STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (the "Agreement") is made and entered into
as of September ___, 2004, by and among Big Bend XI Investments, Ltd. ("Big
Bend"), Crestview Capital Master, LLC ("Crestview"), HLT FFT, LLC ("HLT"),
Midsummer Investment Ltd. ("Midsummer"), Islandia, L.P. ("Islandia"), Xxxxxxx
Xxxxxxx ("Xxxxxxx") and Sponsor Investments, LLC, a Texas limited liability
company ("Sponsor") (collectively, the "Stockholders").
RECITALS
WHEREAS, the Stockholders, each of which is listed on Exhibit A
attached hereto, have received or will receive shares of common stock of North
American Technologies Group, Inc., a Delaware corporation (the "Company") in
connection with a restructuring of the capitalization of the Company;
WHEREAS, in connection with such restructuring, Big Bend, Crestview,
HLT, Midsummer, Islandia and Xxxxxxx (the "Purchasing Group") have acquired or
will acquire shares of the Company's Common Stock from Avalanche Resources,
Ltd., a Delaware corporation ("Avalanche") and Xxxxx Xxxxxx ("Xxxxxx") pursuant
to that certain Common Stock Purchase Agreement dated November ___, 2004 (the
"Common Stock Purchase Agreement");
WHEREAS, Sponsor owns all of the Class B membership interests of TieTek
LLC ("TieTek"), a limited liability company that is a subsidiary of the Company,
and has the option to acquire up to 499 Class A membership interests of TieTek
(the "Class A Option");
WHEREAS, in connection with the restructuring, Sponsor will exchange
its Class B membership interests in TieTek and the Class A Option for shares of
the Company's Common Stock and a warrant to purchase shares of the Company's
Series CC Preferred Stock (the "Exchange") pursuant to that certain Exchange
Agreement dated November ___, 2004 (the "Exchange Agreement");
WHEREAS, Exhibit A attached hereto sets forth the total number of the
Company's equity securities that each Stockholder will beneficially own
immediately following the consummation of the Common Stock Purchase Agreement
and the Exchange Agreement and the transactions contemplated therein; and
WHEREAS, it is a condition to the consummation of the Exchange
Agreement and the Common Stock Purchase Agreement that the parties hereto
execute and deliver this Agreement.
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AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. REPRESENTATION ON COMPANY'S BOARD OF DIRECTORS.
The Company's Board of Directors shall consist of five (5) directors.
On all matters relating to the election of directors of the Company, the
Stockholders agree to vote all shares of Common Stock held by them (or to
consent pursuant to an action by written consent of the holders of Common Stock)
in favor of the election of two (2) nominees designated by the Purchasing Group
(the "Purchasing Group Nominees"), two (2) nominees designated by Sponsor (the
"Sponsor Nominees") and one (1) nominee designated by Sponsor and Big Bend (the
"Sponsor/Big Bend Nominee") to serve on the Company's Board of Directors and
each committee thereof (collectively, the "Designated Directors"). The initial
Purchasing Group Nominees shall be ________________ and _______________. The
initial Sponsor Nominees shall be __________________ and _______________. The
initial Sponsor/Big Bend Nominee shall be ______________. The Stockholders shall
take such action as is necessary to promptly elect such Designated Directors to
the Company's Board of Directors as provided in this Section 1. In the event
that any Designated Director is removed for cause pursuant to a vote of the
Company's Board of Directors, the replacement for such removed Designated
Director shall be designated in accordance with the provisions of this Section
1. Any other vote taken to fill any vacancy created by the resignation or death
of any Designated Director shall also be subject to the provisions of this
Section 1.
2. RECOVERY FOR BREACHES OF EXCHANGE AGREEMENT OR COMMON STOCK PURCHASE
AGREEMENT.
2.1 Sharing of Recovery. In the event that any Stockholder recovers any
funds, proceeds or collateral from either Avalanche or Xxxxxx for any breach of
either the Exchange Agreement or the Common Stock Purchase Agreement (any such
recovery referred to herein as a "Recovery"), then such recovering Stockholder
agrees to share such Recovery with all of the Stockholders in accordance with
the provisions of this Agreement.
2.2 Allocation of Recovery. The Stockholders agree to share any Recovery
among all Stockholders such that each Stockholder shall be entitled to that
percentage of any Recovery that is equal to the quotient of (A) the lesser of
(i) the number of shares of the Company's Common Stock acquired by such
Stockholder pursuant to the Exchange Agreement or the Common Stock Purchase
Agreement, including any shares of Common Stock underlying or acquired pursuant
to the exercise of any warrant to purchase shares of the Company's Common Stock
(a "Warrant") that is acquired pursuant to the Exchange Agreement, the Common
Stock Purchase Agreement or the transactions contemplated therein, and including
any shares of Common Stock issuable upon the conversion of any shares of
Preferred Stock acquired pursuant to the Exchange Agreement or the transactions
contemplated therein, or (ii) the total number of shares of the Company's Common
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Stock that is beneficially owned by such Stockholder at the time of the claim
that resulted in the Recovery, including any shares of Common Stock underlying
any Warrant and including any shares of Common Stock issuable upon the
conversion of any shares of Preferred Stock, and (B) the number of shares of the
Company's Common Stock acquired by all of the Stockholders pursuant to the
Exchange Agreement and the Common Stock Purchase Agreement, including any shares
of Common Stock underlying or acquired pursuant to the exercise of any Warrant
that is acquired pursuant to the Exchange Agreement, the Common Stock Purchase
Agreement or the transactions contemplated therein, and including any shares of
Common Stock issuable upon the conversion of any shares of Preferred Stock
acquired pursuant to the Exchange Agreement or the transactions contemplated
therein. The Stockholders acknowledge and agree that any shares of the Company's
Common Stock (or any shares of Common Stock underlying or acquired pursuant to
the exercise of any Warrant) that were not acquired pursuant to the Exchange
Agreement or the Common Stock Purchase Agreement shall not be counted for
purposes of determining the percentage of any Recovery that each Stockholder
shall be entitled to pursuant to this Agreement.
3. ASSIGNMENT, AMENDMENT AND WAIVER.
3.1 Assignment. No Stockholder may assign its rights under this Agreement,
except to a Permitted Transferee. For purposes of this Agreement, "Permitted
Transferee" means any Affiliate of a Stockholder so long as he, she or it has
agreed in writing to be bound by the terms of the Agreement to the same extent
as his, her or its transferor. For purposes of this Agreement, "Affiliate" shall
mean, with respect to any Stockholder, the following: (a) any person or entity
that directly, or indirectly through one or more intermediaries, Controls such
Stockholder, or (b) any person or entity that is Controlled by or is under
common Control with such Stockholder. For purposes of this Agreement, "Control"
and its derivatives "Controls" and "Controlled" shall mean possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of a person or entity, whether through the ownership of voting
securities, by contract or otherwise.
3.2 Amendment and Waiver. Any provision of this Agreement may be amended
and the observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively), only by an instrument in
writing signed by all of the Stockholders. Any amendment or waiver effected in
accordance with this Section 3.2 will be binding upon the parties, and each
permitted successor or assignee of the parties.
4. GENERAL PROVISIONS.
4.1 Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to the Stockholders at the address set forth in the
signature page to this Agreement, or to such other address as any party may
designate by written notice to the other parties in accordance with this
provision, and (b) deemed to have been given or made: if delivered in person,
immediately upon delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next
business day, one (1) business day after sending; and if by certified mail,
return receipt requested, five (5) days after mailing.
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4.2 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.
(a) The validity, interpretation and enforcement of this Agreement
and the Transaction Agreements and any dispute arising out of the relationship
between the parties hereto, whether in contract, tort, equity or otherwise,
shall be governed by the internal laws of the State of Texas (without giving
effect to principles of conflicts of law).
(b) The parties hereto irrevocably consent and submit to the
non-exclusive jurisdiction of any state court of the State of Texas and any
Federal Court located in the Southern District of Texas and waive any objection
based on venue or forum non conveniens with respect to any action instituted
therein arising under this Agreement or in any way connected with or related or
incidental to the dealings of the parties hereto in respect of this Agreement or
any of the transactions related hereto, in each case whether now existing or
hereafter arising, and whether in contract, tort, equity or otherwise, and agree
that any dispute with respect to any such matters shall be heard only in the
courts described above.
(c) The Stockholders hereby waive personal service of any and all
process upon them and consent that all such service of process may be made by
certified mail (return receipt requested) directed to their respective addresses
set forth on the signature pages hereof and service so made shall be deemed to
be completed five (5) days after the same shall have been so deposited in the
U.S. mails, or in any other manner provided under the rules of any such courts.
Within thirty (30) days after such service, the Stockholders shall appear in
answer to such process, failing which any non-appearing Stockholder shall be
deemed in default and judgment may be entered against the Stockholder for the
amount of the claim and other relief requested.
(d) THE PARTIES HERETO EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY
OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT
OR ANY OF THE OTHER TRANSACTION AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS
AGREEMENT OR THE TRANSACTIONS RELATED HERETO IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE
PARTIES HERETO EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND
THAT THE PARTIES HERETO MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
4.3 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
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4.4 Successors. Subject to the provisions of Section 3.1, this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
parties hereto and their respective successors and assigns.
4.5 Counterparts. This Agreement may be executed in counterparts, each of
which will be deemed an original, but all of which together will constitute one
and the same instrument.
4.6 Entire Agreement. This Agreement, any supplements hereto, and any
instruments or documents delivered or to be delivered in connection herewith
represents the entire agreement and understanding concerning the subject matter
hereof and thereof between the parties hereto, and supersede all other prior
agreements, understandings, negotiations and discussions, representations,
warranties, commitments, proposals, offers and contracts concerning the subject
matter hereof, whether oral or written. In the event of any inconsistency
between the terms of this Agreement and any schedule or exhibit hereto, the
terms of this Agreement shall govern.
4.7 Construction. All references to the plural herein shall also mean the
singular and to the singular shall also mean the plural unless the context
otherwise requires. All references to the Company and the Stockholders pursuant
to the definitions set forth in the preamble hereto, or to any other person
herein, shall include their respective successors and assigns. The words
"hereof", "herein", "hereunder", "this Agreement" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not any
particular provision of this Agreement and as this Agreement now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced. The words "include", "includes", "including" or similar words, when
used in this Agreement shall mean "including, without limitation".
4.8 Termination.
(a) The rights and obligations of the Stockholders under Section 1
of this Agreement shall terminate on May 31, 2005.
(b) The rights and obligations of any individual Stockholder under
Section 2.1 and Section 2.2 of this Agreement shall terminate on the first day
that such Stockholder and/or any of its Permitted Transferees no longer owns any
of the Company's Common Stock or any securities that are convertible into shares
of the Company's Common Stock. If the rights and obligations of any individual
Stockholder under Section 2.1 and Section 2.2 of this Agreement are terminated,
all other Stockholders will continue to be bound by Section 2.1 and Section 2.2
of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this STOCKHOLDERS
AGREEMENT as of the date set forth in the first paragraph hereof.
BIG BEND XI INVESTMENTS, LTD.
By: ___________________________
Name:
Title:
Address:
Facsimile: (____) ____-______
CRESTVIEW CAPITAL MASTER, LLC
By: ___________________________
Name:
Title:
Address:
Facsimile: (____) ____-______
HLT FFT, LLC
By: ___________________________
Name:
Title:
Address:
Facsimile: (____) ____-______
MIDSUMMER INVESTMENT LTD.
By: ___________________________
Name:
Title:
Address:
Facsimile: (____) ____-______
ISLANDIA, L.P.
By: ___________________________
Name:
Title:
Address:
Facsimile: (____) ____-______
XXXXXXX XXXXXXX
By: ___________________________
Name:
Title:
Address:
Facsimile: (____) ____-______
SPONSOR INVESTMENTS, LLC
By: ___________________________
Name:
Title:
Address:
Facsimile: (____) ____-______
Exhibit A
Stockholder Ownership of Company Securities
(Post-Closing of Common Stock Purchase Agreement and Exchange Agreement)
------------------------- ------------------- ----------------------- ------------------------- --------------------------
SHARES OF SHARES ISSUABLE UPON SHARES ISSUABLE ON SHARES ISSUABLE ON
NAME COMMON STOCK EXERCISE OF OPTIONS EXERCISE OF WARRANTS CONVERSION OF PREFERRED
HELD STOCK
------------------------- ------------------- ----------------------- ------------------------- --------------------------
Big Bend XI
Investments, Ltd.
------------------------- ------------------- ----------------------- ------------------------- --------------------------
Crestview Capital
Master, LLC
------------------------- ------------------- ----------------------- ------------------------- --------------------------
HLT FFT, LLC
------------------------- ------------------- ----------------------- ------------------------- --------------------------
Midsummer Investment
Ltd.
------------------------- ------------------- ----------------------- ------------------------- --------------------------
Islandia, L.P.
------------------------- ------------------- ----------------------- ------------------------- --------------------------
Xxxxxxx Xxxxxxx
------------------------- ------------------- ----------------------- ------------------------- --------------------------
Sponsor Investments, LLC
------------------------- ------------------- ----------------------- ------------------------- --------------------------
Each of the Stockholders hereby represents and warrants, as to itself only, that
the number of shares of the Company's Common Stock held by such person, or
issuable to such person upon conversion or exercise of preferred stock, options,
warrants, or any other convertible security, accurately sets forth such
Stockholder's beneficial ownership of the Company's securities after the closing
of the Common Stock Purchase Agreement and the Exchange Agreement and the
transactions contemplated therein, and immediately after the closing of the
Common Stock Purchase Agreement and the Exchange Agreement, such Stockholder
will not beneficially own, or have the right to acquire, any securities of the
Company other than as set forth above.
