EU ENERGY PRINCIPALS' AGREEMENT
THIS EU ENERGY PRINCIPALS' AGREEMENT (this "Agreement"), is made and
entered into as of July 3, 2006 by and among Xxxxxxx Xxxxxxx ("Xxxxxxx"), Xxxxxx
Services Limited ("Keeley"), Laikadog Holdings Ltd. ("Laikadog"), Xxxxx Limited
("Xxxxx") and Wellsford Management Limited ("Wellsford"), and, Xxxxxxx Xxxxxx
("Xxxxxx") on the one hand ("collectively "EU Energy Principals"), and Composite
Technology Corporation, a Nevada Corporation ("Buyer").
RECITALS
A. The Buyer and substantially all shareholders of EU Energy including the EU
Energy Principals have entered into a Share Exchange Agreement (the "Share
Exchange Agreement") pursuant to which the shareholders of EU Energy plc, a
company organized under the laws of the United Kingdom ("EU Energy") and Xxxxxx
shall exchange their equity securities for newly-issued stock of the Buyer (the
"Transaction").
X. Xxxxxxx, Xxxxxx, Xxxxx, Wellsford, and Laikadog (collectively, the
"Shareholders") shall be shareholders of the Buyer upon closing of the
Transaction and Xxxxxx will be the President of the Buyer.
C. In order to induce the Buyer to complete the Transaction, the Shareholders
have agreed to the lock-up provisions relating to all of the shares of the
common stock of the Buyer owned, as of the date of the closing date of the
Transaction (the "Closing Date"), by each of the Shareholders as set forth in
this Agreement ("Locked Up Shares").
D. The Shareholders have further agreed that their outstanding Company common
stock may be used to satisfy any indemnification obligations pursuant to Section
9 of the Share Exchange Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, and other valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
AGREEMENT
1. Lock-Up. For a period of 12 months following the closing date of the
Transaction (the "Lock-Up Period"), each of the Shareholders shall not make a
Transfer of the Locked Up Shares; provided however, that in each month after the
Closing Date, 1/12th of the Locked Up Shares held by each Shareholder shall be
relieved from such restriction, such that by the 12th month after the Closing
Date, all of the Locked Up Shares shall no longer be bound by this obligation;
provided, however, that Shareholder may not Transfer more than 1/6th of the
Locked Up Shares during any 30 day period of the Lock-Up Period. "Transfer"
shall mean transfer, sell, assign, pledge, hypothecate, give, create a security
interest in or lien on, place in trust (voting trust or otherwise), or in any
other way encumber or dispose of, directly or indirectly and whether or not
voluntarily, without the express prior written consent of the Buyer.
2. Injunctive Relief. The Parties agree that a breach of this Agreement may
cause the Buyer irreparable harm for which monetary damages are not adequate. In
addition to all other available legal remedies, the Buyer shall have the right
to injunctive relief to enforce this Agreement.
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3. Other Restrictions.
(a) Legends. Each Shareholder's Locked Up Shares shall be divided equally
into 12 separate stock certificates ("Stock Certificate"). In addition to any
other legends required to be placed on each outstanding certificate representing
the Locked Up Shares, each of the Shareholders hereby agrees that each
outstanding stock certificate representing the Locked Up Shares during the
Restricted Period shall bear a legend reading substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE TERMS AND CONDITIONS SET FORTH IN A EU ENERGY PRINCIPALS'
AGREEMENT, DATED AS OF JUNE 3, 2006 COPIES OF WHICH MAY BE
OBTAINED FROM THE ISSUER. NO TRANSFER OF SUCH SECURITIES WILL
BE MADE ON THE BOOKS OF THE ISSUER UNLESS ACCOMPANIED BY
EVIDENCE OF COMPLIANCE WITH THE TERMS OF SUCH AGREEMENT. THE
COMPANY ACKNOWLEDGES THAT THIS LEGEND (BUT THIS LEGEND ONLY)
RELATING TO THE EU ENERGY PRINCIPALS AGREEMENT MAY BE REMOVED
AT ANY TIME AFTER [Legend Termination Date]"
Each of the 12 Stock Certificates shall bear a different "Legend
Termination Date" ranging from the one-month anniversary of the Closing Date to
the 12-month anniversary of the Closing.
(b) Termination of Restrictive Legends. The restrictions referred to in
Section 1 shall cease and terminate in their entirety at the end of the Lock-Up
Period. Whenever such restrictions shall cease and terminate as to any Locked Up
Shares, the Shareholder holding such shares shall be entitled to receive from
the Buyer, in exchange for such legended certificates, without expense, new
certificates for a like number of Locked Up Shares not bearing the legend set
forth in Section 3(a), provided however, that if any Claim has been made against
the Shareholder for any breach of the Share Exchange Agreement, then the
Shareholder will not be able to remove the legend on that number of shares
sufficient to satisfy the extent of such Claim.
(c) Copy of Agreement. A copy of this Agreement shall be filed with the
corporate secretary of the Buyer and with the Transfer Agent of the Buyer and
shall be kept with the records of the Buyer and shall be made available for
inspection by any shareholders of the Buyer.
(d) Recordation. The Buyer shall not record upon its books any Transfer to
any person except Transfers in accordance with this Agreement.
4. Indemnification. In the event that a Shareholder is required to indemnify the
Buyer under Section 9 of the Share Exchange Agreement, the Locked Up Shares may
be surrendered to the Buyer to satisfy such indemnification obligations.
5. Compliance With Applicable Regulations. The Shareholders and Xxxxxx warrant
and confirm that they shall comply in all respects with any regulations
applicable to the disclosure of their share holdings in the Buyer and the
transfer of such shares.
6. Specific Performance. The Shareholders acknowledge that there would be no
adequate remedy at law if any Shareholder fails to perform any of its
obligations hereunder, and accordingly agree that the Buyer, in addition to any
other remedy to which it may be entitled at law or in equity, shall be entitled
to compel specific performance of the obligations of any Shareholder under this
Agreement in accordance with the terms and conditions of this Agreement. Any
remedy under this Section 5 is subject to certain equitable defenses and to the
discretion of the court before which any proceedings therefor may be brought.
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7. Notices. All notices, statements, instructions or other documents required to
be given hereunder shall be in writing and shall be given either personally or
by mailing the same in a sealed envelope, first-class mail, postage prepaid and
either certified or registered, return receipt requested, or by telecopy, and
shall be addressed to the Buyer at its principal offices and to one or more
Shareholders at the respective addresses furnished to the Buyer by such
Shareholders.
8. Successors and Assigns. This Agreement shall be binding upon and shall inure
to the benefit of the parties and their respective successors and assigns.
9. Recapitalizations and Exchanges Affecting Shares. The provisions of this
Agreement shall apply, to the full extent set forth herein with respect to the
Shares, to any and all shares of capital stock or equity securities of the Buyer
which may be issued by reason of any stock dividend, stock split, reverse stock
split, combination, recapitalization, reclassification or otherwise.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California as applied to contracts to
be performed in California.
11. Waiver of Trial by Jury. ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY
CLAIM OR ACTION ARISING OUT OF THIS AGREEMENT OR IN CONNECTION HEREWITH IS
HEREBY WAIVED.
12. Descriptive Headings, Etc. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein. Unless the context of this Agreement
otherwise requires, references to "hereof," "herein," "hereby," "hereunder" and
similar terms shall refer to this entire Agreement.
13. Amendment. This Agreement may not be amended or supplemented except by an
instrument in writing signed by each of the parties hereto.
14. Severability. If any term or provision of this Agreement shall to any extent
be invalid or unenforceable, the remainder of this Agreement shall not be
affected thereby, and each term and provision of this Agreement shall be valid
and enforceable to the fullest extent permitted by law.
15. Complete Agreement; Counterparts. This Agreement constitutes the entire
agreement and supersedes all other agreements and understandings, both written
and oral, among the parties or any of them, with respect to the subject matter
hereof. This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same instrument.
16. Independent Termination. This Agreement is independent of any other
agreement and will terminate on its own terms.
******THE SIGNATURES OF THE PARTIES APPEAR ON THE NEXT PAGE******
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IN WITNESS WHEREOF, the parties have executed this EU Energy Principals'
Agreement on the above written date.
"Major Shareholders"
Xxxxxxx Xxxxxxx Xxxxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxxx /s/ Xxxxxxx Xxxxxx
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By:
Title:
Address: Address:
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Keeley Services Limited Laikadog Holdings Limited
/s/ Xxx Xxxx-Xxxx /s/ Xxx Xxxx-Xxxx
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By: Xxx Xxxx-Xxxx By: Xxx Xxxx-Xxxx
Title:Power of Attorney Title:Power of Attorney
Address: Address:
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Xxxxx Limited Wellsford Management Limited
/s/ Xxx Xxxx-Xxxx /s/ Xxx Xxxx-Xxxx
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By: Xxx Xxxx-Xxxx By: Xxx Xxxx-Xxxx
Title:Power of Attorney Title:Power of Attorney
________________________________________________
Address: Address:
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[signature page of the EU Energy Principals' Agreement]
COMPOSITE TECHNOLOGY CORPORATION
By:/s/ Xxxxxx Xxxxxxxx
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Xxxxxx Xxxxxxxx, Chief Executive Officer
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