leased Premises by reason of the occurrence
of a Hazardous Discharge; or
3. If the DEP, EPA or any other state or federal agency asserts a claim
against the Tenant or the Landlord for damages or clean-up costs related to a
Hazardous Discharge. Provided, however, such claim shall not constitute a
default if, within five (5) days of the occurrence giving rise to the claims:
A. The Tenant can prove to the Landlord's satisfaction that Tenant has
commenced and is diligently pursuing either (i) cure or correction of the event
which constitutes the basis for the claim, and continues diligently to pursue
such cure or correction to completion; or (ii) proceedings for an injunction, a
restraining order or other appropriate emergent relief preventing such agency or
agencies from asserting such claim, which relief is granted within ten (10) days
of the occurrence giving rise to the claim and the emergent relief is not
thereafter dissolved or reversed on appeal; and
B. In either of the foregoing events, the Tenant has posted a bond, letter
of credit or other security satisfactory in form, substance and amount to the
Landlord and the agency or entity asserting the claim to secure the proper and
complete cure or correction of the event which constitutes the basis for the
claim.
(d) If the Tenant's operations on the Leased Premises now or hereafter
constitute an "Industrial Establishment" subject to the requirements of the New
Jersey Environmental Cleanup Act, N.J.S.A. 13:1k-6 et. seq., and the regulations
pertaining thereto, N.J.A.C. 7:1-3.1 et seq. ("ECRA"), prior to the expiration
or sooner termination of this Lease, Tenant shall comply with all requirements
of ECRA pertaining to an Industrial Establishment closing operations at Its sole
cost and expense to the satisfaction of the DEP and the Landlord. Without
limitation to the foregoing, the Tenant's obligations shall include (i) the
proper filing of the initial notice to the DEP's and the Landlord's satisfaction
of all soil, ground, water and surface water sampling and tests required, by
N.J.A.C. 7:1-37. (ii) the performance to the DEP's and the Landlord's
satisfaction of all soil, ground, water, and surface water sampling tests
required by N.J.A.C. 7:1-3,9. and (iii) the filing of a "negative declaration"
with DEP under N.J.A.C. 7:1-3.12. The Tenant shall immediately provide Landlord
with copies of all correspondence, reports, notices, orders, findings,
declarations and other materials pertinent to Tenant's compliance and DEP's
requirements under ECRA as they are issued or received by the Tenant.
(e) The Tenant hereby agrees to defend (with counsel satisfactory to
Landlord), to indemnify and hold the Landlord harmless from and against any and
all claims, losses, liabilities,
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damage (be they, without limitation, by clean-up costs and reasonable attorney
fees arising by reason of any of the aforesaid or an action against the Tenant
and/or Landlord under this indemnity) arising directly or indirectly from, out
of or by reason of Tenant's failure to comply in full with any of the terms of
this Section 37 or any Hazardous Discharge occurring during the period of this
Lease and any other period of possession of the Leased Premises by the Tenant.
(f) This section shall survive the expiration or sooner termination of
this Lease.
37 INTERPRETATION:
The laws of the State of New Jersey shall govern the validity, performance
and enforcement of this Lease. The invalidity or unenforceability of any
provision hereof shall not affect or impair any other provision.
38 CONSENTS:
Landlord shall not unreasonably withhold or delay its consents to any act
or matter which, pursuant to this Lease, requires its consent.
39 NEGOTIATED LEASE:
This is a negotiated Lease. This Lease shall not be construed against the
Landlord by reason of it being prepared by Landlord, Landlord's agents or
Landlord's attorney's.
40 PROCESSING CHARGE: OMITTED BY INTENTION
41 RIGHT OF FIRST REFUSAL: OMITTED BY INTENTION
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IN WITNESS WHEREOF, the parties hereto have set their hands and seals the
day and year first above written.
WITNESS:
by: /s/ Robert H. Kessler
- ----------------------- ---------------------
ROBERT H. KESSLER
MONTBELL ASSOCIATES
Landlord
ATTEST:
by: /s/ Joseph P. Maceda
- ----------------------- ---------------------
JOSEPH P. MACEDA
H-POWER CORP.
Tenant
SCHEDULE "A"
RENTAL SCHEDULE
DATE PER SQ. FT. ANNUAL MONTHLY
09/01/91 TO 12/31/91 $1.60 $12,000.00 $1,000.00
01/01/92 TO 07/31/92 4.00 30,000.00 2,500.00
08/01/92 TO 07/31/93 4.25 31,875.00 2,656.25
08/01/93 TO 07/31/94 4.50 33,750.00 2,812.50
08/01/94 TO 07/31/95 4.75 35,625.00 2,968.75
08/01/95 TO 07/31/96 5.00 37,500.00 3,125.00
SCHEDULE "B"
Landlord agrees to perform the following before the commencement of this
Lease.
1. All existing lighting will be in working order.
2. All mechanical shall be in working order.
3. Take out the existing conveyor and put in a staircase leading to the
second floor.
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Exhibit 10.37
BUSINESS LEASE
between
MONTBELL ASSOCIATES
LANDLORD
AND
H-POWER CORP.
TENANT
DATE: AUGUST 8, 1991
COMMENCEMENT DATE: MAY 1, 1991
TERMINATION DATE: JULY 31, 1996
<PAGE>
TABLE OF CONTENTS
Section Page
----
1 ANNUAL RENT..............................................................4
2 TAXES....................................................................4
3 USE OF PREMISES..........................................................5
4 MAINTENANCE AND OPERATION OF LEASED PREMISES.............................5
5 TENANT'S EQUIPMENT AND FIXTURES..........................................6
6 INTERIOR ALTERATIONS BY TENANT AND LANDLORD'S ALTERATIONS................6
7 ASSIGNMENT...............................................................7
8 FIRE AND OTHER CASUALTIES................................................7
9 UNAVAILABILITY OF FIRE INSURANCE.........................................8
10 NON-LIABILITY OF LANDLORD LANDLORD INDEMNITY.............................9
11 SURRENDER................................................................9
12 HOLDING OVER.............................................................9
13 QUIET ENJOYMENT..........................................................9
14 REMEDIES ON DEFAULT.....................................................10
15 SUBORDINATE TO MORTGAGES AND DEEDS OF TRUST.............................11
16 NET LEASE...............................................................11
17 CONDEMNATION OR EMINENT DOMAIN..........................................11
18 RENT SECURITY...........................................................12
19 NOTICES.................................................................12
20 SIGNS...................................................................12
21 INTEREST ON DEFAULT.....................................................12
22 FINANCIAL STATEMENTS....................................................13
23 RESERVATION OF TITLE....................................................13
24 CERTIFICATE OF OCCUPANCY................................................13
25 LANDLORD'S COVENANTS AND REPRESENTATIONS................................13
26 LEASE PROVISIONS NOT EXCLUSIVE..........................................14
27 DELIVERY OF LEASE.......................................................14
28 ENTIRE AGREEMENT........................................................14
29 RIGHT TO INSPECT AND EXHIBIT............................................14
30 BENEFITS OF LEASE.......................................................16
31 TABLE OF CONTENTS AND CAPTIONS..........................................16
32 ACCORD AND SATISFACTION.................................................16
33 CONSENTS TO DEFAULTS....................................................16
34 DATE OF POSSESSION OMITTED BY INTENTION.................................16
35 MUTUAL WAIVER OF SUBROGATION............................................16
36 ENVIRONMENTAL LAWS......................................................17
37 INTERPRETATION..........................................................18
38 CONSENTS................................................................18
39 NEGOTIATED LEASE........................................................19
40 PROCESSING CHARGE OMITTED BY INTENTION..................................19
41 RIGHT OF FIRST REFUSAL OMITTED BY INTENTION.............................19
2
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LEASE
THIS AGREEMENT, entered into this 8th day of August 1991 between Montbell
Associates, having its principal office at 40 Warren Street, Paterson, New
Jersey 07524, hereinafter referred to as Landlord; and H-Power Corp., 21
Lackawana Place, Bloomfield, NJ 07003; hereinafter referred to as the Tenant.
W I T N E S S E T H:
That the Landlord hereby demises unto the Tenant and the Tenant hereby
hires and takes from Landlord for the term and on the rental hereinafter
specified, the Premises in the City of Belleville, County of Essex, State of New
Jersey, commonly known as 60 Montgomery Street (2nd Floor).
TO HAVE AND TO HOLD the Leased Premises, approximately 7,500 Square feet
unto Tenant, its successors and assigns, for the term of five (5) Years,
commencing on the 1st day of May , 1991 (the "Commencement Date"), and end at
8:00 pm, Eastern Standard Time, July 31, 1996 after said commencement, unless
this Lease shall be sooner terminated as hereinafter provided.
The term, Leased Premises, shall be defined as that section of the
building shown on Exhibit "A", which represents 4.75% of the total rentable
space of the complex of which the Leased Premises is a part.
SECTION 1: ANNUAL RENT:
(a) Tenant agrees to pay to Landlord an annual rental as set forth in
Schedule "A". Said rent to be paid in equal monthly installments in advance on
the first day of each and every month.
(b) If Tenant moves into or takes possession of the Leased Premises prior
to the Commencement Date, it shall not pay a pro rata portion of the rent from
such time to the Commencement Date, the actual Commencement Date being unchanged
from that set forth above, provided Tenant shall provide Landlord with the first
month's rent and a certificate of insurance as set forth in Section 8 hereof.
SECTION 2: TAXES:
(a) The Landlord agrees to pay the real estate taxes assessed against the
property for the calender year 1992, that being considered base period taxes. A
copy of the most recent tax bill is attached hereto.
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(b) The parties agree that the Tenant shall pay all increases in the real
estate taxes assessed in excess of said base period. Landlord shall furnish
Tenant with a copy of the tax bill for proof of increase. The increase shall
then be due and payable as taxes are due and payable.
(c) Landlord and Tenant agree that Tenant's total share of the real estate
taxes shall be based on the Tenant's pro rata share of occupancy. Tenant's pro
rata share of occupancy is 4.75%.
(d) Tenant further agrees to pay all other taxes levied against the Leased
Premises, special assessments, water and sewer charges and other charges levied
against the land and buildings which comprise the Leased Premises.
SECTION 3: USE OF PREMISES:
Tenant shall use the Leased Premises for the development and manufacture
of fuel cell systems plus hydrogen generation, clean up and storage systems and
for no other purpose other than that connected with Its business.
SECTION 4: MAINTENANCE AND OPERATION OF LEASED PREMISES:
Except as provided in section (f) below, Tenant agrees that Tenant, at Its
expense will:
(a) Pay for all water, gas, fuel, and electricity used or consumed by It
in the Leased Premises directly to the public utility providing the same and
maintain in good working order all plumbing, electrical, heating, ventilating
and air conditioning systems. Landlord represents that all said utilities are
separately metered.
(b) The Tenant agrees to observe and comply with all laws, ordinances,
rules and regulations of the Federal, state, county and municipal authorities
applicable to the business to be conducted by the Tenant in the Leased Premises,
including the making of structural and nonstructural alterations due to the
Tenant's occupancy. If any of such laws, ordinances, rules and regulations shall
require structural changes which would have been necessary irrespective of the
nature of the tenancy, then in such event, the same shall be complied with by
the Landlord. Tenant agrees not to do or permit to be done at any time during
the Term anything in the Leased Premises, or keep anything therein, which will
increase the rate of fire insurance premiums on the improvements or any part
thereof, or on the property kept therein, above the present rate;
(c) Operate and maintain in good condition the buildings and building
equipment installed on the Leased Premises by Landlord, making all necessary
interior repairs thereto, and repainting when necessary except as provided in
section 8, if the necessity therefor is caused by fire or other casualty.
(d) Replace all glass in windows and doors which may be broken or cracked
subsequent to the commencement of this Lease;
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(e) Keep sidewalks, parking lots and driveways abutting the Leased
Premises in good and safe repair and free and clean from ice, snow and debris
within a ten ( 10) foot radius of the building.
(f) Landlord agrees to maintain and repair the roof and structural
portions of the building. Landlord shall commence such repairs as It deems
reasonably necessary within three (3) days written notice by Tenant that said
repairs are needed.
If such damage is the result of the negligence or willful and wanton
misconduct of the Tenant, Landlord shall make such repairs as It deems
reasonably necessary and Tenant shall reimburse Landlord for Its time and
material to make such repairs.
SECTION 5: TENANT'S EQUIPMENT AND FIXTURES:
(a) Tenant at Its expense shall have the right to install, maintain, and
remove in, on or about the Leased Premises all such equipment, furniture and
fixtures as It deems necessary or desirable in connection with the operation of
Its business in the Leased Premises, all of which shall remain the property of
Tenant. Tenant shall pay the cost of repairing any damage to the building on the
Leased Premises occasioned by any such removal of Tenant's equipment by Tenant.
(b) If the Tenant shall not have removed all such equipment, furniture,
and fixtures installed by It in the Leased Premises at the termination of this
Lease for any cause, Landlord shall have the right to remove the same and store
the same and Tenant upon written demand shall pay to Landlord Its cost of
removal, restoration of any damage done to the building in connection therewith
and charges for storage. If Tenant shall not take delivery of the same and pay
such costs, including storage costs, for the period of 15 days after any such
expiration or other termination of this Lease, then Landlord may sell the same
at public or private sale and apply the net proceeds of said sale to its
aforesaid costs, including reasonable attorneys' fees paying over to Tenant any
net proceeds remaining after payment of same.
SECTION 6: INTERIOR ALTERATIONS BY TENANT AND LANDLORD'S ALTERATIONS:
Tenant, at Its expense, may make alterations and additions to the interior
of the Leased Premises which It deems necessary or desirable in connection with
the operation of Its business therein; provided however, that no changes shall
be made in the electric, plumbing, airconditioning or heating systems which will
cause an overloading of such systems or of the sewage outlets to the city sewers
or septic or other sanitary system installed on the Leased Premises or
necessitate any additions to the heating system. All such alterations shall be
made in accordance with the requirements of the building code of the
municipality in which the Leased Premises are located, and other governmental
authorities having jurisdiction and, to the extent applicable, with the
regulations of the Board of Fire Underwriters. Tenant shall not permit any
mechanics' or other liens to stand against the property of which the Leased
Premises is a part for work or material furnished to Tenant, provided that
Tenant shall not be in default pursuant to this provision so long as It is
contesting the
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validity thereof by appropriate legal action diligently pursued and an
appropriate surety bond is posted.
Nothing herein contained shall be construed as a consent on the part of
the Landlord to subject the Landlord's property to liability under the
mechanic's lien law of the State of New Jersey, or any lien law or any lien or
charge whatsoever.
No structural changes shall be made by Tenant without the written consent
of the Landlord, which consent shall not be unreasonably withheld. Landlord
hereby approves of attached plan detailing Tenant's proposed improvements.
SECTION 7: ASSIGNMENT:
The Tenant shall not sublet the Leased Premises or any portion thereof, or
assign this Lease without the prior written consent of the Landlord, which
consent shall not be unreasonably withheld.
In the event that the Landlord shall consent to an assignment or
subletting or an assignment or subletting shall take place because the Landlord
has not consented within 15 days, then all rents in excess of those payments due
from Tenant to Landlord pursuant to this Lease shall be paid to Landlord as
Additional Rent. On demand, any assignee or subtenant shall make payments
directly to Landlord.
SECTION 8: FIRE AND OTHER CASUALTIES:
(a) Tenant at Its expense, throughout the term of this Lease and for the
mutual benefit of the Landlord and Tenant, shall maintain general liability
insurance against claims for bodily injury or death and property damage
occurring upon, in or about the Leased Premises, affording protection to a limit
of not less than $1,000,000.00 Combined Single Limit Per Accident or Occurrence.
(b) The insurance provided for in this section shall be affected under
valid and enforceable policies issued by insurers of recognized responsibility
and acceptable to Landlord and Landlord's mortgagee, and such policies shall
name Landlord and Tenant as the assureds as their respective interests may
appear. The Landlord shall be named as an additional insured under all insurance
policies required herein.
(c) Tenant shall furnish Landlord, upon written request from Landlord,
from time to time certificates evidencing the Policies of insurance required by
It pursuant to this section and shall deliver certified copies of such policies
to Landlord's mortgagee if required by it.
(d) If the Leased Premises is totally destroyed by fire or other casualty
or is damaged by fire or other casualty to the extent of 50% or more, this Lease
at the Landlord's or Tenant's option shall terminate; in the event of such
termination, Tenant shall have six (6) months to procure other reasonably
suitable quarters and any unearned rent paid or credited in advance shall be
refunded.
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If so terminated, Landlord shall be entitled to the insurance proceeds
collectible by reason of such damage or destruction. If not so terminated, then
the Landlord forthwith and with due diligence shall repair and restore such
buildings to their condition immediately prior to such damage and the rent shall
be abated proportionately during the Period of restoration.
(e) The Tenant shall reimburse Landlord for the amount of any increase in
premiums over base year 1991 (at its pro rata share or 4.75%) for fire, extended
coverage, and Landlord's liability coverage including flood insurance, if any
insisted with the current insurance policy covering the complex of which the
Leased Premises is a part and which is attached hereto as an exhibit.
SECTION 9: UNAVAILABILITY OF FIRE INSURANCE:
If, because of Tenant's occupancy, it shall be impossible to obtain fire
insurance on the buildings and improvements on the Leased Premises in an amount
and in the form and in fire insurance companies licensed in the State of New
Jersey; then after providing Tenant with that such insurance is unattainable,
Tenant shall have fifteen (15) days to procure such insurance policy's
reasonably acceptable to the Landlord. In the event Tenant fails to obtain said
insurance in said 15 days then the Landlord may, if Landlord so elects, at any
time thereafter, terminate this Lease and the term thereof on giving the Tenant
(30) days written notice of Landlord's intention to do so, and, upon giving such
notice, this Lease and the Term thereof shall terminate and come to an end.
If any of the policies of insurance that are provided to be obtained and
maintained by Tenant or Landlord cannot be obtained and/or kept in force because
of Tenant's use of the Leased Premises and Tenant shall fail to commence to
cure, remedy and correct the condition which makes it impossible to obtain and
keep in force said policies within thirty (30) days after written notice given
by Landlord to Tenant, and Tenant fails, neglects or refuses to proceed
diligently to curb such condition, Landlord may terminate this Lease by giving
at least thirty (30) days notice of such termination to Tenant, and this Lease
shall terminate at the expiration of said thirty (30) days with the same force
and affect as if that were the original expiration date thereof, and Tenant
shall be and remain liable to Landlord for all damages and losses suffered by it
in the same manner as if this Lease were terminated for any other default of
Tenant. In lieu of exercising such right of termination, Landlord may, at its
option, obtain such policies at regular or increased rates and pay the premiums
thereof and Tenant shall reimburse Landlord for the amount of such premium upon
demand, and if not paid, the amount thereof, together with interest at two (2%)
percent per month, shall be added to the amount of the next month's rent, as
additional rent.
If, due to the Tenant's use of the Leased premises, the insurance rates
are increased on the entire building, contents and liability, the Tenant shall
reimburse the increased cost to the Landlord and other tenants for their
increased cost. Landlord, on request of Tenant, shall provide the Tenant with
any insurance documentation which Pertains to rate changes.
7
<PAGE>
SECTION 10: NON-LIABILITY OF LANDLORD LANDLORD INDEMNITY:
(a) The Landlord shall not be responsible for the loss of or damage to
property for any cause whatsoever including, but not limited to, water damage,
or injury to Persons, including Tenant, occurring in or about the Leased
Premises by reason of any existing or future condition, defect, matter or thing
in the Leased Premises or for the acts, omission or negligence of other persons
or tenants in and about the Leased Premises. The Tenant agrees to indemnify and
save the Landlord harmless from all claims and liability or loss of or damage to
property, or injuries to persons occurring in or about the Leased Premises due
to the negligent acts or omission of Tenant, Its servants, agents, employees or
invitees. Tenant's obligations pursuant to this Section 10 (a) shall be
satisfied provided that it obtains insurance as set forth in Section 8.
SECTION 11: SURRENDER:
At the expiration or termination of this Lease, Tenant shall surrender
immediate possession of the Leased Premises, together with all alterations,
improvements and additions thereto made by Tenant as permitted hereby, to
Landlord in broom clean and as good condition as when delivered, reasonable wear
and tear excepted. Provided Landlord delivers notice to Tenant thirty (30) days
prior to expiration of the term, Tenant shall remove, in a good and workmanlike
manner, any alterations, improvements or additions.
SECTION 12: HOLDING OVER:
Any holding over by Tenant after the expiration of the Term of this Lease
shall not operate except by written agreement to extend or renew this Lease or
to imply or create a new Lease, but in such case, Landlord's rights shall be
limited to either immediate termination of Tenant's occupancy or the treatment
of the Tenant's occupancy as a month-to-month tenancy, then the Tenant shall pay
fixed monthly rental of DOUBLE the Lease rental charged during the final month
of the Lease in addition to other charges set forth in this Lease only if the
Tenant remains without the written consent of the Landlord and only if such
holding over jeopardizes the Landlord's ability to procure another Tenant.
SECTION 13: QUIET ENJOYMENT:
Landlord agrees that the Tenant, upon paying the rent and keeping the
agreements of this Lease on Its part to be kept and performed, shall have
peaceable and uninterrupted possession of the Leased Premises during the term of
this Lease.
SECTION 14: REMEDIES ON DEFAULT:
This Lease and the term thereof are subject to limitation that if at any
time during such term any one or more of the following events (herein called an
"Event of Default") shall occur:
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(a) If Tenant makes an assignment for the benefit of creditors; or
(b) If a decree or other order by a court having jurisdiction shall have
been entered adjucating the Tenant a bankrupt or insolvent, or approving a
properly filed a petition seeking, under the Federal Bankruptcy Laws or any
other similar applicable Federal or State Law, the reorganization of Tenant or
the composition, extension or arrangement of the liabilities of Tenant, and such
decree or order continues undischarged for thirty days; or if a decree or order
by the court for the appointment of a receiver or trustee or assignee in
bankruptcy or insolvency of Tenant or of substantially all of Its properties
shall have been entered and such decree or other order shall have remained in
force undischarged for ninety days; or
(c) If Tenant institutes proceedings for a decree or order of the kind
mentioned in subsection (b) or files a consent to any such decree mentioned in
subsection (b); or if Tenant admits in writing to Its inability to pay Its debts
as they become due; or
(d) If Tenant assigns, mortgages or encumbers this Lease, except with the
prior written consent of the Landlord, or sublets the whole or any portion
thereof, except as permitted pursuant to the provisions of this Lease, or if
this Lease shall be transferred or pass to any person, firm or corporation by
operation of law;
(e) If Tenant fails to pay any installment of rent by the fifteenth day
after receipt of written notice from the Landlord; or
(f) If Tenant fails to pay any other sum required to be paid by Tenant
hereunder and such failure shall continue for the period of five days after
receipt of notice from the Landlord; or
(g) If Tenant fails to perform or observe any other requirements of this
Lease not hereinbefore in this section specifically referred to and such failure
continues for forty five days after receipt of notice thereof from Landlord and
if Tenant fails to commence the performance or observance of such other
requirement; within said forty-five days and to diligently proceed therewith;
then, upon the happening of any one or more such Events of Default,
Landlord, at its election, without demand or notice and without declaring said
term ended, if it so elects, may re-enter the Leased Premises, either with or
without occupying the same again and may repossess and enjoy the Leased
Premises, without the termination of said term (if Landlord elects not to
terminate the same) or such reentry working a forfeiture of the rents to be paid
by Tenant or the agreements to be performed by Tenant during the balance of the
term of this Lease. The commencement of a proceeding or suit in forcible entry
and detainer, or in ejectment, or other action of recovery of possession of the
Leased Premises after default by Tenant. Landlord shall relet the Leased
Premises at the highest rental reasonably obtainable, the Tenant shall remain
liable for and pay to the Landlord for the remainder of the term of this Lease,
upon each rent day specified for the payment of the monthly installments of the
fixed annual rent, the difference between the rent collected by Landlord for
reletting the Leased Premises, after deducting therefrom expenses of preparing
Leased Premises
9
<PAGE>
for renting, brokerage commissions and legal fees in connection therewith, and
the fixed annual rent hereinabove reserved for the balance of the term of this
Lease or at the option of the Landlord the rent due for the remainder of the
term together with all expenses and commissions, incurred by Landlord.
SECTION 15: SUBORDINATE TO MORTGAGES AND DEEDS OF TRUST:
This Lease is subject and is hereby subordinated to all present and future
mortgages, deeds of trust or encumbrances affecting the Leased Premises. The
Tenant agrees to execute such instruments which may be deemed necessary or
desirable by the Landlord to further affect the subordination of this Lease to
any such mortgage, deed of trust or encumbrance. Landlord covenants that it
shall not permit any default under said mortgage and that in the event of such
default, Tenant shall have the right to cure the same and deduct the cost of
curing such default from the rent due hereunder.
SECTION 16: NET LEASE:
This is a "Net" Lease and the Landlord shall not be required to provide
any services or maintenance contracts do any act in connection with the Leased
Premises, except as expressly provided herein including but not limited to
furnishing heat, water and power and Landlord shall not be liable for any
failure of any supply or electric current or of any service by any utility, nor
for injury or damage to person (including death) or property caused by or
resulting from steam, gas, electricity, water, rain or snow which may be or leak
from any part of the Leased Premises, or from any pipes, appliances or plumbing
works of the same, or from interference with light or other appurtenances,
hereditaments or easements, however caused and the rent reserved hereunder shall
be paid to Landlord without any claim on the part of the Tenant for dimunition
or abatement except as expressly provided herein, and the fact that the Tenants
use and occupancy of the Leased Premises shall be disturbed or prevented from
any cause whatsoever shall not in any way suspend, abate or reduce the rentals
to be paid hereunder.
SECTION 17: CONDEMNATION OR EMINENT DOMAIN:
If the entire property or any substantial part thereof wherein the Leased
Premises are located shall be taken by public or quasi-public authority under
any power of eminent domain or condemnation, or in the event of a conveyance in
lieu thereof, this Lease shall terminate upon the actual possession by the
condemning authority and the tenant may pursue Its own claim against the
condemning authority so long as said claim does not interfere with the
Landlord's award.
SECTION 18: RENT SECURITY:
To secure the covenants and promises of the Tenant contained herein the
Tenant herewith deposits (on signing of this Lease) the sum of $2,812.50. Said
sum shall be returned to the Tenant at the expiration of the term hereof,
without interest, provided the Tenant has performed in
10
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accordance with the terms hereof. In the event repairs are necessary, beyond
ordinary wear and tear, then said sum or a portion thereof, may be used by the
Landlord to make such repairs and the balance remaining shall be returned to the
Tenant provided that Landlord shall not otherwise be obligated to make such
repairs as otherwise set forth in Section 4(b) of this Lease. The security
deposited herein shall not be mortgaged, assigned or encumbered by the Tenant
without the written consent of the Landlord. If Landlord applies any part of
said sum to cure any default of Tenant, Tenant shall, upon demand, deposit with
Landlord the amount so applied so that the Landlord may have the full deposit on
hand at all times during the term of the Lease provided that Landlord gives
reasonable written notice to the Tenant. Tenant hereby waives any future law or
laws which may require the Landlord to segregate the aforementioned security or
pay interest on said security deposit. In addition to the security deposit upon
signing of this agreement the Tenant deposits with the Landlord a sum equal to
the first month's rent which shall be held by the Landlord and shall be applied
toward the rent to be paid in accordance with this Lease.
SECTION 19: NOTICES:
All notices hereunder shall be in writing and sent by hand or fax
confirmed by United States certified mail, postage prepaid:
a. If to Landlord at 10 Warren Street, Paterson. New Jersey 07524
b. lf to Tenant at the Leased Premises, or in either case, at such other
address as either party, by written notice to the other party shall furnish.
SECTION 20: SIGNS:
No signs shall be affixed to or placed upon any exterior part of the
Leased Premises by Tenant, except in such manner and of such size, design and
color as shall be in conformity with all applicable laws and approved in advance
by Landlord in writing, which consent shall be unreasonably withheld or delayed.
SECTION 21: INTEREST ON DEFAULT:
a. In the event Tenant fails to make any payment of Rent ten (10) days
after written notice that it is due, or fails within ten (10) days after notice,
to take any other action required of it under this Lease, TIME BEING OF THE
ESSENCE, which action is then taken by Landlord. Tenant shall pay to Landlord as
Additional Rent the greater of (i) 5% of the amount of Rent or monies expended
by Landlord to cure any such default of the Tenant, or (ii) $500.00, which sum
is deemed reasonable by the parties to compensate the Landlord for additional
costs and not as a penalty.
b. In the event the Tenant fails to pay Rent when due, or fails, after
notice, to take any action required of It under this Lease, which action is then
taken by Landlord, Tenant shall pay to
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Landlord interests at the rate of two (1%) per cent per month, or the then
highest amount allowed by law, on Rent or monies expended by the Landlord to
cure any default of the Tenant, said interest to run from the date same becomes
due from Tenant until the date of payment. No interest shall be due provided
Rent is paid on or before the tenth day after it is due.
SECTION 22: FINANCIAL STATEMENTS:
After the first anniversary of the commencement date of the term, Tenant
shall, if required by Landlord's mortgagee or any future mortgage, or
prospective purchaser, submit, without cost to take Landlord, Tenant's financial
statement. Tenant shall also, without cost to Landlord, submit to any
prospective mortgagee or purchaser such statements as it may have, as and when
required by Landlord or Landlord's mortgagee or prospective mortgagee or
prospective purchaser.
SECTION 23: RESERVATION OF TITLE:
Tenant may not consent to the reservation of any title to property by any
conditional vendor to any property which may be affixed to the Leased Premises
so as to become a part thereof (excluding trade fixtures and trade machinery and
equipment used in Tenant's business), wholly or in any portion, without material
injury to the Leased Premises. Landlord hereby states that the reservation of
any such title by any conditional vendor or similar party shall be null and
void.
SECTION 24: CERTIFICATE OF OCCUPANCY:
If required, Landlord shall obtain a Certificate of Occupancy permitting
the use of the Leased Premises by Tenant in accordance with the terms of this
Lease, provided that Tenant, shall cooperate fully with the Landlord in
obtaining said Certificate of Occupancy.
SECTION 25: LANDLORD'S COVENANTS AND REPRESENTATIONS:
Landlord covenants, represents and warrants that:
a. Landlord has title to the Leased Premises and has the full right and
power to execute and perform this Lease and to grant the estate demised herein,
and that Tenant, on payment of the rent herein reserved and performing the
covenants and agreements hereof, shall peaceably and quietly have, hold and
enjoy the Leased Premises and all rights appurtenances and privileges belonging
or in anywise appertaining thereto during the Lease term without molestation or
hindrances of any persons whomsoever.
b. The Leased Premises complies with all zoning requirements and is free
of any known building fire or other violations.
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c. At the commencement of the term, the Leased Premises will be in a good
state of repair, and all heating, ventilating and air-conditioning systems, as
well as plumbing and electrical systems, shall be in good working order.
d. Landlord agrees to perform improvements as per Schedule "B" prior to
the commencement of the term.
SECTION 26: LEASE PROVISIONS NOT EXCLUSIVE:
The rights and remedies of the Landlord contained in this Lease are not
intended to be exclusive but as additional to all other rights and remedies the
Landlord would otherwise have by law.
SECTION 27: DELIVERY OF LEASE:
No rights are to conferred upon the Tenant except that Tenant shall have
the right to store equipment within the Leased Premises until this Lease has
been signed by the Landlord and an executed copy of the Lease has been delivered
to the Tenant.
SECTION 28: ENTIRE AGREEMENT:
This Lease contains all agreements between the parties hereto. No
representatives or agent of Landlord or Tenant's authorized to make any
representations or alter, or modify this Lease or any of the options in this
Lease contained and provided for in any way. Any additions, alterations, changes
or modifications to or in this Lease or any agreements, hereafter made or
conditions created, to be binding upon the parties hereto, must be in writing
and signed by parties, and it is agreed that none of the provisions of this
Lease, including this provision, can be waived, except by writing duly signed by
the parties hereto.
SECTION 29: RIGHT TO INSPECT AND EXHIBIT:
The Landlord or its agent, shall have the right to enter the Leased
Premises at reasonable hours, given reasonable notice to the Tenant in the day,
and at night in the case of an emergency, to examine the same or to make such
repairs, additions or alterations as it shall deem necessary for safety,
preservation or restoration of the improvements, or the safety or convenience of
the occupants or users thereof (there being no obligation however, unless
expressly set forth herein, on the part of the Landlord to make any such
repairs, additions or alterations), or to exhibit the same to prospective
purchasers, and to put upon the Leased Premises a suitable "For Sale" or "To
Let" sign for six (6) months prior to the end of this Lease. For six (6) months
prior to the expiration of the Term, the Landlord, or its agents, may similarly
exhibit the Leased Premises to prospective tenants.
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SECTION 30: BENEFITS OF LEASE:
This Lease shall be binding upon and inure to the benefit of the parties
hereto, their successors and assigns subject however, as to Tenant to the
provisions of Section 7 of this Lease.
SECTION 31: TABLE OF CONTENTS AND CAPTIONS:
The Table of Contents and Captions in this Lease are, inserted only as a
matter of convenience and in no way to define, amplify, limit or describe the
scope or intent of this Lease, or the terms, conditions and provisions hereof,
nor as affecting the meaning of the text of any article or section hereof in any
way.
SECTION 32: ACCORD AND SATISFACTION:
No payment by Tenant or receipt by Landlord of lesser amount than the rent
stipulated in this Lease shall be deemed to be other than on account of the
earliest stipulated rent, nor shall any endorsement or statement on any check or
any letter accompanying any check or payment as rent to be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
the Landlord's right to recover the balance of such rent or pursue any other
remedy provided in this Lease or by law.
SECTION 33: CONSENTS TO DEFAULTS:
No consent or waiver, express or implied, by the Landlord, to or of any
breach or default in the performance by the Tenant of Tenant's obligations
hereunder shall be deemed or construed to be a consent or waiver to or of any
other breach or default in performance by Tenant hereunder. Failure on the part
of the Landlord to complain of any act or failure to act of the Tenant or to
declare the Tenant in default, irrespective of how long such act or failure
continues, shall not constitute a waiver by the Landlord or its rights
hereunder.
SECTION 34: DATE OF POSSESSION OMITTED BY INTENTION:
SECTION 35: MUTUAL WAIVER OF SUBROGATION:
It is covenanted and agreed by and between the Parties hereto that the
Tenant shall relieve the Landlord of all liability or loss or damage to the
Tenant's property, whether real or personal, caused by fire and/or perils
covered in a standard form fire insurance policy with extended coverage, due to
any acts of commission or omission of Landlord; and Landlord shall relieve the
Tenant of all liability for loss or damage to Landlord's property, whether real
or personal, caused by fire and/or the perils covered in a standard form fire
insurance policy with extended coverage due to any acts of commission or
omission of Tenant.
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SECTION 36: ENVIRONMENTAL LAWS:
a. If Tenant receives any notice ("Notice") of the happening of any event
involving the use, spill, discharge or clean-up of any hazardous or toxic
substances or waste, or any oil or pesticide on or about the Leased Premises or
into the sewer and/or waste treatment system operated by the Landlord or any
utility (any such event is hereinafter referred to as a "Hazardous Discharge")
from any person entity, including the New Jersey Department of Environmental
Protection ("DEP") and Environmental Protection Agency ( "EPA"), which Notice is
caused by Tenant's occupancy of the Leased Premises (or any assignee or
sub-tenants use of the Leased Premises), then the Tenant shall give immediate
written notice of same to Landlord, detailing all relevant facts and
circumstances. Tenant's SIC number is ______________.
b. Without limitation to the forgoing, the Landlord shall have the option,
but shall not be obligated, to exercise any of its rights as provided herein
immediately upon Tenant's failure to comply in full with any of the terms of
this Section or Landlord's receipt of any notice from any person or entity
asserting the happening of a Hazardous Discharge and Landlord may take such
action as it deems necessary or advisable to remedy Tenant's failure to
clean-up, remove or minimize the impact of any such Hazardous Discharge, and all
costs and expenses incurred by the Landlord in the exercise of any such rights
shall be paid to the Landlord by Tenant, on demand, all as additional rent.
c. The occurrence of any of the following events shall constitute an Event
of Default under this Lease:
1. If the Landlord receives its first notice of a Hazardous Discharge
other than from the Tenant, and the Landlord does not receive a notice (which
may be given in oral or written form, provided same is following with all due
dispatch by written notice given by certified mail, return receipt requested) of
such Hazardous Discharge from Tenant within seventy-two (72) hours of the time
Tenant received said first notice from any governmental agency, having
jurisdiction.
2. If the DEP, EPA or any other state or federal agency asserts or creates
a first lien upon any or all of the Leased Premises by reason of the occurrence
of a Hazardous Discharge; or
3. If the DEP, EPA or any other state or federal agency asserts a claim
against the Tenant or the Landlord for damages or clean-up costs related to a
Hazardous Discharge. Provided, however, such claim shall not constitute a
default if, within five (5) days of the occurrence giving rise to the claim.
A. The Tenant can prove to the Landlord's satisfaction that Tenant has
commenced and is diligently pursuing either (i) cure or correction of the event
which constitutes the basis for the claim, and continues diligently to pursue
such cure or correction to completion; or (ii) proceedings for an injunction, a
restraining order or other appropriate emergency relief preventing such agency
15
<PAGE>
or agencies from asserting such claim, which relief is granted within ten (10)
days of the occurrence giving rise to the claim and the emergent relief is not
thereafter dissolved or reversed on appeal; and
B. In either of the foregoing events, the Tenant has posted a bond, letter
of credit or other security satisfactory in form, substance and amount to the
Landlord and the agency or entity asserting the claim to secure the proper and
complete cure or correction of the event which constitutes the basis for the
claim.
d. If the Tenant's operations on the Leased Premises now or hereafter
constitute an "Industrial Establishment" subject to the requirements of the New
Jersey Environmental Cleanup Act, N.J.S.A. 13:1k-6 et.seq., and the regulations
pertaining thereto, N.J.A.C. 7:1-3.1 et seq. ("ECRA"), prior to the expiration
or sooner termination of this Lease, Tenant shall comply with all requirements
of ECRA pertaining to an Industrial Establishment closing operations at Its sole
cost and expense to the satisfaction of the DEP and the Landlord. Without
limitation to the foregoing, the Tenant's obligations shall include (i) the
proper filing of the initial notice to the DEP's and the Landlord's satisfaction
of all soil, ground, water and surface water sampling and tests required by
N.J.A.C. 7:1-37, (ii) the performance to the DEP's and the Landlord's
satisfaction of all soil, ground, water, and surface water sampling tests
required by N.J.A.C. 7:1-3,9 and (iii) the filing of a "negative declaration"
with DEP under N.J.A.C. 7:1-3.12. The Tenant shall immediately Provide Landlord
with copies of all correspondence, reports, notices, orders, findings,
declarations and other materials pertinent to Tenant's compliance and DEP's
requirements under ECRA as they are issued or received by the Tenant.
e. The Tenant hereby agrees to defend (with counsel satisfactory to
Landlord), to indemnify and hold the Landlord harmless from and against any and
all claims, losses, liabilities, damage (be they, without limitation, clean-up
costs and reasonable attorney fees arising by reason of any of the aforesaid or
an action against the Tenant arid/or Landlord under this indemnity) arising
directly or indirectly from, out of or by reason of Tenant's failure to comply
in full with any of the terms of this Section 37 or any Hazardous Discharge
occurring during the period of this Lease and any other period of Possession of
the Leased Premises by the Tenant.
f. This section shall survive the expiration or sooner termination of this
Lease.
SECTION 37: INTERPRETATION:
The laws of the State of New Jersey shall govern the validity, performance
and enforcement of this Lease. The invalidity or unenforcibility of' any
provision hereof shall not affect or impair any other provision.
SECTION 38: CONSENTS:
Landlord shall not unreasonably withhold or delay its consents to any act
or matter which, pursuant to this Lease, requires its consent.
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SECTION 39: NEGOTIATED LEASE:
This is a negotiated Lease. This Lease shall not be construed against the
Landlord by reason of it being prepared by Landlord, Landlord's agents or
Landlord's attorney's.
SECTION 40: PROCESSING CHARGE OMITTED BY INTENTION:
SECTION 41: RIGHT OF FIRST REFUSAL OMITTED BY INTENTION
IN WITNESS WHEREOF the parties hereto have set their hands and seals the day and
year first above written.
WITNESS:
by: /s/ Robert H. Kessler
- -------------------------- -----------------------
ROBERT H. KESSLER
MONTBELL ASSOCIATES
Landlord
ATTEST:
by: /s/ Joseph P. Maceda
- -------------------------- -----------------------
JOSEPH P. MACEDA
H-POWER CORP.
Tenant
17
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SCHEDULE "A"
RENTAL SCHEDULE
DATE PER SQ. FT. ANNUAL MONTHLY
09/01/91 TO 12/31/91 $1.60 $12,000.00 $1,000.00
01/01/92 TO 07/31/92 4.00 30,000.00 2,500.00
08/01/92 TO 07/31/93 4.25 31,875.00 2,656.25
08/01/93 TO 07/31/94 4.50 33,750.00 2,812.50
08/01/94 TO 07/31/95 4.75 35,625.00 2,968.75
08/01/95 TO 07/31/96 5.00 37,500.00 3,125.00
SCHEDULE "B"
Landlord agrees to perform the following before the commencement of this
Lease.
1. All existing lighting will be in working order.
2. All mechanical shall be in working order.
3. Take out the existing conveyor and put in a staircase leading to the
second floor.
4. Install male/female bathrooms on the second floor of the Leased
Premises.
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Exhibit 10.38
ADDENDUM TO LEASES DATED AUGUST 8, 1991
BETWEEN MONTBELL ASSOCIATES now known as MONTBELL
ASSOCIATES, L.L.C., as LANDLORD, and
H-POWER CORP., as TENANT.
IT IS AGREED by and between the parties hereto that:
(A) So long as the Tenant is not in default under any of the terms
and conditions of the above mentioned lease, the Tenant and Landlord agree to
modify the terms and conditions of the lease as set forth in Schedule "A" below.
All other terms and conditions of the Lease except as expressly provided for
herein shall remain unchanged and in full force and effect.
SCHEDULE "A"
RENTAL SCHEDULE
DATE ANNUALLY MONTHLY
08/01/96 TO 07/31/97 $58,250.00 $4,687.50
08/01/97 TO 07/31/98 $58,250.00 $4,687.50
08/01/98 TO 07/31/99 $58,250.00 $4,687.50
OPTION TO RENEW
So long as the Tenant is not in default under any of the terms and
conditions of this Lease, the Tenant may extend this Addendum for an additional
two (2) year period at the rentals set forth in Schedule "B" below. Tenant must
notify Landlord of its intention to so renew in writing, certified mail, return
receipt requested, during the 30th month of this Addendum.
All other terms and conditions of the Lease except as expressly provided for
herein shall remain unchanged and in full force and effect.
<PAGE>
SCHEDULE "B"
RENTAL SCHEDULE
DATE ANNUALLY MONTHLY
08/01/99 TO 07/31/00 $58,250.00 $4,687.50
08/01/00 TO 07/31/01 $58,250.00 $4,687.50
IN WITNESS WHEREOF, the Parties hereto have hereunto set their hands and
seals or caused these presents to be signed by their proper corporate officers.
DATED: April 4, 1996
Witness:
/s/ Robert H. Koch
- ----------------------------- ------------------------------
As To Landlord Montbell Associates, L.L.C.
Landlord
/s/ R. C. Cope
- ----------------------------- ------------------------------
As to Tenant H-Power Corp.
Tenant
<PAGE>
Exhibit 10.39
ADDENDUM TO LEASE DATED AUGUST 8, 1991 AND MODIFIED BY
SUBSEQUENT ADDENDUM DATED APRIL 4, 1996 BETWEEN MONTBELL
ASSOCIATES now known as MONTBELL ASSOCIATES, L.L.C., AS LANDLORD,
AND H-POWER CORP., AS TENANT
IT IS AGREED by and between the parties hereto that:
So long as the Tenant is not in default under any of the terms and conditions of
the above mentioned lease and subsequent addendum, the Landlord and Tenant agree
to modify the terms and conditions of said agreements as set forth in Schedule
"A" below:
All other terms and conditions of the Lease except as expressly provided for
herein shall remain unchanged and in full force and effect.
SCHEDULE "A"
RENTAL SCHEDULE
DATE ANNUAL MONTHLY
08/01/99 TO 07/31/00 $58,250.00 $4,687.50
08/01/00 TO 07/31/01 $58,250.00 $4,687.50
The Tenant shall have the right to renew this addendum for a one (1) year period
for the rentals set forth in Schedule "B" below. Tenant must notify the Landlord
in writing, via certified mail, return receipt requested during the month of
February 2001:
SCHEDULE "B"
RENTAL SCHEDULE
DATE ANNUAL MONTHLY
08/01/01 TO 07/31/02 $61,745.00 $5,145.42
<PAGE>
The Tenant shall have the right to renew this addendum for a second (2nd) one
(1) year period for the rentals set forth in Schedule "C" below. Tenant must
notify the Landlord in writing, via certified mail, return receipt requested
during the month of February 2002:
SCHEDULE "C"
RENTAL SCHEDULE
DATE ANNUAL MONTHLY
08/01/02 TO 07/31/03 $65,449.70 $5,454.14
IN WITNESS WHEREOF, the Parties hereto have hereunto set their hands and
seals or caused these presents to be signed by their proper corporate officers.
Dated March 29, 1999
Witness:
/s/ Robert H. Koch
- ----------------------------- ------------------------------
As To Landlord MONTBELL ASSOCIATES, L.L.C.
LANDLORD
/s/ H. Frank Gibbard
- ----------------------------- ------------------------------
As to Tenant H-POWER INC.
TENANT
-2-
<PAGE>
Exhibit 10.40
- --------------------------------------------------------------------------------
AGREEMENT OF LEASE
BETWEEN
SITQ INC.
For: SITQ INDUSTRIEL INC.,
ABRIM 14 INC.,
149855 CANADA INC.,
149856 CANADA INC.,
The Lessor
AND
H. POWER ENTERPRISES OF CANADA INC.
The Lessee
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
TITLES PAGES
DEFINITIONS, INTENT AND INTERPRETATION.......................................1
LEASE AND DELIVERY OF LEASED PREMISES........................................6
RENT.........................................................................7
OPERATING EXPENSES AND REAL ESTATE TAXES.....................................7
TAXES........................................................................8
HEATING, VENTILATION AND AIR CONDITIONING....................................8
USE, MAINTENANCE AND REPAIR OF THE LEASED PREMISES AND OF THE
COMMON AREAS......................................................8
LEASEHOLD IMPROVEMENTS......................................................10
INSURANCE...................................................................11
DAMAGE AND DESTRUCTION......................................................12
DAMAGES AND SANCTION........................................................13
EXPROPRIATION...............................................................13
SIGNS AND ADVERTISING.......................................................13
COMPLIANCE WITH LAWS AND INDEMNIFICATION....................................14
ASSIGNMENT AND SUBLEASE.....................................................14
SUBORDINATION AND ATTORNMENT................................................15
DEFAULT AND RECOURSE........................................................16
NOTICE......................................................................18
TERMINATION OF LEASE........................................................18
UNAVOIDABLE DELAY...........................................................18
MISCELLANEOUS PROVISIONS....................................................18
REGULATIONS.................................................................20
ENVIRONMENTAL MATTERS.......................................................20
LANGUAGE....................................................................22
SPECIAL PROVISIONS..........................................................22
SCHEDULES:
SCHEDULE "A" ENVIRONMENTAL QUESTIONNAIRE
20
<PAGE>
SCHEDULE "B" PLAN OF LEASED PREMISES
SCHEDULE "C" DESCRIPTION OF LAND ON WHICH THE IMMOVABLE IS
ERECTED
SCHEDULE "D" REGULATIONS
SCHEDULE "E" STANDARD RESOLUTION
<PAGE>
AGREEMENT OF LEASE
SAINT-LAURENT / INDUSTRIAL
BETWEEN: SITQ INDUSTRIEL INC., ABRIM 14 INC., 149855 CANADA INC., 149856
CANADA INC., duly represented by their mandatary, SITQ INC., a duly
constituted company, represented by Mr. Andre Girard, Vice President
and Mr. Denis Perreault, Leasing Director, Industrial Division, duly
authorized for the purposes hereof as they so declare;
(hereinafter called the Lessor)
AND: H. POWER ENTERPRISES OF CANADA INC., a duly constituted company,
represented by Frank Gibbard, duly authorized for the purposes
hereof as he so declares and pursuant to the resolution annexed
hereto in Schedule "E";
(hereinafter called the Lessee)
THE PARTIES HEREBY MUTUALLY AGREE AS FOLLOWS:
ARTICLE 1
DEFINITIONS, INTENT AND INTERPRETATION
1.1 Definitions - When used in the Lease, the following expressions and
words shall have the meanings hereinafter set forth, unless the
context indicates otherwise:
1.1.1 Additional Rent: means all financial obligations of the
Lessee other than the Minimum Rent.
1.1.2 Commencement of the Lease: October 1st 1997.
1.1.3 Common Areas: means all those interior or exterior areas
and parts of the Immovable which, are not intended for
the exclusive use of a lessee.
1
<PAGE>
1.1.4 Contaminants and Hazardous Materials: have the meaning
attributed thereto in the Environmental Legislation and
include any material which, because of its properties,
presents a real or potential hazard to the environment
or the health of users of the Immovable or of the Leased
Premises.
1.1.5 Environmental Legislation: means all federal, provincial
or municipal legislative and regulatory environmental
provisions, including, in all cases, any judgments,
orders, notices, notices of offence, decrees, codes,
rules, instructions, policies, guidelines and guides,
authorizations, certificates of authorization,
approvals, permits and licences issued by any authority
having jurisdiction, the whole as amended from time to
time ;
2
<PAGE>
1.1.6 Fiscal Period: means the calendar year or any other
period which the Lessor may determine.
1.1.7 Immovable: means the constructions erected on the
land described in Schedule "C".
1.1.8 Land: means all lots or parts of lots described in
Schedule "C" of this Lease.
1.1.9 Leasable Area of the Immovable: means the total area
of all of the premises leased or intended for lease
in the immovable.
1.1.10 Lease: means this agreement and all its schedules as
well as any modifications thereto.
1.1.11 Leased Premises: means those premises leased by the
Leasee and outlined in red on Schedule "B", having an
approximate area of nine thousand (9,000) square
feet, situated at 1069 Begin in the City of St.
Laurent, Quebea.
1.1.12 Lessee: means the Lessee or its successor.
1.1.13 Lessor: means the owner of the immovable or its
mandatary.
1.1.14 Minimum Rent: means, during the Term, the annual
Minimum Rent equal to SIXTY-NINE THOUSAND, THREE
HUNDRED AND NINETY DOLLARS ($69,390.00) payable in
equal, monthly and consecutive instalments of FIVE
THOUSAND, SEVEN HUNDRED AND EIGHTY-TWO DOLLARS AND
FIFTY CENTS ($5,782.50), in advance on the first day
of each month representing SEVEN DOLLARS AND
SEVENTY-ONE CENTS ($7.71) per square foot net net per
annum.
1.1.15 Operating Expenses: means all of the Lessor's
expenses incurred (2) in the operation,
administration, maintenance, repair, supervision and
management of the immovable, including without
limiting the following:
1.1.15.1 salaries, wages and costs related to
fringe benefits and pension plan benefits
of the employees of the Lessor engaged in
the operation, administration,
maintenance, repair, supervision and
management of the immovable;
1.1.15.2 the reasonable rental value of the space
occupied by the employees of the Lessor
engaged in the operation, administration,
maintenance, repair, supervision and
management of the immovable, as well as
of any space utilized or required in the
immovable for the purposes of security,
protection or other similar services;
- ----------
(1) Provided that no change in the Fiscal Period result in the Lessee
paying any amount in excess of the amount which it would have paid had
the Fiscal Period not have been changed.
(2) without duplication or profit to the Lessor or any affiliates (as that
term is defined in the Canada Business Corporation Act)
3
<PAGE>
1.1.15.3 the cost of all goods and services
furnished, employed or utilized in the
operation, administration, maintenance,
repair, supervision and management of the
Immovable and of the Common Areas;
1.1.15.4 the cost of works, replacements or of
repairs made to the Common Areas or to the
Immovable, except those relating to the
structure of the Immovable which shall be
paid by the Lessor, subject to article 7.3.
The term "structure" means the
foundations,(1) and the frame of the
Immovable;
1.1.15.5 the Cost Of(2) modifications, improvements
and additions to the Immovable and to the
equipment thereof as well as the specialized
equipment or services necessary for the
establishment, in the Immovable, of energy
conservation measures, when, in the opinion
of the Lessor, these costs are likely to
reduce the Operating Expenses of the
Immovable, improve the welfare or the
security of the lessees of the Immovable or
are required by law;
1.1.15.6 the capital cost, calculated according to a
method of depreciation determined by the
Lessor, of work or of equipment required for
the operation, administration, maintenance,
repair, supervision, management,
modification or improvement of the Immovable
or the Common Areas or of energy
conservation measures as well as interest,
at the Prime Rate, on the undepreciated
capital cost of all such items;
1.1.15.7 expenses incurred to redo, improve, modify
or increase the insulation of the Immovable
when, in the opinion of an expert in such
matters, such expenses may reduce the cost
of the electricity or gas consumed in the
Leased Premises;
1.1.15.8 the cost of insurance premiums subscribed
for by the Lessor in respect of the
Immovable;
1.1.15.9 annual administrative fees of fifteen
percent (15%) calculated on the total of the
Operating Expenses.(3)
1.1.16 Prime Rate: means the prime rate of the National Bank of
Canada, plus(4).
RIDER PAGE 3A
1.1.15 Operating Expenses chargeable to the Lessee shall not
include :
1) salaries and bonuses of officers and
executives of the Lessor;
2) the costs of any work or service performed
on an extra cost basis for any tenant of the
Immovable to a materially greater extent or
in a materially more
- ----------
(1) the sub-floors, outer walls, structural columns and beams, common
walls, floors (except floor coverings)
(2) non-structural
(3) See Rider Page 3A
(4) two percentage points (2%)
4
<PAGE>
favourable manner that furnished generally
to the tenants or other occupants of the
Immovable (including the Lessee);
3) the cost of any work or services performed
for any facility other than the Immovable;
4) the cost and other Operating Expenses
related to any additions to the Immovable
after the original construction;
5) interest on debt or principal amortization
payments or any other payments on any
hypothec and rental or any other payments
under any emphyteutic lease or other
underlying lease;
6) any fees or costs incurred in procuring or
attempting to procure other tenants
including, but not necessarily limited to,
finders' fees, attorneys' fees and expenses,
entertainment costs and travel expenses;
7) any costs included in Operating Expenses
representing an amount paid to a person,
firm, corporation or other entity related
(as defined in the Income Tax Act (Canada)
to the Lessor which is in excess of the
amount which would have been paid on an
arm's-length basis in the absence of such
relationship;
8) the costs of initial cleaning of, and
rubbish removal from, the Immovable to be
performed prior to final completion of any
tenant's space;
9) attorney fees, costs and other expenditures
incurred in connection with leasing disputes
with other tenants or occupants of the
Immovable or with other third persons and/or
claims by such other tenants or occupants or
third persons;
10) the cost of advertising or promoting for the
Immovable;
11) taxes and insurance on tenant improvements
in locations other than the Leased Premises;
12) the cost of curing any violation of any law,
ordinance, or regulation applicable to the
Immovable or remedying any environmental
problem, unless such condition was caused by
the Lessee.
1.1.17 Proportionate Share: means the ratio of the area of the
Leased Premises to the Leasable Area of the Immovable,
which the parties have set as being NINETEEN PER CENT
AND TWENTY-THREE HUNDREDTHS ( 19.23 % ); this percentage
may vary in the event of a change of the area of the
Leased Premises or of the Leasable Area of the
Immovable.
1.1.18 Real Estate Taxes: means all taxes or surtaxes that a
local municipality or a school board imposes on an
immovable or in respect of the immovable if the tax or
surtax is imposed regardless of use, including interest
on deferred payments and annual administration fees of
fifteen percent (15%) calculated on the total of the
Real Estate Taxes, but excluding tax on the income or on
the capital of the Lessor and excluding any tax on real
estate transfers.
1.1.19 Rent: means the Minimum Rent and the Additional Rent.
1.1.20 Taxes: means all governmental levies of whatever nature
normally paid by lessees (for example, business and
water taxes, G.S.T., Q.S.T.), whether they relate to the
Leased Premises, to the contents thereof or to the
business carried on therein.
5
<PAGE>
1.1.21 Taxing Authority: means any governmental authority
authorized to impose taxes.
1.1.22 Term: means the period commencing at the Commencement of
the Lease and terminating at the Termination of the
Lease.
1.1.23 Termination of the Lease: September 30th 2000.
1.1.24 Unavoidable delay: means a delay caused by circumstances
(other than the financial situation of either of the
parties) which are beyond the control of the Lessor or
of the Lessee.
1.1.25 Use of the Leased Premises: OFFICE, WAREHOUSE AND
MANUFACTURE OF FUEL CELLS AND FUEL CELL COMPONENTS and
for no other purposes.
1.2 Intent - It is the intention of the parties that the Lessor collect
an entirely net rent. The Lessor shall not be liable for any costs
of any nature whatsoever relating to the Leased Premises, which
costs shall be entirely borne by the Lessee, except as expressly
otherwise provided herein.
ARTICLE 2
LEASE AND DELIVERY OF LEASED PREMISES
2.1 Inspection and Delivery of Leased Premises - The Lessee acknowledges
having carefully inspected the Leased Premises and acknowledges to be
entirely satisfied therewith. If such inspection has not been made,
the Lessee undertakes to do so at the time of the delivery of the
Leased Premises and to notify the Lessor, within(1) days of the said
delivery, of any defects in the Leased Premises failing which, the
Lessee shall be deemed to have taken delivery of the Leased Premises
in a good state and to be satisfied therewith and shall acknowledge
that the Lessor has discharged all of its obligations with respect to
the preparation and delivery of the Leased Premises.(2)
2.2 Delay in the Leasehold Improvements of the Lessee - The Term shall in
no way be affected, if the Lessor agrees that the Lessee undertake
leasehold improvements for the Leased Premises and that same have not
been completed prior to the Commencement of the Lease.
2.3 Delay in the Leasehold Improvements of the Lessor - The Term shall in
no way be affected, if the Lessor agrees to undertake leasehold
improvements for the Leased Premises and that same have not been
completed prior to the Commencement of the Lease due to a reason
attributable to the Lessee. If the delay is attributable to the
Lessor, the Lessee may not claim any damages but the Commencement of
the Lease shall be delayed by the number of days equal to the number
of days for which the delay has occurred.(3)
2.4 Minor Deficiencies - The Leased Premises shall be deemed ready for
delivery and consequently there shall be Commencement of the Lease
notwithstanding uncompleted work, insofar as they do not
significantly interfere with the use of the Leased Premises.
- ----------
(1) thirty (30)
(2) Exceptions to the foregoing relate to latent or structural defects,
as well as defects which cannot be determined within said thirty
(30) day period as a result of the time of year when delivery of the
Leased Premises is given to the Lessee (e.g. the heating system).
(3) Should the Lessor be unable to have completed the Initial Leasehold
Improvements prior to the Commencement of the Lease, the Lessor
covenants that the lease signed between the parties shall be
entitled, therefore the Lessee shall be entitled to continue to
occupy the temporary office space it presently occupies at 3300
Cote-Vertu, suite 204 until such time as the Lessor will have
completed the Initial Leasehold Improvements.
6
<PAGE>
ARTICLE 3
RENT
3.1 The Rent shall be paid on the first day of each month, without
compensation nor reduction and remitted at the office designated by
the Lessor. Any adjustments for parts of months shall be made on a
per diem basis.
ARTICLE 4
OPERATING EXPENSES AND REAL ESTATE TAXES
4.1 Upon the Commencement of the Lease and thereafter prior to or at the
beginning of each Fiscal Period, the Lessor shall estimate the amount
of the Operating Expenses which will be incurred for the upcoming
year. The Lessee shall pay the Lessor, on a monthly basis, an
Additional Rent equal to one-twelfth (1/12th) of its Proportionate
Share of such Operating Expenses. The Lessor has estimated the
Operating Expenses for 1997 to be EIGHTY-SIX CENTS per square foot
($0.86/sq. ft.) per annum of the area of the Leased Premises.
4.2 At the end of each Fiscal Period, the Lessor shall remit to the
Lessee a statement audited by an independent firm of chartered
accountants indicating the actual Operating Expenses incurred for the
said Fiscal Period. This statement shall bind the parties. If it is
determined that the payments made by the Lessee are incorrect, the
parties shall make the necessary adjustments.
4.3 Should the Fiscal Period be modified or should a part only of a
Fiscal Period be comprised in the Term, the parties shall immediately
make the necessary adjustments.
4.4 The Lessor may, during the course of the Fiscal Period, reevaluate
its estimate of the Operating Expenses and, in such a case, the
Additional Rent shall be adjusted accordingly.
4.5 During the course of each Fiscal Period, the Lessee shall pay its
Proportionate Share of the Real Estate Taxes at such time indicated
by the Lessor(1) and following the remittance of an invoice. The
Lessor has estimated the Real Estate Taxes for 1997 to be ONE DOLLAR
AND SIXTY-EIGHT CENTS per square foot ($1.68/ sq. ft.) per annum of
the area of the Leased Premises.
4.6 Only the Lessor may contest the property evaluation of the Immovable
as well as the collection or imposition of Real Estate Taxes. All
costs associated with such contestation shall be included in the
Operating Expenses and any reimbursement of Real Estate Taxes shall
be credited to the Lessee.
- ----------
(1) in two (2) instalments
7
<PAGE>
4.7 If, during the Term, the system of real estate taxation is modified
or if in addition to or instead of the Real Estate Taxes a new tax
or levy is imposed with respect to the Immovable, the words "Real
Estate Taxes" shall include such new tax or levy.
ARTICLE 5
TAXES
5.1 The Lessee shall pay all Taxes when due. If the method of collecting
such Taxes is altered so as to make the Lessor liable for payment
thereof, the Lessee shall reimburse the Lessor on demand.
ARTICLE 6
HEATING, VENTILATION AND AIR CONDITIONING
6.1 Heating - The Lessee shall ensure that the Leased Premises are
adequately heated.
6.2 Services - The Lessee shall pay to the public utilities all costs
relating to heating, gas, electricity, lighting and as well as all
other services used by it in the Leased Premises.
6.3 Maintenance and Repair of Equipment - The Lessee shall retain at its
expense the services of experts in order to repair, maintain or
replace equipment and accessories necessary for the heating,
ventilation and air conditioning, if any, of the Leased Premises.
The Lessee shall provide the Lessor with a duly executed copy of the
service contract with respect to the foregoing within thirty (30)
days from the date of the signature of the Lease. The Lessor may, at
its sole discretion, provide the repair and maintenance service for
the equipment, and in such a case, the related expenses shall be
included in the Operating Expenses.
ARTICLE 7
USE, MAINTENANCE AND REPAIR OF THE
LEASED PREMISES AND OF THE COMMON AREAS
7.1 Use of the Leased Premises - The Lessee undertakes to use the Leased
Premises with prudence and diligence. The Lessee undertakes not to
disturb the peaceful enjoyment of the other lessees failing which
the Lessee will be liable towards the Lessor and the other lessees
for any damage that may result, whether such damage is caused by the
Lessee's own fault, acts or omissions or by the fault, acts or
omissions of persons it allows to use or to have access to the
Leased Premises.
7.2 (1)
7.3 [Maintenance and Repair of the Leased Premises] - The Lessor shall
not effect any work, replacement, repairs or maintenance in the
Leased Premises, unless as expressly otherwise provided herein.
Notwithstanding any law to the contrary, the Lessee shall undertake,
without delay and at its expense, all such works, replacements,
repairs, and maintenance of any nature whatsoever in order to keep
the Leased Premises in a good state. The present provision includes
the Lessee's obligations to pay for the works, replacements, repairs
and maintenance relating to the structure of the Immovable when such
are attributable to an act or omission of the Lessee or of any
person the Lessee allows to use or to have access to the Leased
Premises.
- ----------
(1) The Lessee shall have the right to leave the Leased Premises vacant
but shall respect all of its monetary obligations under the Lease
until the Termination of the Lease.
8
<PAGE>
The Lessee shall not effect in the Leased Premises, in the Immovable
or in the Common Areas, such works, replacements, repairs and
maintenance for which the Lessor is liable pursuant to the Lease or
by law.
7.4 Inspection and Repairs - The Lessor may enter the Leased Premises at
all times to examine their condition.(1) If the Lessee neglects to
undertake the works, replacements, repairs and maintenance to which
it is bound, the Lessor may, after having given five (5) days prior
written notice, enter the Leased Premises and carry them out in the
place and at the expense of the Lessee. The cost thereof, plus an
administration fee equal to fifteen percent (15%), shall be paid by
the Lessee as Additional Rent, subject to the rights and recourses
of the Lessor pursuant to the Lease.
7.5 Notice of Defects - The Lessee(2) shall notify the Lessor within a
reasonable delay of any defect or deterioration which is susceptible
of damaging the Leased Premises, the Immovable or the Common Areas.
7.6 Use of the Common Areas - The Lessee may use the Common Areas with
all others who are also entitled to use them
The Lessor may at all times, (3) court authorization (4), change the
form and the destination of the Immovable and of its Common Areas
and carry out all works, replacements, repairs and maintenance which
it deems necessary to ensure the conservation and the enjoyment of
the Immovable and the Leased Premises. If the Lessor proceeds with
such works, it shall ensure that the enjoyment of the Leased
Premises is not materially diminished. If necessitated by the nature
of the work, replacements, repairs or maintenance, the Lessor may,
without court authorization, require the Lessee to vacate or be
temporarily dispossessed of the Leased Premises; and in such a case,
the Lessor shall compensate the Lessee.
7.7 Right of Access - If the Lessor deems it necessary to install in the
Leased Premises some portions of the systems serving the Immovable,
the Lessee shall authorize the Lessor to carry out such work without
being compensated, provided that the enjoyment of the Leased
Premises is not diminished(5).
(6)
- ----------
(1) Such entry shall be preceded by at least twenty-four (24) hour
notice, save in the event of an emergency, when no prior notice is
necessary.
(2) upon becoming aware of same,
(3) with
(4) and prior written notice
(5) and the Lessor compensated the Lessee for any damage caused to the
Leased Premises or any property therein
(6) 7.8 The Lessor shall throughout the Term, subject to the
provisions of Section 7.3, Article 11 and Article 20
hereof, be responsible to effect in a timely and proper
manner all repairs which are the responsibility of the
Lessor as provided for in this Lease, and all repairs
which are the consequence of the negligent act or
omissions of the Lessor or those for whom the Lessor is
responsible in law or things under the Lessor's custody.
9
<PAGE>
ARTICLE 8
LEASEHOLD IMPROVEMENTS
8.1 All of the leasehold improvements carried out in the Leased Premises
shall be subject to the prior approval of the Lessor and to the
following conditions:
8.1.1 If the leasehold improvements are effected by the
Lessor, the Lessee must pay all costs thereof on demand
and an additional amount equal to fifteen percent (15%)
as a coordination and supervision fee.
8.1.2 If such leasehold improvements are effected by the
Lessee, it shall, at its expense, under pain of
suspension of the work, execute such work by contractors
approved by the Lessor. Such contractors shall:
(a) furnish to the Lessor the plans and
specifications of the proposed leasehold
improvements; if the plans and
specifications are approved, such leasehold
improvements must be made in accordance with
same(1);
(b) obtain all required permits and
authorizations;
(c) effect the leasehold improvements pursuant
to instructions from the Lessor; and
(d) subscribe for liability insurance covering
their activities in the Immovable for a
minimum amount of three million dollars
($3,000,000).
8.1.3 Should the Lessee carry out the leasehold improvements,
it recognizes that it is not the mandatary of the Lessor
and the Lessee also acknowledges that such leasehold
improvements have been requested and carried out by it
for its own benefit.
8.1.4 Should the Lessee carry out the leasehold improvements,
it shall pay to the Lessor a sum equal to five percent
(5%) of the cost of such work to compensate the Lessor
for the review and approval of the plans and
specifications.
8.2 Any leasehold improvements, whether they have been effected by the
Lessee or by the Lessor, prior to or during the Term, shall, upon
their completion, become a part of the Leased Premises and shall be
surrendered with the Leased Premises at the Termination of the
Lease, without any compensation being due by the Lessor to the
Lessee. Alternatively, the Lessor may require the Lessee to remove
at Lessee's cost any(2), in such a case, the Lessee shall restore
the Leased Premises to their original condition including repairs
resulting from the normal aging of the Leased Premises.
The Lessee may, at the Termination of the Lease, remove all movable
property found on the Leased Premises, subject to the fulfilment of
all of its obligations pursuant to the Lease. All movable property
found on the Leased Premises after the Termination of the Lease(3),
shall be deemed to have been abandoned and the Lessor may dispose of
same at its sole discretion without compensation.
(4)
- ----------
(1) in all material respects
(2) trade fixtures
(3) , which is not removed within ten (10) days following receipt of
written notice to this effect
(4) At the expiration or earlier termination of the Term, the Lessee
will have no obligation to restore the Leased Premises to any
previous or base-building condition. For greater certainty, the
Lessee shall have no obligation to remove the Initial Leasehold
Improvements and, should the Lessor desire to remove any of same,
all costs relating thereto shall be borne solely by the Lessor.
Notwithstanding the foregoing, the Lessee shall be permitted to
remove any of the Initial Leasehold Improvements, provided that the
Lessee shall repair any damage caused by such removal.
10
<PAGE>
ARTICLE 9
INSURANCE
9.1 The Lessee shall, at its own expense and throughout the Term, keep
in force:
(a) insurance coverage for public liability of
business, covering the Leased Premises and
the movable property located therein, for an
amount equal to a minimum of THREE MILLION
DOLLARS 03,000,000) for each occurrence or
for any greater amount which the Lessor may
reasonably request from time to time, which
insurance must contain such guarantees as
required by the Lessor;
(b) a broad form insurance coverage for all of
the movable property located in the Leased
Premises, and namely the leasehold
improvements, for an amount equal to their
replacement cost, without any deductions for
depreciation, which insurance shall, in
addition, have the following endorsements:
replacement value and any other endorsements
required by the Lessor;
(c) business interruption insurance "broad form"
providing standard coverage of a minimum
period of TWELVE (12) months, in such amount
to compensate the Lessee for all loss of
earnings and for additional expenses
attributable namely to the perils to be
insured against pursuant to sub-paragraphs
(a), (b) and (c) mentioned above, which
insurance shall also include such
endorsements as required by the Lessor;
(d) all other insurance which the Lessor may
reasonably require from time to time.
9.2 All insurance policies shall satisfy the following conditions:
(a) they shall be subscribed with insurers
acceptable to the Lessor; and
(b) they shall provide that they will not be
permitted to lapse or be modified unless the
insurer gives the Lessor a prior written
notice of at least thirty (30) days to that
effect.
9.3 Increase in Risk - The Lessee shall:
(a) not do anything which increases the risk of
fire and the insurance premium rates for the
Immovable;
(b) comply with the requirements of the Lessor's
insurers or of any associations of insurers
having jurisdiction in such matters; and
(c) not keep dangerous materials in the Leased
Premises unless same are required for its
business and, in such case, in such
quantities as are permitted by the Lessor's
insurance policies, failing which the Lessee
shall pay to the Lessor any resulting
increase of the insurance premiums.
9.4 Certificates - The Lessee shall furnish the Lessor with certificates
of insurance at least ten (10) days prior to taking possession of
the Leased Premises and thereafter, within ten (10) days of the
renewal thereof. If the Lessee fails to subscribe for the insurance
for which it is
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permitted to remove any of the Initial Leasehold Improvements,
provided that the Lessee shall repair any damage caused by such
removal.
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bound, the Lessor(1) may do so in the name of the Lessee and in
such event, all premiums paid by the Lessor shall be reimbursed by
the Lessee.
9.5 Notwithstanding the fact that the Lessee pays its Proportionate
Share of the Lessor's insurance premiums, the Lessee acknowledges
that it shall not be a co-insured, that it shall not have any
insurable interest in the policies and that it shall remain liable
for any damage that might be caused by its fault, acts or omissions
or those of the persons the Lessee allows to use or to have access
to the Leased Premises. The Lessor or its insurers shall not waive
their right to claim from the Lessee any damage that the Lessee is
responsible for under the Lease or the law.
9.6 Lessor shall, at all times throughout the Term, carry all-risks
property insurance on the Immovable and comprehensive boiler and
machinery insurance on the equipment contained therein and owned by
the Lessor, in such reasonable amounts and with such reasonable
deductions as would be carried by the prudent owner of a reasonably
similar building having regard to size, age and geographical
location.
ARTICLE 10
DAMAGE AND DESTRUCTION
10.1 Destruction of Leased Premises - Should the Leased Premises(2) be
damaged by a loss covered by the Lessor's insurance,(3) the Lessor
shall notify the Lessee, by way of written notice transmitted within
thirty (30) days of such loss, that the Leased Premises are:
10.1.1 wholly uninhabitable or that their utilization is
dangerous and cannot be reasonably repaired within one
hundred and eighty (180) days following the loss, as the
case may be, either party may resiliate the Lease with
retroactive effect to the date of the loss(4);
10.1.2 wholly uninhabitable or that their utilization is
dangerous but are reasonably reparable within one
hundred and eighty (180) days following the loss, then,
in such a case(5), the payment of Rent shall abate from
the date of the loss until such time that the Leased
Premises are repaired and ready to be occupied by the
Lessee;
10.1.3 reasonably reparable within one hundred and eighty (180)
days following the loss and are partly usable in the
interim; then, in such a case, payment of Rent shall
abate, with respect to the unusable area, from the date
of the loss until such time that the damages have been
substantially repaired.
(6)
10.2 No Obligation to Rebuild - The Lessor shall not have the obligation
to repair or rebuild the Immovable, the Leased Premises or their
contents(7).
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(1) , subject to Section 17.1 (a) (iii),
(2) or access thereto or egress therefrom,
(3) to the extent that the Lessee shall no longer be able to carry on
its business.
(4) by written notice given to the other party within twenty (20) days
of receipt of the aforesaid notice. If neither party reiliates the
Lease within such period, Lessor shall be obliged to repair, replace
or reconstruct the Leased Premisis in an expeditious and diligent
manner
(5) the Lessor shall repair, replace or reconstruct the Leased Premises
in an expeditious and diligent manner
(6) For the purpose of this Section 10.1, the term "uninhabitable" shall
include the situation where access to or egress from the Leased
Premises are materially adversely affected, whether or not the
Leased Premises itself are damaged or destroyed.
(7) , unless the loss can reasonably be repaired within one hundred and
eighty (180) days following the loss
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ARTICLE 11
DAMAGES AND SANCTION
11.1 Liability of the Lessee - The Lessee shall be liable for damages
caused by its fault,(2) acts or omissions or of those of such
persons for whom(3). The Lessee shall hold the Lessor harmless from
any claim made by any person following such damages.
11.2 Non Liability of the Lessor - The Lessor shall not be liable for
damages occurring inside or outside the Leased Premises resulting
from any cause whatsoever, unless such damages are to the fault(4)
of the Lessor(5). The Lessor shall not be liable for damages
suffered by the Lessee resulting from the fault, acts or omissions
attributable to a lessee or a third party even if such lessee or
third party is a person whom the Lessee or another lessee of the
Immovable allows to use or to have access to the Leased Premises.
11.3 Limited Liability - Even if the damages are directly attributable to
the fault of the Lessor, its liability shall extend only to the
movable property and to the ordinary fixtures of the Lessee located
in the Leased Premises and shall not extend to documents and
securities.
11.4 Sanction - Unless otherwise stipulated in the Lease, the Lessee
shall not in any case have the right to a reduction of Rent or to
the resiliation of the Lease, even if the damage suffered by the
Lessee is attributable to the fault, an act or an omission of the
Lessor or of the other lessees or occupants of the Immovable.
Nevertheless, the Lessee may, where a court grants it, obtain from
the Lessor compensation resulting from damages directly attributable
to the fault of the Lessor.
ARTICLE 12
EXPROPRIATION
12.1 Resiliation of the Lease - In the case of an expropriation or of a
taking of possession ("Expropriation") which, according to the
Lessor, renders the Immovable or the Leased Premises unusable,(6)
may terminate the Lease from the date of the Expropriation by way of
a written notice to the(7) Lessee. The Lessee may claim any damages
from the expropriating party and not from the Lessor. The Lessor is
not obligated to contest the Expropriation.
ARTICLE 13
SIGNS AND ADVERTISING
13.1 Consent of the Lessor - Any sign or notice visible from the exterior
of the Leased Premises shall be approved by the Lessor. The Lessee
shall repair at its expense any damage which may be caused by their
installation or removal.
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1) In any event, should the Leased Premises not have been substantially
completed, repaired or rebuilt within two hundred and forty (240)
days of the damage or destruction, the Lessee shall have the right
to terminate the Lease on thirty (30) day notice sent to the Lessor.
(2) negligent
(3) it is responsible in law
(4) negligent act or omission
(5) , or those for whom the Lessor is responsible in law. Subject to the
foregoing,
(6) either party
(7) other party
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ARTICLE 14
COMPLIANCE WITH LAWS AND INDEMNIFICATION
14.1 Compliance with Laws and Regulations - The Lessee shall comply with
all laws and regulations governing the business conducted in the
Leased Premises. The Lessee shall carry out any changes to the
Leased Premises or to the business conducted therein which may be
legally required by the competent authorities, failing which, the
Lessor, after having given written notice to the Lessee, may make
such changes in its place and at its expense. The Lessee shall
indemnify the Lessor against any penalty payable by the Lessor
resulting from the Lessee's breach to comply with the present
article, including all related expenses and legal fees incurred by
the Lessor.
ARTICLE 15
ASSIGNMENT AND SUBLEASE
15.1 Mandatory Consent of the Lessor - The Lessee shall not assign the
Lease or sublet the Leased Premises in whole or in part, nor suffer
a portion or all of the Leased Premises to be utilized by another
person without the written consent of the Lessor, which consent may
not be withheld without a serious reason.
15.3 Information to be provided - If the Lessee wishes to sublet the
Leased Premises or assign the Lease, it shall provide the Lessor
with the following information:
15.3.1 the name, address and telephone number of the proposed
sublessee or assignee or in the case of a change in the
effective control of a corporation, a company, a general
partnership, a limited partnership or an undeclared
partnership the names, addresses and telephone numbers
of the senior executives of a corporation, a company, a
general partnership, a limited partnership or an
undeclared partnership acquiring the control thereof;
15.3.2 references from banks and other credit organizations,
financial statements (if available) and any other
information relating to commercial experience which the
Lessor may reasonably require for the purposes of its
evaluation;
15.3.3 if the sublessee or the assignee is a corporation, a
company, a general partnership, a limited partnership or
an undeclared partnership, the constituting documents or
declarations thereof, as the case may be; and
15.3.4 the agreement of sublease or assignment.
15.4 Justified Refusal - The Lessor may refuse the sublet or the
assignment, for any serious reason, including the following:
15.4.1 failure to provide the required information pursuant to
section 15.3;
15.4.2 ;
15.4.3 the poor reputation or precarious financial situation of
the sublessee or the assignee;
15.4.4 should the Lessor be of the view that the sublessee or
the assignee has the intention to modify the use of the
Leased Premises or may carry out activities which may
cause injury to the Lessor.
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15.5 Answer of Lessor - Within thirty (30) days from the receipt of the
information and documents requested, the Lessor shall notify the
Lessee whether it has accepted or refused the sublease or the
assignment and shall stipulate the reasons therefor or may choose
to:
(i) resiliate the Lease from the fifteenth (15") day of the
date of the Lessor's notice, in which case the Lessee
may desist from its request to sublet or to assign the
Lease within such fifteen (15) day delay; or
(ii) require that the sublessee or the assignee execute a new
lease to which the Lessee shall intervene as guarantor
of all of the obligations of the lessee pursuant to such
new lease.
15.6 Solidarity - Where the Lease is assigned, the Lessee's liability
shall remain solidary with the assignee for all of the Lessee's
obligations pursuant to the Lease so that the Lessor may compel the
Lessee to observe all of the obligations of the Lease as if no
assignment had occurred.
15.7 Default of the Lessor - Should the Lessor fail to perform its
obligations for which it is bound to the Lessee, the sublessee may
not exercise the rights and remedies of the Lessee against the
Lessor.
15.8 Default of the Sublessee - Should the sublessee fail to perform its
obligations and therefore causes damage to the Lessor or to the
other lessees or occupants of the Immovable, the Lessor may apply
for the resiliation of the sublease.
15.9 Expenses of the Sublease or the Assignment - If the sublease or the
assignment is accepted, the Lessee shall reimburse the Lessor for
the related administrative expenses in the amount of [three hundred
and fifty dollars ($350)] which shall be payable by certified cheque
and shall be remitted at the time of signature of the agreement of
sublease or of assignment.
15.10 Approval of Signs - The Lessee shall not place any signs or notices
announcing that it wishes to assign the Lease or sublet the Leased
Premises if same is visible from the exterior thereof(1).
ARTICLE 16
SUBORDINATION AND ATTORNMENT
16.1 Assignment by the Lessor - In the event of the sale of the Immovable
or the assignment by the Lessor of the Lease in favor of a third
party (the "Assignee"), the Lessor shall be released of all of
its(2) obligations towards the Lessee, subject to the condition that
such obligations be assumed by the Assignee.
16.2 Subordination - All of the Lessee's rights under this Lease shall be
subordinate to those of any creditor holding a charge against the
Immovable or of any other Assignee of the Lessor's rights under this
Lease. The Lessor shall ensure that the Lessee's rights pursuant to
this Lease are not thereby affected.
16.3 Signature of Documents - The Lessee shall sign any document and
shall do all things required by the Lessor in order to subordinate
the Lease to any charge to which the Immovable is or may be subject.
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(1) without first having obtained the prior consent of the Lessor.
(2) future
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ARTICLE 17
DEFAULT AND RECOURSE
17.1 A default shall occur in the following cases:xxx
(a) if the Lessee does not fulfil any of its
obligations pursuant to the Lease and if
this default continues:
(i) in the case of a pecuniary obligation, for
more than five (5) days following the
receipt by the Lessee of a written notice
from the Lessor;
(ii) in all other cases, for more than fifteen
(15) days following the receipt of a written
notice from the Lessor (unless the default
cannot be remedied within said delay, in
which case the Lessee shall have commenced
to remedy the default within the prescribed
delay and to continue to do so with
diligence) or within a shorter delay
stipulated in the Lease (the latter delay
taking precedence);
(b) if the Lessee is party to bankruptcy or
dissolution proceedings or loses control of
the property located in the Leased Premises;
(c) if the Lessee makes a sale of an
enterprise(1)I or if the property located in
the Leased Premises is seized and that a
release thereof is not obtained within
fifteen (15) days.
The sole lapse of time with respect to the delays mentioned above or
with respect to any other delay referred to in the Lease shall have
the effect of putting the Lessee in default.
In the event of a default, the Lessor may, notwithstanding any law
to the contrary and subject to its other rights and remedies
provided by the Lease or by law:
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(1) (other than pursuant to an assignment or sublet permitted hereunder)
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(d) enter into the Leased Premises and remedy
the default on behalf of and at the expense
of the Lessee and recover from the Lessee
all damages suffered by the Lessor,
including all expenses incurred by it,
whether such expenses result directly from
the default;
(e) resiliate the Lease without legal
proceedings.
17.2 Consequences of the Resillation - If the Lessor resiliates the Lease
pursuant to the present article then:
(a) the Lessee shall immediately leave the
Leased Premises, failing which the Lessor
may: enter the Leased Premises, as mandatary
of the Lessee, re-let them for the duration
of the Term and on conditions which the
Lessor may determine at its discretion,
collect the Rent, take possession, as
mandatary of the Lessee, of all movable
property located in the Leased Premises and,
in such a case, store the movable property
at the cost and risk of the Lessee or sell
or assign it in such manner as the Lessor
deems appropriate without notice to the
Lessee; make modifications to the Leased
Premises in order to facilitate their
re-letting; apply the proceeds of any sale
or re-letting to the payment of all expenses
incurred by the Lessor in connection with
such re letting or of such sale and of any
other debt of the Lessee towards the Lessor
and, lastly, to the payment of Rent in
arrears or of Rent to become due. The Lessee
shall remain liable to the Lessor for any
deficiency;
(b) the Lessor shall have the right to recover
from the Lessee all damages suffered by the
Lessor and all expenses incurred by same
including the Rent to be due until the
Termination of the Lease as liquidated
damages;
(c) should the resiliation of the Lease result
from the Lessee's bankruptcy or insolvency,
the Lessor may recover arrears of Rent for a
period of three (3) months preceding the
bankruptcy and of three (3) months' Rent in
advance following the bankruptcy.
17.3 Waiver - Should the Lessor have served a notice of resiliation of
the Lease, the Lessee may not avoid such resiliation by curing the
default, notwithstanding any law or custom to the contrary.
17.4 Indemnity - Should the Lessor retain the services of legal counsel
in connection with the nonperformance of the Lessee's obligations
under this Lease, the Lessee shall pay to the Lessor the judicial
fees.
17.5 Guarantee of Performance - The Lessee hereby deposits with the
Lessor the sum of SIXTEEN THOUSAND, FOUR HUNDRED AND FORTY-SEVEN
DOLLARS AND EIGHTY CENTS ($16 447.80), EIGHT THOUSAND, SEVEN HUNDRED
AND SIXTY DOLLARS AND THIRTY CENTS ($8,760.30) of which as a prepaid
Rent payment for the first month of the Term, including G.S.T. and
Q.S.T., and SEVEN THOUSAND, SIX HUNDRED AND EIGHTY-SEVEN DOLLARS AND
FIFTY CENTS ($7,687.50) of which as a security deposit to guarantee
the fulfillment of the Lessee's obligations contained in the Lease.
This security deposit may be used by the Lessor(1) in order to
cure any of the Lessee's defaults and in such a case, the Lessee
shall be bound to furnish the Lessor with a new security deposit, by
remitting without delay an amount equal to the sum used. If at the
Termination of the Lease the Lessee is not in default pursuant to
the Lease and if the Lessor has not used the security deposit to
cure a default, this security deposit or any part thereof shall be
reimbursed to the Lessee. This security deposit is not deemed to be
a prepayment of Rent. The Lessee, by signing these presents,
expressly
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(1) , following the expiration of all delays provided for in Section
17.1,
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acknowledges that no declaration guaranteeing the reimbursement of
this security deposit has been made other than in accordance with
the provisions of this article.
ARTICLE 18
NOTICE
18.1 Any notice under this Lease shall be sent by registered mail or by
telecopier transmission or delivered in person at the addresses
indicated below. The Lessor reserves the right to change its
address.
Notices sent by registered mail and delivered in person shall be
deemed to have been received the day of its reception and those sent
by telecopier transmission to have been received(1) its
transmission. The Lessee elects domicile in the Leased Premises for
all purposes relating hereto.
Lessor's address Lessee's address
SITQ INC. H. POWER ENTERPRISES OF CANADA INC.
3300 Cote Vertu 1069 Begin
Suite 400 St-Laurent, Quebec
St-Laurent, Quebec H4R 1V8
H4R 2137
Telecopier: (514) 333-1313 Telecopier : (514) _________________
(2)
ARTICLE 19
TERMINATION OF LEASE
19.1 Unless an option to renew the Lease has been granted to the Lessee,
the occupation of the Leased Premises by the Lessee after the
Termination of the Lease shall not have the effect of extending or
of expressly or tacitly renewing the Lease. If the Lessee continues
to occupy the Leased Premises after the Termination of the Lease,
the Lessor may require the eviction of the Lessee or may permit the
Lessee to continue to occupy the Leased Premises pursuant to a
monthly lease in consideration of a monthly Minimum Rent which is(3)
greater than the last monthly Minimum Rent of the Term, the other
terms and conditions of the Lease remaining the same.
ARTICLE 20
UNAVOIDABLE DELAY
20.1 Except for the payment of an amount of money, the parties shall not
be deemed to be in default of the performance of any obligation
under this Lease if they are prevented from so doing by Unavoidable
Delay; any period of time for the performance of such obligation
shall be extended accordingly. The parties shall respectively notify
each other of the cause, the probable duration and the effect of any
Unavoidable Delay.
ARTICLE 21
MISCELLANEOUS PROVISIONS
21.1 Modification of Lease - Any modification of the Lease shall be valid
only if expressly agreed to in writing by the Lessor and the Lessee.
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(1) upon confirmation of receipt of
(2) copies of default notices to be forwarded to head office:
H. POWER ENTERPRISES INC.
60 Montgomery Street
Belleville, New Jersey 07109
(3) twenty-five percent (25%)
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21.2 Performance by Third Party - A third party may not acquire any
rights under this Lease by the performance of any obligation to
which the Lessee is bound.
21.3 Declaration of Intent - In this Lease, it is intended to give to
words or expressions their wider meaning, unless the context
dictates otherwise.
21.4 Absence of Waiver - The fact that one or the other party has not
exercised any of its rights hereunder shall not constitute a waiver
thereof.
21.5 Cancellation of Previous Agreements - This Lease represents the
entire agreement between the parties in connection with the Leased
Premises. It replaces all previous documents and discussions between
the parties.
21.6 Successors and Assigns - The Lease shall bind the successors and
assignees of the parties.
21.7 Brokerage Commission - Any brokerage commission with respect to this
Lease shall be borne exclusively by the Lessee who shall indemnify
the Lessor against any claim with respect thereto, unless the Lessor
has bound itself in writing to pay a commission.
21.8 Access to the Leased Premises - During the last(1) months of the
Term, the Lessor may exhibit the Leased Premises during business
hours to persons interested in leasing the Leased Premises. During
the Term, the Lessee may exhibit the Leased Premises at any time
during business hours to any broker, purchaser or evaluator. The
Lessor shall exercise its right in a reasonable manner.
21.9 Cumulative Rights - The rights of the Lessor(2) are cumulative and
not exclusive.
21.10 Undertaking to Cooperate - The parties undertake to sign all
documents and to take all necessary or desirable steps to give
effect to these presents.
21.11 Publication of Rights - The Lessee may register the Lease by summary
only, to the extent that such summary does not refer to any
financial terms and conditions and that the prior approval of the
Lessor has been obtained. The Lessee shall pay the cost of
registration and shall provide the Lessor with one (1) registered
copy of the summary. The Lessee will, at the Termination of the
Lease, cause the registration of the summary to be canceled at its
expense, failing which the Lessor(3) may do so at the Lessee's
expense.
21.13 Partial Invalidity - All of the parts of this Lease are divisible.
If for any reason whatsoever a provision thereof is judged to be
illegal or unenforceable, the other provisions of the Lease shall
remain in effect mutatis mutandis.
21.14 Interpretation - In this Lease, unless the context dictates
otherwise, the masculine includes the feminine and the singular
includes the plural and the words "herein above" and "these
presents" as well as similar words or expressions shall refer to the
Lease in its entirety.
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(1) six (6)
(2) and the Lessee
(3) , following the expiration of five (5) days notice to Lessee
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21.15 Laws - The Lease shall be governed by the laws of the province of
Quebec(1) and the parties shall take all proceedings in the court of
jurisdiction for the judicial district of Montreal.
21.16 Late Payments - The acceptance by the Lessor of any ante-dated
cheque or of any late payment shall be considered as a means of
collection only, subject to the rights of the Lessor pursuant to
these presents. Any sums unpaid by the Lessee(2), shall bear
interest at the Prime Rate.
21.17 Partial payment of Rent - The payment by the Lessee of an amount
inferior to the Rent, shall not be deemed to be an acknowledgment of
total payment of the Rent and the Lessor shall be deemed to have
accepted such payment as partial payment without prejudices to or
under reserve of the Lessor's rights and recourses in order to
recover the balance due.
21.18 Solidary Liability - Should the Lease be signed by several persons
their liability shall be solidary so that each of them shall be
liable for all of the obligations of the Lessee under this Lease.
21.19 Titles - The titles and the numbering of the articles have been
inserted as a matter of convenience and shall not be used to
interpret the text thereof.
21.20 Protection of Information - The Lessee specifically authorizes the
Lessor to collect (and to establish a file, if the Lessor so wishes)
all information on the Lessee , including the solvency of the Lessee
which may be relevant or necessary for the execution of the Lease.
To this end, any person, including personal information agents
(credit bureaus), banks, sub-contractors and suppliers, having such
information are, by these presents, authorized to give such
information to the Lessor during the Term and subsequently thereto
if necessary.
21.21 Understanding of the Lease - Notwithstanding that the Lease was
drawn up and submitted by the Lessor, the Lessee acknowledges that
it has negotiated the Lease, that it understands all of its
provisions and that the Lessor has given the Lessee adequate
explanations as to the nature and extent of the Lease.
ARTICLE 22
REGULATIONS
22.1 The Lessee shall observe the regulations respecting the use of the
Immovable and of the Common Areas, which are annexed hereto as
Schedule "C", as such regulations may be modified by the Lessor, to
the extent that they are not in contradiction with the Lease. The
regulations may differ depending on the type of business located in
the Immovable but may not be discriminatory.
ARTICLE 23
ENVIRONMENTAL MATTERS
23.1 During the Term, the Lessee agrees to respect the Environmental
Legislation and comply therewith promptly at its expense and to
immediately notify the Lessor of any release and discharge and
presence inside or outside the Leased Premises of any Contaminants
and Hazardous Materials which are in breach of the Environmental
Legislation.
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(1) and the laws of Canada applicable therein
(2) or the Lessor, as the case may be,
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The Lessee is liable for any damage whatsoever caused in or to the
Immovable or the Leased Premises as a result of non-compliance with
the Environmental Legislation, which damage may also entail the
termination of the Lease.
Notwithstanding anything to the contrary, the Lessee undertakes to
save and hold harmless the Lessor, its representatives, agents or
employees from any claims, losses, costs, fees, expenses, damages
for bodily injury, moral damages, property damages, actions, suits
or proceedings arising from or attributable to Lessee's act,
refusal, negligence or omission to comply with the Environmental
Legislation. (1)
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(1) The foregoing provisions of this Section 23.1 shall apply, "mutatis
mutandis," to the Lessor's obligations to respect the Environmental
Legislation.
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ARTICLE 24
LANGUAGE
24.1 The Parties specifically declare that they have requested the
present lease and all documents relating thereto to be drawn up in
the English Language. Les Parties declarent qu'elles ont demande que
le present Bail et tout document s'y relatant soient rediges en
anglais.
ARTICLE 25
SPECIAL PROVISIONS
25.1 LEASEHOLD IMPROVEMENTS
The Lessor declares that at the commencement of the Lease, all
utilities and services such as heating, air conditioning, if any,
electricity and doors shall be properly functional(1).
The Lessee declares that it has examined the Leased Premises and
that it is satisfied and content therewith. The Lessee agrees and
covenants to take the Leased Premises "AS IS", in their present
state and condition, save and except for leasehold improvements
(hereinafter referred to as "Initial Leasehold Improvements") which
shall be performed by the Lessor, at its cost, in accordance with
final plans to be prepared by the Lessor and approved by both
parties(2). The cost of the Leasehold Improvements, including the
cost for all base building items, the cost incurred by the Lessor to
have the final plans prepared, the administration, supervision,
design and professional fees are estimated at ONE HUNDRED AND SIXTY
THOUSAND DOLLARS ( $ 160,000.00) excluding G.S.T. and G.S.T.
Notwithstanding anything contained in this article, the Lessor's
liability for the cost of the Initial Leasehold Improvements shall
not exceed ONE HUNDRED THOUSAND DOLLARS ( $ 100,000.00 ) excluding
G.S.T. and Q.S.T., any sum in excess thereof being the
responsibility of the Lessee.
25.2 OPTIONS TO RENEW
First Option
Provided the Lessee is not or has not at any time been in default
pursuant to the Lease, the Lessor shall grant to the Lessee a first
option to renew the Lease. ((hereinafter called "First Option") for
an additional period of ONE (1) year, commencing on the date of the
Termination of the Lease and ending ONE (1) year later, provided the
Lessee notifies the Lessor of such intention in writing by
registered or certified mail at least SIX (6) months prior to the
Termination of the Lease, failing which, the First Option shall
become null and void and of no legal effect whatsoever. In the event
of the Lessee exercising the First Option, all terms and conditions
of the Lease shall remain in effect for the renewal period, save
that:
(i) The Minimum Rent shall be at a rate equal to the then
current market value for comparable space in the
Building in which the Leased Premises are located;
(ii) The Lessor shall not be obliged to execute any leasehold
improvements in the Leased Premises.
Second Option
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(1) Should same not be the case, all costs relating to the remedying of
this situation shall be borne solely by the Lessor.
(2) , and save for any latent or structural defects, which shall be
remedied by Lessor at its sole cost
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<PAGE>
Provided the Lessee has exercised the First Option and provided it
shall not at any time be in default pursuant to the Lease, the
Lessor shall grant to the Lessee a second option to renew the Lease
(hereinafter called "Second Option") for an additional period of ONE
(1) year, commencing on the date of the expiration of the First
Option and ending ONE (1) year later, provided the Lessee notifies
the Lessor of such intention in writing by registered or certified
mail at least SIX (6) months prior to the expiration of the First
Option, failing which, the Second Option shall become null and void
and of no legal effect whatsoever. In the event of the Lessee
exercising the Second Option, all terms and conditions of the Lease
shall remain in effect for the second renewal period, save that:
(i) The Minimum Rent shall be at a rate equal to the then
current market value for comparable space in the
Building in which the Leased Premises are located;
(ii) The Lessor shall not be obliged to execute any leasehold
improvements in the Leased Premises.
Third Option
Provided the Lessee has exercised the Second Option and provided it
shall not at any time be in default pursuant to the Lease, the
Lessor shall grant to the Lessee a third option to renew the Lease
(hereinafter called "Third Option") for an additional period of ONE
(1) year, commencing on the date of the expiration of the Second
Option and ending ONE (1) year later, provided the Lessee notifies
the Lessor of such intention in writing by registered or certified
mail at least SIX (6) months prior to the expiration of the Second
Option, failing which, the Third Option shall become null and void
and of no legal effect whatsoever. In the event of the Lessee
exercising the Third Option, all terms and conditions of the Lease
shall remain in effect for the third renewal period, save that:
(i) The Minimum Rent shall be at a rate equal to the then
current market value for comparable space in the
Building in which the Leased Premises are located;
(ii) The Lessor shall not be obliged to execute any leasehold
improvements in the Leased Premises.
Fourth Option
Provided the Lessee has exercised the Third Option and provided it
shall not at any time be in default pursuant to the Lease, the
Lessor shall grant to the Lessee a fourth option to renew the Lease
(hereinafter called "Fourth Option") for an additional period of ONE
(1) year, commencing on the date of the expiration of the Third
Option and ending ONE (1) year later, provided the Lessee notifies
the Lessor of such intention in writing by registered or certified
mail at least SIX (6) months prior to the expiration of the Third
Option, failing which, the Fourth Option shall become null and void
and of no legal effect whatsoever. In the event of the Lessee
exercising the Fourth Option, all terms and conditions of the Lease
shall remain in effect for the fourth renewal period, save that:
(i) The Minimum Rent shall be at a rate equal to the then
current market value for comparable space in the
Building in which the Leased Premises are located;
(ii) The Lessor shall not be obliged to execute any leasehold
improvements in the Leased Premises;
(iii) The present option shall cease to remain in force.
25.3 LESSOR'S ENTRY
In all instances in this Lease where the entry by the Lessor into
the Leased Premises is provided, the Lessor, its agents or
representatives shall provide the Lessee with not less than
twenty-four (24) hour advance written notice (unless longer notice
is provided for elsewhere
23
<PAGE>
in the Lease) in each instance prior to its entry upon the Leased
Premises, except in the cases of emergency or routine janitorial
service. In cases of emergency, the Lessor shall use its best
efforts to notify the Lessee prior to entering upon the Leased
Premises.
25.4 LESSEE'S ACCESS TO LEASED PREMISES
The Lessee shall be allowed full access to the Leased Premises and
the use of all services in respect thereof at all times, seven (7)
days per week, twenty-four (24) hours per day, the whole at no
additional cost to the Lessee.
24
<PAGE>
25.5 LESSOR'S OBLIGATIONS TO OPERATE
The Lessor covenants and aggress throughout the Term of the Lease,
it will operate the Immovable in a first class manner and will
maintain and keep in good order and repair, the Common Areas,
including, without limitation, the parking area, and will keep it
properly drained and free of ice and snow and in suitable condition
for the purposes of the Lessee and other tenants of the Immovable
and their employees, customers and suppliers at all times as may be
required for the purposes of business operations of the Immovable.
25.6 LESSOR'S OBLIGATION TO PERFORM WORK
Notwithstanding anything contained in the Lease, and subject to the
Lessee's obligations contained in article 7.3, in the event that any
statute, by-law, law, ordinance, regulation, order or requirement of
law or any insurance advisory body requires work of a structural
nature to be made to the Leased Premises, same shall be performed by
the Lessor at its sole cost and expense.
25
<PAGE>
Signed in the City of Saint-Laurent,
This 23rd day of September 1997.
SITQ INC.
for:
SITQ INDUSTRIEL INC.,
ABRIM 14 INC.,
149855 CANADA INC.,
149856 CANADA INC.,
By: /s/ Andre Girard
- --------------------------- --------------------------------
Witness Andre Girard
By: /s/ Denis Perrault
- --------------------------- --------------------------------
Witness Denis Perreault
Signed in the City of New Jersey
This 15th day of September 1997.
H. POWER ENTERPRISES OF CANADA INC.
By: /s/ Frank Gibbard
- --------------------------- --------------------------------
Witness Frank Gibbard
By:
- --------------------------- --------------------------------
Witness
26
<PAGE>
SCHEDULE "A"
ENVIRONMENTAL QUESTIONNAIRE
(The following questionnaire must be completed and signed by the Lessee)
COMPANY NAME: H. POWER ENTERPRISES OF CANADA INC.
TENANT NUMBER: 2350-50-1069-11
Person responsible for environmental risks: Dr. Alan Attia
Telephone No.: Office: 973-450-4400 Residence: 973-473-4090
Ext. 449
GENERAL INFORMATION
A) Describe the business activities carried on in the Leased Premises.
Research and Development Activities in the area of fuel cell
technology development in support of anticipated future
manufacturing requirements.
B) Will the business activities to be carried on in the Leased Premises
entail the use of Contaminants and Hazardous Materials? If so,
describe them.
Materials to be used in the above described activities are not
considered to be hazardous or contaminants. Lab quantities of
Hydrogen and other gasses will be present in approved storage
containers.
C) Indicate the approximate amounts of Contaminants and Hazardous
Materials which will be generated, monthly or annually, in the
Leased Premises.
Storage cylinders of Hydrogen up to 10 will be in the facility under
approved storage methods.
D) How do you intend to store the Contaminants and Hazardous Materials
described in C)?
Material storage will have the required isolation of material and
proper securing of storage tanks,.
E) How will you dispose of the Contaminants and Hazardous Materials
generated in the Leased Premises by your business and who will be
the carrier?
The Hydrogen will be consumed in the fuel cell process. No
contaminants are generated in the process.
<PAGE>
Cont'd / Questionnaire / Page ii
F) Will the business activities to be carried on in the Leased Premises
require that you obtain any certificate of authorization, permit or
environmental approval? If so, give details and attach your
certificate.
It is not anticipated that any environmental permitting will be
required at this time. Should the nature of the activity change in
the future the appropriate permits will be obtained at that time.
G) Will the business activities to be carried on in the Leased Premises
entail the discharge of Contaminants and Hazardous Material in the
water system or in the air?
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
H) Will pollution control equipment be required in the Leased Premises
to ensure that the discharge of Contaminants or Hazardous Materials
in the water system or in the air will comply with the Environmental
Legislation? If so, give details and list the standards to be met
Not at this time. If the nature of the operation changes this will
be addressed at that time.
I) Will the business activities to be carried on in the Leased Premises
necessitate the installation of an underground or surface storage
tank in the Leased Premises ? If so, describe in detail the tank to
be installed and material to be stored.
No.
J) Do you intend to have a prevention training or emergency plan in
place to prevent an environmental incident? If so, give details and
attach a copy of the plan and training procedure.
As a part of good business operation all HPEC employees will receive
training in the appropriate areas. Since there are no materials of
concern a specific environmental training plan is not required.
DATE: SIGNATURE:
------------------- ----------------------
<PAGE>
SCHEDULE"B"
PLAN OF LEASED PREMISES
[Insert Picture]
<PAGE>
[Insert Picture]
<PAGE>
SCHEDULE"C"
DESCRIPTION OF LAND
ON WHICH THE IMMOVABLE IS ERECTED
That certain emplacement fronting on Begin Street, known and
designated as lot number TWELVE of original lot number TWO HUNDRED
AND FIVE (205-12) on the said Official Plan and Book of Reference of
the Parish of Saint-Laurent.
With the one storey industrial building thereon erected bearing
civic numbers 1055 to 1083 Begin Street.
<PAGE>
SCHEDULE"D"
REGULATIONS
The Lessee shall observe the following provisions regulating the use and
occupation of the Leased Premises and of the Common Areas:
1. keep the windows of the Leased Premises clean;
2. promptly replace, at its expense, any cracked or broken windows by
windows of the same nature and quality;
3. keep, at its expense, the Leased Premises clean and in a good state
and ensure the absence of insects, rodents or other vermin;
4. keep all refuse, waste or rubbish in such containers which the
Lessor deems acceptable and in a location it determines;
5. not to place or keep any article or merchandise in the Common Areas;
6. not to permit any undue accumulation of rubbish, waste or refuse in
the Leased Premises and in the Common Areas;
7. not to permit the parking of delivery vehicles in such a manner as
to hinder the use of the exterior Common Areas;
8. not to use the plumbing installations for purposes other than for
which they were destined and not to discard any toxic substance
whatsoever therein;
9. not to use, make or keep in the Leased Premises any product,
substance or contaminant which risks the Lessor of being exposed to
any claim whatsoever;
10. in order to facilitate snow removal, not to park any vehicle
overnight on the parking lot from the first (1st) day of November to
the first (1st) day of April. Any vehicles left on the parking lot
overnight shall be removed, unless prior written authorization has
been given by the Lessor;
11. provide to the Lessor a list of emergency telephone numbers so that
the Lessee may be contacted seven (7) days a week;
12. not to obstruct or disrupt the operation of the heating, ventilation
and air conditioning systems serving the Leased Premises.
<PAGE>
SCHEDULE "E"
RESOLUTION
EXCERPT OF THE MINUTES OF A MEETING OF THE DIRECTORS OF H. POWER ENTERPRISES OF
CANADA INC., (THE "COMPANY") HELD THIS 17th DAY OF SEPTEMBER 1997.
IT IS RESOLVED THAT:
The Company enter into a Lease (the "Lease") with SITQ INDUSTRIAL INC., ABRIM 14
INC., 149855 CANADA INC., 149856 CANADA INC., represented by their mandatary,
SITQ INC., for the premises located in 1069 Begin, St-Laurent (Quebec), the
whole in accordance with a Lease which has been submitted to the meeting and
that Frank Gibbard be authorized to sign the Lease on behalf of the Company and
to make all modifications which he deems at his sole discretion, to be
appropriate.
I, THE UNDERSIGNED, CERTIFY that the foregoing is a true copy of a resolution
adopted at a meeting of the directors of H POWER ENTERPRISES OF CANADA INC.,
duly called and held this 17th day of September 1997.
This 17th day of September 1997.
Secretary
<PAGE>
Exhibit 10.41
THIS LEASE, dated the Eighth day of December, 1999
Parties
Between KHUBANI ENTERPRISES, INC.
2 Daniel Road hereinafter referred to as the Landlord, and
Fairfield, NJ 07004
H. Power Corporation,
60 Montgomery Street,
Bellville, NJ 07109 hereinafter referred to as the Tenant,
WITNESSETH: That the Landlord hereby demises and leases unto the Tenant, and the
Tenant hereby hires and takes from the Landlord for the term and upon the
rentals hereinafter specified, the premises described as follows, situated in
the Third Floor (3/F) of Sutton Plaza County of Essex and State of New Jersey
Premises
Office space on the third floor of the building known as Sutton Plaza located at
1373 Broad St., Clifton, NJ 07013 and comprising of 4,382 sq. ft. rentable area
as shown on the attached floor plan
Landlord shall deliver the premises to the tenant vacant as of the date hereof.
Term
The term of this demise shall be for Nineteen (19) months beginning
January 1st, 2000 and ending July 31st, 2001
Rent
The rent for the demised term shall be One hundred twentyfour thousand,
eight hundred, eighty seven ($124,887.00), which shall accrue at the yearly
rate of Seventy eight thousand, eight hundred and seventy six ($78,876.00),
including Tenant Electricity within the demised premises.
Payment of Rent
The said rent is to be payable monthly in advance on the first day of each
calendar month for the term hereof, in instalments as follows:
$6,025.25 + $547.75 Tenant Electricity = $6,573.00
at the office of Khubani Enterprises, Inc., 2 Daniel Road, Fairfield, NJ 07004
or as may be otherwise directed by the Landlord in writing.
THE ABOVE LETTING IS UPON THE FOLLOWING CONDITIONS:
Peaceful Possession
First.--The Landlord covenants that the Tenant, on paying the said rental
and performing the covenants and conditions in this Lease contained, shall and
may peaceably and quietly have, hold and enjoy the demised premises for the term
aforesaid.
Purpose
Second.--The Tenant covenants and agrees to use the demised premises as a
General Offices
and agrees not to use or permit the premises to be used for any other purpose
without the prior written consent of the Landlord endorsed hereon.
Default in Payment of Rent
Abandonment of Premises
Re-entry and Reletting by Landlord
Tenant Liable for Deficiency
Lien of Landlord to Secure
Performance Attorney's Fees
Third.--The Tenant shall, without any previous demand therefor, pay to the
Landlord, or its agent, the said rent at the times and in the manner above
provided. In the event of the non-payment of said rent, or any instalment
thereof, at the times and in the manner above provided, and if the same shall
remain in default for ten days after becoming due, or if the Tenant shall be
dispossessed for non-payment of rent, or if the leased premises shall be
deserted or vacated, the Landlord or its agents shall have the right to and may
enter the said premises as the agent of the Tenant, either by force or
otherwise, without being liable for any prosecution or damages therefor; and may
relet the premises as the agent of the Tenant, and receive the rent therefor,
upon such terms as shall be satisfactory to the Landlord, and all rights of the
Tenant to repossess the premises under this lease shall be forfeited. Such
re-entry by the Landlord shall not operate to release the Tenant from any rent
to be paid or covenants to be performed hereunder during the full term of this
lease. For the purpose of reletting, the Landlord shall be authorized to make
such repairs or alterations in or to the leased premises as may be necessary to
place the same in good order and condition. The Tenant shall be liable to the
Landlord for the cost of such repairs or alterations, and all expenses of such
reletting. If the sum realized or to be realized from the reletting is
insufficient to satisfy the monthly or term rent provided in this lease, the
Landlord, at its option, may require the Tenant to pay such deficiency month by
month, or may hold the Tenant in advance for the entire deficiency to be
realized during the term of the reletting. The Tenant shall not be entitled to
any surplus accruing as a result of the reletting. The Landlord is hereby
granted a lien, in addition to any statutory lien or right to distrain that may
exist, on all personal property of the Tenant in or upon the demised premises,
to secure payment of the rent and performance of the covenants and conditions of
this lease. The Landlord shall have the right, as agent of the Tenant, to take
possession of
<PAGE>
any furniture, fixtures or other personal property of the Tenant found in or
about the premises, and sell the same at public or private sale and to apply the
proceeds thereof to the payment of any monies becoming due under this lease, the
Tenant hereby waiving the benefit of all laws exempting property from execution,
levy and sale on distress or judgment. The Tenant agrees to pay, as additional
rent, all attorney's fees and other expenses incurred by the Landlord in
enforcing any of the obligations under this lease.
Sub-letting and Assignment
Fourth.--The Tenant shall not sub-let the demised premises nor any portion
thereof, nor shall this lease be assigned by the Tenant without the prior
written consent of the Landlord endorsed hereon.
Condition of Premises, Repairs
Alterations and Improvements
Sanitation, Inflammable Materials
Sidewalks
Fifth.--The Tenant has examined the demised premises, and accepts them in
their present condition (except as otherwise expressly provided herein) and
without any representations on the part of the Landlord or its agents as to the
present or future condition of the said premises. The Tenant shall keep the
demised premises in good condition, and shall redecorate, paint and renovate the
said premises as may be necessary to keep them in repair and good appearance.
The Tenant shall quit and surrender the premises at the end of the demised term
in as good condition as the reasonable use thereof will permit. The Tenant shall
not make any alterations, additions, or improvements to said premises without
the prior written consent of the Landlord. All erections, alterations, additions
and improvements, whether temporary or permanent in character, which may be made
upon the premises either by the Landlord or the Tenant, except furniture or
movable trade fixtures installed at the expense of the Tenant, shall be the
property of the Landlord and shall remain upon and be surrendered with the
premises as a part thereof at the termination of this Lease, without
compensation to the Tenant. The Tenant further agrees to keep said premises and
all parts thereof in a clean and sanitary condition and free from trash,
inflammable material and other objectionable matter. If this lease covers
premises, all or a part of which are on the ground floor, the Tenant further
agrees to keep the sidewalks in front of such ground floor portion of the
demised premises clean and free of obstructions, snow and ice.
Mechanics' Liens
Sixth.--In the event that any mechanics' lien is filed against the
premises as a result of alterations, additions or improvements made by the
Tenant, the Landlord, at its option, after thirty days' notice to the Tenant to
cure may terminate this lease and may pay the said lien, without inquiring into
the validity thereof, and the Tenant shall forthwith reimburse the Landlord the
total expense incurred by the Landlord in discharging the said lien, as
additional rent hereunder.
Glass
Seventh.--The Tenant agrees to replace at the Tenant's expense any and all
glass which may become broken in and on the demised premises. Plate glass and
mirrors, if any, shall be insured by the Tenant at their full insurable value in
a company satisfactory to the Landlord. Said policy shall be of the full premium
type, and shall deposit Certificate hereof with the Landlord or his agent.
Liability of Landlord
Eighth.--Except for landlord's negligence the Landlord shall not be
responsible for the loss of or damage to property, or injury to persons,
occurring in or about the demised premises, by reason of any existing or future
condition, defect, matter or thing in said de mised premises or the property of
which the premises are a part, or for the acts, omissions or negligence of other
persons or tenants in and about the said property. The Tenant agrees to
indemnify and save the Landlord harmless from all claims and liability for
losses of or damage to property, or injuries to persons occurring in or about
the demised premises.
Services and Utilities
Ninth.--Utilities and services furnished to the demised premises for the
benefit of the Tenant shall be provided and paid for as follows: water by the
Landlord ; gas by the Landlord ; electricity by the Landlord ; heat by the
Landlord ; refrigeration by the Landlord ; hot water by the Landlord.
Tenant shall have 24 hours access to the premises, including elevator
service
The Landlord shall not be liable for any interruption or delay in any of
the above services for any reason beyond landlord's control.
Right to Inspect and Exhibit
Tenth.--The Landlord, or its agents, shall have the right to enter the
demised premises at reasonable hours in the day or night to examine the same, or
to run telephone or other wires, or to make such repairs, additions or
alterations as it shall deem necessary for the safety, preservation or
restoration of the improvements, or for the safety or convenience of the
occupants or users thereof (there being no obligation, however, on the part of
the Landlord to make any such repairs, additions or alterations), or to exhibit
the same to prospective purchasers and put upon the premises a suitable "For
Sale" sign. For three months prior to the expiration of the demised term, the
Landlord, or its agents, may similarly exhibit the premises to prospective
tenants, and may place the usual "To Let" signs thereon.
Damage by Fire, Explosion, The Elements or Otherwise
Eleventh.--In the event of the destruction of the demised premises or the
building containing the said premises by fire, explosion, the elements or
otherwise during the term hereby created, or previous thereto, or such partial
destruction thereof as to render the premises wholly untenantable or unfit for
occupancy, or should the demised premises be so badly injured that the same
cannot be repaired within ninety days from the happening of such injury, then
and in such case the term hereby created shall, at the option of the Landlord or
tenant cease and become null and void from the date of such damage or
destruction, and the Tenant shall immediately surrender said premises and all
the Tenant's interest therein to the Landlord, and shall pay rent only to the
time of such surrender, in which event the Landlord may re-enter and re-possess
the premises thus discharged from this lease and may remove all parties
therefrom. Should the demised premises be rendered untenantable and unfit for
occupancy, but yet be repairable within ninety days from the happening of said
injury, the Landlord may enter and repair the same with reasonable speed, and
the rent shall not accrue after said injury or while repairs are being made, but
shall recommence immediately after said repairs shall be completed. But if the
premises shall be so slightly injured as not to be rendered untenantable and
unfit for occupancy, then the Landlord agrees to repair the same with reasonable
promptness and in that case the rent accrued and accruing
<PAGE>
shall not cease or determine. The Tenant shall immediately notify the Landlord
in case of fire or other damage to the premises.
Observation of Laws, Ordinances, Rules and Regulations
Twelfth.--The Tenant agrees to observe and comply with all laws,
ordinances, rules and regulations of the Federal, State, County and Municipal
authorities applicable to the business to be conducted by the Tenant in the
demised premises. The Tenant agrees not to do or permit anything to be done in
said premises, or keep anything therein, which will increase the rate of fire
insurance premiums on the improvements or any part thereof, or on property kept
therein, or which will obstruct or interfere with the rights of other tenants,
or conflict with the regulations of the Fire De partment or with any insurance
policy upon said improvements or any part thereof. In the event of any increase
in insurance premiums resulting from the Tenant's occupancy of the premises, or
from any act or omission on the part of the Tenant, the Tenant agrees to pay
said increase in insurance premiums on the improvements or contents thereof as
additional rent.
Signs
Thirteenth.--No sign, advertisement or notice shall be affixed to or
placed upon any part of the demised premises by the Tenant, except in such
manner, and of such size, design and color as shall be approved in advance in
writing by the Landlord.
Subordination to Mortgages and Deeds of Trust
Fourteenth.--This lease is subject and is hereby subordinated to all
present and future mortgages, deeds of trust and other encumbrances affecting
the demised premises or the property of which said premises are a part. The
Tenant agrees to execute, at no expense to the Landlord, any instrument which
may be deemed necessary or desirable by the Landlord to further effect the
subordination of this lease to any such mortgage, deed of trust or encumbrance.
Fifteenth.--Nightly cleaning of the premises shall be performed on
business days at the landlord's expense.
Rules and Regulations of Landlord
Sixteenth.--The rules and regulations regarding the demised premises,
affixed to this lease, if any, as well as any other and further reasonable rules
and regulations which shall be made by the Landlord, shall be observed by the
Tenant and by the Tenant's employees, agents and customers. The Landlord
reserves the right to rescind any presently existing rules applicable to the
demised premises, and to make such other and further reasonable rules and
regulations as, in its judgment, may from time to time be desirable for the
safety, care and cleanliness of the premises, and for the preservation of good
order therein, which rules, when so made and notice thereof given to the Tenant,
shall have the same force and effect as if originally made a part of this lease.
Such other and further rules shall not, however, be inconsistent with the proper
and rightful enjoyment by the Tenant of the demised premises.
Violation of Covenants, Forfeiture of Lease, Re-entry by Landlord
Non-waiver of Breach
Seventeenth.--In case of violation by the Tenant of any of the covenants,
agreements and conditions of this lease, or of the rules and regulations now or
hereafter to be reasonably established by the Landlord, and upon failure to
discontinue such violation within ten days after notice thereof given to the
Tenant, this lease shall thenceforth, at the option of the Landlord, become null
and void, and the Landlord may re-enter without further notice or demand. The
rent in such case shall become due, be apportioned and paid on and up to the day
of such re-entry, and the Tenant shall be liable for all loss or damage
resulting from such violation as aforesaid. No waiver by the Landlord of any
violation or breach of condition by the Tenant shall constitute or be construed
as a waiver of any other violation or breach of condition, nor shall lapse of
time after breach of condition by the Tenant before the Landlord shall exercise
its option under this paragraph operate to defeat the right of the Landlord to
declare this lease null and void and to re-enter upon the demised premises after
the said breach or violation.
Notices
Eighteenth.--All notices and demands, legal or otherwise, incidental to
this lease, or the occupation of the demised premises, shall be in writing. If
the Landlord or its agent desires to give or serve upon the Tenant any notice or
demand, it shall be sufficient to send a copy thereof by registered mail,
addressed to the Tenant at the demised premises, or to leave a copy thereof with
a person of suitable age found on the premises, or to post a copy thereof upon
the door to said premises. Notices from the Tenant to the Landlord shall be sent
by registered mail or delivered to the Landlord at the place hereinbefore
designated for the payment of rent, or to such party or place as the Landlord
may from time to time designate in writing.
Bankruptcy, Insolvency, Assignment for Benefit of Creditors
Nineteenth.--It is further agreed that if at any time during the term of
this lease the Tenant shall make any assignment for the benefit of creditors, or
be decreed insolvent or bankrupt according to law, or if a receiver shall be
appointed for the Tenant, then the Landlord may, at its option, terminate this
lease, exercise of such option to be evidenced by notice to that effect served
upon the assignee, receiver, trustee or other person in charge of the
liquidation of the property of the Tenant or the Tenant's estate, but such
termination shall not release or discharge any payment of rent payable hereunder
and then accrued, or any liability then accrued by reason of any agreement or
covenant herein contained on the part of the Tenant, or the Tenant's legal
representatives.
Holding Over by Tenant
Twentieth.--In the event that the Tenant shall remain in the demised
premises after the expiration of the term of this lease without having executed
a new written lease with the Landlord, such holding over shall not constitute a
renewal or extension of this lease. The Landlord may, at its option, elect to
treat the Tenant as one who has not removed at the end of his term, and
thereupon be entitled to all the remedies against the Tenant provided by law in
that situation, or the Landlord may elect, at its option, to construe such
holding over as a tenancy from month to month, subject to all the terms and
conditions of this lease, except as to duration thereof, and in that event the
Tenant shall pay monthly rent in advance at the rate provided herein as
effective during the last month of the demised term.
Eminent Domain, Condemnation
Twenty-first.--If the property or any part thereof wherein the demised
premises are located shall be taken by public or quasi-public authority under
any power of eminent domain or condemnation, this lease, at the option of the
Landlord, shall forthwith terminate and the Tenant shall have no claim or
interest in or to any award of damages for such taking.
Security
Twenty-second.--The Tenant has this day deposited with the Landlord the
sum of $ 13,146.00 as security
<PAGE>
for the full and faithful performance by the Tenant of all the terms, covenants
and conditions of this lease upon the Tenant's part to be performed, which said
sum shall be returned to the Tenant within 30 days after the time fixed as the
expiration of the term herein, provided the Tenant has fully and faithfully
carried out all of said terms, covenants and conditions on Tenant's part to be
performed. In the event of a bona fide sale, subject to this lease, the Landlord
shall have the right to transfer the security to the vendee for the benefit of
the Tenant and the Landlord shall be considered released by the Tenant from all
liability for the return of such security; and the Tenant agrees to look to the
new Landlord solely for the return of the said security, and it is agreed that
this shall apply to every transfer or assignment made of the security to a new
Landlord. The security deposited under this lease shall not be mortgaged,
assigned or encumbered by the Tenant without the written consent of the
Landlord.
Arbitration
Twenty-third.--Any dispute arising under this lease shall be settled by
arbitration. Then Landlord and Tenant shall each choose an arbitrator, and the
two arbitrators thus chosen shall select a third arbitrator. The findings and
award of the three arbitrators thus chosen shall be final and binding on the
parties hereto.
Delivery of Lease
Twenty-fourth.--No rights are to be conferred upon the Tenant until this
lease has been signed by the Landlord, and an executed copy of the lease has
been delivered to the Tenant.
Lease Provisions Not Exclusive
Twenty-fifth.--The foregoing rights and remedies are not intended to be
exclusive but as additional to all rights and remedies the Landlord would
otherwise have by law.
Lease Binding on Heirs, Successors, Etc.
Twenty-sixth.--All of the terms, covenants and conditions of this lease
shall inure to the benefit of and be binding upon the respective heirs,
executors, administrators, successors and assigns of the parties hereto.
However, in the event of the death of the Tenant, if an individual, the Landlord
may, at its option, terminate this lease by notifying the executor or
administrator of the Tenant at the demised premises.
Twenty-seventh.--This lease and the obligation of Tenant to pay rent
hereunder and perform all of the other covenants and agreements hereunder on
part of Tenant to be performed shall in nowise be affected, impaired or excused
because Landlord is unable to supply or is delayed in supplying any service
expressly or impliedly to be supplied or is unable to make, or is delayed in
making any repairs, additions, alterations or decorations or is unable to supply
or is delayed in supplying any equipment or fixtures if Landlord is prevented or
delayed from so doing by reason of governmental preemption in connection with
the National Emergency declared by the President of the United States or in
connection with any rule, order or regulation of any department or subdivision
thereof of any governmental agency or by reason of the conditions of supply and
demand which have been or are affected by the war.
Twenty-eighth.--This instrument may not be changed orally.
Twenty-ninth.--Provided that Tenant is not in default in the performance
of this lease, Tenant shall have the option to renew the lease for an additional
term of ________ years commencing at the expiration of the initial lease term.
All of the above terms and conditions shall apply during the renewal period
except that the Base Rent shall be ($ ____________) per annum. The
option shall be exercised in writing, by certified mail, to Landlord not less
than five (5) months prior to the expiration of the initial lease term. If this
notice is not given in the manner provided herein within the time specified,
this option shall, at the Landlord's discretion, expire.
The Landlord shall:-
1) Replace ceiling tiles where necessary
2) Replace flourescent tube light where necessary
3) Parking - 18 spaces.
The Landlord hereby consents to the following work by the tenant:-
a) Demolation of bullpen partition by tenant
b) Carpeting by Tenant & c) Painting by tenant
Broker on record - Palestna Properties, Inc.
Landlord agrees to pay such broker commissions.
IN WITNESS WHEREOF, the said Parties have hereunto set their hands and
seals the day and year first above written.
Witness: KHUBANI ENTERPRISES, INC. (SEAL)
----------------------------------------------------------------
Landlord
- --------------------------------------------------------------------------------
By /s/ V. N. Khubani
H. POWER CORPORATION (SEAL)
- ------------------------------------------------------------------------
Tenant
By /s/ H. Frank Gibbard
<PAGE>
================================================================================
GUARANTY
In consideration of the execution of the within lease by the Landlord, at
the request of the undersigned and in reliance of this guaranty, the undersigned
hereby guarantees unto the Landlord, its successors and assigns, the prompt
payment of all rent and the performance of all of the terms, covenants and
conditions provided in said lease, hereby waiving all notice of default, and
consenting to any extensions of time or changes in the manner of payment or
performance of any of the terms and conditions of the said lease the Landlord
may grant the Tenant, and further consenting to the assignment and the
successive assignments of the said lease, and any modifications thereof,
including the sub-letting and changing of the use of the demised premises, all
without notice to the undersigned. The undersigned agrees to pay the Landlord
all expenses incurred in enforcing the obligations of the Tenant under the
within lease and in enforcing this guaranty.
Witness: (SEAL)
------------------------------- -------------------------
(SEAL)
------------------------------- -------------------------
Date
-------------------------------
Lease
================================================================================
KHUBANI ENTERPRISES, INC.
2 Daniel Road
Fairfield, NJ 07004
Landlord
to
H. POWER CORPORATION,
60 Montgomery Street
Bellville, NJ 07019
Tenant
================================================================================
Premises leased:
From: January 1st, 2000
To: July 31st, 2001
ASSIGNMENT AND ACCEPTANCE OF ASSIGNMENT
For value received the undersigned Tenant hereby assigns all of said
Tenant's right, title and interest in and to the within lease from and after
unto heirs, successors, and assigns,
the demised premises to be used and occupied for and for no
other purpose, it being expressly agreed that this assignment shall not in any
manner relieve the undersigned assignor from liability upon any of the covenants
of this lease.
Witness: (SEAL)
------------------------------- -------------------------
(SEAL)
------------------------------- -------------------------
Date
-------------------------------
In consideration of the above assignment and the written consent of the
Landlord thereto, the undersigned assignee,
hereby assumes and agrees from and after to make all
payments and to perform all covenants and conditions provided in the within
lease by the Tenant therein to be made and performed.
Witness: (SEAL)
------------------------------- -------------------------
(SEAL)
------------------------------- -------------------------
Date
-------------------------------
CONSENT TO ASSIGNMENT
The undersigned Landlord hereby consents to the assignment of the within
lease to on the express conditions that the original Tenant
, the assignor, herein, shall remain liable for the prompt
payment of the rent and the performance of the covenants provided in the said
lease by the Tenant to be made and performed, and that no further assignment of
said lease or sub-letting of any part of the premises thereby demised shall be
made without the prior written consent of the undersigned Landlord.
----------------------------------
Landlord
Date: By
---------------------------- --------------------------------
<PAGE>
Exhibit 10.42
[ Letterhead of NBG Technologies, Inc.]
March 29, 2000
H Power Corp.
60 Montgomery Street
Belleville, NJ 07109
Gentlemen:
Reference is made to the Termination Agreement dated as of March 29,
2000 (the "Termination Agreement") between H Power Corp. ("H Power") and NBG
Technologies, Inc. ("NBG"). This is to confirm that notwithstanding anything to
the contrary contained in the Termination Agreement the parties hereto
acknowledge that H Power's involvement with NBG's sales/marketing/engineering
activities on the projects for NBG's customers set forth below shall continue as
follows:
1) NBG is currently dealing with Everest & Jennings Canadian,
LTD, Sunrise Medical, Inc. and Invacare Corporation, all of
which may be potential customers for Fuel Cell powered wheel
chairs. H Power will continue to furnish such engineering
cooperation, if any, as H Power deems appropriate with respect
to the foregoing.
2) NBG will require Fuel Cells for current stationary power
activities with (a) Prima Guard, Inc., (b) Advanced Local
Development, Inc., (c) North American Native Education and
Wellness, and (d) Long Island Power Authority.
It is understood and agreed that the Termination Agreement is not
intended to require H Power and NBG to cease to continue doing business together
and that H Power shall supply Fuel Cells to NBG in connection with the foregoing
projects if commercially reasonable terms, prices, delivery schedules and
quantities can be mutually agreed upon.
Please confirm your agreement with the foregoing by signing below.
Very truly yours,
NBG Technologies, Inc.
By: /s/ Bernard I. Rachowitz
-------------------------
By: /s/ Glenn Spacht
-------------------------
Agreed
H Power Corp.
By: /s/ William Zang
-------------------------
By: /s/ Thomas Michael
-------------------------
<PAGE>
Exhibit 21.1
SUBSIDIARIES OF H POWER CORP.
The Registrant currently owns a 50% equity interest in H Power
Enterprises of Canada, Inc., or HPEC. Immediately prior to the consummation
of this offering, the owners of the other 50% of HPEC will exchange their
equity interest for 2,666,664 shares of the Registrant's common stock and
HPEC will become a wholly-owned subsidiary of the Registrant.
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-1 of
our report dated August 25, 1999 relating to the financial statements of H Power
Corp. and its subsidiary, which appear in such Registration Statement. We also
consent to the references to us under the headings "Experts" and "Selected
Financial Data" in such Registration Statement.
PricewaterhouseCoopers LLP
Florham Park, New Jersey
April 6, 2000
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