STOCKHOLDERS AGREEMENT
This
STOCKHOLDERS AGREEMENT (this “Agreement”)
dated
as of February 15, 2006, by and among Gecko Energy Technologies, Inc.,
a
Delaware corporation (the “Company”),
Millennium Cell Inc., a Delaware corporation (“MCEL”),
Xxxxxx X. Xxxxxx (“Xxxxxx”),
and
Xxxxxx X. Xxxxx (“Xxxxx,”
together with Xxxxxx, the “Founders”
and
collectively with MCEL and Xxxxxx, the “Stockholders”).
RECITALS
WHEREAS,
each of the Stockholders is the beneficial owner of the number of shares of
Common Stock, no par value, of the Company (“Common
Stock”)
set
forth on Exhibit A
attached
hereto with respect to such Stockholder;
WHEREAS,
the Company and MCEL have entered into that Joint Development Agreement dated
as
of the date hereof (the “Joint
Development Agreement”),
pursuant to which MCEL acquired shares of Common Stock and may acquire
additional shares of Common Stock in the future;
WHEREAS,
the execution and delivery of this Agreement by the parties hereto is a
condition to closing the transactions contemplated by the Joint Development
Agreement; and
WHEREAS,
the parties hereto desire to provide for the future voting of shares of the
Company’s capital
stock,
impose
certain restrictions upon the assignment, sale, transfer or other disposition
of
the Company’s capital stock and to set forth certain other rights and
obligations of the Company and the Stockholders with respect to the Company’s
capital stock.
NOW,
THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
parties hereto agree as follows:
DEFINITIONS
Defined
Terms. Capitalized terms used herein are defined as follows:
(a) “Acceptance
Notice” has the meaning set forth in Section 3.2(a).
(b) “Affiliate”
means, with respect to any specified Person, any other Person which directly
or
indirectly through one or more intermediaries controls, or is controlled by,
or
is under common control with, such specified Person (for the purposes of this
definition, “control” (including, with correlative meanings, the terms
“controlling,”“controlled by” and “under common control with”), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise).
(c) “Beneficially
Owned” has the meaning set forth in Rule 13d-3 promulgated under the Exchange
Act, except that paragraph (d)(1) of Rule 13d-3 shall not apply to this
Agreement.
(d) “Board
of
Directors” means the board of directors of the Company.
(e) “Business
Day” means any day other than a Saturday, Sunday or a day when banks in
New York City are authorized or required by law to be closed.
(f) “Certificate
of Incorporation” means the Certificate of Incorporation of the
Company.
(g) “Common
Stock” has the meaning set forth in the Recitals.
(h) “Company”
has the meaning set forth in the Preamble.
(i) “Convertible
Securities” means, collectively, any evidences of indebtedness, shares or other
securities of the Company directly or indirectly convertible into, or
exercisable or exchangeable for, Common Stock.
(j) “Drag-Along
Sale” has the meaning set forth in Section 5.1(a).
(k) “Drag-Along
Seller” has the meaning set forth in Section 5.1(a).
(l) “Drag-Along
Transfer Notice” has the meaning set forth in Section 5.1(b).
(m) “Exchange
Act” means the Securities Exchange Act of 1934, as amended, of the United States
and the rules and regulations promulgated thereunder.
(n) “First
Closing” has the meaning set forth in the Joint Development
Agreement.
(o) “Liens”
means any liens, claims, security interests, options, charges or other
encumbrances.
(p) “New
Securities” means the Company’s Common Stock, Convertible Securities and
Options, whether authorized now or in the future, and rights, options or
warrants to purchase such securities.
(q) “Options”
means any and all options, warrants or other similar rights to subscribe for,
purchase or otherwise directly or indirectly acquire Common Stock or Convertible
Securities.
(r) “Permitted
Issuances” means issuances by the Company of any of the following securities:
(i) securities issued in connection with any employee benefit plan which
has been approved by the Board of Directors, pursuant to which the Company’s
securities may be issued to any employee, officer, consultant or director for
services provided to the Company, subject to a maximum of three
percent (3%) of the then outstanding Common Stock of the Company;
(ii) securities issued upon the exercise or conversion of Options or
Convertible Securities; (iii) securities issued in connection with any
stock split, stock dividend, recapitalization or similar transaction by the
Company; (iv) Common Stock issued to MCEL pursuant to the Joint Development
Agreement; and
(v)
Options
to acquire any of the foregoing securities.
(s) “Permitted
Transferee” means a recipient of a Transfer permitted under Section
2.2.
(t) “Person”
means any individual, partnership, corporation, company, association, trust,
joint venture, limited liability company or other entity.
(u) “Preemptive
Rights Closing” has the meaning set forth in Section 6.3.
(v) “Preemptive
Rights Notice” has the meaning set forth in Section 6.1.
(w) “Proposed
Purchaser” has the meaning set forth in Section 3.1.
(x) “Proposed
Transferor” has the meaning set forth in Section 3.1.
(y) “Pro
Rata
Share” means, for purposes of Article VI, the percentage of New Securities being
issued by the Company in the Subject Issuance that each Subscribing Stockholder
shall be entitled to purchase, which percentage shall be determined by dividing
the number of Shares Beneficially Owned by such Subscribing Stockholder by
the
aggregate number of Shares of the Company outstanding immediately prior to
the
Subject Issuance.
(z) “Public
Offering” means the public offering pursuant to an effective registration
statement under the Securities Act, covering the offer and sale of Common Stock
for the account of the Company to the public.
(aa) “Qualified
IPO” means a firm commitment underwritten public offering pursuant to an
effective registration statement under the Securities Act, covering the offer
and sale of Common Stock for the account of the Company to the public with
aggregate gross proceeds (before deduction of expenses and underwriters’
commissions) to the Company of at least $30,000,000.
(bb) “ROFR
Offer” has the meaning set forth in Section 3.1.
(cc) “Sale
Percentage” has the meaning set forth in Section 3.1.
(dd) “Securities
Act” means the Securities Act of 1933, as amended, of the United States and the
rules and regulations promulgated thereunder.
(ee) “Shares”
means, with respect to any Stockholder, all shares of Common Stock now
Beneficially Owned or hereafter acquired by such Stockholder and all Convertible
Securities and Options now Beneficially Owned or hereafter acquired by such
Stockholder.
(ff) “Subject
Issuance” has the meaning set forth in Section 6.1.
(gg) “Subscribing
Stockholder” has the meaning set forth in Section 6.2.
(hh) “Tag-Along
Notice” has the meaning set forth in Section 4.1.
(ii) “Tag-Along
Sale” has the meaning set forth in Section 4.1.
(jj) “Transfer”
means any sale, assignment, pledge, encumbrance, transfer or other hypothecation
or disposition, whether directly, indirectly, voluntarily, involuntarily, by
operation of law, pursuant to judicial process or otherwise.
(kk) “Transfer
Shares” has the meaning set forth in Section 3.1.
(ll) "Voting
Shares" means all Shares Beneficially Owned by a Stockholder, together with
any
Shares or other voting securities of the Company that are acquired or
Beneficially Owned by such Stockholder after the date of this Agreement, whether
upon the exercise of Options, conversion of Convertible Securities or otherwise,
or over which such Stockholder has, directly or indirectly, the right to
vote.
TRANSFER
OF SHARES
Restrictions
on Transfer.
No
Stockholder nor any of their respective Permitted Transferees hereunder shall
Transfer, attempt to Transfer or permit to be Transferred, any Shares (or any
interest therein) Beneficially Owned now or in the future by such Stockholder
to
any other Person except as expressly provided in this Agreement and except
to
the extent not expressly restricted or limited by this Agreement. No Transfer
or
attempted Transfer in violation of this Agreement shall be made or recorded
on
the books and records of the Company and any such Transfer or attempted Transfer
shall be void ab initio
and of
no force or effect. Subject to the terms of this Agreement, the Stockholders
shall be entitled to exercise all rights of ownership of their respective
Shares.
Certain
Permitted Transfers. Notwithstanding the general prohibition on Transfers
contained in Section 2.1, the Company and the Stockholders acknowledge and
agree
that any of the following Transfers shall be deemed permitted Transfers, subject
to the requirements of Section 2.3 (and subject to any other contractual or
legal restrictions applicable to such Stockholder):
a
Transfer made in accordance with Articles III, IV or V;
a
Transfer made pursuant to a Public Offering;
a
Transfer made by a Stockholder without consideration (i) to an Affiliate, (ii)
if such Stockholder is a partnership, to its partners or former partners in
accordance with their partnership interests, (iii) if such Stockholder is a
corporation, to its stockholders in accordance with their interest in such
corporation, or (iv) if such Stockholder is a limited liability company, to
its
members or former members in accordance with their interest in such limited
liability company;
upon
the
death of any Stockholder who is a natural Person, a Transfer of shares pursuant
to a will or other instrument taking effect at death of such Stockholder or
pursuant to the applicable laws of descent and distribution to such
Stockholder’s estate, executors, administrators and personal representatives,
and then to such holder’s heirs, legatees or distributees; or
if
a
Stockholder is a natural Person, a Transfer for nominal consideration or as
a
gift (i) to such Stockholder’s spouse, parents, siblings or issue, (ii) to
a trust or custodial account, the beneficiaries of which include only the
Stockholder and/or such Stockholder’s spouse or issue, provided that such
Stockholder is trustee of the trust or custodial account and retains sole voting
power or control with respect to the Shares held in trust and the trust
documents provide for compliance with the provisions of this Agreement, or
(iii)
to a corporation or partnership, the stockholders or partners (as the case
may
be) of which include only the Stockholder and/or such Stockholder’s spouse or
issue; provided,
however,
in each
case that the Company shall be entitled to receive, upon request, a legal
opinion reasonably acceptable to it from the transferor (and obtained at the
transferor’s expense) to the effect that such Transfer is in compliance with
applicable federal and state securities laws.
Conditions
to Transfer.
No
Transfer permitted under the terms of this Article II shall be effective unless
and until the transferee of such Shares, if not already bound by the terms
of
this Agreement, shall agree in writing to become a party to, and to be bound
by
the terms and provisions of, this Agreement, and shall agree that the Shares
or
other securities acquired by it pursuant to any Transfer shall be subject to
the
terms of this Agreement. No Transfer of Shares shall be required to be
recognized by the Company unless and until the transferee has executed such
undertaking. Upon any Transfer of Shares in accordance with the provisions
of
this Agreement, the transferee of a Stockholder shall have the rights and
obligations of a Stockholder hereunder; provided, however, that no Transfer
by
any Stockholder to a Permitted Transferee shall relieve such Stockholder of
any
of its obligations hereunder.
RIGHT
OF FIRST REFUSAL
The
Offer.
If
at any
time a Founder or any of its Permitted Transferees (for purposes of Articles
III
and IV, the “Proposed
Transferor”)
shall
receive a bona fide written offer and desires to Transfer, directly or
indirectly, all or any part of the Shares then Beneficially Owned by such
Proposed Transferor to any Person (a “Proposed
Purchaser”)
(other
than a Transfer (a) pursuant to a Public Offering, (b) to a Permitted
Transferee, or (c) pursuant to Article IV or Article V), then
at least
thirty (30) days prior to consummating such Transfer, the Proposed Transferor
shall deliver a written notice (a “ROFR
Offer”)
to the
Company and MCEL specifying: (i) the number and class of Shares proposed
to
be Transferred by the Proposed Transferor (the “Transfer
Shares”),
(ii) the name and address of the Proposed Purchaser in such proposed
Transfer, (iii) the proposed consideration, the specific payment terms
(deferred, contingent or otherwise) and any other material terms and conditions
of such proposed Transfer, (iv) the fraction, expressed as a percentage,
determined by dividing the number of Shares to be purchased from the Proposed
Transferor in the Proposed Transfer by the total number of Shares Beneficially
Owned by the Proposed Transferor as of the date of such ROFR Offer (the
“Sale
Percentage”),
and
(v) that the Proposed Purchaser has been informed of the right of first
refusal rights in this Article III and the tag-along rights set forth
in
Article IV, and has agreed to comply with the terms hereof and thereof, subject
to the limitation set forth in Section 4.3.
Right
of
First Refusal. Upon
receipt of the ROFR Offer, MCEL shall have the right, exercisable upon written
notice thereof (an “Acceptance
Notice”)
to the
Proposed Transferor, with a copy to the Company, delivered within twenty (20)
days after its receipt of the ROFR Offer, to purchase all of the Transfer
Shares,
upon the
terms and subject to the conditions set forth in the ROFR Offer.
ROFR
Closing.
The
closing of the purchase of the Transfer Shares by MCEL, if any, pursuant to
this
Article III shall take place at the principal office of the Company (or such
other location as agreed by the relevant parties) within sixty (60) days
following the date of the ROFR Offer (or if such sixtieth (60th)
day is
not a Business Day, then on the next succeeding Business Day) or as soon as
practicable thereafter as agreed by the relevant parties. At each such closing,
the Proposed Transferor shall cause the Company to deliver to MCEL an original
certificate or certificates evidencing the Transfer Shares to be purchased
by
MCEL, free and clear of all Liens and duly endorsed for transfer, against
payment to the Proposed Transferor of the consideration therefor.
Form
of
Consideration. All payments for Transfer Shares pursuant to this Article III
shall be made in accordance with the payment terms specified in the ROFR Offer
(deferred, contingent or otherwise) and shall be made in cash, notwithstanding
any other payment terms offered to the Proposed Transferor by the Proposed
Purchaser. If the proposed consideration for any such sale specified in the
ROFR
Offer is to be paid in any property other than cash, the Company shall engage
and instruct a reputable independent accounting firm (not acting or representing
the Company in other matters at that time) to prepare a valuation of such
property. The costs of such accounting firm in respect of such valuation shall
be borne by the Company.
Sale
to
Third Party. If
MCEL
elects to purchase less than all of the Transfer Shares proposed to be offered
by the Proposed Transferor as set forth in the ROFR Offer, then MCEL’s right of
first refusal with respect to the Transfer Shares pursuant to this Article
III
shall cease and, subject to compliance with Article IV, the Proposed Transferor
may Transfer the Transfer Shares to the Proposed Purchaser within
ninety (90) days following the date of the ROFR Offer (or if such ninetieth
(90th)
day is
not a Business Day, then on the next succeeding Business Day), for a price
and
upon other terms no more favorable in the aggregate than those specified in
the
applicable ROFR Offer. The closing of such sale shall take place at the
principal office of the Company (or such other location mutually agreeable
to
the relevant parties). Promptly following any Transfer pursuant to this Section
3.5, the Proposed Transferor shall provide written notice to the Company and
MCEL of the consummation and terms thereof. If the Proposed Transferor has
not
consummated the Transfer of all of the Transfer Shares within such
ninety (90) day period, the Transfer Shares may not be Transferred by
the
Proposed Transferor without again complying with this Article III in
its
entirety. If the Proposed Transferor determines at any time within such
ninety (90) day period that the Transfer of all or any part of such
Transfer Shares at a price and on terms permitted by this Article III
is
impractical, such Proposed Transferor may terminate all attempts to Transfer
such Transfer Shares and recommence the procedures of this Article III
in
their entirety without waiting for the expiration of such ninety (90)
day
period by delivering written notice of such decision to the
Company.
TAG-ALONG
RIGHTS
Tag-Along
Notice.
If,
after complying with the right of first refusal procedures contained in
Article III, the Proposed Transferor wishes to proceed with the proposed
Transfer (other than a Transfer (a) pursuant to a Public Offering or (b)
pursuant to a tag-along right pursuant to this Article IV or (c) to a Permitted
Transferee) (a “Tag-Along
Sale”)
to the
Proposed Purchaser, the Proposed Transferor shall provide written notice (a
“Tag-Along
Notice”)
thereof to MCEL at least thirty (30) days prior to the proposed effective date
of such proposed Tag-Along Sale. The Tag-Along Notice shall include the proposed
effective date of the Tag-Along Sale and any terms and conditions of the
Tag-Along Sale to the extent that they differ in any material respect from
the
terms and conditions set forth in the ROFR Offer.
Tag-Along
Right.
If MCEL
desires to participate in a Tag-Along Sale upon
the
terms and subject to the conditions set forth in the ROFR Offer (as such terms
and conditions may have been modified
as
set
forth in the Tag-Along Notice),
MCEL
shall deliver a written notice to the Proposed Transferor, with a copy to the
Company, within twenty (20) days after its receipt of the Tag-Along Notice
from
the Proposed Transferor. Such notice shall specify the number of MCEL’s Shares
(not in any event to exceed the Sale Percentage with respect to Shares
Beneficially Owned by MCEL) which MCEL desires to have included in the Tag-Along
Sale.
Reduction
of Shares.
The
Proposed Transferor shall use commercially reasonable efforts to have included
in the proposed Tag-Along Sale the entire number of Shares which MCEL requested
to have included in the Tag-Along Sale. In the event that the Proposed Purchaser
is unwilling to purchase any or all of the Shares requested to be included
in
the Tag-Along Sale, then the number of Shares to be sold to such Proposed
Purchaser shall be allocated among the Proposed Transferor and MCEL in
proportion, as nearly as practicable, to the respective number of Shares which
each such selling Stockholder proposes to sell in the Tag-Along
Sale.
Tag-Along
Sale Terms.
In the
event that MCEL shall participate in a Tag-Along Sale, MCEL shall, at or prior
to the closing of any such proposed Tag-Along Sale, execute any purchase
agreement or other certificate, instrument or other agreement required by the
Proposed Purchaser to consummate the proposed Tag-Along Sale, subject to the
last sentence of this Section 4.4. MCEL shall not be required to comply
with Article III in respect of a Transfer pursuant to this Article IV. The
obligations of MCEL with respect to a Tag-Along Sale are subject to the
satisfaction of the following conditions (unless waived in writing): (a) the
Proposed Transferor and MCEL shall receive the same per Share amounts and the
same timing (deferred, contingent or otherwise) and forms of consideration
(and
in the same relative proportions if more than one form is received) under such
Tag-Along Sale; provided, however, that each such seller acknowledges that
appropriate reduction will be made, if required by applicable law, for
appropriate tax withholdings; (b) MCEL shall not be required to make
any
representations or warranties in connection with such Tag-Along Sale except
as
to (i) good title and the absence of Liens with respect to MCEL’s Shares being
sold, (ii) the valid existence, authority and good standing of MCEL,
(iii) the validity and binding effect (subject only to the usual and
customary qualifications) of (as against MCEL) any agreement entered into by
MCEL in connection with such Tag-Along Sale, and (iv) the absence of any
conflicts under the charter documents and material agreements of MCEL or
applicable law; and (c) MCEL shall not be required to provide any indemnities
in
connection with such Tag-Along Sale except for indemnities for losses resulting
from a breach of the above-stated representations and warranties.
Tag-Along
Closing. The
closing of a Tag-Along Sale pursuant to this Article IV shall take place at
the
time and place set forth in the Tag-Along Notice or such other time and place
as
the Proposed Transferor shall specify by notice to MCEL. At the closing of
such
Tag-Along Sale, MCEL shall deliver to the Proposed Transferor the certificate(s)
evidencing the Shares to be Transferred by MCEL, duly endorsed, or with stock
(or equivalent) powers duly endorsed for Transfer, free and clear of any Liens,
with any stock (or equivalent) transfer tax stamps affixed, against delivery
of
the applicable consideration therefor. If
the
Proposed Transferor has not completed the proposed Tag-Along Sale as of the
end
of the ninetieth (90th)
day (or
if such ninetieth (90th)
day is
not a Business Day, then on the next succeeding Business Day) following the
date
of the ROFR Offer, MCEL shall be released from any obligation to Transfer its
Shares under such Tag-Along Sale, the ROFR Notice and the Tag-Along Notice
shall
be null and void, and it shall be necessary for a separate ROFR Notice to be
furnished, and the terms and provisions of Article III and this Article IV
separately complied with, in order to consummate such Tag-Along Sale pursuant
to
this Article IV.
DRAG-ALONG
RIGHTS
Drag-Along
Right; Notice.
(a) If,
at
any time following the date on which (and thereafter for so long as) MCEL
Beneficially Owns fifty percent (50%) or more of the Company’s then issued and
outstanding shares of voting capital stock, MCEL receives a bona fide written
offer (a “Drag-Along
Sale Offer”)
from a
Proposed Purchaser other than a Permitted Transferee, and desires to Transfer
all Shares Beneficially Owned by MCEL to such Proposed Purchaser, in a single
transaction or a series of related transactions (a “Drag-Along
Sale”),
MCEL
may, at its option, require that each other Stockholder (each, a “Drag-Along
Seller”)
Transfer all of their respective Shares to such Proposed Purchaser upon the
terms and subject to the conditions of the Drag-Along Sale. Notwithstanding
the
foregoing, if the price per Share set forth in such Drag-Along Sale Offer is
equal to or less than the purchase price per Share paid by MCEL for such Share
under the Joint Development Agreement, and MCEL desires to Transfer its Shares
to such Proposed Purchaser, then MCEL shall provide written notice of such
offer
to each other Stockholder. Upon receipt of such Drag-Along Sale Offer, the
other
Stockholders shall have a right, exercisable upon written notice to MCEL
delivered within twenty (20) days after its receipt of the Drag-Along
Sale
Offer from MCEL, to purchase all, but not less than all, of the Shares proposed
to be sold in such Drag-Along Sale.
(b) If
the
price per Share set forth in the Drag-Along Sale Offer is greater than the
purchase price per Share paid by MCEL for such Share under the Joint Development
Agreement, MCEL shall provide written notice (the “Drag-Along
Transfer Notice”)
of any
proposed Drag-Along Sale to the Company and each other Stockholder at least
thirty (30) days prior to the proposed effective date of the Drag-Along Sale.
The Drag-Along Transfer Notice shall include (i) the number of Shares
proposed to be Transferred by MCEL, (ii) the name and address of the Proposed
Purchaser in such Drag-Along Sale, (iii) the proposed consideration
to be
paid by the Proposed Purchaser with respect to the Shares in such Drag-Along
Sale, (iv) the other material terms and conditions of such proposed
Drag-Along Sale, (v) the proposed effective date of the proposed Drag-Along
Sale and (vi) that the Proposed Purchaser has been informed of the
drag-along rights set forth in this Article V, and has agreed to purchase Shares
Beneficially Owned by other Stockholders in accordance with the terms
hereof.
Drag-Along
Sale Terms.
In the
event that a Drag-Along Seller shall be required to Transfer its Shares in
a
Drag-Along Sale, such Drag-Along Seller shall, at or prior to the closing of
any
such proposed Drag-Along Sale, execute any purchase agreement or other
certificate, instrument or other agreement required by the Proposed Purchaser
to
consummate the proposed Drag-Along Sale, subject to the last sentence of this
Section 5.2. The Drag-Along Sellers shall not be required to comply
with
Article III in respect of a Transfer pursuant to this Article V. The
obligations of the Drag-Along Sellers with respect to a Drag-Along Sale are
subject to the satisfaction to the following conditions (unless waived in
writing): (a) MCEL and all Drag-Along Sellers shall receive the same per Share
amounts and the same timing (deferred, contingent or otherwise) and forms of
consideration (and in the same relative proportions if more than one form is
received) under such Drag-Along Sale; provided, however, that each such seller
acknowledges that appropriate reduction will be made, if required by applicable
law, for appropriate tax withholdings; (b) no Drag-Along Seller
participating in a Drag-Along Sale shall be required to make any representations
or warranties in connection with such Drag-Along Sale except as to (i) good
title and the absence of Liens with respect to such Drag-Along Seller’s Shares
being sold, (ii) the validity and binding effect (subject only to the
usual
and customary qualifications) of (as against such Drag-Along Seller) any
agreement entered into by such Drag-Along Seller in connection with such
Drag-Along Sale, and (iii) the absence of any conflicts under any material
agreements of such Drag-Along Seller or applicable law; and (c) no Drag-Along
Seller shall be required to provide any indemnities in connection with such
Drag-Along Sale except for indemnities for losses resulting from a breach of
the
above-stated representations and warranties.
Drag-Along
Closing. The closing of a Drag-Along Sale pursuant to this Article V
shall
take place at the time and place set forth in the Drag-Along Transfer Notice
or
such other time and place as MCEL shall specify by notice to each Drag-Along
Seller. At the closing of such Drag-Along Sale, each Drag-Along Seller
participating in such Drag-Along Sale shall deliver to MCEL the certificate(s)
evidencing the Shares to be Transferred by such Drag-Along Seller, duly
endorsed, or with stock (or equivalent) powers duly endorsed, for Transfer
with
signature guaranteed, free and clear of any Liens, with any stock (or
equivalent) transfer tax stamps affixed, against delivery of the applicable
consideration therefor. If MCEL has not completed the proposed Drag-Along Sale
as of the end of the one hundred eightieth (180th)
day (or
if such one hundred eightieth (180th)
day is
not a Business Day, then on the next succeeding Business Day) following the
date
of the Drag-Along Transfer Notice, each Drag-Along Seller with respect to such
Drag-Along Sale shall be released from any obligation to Transfer its Shares
under such Drag-Along Sale, the Drag-Along Transfer Notice shall be null and
void, and it shall be necessary for a separate Drag-Along Transfer Notice to
be
furnished, and the terms and provisions of this Article V separately
complied with, in order to consummate such Drag-Along Sale pursuant to this
Article V, unless the failure to complete such proposed Drag-Along Sale
resulted from any failure by any Drag-Along Seller to comply with the terms
of
this Article V.
Business
Combinations. In the event that the Drag-Along Sale is consummated through
a
business combination (whether by way of merger, recapitalization, sale of assets
or otherwise), then each Drag-Along Seller shall, if requested by the Company
(i) vote for, consent to and/or not raise objections against such Drag-Along
Sale, (ii) waive (to the extent applicable) any dissenters, appraisal rights
or
similar rights in connection with a merger or consolidation and (iii) take
all
necessary and desirable actions in connection with the consummation of the
Drag-Along Sale as reasonably requested by the Company, including, without
limitation, exercising any Options or conversion privileges.
PREEMPTIVE
RIGHTS
Preemptive
Rights Notice.
In
the
event that the Company proposes to undertake an issuance or sale, or enter
into
any agreements providing for the issuance or sale, of any New Securities other
than Permitted Issuances (each a “Subject
Issuance”),
the
Company shall deliver a written notice (the “Preemptive
Rights Notice”)
of the
principal terms thereof to each Stockholder at least thirty (30) days prior
to
the proposed Subject Issuance. The Preemptive Rights Notice shall specify the
number and class of New Securities to be issued in the Subject Issuance, the
proposed consideration with respect to such proposed Subject Issuance and any
other material terms and conditions of such proposed Subject
Issuance.
Preemptive
Rights.
Each
Stockholder that wishes to subscribe for up to such Stockholder’s Pro Rata Share
of New Securities (each, a “Subscribing
Stockholder”),
upon
the same economic terms and subject to the conditions set forth in the
Preemptive Rights Notice, shall deliver written notice to the Company within
twenty (20) days of the date of the Preemptive Rights Notice, which notice
shall
specify the number of New Securities (not to exceed such Subscribing
Stockholder’s Pro Rata Share thereof) that such Subscribing Stockholder desires
to acquire in the Subject Issuance.
Preemptive
Rights Closing. The closing (the “Preemptive
Rights Closing”)
of the
purchase by the Subscribing Stockholders of New Securities pursuant to this
Article VI shall take place at the principal office of the Company either,
at the option of the Company, (a) on the thirtieth (30th)
day
after the date of the Preemptive Rights Notice (or if such thirtieth
(30th)
day is
not a Business Day, then on the next succeeding Business Day) or
(b) simultaneously with (and, if specified by the Company, as a part
of)
the closing of, the Subject Issuance. At the Preemptive Rights Closing, the
Company shall deliver to each Subscribing Stockholder an original certificate
or
other appropriate instrument evidencing the New Securities to be purchased
by
such Subscribing Stockholder and registered in the name of such Subscribing
Stockholder or its designated nominee(s), against payment to the Company of
the
appropriate consideration therefor. The New Securities issued pursuant to this
Article VI shall be duly authorized, fully paid and non-assessable,
not
subject to any Lien and freely transferable subject only to compliance with
any
applicable securities laws.
Form
of
Consideration.
All
payments for New Securities pursuant to this Article VI shall be made
in
accordance with the payment terms specified in the Preemptive Rights Notice
(deferred, contingent or otherwise) and shall be made in cash, notwithstanding
any other payment terms offered to the Company by the proposed subscriber.
If
the proposed consideration for any such sale specified in the Preemptive Rights
Notice is to be paid in any property other than cash, the Company shall engage
and instruct a reputable independent accounting firm (not acting or representing
the Company in other matters at that time) to prepare a valuation of such
property. The costs of such accounting firm in respect of such valuation shall
be borne by the Company.
Time
Limitation.
If, as
of the end of the one hundred twentieth (120th)
day (or
if such one hundred twentieth (120th)
day is
not a Business Day, then on the next succeeding Business Day) following the
date
of the Preemptive Rights Notice, the Company has not completed the Subject
Issuance, each Subscribing Stockholder shall be released from any obligations
with respect to such Subject Issuance, the Preemptive Rights Notice shall be
null and void, and it shall be necessary for a separate Preemptive Rights Notice
to be furnished, and the terms and provisions of this Article VI separately
complied with, in order to consummate such Subject Issuance pursuant to this
Article VI. If the Company determines at any time within such one hundred
twentieth (120th)
day
period that the issuance of all or any part of such New Securities at a price
and on terms permitted by this Article VI is impractical, the Company may
terminate all attempts to complete such Subject Issuance and recommence the
procedures of this Article VI in their entirety without waiting for
the
expiration of such one hundred twentieth (120th)
day
period.
COVENANTS
Additional
Stockholders.
In the
event that the Company issues any securities after the date hereof (each an
“Additional
Issuance”),
no
Additional Issuance shall be effective unless and until the recipient of such
securities, if not already bound by the terms of this Agreement, shall agree
in
writing to become a party to, and to be bound by the terms and provisions of,
this Agreement, and shall agree that the securities acquired by it pursuant
to
any Additional Issuance shall be subject to the terms of this Agreement. Upon
any Additional Issuance of securities in accordance with the provisions of
this
Section, the recipient of such securities shall have the rights and obligations
of a Stockholder hereunder as such rights and obligations exist of the date
hereof. The Company shall update Exhibit A from time to time to reflect
the
admission of any additional Stockholder and any change in the number of Shares
held by any existing Stockholder. The Company shall provide each Stockholder
with a copy of each such updated Exhibit A.
Termination
of Buy-Sell Agreement. The Company, Xxxxxx and Xxxxx agree that, effective
on
and as of the date hereof, without the need of any further action on the part
of
any such party, the Buy-Sell Agreement dated April 5, 2004 among the Company,
Xxxxxx and Xxxxx shall terminate and be of no further force and effect,
notwithstanding any provision to the contrary contained in such agreement,
and
neither the Company, Xxxxxx nor Xxxxx shall have any further liability or
obligation with respect to such agreement or the termination
thereof.
BOARD
REPRESENTATION; VOTING AGREEMENT
Board
Representation.
(a)
Upon the occurrence of the First Closing, MCEL will be entitled to designate
one (1) director (the “MCEL
Designee”)
to the
three-member Board of Directors. The initial members of the Board of Directors
following the First Closing will consist of Xxxxx, Xxxxxx and the MCEL Designee.
The number of directors on the Board of Directors will remain at three
(3)
unless
otherwise agreed in writing by MCEL and the Founders (so long as MCEL and each
such Founder continue to own Shares); provided, however, that if at any time
MCEL’s percentage ownership of the outstanding equity of the Company exceeds
sixty percent (60%), then the number of directors serving on the Board
of
Directors will be increased to five (5), consisting of Xxxxx, Xxxxxx
and
three (3) MCEL Designees.
(b) At
all
times during the term of the Joint Development Agreement, (i) Xxxxx
and
Xxxxxx will be directors on the Board of Directors, and (ii) MCEL’s
representation on the Board of Directors will correspond, as closely as
possible, to MCEL’s percentage ownership of the outstanding equity of the
Company. So long as MCEL Beneficially Owns a percentage ownership of the
outstanding equity of the Company of five percent (5%) or more, MCEL
shall
be entitled to designate one (1) director to the Board of
Directors.
Voting
Agreement.
The
Stockholders agree to vote their respective Shares and take all such lawful
actions necessary to implement the terms set forth in Section 8.1. The
Stockholders will vote for any amendment or change to the Certificate of
Incorporation and/or the Bylaws of the Company necessary at all times to ensure
that such documents remain consistent with the terms of
Section 8.1.
MISCELLANEOUS
Expiration.
The
rights granted and the restrictions provided under Articles II, III,
IV, V
and VI of this Agreement shall expire upon the closing of a Qualified
IPO.
Tolling.
All time periods specified herein are subject to reasonable extension for the
purpose of complying with requirements of applicable law or regulation or the
rules of any applicable securities exchange or interdealer quotation
system.
Stock
Certificate Legend. The Company shall use commercially reasonable efforts to
cause each certificate representing Shares to bear a legend substantially
similar to the following legend, in addition to any other legends required
under
the Securities Act and other applicable securities laws or deemed appropriate
or
necessary by the Company:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
PROVISIONS OF A STOCKHOLDERS AGREEMENT AMONG THE COMPANY AND ITS STOCKHOLDERS.
A
COPY OF SUCH STOCKHOLDERS AGREEMENT IS ON FILE AT THE COMPANY’S PRINCIPAL PLACE
OF BUSINESS, AND THE COMPANY WILL FURNISH A COPY OF SUCH AGREEMENT TO THE RECORD
HOLDER OF THIS CERTIFICATE, WITHOUT CHARGE, UPON WRITTEN REQUEST TO THE COMPANY
AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE.
Specific
Performance.
The
parties hereto recognize that the Company’s Shares cannot be readily purchased
or sold on the open market and that it is to the benefit of the Company and
the
Stockholders that this Agreement be carried out; and for those and other
relevant reasons, the parties hereto would be irreparably damaged if this
Agreement is not specifically enforced in the event of a breach hereof. Upon
any
breach or threatened breach of this Agreement, the parties hereto agree that
monetary damages shall be inadequate for any such breach and that, therefore,
such rights and obligations, and this Agreement, shall be enforceable by
specific performance or other equitable remedies. The remedy of specific
performance shall not be an exclusive remedy, but shall be cumulative of all
other rights and remedies of the parties hereto at law, in equity or under
this
Agreement.
Notices.
Any notices or other communications required or permitted to be given hereunder
shall be in writing and shall be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); (iii) one Business Day after
deposit with an overnight courier service, or (iv) if sent by registered
or
certified mail, return receipt requested, three (3) Business Days after
dispatch, in each case properly addressed to the party to receive the same
as
follows:
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(a)
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if
to the Company:
Gecko
Energy Technologies, Inc.
Xxx
Xxxxxxxxxx Xxx Xxxx
Xxxxxxxxx,
XX 00000
Facsimile: (000)
000-0000
Attention: President
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(b)
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if
to a Stockholder:
at
the address for such Stockholder set forth on Exhibit
A
attached hereto.
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Binding
Effect.
This
Agreement, including, the rights and conditions contained herein in connection
with disposition of Shares, shall be binding upon and inure to the benefit
of
the parties hereto, together with their respective heirs, executors,
administrators, legal representatives, successors and assigns permitted under
this Agreement.
Governing
Law. This Agreement shall be governed by and construed and enforced in
accordance with the substantive laws of the State of New York, without giving
effect to the conflict of law principles thereof. Each party agrees that all
legal proceedings concerning the interpretations, enforcement and defense of
the
transactions contemplated by this Agreement (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York, Borough of Manhattan. Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, Borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect
to
the enforcement of any of this Agreement), and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is
not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is improper. Nothing contained herein shall be deemed to limit
in
any way any right to serve process in any manner permitted by law. Each party
hereto hereby irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding arising out
of
or relating to this Agreement or the transactions contemplated hereby. If any
party shall commence an action or proceeding to enforce any provisions of this
Agreement, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its reasonable attorneys fees and other
reasonable costs and expenses incurred with the investigation, preparation
and
prosecution of such action or proceeding.
No
Waiver. No failure or delay on the part of any party to exercise any right,
power or remedy shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or remedy preclude any other or further
exercise thereof or of any other right, power, or remedy. The parties hereto
may
by written agreement extend the time for or waive or modify the performance
of
any of the obligations or other acts of the parties hereto.
Severability.
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under applicable law, such provisions shall be fully severable
and
this Agreement shall be construed and enforced as if such illegal, invalid
or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
herefrom.
Entire
Agreement. This Agreement embodies the entire agreement and understanding
between or among the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings between or among the
parties hereto relating to the subject matter hereof.
Amendments;
Assignability. This Agreement shall not be amended, modified or supplemented
except by a written agreement signed by the Company and the holders of a
majority of the outstanding Shares Beneficially Owned by the Stockholders (and
any such amendment, modification or supplement signed by the holders of a
majority of the outstanding Shares Beneficially Owned by such Stockholders
shall
be binding on all such Stockholders). Except as provided herein, the respective
rights and obligations of each party hereto shall not be assignable by any
party
without the prior written consent of the other parties, and any purported
assignment without such prior written consent shall be void and of no force
and
effect.
No
Third
Party Beneficiaries. Nothing in this Agreement, express or implied, is intended
to confer on any Person, other than the parties hereto and their respective
successors and permitted assigns, any rights or remedies under or by virtue
of
this Agreement and no Person shall assert any rights as a third party
beneficiary hereunder.
Captions.
The captions of this Agreement are for convenience of reference only and shall
not limit or otherwise affect any of the terms or provisions
hereof.
Counterparts.
This Agreement may be executed in counterparts, each of which shall be deemed
an
original, but all of which together shall constitute one instrument. The parties
hereto confirm that any facsimile copy of another party's executed counterpart
of this Agreement (or its signature page thereof) will be deemed to be an
executed original thereof.
IN
WITNESS WHEREOF,
each
Stockholder and the Company have caused this Stockholders Agreement to be
duly
executed as of the date first written above.
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GECKO
ENERGY TECHNOLOGIES, INC.
By:
/s/Xxxxxx X. Xxxxxx
Name:
Xxxxxx X. Xxxxxx
Title:
President
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By:
/s/Xxxx Xxxxxx
Name: Xxxx
Xxxxxx
Title: President
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/s/Xxxxxx
X. Xxxxxx
Xxxxxx
X. Xxxxxx
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/s/Xxxxxx
X. Xxxxx
Xxxxxx
X. Xxxxx
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