1
EXHIBIT 10.7
JOINT VENTURE AND SHAREHOLDERS' AGREEMENT
between
Stoneridge, Inc.
Alphabet Division
and
CONNECTO AB
2
JOINT VENTURE AND SHAREHOLDERS' AGREEMENT
This Agreement is made and entered into on this 25th day of August 1997 at
Warren, Ohio by and between
Stoneridge, Inc., represented by its Alphabet Division ("Alphabet"), a
corporation organized and existing under the laws of Ohio, U.S.A.
and
Connecto AB ("Connecto"), a corporation organized and existing under the laws of
Sweden.
1. INTRODUCTION
1.1 Connecto and Alphabet are both in the power distribution systems
business. Connecto has a strong position on the Scandinavian market
while Alphabet has a strong position on the North American market. The
parties share the view THAT global presence and economies of scale are
becoming of increasing importance in the power distribution systems
components business as large customers are more and more relying on one
rather than many suppliers in a particular field, and, further, THAT it
is important to have production facilities in
3
low cost countries, as a way to compensate for decreasing margins in
the business as well as to gain a foothold on the large emerging
markets.
1.2 In light of the above, the parties have formed a strategic alliance,
evidenced by a co-operation agreement dated August 25, 1997 (the
"Co-operation Agreement"). Pursuant to said agreement, APPENDIX, the
parties shall primarily co-operate by establishing joint venture
companies limited by shares, initially in Europe and South America for
the purpose of manufacturing and selling power distribution systems.
Such joint venture companies shall not only be production facilities but
also sales and marketing vehicles for the parties' products and services
to the extent found practicable by the parties.
1.3 The parties are in agreement that the first South American venture (the
"Company") shall be located in Brazil and that Alphabet shall primarily
be responsible for establishing the Company. In the Company, Alphabet
will have a shareholding equal to 60 per cent of the capital and votes
of the Company, whereas Connecto will own the remaining 40 per cent of
the shares, representing a corresponding share of the Company's capital
and votes.
1.4 To establish the Company, the parties hereby enter into this Agreement,
stipulating that the parties shall jointly establish, own and operate
the Company on the terms and conditioned contained herein. Any
deviations from this Agreement made necessary due to any requirements
stipulated by local laws and regulations shall be mutually agreed
between the parties.
2. ESTABLISHING THE COMPANY
2.1 Alphabet shall no later than September 1, 1997 present to Connecto a
detailed business plan as regards the conditions for establishing the
Company, after which the parties shall in writing agree on the suitable
form and location of the
4
Company. Connecto is required to render any reasonable assistance
requested by Alphabet in preparing the business plan, which plan shall
include, inter alia
- market analysis;
- market potential;
- cost models;
- possible location sites of production facility;
- management issues;
- time schedule;
- financial investments; and
- local political and financial situation.
2.2 The parties shall no later than September 15, 1997, in writing agree on
the size of their initial capital contribution to the Company. The
initial capital contribution is expected to be in the range of US
Dollars 1.5-2.0 million, with a maximum outlay of US Dollars 4.0
million, and shall be contributed to the Company in the form of equity
or as loans or guarantees by the parties in proportion to their
respective shareholdings in the Company. The initial capital shall be
contributed by the parties in cash unless the parties otherwise agree.
In the event the parties should agree on contribution in kind, the value
of such contribution shall be assessed by a reputable accounting firm
jointly chosen by the parties. During the term of the Agreement, the
maximum outlay to the Company may be increased, provided both parties
agree thereto. If, in such event, one party should refrain from
investing more money in the Company, the other party may take on such
additional investment, whereupon the first party's ownership percentage
shall be reduced accordingly.
2.3 Alphabet shall at its own cost commission such local counsel as is
necessary for the drawing up of the articles of association of the
Company, [a share purchase agreement], and any other legal documents
necessary to establish the
5
Company, all in a form to be agreed by the parties. Such documents shall
accurately reflect the parties' intentions as set forth in this
Agreement. Alphabet shall incorporate, or begin filing for the
incorporation of, the Company no later than September 1, 1997. It is the
intention of the parties to have an operation facility in place in
Brazil before the end of 1997.
3. OPERATION OF THE COMPANIES
3.1 For the development and operation of the Company the parties have
agreed on the following guidelines:
a) the agreement shall be a long-term engagement between the
parties;
b) the business of the Company shall be conducted on sound and
businesslike principles;
c) the business of the Company shall be conducted in a
cost-efficient manner;
d) both parties shall have a clear insight into the Company's
finances and other material matters; and
e) both parties shall be informed of all matters of a strategical
nature to the Company.
3.2 During the term of this Agreement neither Connecto nor Alphabet shall go
into the power distribution systems business in South America on its
own, but only through the Company.
6
3.3 Both parties undertake to use their best efforts to promote the business
of the Company, and to contribute any human and technical resources the
Company would reasonably desire to procure from the parties. All
dealings between the parties and the Company shall be on an arm's length
basis.
A method for reimbursing Alphabet and Connecto for services rendered to
the Company shall be determined. Reimbursable expenses may include areas
such as
- engineering services
- technical services
- sales services
- out-of-pocket expenses
3.3.1 Alphabet shall undertake to ensure that the Company shall at all times
a) keep accurate, true, complete and separate books of account of
all transactions and dealings carried out by the Company;
b) conduct its business and affairs in compliance with law and all
other relevant rules and regulations;
c) prepare and regularly update quarterly management accounts,
operating statistics and financial information;
d) apply such accounting policies as may from time to time be in
compliance with Brazilian as well as US GAAP;
e) protect all confidential information whether it belongs to the
Company or to the parties;
7
f) adequately insure and keep so insured, against all risk usually
insured against by companies carrying on the same or similar
business, for full replacement of reinstatement value and with a
reputable insurance company, all the assets or activities of the
Company of an insurable nature;
g) no later than 30 days after the end of each quarter of each
financial year of the Company deliver to the parties: (i) the
profit and loss accounts of the Company for such quarter and for
the period from the beginning of the financial year, and (ii)
the related balance sheet of the Company as at the end of such
quarter, (iii) reports of revenue, expense and cash flow and a
statement of source and application of funds for each quarter
and for the applicable financial year to the date of such
report, (iv) projected expenses and capital expenditures to be
incurred during the quarter immediately succeeding the end of
that quarter, all in reasonable detail and (v) a report
specifically stating all material transactions between the
Company and the parties to this Agreement that have taken place
during the preceding quarter;
h) no later than 60 days after the end of each financial year of
the Company, prepare and deliver to each party: (i) audited
profit and loss accounts of the Company for that financial year,
and (ii) the related audited balance sheet of the Company as at
the end of such year, all in reasonable detail, and (iii) the
directors' report on and notes to such accounts and balance
sheet;
i) no later than five (5) days after the end of each month provide
the parties with adequate information as regards sales, cost for
raw material, cost for
8
personnel, operating profit, depreciations and financial costs
and profits after depreciations and financial net; and
j) from time to time, with reasonable promptness, provide such
further information regarding the business and affairs of the
Company as either party may reasonably request.
4. BOARD OF DIRECTORS
4.1 (a) The board of directors shall consist of five persons, with a
maximum of five deputy directors. Each party shall have the
right to appoint one director for each full twenty per cent
ownership of the shares. The party holding the majority of the
shares shall always have the right to nominate the chairman.
(b) Each of the parties may appoint one deputy for every director
appointed by such a party. The deputy directors may attend any
meetings of the board of directors. As long as the ordinary
director is present, the deputy director may not exercise any
voting powers.
(c) From time to time during the term of this Agreement, each party,
as applicable, may, and shall, upon the death, disability,
resignation or removal of any director designated by such party,
appoint a successor director, and shall promptly notify the
Company and the other party of such appointment. The parties
shall not exercise their rights or votes so as to remove a
director from office without the prior written consent of the
party appointing that director.
(d) If a party for any reason whatsoever reduces the percentage of
shares held by it to less than 15 per cent of the capital of the
Company, such
9
party shall not have the right to appoint any directors of the
board. and any director or directors then in office appointed by
such a party shall automatically and immediately cease to hold
office, unless the parties agree otherwise in writing.
4.2 The parties agree to keep the Company indemnified against any
claim for loss of office by any director removed by it or
otherwise ceasing to hold office pursuant to the provisions of
this Agreement.
4.3 (a) Each director present at any meeting shall have one (1)
vote and the chairman of the board shall have a casting
vote.
(b) Except as expressly provided for herein, the quorum for
the board shall be two directors or their deputies,
representing both of the parties.
(c) Each director shall be given not less than twenty-eight
(28) days' notice in writing of a meeting of the board
and not less than seventy-two (72) hours' notice in
writing of an adjourned meeting, or in emergency such
shorter period as may be reasonable, provided that
reasonable efforts shall be used in emergency to give
notice to all directors. Every such notice shall be
accompanied by a written agenda and, so far as
reasonably practicable, such other documents and
information as shall be reasonably required by the
director for the purposes of the meeting. Each director
shall be entitled to pass all such information and any
other information he acquires as a director to such
individual officers or employees of his appointor as
reasonably have an interest in knowing the same for the
purposes of such party's investment in the Company. Any
director may waive his right to receive a notice of
meeting of the board either generally or in
10
respect of specific meetings.
(d) The board shall meet not less than twice a year on a
site convenient for the parties. Each party shall be
entitled to have present at each meeting of the board,
in addition to its designated directors, such officers
or other employees or professional advisers as it shall
reasonably deem appropriate.
4.4 The following decisions may not be made unless at least four (4)
directors, representing both parties, approve:
(i) the appointment and dismissal of the Company's managing
director;
(ii) any major changes as regards the business of the
Company;
(iii) decisions to enter into share or asset sale/purchase
agreements of a substantial nature to the Company;
(iv) the lending of substantial amounts of money or the
incurrence of any substantial indebtedness, in excess of
what has been provided for in an approved business plan;
(v) major investments in excess of a capital cost of US
Dollars 20,000, or the equivalent in local currencies;
(vi) the passing of are solution for the winding up or
liquidation of the Company;
(vii) issuing or selling any debt or equity security of the
Company or any Production facility or options or other
rights therefor;
11
(viii) amending the organizational or governing documents of
the Company or any Production facility;
(ix) filing a voluntary petition for bankruptcy;
(x) merging or consolidating the Company or any Production
facility with or into any other entity;
(xi) incurring or permitting the incurrence of any lien,
security interest or other encumbrance or restriction
upon any significant asset of the Company or any
Production facility, except in the ordinary course of
business;
(xii) entering into any material contract outside the ordinary
course of the Company's or any Production facility's
business;
(xiii) form any Production facility or make any investment in
any other entity;
(xiv) adopt or modify any business plan; or
(xv) adopt or modify any significant benefit arrangement for
officers or employees.
5. FINANCING
5.1 The Company shall primarily be financed through its own earnings. To
this end, the parties agree, during the Company's first three financial
years, not to distribute annually more than 25 per cent of the Company's
lawfully distributable earnings as dividend to its owners, and to retain
any additional
12
earnings in the Company in order to consolidate its financial position.
After the Company's third financial year the distribution of the
Company's lawfully distributable earnings shall be determined by the
board of directors. Such distribution shall always be in an amount
sufficient to permit the parties to pay their respective taxes,
resulting from or related to the ownership of shares in the Company.
5.2 The parties undertake to be the primary source for providing any
external financing to the Company and to contribute capital in
proportion to their respective shareholding in the Company, unless
otherwise agreed in writing.
6. VOTING
6.1 Each of the parties undertake to exercise its right to vote for the
shares owned in the Company at each time at shareholders' meetings
(either by itself or by proxy), at board meetings or otherwise, in
accordance with the provisions of this Agreement.
6.2 A party shall be entitled to exercise his right to vote for the full
number of shares represented by the party at a shareholders' meeting
without any limitation.
7. RESTRICTIONS ON TRANSFER OR ENCUMBRANCE
7.1 Unless otherwise agreed the parties shall remain shareholders in the
Company for at least five (5) years from the date hereof, and under no
circumstances, except as provided in section 8, shall either party
thereafter, directly or indirectly, voluntarily transfer any shares or
any right, title or interest therein without the prior written consent
of the other party to this Agreement.
13
7.2 In order that the intention of the parties with, respect to the transfer
of shares shall not be frustrated or impaired, no party shall at any
time directly or indirectly encumber any shares without the prior
written consent of the other party to this Agreement except as provided
in section 8.1.
8. VOLUNTARY TRANSFERS
8.1 Notwithstanding section 7 above each party hereto may at any time or
times transfer any right, title or interest in all of its shares to any
person or entity who is a "Permissible Transferee" with respect to the
transferor. "Permissible Transferee" with respect to the transferor
means any affiliate of a party, provided that the transferee gives an
undertaking to the Company and to the other party that if it ceases for
any reason to be affiliated with the ultimate holding company of the
transferor, it will, immediately before so ceasing, transfer the legal
and beneficial interest in all of its shares in the Company to a company
which is affiliated at the time of the transfer by the transferee with
the company which is the ultimate holding company of the transferor as
at the date of the transfer to the transferee and which before such
transfer has given an equivalent undertaking to the Company and to the
other party.
8.2 No party wishing to transfer any shares under this section 8 may do so
without first procuring that the proposed transferee enters in an
agreement of adherence with the continuing party hereto to observe,
perform and be bound by all the terms of this Agreement which are
capable of applying to such person. The Company shall not register any
person or entity as a holder of any share unless and until such a
agreement has been duly executed and an original counterpart thereof has
been delivered to the Company. Upon being so registered that party shall
be deemed to be a party to this Agreement.
14
8.3 If any party hereto ("the Initial Transferor") transfers shares to a
Permissible Transferee pursuant to section 8.1 such Permissible
Transferee shall not thereafter transfer any such shares pursuant to
section 8. 1, other than to a person who is a Permissible Transferee
with respect to the Initial Transferor. Prompt notice of any transfer
pursuant to section 8.1 shall be given by the transferor and transferee
to the other party.
8.4 A party wishing to voluntarily transfer shares (a "Voluntary
Transferor") to any person or entity other than a Permissible Transferee
may do so only after it has complied with the following:
(i) The Voluntary Transferor shall first obtain a bona fide cash
offer (the "Offer") in writing for the acquisition of its shares
by an independent, willing third party who shall not be a third
party whose acquisition of an interest in the shares concerned
would give rise to any default, or to any right of termination
becoming exercisable, under any licence or similar granted or
proposed to be granted to the Company.
(ii) The Voluntary Transferor shall give not less than thirty (30)
days' written notice to the other party of the Voluntary
Transferor's intention to transfer all or part of its shares.
Each such notice shall contain all the terms and conditions of
the Offer, a copy of the Offer and the name of the person or
entity making the Offer and (if an entity) the person or persons
believed to control it.
(iii) The other party shall have the irrevocable and exclusive right,
but not the obligation, to purchase all of the shares that are
the subject of the Offer on the terms and conditions set forth
in the Offer. Any election by the other party to exercise a
right provided pursuant to this paragraph shall be made by
written notice to the Voluntary Transferor
15
within thirty (30) days of notice of the Offer being given to
the other party and shall state the number of shares the said
party is willing to purchase. If the other party does not elect
to purchase all of the offered shares, then the voluntary
transfer shall have the right, but not the obligation, to sell
all but not less than all of the offered shares, within 60 days,
to the third party specified in the offer notice, for a price
not less than the price specified in the offer notice.
8.5 When the five year period stated in section 7.1 above have lapsed, a
party to this Agreement (the "Offeror") shall be at liberty to make a
bid for all of the other party's (the "Offeree") shares in the Company.
Such bid has to be accepted or rejected in writing within (60) days from
receipt of it. If the Offeree rejects the bid, it is obligated, within
sixty (60) days from the date of the rejection, to acquire all of the
Offeror's shares in the Company for a price per share equal to the
Offeror's bid.
9. CONFIDENTIALITY
9.1 This Agreement shall in its entirety be dealt with confidentially by the
parties unless otherwise agreed in writing. All information of a
confidential nature which a party learns from the other party or from
the Company shall be dealt with confidentially by the receiving party
and may not be disclosed to any third party. A party which voluntarily
or involuntarily ceases to be a party to this Agreement undertakes
hereby to treat the Agreement in its entirety as confidential.
9.2 However, information shall not be considered confidential pursuant to
this Agreement if the receiving party can show
16
(i) that such information was known to it without an obligation of
confidentiality when the information in question was received
from the other party or from the Company;
(ii) that it received such information legally or obtained it from a
third party without being instructed to keep the information
confidential; or
(iii) that such information is or will become known to the public
other than as a result of the receiving party's failure to
observe the confidentiality obligation.
10. CORPORATE NAME
If a party desires to sell or transfer all its shares in the Company to the
other party or to an unaffiliated third party, or in any other way intends to
divest all its shares in the Company, the parties jointly undertake, at the
written request of the disposing party, to take any steps necessary to change
the name of the Company so that it does not contain any reference to the whole
or part of the corporate name of the party who does not intend to remain a
shareholder of the Company.
11. TERM OF AGREEMENT
11.1 This Agreement shall terminate five (5) years from the date of
agreement, by either party giving one (1) year's written notice. Unless
terminated, the Agreement will be automatically prolonged for two (2)
years at a time. During periods of prolongation, the same notice period
shall apply as during the initial term of the Agreement.
11.2 This Agreement shall be immediately terminated upon
17
(i) the consummation of any merger or consolidation to which the
Company is a party (except any merger or consolidation
immediately following which a majority of the shares of the
surviving or resulting company shall be held by the parties and
any Permissible Transferee);
(ii) any admission to listing of, or quotation of, or commencement of
dealing in, the shares of the Company pursuant to a public
offering;
(iii) the unanimous written consent of both parties to the termination
hereof, or
(iv) any order being made or a resolution being passed for the
winding up or liquidation of the Company.
Termination will not affect the accrued liability of any party for any
default, but accrued but unperformed obligations shall cease to apply
save for obligations which expressly or by implication are to survive
termination.
11.3 In the event the Co-operation Agreement, or any other agreement between
the parties, should be terminated, such termination shall have no effect
on the validity of this Joint Venture and Shareholders' Agreement.
12. MISCELLANEOUS
12.1 This Agreement shall apply to all of the parties' shares or other
securities in THE Company, at present as well as in the future. The term
"share" or "shares" in this Agreement shall also encompass any other
securities from time to time issued by the Company and outstanding.
18
12.2 Copies of this Agreement shall be filed with the Secretary of the
Company at the office of the Company. Each certificate representing
shares of the Company shall bear the following endorsement:
The securities represented by this certificate are issued, accepted and
held in accordance with the terms of an Agreement dated August 25, 1997.
A copy of such Agreement has been filed at the office of the Company and
will be made available for inspection by the person named in this
Certificate or anyone designated by him in writing on application to the
Company subject to the execution of a confidentiality undertaking in
such terms as the Company may request. This certificate and the
securities represented hereby may not be made subject to direct or
indirect sale, assignment, transfer, mortgage, pledge, hypothecation or
other encumbrance or disposition, except as provided in such Agreement,
to all of which and to which Agreement the holder hereof, by the
acceptance hereof, agrees.
12.3 Each of the parties acknowledges that damages may not be an adequate
remedy if it or its transferee or its legal representative is in breach
of any of the restrictions or obligations imposed hereby. Therefore,
each party consents to the issuance of an injunction or the enforcement
of other equitable remedies against it at the suit of an aggrieved
party.
12.4 All notices and other communications provided for herein (including,
without limitation, any modifications of, or waivers or consents under,
this Agreement) shall be given or made by telefax or in writing and
telefaxed, mailed or delivered to the intended recipient at the "Address
for Notices" specified below its name on the signature pages hereof or
at such other address as shall be designated by either of the parties in
a written notice to the other party. Except
19
as otherwise provided in this Agreement, all such communications shall
be deemed to have been duly given when transmitted by telefax or
personally delivered or, in the case of a mailed notice, upon receipt,
in each case given or addressed as aforesaid.
12.5 If any provision hereof, or the application of any such provision,
should be held invalid by a court or tribunal of competent jurisdiction,
the remainder of this Agreement, or the application of such provision,
shall not be affected thereby.
13. GOVERNING LAW
The Agreement shall be governed by and construed in accordance with the laws of
Brazil.
14. JURISDICTION
Any dispute, controversy or claim arising out of or in connection with this
Agreement, or the breach, termination or invalidity thereof, shall be subject to
the non-exclusive jurisdiction of the courts of Brazil. However, to the extent
this provision conflicts with the arbitration clause contained in the
Co-operation Agreement entered into by the parties, such arbitration clause
shall be deemed to govern, i.e., any disputes the subject of which is governed
by this Agreement as well as the aforementioned Co-operation Agreement, shall
exclusively be settled by arbitration rather than by the courts of Brazil or any
other courts.
-------------
20
This Agreement has been executed in two (2) original i copies of which the
parties have taken one copy each.
STONERIDGE, INC. CONNECTO AB
ALPHABET DIVISION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ Lars Eje ▇▇▇▇▇▇
---------------------------- -------------------------------
Title: President Title: President
------------------------- ----------------------------
Address Address
for Notices: for Notices:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇ 3
------------------------------- ---------------------------------
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ 82430 Hudiksvall
------------------------------- ---------------------------------
SWEDEN
------------------------------- ---------------------------------
------------------------------- ---------------------------------
21
JOINT VENTURE AND SHAREHOLDERS' AGREEMENT
between
CONNECTO AB
and
Stoneridge, Inc.
Alphabet Division
22
JOINT VENTURE AND SHAREHOLDERS' AGREEMENT
This Agreement is made and entered into on this 25th day of August 1997 at
Warren, Ohio
by and between
Connecto AB ("Connecto"), a corporation organized and existing under the laws of
Sweden,
and
Stoneridge, Inc., represented by its Alphabet Division ("Alphabet"), a
corporation organized and existing under the laws of Ohio, U.S.A.
1. INTRODUCTION
1.1 Connecto and Alphabet are both in the power distribution systems
business. Connecto has a strong position on the Scandinavian market
while Alphabet has a strong position on the North American market. The
parties share the view THAT global presence and economies of scale are
becoming of increasing importance in the power distribution systems
business as large customers are more and more relying on one rather than
many suppliers in a particular field. and, further, THAT it
23
2
is important to have production facilities in low cost countries, as a
way to compensate for decreasing margins in the business as well as to
gain a foothold on the large emerging markets.
1.2 In light of the above, the parties have formed a strategic alliance,
evidenced by a co-operation agreement dated August 25, 1997 (the
"Co-operation Agreement"). Pursuant to said agreement, APPENDIX, the
parties shall primarily co-operate by establishing joint venture
companies limited by shares, initially in Europe and South America for
the purpose of manufacturing and selling power distribution systems.
Such joint venture companies shall not only be production facilities but
also sales and marketing vehicles for the parties' products and services
to the extent found practicable by the parties.
1.3 The parties are in agreement that the European venture (the "Company")
shall be located in Europe with, initially, a Polish Production facility
(the "Production facility") and that Connecto shall primarily be
responsible for establishing the Company and the Production facility. In
the Company, Connecto will have a shareholding equal to 60 per cent of
the capital and votes of the Company, whereas Alphabet will own the
remaining 40 per cent of the shares, representing a corresponding share
of the Company's capital and votes.
1.4 To establish the Company and the Production facility, the parties hereby
enter into this Agreement, stipulating that the parties shall jointly
establish, own and operate the Company and the Production facility on
the terms and conditioned contained herein. Any deviations from this
Agreement made necessary due to any requirements stipulated by local
laws and regulations shall be mutually agreed between the parties.
24
3
2. ESTABLISHING THE COMPANY AND THE PRODUCTION FACILITY
2.1 Connecto shall no later than September 1, 1997 present to Alphabet a
detailed business plan as regards the conditions for establishing the
Company and the Production facility. The parties are in agreement that
the Company shall be a European company incorporated by shares. The
exact location of the Production facility shall be decided by the
parties jointly within eight weeks after the presentation of the
business plan. Alphabet is required to render any reasonable assistance
requested by Connecto in preparing the business plan, which plan shall
include, inter alia
- market analysis;
- market potential;
- cost models;
- possible location sites of production facility;
- management issues;
- time schedule;
- financial investments; and
- local political and financial situation.
2.2 The parties shall no later than September 15, 1997, in writing agree on
the size of their initial capital contribution to the Company. The
initial capital contribution is expected to be in the range of SEK 12-16
million, including the capital necessary to establish the Production
facility, with a maximum outlay of SEK 24 million, and shall be
contributed to the Company in the form of equity or as loans or
guarantees by the parties in proportion to their respective
shareholdings in the Company. The initial capital shall be contributed
by the parties in cash unless the parties otherwise agree. In the event
the parties should agree on contribution in
25
4
kind, the value of such contribution shall be assessed by a reputable
accounting firm jointly chosen by the parties. During the term of the
Agreement, the maximum outlay to the Company may be increased, provided
both parties agree thereto. If, in such event, one party should refrain
from investing more money in the Company, the other party may take on
such additional investment, whereupon the first party's ownership
percentage shall be reduced accordingly.
2.3 Connecto shall at its own cost commission such local counsel as is
necessary for the drawing up of the articles of association of the
Company and the Production facility, a share purchase agreement for the
Company and/or the Production facility and any other legal documents
necessary to establish the Company and the Production facility, all in a
form to be agreed by the parties. Such documents shall accurately
reflect the parties' intentions as set forth in this Agreement. The
Company shall be incorporated no later than October 31, 1997, at which
date documentation for the filing for registration of the Production
facility shall also have been made with the relevant Polish authorities.
It is the intention of the parties to have an operation facility in
place in Poland before the end of 1997.
3. OPERATION OF THE COMPANY
3.1 For the development and operation of the Company and the Production
facility the parties have agreed on the following guidelines:
a) the agreement shall be a long-term engagement between the
parties;
b) the business of the Company shall be conducted on sound and
businesslike principles;
c) the business of the Company shall be conducted in a
cost-efficient manner,
26
5
d) both parties shall have a clear insight into the Company's
finances and other material matters; and
e) both parties shall be informed of all matters of a strategical
nature to the Company.
3.2 The Company shall be the joint sales and marketing vehicle for Connecto
and Alphabet in Europe for power distribution systems, with the purpose
of serving all Connecto's and Alphabet's customers in Europe, with the
exception of Connecto's customers in Scandinavia and Finland.
Notwithstanding the above the Company shall have the right to serve
Connecto's present customers, Scania, Volvo and VCE, with power
distribution systems and components not presently supplied by Connecto.
Alphabet shall also have the right to make regular sales calls to Volvo
in Sweden in order to promote Alphabet's supply of harnesses in North
America.
In order to promote the business of the Company, Connecto and Alphabet
shall endeavour to bring in new customers to the Company, as well as new
business opportunities for existing customers. The company shall utilize
certain resources of Alphabet's existing branch office in Frankfurt.
Manufacture of products, sold by the Company and/or Connecto or Alphabet
shall, to the extent practicable, be made at the Production facility.
3.3 Both parties undertake to use their best efforts to promote the business
of the Company and the Production facility, and to contribute any human
and technical resources the Company and/or the Production facility may
reasonably request from
27
6
the parties. All dealings between the parties on the one side and the
Company and the Production facility on the other side shall be on an
arm's length basis.
A method for reimbursing Alphabet and Connecto for services rendered to
the Company shall be determined. Reimbursable expenses may include areas
such as
- engineering services
- technical services
- sales services
- services provided by the German branch office
- out-of-pocket expenses
3.4 Connecto shall undertake to ensure that the Company and the Production
facility shall at all times
a) keep accurate, true, complete and separate books of account of
all transactions and dealings carried out by the Company and the
Production facility;
b) conduct its respective business and affairs in compliance with
law and all other relevant rules and regulations;
c) prepare and regularly update quarterly management accounts,
operating statistics and financial information;
d) apply accounting policies that from time to time will be in
compliance with Swedish and, as regards the Production facility,
with Polish as well as Swedish GAAP;
28
7
e) protect all confidential information whether it belongs to the
Company and the Production facility or to the parties;
f) adequately insure and keep so insured, against all risk usually
insured against by companies carrying on the same or similar
business, for full replacement of reinstatement value and with a
reputable insurance company, all the assets or activities of the
Company and the Production facility of an insurable nature;
g) no later than 30 days after the end of each quarter of each
financial year of the Company deliver to the parties: (i) the
profit and loss accounts of the Company and the Production
facility for such quarter and for the period from the beginning
of the financial year, and (ii) the related balance sheet of the
Company and the Production facility as at the end of such
quarter, (iii) reports of revenue, expense and cash flow and a
statement of source and application of funds for each quarter
and for the applicable financial year to the date of such
report, (iv) projected expenses and capital expenditures to be
incurred during the quarter immediately succeeding the end of
that quarter, all in reasonable detail and (v) a report
specifically stating all material transactions between the
Company and the Production facility on the one side and the
parties to this Agreement on the other side that have taken
place during the preceding quarter;
h) no later than 60 days after the end of each financial year of
the Company, prepare and deliver to each party: (i) audited
profit and loss accounts of the Company and the Production
facility for that financial year, and (ii) the related audited
balance sheet of the Company and the Production facility as
29
8
at the end of such year, all in reasonable detail, and (iii) the
directors' report on and notes to such accounts and balance
sheet;
i) no later than five (5) business days after the end of each month
provide the parties with adequate information as regards sales,
cost for raw material, cost for personnel, operating profit,
deprecations and financial net; and
j) from time to time, with reasonable promptness, provide such
further information regarding the business and affairs of the
Company and the Production facility as either party may
reasonably request.
4. BOARD OF DIRECTORS
4.1 a) The board of directors shall consist of five persons, with a
maximum of five deputy directors. Each party shall have the
right to appoint one director for each full twenty per cent
ownership of the shares. The party holding the majority of the
shares shall always have the right to nominate the chairman.
b) Each of the parties may appoint one deputy for every director
appointed by such party. The deputy directors may attend any
meetings of the board of directors. As long as the ordinary
director is present, the deputy director may not exercise any
voting powers.
C) From time to time during the term of this Agreement, each party,
as applicable, may, and shall, upon the death, disability,
resignation or removal of any director designated by such party,
appoint a successor
30
9
director, and shall promptly notify the Company and the other
party of such appointment. The parties shall not exercise their
rights or votes so as to remove a director from office without
the prior written consent of the party appointing that director.
d) If a party for any reason whatsoever reduces the percentage of
shares held by it to less than 15 per cent of the capital of the
Company, such party shall not have the right to appoint any
directors of the board, and any director or directors then in
office appointed by such a party shall automatically and
immediately cease to hold office, unless the parties agree
otherwise in writing.
4.2 The parties agree to keep the Company indemnified against any claim for
loss of office by any director removed by it or otherwise ceasing to
hold office pursuant to the provisions of this Agreement.
4.3 a) Each director present at any meeting shall have one (1) vote
and the chairman of the board shall have a casting vote.
b) Except as expressly provided for herein, the quorum for the
board shall be two directors or their deputies, representing
both of the parties.
c) Each director shall be given not less than twenty-eight (28)
days' notice in writing of a meeting of the board and not less
than seventy-two (72) hours' notice in writing of an adjourned
meeting, or in emergency such shorter period as may be
reasonable, provided that reasonable efforts shall be used in
emergency to give notice to all directors. Every such notice
shall be accompanied by a written agenda and, so far as
reasonably
31
10
practicable, such other documents and information as shall be
reasonably required by the director for the purposes of the
meeting. Each director shall be entitled to pass all such
information and any other information he acquires as a director
to such individual officers or employees of his appointor as
reasonably have an interest in knowing the same for the purposes
of such party's investment in the Company. Any director may
waive his right to receive a notice of meeting of the board
either generally or in respect of specific meetings.
d) The board shall meet not less than twice a year on a site
convenient for the parties. Each party shall be entitled to have
present at each meeting of the board, in addition to its
designated directors, such officers or other employees or
professional advisers as it shall reasonably deem appropriate.
4.4 The following decisions may not be made unless at least four (4)
directors, representing both parties, approve:
(i) the appointment and dismissal of the Company's managing
director;
(ii) the nomination of directors of the board of the Production
facility;
(iii) any major changes as regards the business of the Company or the
Production facility;
(iv) decisions to enter into share or asset sale/purchase agreements
of a substantial nature to the Company or the Production
facility;
32
11
(v) the lending of substantial amounts of money or the incurrence of
any substantial indebtedness, in excess of what has been
provided for in an approved business plan;
(vi) major investments in excess of a capital cost of SEK 150,000, or
the equivalent in local currencies;
(vii) the passing of a resolution for the winding up or liquidation of
the Company or the Production facility;
(viii) issuing or selling any debt or equity security of the Company or
any Production facility or options or other rights therefor;
(ix) amending the organizational or governing documents of the
Company or any Production facility;
(x) filing a voluntary petition for bankruptcy;
(xi) merging or consolidating the Company or any Production facility
with or into any other entity;
(xii) incurring or permitting the incurrence of any lien, security
interest or other encumbrance, or restriction upon any
significant asset of the Company or any Production facility,
except in the ordinary course of business;
(xiii) entering into any material contract outside the ordinary course
of the Company's or any Production facility's business;
33
12
(xiv) form any Production facility or make any investment in any other
entity;
(xv) adopt or modify any business plan; or
(xvi) adopt or modify any significant benefit arrangement for officers
or employees.
5. FINANCING
5.1 The Company shall primarily be financed through its own earnings. To
this end, the parties agree, during the Company's first three financial
years, not to distribute annually more than 25 per cent of the
Company's lawfully distributable earnings as dividend to its owners,
and to retain any additional earnings in the Company in order to
consolidate its financial position. After the Company's third financial
year the distribution of the Company's lawfully distributable earnings
shall be determined by the board of directors. Such distribution shall
always be in an amount sufficient to permit the parties to pay their
respective taxes, resulting from or related to the ownership of shares
in the Company.
5.2 The parties undertake to be the primary source for providing any
external financing to the Company and to contribute capital in
proportion to their respective shareholding in the Company, unless
otherwise agreed in writing.
6. VOTING
6.1 Each of the parties undertake to exercise its right to vote for the
shares owned in the Company at each time, at shareholders' meetings
(either by itself or by proxy),
34
13
at board meetings or otherwise, in accordance with the provisions of
this Agreement.
6.2 A party shall be entitled to exercise his right to vote for the full
number of shares represented by the party at a shareholders' meeting
without any limitation.
7. RESTRICTIONS ON TRANSFER OR ENCUMBRANCE
7.1 Unless otherwise agreed the parties shall remain shareholders in the
Company for at least five (5) years from the date hereof, and under no
circumstances, except as provided in section 8, shall either party
thereafter, directly or indirectly, voluntarily transfer any shares or
any right, title or interest therein without the prior written consent
of the other party to this Agreement.
7.2 In order that the intention of the parties with respect to the transfer
of shares shall not be frustrated or impaired, no party shall at any
time directly or indirectly encumber any shares without the prior
written consent of the other party to this Agreement except as provided
in section 8.1.
8. VOLUNTARY TRANSFERS
8.1 Notwithstanding section 7 above each party hereto may at any time or
times transfer any right, title or interest in all of its shares to any
person or entity who is a "Permissible Transferee" with respect to the
transferor. "Permissible Transferee" with respect to the transferor
means any affiliate of a party, provided that the transferee gives an
undertaking to the Company and to the other party that if it ceases for
any reason to be affiliated with the ultimate holding company of the
transferor, it will, immediately before so ceasing, transfer the legal
and beneficial
35
14
interest in all of its shares in the Company to a company which is
affiliated at the time of the transfer by the transferee with the
company which is the ultimate holding company of the transferor as at
the date of the transfer to the transferee and which before such
transfer has given an equivalent undertaking to the Company and to the
other party.
8.2 No party wishing to transfer any shares under this section 8 may do so
without first procuring that the proposed transferee enters in an
agreement of adherence with the continuing party hereto to observe,
perform and be bound by all the terms of this Agreement which are
capable of applying to such person. The Company shall not register any
person or entity as a holder of any share unless and until such an
agreement has been duly executed and an original counterpart thereof has
been delivered to the Company. Upon being so registered that party shall
be deemed to be a party to this Agreement.
8.3 If any party hereto ("the Initial Transferor") transfers shares to a
Permissible Transferee pursuant to section 8.1, such Permissible
Transferee shall not thereafter transfer any such shares pursuant to
section 8.1, other than to a person who is a Permissible Transferee
with respect to the Initial Transferor. Prompt notice of any transfer
pursuant to section 8.1 shall be given by the transferor and transferee
to the other party.
8.4 A party wishing to voluntarily transfer shares (a "Voluntary
Transferor") to any person or entity other than a Permissible Transferee
may do so only after it has complied with the following:
(i) The Voluntary Transferor shall first obtain a bona fide cash
offer (the "Offer") in writing for the acquisition of its shares
by an independent.
36
15
willing third party who shall not be a third party whose acquisition of
an interest in the shares concerned would give rise to any default, or
to any right of termination becoming exercisable, under any licence or
similar granted or proposed to be granted to the Company.
(ii) The Voluntary Transferor shall give not less than thirty (30)
days' written notice to the other party of the Voluntary Transferor's
intention to transfer all or part of its shares. Each such notice shall
contain all the terms and conditions of the Offer, a copy of the Offer
and the name of the person or entity making the Offer and (if an entity)
the person or persons believed to control it.
(iii) The other party shall have the irrevocable and exclusive right, but not
the obligation, to purchase all of the shares that are the subject of
the Offer on the terms and conditions set forth in the Offer. Any
election by the other party to exercise a right provided pursuant to
this paragraph shall be made by written notice to the Voluntary
Transferor within thirty (30) days of notice of the Offer being given to
the other party and shall state the number of shares the said party is
willing to purchase. If the other party does not elect to purchase all
of the offered shares, then the voluntary transfer shall have the right,
but not the obligation, to sell all but not less than all of the offered
shares, within 60 days, to the third party specified in the offer
notice, for a price not less than the price specified in the offer
notice.
8.5 When the five year period stated in section 7.1 above have lapsed, a
party to this Agreement (the "Offeror") shall be at liberty to make a
bid for all of the other party's (the "Offeree") shares in the Company.
Such bid has to be accepted or
37
16
rejected in writing within (60) days from receipt of it. if the Offeree
rejects the bid, it is obligated, within sixty (60) days from the date
of the rejection, to acquire all of the offeror's shares in the company
for a price per share equal to the Offeror's bid.
9. CONFIDENTIALITY
9.1 This agreement shall in its entirety be dealt with confidentially by the
parties unless otherwise agreed in writing. All information of a
confidential nature which a party learns from the other party or from
the Company or the Production facility shall be dealt with
confidentially by the receiving party and may not be disclosed to any
third party. A party which voluntarily or involuntarily ceases to be a
party to this Agreement undertakes hereby to treat the Agreement in its
entirety as confidential.
9.2 However, information shall not be considered confidential pursuant to
this agreement if the receiving party can show
(i) that such information was known to it without an obligation of
confidentiality when the information in question was received
from the other party or from the Company or the Production
facility;
(ii) that it received such information legally or obtained it from a
third party without being instructed to keep the information
confidential; or
(iii) that such information is or will become known to the public
other than as a result of the receiving party's failure to
observe the confidentiality obligation.
38
17
10. CORPORATE NAME
If a party desires to sell or transfer all its shares in the Company to the
other party or to an unaffiliated third party, or in any other way intends to
divest all its shares in the Company, the parties jointly undertake, at the
written request of the disposing party, to take any steps necessary to change
the name of the Company so that it does not contain any reference to the whole
or part of the corporate name of the party who does not intend to remain a
shareholder of the Company.
11. TERM OF AGREEMENT
11.1 This Agreement shall terminate five (5) years from the date of
agreement, by either party giving one (1) year's written notice.
Unless terminated, the Agreement will be automatically prolonged for
two (2) years at a time. During periods of prolongation, the same
notice period shall apply as during the initial term of the Agreement.
11.2 This Agreement shall be immediately terminated upon
(i) the consummation of any merger or consolidation to which the
Company is a party (except any merger or consolidation
immediately following which a majority of the shares of the
surviving or resulting company shall be held by the parties and
any Permissible Transferee);
(ii) any admission to listing of or quotation of, or commencement of
dealing in, the shares of the Company pursuant to a public
offering;
39
18
(iii) the unanimous written consent of both parties to the termination
hereof, or
(iv) any order being made or a resolution being passed for the
winding up or liquidation of the Company.
Termination will not affect the accrued liability of any party for any
default, but accrued but unperformed obligations shall cease to apply
save for obligations which expressly or by implication are to survive
termination.
11.3 In the event the Co-operation Agreement, or any other agreement between
the parties, should be terminated, such termination shall have no effect
on the validity of this Joint Venture and Shareholders' Agreement.
12. MISCELLANEOUS
12.1 This Agreement shall apply to all of the parties' shares or other
securities in the Company, at present as well as in the future. The term
"share" or "shares" in this Agreement shall also encompass any other
securities from time to time issued by the Company and outstanding.
12.2 Copies of this Agreement shall be filed with the Secretary of the
Company at the office of the Company. Each certificate representing
shares of the Company shall bear the following endorsement:
The securities represented by this certificate are issued, accepted
and held in accordance with the terms of an Agreement dated August 25,
1997. A copy of such Agreement has been filed at the office of the
Company and
40
19
will be made available for inspection by the person named in this
Certificate or anyone designated by him in writing on application to
the Company subject to the execution of a confidentiality undertaking
in such terms as the Company may request. This certificate and the
securities represented hereby may not be made subject to direct or
indirect sale, assignment, transfer, mortgage, pledge, hypothecation or
other encumbrance or disposition, except as provided in such Agreement,
to all of which and to which Agreement the holder hereof, by the
acceptance hereof, agrees.
12.3 Each of the parties acknowledges that damages may not be an adequate
remedy if it or its transferee or its legal representative is in breach
of any of the restrictions or obligations imposed hereby. Therefore,
each party consents to the issuance of an injunction or the enforcement
of other equitable remedies against it at the suit of an aggrieved
party.
12.4 All notices and other communications provided for herein (including,
without limitation, any modifications of, or waivers or consents under,
this Agreement) shall be given or made by telefax or in writing and
telefaxed, mailed or delivered to the intended recipient at the "Address
for Notices" specified below its name on the signature pages hereof or
at such other address as shall be designated by either of the parties
in a written notice to the other party. Except as otherwise provided in
this Agreement, all such communications shall be deemed to have been
duly given when transmitted by telefax or personally delivered or, in
the case of a mailed notice, upon receipt, in each case given or
addressed as aforesaid.
41
20
12.5 If any provision hereof, or the application of any such provision,
should be held invalid by a court or tribunal of competent jurisdiction,
the remainder of this Agreement, or the application of such provision,
shall not be affected thereby.
13. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of
Sweden.
14. JURISDICTION
Any dispute, controversy or claim arising out of or in connection with this
Agreement, or the breach, termination or invalidity thereof, shall be settled by
arbitration in accordance with the rules of the Arbitration Institute of the
Stockholm Chamber of Commerce.
----------------
42
21
This Agreement has been executed in two (2) original copies of which the parties
have taken one copy each.
CONNECTO AB STONERIDGE, INC.
ALPHABET DIVISION
By: /s/ Lars Eje ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------- ----------------------------
Title: President Title: President
---------------------------- -------------------------
Address Address
for Notices: for Notices:
Marknadsgatan 3 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
--------------------------------- -------------------------------
82430 Hudiksvall ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
--------------------------------- -------------------------------
SWEDEN
--------------------------------- -------------------------------
--------------------------------- -------------------------------
43
CO-OPERATION AGREEMENT
between
Connecto AB
and
Stoneridge, INC.
Alphabet Division
44
CO-OPERATION AGREEMENT
This Agreement is made and entered into on this 25th day of August 1997 at
Warren, Ohio
by and between
Connecto AB ("Connecto"), a corporation organized and existing under the laws of
Sweden,
and
Stoneridge, Inc., represented by its Alphabet Division ("Alphabet"), a
corporation organized and existing under the laws of Ohio, U.S.A.
1. INTRODUCTION
Connecto and Alphabet are both in the power distribution systems business.
Connecto has a strong position on the Scandinavian market while Alphabet has a
strong position on the North American market. The parties share the view that
global presence and economies of scale are becoming of increasing importance in
the harness business as large customers are more and more relying on one rather
than many suppliers in a particular field, and, further, that it is important to
have production facilities in low cost countries, as a way to compensate for
45
2
decreasing margins in the business as well as to gain a foothold on the large
emerging markets. Therefore, the parties have decided to form a strategic
alliance, with the goal of jointly becoming a market leader in the power
distribution systems business, by way of increased cooperation in the field of
technical development and through the establishment of joint venture companies
as set forth below.
2. JOINT VENTURES
2.1 The parties are in agreement that the co-operation between the parties
initially and primarily shall be in the form of joint ventures which are
to be established in Europe and South America at locations later to be
decided by the parties. Such joint ventures shall be for the purpose of
manufacturing and selling power distribution systems and not only be
production facilities but also sales and marketing vehicles for the
parties' products and services to the extent found practicable.
2.2 The parties are further in agreement that Connecto shall primarily be
responsible for establishing the parties' European ventures and that
Alphabet shall primarily be responsible for establishing the parties'
South American ventures (each a "Venture" and together the "Ventures").
In the respective Venture, the primarily responsible party (the "PRP")
will have a shareholding equal to 60 per cent of the capital and votes
of the Venture, whereas the other party will own the remaining 40 per
cent of the shares, representing a corresponding share of the company's
capital and votes.
2.3 The parties shall for each Venture that they eventually decide to
establish, enter into a shareholders' agreement, which agreement shall
in more detail set out the terms and conditions for the parties' duties
and obligations as regards the specific
46
3
Venture. However, certain basic rules shall apply for any and all
Ventures operated by the parties. Hence, as regards development and
operation of Ventures the parties have agreed on the following
guidelines:
a) all Ventures shall be a long-term engagement between the
parties;
b) the business of the Ventures shall be conducted on sound and
businesslike principles;
c) the business of the Ventures shall be conducted in a cost
efficient manner;
d) both parties shall have a clear insight into the Ventures'
finances and other material matters; and
e) both parties shall be informed of all matters of a strategic
nature to the Ventures.
2.4 The PRP for each Venture is responsible for the Venture developing and
implementing such guidelines and manuals as are necessary for the
expedient and efficient running of operations at all levels. The PRP is
further responsible for quality control of the Venture's production,
thereby assuring that the harnesses and other products and services
produced by the Venture are of a commercially satisfactory quality.
3. OTHER FORMS OF CO-OPERATION
3.1 In addition to establishing joint ventures, the parties intend to find
other ways of co-operation, e.g. by way of sharing information and
technological know-how as regards product development as well as in
other key areas. To this end the parties shall exchange qualified
personnel, particular in the technical field, with the purpose of using
their respective experience and know-how to the mutual benefit of the
parties.
47
4
3.2 Whenever possible the parties shall also promote each others' products
and services, rather than the products and services of any competitors.
Due to the parties' respective geographical and commercial focus, within
the alliance, Connecto will have a leading position on the European
market, while Alphabet will, correspondingly, have a leading position in
the Americas. Nevertheless, the parties shall strive to integrate (to
the extent found acceptable by the parties) their sales and marketing
organizations, thereby enabling the parties to offer present and future
customers a better market support than what is currently possible.
3.3 To the extent practicable, the parties shall strive to make purchases
from each other rather than from third parties. Moreover, as part of the
co-operation the parties shall have the right to purchase harnesses from
each others' production facilities in low cost countries, currently
Russia and Mexico respectively. Terms and conditions for orders from one
party to the other under this clause shall be negotiated separately from
time to time.
4. SHORT AND LONG TERM GOALS OF THE ALLIANCE
4.1 In the short term, the parties, through their co-operation, have the
ambition to:
i) improve production efficiency;
ii) enhance technical development; and
iii) strengthen competitiveness.
4.2 In the long terms, the parties, through their co-operation, have the
ambition to:
i) establish an organization with global reach; and
ii) integrate the businesses of Connecto and Alphabet.
48
5
5. CONFIDENTIALITY
5.1 This Agreement shall in its entirety be dealt with confidentially by the
parties unless otherwise agreed in writing. All information of a
confidential nature which a party learns from the other party shall be
dealt with confidentially by the receiving party and may not be
disclosed to any third party. A party which voluntarily or involuntarily
ceases to be a party to this Agreement undertakes hereby to treat the
Agreement in its entirety as confidential.
5.2 However, the statements made in section 5.1 above shall not be valid if
the receiving party can show
(i) that such information was known to it without an obligation of
confidentiality when the information in question was received
from the other party;
(ii) that it received such information legally or obtained it from a
third party without being instructed to keep the information
confidential; or
(iii) that such information is or will become known to the public
other than as a result of the receiving party's failure to
observe the confidentiality obligation.
5.3 The provision of section 5.1 will survive the expiration or termination
of this agreement.
49
6
6. TERM OF AGREEMENT
6.1 This Agreement shall terminate five (5) years from the date of
Agreement, by either party giving one (1) year's written notice. Unless
terminated, the Agreement will be automatically prolonged for two (2)
years at a time. During periods of prolongation, the same notice period
shall apply as during the initial terms of agreement.
6.2 In a case where the basis for the co-operation of the parties pursuant
to this Agreement is fundamentally altered, the parties hereto shall
carry out good faith negotiations with the purpose of resolving the
matter. If the parties within eight (8) weeks after the commencement of
such negotiation have not been able to agree upon what action to take,
each party shall be entitled to terminate this Agreement.
6.3 Each joint venture agreement exclusively governs the parties'
relationship with respect to the applicable territory and supersedes in
its entirety to this agreement.
7. MISCELLANEOUS
7.1 Each of the Parties acknowledges that damages may not be an adequate
remedy if it or its transferee or its legal representative is in
breach of any of the restrictions or obligations imposed hereby.
Therefore, each Party consents to the issuance of an injunction or the
enforcement of other equitable remedies against it at the suit of
an aggrieved party.
7.2 All notices and other communications provided for herein (including,
without limitation, any modifications of, or waivers or consents under,
this Agreement)
50
7
shall be given or made in writing and telecopied, mailed or delivered to
the intended recipient at the "Address for Notices" specified below its
name on the signature pages hereof or at such other address as shall be
designated by either of the Parties in a written notice to the other
Party. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted
by telecopier or personally delivered or, in the case of a mailed
notice, upon receipt, in each case given or addressed as aforesaid.
7.3 If any provision hereof, or the application of any such provision should
be held invalid by a court or tribunal of competent jurisdiction, the
remainder of this Agreement, or the application of such provision, shall
not be affected thereby.
8. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of
Sweden.
9. ARBITRATION
9.1 Any dispute, controversy or claim arising out of or in connection with
this agreement, or the breach, termination or invalidity thereof, shall
be settled by arbitration in accordance with the Rules of the
Arbitration Institute of the Stockholm Chamber of Commerce.
9.2 The arbitration proceeding shall take place in Stockholm and be
conducted in the English language.
-----------
51
8
This agreement has been executed in two (2) original copies of which the
parties have taken one copy each.
CONNECTO AB STONERIDGE, INC.
ALPHABET DIVISION
By: /s/ Lars Eje ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------- --------------------------
Title: President Title: President
-------------------------- -----------------------
Address Address
for Notice: for Notice:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
-------------------------------- -----------------------------
Markmadsgatan3 ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
-------------------------------- -----------------------------
82430 Hudiksvall
-------------------------------- -----------------------------
Sweden
-------------------------------- -----------------------------