RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT by and among TRULITE, INC., TRULITE ENERGY PARTNERS, L.P. and THE PRINCIPAL STOCKHOLDERS NAMED HEREIN Dated _________, 2004
Exhibit
10.17
by
and among
TRULITE,
INC.,
TRULITE
ENERGY PARTNERS, L.P.
and
THE
PRINCIPAL STOCKHOLDERS NAMED HEREIN
Dated
_________, 2004
TABLE OF CONTENTS
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ARTICLE
I
GENERAL PROVISIONS
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3
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Section
1.1 Definitions
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3
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Section
1.2 Interpretation
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4
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ARTICLE
II
TRANSFERS OF CONTROLLED SHARES
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5
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Section
2.1 Transfers
by a Principal Stockholder
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5
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Section
2.2 Stock
Transfer Restriction
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5
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Section
2.3 Notice
of Transfer
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5
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Section
2.4 Company
Right of First Refusal
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5
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Section
2.5 Investor
Right of First Refusal
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6
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Section
2.6 Right
of Co-Sale
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6
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Section
2.7 Third
Party Transfers
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7
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Section
2.8 Compliance
with Securities Laws
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7
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Section
2.9 Reservation
of Rights
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7
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ARTICLE
III EXEMPT TRANSFERS
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7
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Section
3.1 Permitted
Transferees
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8
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Section
3.2 Other
Exempt Offerings
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8
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Section
3.3 Transfers
Among Principal Stockholders
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8
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ARTICLE
IV
CO-SALE RIGHTS OF PRINCIPAL SHAREHOLDERS
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8
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Section
4.1 Right
of Co-Sale
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8
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Section
4.2 Third
Party Transfers
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10
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Section
4.3 Compliance
with Securities Laws
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10
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ARTICLE
V
PROHIBITED TRANSFERS
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10
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Section
5.1 Remedies
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10
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Section
5.2 Sale
Rights
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10
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Section
5.3 Void
Transfers
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11
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ARTICLE
VI
TERMINATION AND ASSIGNMENT OF RIGHTS
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11
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Section
6.1 Term
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11
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Section
6.2 Assignment
of Rights
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11
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ARTICLE
VII
MISCELLANEOUS
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12
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Section
7.1 Successors
and Assigns
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12
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Section
7.2 Legend
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12
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Section
7.3 Ownership
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12
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Section
7.4 Notices
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12
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Section
7.5 Governing
Law
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12
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Section
7.6 Counterparts
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12
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Section
7.7 Attorney’s
Fees
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12
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Section
7.8 Entire
Agreement
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12
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Section
7.9 Additional
Actions and Documents
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13
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Section
7.10 Amendment
and Waiver
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13
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Section
7.11 Delays
or Omissions
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13
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Section
7.12 Severability
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13
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LIST
OF
APPENDICES
APPENDIX
A CONTROLLED
SHARES HELD BY PRINCIPAL STOCKHOLDERS
This
RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT (this “Agreement”)
is
entered into as of the _____ day of July, 2004, by and among (i) Trulite,
Inc.,
a Delaware corporation (the “Company”),
(ii)
Trulite Energy Partners, L.P. (“Investor”)
in its
capacity as the purchaser of the Company’s Series A 8% Cumulative Convertible
Preferred Stock (“Series
A Preferred Stock”),
and
(iii) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, who collectively beneficially
own
approximately 69.7% of the common stock of the Company issued and outstanding
on
the date hereof (the “Principal
Stockholders”).
WITNESSETH:
WHEREAS,
on the date hereof, Investor desires to purchase Series A Preferred Stock
pursuant to a Purchase Agreement dated July __, 2004 by and between the Company,
Investor and the Principal Stockholders (the “Purchase
Agreement”);
and
WHEREAS,
the Company desires to set forth certain rights of the holders of its securities
relating to the purchase and sale of shares of the Company’s stock;
NOW,
THEREFORE, in consideration of the mutual promises and covenants set forth
herein and in the Purchase Agreement, the parties hereto agree as
follows:
GENERAL
PROVISIONS
Definitions.
Capitalized terms used in this Agreement and not defined in the text hereof
shall have the meanings set forth below:
“Change
of Control”
means
when Investor becomes the beneficial owner of less than 25% of the Common
Stock
on a Fully-diluted basis.
“Common
Stock”
means
the Company’s common stock and shares of common stock issued or issuable upon
conversion of the Series A Preferred Stock or the exercise of any option,
warrant or other security or right of any kind convertible into or exercisable
or exchangeable for Common Stock.
“Controlled
Shares”
means,
when used in reference to any Principal Stockholder, shares of the Company’s
Common Stock now owned or subsequently acquired by such Principal Stockholder
by
purchase, gift, dividend, recapitalization, reclassification, option exercise
or
any other means whether or not such securities are only registered in such
Principal Stockholder’s name or beneficially or legally owned by such Principal
Stockholder, including any interest of a spouse in any of such shares, whether
that interest is asserted pursuant to marital property laws or otherwise.
The
number of Controlled Shares owned by each Principal Stockholder as of the
date
hereof is set forth on Appendix
A,
which
appendix may be amended from time to time by the Company to reflect changes
in
the number of Controlled Shares owned by the Principal Stockholders, but
the
failure to so amend shall have no effect on such Controlled Shares being
subject
to this Agreement.
“Fully-diluted”
means
the computation of outstanding shares of Common Stock after giving effect
to (i)
the exercise of all outstanding options and warrants, (ii) the conversion
or
exchange of all convertible securities (including the Series A Preferred
Stock)
or exchangeable securities, and (iii) the issuance of all shares of Common
Stock
pursuant to any other subscriptions, rights, contracts, commitments or other
arrangements of any character.
“Investor’s
Rights Agreement”
means
that Investor’s Rights Agreement dated as of the date hereof by and among the
Company, Investor and the other parties named therein.
“Investor
Shares”
means,
as of any particular date, the aggregate number of Fully-diluted shares of
Common Stock held or subject to acquisition by Investor as of such
date.
“Principal
Stockholders”
means
the principal stockholders of the Company set forth in the preamble to this
Agreement, or any successors, heirs, executors, administrators and assigns
thereof (including, except as set forth herein, transferees of the Controlled
Shares held by such stockholders).
“Transfer”
means
any sale, assignment, encumbrance, hypothecation, pledge, conveyance in trust,
gift, transfer by request, devise or descent, or other transfer or disposition
of any kind, including transfers to receivers, levying creditors, trustees
or
receivers in bankruptcy proceedings or general assignees for the benefit
of
creditors, whether voluntary or by operation of law, directly or indirectly,
of
any Controlled Shares.
Interpretation.
Unless
the context otherwise requires, (i) all references to Sections, Articles
or
Appendices are to Sections, Articles or Appendices of or to this Agreement,
(ii)
the term “including” means including without limitation and (iii) all references
to any particular statute shall be deemed to refer to such statute as amended
through the date hereof or to any successor statute.
No
provision of this Agreement will be interpreted in favor of or against any
of
the parties by reason of the extent to which any such party or its counsel
participated in the drafting thereof or by reason of the extent to which
any
such provision is inconsistent with any prior draft of this
Agreement.
The
titles and subtitles used in this Agreement are used for convenience only
and
are not to be considered in construing or interpreting this
Agreement.
All
pronouns contained herein, and any variations thereof, shall be deemed to
refer
to the masculine, feminine or neutral, singular or plural, as the identities
of
the parties hereto may require.
TRANSFERS
OF CONTROLLED SHARES
Transfers
by a Principal Stockholder.
Except
as expressly permitted by this Agreement, no Principal Stockholder shall,
directly or indirectly, Transfer any Controlled Shares or any rights or
interests in any Controlled Shares. During the term of this Agreement, any
Controlled Shares, or rights or interests therein, transferred by a Principal
Stockholder or its assignees shall remain subject to the same restrictions
that
were applicable thereto while they were held by such stockholder, except
as
otherwise provided in Section 3.2(ii).
Stock
Transfer Restriction.
Notwithstanding any other provisions of this Article II, prior to the two-year
anniversary date of the date hereof (the “Measuring
Date”),
no
Principal Stockholder shall, directly or indirectly, transfer any Controlled
Shares or any rights or interests in any Controlled Shares. Thereafter, on
each
anniversary of the Measuring Date, 50% of such Controlled Shares shall be
released from the Transfer restriction imposed by the foregoing sentence
such
that on the second anniversary of the Measuring Date none of such Controlled
Shares shall be subject to such Transfer restriction. Any such Controlled
Shares
that have been released from the Transfer restriction imposed by this Section
2.2 may be Transferred in accordance with the terms of this Article
II.
Notice
of Transfer.
If a
Principal Stockholder proposes to Transfer any Controlled Shares no longer
subject to the Transfer restriction imposed by Section 2.2 and such Principal
Stockholder shall have received a bona
fide
arm’s
length written offer for the purchase of such shares for cash from a person
or
entity who is not an affiliate of such Principal Stockholder (“Bona
Fide Offer”),
then
the Principal Stockholder shall promptly give written notice (the “Notice”)
simultaneously to the Company, Investor and each other Principal Stockholder.
The Notice shall describe in reasonable detail the proposed Transfer, including
the number of Controlled Shares proposed to be transferred, the nature of
such
Transfer, the consideration to be paid, and the name and address of each
prospective purchaser or transferee. A copy of the Bona Fide Offer, and all
other documents directly or indirectly relating to the proposed Transfer,
shall
be included as part of the Notice.
Company
Right of First Refusal.
For a
period of 20 days following receipt of any Notice described in Section 2.3,
the
Company shall have the right to purchase all or a portion of the Controlled
Shares subject to such Notice on the same terms and conditions as set forth
therein. The Company’s purchase right may be exercised by the Company’s Board of
Directors, as evidenced by a written notice signed by a duly authorized officer
of the Company (the “Company
Notice”)
and
delivered to the applicable Principal Stockholder. If the Company exercises
such
right, it shall effect the purchase of the Controlled Shares, including payment
of the purchase price, not more than 10 days after delivery of the Company
Notice, and at such time such Principal Stockholder shall deliver to the
Company
the certificate(s) representing the Controlled Shares to be purchased by
the
Company, each certificate to be properly endorsed for transfer. The Controlled
Shares so purchased shall thereupon be cancelled and cease to be issued and
outstanding shares of Common Stock.
Investor
Right of First Refusal.
In the
event that the Company does not elect to purchase all of the Controlled
Shares
available pursuant to its rights under Section 2.4 within the 20-day period
set
forth therein, the applicable Principal Stockholder shall promptly give
written
notice (the “Second
Notice”)
to
Investor, which shall set forth the number of Controlled Shares not purchased
by
the Company and which shall offer to sell such shares to Investor on the
same
terms and conditions described in the Notice previously furnished under
Section
2.3. Investor shall then have the right, exercisable upon written notice
to such
Principal Stockholder (the “Investor
Notice”)
within
15 days after the receipt of the Second Notice, to purchase, on such terms
and
conditions the Controlled Shares subject to the Second Notice. Investor
shall
effect the purchase of the Controlled Shares, including payment of the
purchase
price, not more then 10 days after delivery of the Investor Notice, and
at such
time such Principal Stockholder shall deliver to Investor the certificate(s)
representing the Controlled Shares to be purchased by Investor, each certificate
to be properly endorsed for transfer.
Right
of Co-Sale.
If
there
are any remaining unpurchased Controlled Shares after giving effect to Sections
2.4 and 2.5 (“Remaining
Shares”),
then
the applicable Principal Stockholder shall deliver to the Company and Investor
written notice (the “Principal
Stockholder Co-Sale Notice”)
offering Investor, the right to participate in such sale of Remaining Shares
on
the same terms and conditions as specified in the Principal Stockholder Co-Sale
Notice (which shall be the same as those specified in the notices under Sections
2.4 and 2.5) by notifying such Principal Stockholder, within ten days after
delivery of the Principal Stockholder Co-Sale Notice, of its acceptance of
such
offer. The notice of Investor accepting such offer shall indicate the number
of
shares of Common Stock such Investor wishes to sell. To the extent Investor
exercises such right of participation in accordance with the terms and
conditions set forth below, the number of Remaining Shares that such Principal
Stockholder may sell in the transaction shall be correspondingly
reduced.
Investor
may sell all or any part of that number of Remaining Shares equal to the
product
obtained by multiplying (i) the aggregate number of Remaining Shares
by
(ii) a fraction, the numerator of which is the number of Fully-diluted
shares of Common Stock held by Investor on the date of the Principal Stockholder
Co-Sale Notice and the denominator of which is the total number of Fully-diluted
shares of Common Stock held on such date by such Principal Stockholder and
Investor.
Investor
shall effect its participation in the Transfer by promptly delivering to
such
Principal Stockholder for transfer to the prospective purchaser one or more
certificates, properly endorsed for transfer, which represent:
the
number of shares of Common Stock that such Investor elects to sell;
or
that
number of Series A Preferred Stock that are at such time convertible into
the
number of shares of Common Stock that such Investor elects to sell; provided,
however,
that if
the prospective third-party purchaser objects to the delivery of Series A
Preferred Stock in lieu of Common Stock, Investor shall convert such Series
A
Preferred Stock into Common Stock and deliver Common Stock as provided in
Section 2.6(c)(i) above. The Company agrees to make any such conversion
concurrent with the actual transfer of such shares to the purchaser and
contingent on such transfer.
The
stock
certificate or certificates that Investor delivers to such Principal Stockholder
pursuant to this Section 2.6 shall be transferred to the prospective
purchaser for purposes of consummating the sale of the Common Stock pursuant
to
the terms and conditions specified in the Principal Stockholder Co-Sale Notice,
and such Principal Stockholder shall concurrently therewith remit to Investor
that portion of the sale proceeds to which Investor is entitled by reason
of its
participation in such sale. To the extent that any prospective purchaser
or
purchasers prohibits such assignment or otherwise refuses to purchase shares
or
other securities from Investor, such Principal Stockholder shall not sell
to
such prospective purchaser or purchasers any of its Remaining Shares unless
and
until, simultaneously with such sale, such Principal Stockholder shall purchase
such shares or other securities from Investor for the same consideration
and on
the same terms and conditions as the proposed transfer described in the
Principal Stockholder Co-Sale Notice.
Third
Party Transfers.
If a
Principal Stockholder has received a Bona Fide Offer, any Controlled Shares
not
purchased under Section 2.4 or 2.5 and not subject to sale under Section
2.6 may
be sold by such Principal Stockholder, not later than 60 days following delivery
to the Company and Investor of the Principal Stockholder Co-Sale Notice,
on
terms and conditions (including the purchase price) no more favorable to
the
transferor than those specified in the Principal Stockholder Co-Sale Notice.
Any
proposed Transfer on terms and conditions more favorable than those described
in
the Principal Stockholder Co-Sale Notice, as well as any subsequent proposed
Transfer of any Controlled Shares by a Principal Stockholder, shall again
be
subject to the first refusal and co-sale rights of the Company and Investor,
and
to the transfer restrictions imposed on such Principal Stockholder, described
in
this Article II.
Compliance
with Securities Laws.
Notwithstanding anything herein to the contrary, all parties hereto shall
take
all actions reasonably necessary to ensure that all Transfers of Controlled
Shares are made in compliance with the registration requirements of all
applicable federal and state securities laws.
Reservation
of Rights.
The
exercise or non-exercise of the rights of Investor hereunder to participate
in
one or more Transfers of Controlled Shares shall not adversely affect their
rights to participate in subsequent Transfers of Controlled Shares subject
to
Article II.
EXEMPT
TRANSFERS
Permitted
Transferees.
Notwithstanding the provisions of Article II, a Principal Stockholder may
Transfer, with or without consideration, Controlled Shares, (i) to any entity
wholly owned and controlled by such Principal Stockholder, (ii) to any parent,
spouse, child, grandchild, or sibling (each, a “Relative”)
of any
Principal Stockholder or (iii) to any trust established for or in the name
of
any Principal Stockholder, or in either case any of their respective Relatives,
provided that each such transferee or assignee, prior to the completion of
the
Transfer shall have executed documents agreeing to be bound by and subject
to
the terms and conditions of this Agreement.
Other
Exempt Offerings.
The
provisions of Article II shall not apply to (i) any Transfer of Controlled
Shares by a Principal Stockholder that is expressly approved in advance in
writing by Investor, provided that each transferee or assignee, prior to
the
completion of such Transfer, shall have executed documents agreeing to be
bound
by and subject to the terms and conditions of this Agreement, (ii) the
sale
of any securities pursuant to the Purchase Agreement, (iii) the sale of any
Controlled Shares to the public pursuant to a registration statement filed
with,
and declared effective by, the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the “Securities
Act”),
in
which event the purchasers of such registered shares shall not be subject
to
this Agreement;
or (iv)
the sale of any Controlled Shares by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ to ▇▇▇▇
▇▇▇▇.
Transfers
Among Principal Stockholders.
If any
Principal Stockholder makes a Bona Fide Offer to acquire Controlled Shares
from
any other Principal Stockholder (except for any transferee permitted under
Section 3.1 or 3.2), the provisions of Sections 2.4 and 2.5 shall not apply
to
such proposed Transfer, but the provisions of Section 2.6, if still applicable
to this Agreement, shall apply to such proposed Transfer (and all Controlled
Shares subject to such Proposed Transfer shall be deemed to be “Remaining
Shares”
for
purposes of Section 2.6).
CO-SALE
RIGHTS OF PRINCIPAL SHAREHOLDERS
Right
of Co-Sale.
If
Investor proposes to transfer any Investor Shares pursuant to a Bona Fide
Offer
for the purchase of such shares for cash from a person or entity who is not
an
affiliate of Investor that would result in a Change of Control, then Investor
shall deliver to the Company and each Principal Stockholder written notice
(the
“Investor
Co-Sale Notice”)
offering each Principal Stockholder, the right to participate in such sale
of
Investor Shares on the same terms and conditions as specified in the Investor
Co-Sale Notice by notifying Investor, within ten days after delivery of the
Investor Co-Sale Notice, of its acceptance of such offer. The Investor Co-Sale
Notice shall describe in reasonable detail the proposed Transfer, including
the
number of Investor Shares proposed to be transferred, the nature of such
Transfer, the consideration to be paid, and the name and address of each
prospective purchaser or transferee. A copy of the Bona Fide Offer, and all
other documents directly or indirectly relating to the proposed Transfer,
shall
be included as part of the Investor Co-Sale Notice. Each notice of any Principal
Stockholder accepting such offer shall indicate the number of shares of Common
Stock such Principal Stockholder wishes to sell. To the extent one or more
Principal Stockholders exercises such right of participation in accordance
with
the terms and conditions set forth below, the number of Investor Shares that
Investor may sell in the transaction shall be correspondingly
reduced.
Each
Principal Stockholder 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 by (ii) a fraction, the numerator
of which
is the number of Fully-diluted shares of Common Stock held by such Principal
Stockholder on the date of the Investor Co-Sale Notice and the denominator
of
which is the total number of Fully-diluted shares of Common Stock held on
such
date by Investor and all of the Principal Stockholders who elect to participate
in the Transfer pursuant to this Section 4.1 (a “Co-Sale
Participant”).
If any
Principal Stockholders fail to elect to fully participate in Investor’s sale
within such 10-day period, then Investor shall promptly notify in writing
each
Co-Sale Participant who has elected to fully participate, and shall offer
each
such Co-Sale Participant the additional right to 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 that the other
Principal
Stockholders elected not to sell (the “Unsold
Shares”)
by
(ii) a fraction, the numerator of which is the number of Fully-diluted
shares of Common Stock held by such Co-Sale Participant on the date of such
notice and the denominator of which is the total number of Fully-diluted
shares
of Common Stock held on such date by Investor and all of the Co-Sale
Participants who elect to sell Unsold Shares under this sentence. Each Co-Sale
Participant shall have five days after receipt of such notice to notify Investor
of its election to sell all or a portion thereof of the Unsold Shares.
Each
Co-Sale Participant shall effect its participation in the Transfer by promptly
delivering to Investor for transfer to the prospective purchaser one or more
certificates, properly endorsed for transfer, which represent:
the
number of shares of Common Stock that such Co-Sale Participant elects to
sell;
or
that
number of Series A Preferred Stock that are at such time convertible into
the
number of shares of Common Stock that such Co-Sale Participant elects to
sell;
provided,
however,
that if
the prospective third-party purchaser objects to the delivery of Series A
Preferred Stock in lieu of Common Stock, such Co-Sale Participant shall convert
such Series A Preferred Stock into Common Stock and deliver Common Stock
as
provided in Section 5.1(c)(i) above. The Company agrees to make any such
conversion concurrent with the actual transfer of such shares to the purchaser
and contingent on such transfer.
The
stock
certificate or certificates that the Co-Sale Participant delivers to Investor
pursuant to this Section 5.1 shall be transferred to the prospective
purchaser for purposes of consummating the sale of the Common Stock pursuant
to
the terms and conditions specified in the Investor Co-Sale Notice, and Investor
shall concurrently therewith
remit to such Co-Sale Participant that portion of the sale proceeds to which
such Co-Sale Participant is entitled by reason of its participation in such
sale. To the extent that any prospective purchaser or purchasers prohibits
such
assignment or otherwise refuses
to purchase shares or other securities from such Co-Sale Participant, Investor
shall not sell to such prospective purchaser or purchasers any of its Investor
Shares unless and until, simultaneously with such sale, Investor shall purchase
such shares or other securities from the Co-Sale Participants for the same
consideration and on the same terms and conditions as the proposed transfer
described in the Investor Co-Sale Notice.
Third
Party Transfers.
If
Investor has received a Bona Fide Offer, any Investor Shares not subject
to sale
under Section 4.1 may be sold by Investor, not later than 60 days following
delivery to the Company and each Principal Stockholder of the Investor Co-Sale
Notice, on terms and conditions (including the purchase price) no more favorable
to the transferor than those specified in the Investor Co-Sale Notice. Any
proposed Transfer on terms and conditions more favorable than those described
in
the Investor Co-Sale Notice, as well as any subsequent proposed Transfer
of any
Investor Shares by Investor, shall again be subject to the co-sale rights
of the
Principal Stockholder, described in this Article IV.
Compliance
with Securities Laws.
Notwithstanding anything herein to the contrary, all parties hereto shall
take
all actions reasonably necessary to ensure that all Transfers of Investor
Shares
are made in compliance with the registration requirements of all applicable
federal and state securities laws.
PROHIBITED
TRANSFERS
Remedies.
In the
event that a Principal Stockholder or Investor (“Prohibited
Transferor”)
should
Transfer any Controlled Shares or Investor Shares, as the case may be, in
contravention of the co-sale rights of Investor or the Principal Stockholders
(the “Co-Sale
Right Holder”)
under
this Agreement (a “Prohibited
Transfer”),
the
Co-Sale Right Holder, in addition to such other remedies as may be available
at
law, in equity or hereunder, shall have the rights provided below in Section
5.2, and such Prohibited Transferor shall be bound by the applicable provisions
thereof.
Sale
Rights.
In the
event of a Prohibited Transfer, the Co-Sale Right Holder shall have the right
to
sell to such Prohibited Transferor the type and number of shares of Common
Stock
equal to the number of shares the Co-Sale Right Holder would have been entitled
to transfer to the third-party transferee(s) under Section 2.6 or
4.1, as
the case may be, hereof had the Prohibited Transfer been effected pursuant
to
and in compliance with the terms hereof (assuming that neither the Company
nor
Investor would have exercised their purchase rights under Section 2.4 or
2.5).
Such sale shall be made on the following terms and conditions:
The
price
per share at which the Common Stock is to be sold to the Prohibited Transferor
shall be equal to the greater of (i) 120% of the price per share paid by
the
third-party transferee(s) to such Prohibited Transferor in the Prohibited
Transfer or (ii) an amount equal to 120% of the fair market value of the
stock
to be sold, determined as of the date immediately prior to the Prohibited
Transfer in good faith by the Board of Directors of the Company. The Prohibited
Transferor shall also reimburse the Co-Sale Right Holder for any and all
fees
and expenses, including legal fees and expenses, incurred pursuant to the
enforcement of such Investor’s rights under this Section 5.2.
Within
90
days after the later of the dates on which the Co-Sale Right Holder received
notice of the Prohibited Transfer or otherwise become aware of the Prohibited
Transfer, the Co-Sale Right Holder shall, if exercising the rights afforded
under this Section 5.2, deliver to the Prohibited Transferor the certificate
or
certificates representing Common Stock to be sold, each certificate to be
properly endorsed for transfer.
Such
Prohibited Transferor shall, upon receipt of the certificate or certificates
for
the Common Stock to be sold by the Co-Sale Right Holder pursuant to this
Section 5.2, pay the aggregate purchase price therefor and the amount
of
reimbursable fees and expenses, as specified in Section 5.2(a), in cash or
by
other means acceptable to such Prohibited Transferor.
Void
Transfers.
Notwithstanding any thing in this Agreement to the contrary, any attempt
by a
Principal Stockholder to Transfer Controlled Shares in violation of Article
II
hereof or Investor to Transfer Investor Shares in violation of Article IV
hereof
shall be void (unless expressly ratified in writing by Investor or the Principal
Stockholders, as the case may be), and the Company agrees it will not effect
such a Transfer nor will it treat any alleged transferee(s) as the holder
of
such shares in the absence of any such express written
ratification.
TERMINATION
AND ASSIGNMENT OF RIGHTS
Term.
This
Agreement shall terminate upon the earlier of (i) the consummation of the
Company’s first firm commitment underwritten public offering of its Common Stock
under the Securities Act in which the aggregate gross proceeds to the Company
equal at least $40 million and that results in a market capitalization
(calculated by the managing underwriter or underwriters for such offering)
of at
least $150 million or (ii) the consummation of any acquisition of the Company
by
consolidation, merger or other business combination in which the holders
of the
Company’s outstanding securities immediately prior to such transaction own,
immediately after such transaction, securities representing less than 50%
of the
voting power of the corporation or other entity surviving such transaction.
In
addition, this Agreement shall terminate with respect to Investor or a Principal
Stockholder when and if Investor or Principal Stockholder no longer holds
any
Investor Shares or Controlled Shares, as the case may be.
Assignment
of Rights.
Investor
may assign its rights hereunder to a transferee in connection with any Transfer
of any Investor Shares, provided that (i) such transferee holds, immediately
after such Transfer, at least 25% of the Investor Shares held by the transferor
immediately prior to such Transfer, (ii) such transferee or assignee agrees
in
writing to be bound by and subject to the terms and conditions of this Agreement
and (iii) such writing, along with the transferee’s name and address, is
furnished to the Company.
MISCELLANEOUS
Successors
and Assigns.
Subject
to Sections 3.2 and 6.2, the terms and conditions of this Agreement shall
inure
to the benefit of, and be binding upon, the respective successors, heirs,
executors, administrators and assigns of the parties, including transferees
of
Controlled Shares or Investor Shares.
Legend.
Each
existing or replacement certificate for Common Stock now owned or hereafter
acquired by a Principal Stockholder or issued to any person in connection
with a
transfer pursuant to Article II, III, IV or V hereof shall bear a legend
referring to this Agreement substantially similar to the legend set forth
in the
Purchase Agreement (in addition to any legend required under applicable state
laws).
Ownership.
Each
Principal Stockholder represents and warrants that as of the date hereof
such
Principal Stockholder is the sole legal and beneficial owner of the number
of
Controlled Shares specified on Appendix A, and that no other person has any
ownership interest (other than a community property interest) in such
shares.
In
connection with any purchase of Common Stock hereunder, the purchaser of
such
shares may condition its purchase upon receiving a representation and warranty
as to the matters referred to in the prior sentence.
Notices.
Unless
otherwise provided, any notice required or permitted under this Agreement
shall
be given in writing and shall be deemed effectively given upon personal delivery
to the party to be notified or upon delivery by confirmed facsimile
transmission, nationally recognized overnight courier service, or upon deposit
with the United States Post Office, by registered or certified mail, postage
prepaid and addressed to the party to be notified at the address indicated
for
such party in the Investor’s Rights Agreement, or at such other address as such
party may designate by ten days’ advance written notice to the other parties. If
any Principal Stockholder is not listed in the Investor’s Rights Agreement and
has not previously furnished an address hereunder, then notices may be furnished
to the address for such person reflected in the books and records of the
Company.
Governing
Law.
This
Agreement shall be interpreted under the laws of the State of Texas, without
reference to its conflicts of laws provisions.
Counterpart.
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.
Attorney’s
Fees.
If any
action at law or in equity is necessary to enforce or interpret the terms
of
this Agreement, the prevailing party shall be entitled to reasonable attorneys’
fees, costs and necessary disbursements in addition to any other relief to
which
such party may be entitled.
Entire
Agreement.
This
Agreement, the Purchase Agreement, the Investor’s Rights Agreement and any other
agreements referred to herein constitute the entire understanding of the
parties
hereto with respect to the subject matter hereof, and supersede all other
agreements between or among any of the parties with respect to the subject
matter hereof.
Additional
Actions and Documents.
The
parties shall execute and deliver further documents and instruments and shall
take other further actions as may be required or appropriate to carry out
the
intent and purposes of this Agreement.
Amendment
and Waiver.
Except
as otherwise provided herein, any term of this Agreement may be amended only
by
a written instrument duly executed and delivered by the Company, the holders
of
at least 80% of the Investor Shares, and the holders of at least 80% of the
Controlled Shares. The observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of (i) as to the Company, the
Company, (ii) as to Investor, at least 80% of the Investor Shares, and (iii)
as
to Principal Stockholders, at least 80% of the Controlled Shares; provided,
however,
that
each party to this Agreement may waive its own rights hereunder without
obtaining the consent of any other party. Any amendment or waiver effected
in
accordance with this paragraph shall be binding upon the Company, Investor,
each
Principal Stockholder, and each transferee or assignee hereunder.
Delays
or Omissions.
It is
agreed that no delay or omission to exercise any rights, power, or remedy
accruing to any party upon any breach, default or noncompliance under this
Agreement shall impair any such rights, 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, consent or approval
of any kind or character of any breach, default or noncompliance under this
Agreement or any waiver of any provisions or conditions of this Agreement
must
be in writing, must be made in accordance with Section 6.10 and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, by law or otherwise, shall be cumulative
and not alternative.
Severability.
If one
or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this Agreement and
the
balance of the Agreement shall be interpreted as if such provision was so
excluded and shall be enforceable in accordance with its terms.
[SIGNATURES
ON THE FOLLOWING PAGES]
IN
WITNESS WHEREOF, the parties hereto have executed this Right of First Refusal
and Co-Sale Agreement as of the date first written above.
| THE COMPANY: | ||
| TRULITE, INC. | ||
| By: |
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ |
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| Title: President and Chief Executive Officer | ||
| INVESTOR: | ||
| TRULITE ENERGY PARTNERS, L.P. | ||
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| By: |
Contango
Capital Partnership Management LLC,
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| Its: | General Partner | |
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By:
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ |
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| Title: President and Chief Executive Officer | ||
| PRINCIPAL STOCKHOLDERS: | ||
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By:
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By:
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