US SENSOR SYSTEMS INC. STOCKHOLDERS’ AGREEMENT
Exhibit
10.3
US
SENSOR SYSTEMS INC.
STOCKHOLDERS’
AGREEMENT
STOCKHOLDERS’
AGREEMENT
THIS STOCKHOLDERS’ AGREEMENT
(the “Agreement”) is
made as of February 23, 2010 by and among US SENSOR SYSTEMS INC., a Delaware
corporation (the “Company”), and each of the
stockholders and warrant holders listed on Schedule A hereto, each person
to whom the rights of a Stockholder (as defined below) are assigned pursuant to
Section 7.1 and
each person who hereafter becomes a signatory to this Agreement pursuant to
Section 7.10
(each, a “Stockholder”
and, collectively, the “Stockholders”).
RECITALS
WHEREAS, the Company and Acorn
Energy (as defined below) are parties to the Common Stock Option Purchase
Agreement of even date herewith (the “Purchase Agreement”);
and
WHEREAS, in order to induce
Acorn Energy to enter into the Purchase Agreement and to induce Acorn Energy 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” means Acorn
Energy, Inc., a Delaware corporation, and its Affiliates.
“Acorn Secondary Notice” means
written notice from Acorn Energy notifying the Company and the selling
Stockholder that Acorn Energy intends to exercise its Secondary Refusal Right as
to a portion of the Transfer Stock with respect to any Proposed
Transfer.
“Affiliate” means 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” means 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.
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“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“GAAP” means U.S. generally
accepted accounting principles.
“IPO” means the Company’s first underwritten public offering
of its Common Stock under the Securities Act.
“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.
“Preferred Stock” means shares
of the Company’s preferred stock, $0.001 par value per share.
“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
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 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.
“Right of Co-Sale” means the
right, but not an obligation, of Acorn Energy or a 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 Acorn Energy 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.
“Rights Agreement” means that
certain Amended and Restated Investors Rights Agreement of even date herewith,
by and among the Company, Acorn Energy and certain other stockholders of the
Company.
“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 Acorn Energy 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.
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“Secondary Refusal Right” means
the right, but not an obligation, of Acorn Energy to purchase Transfer Stock not
purchased pursuant to the Company’s Right of First Refusal, on the terms and
conditions specified in the Proposed Transfer Notice.
“Stock” means Common Stock or
Preferred Stock.
“Stockholder Stock” means any
Stock now owned or subsequently acquired by any Stockholder or such
Stockholder’s permitted transferees or assigns.
“Transfer Stock” means shares
of Stock subject to a Proposed Transfer.
2. Rights of Refusal and
Co-Sale.
2.1. 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
Acorn Energy, not later than 30 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 2.1 by giving
a Company Notice to such selling holder of Stock within fifteen (15) days after
delivery of the Proposed Transfer Notice.
2.2. Secondary Refusal Right of
Acorn Energy. Each Stockholder hereby unconditionally and
irrevocably grants to Acorn Energy a Secondary Refusal Right to purchase the
shares of Stockholder Stock not purchased by the Company pursuant to the
Company’s Right of First Refusal under Section 2.1, as
provided in this Section
2.2. If the Company does not intend to exercise its Right of
Refusal under Section
2.1 with respect to all Stockholder Stock subject to a Proposed Transfer,
the Company must deliver a Secondary Notice to Acorn Energy 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, Acorn Energy must deliver an Acorn Secondary Notice to the selling
Stockholder and the Company within ten (10) days after the deadline for delivery
of the Secondary Notice.
2.3. 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 Acorn Energy cannot
for any reason pay for the Transfer Stock in the same form of non-cash
consideration, the Company or Acorn Energy 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 Acorn Energy, as the case may
be, shall take place, and all payments from the Company and/or Acorn Energy, 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.
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2.4. Right of
Co-Sale.
(a) If
any Transfer Stock subject to a Proposed Transfer by a Stockholder is not
purchased pursuant to Sections 2.1 and
2.2 above and
thereafter is to be sold to a Prospective Transferee, Acorn Energy 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. If Acorn Energy desires to exercise its Right of
Co-Sale, it must give the selling Stockholder written notice to that effect
within fifteen (15) days after the deadline for delivery of Acorn Secondary
Notice as described above, and upon giving such notice Acorn Energy shall be
deemed to have effectively exercised the Right of Co-Sale.
(b) Upon
timely exercising its Right of Co-Sale by delivering the written notice provided
for above in Section
2.4(a), Acorn Energy may include in the Proposed Transfer all or any part
of its Common Stock equal to the product obtained by multiplying (i) the
aggregate number of shares of Stockholder 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 Stock owned by Acorn Energy immediately before consummation of the
Proposed Transfer and the denominator of which is the total number of
shares of Stock owned, in the aggregate, by all Stockholders immediately prior
to the consummation of the Proposed Transfer. To the extent Acorn
Energy exercises such right of participation in accordance with the terms and
conditions set forth herein, the number of shares of Stock that the selling
Stockholder may sell in the Proposed Transfer shall be correspondingly
reduced.
(c) Acorn
Energy shall effect its participation in the Proposed Transfer by delivering to
the transferring Stockholder, no later than fifteen (15) days after Acorn
Energy’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 Stock that Acorn Energy elects to include in the Proposed
Transfer.
(d) The
terms and conditions of any sale pursuant to this Section 2.4 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 Acorn Energy 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 Acorn Energy the portion of the sale proceeds to which Acorn
Energy 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 Acorn Energy exercising its Right of
Co-Sale hereunder, no Stockholder may sell any 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 Acorn Energy.
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(f) If
any Proposed Transfer is not consummated within forty-five (45) days after
receipt of the Proposed Transfer Notice by Acorn Energy or the Company, as the
case may be, the Stockholder proposing the Proposed Transfer may not sell any of
its Stock unless it first complies in full with each provision of this Section
2. The exercise or election not to exercise any right by Acorn
Energy shall not adversely affect its right to participate in any other sales of
Transfer Stock subject to this Section
2.4.
2.5. Drag-Along
Right.
(a) In
the event that Acorn Energy owns more than fifty percent (50%) of the Company’s
issued and outstanding capital stock and Acorn Energy 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
Stock then held by Acorn Energy, then Acorn Energy shall promptly deliver to
each of the other Stockholders a written notice (the “Purchase Offer Notice”)
stating Acorn Energy’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, if Acorn Energy owns more than fifty percent
(50%) of the Company’s issued and outstanding capital stock, it shall have the
right (“Drag Along
Right”) to require each other Stockholder to participate in such sale of
Common Stock by Acorn Energy 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 Acorn Energy’s sale of shares of Common Stock
to the proposed purchaser). Such Drag Along Right shall be
exercisable by Acorn Energy including in its Purchase Offer Notice a statement
to the effect that Acorn Energy elects to exercise its Drag Along Right in
connection with the proposed sale. At any time prior to the closing
of such sale, Acorn Energy may withdraw its election to exercise its Drag Along
Right upon written notice to the Stockholders.
(c) The
closing of the purchase and sale of any shares of Stock to be sold pursuant to
the Drag Along Right shall occur concurrently with the closing of the sale of
the shares of the Stock by Acorn Energy, 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 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
2.5. It shall be a condition of the obligation to sell under
this Section
2.5 that all facts and circumstances and all material aspects of any
transaction under this Section 2.5 shall be
disclosed. The provisions of this Section 2.5 shall
terminate upon an IPO.
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2.6. 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 Stock
not made in strict compliance with this Agreement).
(b) If
any Stockholder becomes obligated to sell any Stock to the Company under this
Agreement and fails to deliver such 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 Stock as is
herein specified and cancel on its books the certificate or certificates
representing the Stock to be sold.
(c) If
any Stockholder purports to sell any Stock in contravention of the terms of this
Agreement (a “Prohibited
Transfer”), the Company or Acorn Energy, 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, Acorn Energy or the
Company, as the case may be, who timely exercises its Right of First Refusal
under Sections
2.1 and 2.2 may require such
Stockholder, to sell to Acorn Energy or the Company, as the case may
be, the number of shares of Stock that Acorn Energy or the Company,
as the case may be, would have been entitled to purchase under Sections 2.1 and
2.2 had the
Prohibited Transfer been effected pursuant to and in compliance with the terms
of Sections 2.1
and 2.2.
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 Acorn Energy, as the case may be, learns of the
Prohibited Transfer, as opposed to the timeframe proscribed in Sections 2.1, 2.2, 2.3, 2.4, or 2.5 as the case may
be. Such Stockholder shall also reimburse Acorn Energy 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 Acorn Energy ‘s or the Company’s, as the case may be,
rights under Sections
2.1, 2.2, 2.3, 2.4, or 2.5 as the case may
be.
2.7. Assistance with Pledging of
Interests. The rights of the Company and
Acorn Energy under this Section 2 shall not
pertain or apply to any pledge by Acorn Energy of its Stock which
creates a mere security interest in such Stock. The Company shall consent to any
pledging of Acorn Energy Stock and other matters customarily
requested of Acorn Energy by Acorn Energy’s lenders; provided that any
pledge of 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.
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3. Exempt
Transfers.
3.1. Transfers to Affiliates,
Etc. Notwithstanding the foregoing or anything to the contrary
herein, the provisions of Sections 2.1, 2.2 and 2.4 shall not apply:
(i) in the case of Acorn Energy, upon a transfer by
Acorn Energy to its stockholders, (ii) to a repurchase of Stock from
Acorn Energy by the Company at a price no greater than that originally paid by
Acorn Energy for such Stock and pursuant to an agreement containing
vesting and/or repurchase provisions approved by a majority of the Board of
Directors, (iii) to a redemption of Stock by the Company pursuant to Article V,
Section 5, of the Company’s Amended and Restated Certificate of Incorporation,
or (iv) to the to the sale or transfer of Stock between Acorn Energy
and its 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 Stock shall remain
Stock and Stockholder Stock for all purposes hereunder, and such transferee
shall have all the rights, duties and responsibilities which were held by Acorn
Energy prior to such transfer (but only with respect to the securities so
transferred to the transferee) for all purposes of this Agreement; 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.
3.2. Public
Offering. Notwithstanding the foregoing or anything to the
contrary herein, the provisions of Section 2 shall not
apply to the sale of any Stock to the public in an IPO, and the provisions of
Section 2 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.
4. Board of
Directors.
(a) 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: six individuals of whom (i) one shall be designated by Acorn Energy
to serve as a designee of the holders of Common Stock, which individual shall
initially be ▇▇▇▇ ▇. ▇▇▇▇▇, for so long as Acorn Energy owns at least
50,000 shares of Stock but less than a majority of the shares of Stock or (ii) a
majority of such individuals shall be designees of Acorn Energy for so long as
Acorn Energy owns more than 50% of the number of issued and outstanding shares
of Stock.
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(b) Each
authorized committee of the Board shall include the director elected by Acorn
Energy. Acorn Energy shall be entitled to appoint an observer who may
attend all Board and Board Committee meetings, events and functions which Acorn
Energy’s Board designee is entitled to attend. The Company will
reimburse non-employee directors for all reasonable out-of-pocket expenses
incurred in attending board and committee meetings.
5. Management Option
Plan. Notwithstanding the foregoing or anything to the
contrary herein, the provisions of Section 2 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 a number of shares of Stock which shall not
exceed 8% of the issued and outstanding shares of Stock of the Company on a
fully diluted basis (i.e., assuming conversion rights of all then currently
issued and outstanding shares of Stock and exercise of all then currently issued
and outstanding options and warrants to purchase shares of Stock); and (ii) the
option pool under the Management Option Plan shall not be increased without
Acorn Energy’s written consent. Any options issued under the
Management Option Plan shall vest in accordance with the terms of Section
6.2.
6. Additional
Covenants.
6.1. 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 reasonably satisfactory to Acorn
Energy.
6.2. 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 quarterly 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.
6.3. 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, Amended and Restated Certificate of
Incorporation, or elsewhere, as the case may be.
6.4. 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.
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6.5. Actions Requiring Majority
Stockholder Approval. Consent of the Stockholders holding a
majority of the outstanding voting shares of Stock, which Stockholders must
include Acorn Energy provided that (x) Acorn Energy holds at least 50,000 shares
or more of the Company’s issued and outstanding Stock and (y) Acorn Energy has
exercised all of its rights under Section 3 of the Rights Agreement to acquire
“New Securities” (as such quoted term is defined in the Rights Agreement) prior
to the termination of such rights under Section 3.6 of the Rights Agreement,
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 individual debt or lease transaction resulting in an
obligation to the Company in excess of $50,000.
6.6. Actions Requiring
Super-Majority Stockholder Approval. Consent of the holders of
more than 67% of the outstanding voting shares of the 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 any class of Stock or creates or
authorizes any obligation or security convertible into shares of
Stock,
(b) liquidates,
dissolves or winds up the business and affairs of the Company or consents to any
of the foregoing,
(c) amends
or waives any provision of the certificate, incorporation, 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,
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(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.
6.7. Purchase of Shares of
Preferred Stock. For purposes of
this Section
6.7,
“Preferred Stockholders”
means those holders of the Company’s shares of Preferred Stock who are parties
to this Agreement, and “Non-Management Common
Stockholders” means those holders of the Company’s shares of Common Stock
who are parties to this Agreement other than ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ Cherbettchian, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ and Acorn
Energy. Acorn Energy covenants and agrees that if it acquires
ownership of 50% or more of the outstanding shares of capital stock of the
Company without exercising its option to purchase the shares of Preferred Stock
held by the Preferred Stockholders and the shares of Common Stock held by the
Non-Management Common Stockholders (the “Trigger Event”) under the
terms of that certain Capital Stock Option Purchase Agreement (the “Capital Option Agreement”) of
even date herewith entered into by and among Acorn Energy, the Preferred
Stockholders, the Non-Management Common Stockholders and other parties thereto,
Acorn Energy shall within 30 days after the occurrence of the Trigger Event
purchase all of the shares of Preferred Stock held by the Preferred Stockholders
and all shares of Common Stock held by the Non-Management Common Stockholders on
the same terms as if Acorn Energy had exercised its options to purchase all such
shares under the Capital Option Agreement.
6.8. Termination of
Covenants. The covenants set forth in this Section 6, 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. Miscellaneous.
7.1. 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.
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7.2. 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.
7.3. 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.
7.4. 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.
7.5. 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, two business days after deposit with a recognized
international messenger service such as FedEx, UPS or DHL or three days after
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the following
address: (a) if to the Company, at the address set forth on the
signature page of this Agreement (or at such other address as the Company shall
have furnished to the Purchasers in writing), attention of Chief Executive
Officer and (b) if to a Stockholder, at the latest address of such person shown
on the Company’s records.
7.6. 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 stockholders of the
Company who then own shares representing at least 50% of the outstanding Stock
and including in all instances Acorn Energy. 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 stockholder 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 Acorn Energy
shall not be required for any amendment or waiver if such amendment or waiver
does not apply to or adversely affect Acorn Energy. 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.
11
7.7. Severability. The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
7.8. Additional
Stockholders. Notwithstanding anything to the contrary
contained herein, if the Company shall issue additional shares of Stock or
options under the Management Option Plan after the date hereof, the Company’s
issuance to any purchaser of such shares of 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.
7.9. 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.
7.10. 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 Stock is 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.
7.11. 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.
7.12. Effectiveness. This
Agreement shall be effective upon execution by the parties hereto.
12
7.13. Legend on Stock
Certificates. Each certificate representing shares of Stock
issued on and after the date hereof 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 23, 2010 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; signature pages follow.]
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
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US
SENSOR SYSTEMS INC.
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By:
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/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇,
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President
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By:
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/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇
▇. ▇▇▇▇▇,
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President
&
CEO
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/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇
▇. ▇▇▇▇▇
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/s/ ▇▇▇▇ Cherbettchian
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▇▇▇▇
Cherbettchian
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CKSW
Partners
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By:
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/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Name:
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▇▇▇▇▇▇▇ ▇▇▇▇▇
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Title:
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General Partner
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/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇
▇. ▇▇▇▇▇▇▇
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LWL
Investment Group LLC
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By:
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/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Name:
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▇▇▇▇▇▇▇ ▇▇▇▇▇
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Title:
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Manager
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/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇
▇▇▇▇▇
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/s/ ▇▇▇▇▇ ▇▇▇
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▇▇▇▇▇
▇▇▇
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/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
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/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇
▇▇▇▇▇
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇,
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Trustee
of the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Trust dtd 7/25/97
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/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇,
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Trustee
of the ▇▇▇▇▇ ▇▇▇▇▇▇ Trust of 2004
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/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇▇
▇▇▇▇,
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Trustee
of The ▇▇▇▇ Family Trust dtd 12/15/97
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RAE
Systems, Inc.
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By:
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Name:
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Title:
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