Exhibit 10.32
LOCK-UP AGREEMENT
AGREEMENT, by and between IDM ENVIRONMENTAL CORP., a New Jersey corporation
(the "Company"), and the undersigned holders of warrants of the Company (the
"Holders").
W I T N E S S E T H :
WHEREAS, the Company previously sold to the Holders certain Promissory
Notes (the "Prior Notes") and Warrants (the "$3.00 Warrants");
WHEREAS, the Company desires to secure the commitment of the Holders to
"lock-up" the shares issuable in connection with the $3.00 Warrants for the
period described herein;
WHEREAS, the Holders are willing and able to "lock-up" the underlying
shares of common stock in exchange for the issuance to the Holders of the number
of new warrants (the "Lock-Up Warrants") set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and promises herein, the parties hereto agree as follows:
1. Lock-Up of Warrant Shares. The Holders agree that they will not,
without the prior written consent of the Company, sell, assign, transfer,
pledge, hypothecate or otherwise dispose of any of the shares of common
stock underlying the $3.00 Warrants (the "Warrant Shares") prior to July
30, 1998 (the "Lock-Up Period"). In order to enforce the "lock-up"
requirement under this paragraph 1, the Warrant Shares shall bear a legend
indicating that the Warrant Shares may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of before July 30, 1998 without
the prior written consent of the Company.
2. Issuance of New Warrants to Holders. As consideration for the
Holders' "lock-up" agreement pursuant to paragraph 1, the Company agrees to
issue to the Holders an aggregate of 1,270,000 warrants (the "Lock-Up
Warrants") which shall be substantially in the form attached hereto as
Exhibit A. The Lock-Up Warrants shall be allocated among and issued to the
Holders in the numbers set forth on the signature page.
3. Registration Rights. (a) The Company will use commercially
reasonable efforts to cause a registration statement (the "New Registration
Statement") covering the resale of the shares of common stock underlying
the Lock-Up Warrants (the "Lock-Up Warrant Shares") to be filed with the
Securities and Exchange Commission no later than April 17, 1998. The
Company will use commercially reasonable efforts to cause the New
Registration Statement to remain effective for three years. The New
Registration Statement shall be accompanied by blue sky clearances in such
states as Holders may reasonably request.
(b) The Company shall pay all expenses in connection with the
preparation and filing of the New Registration Statement, other than
the Holders' underwriting discounts, legal fees and other costs
incurred by the Holders on a voluntary basis.
(c) The Company shall supply to the Holders a reasonable number
of copies of the New Registration Statement, prospectuses and other
related materials prepared by the Company. The Company and the Holders
shall execute and deliver to each other indemnity agreements which are
conventional in registered offerings of the nature contemplated. The
Holders shall reasonably cooperate with the Company in the preparation
and filing of the New Registration Statement and appropriate
amendments thereto.
(d) Holders may transfer a proportionate part of its registration
rights to a limited number of permitted transferees of the Lock-Up
Warrants or portions thereof. A "permitted transferee" is a person to
whom a transfer is made in compliance with the provisions of paragraph
4 below.
(e) Once the New Registration Statement is effective, the Company
will issue UNLEGENDED shares of common stock (except as may be
required by paragraph 1 above) on exercise of the Lock-Up Warrants,
whether or not such shares are sold simultaneous with such exercise.
(f) Should the Holders from time to time or times give to the
Company notice that it has assigned the Lock-Up Warrants or any
portion thereof, the Company shall within three business days file a
supplement to the registration statement to reflect the name(s) of the
transferee(s) as a selling shareholder(s).
4. Securities Representations. (a) Holders represent and warrant that
they are acquiring the Lock-Up Warrants solely for investment, solely for
their own account and not with a view to or for the resale or distribution
thereof except as permitted under the New Registration Statement.
(b) Holders understand that they may sell or otherwise transfer
the Lock-Up Warrants or the Lock-Up Warrant Shares only if such
transaction is duly registered under the Securities Act of 1933, as
amended (the "1933 Act"), under the New Registration Statement or
otherwise, or if Holder shall have received the favorable opinion of
counsel to the Holder, which opinion shall be reasonably satisfactory
to counsel to the Company, to the effect that such sale or other
transfer may be made in the absence of registration under the 1933 Act
and registration or qualification in every applicable state. Subject
to the provisions of paragraph 3(e) above, the certificates
representing the aforesaid securities will be legended to reflect
these restrictions, and stop transfer instructions will apply. Holder
realizes that the Lock-Up Warrants and, prior to the effectiveness of
the New Registration Statement, the Lock-Up Warrant Shares are not
liquid investments.
(c) Holders have had the opportunity to discuss the Company's
affairs with the Company's officers and to review the Company's
filings with the Securities and Exchange Commission (the
"Commission"), including the currently effective registration
statement on Form S-3 (the "Prior Registration Statement") and the
Commission's accounting comments relating to the Prior Registration
Statement.
(d) Holders have not relied upon the advice of "Purchaser
Representatives" (as defined in Regulation D of the 0000 Xxx) in
evaluating the risks and merits of this investment. Holders have the
knowledge and experience to evaluate the Company and the risks and
merits relating thereto.
(e) Holders represent and warrant that they are "accredited
investors" as such term is defined in Rule 501 of Regulation D
promulgated pursuant to the 1933 Act. Holders acknowledge that Holders
are able to bear the economic risk of losing Holder's entire
investment in the Warrant Shares and the Lock-Up Warrant Shares and
understands that an investment in the Company involves substantial
risks; Holders have the power and authority to enter into this
agreement, and the execution and delivery of, and performance under,
this agreement shall not conflict with any rule, regulation, judgment
or agreement applicable to the Holders; and Holders have invested in
previous transactions involving restricted securities.
5. Prior Agreements Confirmed. The Company and the Holders confirm
their obligations under the agreements dated August 13, 1997 pursuant to
which the Company issued the $3.00 Warrants.
6. Legal Fees. The Company, upon execution of this Agreement by all
parties, shall pay legal fees in the amount of $15,000 to Xxxxx X. Xxxxxx,
counsel to the Holders.
7. Miscellaneous. (a) This Agreement may not be changed or terminated
except by written agreement among the parties hereto.
(b) This Agreement shall be binding on the parties hereto and on
their personal representatives and permitted assigns.
(c) This Agreement contains the entire agreement between the
parties hereto with respect to the subject matter hereof and
supersedes all prior arrangements or understandings between the
parties with respect thereto.
(d) This Agreement shall be enforceable by decrees of specific
performance (without posting bond or other security) as well as by
other available remedies.
(e) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New Jersey. The federal and
state courts sitting in the City of Newark, New Jersey shall have
exclusive jurisdiction over all matters relating to this Agreement.
Trial by jury is expressly waived.
(f) All notices, requests, service of process, consents, and
other communications under this Agreement shall be in writing and
shall be deemed to have been delivered (i) on the date personally
delivered, or (ii) one day after properly sent by a recognized
national overnight courier service, addressed to the respective
parties at their address set forth on the signature page for each
Holder and addressed to the Company at 000 Xxxxxxxxx Xxxxxx, Xxxxx
Xxxxx, Xxx Xxxxxx 00000, Attn: Chief Financial Officer, facsimile #
(000) 000-0000, or (iii) on the day transmitted by facsimile so long
as a confirmation copy is simultaneously forwarded by a recognized
national overnight courier service, in each case addressed to the
respective parties at their address set forth in this Agreement.
Either party may designate a different address by providing written
notice of such new address to the other party hereto as provided
above.
(g) Each party hereto shall be responsible for its own expenses
with regard to the negotiation and execution of this Agreement.
(h) The Company may waive, in writing, the lock-up requirements
of paragraph 1 with respect to part or all of the Warrant Shares on
any one or more occasions. Any such waiver shall be binding upon the
Company but shall not be construed as a waiver of any other lock-up
requirements or other provisions of this Agreement unless expressly
provided for in writing.
(i) If one or more of the provisions contained herein for any
reason shall be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not
affect any other provisions hereof, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and date set forth below.
Dated: IDM ENVIRONMENTAL CORP.
-----------, 1998
By:
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Title:
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HOLDER:
Name: No. of $3.00 Warrants:
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Address: No. of Lock-up Warrants:
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Fax No. Signature:
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