COALOGIX INC. STOCKHOLDERS’ AGREEMENT
COALOGIX
INC.
STOCKHOLDERS’
AGREEMENT
TABLE
OF CONTENTS
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Page
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1.
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Definitions.
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1
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2.
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Registration
Rights.
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3
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2.1.
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Participation
in Subsequent Registration Rights.
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3
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3.
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Information
Rights
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3
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3.1.
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Delivery
of Financial Statements
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3
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3.2.
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Inspection.
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5
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3.3.
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Termination
of Information and Inspection Covenants
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5
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3.4.
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Confidentiality
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6
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4.
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Right
of First Offer on Company Offerings
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6
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4.1.
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Right
of First Offer.
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6
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4.2.
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Termination.
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7
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5.
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Rights
of Refusal and Co-Sale
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8
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5.1.
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Company
Right of First Refusal
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8
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5.2.
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Secondary
Refusal Right of Key Holders
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8
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5.3.
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Consideration;
Closing
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9
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5.4.
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Right
of Co-Sale.
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9
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5.5.
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Drag-Along
Right
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10
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5.6.
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Effect
of Failure to Comply
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11
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5.7.
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Assistance
with Pledging of Interests
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12
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6.
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Exempt
Transfers.
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12
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6.1.
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Transfers
to Affiliates, Etc
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12
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6.2.
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Public
Offering
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13
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7.
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Key
Holder Buy/Sell
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13
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7.1.
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Triggering
Notice
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13
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7.2.
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Response
Notice
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13
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7.3.
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Cure
Period
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13
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7.4.
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Closing
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13
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8.
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Management
Option Plan
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14
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9.
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Additional
Covenants
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14
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9.1.
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Insurance.
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14
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9.2.
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Employee
Agreements.
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14
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9.3.
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Employee
Vesting
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14
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9.4.
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Board
of Directors
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14
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9.5.
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Meetings
of the Board of Directors
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15
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9.6.
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Successor
Indemnification
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15
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9.7.
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Transactions
with Related Parties
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15
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9.8.
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Actions
Requiring Majority Stockholder Approval
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15
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9.9.
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Actions
Requiring Super-Majority Stockholder Approval
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15
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9.10.
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Termination
of Covenants.
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16
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10.
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Miscellaneous
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16
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10.1.
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Transfers,
Successors and Assigns.
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16
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10.2.
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Governing
Law.
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17
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10.3.
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Counterparts.
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17
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10.4.
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Titles
and Subtitles.
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17
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10.5.
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Notices
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17
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10.6.
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Amendments
and Waivers.
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18
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10.7.
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Severability.
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18
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10.8.
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Additional
Stockholders
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18
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10.9.
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Entire
Agreement.
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18
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10.10.
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Transfers
of Rights
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18
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10.11.
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Delays
or Omissions
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19
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10.12.
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Effectiveness
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19
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10.13.
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Legend
on Stock Certificates
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19
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Schedule
A
- Schedule of
Investors
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STOCKHOLDERS’
AGREEMENT
THIS
STOCKHOLDERS’ AGREEMENT
(the
“Agreement”)
is
made as of February 29, 2008 by and among CoaLogix Inc., a Delaware corporation
(the “Company”),
and
each of the stockholders or option holders listed on Schedule A hereto,
each person to whom the rights of a Stockholder are assigned pursuant to Section
10.1 and each person who hereafter becomes a signatory to this Agreement
pursuant to Section 10.9 (each, a “Stockholder”
and,
collectively, the “Stockholders”).
RECITALS
WHEREAS,
the
Company and EnerTech (as defined below) are parties to the Common Stock Purchase
Agreement of even date herewith (the “Purchase
Agreement”);
and
WHEREAS,
in
order to induce EnerTech to enter into the Purchase Agreement and to induce
EnerTech to invest funds in the Company pursuant to the Purchase Agreement,
the
Stockholders and the Company hereby agree that this Agreement shall govern
the
rights of the Stockholders to receive certain information from the Company,
to
participate in future equity offerings by the Company and certain other matters
as set forth in this Agreement;
1. Definitions. For
purposes of this Agreement:
“Acorn
Energy”
shall
mean Acorn Energy, Inc and it Affiliates.
“Affiliate”
shall
mean with respect to any individual, corporation, partnership, association,
trust, or any other entity (in each case, a “Person”),
any
Person which, directly or indirectly, controls, is controlled by or is under
common control with such Person, including, without limitation any general
partner, officer or director of such Person and any venture capital fund now
or
hereafter existing which is controlled by or under common control with one
or
more general partners or shares the same management company with such
Person.
“Common
Stock”
shall
mean shares of the Company’s common stock, $0.001 par value per
share.
“Company
Notice”
means
written notice from the Company notifying a selling Stockholder that the Company
intends to exercise its Right of First Refusal as to some or all of the Transfer
Stock with respect to any Proposed Transfer.
“EnerTech”
shall
mean EnerTech Capital Partners III L.P. and its Affiliates.
“Exchange
Act”
shall
mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“GAAP”
shall
mean U.S. generally accepted accounting principles.
1
“IPO”
means
the Company’s first underwritten public offering of its Common Stock under the
Securities Act.
“Key
Holders”
means
Acorn Energy and EnerTech, so long as they are Stockholders owning at least
five
percent (5.0%) of the issued and outstanding capital stock of the Company.
If
either Acorn Energy or EnerTech no longer owns at least five percent of the
issued and outstanding capital stock of the Company, but still owns some capital
stock of the Company, such former Key Holder shall still be a Stockholder.
“Key
Holder Secondary Notice”
means
written notice from a Key Holder notifying the Company and the selling Key
Holder or Stockholder, as the case may be, that such Key Holder intends to
exercise its Secondary Refusal Right as to a portion of the Transfer Stock
with
respect to any Proposed Transfer.
“Key
Holder Stock”
means
any Common Stock now owned or subsequently acquired by any Key Holder or such
Key Holder’s permitted transferees or assigns.
“Management
Stockholder”
means
a
Stockholder currently employed in the management of the Company, for so long
as
such Stockholder is employed in such a capacity.
“New
Securities”
shall
mean equity securities of the Company, whether now authorized or not, or rights,
options, or warrants to purchase said equity securities, or securities of any
type whatsoever that are, or may become, convertible into or exchangeable into
or exercisable for said equity securities (collectively “New
Securities”).
“Proposed
Transfer”
means
any proposed assignment, sale, offer to sell, pledge, mortgage, hypothecation,
encumbrance, disposition of or any other like transfer or encumbering of any
Common Stock (or any interest therein) proposed by any of the Stockholders;
provided
that
Proposed Transfer shall not include any merger, consolidation or like transfer
effected pursuant to a vote of the Stockholders of Common Stock of the
Company.
“Proposed
Transfer Notice”
means
written notice from a Stockholder setting forth the terms and conditions of
a
Proposed Transfer.
“Prospective
Transferee”
means
any Person to whom a Stockholder proposes to make a Proposed
Transfer.
“Registrable
Securities”
means
(i) the Common Stock owned by either Key Holder, and (ii) any Common Stock
of
the Company issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of the shares
referenced in clause (i),
excluding in all cases, however, any Registrable Securities sold by a Person
in
a transaction in which such Person’s rights under Section 2
hereof
are not assigned or any shares for which registration rights have
terminated.
2
“Right
of Co-Sale”
means
the right, but not an obligation, of a Key Holder or Management Stockholder
to
participate in a Proposed Transfer on the terms and conditions specified in
the
Proposed Transfer Notice.
“Right
of First Refusal”
means
the right, but not an obligation, of a Key Holder or the Company, as the case
may be, or his, her or its permitted transferees or assigns, to purchase some
or
all of the Transfer Stock with respect to a Proposed Transfer, on the terms
and
conditions specified in the Proposed Transfer Notice.
“Securities
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Secondary
Notice”
means
written notice from the Company notifying the selling Key Holder and the other
Key Holder that the Company does not intend to exercise its Right of First
Refusal as to all shares of Transfer Stock with respect to any Proposed
Transfer.
“Secondary
Refusal Right”
means
the right, but not an obligation, of each Key Holder to purchase up to its
pro
rata portion (based upon the total number of shares of Common Stock then held
by
all Key Holders) of Transfer Stock not purchased pursuant to the Company’ s
Right of First Refusal, on the terms and conditions specified in the Proposed
Transfer Notice.
“Transfer
Stock”
means
shares of Common Stock subject to a Proposed Transfer.
2. Registration
Rights. The
Company covenants and agrees as follows:
2.1. Participation
in Subsequent Registration Rights. So
long
as either Key Holder remains a Key Holder, from and after the date of this
Agreement, the Company shall not, without the prior written consent of each
Key
Holder, enter into any agreement with any stockholder or prospective stockholder
of any securities of the Company which would grant such stockholder or
prospective stockholder registration rights in respect of Registrable
Securities, unless the Company shall thereunder grant each Key Holder
registration rights identical to the most favorable registration rights provided
to any other stockholder or prospective stockholder of any securities of the
Company.
3. Information
Rights.
3.1. Delivery
of Financial Statements. So long as EnerTech owns one percent (1.0%) of the
issued and outstanding capital stock of the Company, the
Company shall deliver to EnerTech or its Affiliate, as the case may
be:
3
(a) as
soon
as practicable, but in any event within ninety (90) days after the end of each
fiscal year of the Company, a balance sheet and income statement as of the
last
day of such year; a statement of cash flows for such year and a comparison
between the actual figures for such year, the comparable figures for the prior
year and the comparable figures included in the Budget (as defined below) for
such year, with an explanation of any material differences between them and
a
schedule as to the sources and applications of funds for such year, such
year-end financial reports to be in reasonable detail, prepared in accordance
with GAAP, of the Company;
(b) as
soon
as practicable, but in any event within forty-five (45) days after the end
of
each of the first three (3) quarters of each fiscal year of the Company, an
unaudited income statement, schedule as to the sources and application of funds
for such fiscal quarter, an unaudited balance sheet and a statement of
stockholder’s equity as of the end of such fiscal quarter;
(c) as
soon
as practicable, but in any event with forty-five (45) days after the end of
each
of the first three (3) quarters of each fiscal year of the Company, a statement
showing the number of shares of each class and series of capital stock and
securities convertible into or exercisable for shares of capital stock
outstanding at the end of the period, the number of common shares issuable
upon
conversion or exercise of any outstanding securities convertible or exercisable
for common shares and the exchange ratio or exercise price applicable thereto
and number of shares of issued stock options and stock options not yet
issued but reserved for issuance, if any, all in sufficient detail as to permit
EnerTech or its Affiliate to calculate its percentage equity ownership in the
Company and certified by the Chief Financial Officer or Chief Executive Officer
of the Company as being true, complete and correct;
(d) as
soon
as practicable, but in any event within thirty (30) days of the end of each
month, an unaudited income statement, an unaudited profit or loss statement;
(e) as
soon
as practicable, but in any event thirty (30) days prior to the end of each
fiscal year, a budget and business plan for the next fiscal year (collectively,
the “Budget”),
prepared on a monthly basis, including balance sheets and sources and
applications of funds statements for such months and, as soon as prepared,
any
other budgets or revised budgets prepared by the Company;
(f) with
respect to the financial statements called for in subsections
(a) and(b)
of this
Section 3.1,
an
instrument executed by the Chief Financial Officer and President or Chief
Executive Officer of the Company and certifying that such financials were
prepared in accordance with GAAP consistently applied with prior practice for
earlier periods (with the exception of footnotes that may be required by GAAP)
and fairly present the financial condition of the Company and its results of
operation for the periods specified therein, subject to year-end audit
adjustment;
(g) such
other information relating to the financial condition, business, prospects
or
corporate affairs of the Company as EnerTech or any assignee of EnerTech may
from time to time reasonably request, provided,
however,
that
the Company shall not be obligated under this subsection (g)
or any
other subsection of Section 3.1
to (i)
provide information which the Company reasonably deems in good faith to be
a
trade secret or similar confidential information (unless covered by an
enforceable confidentiality agreement, in form acceptable to the Company) or
(ii) would adversely affect the attorney-client privilege between the Company
and its counsel;
4
(h) if
for
any period the Company shall have any subsidiary whose accounts are consolidated
with those of the Company, then in respect of such period the financial
statements delivered pursuant to the foregoing sections shall be the
consolidated and consolidating financial statements of the Company and all
such
consolidated subsidiaries.
(i)
notices describing in reasonable detail any claim, action, suit, proceeding,
arbitration, complaint, charge or investigation pending or to the knowledge
of
the Company threatened against the Company or any officer or director of the
Company involving the Company or any default or breach by any party under any
agreement of the Company as soon as practicable, but in any event within five
(5) days after the Company becomes aware of such litigation or contract default.
3.2. Inspection. So
long
as EnerTech owns one percent (1.0%) of the issued and outstanding capital stock
of the Company,
the
Company shall permit, at EnerTech’s expense, EnerTech to visit and inspect the
Company’s properties, to examine its books of account and records and to discuss
the Company’s affairs, finances and accounts with its officers, all at such
reasonable times as may be reasonably requested by at EnerTech; provided,
however,
that
the Company shall not be obligated pursuant to this Section 3.2
to
provide access to any information which it reasonably considers to be a trade
secret or similar confidential information (unless covered by an enforceable
confidentiality agreement in a form acceptable to the Company) or would
adversely affect the attorney-client privilege between the Company and its
counsel.
3.3. Termination
of Information and Inspection Covenants. The
covenants set forth in Section
3.1
and
Section 3.2
shall
terminate as to EnerTech and be of no further force or effect immediately prior
to the consummation of the sale of shares of Common Stock in the Company’s IPO
or when the Company first becomes subject to the periodic reporting requirements
of Sections 12(g) or 15(d) of the Exchange Act, unless EnerTech ceases to
own
one
percent (1.0%) of the issued and outstanding capital stock of the Company
prior
to
the occurrence of such events, in which case the covenants shall terminate
as of
the date that EnerTech no longer owns
one
percent (1.0%) of the issued and outstanding capital stock of the
Company.
5
3.4. Confidentiality.
Each
Stockholder agrees that such Stockholder will keep confidential and will not
disclose, divulge or use for any purpose, other than to monitor its investment
in the Company, any confidential information obtained from the Company pursuant
to the terms of this Agreement, unless such confidential information (i) is
known or becomes known to the public in general (other than as a result of
a
breach of this Section
3.4
by such
Stockholder), (ii) is or has been independently developed or conceived by the
Stockholder without use of the Company's confidential information or (iii)
is or
has been made known or disclosed to the Stockholder by a third party without
a
breach of any obligation of confidentiality such third party may have to the
Company; provided,
however,
that a
Stockholder may disclose confidential information (a) to its attorneys,
accountants, consultants, and other professionals to the extent necessary to
obtain their services in connection with monitoring its investment in the
Company, (b) to any prospective purchaser of any Registrable Securities
from such Stockholder as long as such prospective investor agrees to be bound
by
the provisions of this Section
3.4,
(c) to any Affiliate, partner, member, stockholder or wholly owned
subsidiary of such Stockholder in the ordinary course of business, as long
as
such Affiliate, partner, member stockholder or wholly owned subsidiary of such
Stockholder agrees to be bound by the provisions of this Section
3.4,
or (d)
as may otherwise be required by law, provided that the Stockholder takes
reasonable steps to minimize the extent of any such required disclosure. The
Company, EnerTech, and the Stockholders hereby acknowledge that EnerTech invests
in numerous companies, some of which may be competitive with the Company’s
business. The Company, EnerTech and the Stockholders agree that EnerTech shall
not be liable for any claim arising out of, or based upon, (i) the investment
by
EnerTech in any entity competitive to the Company, (ii) actions taken by any
partner, officer or other representative of EnerTech to assist any such
competitive company, whether or not such action was taken as a board member
of
such competitive company, or otherwise, and whether or not such action has
a
detrimental effect on the Company, unless such claim arises directly from the
EnerTech’s misuse of confidential information in material breach of this
Section
3.4.
4. Right
of
First Offer on Company Offerings
4.1. Right
of First Offer. Subject
to the terms and conditions specified in this Section 4.1,
and
applicable securities laws, in the event the Company proposes to offer or sell
any New Securities, the Company shall first make an offering of such New
Securities to EnerTech in accordance with the following provisions of this
Section
4.1.
EnerTech shall be entitled to apportion the right of first offer hereby granted
it among itself and its partners, members and Affiliates in such proportions
as
it deems appropriate.
(a) The
Company shall deliver a notice, in accordance with the provisions of
Section
10.5
hereof,
(the “Offer
Notice”)
to
EnerTech stating (i) its bona fide intention to offer such New Securities,
(ii) the number of such New Securities to be offered, and (iii) the
price and terms, if any, upon which it proposes to offer such New
Securities.
(b) By
written notification received by the Company, within twenty (20) calendar days
after mailing of the Offer Notice, EnerTech may elect to purchase or obtain,
at
the price and on the terms specified in the Offer Notice, up to that portion
of
such New Securities which equals the proportion that the number of shares of
Common Stock issued and then held by EnerTech bears to the total number of
shares of Common Stock of the Company issued and then
held by
all the Stockholders.
(c) In
the
event that the Company proposes to offer New Securities contingently, EnerTech
will be issued warrants (“Contingent
Warrants”)
to
purchase its pro rata portion of equity securities which may be purchased
pursuant to such New Securities, or into which such New Securities may become
convertible, as the case may be, in lieu of receiving such New Securities on
the
same terms as stated in the Offer Notice. The exercise of such Contingent
Warrants will be subject to the same contingencies as the New Securities
proposed to be offered. EnerTech must exercise such Contingent Warrants within
twenty (20) calendar days after the Company has properly delivered a notice
to
EnerTech, in accordance with Section
10.5
hereof,
that such Contingent Warrants may be exercised.
6
(d) If
the
consideration proposed to be paid for New Securities is in property, services
or
other non-cash consideration, the value of the consideration shall be as agreed
in good faith by EnerTech and the Company. If EnerTech and the Company fail
to
agree in good faith as to the value of such consideration, the price paid for
such offered New Securities shall be deemed to be the value of such
consideration as calculated in accordance with GAAP.
(e) The
right
of first offer in this Section
4.1
shall
not be applicable to: (i) up to 14,706 shares of Common Stock properly issued
or
deemed issued to employees or directors of, or consultants to, the Company
or
any of its subsidiaries pursuant to the Management Option Plan (as defined
in
Section
8);
or
(ii) securities issued in connection with any stock split or stock dividend
of
the Company.
(f) The
right
of first offer set forth in this Section 4.1
may not
be assigned or transferred except that such right is assignable by EnerTech
to any of its Affiliates.
(g) If
(i)
the Company proposes to issue New Securities at any time before the provisions
of this Section
4
have
terminated pursuant to Section
4.2,
(ii)
EnerTech has been issued Contingent Warrants pursuant to Section 4.1(c), and
(iii) EnerTech would be barred from exercising its rights under this
Section
4,
pursuant
to Section
4.2
had the
Contingent Warrants been exercised prior to the delivery of the Offer Notice
because Acorn Energy’s ownership of the Company’s Common Stock would be less
than seventy-five percent (75%) of the Company’s capital stock calculated on a
fully diluted basis, then EnerTech shall not have the right to purchase or
obtain New Securities proposed to be offered, but rather EnerTech will be issued
warrants (“Secondary
Contingent Warrants”)
to
purchase its pro rata portion of equity securities which may be purchased
pursuant to such New Securities, or into which such New Securities may become
convertible, as the case may be, in lieu of receiving such New Securities on
the
same terms as stated in the Offer Notice. Any Secondary Contingent Warrants
shall become exercisable upon the lapse of Contingent Warrants referenced in
subsection
(iii)
of this
Section
4.1(g).
EnerTech must exercise such Secondary Contingent Warrants within twenty (20)
calendar days after the Company has properly delivered a notice to EnerTech,
in
accordance with Section
10.5
hereof,
that such Secondary Contingent Warrants may be exercised.
4.2. Termination. The
provisions of this Section
4
shall
terminate upon the first to occur of (i) the consummation of an IPO, (ii) a
failure by EnerTech to elect to purchase a portion of New Securities to which
it
is entitled under Section
4.1(b),
or to
exercise its Contingent Warrants or Secondary Contingent Warrants, if any,
as
provided under Sections
4.1(c)
and
4.1(g),
respectively and (iii) the point at which Acorn Energy’s ownership of the
Company’s Common Stock is equal to seventy-five percent (75%) of the Company’s
capital stock calculated on a fully diluted basis after giving effect to any
proposed issuance of New Securities and the corresponding exercise by EnerTech
of its rights under this Section
4,
but
excluding shares issued or reserved for issuance under the Management Option
Plan (as hereinafter defined). For the avoidance of doubt, Enertech shall have
the ability to exercise such right with respect to the proposed issuance of
New
Securities to the extent that the exercise of such right will not reduce Acorn
Energy’s ownership of the Company’s Common Stock below seventy-five percent
(75%) of the Company’s capital stock. For illustrative purpose, in the event of
a proposed issuance of New Securities that would reduce Acorn Energy’s ownership
of the Company’s Common Stock below seventy-five percent (75%) of the Company’s
capital stock, EnerTech shall have the right to purchase or obtain only that
portion of such New Securities as it would be entitled to purchase or obtain
if
the size of the proposed issuance of New Securities were such that it would
result in Acorn Energy owning exactly seventy-five percent (75%) of the
Company’s capital stock calculated on a fully diluted basis after giving effect
to any proposed issuance of New Securities and the corresponding exercise by
EnerTech of its rights under this Section
4.
7
5. Rights
of
Refusal and Co-Sale
5.1. Company
Right of First Refusal.
Each
Stockholder hereby unconditionally and irrevocably grants to the Company a
Right
of First Refusal to purchase all or any portion of Transfer Stock that such
Stockholder may propose to transfer in a Proposed Transfer, at the same price
and on the same terms and conditions as those offered to the Prospective
Transferee. Each Stockholder proposing to make a Proposed Transfer must deliver
a Proposed Transfer Notice to the Company and the Key Holders, not later than
10
days prior to the consummation of such Proposed Transfer. Such Proposed Transfer
Notice shall contain the material terms and conditions of the Proposed Transfer
and the identity of the Prospective Transferee. The Company must exercise its
Right of First Refusal under this Section
5.1
by
giving a Company Notice to such selling holder of Common Stock within fifteen
(15) days after delivery of the Proposed Transfer Notice.
5.2. Secondary
Refusal Right of Key Holders.
(a) Each
Key
Holder hereby unconditionally and irrevocably grants to the other Key Holder
a
Secondary Refusal Right to purchase the shares of Key Holder Stock not purchased
by the Company pursuant to the Company’s Right of First Refusal under
Section
5.1,
as
provided in this Section
5.2.
If the
Company does not intend to exercise its Right of Refusal under Section
5.1
with
respect to all Key Holder Stock subject to a Proposed Transfer, the Company
must
deliver a Secondary Notice to the other Key Holder to that effect no later
than
fifteen (15) days after the selling Key Holder delivers the Proposed Transfer
Notice to the Company. To exercise its Secondary Refusal Right, a Key Holder
must deliver a Key Holder Secondary Notice to the selling Key Holder and the
Company within ten (10) days after the deadline for delivery of the Secondary
Notice.
(b) Each
Stockholder that is not a Key Holder hereby unconditionally and irrevocably
grants to the Key Holders a Secondary Refusal Right to purchase up to each
Key
Holder’s pro rata portion (based upon the total number of shares of each Key
Holder’s Stock) of the Stockholder’s stock not purchased by the Company pursuant
to the Company’s Right of First Refusal under Section
5.1,
as
provided in this Section
5.2.
If the
Company does not intend to exercise its Right of Refusal under Section
5.1
with
respect to all of the selling Stockholder’s Common Stock subject to a Proposed
Transfer, the Company must deliver a Secondary Notice to the Key Holders to
that
effect no later than fifteen (15) days after the selling Stockholder delivers
the Proposed Transfer Notice to the Company. To exercise its Secondary Refusal
Right, a Key Holder must deliver a Key Holder Secondary Notice to the selling
Stockholder and the Company within ten (10) days after the deadline for delivery
of the Secondary Notice.
8
5.3. Consideration;
Closing.
If the
consideration proposed to be paid for the Transfer Stock is in property,
services or other non-cash consideration, the fair market value of the
consideration shall be determined in good faith by the Company’s Board of
Directors. If the Company or any Key Holder cannot for any reason pay for the
Transfer Stock in the same form of non-cash consideration, the Company or such
Key Holder may pay the cash value equivalent thereof, as determined by the
Board
of Directors. The closing of the purchase of Transfer Stock by the Company
and/or the other Key Holder, as the case may be, shall take place, and all
payments from the Company and/or the other Key Holder, as the case may be,
shall
have been delivered to the selling Stockholder by the later of (i) the date
specified in the Proposed Transfer Notice as the intended date of the Proposed
Transfer and (ii) forty-five (45) days after delivery of the Proposed Transfer
Notice.
5.4. Right
of Co-Sale.
(a) If
any
Transfer Stock subject to a Proposed Transfer by a Stockholder is not purchased
pursuant to Sections
5.1
and
5.2
above
and thereafter is to be sold to a Prospective Transferee, a Key Holder or
Management Stockholder may elect to exercise its Right of Co-Sale and
participate on a pro-rata basis in the Proposed Transfer on the same terms
and
conditions specified in the Proposed Transfer Notice. A Key Holder or Management
Stockholder who desires to exercise its Right of Co-Sale must give the selling
Stockholder written notice to that effect within fifteen (15) days after the
deadline for delivery of the Key Holder Secondary Notice as described above,
and
upon giving such notice such Key Holder or Management Stockholder shall be
deemed to have effectively exercised the Right of Co-Sale.
(b) Each
Key
Holder or Management Stockholder who timely exercises its Right of Co-Sale
by
delivering the written notice provided for above in Section
5.4(a)
may
include in the Proposed Transfer all or any part of his, her or its Common
Stock
equal to the product obtained by multiplying (i) the aggregate number of shares
of Stockholder Common Stock subject to the Proposed Transfer (excluding shares
purchased by the Company pursuant to the Right of First Refusal of the Company)
by (ii) a fraction, the numerator of which is the number of shares of Common
Stock owned by such Key Holder or Management Stockholder immediately before
consummation of the Proposed Transfer and the denominator of which is the total
number of shares of Common Stock owned, in the aggregate, by all Stockholders
immediately prior to the consummation of the Proposed Transfer. To the extent
a
Key Holder or Management Stockholder exercises such right of participation
in
accordance with the terms and conditions set forth herein, the number of shares
of Common Stock that the selling Stockholder may sell in the Proposed Transfer
shall be correspondingly reduced.
(c) Each
participating Key Holder or Management Stockholder shall effect its
participation in the Proposed Transfer by delivering to the transferring
Stockholder, no later than fifteen (15) days after such Key Holder’s or
Management Stockholder’s exercise of the Right of Co-Sale, one or more stock
certificates, properly endorsed for transfer to the Prospective Transferee,
representing the number of shares of Common Stock that such Key Holder or
Management Stockholder elects to include in the Proposed Transfer.
9
(d) The
terms
and conditions of any sale pursuant to this Section
5.4
will be
memorialized in, and governed by, a written purchase and sale agreement with
customary terms and provisions for such a transaction.
(e) Each
stock certificate a participating Key Holder or Management Stockholder delivers
to the selling Stockholder pursuant to subparagraph (c) above will be
transferred to the Prospective Transferee against payment therefor in
consummation of the sale of the Transfer Stock pursuant to the terms and
conditions specified in the Proposed Transfer Notice and the purchase and sale
agreement, and the selling Stockholder shall concurrently therewith remit to
the
appropriate Key Holder or Management Stockholder the portion of the sale
proceeds to which such Key Holder or Management Stockholder is entitled by
reason of its participation in such sale. If any Prospective Transferee or
Transferees refuse(s) to purchase securities subject to the Right of Co-Sale
from a Key Holder or Management Stockholder exercising its Right of Co-Sale
hereunder, no Stockholder may sell any Common Stock to such Prospective
Transferee or Transferee unless and until, simultaneously with such sale, such
selling Stockholder purchases all securities subject to the Right of Co-Sale
from such other Stockholders.
(f) If
any
Proposed Transfer is not consummated within forty-five (45) days after receipt
of the Proposed Transfer Notice by the Key Holders, the Management Stockholders,
or the Company, as the case may be, the Stockholder proposing the Proposed
Transfer may not sell any of its Common Stock unless it first complies in full
with each provision of this Section
5.
The
exercise or election not to exercise any right by any Key Holder or Management
Stockholder hereunder shall not adversely affect its right to participate in
any
other sales of Transfer Stock subject to this Section
5.4.
5.5. Drag-Along
Right.
(a) In
the
event that any Key Holder owns more than fifty percent (50%) of the Company’s
issued and outstanding capital stock and such Key Holder desires to accept
a
bona fide offer (a "Purchase
Offer")
from
any person or persons, other than an Affiliate or another Stockholder, to
purchase all (a "Divestiture")
the
shares of Common Stock then held by such Key Holder, then such Key Holder shall
promptly deliver to each of the other Stockholders a written notice (the
"Purchase
Offer Notice")
stating such Key Holder’s intention to sell such shares pursuant to such
Purchase Offer and setting forth the terms and conditions of such Purchase
Offer, including, without limitation, the identity of the proposed purchaser
and
the amount and type of consideration to be paid therefor. The Purchase Offer
Notice shall include a copy of any written offer, letter of intent, term sheet
or contract of sale pertaining to the Purchase Offer.
(b)
In
connection with a Divestiture, any Key Holder owning more than fifty percent
(50%) of the Company’s issued and outstanding capital stock shall have the right
("Drag
Along Right")
to
require each other Stockholder to participate in such sale of Common Stock
by
such Key Holder on the terms and conditions set forth in the Purchase Offer
Notice (which shall be the same terms and conditions (on a per share basis)
as
are applicable to such Key Holder’s sale of shares of Common Stock to the
proposed purchaser). Such Drag Along Right shall be exercisable by such Key
Holder including in its Purchase Offer Notice a statement to the effect that
such Key Holder elects to exercise its Drag Along Right in connection with
the
proposed sale. At any time prior to the closing of such sale, such Key Holder
may withdraw its election to exercise its Drag Along Right upon written notice
to the Stockholders.
10
(c) The
closing of the purchase and sale of any shares of Common Stock to be sold
pursuant to the Drag Along Right shall occur concurrently with the closing
of
the sale of the shares of the Common Stock by the Key Holder owning more than
fifty percent (50%) of the Company’s issued and outstanding capital stock, which
shall be a date not less than sixty (60) days after the giving of the Purchase
Offer Notice. At any such closing, each Stockholder shall deliver to the
purchaser a certificate or certificates representing the number of shares of
Common Stock to be sold by such Stockholder, duly endorsed in blank or
accompanied by a duly executed stock power in blank, with signatures duly
guaranteed and all requisite stock transfer stamps affixed thereto. All
Stockholders shall be treated equally under this Section
5.5.
It
shall be a condition of the obligation to sell under this Section
5.5
that all
facts and circumstances and all material aspects of any transaction under this
Section
5.5
shall be
disclosed. The provisions of this Section
5.5
shall
terminate upon an IPO.
5.6. Effect
of Failure to Comply.
(a) Any
Proposed Transfer not made in compliance with the requirements of this Agreement
shall be null and void ab initio, shall not be recorded on the books of the
Company or its transfer agent and shall not be recognized by the Company. Each
party hereto acknowledges and agrees that any breach of this Agreement would
result in substantial harm to the other parties hereto for which monetary
damages alone could not adequately compensate. Therefore, the parties hereto
unconditionally and irrevocably agree that any non-breaching party hereto shall
be entitled to seek protective orders, injunctive relief and other remedies
available at law or in equity (including, without limitation, seeking specific
performance or the rescission of purchases, sales and other transfers of Common
Stock not made in strict compliance with this Agreement).
(b) If
any
Stockholder becomes obligated to sell any Common Stock to the Company under
this
Agreement and fails to deliver such Common Stock in accordance with the terms
of
this Agreement, the Company may, at its option, in addition to all other
remedies it may have, send to such Stockholder the purchase price for such
Common Stock as is herein specified and cancel on its books the certificate
or
certificates representing the Common Stock to be sold.
(c) If
any
Stockholder purports to sell any Common Stock in contravention of the terms
of
this Agreement (a “Prohibited
Transfer”),
the
Company or a Key Holder, as the case may be, in addition to such remedies as
may
be available by law, in equity or hereunder, is entitled to require the
following actions of such Stockholder, and such Stockholder will be bound by
the
terms of such option:
(i) If
a
Stockholder makes a Prohibited Transfer, a Key Holder or the Company, as the
case may be, who timely exercises his, her or its Right of First Refusal under
Sections
5.1
and
5.2
may
require such Stockholder, to sell to the other Key Holder or the Company, as
the
case may be, the number of shares of Common Stock that such other Key Holder
or
the Company, as the case may be, would have been entitled to purchase under
Sections
5.1
and
5.2
had the
Prohibited Transfer been effected pursuant to and in compliance with the terms
of Sections
5.1
and
5.2.
11
(ii) If
a Key
Holder makes a Prohibited Transfer, the other Key Holder that timely exercises
its Right of Co-Sale under Section
5.4
may
require such Key Holder to purchase from it the number of shares of Common
Stock
that such Key Holder would have been entitled to sell to the Prospective
Transferee under Section
5.4
had the
Prohibited Transfer been effected pursuant to and in compliance with the terms
of Section
5.4.
In
each
case, the sale will be made on the same terms and subject to the same conditions
as would have applied had the Stockholder not made the Prohibited Transfer,
except that the sale (including, without limitation, the delivery of the shares
or the purchase price, as the case may be) must be made within ninety (90)
days
after the Company or the other Key Holder, as the case may be, learns of the
Prohibited Transfer, as opposed to the timeframe proscribed in Sections
5.1,
5.2,
5.3,
5.4,
or
5.5
as the
case may be. Such Stockholder shall also reimburse the other Key Holder and
the
Company, as the case may be, for any and all fees and expenses, including legal
fees and expenses, incurred pursuant to the exercise or the attempted exercise
of the Key Holder’s or the Company’s, as the case may be, rights under
Sections
5.1,
5.2,
5.3,
5.4,
or
5.5
as the
case may be.
5.7. Assistance
with Pledging of Interests.
The
rights of the Company and the Key Holders under this Section
5
shall
not pertain or apply to any pledge by a Key Holder of its Common Stock which
creates a mere security interest in such Common Stock. The Company shall consent
to any pledging of any Key Holder’s Common Stock and other matters customarily
requested of the Key Holders by the Key Holders’ lenders; provided
that any
pledge of Common Stock shall be contingent upon the pledgee providing a written
instrument to the Company agreeing in writing that its lien is subject to the
terms of this Agreement.
6. Exempt
Transfers.
6.1. Transfers
to Affiliates, Etc.
Notwithstanding the foregoing or anything to the contrary herein, the provisions
of Sections
5.1,
5.2
and
5.4
shall
not apply: (i) in the case of a Key Holder that is an entity, upon a transfer
by
such Key Holder to its stockholders, members, partners or other equity holders,
(ii) to a repurchase of Common Stock from a Key Holder by the Company at a
price
no greater than that originally paid by such Key Holder for such Common Stock
and pursuant to an agreement containing vesting and/or repurchase provisions
approved by a majority of the Board of Directors, or (iii) to the sale or
transfer of Common Stock between Key Holders and their respective Affiliates;
provided,
however,
that
such transfer shall be contingent upon the transferee providing a written
instrument to the Company notifying the Company of such transfer and assignment
and agreeing in writing to be bound by the terms of this Agreement; and
provided further,
notwithstanding any such permitted transfer, such transferred Common Stock
shall
remain Common Stock and Key Holder Stock for all purposes hereunder, and such
transferee shall be treated as a Key Holder, as the case may be, (but only
with
respect to the securities so transferred to the transferee) for all purposes
of
this Agreement (including the obligations of a Key Holder with respect to
Proposed Transfers of such Capital Stock pursuant to Section
5);
and
provided,
further,
in the
case of any transfer pursuant to clause (i), that such transfer is made pursuant
to a transaction in which there is no consideration actually paid for such
transfer.
12
6.2. Public
Offering.
Notwithstanding the foregoing or anything to the contrary herein, the provisions
of Section
5
shall
not apply to the sale of any Common Stock to the public in an IPO, and the
provisions of Section
5
shall
terminate and be of no further force or effect upon (a) the consummation of
the
IPO, or (b) the Company first becoming subject to the periodic reporting
requirements of Sections 12(g) or 15(d) of the Exchange Act, whichever event
shall first occur.
7. Key
Holder Buy/Sell.
7.1. Triggering
Notice.
At any
time following the first anniversary of the Closing of the Purchase Agreement
(as defined therein), either Key Holder (such Key Holder, the “Triggering
Key Holder”)
may
deliver a written notice in accordance with the provisions of Section 10.5
hereof, (a “Triggering
Notice”)
to the
other Key Holder (the “Responding
Key Holder”)
stating: (i) its intent to commence a purchase or sale of Key Holder Stock
under
this Section
7
and (ii)
the per-share price (the “Per-Share
Buy/Sell Price”)
which
will be applicable to such transaction.
7.2. Response
Notice.
Within
90 days of the delivery of a Triggering Notice, the Responding Key Holder shall
deliver a written notice in accordance with the provisions of Section 10.5
(the
“Response
Notice”)
to the
Triggering Key Holder stating whether the Responding Key Holder has elected:
(i)
to purchase the entirety of the Triggering Key Holder’s Common Stock at the
Per-Share Buy/Sell Price or (ii) to sell the entirety of its Common Stock to
the
Triggering Key Holder at the Per-Share Buy/Sell Price.
7.3. Cure
Period.
If no
Response Notice is delivered within 90 days of a Triggering Notice, the
Triggering Key Holder shall deliver a written notice in accordance with the
provisions of Section 10.5 (the “Cure
Period Notice”)
to the
Responding Key Holder stating that the Responding Key Holder has failed to
deliver a Response Notice and stating that the Responding Key Holder has 15 days
from delivery of the Cure Period Notice (the “Cure
Period”)
to
deliver a Response Notice to the Triggering Key Holder. If the Responding Key
Holder does not deliver a Response Notice within the Cure Period, the Triggering
Key Holder shall, at its sole option, within ten days of the conclusion of
the
Cure Period elect: (i) to purchase the entirety of the Responding Key Holder’s
Common Stock at the Per-Share Buy/Sell Price or (ii) to sell the entirety of
its
Common Stock to the Responding Key Holder at the Per-Share Buy/Sell Price.
The
Key Holders shall thereupon effect a Closing of a sale or purchase in accordance
with the provisions of Section 7.4 pursuant to the terms of the preceding
sentence.
7.4. Closing.
The
closing of a sale or purchase under this Section
7
shall
take place, and stock certificates representing all of the shares of Common
Stock of the Selling Key Holder, properly endorsed for transfer to the
purchasing Key Holder, as well as all payments from the purchasing Key Holder
shall have been delivered to the selling Key Holder within forty-five (45)
days
after delivery of the Response Notice, the Cure Period Notice or the expiration
of the Cure Period, as the case may be.
13
8. Management
Option Plan.
Notwithstanding the foregoing or anything to the contrary herein, the provisions
of Sections
4
and
5
shall
not apply to the issuance of options under a management option plan (the
“Management
Option Plan”),
provided that: (i) the total Company equity available for issuance under the
Management Option Plan will be 14,706 shares of Common Stock, equivalent to
12.5% ownership of the Company, on a fully diluted basis following Closing
(as
defined in the Purchase Agreement); (ii) the exercise price per share for any
options issued under the Management Option Plan will be equal to or greater
than
the price per share paid by EnerTech under the Purchase Agreement; and (iii)
the
option pool under the Management Option Plan shall not be increased without
EnerTech’s written consent.
9. Additional
Covenants.
9.1. Insurance. Acorn
Energy maintains Directors and Officers Errors and Omissions insurance
pursuant to a policy of insurance substantially in the form provided to
EnerTech. The Company and Acorn Energy will use reasonable best efforts to
cause
such insurance policy to be maintained until such time as the Board of Directors
of the Company determines that such insurance should be discontinued. The policy
shall not be cancelable by Acorn Energy without prior approval of the Board
of
Directors.
9.2. Employee
Agreements. The
Company will cause each person now or hereafter employed by it or any subsidiary
(or engaged by the Company or any subsidiary as a consultant/independent
contractor) with access to confidential information and/or trade secrets to
enter into a proprietary information, inventions, non-competition and
non-solicitation agreement substantially in the form approved by the Board
of
Directors and satisfactory to the Stockholders.
9.3. Employee
Vesting.
All
future employees and consultants of the Company who shall purchase, or receive
options to purchase, shares of the Company’s capital stock following the date
hereof shall be required to execute stock purchase or option agreements
providing for vesting of shares over a four-year period with the first 25%
of
such shares vesting following 12 months of continued employment or services
after the grant date of each such security, and the remaining shares vesting
in
equal monthly installments over the following 36 months. The issuance or
transfer of any options to purchase shares of the Company’s capital stock shall
be contingent upon the holder or transferee becoming a party to this Agreement
by executing and delivering an additional counterpart signature page to this
Agreement, and thereafter such holder or transferee shall be deemed a
“Stockholder” for all purposes hereunder.
9.4. Board
of Directors.
Each
Stockholder agrees to vote all of his, her or its shares of voting securities
in
the Company, whether now owned or hereafter acquired or which such Stockholder
may be empowered to vote, from time to time and at all times, in whatever manner
shall be necessary to ensure that at each annual or special meeting of
stockholders at which an election of directors is held or pursuant to any
written consent of the stockholders, the following persons shall be elected
to
the Board: five to seven individuals designated in the following proportions:
(i) one designee of EnerTech, which individual shall initially be ▇▇▇▇▇ ▇▇▇▇▇▇▇,
for so long as EnerTech remains a Key Holder , (ii) two designees of Acorn
Energy, one of which individuals shall initially be ▇▇▇▇ ▇▇▇▇▇, Chairman, (iii)
one to three outside directors designated by the Stockholders voting together
as
a single class, and (iv) the chief executive officer of the Company, which
individual shall initially be ▇▇▇▇ ▇▇▇▇▇▇▇.
14
9.5. Meetings
of the Board of Directors.
The
Board shall meet no less frequently than once every quarter, with monthly
telephone conversations on an as-needed basis. Each authorized committee of
the
Board shall include the director elected by EnerTech. EnerTech shall be entitled
to appoint an observer, who is approved by the Company’s Chief Executive, to all
Board meetings. The Company will reimburse non-employee directors for all
reasonable out-of-pocket expenses incurred in attending board and committee
meetings.
9.6. Successor
Indemnification. In
the
event that the Company or any of its successors or assigns (i) consolidates
with
or merges into any other entity and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers or
conveys all or substantially all of its properties and assets to any person
or
entity, then, and in each such case, to the extent necessary, proper provision
shall be made so that the successors and assigns of the Company assume the
obligations of the Company with respect to indemnification of members of the
Board of Directors as in effect immediately prior to such transaction, whether
in the Company’s bylaws, Certificate of Incorporation, or elsewhere, as the case
may be.
9.7. Transactions
with Related Parties.
The
Company shall not enter into any business dealing, undertaking, contract,
agreement, lease or other arrangement for the furnishing to or by the Company
of
goods, services or space or any other transaction with any Stockholder or any
Affiliate of any Stockholder (an “Affiliate
Contract”)
and
shall not take any action pertaining to the rights and obligations of the
Company under such Affiliate Contract, without the approval of a majority of
the
disinterested members of the Company’s Board of Directors.
9.8. Actions
Requiring Majority Stockholder Approval.
Consent
of the Stockholders holding a majority of the outstanding voting shares of
Common Stock, which Stockholders must include EnerTech, provided that (x)
EnerTech holds 5% or more of the Company’s issued and outstanding Common Stock
and (y) EnerTech has exercised all of its rights under Section
4
to
acquire New Securities prior to the termination of such rights under
Section
4.2,
shall
be required for any action that (including by way of merger, consolidation,
reclassification, reorganization or other similar event) creates, authorizes,
or
issues: (i) any class of stock or securities of the Company having any right,
preference, privilege, power or priority superior to the Common Stock, or (ii)
any debt or lease transaction resulting in an obligation to the Company, in
the
aggregate, in excess of $3,000,000.
9.9. Actions
Requiring Super-Majority Stockholder Approval.
Consent
of the holders of more than 67% of the outstanding voting shares of the Common
Stock shall be required for any action that (including by way of merger,
consolidation, reclassification, reorganization or other similar
event):
(a) increases
or decreases the number of authorized shares of Common Stock or creates or
authorizes any obligation or security convertible into shares of Common
Stock,
(b) liquidates,
dissolves or winds up the business and affairs of the Company or consents to
any
of the foregoing,
15
(c) amends
or
waives any provision of the charter, by-laws or articles of the Company in
a
manner which adversely affects the holders of the Common Stock,
(d) acquires
any other corporation or entity,
(e) adversely
alters, affects or changes the rights, preferences, privileges, powers, or
interests of, or the restrictions provided for the benefit of, the holders
of
the Common Stock,
(f) creates,
authorizes shares of, or issues shares of any class or series of shares stock
having any right, preference, privilege, power or priority on parity with the
Common Stock,
(g) effects
or authorizes any merger, recapitalization, reorganization, acquisition,
consolidation, liquidation, winding up, or sale of all or substantially all
of
the assets of the Company,
(h) makes
any
loan or advance to, or own any stock or other securities of, any subsidiary
or
other corporation, partnership, or other entity unless it is wholly owned by
the
Company;
(i) makes
any
loan or advance to any person, including, any employee or director,
(j) guarantees
any indebtedness except for trade accounts of the Company or any subsidiary
arising in the ordinary course of business,
(k) makes
any
investment other than investments in prime commercial paper, money market funds,
certificates of deposit in any United States bank having a net worth in excess
of $100,000,000 or obligations issued or guaranteed by the United States of
America, in each case having a maturity not in excess of two years,
or
(l) enters
into or causes the Company to be a party to any transaction with any director,
officer or employee of the Company or any “associate” (as defined in Rule 12b-2
promulgated under the Exchange Act) of any such person or any Affiliate of
the
Company.
9.10. Termination
of Covenants. The
covenants set forth in this Section
9,
shall
terminate and be of no further force or effect upon (a)
the
consummation of the IPO, or (b) the Company first becoming subject to the
periodic reporting requirements of Sections 12(g) or 15(d) of the Exchange
Act,
whichever event shall first occur.
10. Miscellaneous.
10.1. Transfers,
Successors and Assigns. The
terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
16
10.2. Governing
Law. This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of Delaware, without regard to its principles of conflicts
of
laws.
10.3. Counterparts. 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. This Agreement may also be executed and delivered by facsimile
signature and 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.
10.4. Titles
and Subtitles. 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.
10.5. Notices. All
notices and other communications given or made pursuant to this Agreement shall
be in writing and shall be deemed effectively given: (a) upon personal delivery
to the party to be notified, (b) when sent by confirmed electronic mail or
facsimile if sent during normal business hours of the recipient, and if not
so
confirmed, then on the next business day, (c) five (5) days after having been
sent by registered or certified mail, return receipt requested, postage prepaid,
or (d) one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All
communications shall be sent to the respective parties at their address as
set
forth on the signature page or Schedule A
hereto,
or to such email address, facsimile number or address as subsequently modified
by written notice given in accordance with this Section
10.5.
If
notice
is given to the Company or Acorn Energy, a copy shall also be sent
to:
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax
No.
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, PLLC
One
Wachovia Center, Suite 3500
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Fax
No.
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Attention:
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If
notice
is given to EnerTech, a copy shall also be sent to:
Dechert
LLP
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Centre
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Fax
No.
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Attention:
▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
17
10.6. Amendments
and Waivers. This
Agreement may be amended or modified and the observance of any term hereof
may
be waived (either generally or in a particular instance and either retroactively
or prospectively) only by a written instrument executed by each of the Key
Holders, provided that such consent shall not be required if the Key Holders
do
not then own shares representing at least 50% of the outstanding Common Stock.
Any amendment or waiver so effected shall be binding upon the Company, the
Stockholders and all of their respective successors and permitted assigns
whether or not such party, assignee or other shareholder entered into or
approved such amendment or waiver. Notwithstanding the foregoing, (a) this
Agreement may not be amended or terminated and the observance of any term
hereunder may not be waived with respect to any Stockholder without the written
consent of such Stockholder unless such amendment, termination or waiver applies
to all Stockholders, respectively, in the same fashion and (b) the consent
of
the Key Holders shall not be required for any amendment or waiver if such
amendment or waiver does not apply to the Key Holders. The Company shall give
prompt written notice of any amendment or termination hereof or waiver hereunder
to any party hereto that did not consent in writing to such amendment,
termination or waiver. No waivers of or exceptions to any term, condition or
provision of this Agreement, in any one or more instances, shall be deemed
to
be, or construed as, a further or continuing waiver of any such term, condition
or provision.
10.7. Severability. The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
10.8. Additional
Stockholders.
Notwithstanding anything to the contrary contained herein, if the Company shall
issue additional shares of Common Stock or options under the Management Option
Plan after the date hereof, the Company’s issuance to any purchaser of such
shares of Common Stock or recipient of stock options shall be contingent on
such
purchaser or option holder becoming a party to this Agreement by executing
and
delivering an additional counterpart signature page to this Agreement and
thereafter such purchaser shall be deemed a “Stockholder” for all purposes
hereunder.
10.9. Entire
Agreement. This
Agreement (including the Exhibits hereto, if any) and the other Transaction
Agreements (as defined in the Purchase Agreement) constitute the full and entire
understanding and agreement between the parties with respect to the subject
matter hereof, and any other written or oral agreement relating to the subject
matter hereof existing between the parties are expressly canceled.
10.10. Transfers
of Rights. Each
Stockholder hereto hereby agrees that it will not, and may, not assign any
of
its rights and obligations hereunder, unless such rights and obligations are
assigned by such Stockholder to (a) any person or entity to which Registrable
Securities are transferred by such Stockholder, or (b) to any Affiliate of
such
Stockholder, and, in each case, such transferee shall be deemed a “Stockholder”
for purposes of this Agreement; provided
that
such assignment of rights shall be contingent upon the transferee providing
a
written instrument to the Company notifying the Company of such transfer and
assignment and agreeing in writing to be bound by the terms of this Agreement
or
such transfer or assignment shall be void.
18
10.11. Delays
or Omissions.
No
delay or omission to exercise any right, power or remedy accruing to any party
under this Agreement, upon any breach or default of any other party under this
Agreement, shall impair any such right, power or remedy of such non-breaching
or
non-defaulting party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only
to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any party, shall be cumulative
and not alternative.
10.12. Effectiveness.
This
Agreement shall be effective as of the Closing (as defined in the Purchase
Agreement).
10.13. Legend
on Stock Certificates.
Each
certificate representing shares of Common Stock shall bear a legend
substantially in the following form:
“THE
SALE, TRANSFER, ASSIGNMENT, PLEDGE OR ENCUMBRANCE OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF A STOCKHOLDERS’
AGREEMENT DATED AS OF FEBRUARY 29, 2008 BY AND AMONG THE ISSUER OF THIS SECURITY
AND CERTAIN HOLDERS OF THE STOCK OF SUCH CORPORATION. COPIES OF SUCH AGREEMENT
MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD
OF
THIS CERTIFICATE TO THE CORPORATION AT ITS PRINCIPAL EXECUTIVE
OFFICE.”
[Remainder
of Page Intentionally Left Blank]
19
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
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By:
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Name:
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Title:
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By:
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Name:
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Title:
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ENERTECH
CAPITAL PARTNERS III L.P.
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By:
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ECP
III Management L.P.,
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Its
general partner
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By:
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ECP
III Management LLC,
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Its
general partner
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