Form of] STANDSTILL AGREEMENT
Exhibit
10.6
[Form
of]
THIS
STANDSTILL AGREEMENT (this "Agreement") is entered into as of _______________
___,
2005 (the "Effective Date") by and between Millennium Cell Inc., a
Delaware corporation (the "Company") and The Dow Chemical Company, a Delaware
corporation (“Dow”) together with its Affiliates, successors and
assigns,
the "Restricted Party").
The foregoing parties
to this Agreement are each a "Party" and collectively the "Parties". Capitalized
terms not defined herein shall have the meanings ascribed to such terms
in the Stock Purchase Agreement (as defined below).
BACKGROUND
STATEMENT
Pursuant
to that certain Stock Purchase Agreement (the "Stock Purchase Agreement") dated
as of February 27, 2005 between the Company and Dow, executed simultaneously
herewith, Dow will obtain the right to receive shares of the Company’s Series A
Preferred Stock, Series B Preferred Stock and/or warrants to purchase shares of
the Company's Common Stock.
The Company has required, as a material inducement to its consummation of the
transactions contemplated by the Stock Purchase Agreement, that Dow
enter into this Agreement, whereby Dow agrees
to limit future acquisitions by the Restricted Party of the capital stock of the
Company for the time periods and on the terms set forth herein.
STATEMENT
OF AGREEMENT
NOW,
THEREFORE, in consideration of the mutual representations, warranties, covenants
and agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the Parties agree as follows:
ARTICLE
I.
DEFINED
TERMS
1.1
Defined
Terms.
Capitalized terms used in this Agreement shall have the meanings ascribed to
such terms in the Stock Purchase Agreement. In addition, as used in this
Agreement the following terms shall have
the following meanings:
"Company
Voting Securities"
means, collectively, the Common Stock, any other class of capital stock of the
Company issued and outstanding, and any other securities, warrants or options or
rights of any nature (whether or not issued by the Company) that are convertible
into, exchangeable for, or exercisable for the purchase of, or otherwise give
the holder thereof any rights in respect of any class or series of Company
securities that is entitled to vote generally for the election of
directors.
"Exchange
Act"
means the Securities Exchange Act of 1934, as amended.
"Transfer"
means, as a noun, any transfer, sale, assignment, exchange, charge, pledge,
gift, hypothecation, conveyance, encumbrance or other disposition whether direct
or indirect, voluntary or involuntary, by operation of Applicable Law or
otherwise and, as a verb, directly or indirectly, voluntarily or involuntarily,
by operation of Applicable Law or otherwise, to transfer, sell, assign,
exchange, charge, pledge, give, hypothecate, convey, encumber or otherwise
dispose of.
ARTICLE
II.
REPRESENTATIONS
AND WARRANTIES
Each
of the Parties hereby represents and warrants with respect to itself only
that:
(a)
it
has the corporate power and authority to enter into this Agreement and to
perform its obligations hereunder;
(b)
this
Agreement constitutes its valid and legally binding obligation, enforceable in
accordance with the terms hereof except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of
general application relating to or affecting the enforcement of creditors’
rights generally and (b) as limited by laws relating to the availability of
specific performance, injunctive relief, or other equitable remedies;
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(c)
neither
the execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby by it, will (i) violate any Applicable Law or
any provision of its certificate of incorporation, bylaws or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party thereto the right to accelerate, terminate, modify, or
cancel, or require any notice under any material agreement, contract, lease,
license, instrument or other material arrangement to which it is a party or by
which it is bound or to which any of its material assets is subject (or result
in the imposition of any lien, security interest or other encumbrance upon any
of its assets);
(d)
it
need not give any notice to, make any filing with, or obtain any consent or
authorization of any Person not already been obtained in order to consummate the
transactions contemplated by this Agreement; and
(e)
in
the case of Dow, except for agreements expressly contemplated in, or entered
into for the purpose of consummating the transactions contemplated in, the Stock
Purchase Agreement, Dow does not currently have any agreement, arrangement or
understanding with any other Person or group with respect to acquiring, holding,
voting or disposing of Company Voting Securities.
ARTICLE
III.
STANDSTILL
3.1
Standstill
Periods.
(a)
During
the period commencing on the date hereof and ending on the later of the third
anniversary of the Effective Date or the first anniversary of the date of the
termination by Dow other than for Cause (as defined in the Joint Development
Agreement) of the Joint Development Agreement pursuant to the terms thereof (the
"Acquisition Standstill Period"), except as specifically approved in writing in
advance by the Board of Directors of the Company, the Restricted Party shall not
in any manner, directly or indirectly, either individually or acting in concert
with any Person or Persons publicly or privately propose, encourage, solicit or
participate in the solicitation of any Person to acquire, offer to acquire or
agree to acquire, by merger, tender offer, purchase or otherwise, the Company or
more than 50% of the outstanding capital stock or assets of the
Company.
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(b)
During
the period commencing on the date hereof and ending on the first anniversary of
the Effective Date (the “Solicitation Standstill Period”), except as
specifically approved in writing in advance by the Board of Directors of the
Company, the Restricted Party shall not, in any manner, directly or indirectly,
either individually or acting in concert with any Person or Persons make or
participate in any "solicitation" of “proxies” (as such terms are defined or
used in Regulation 14A under the Exchange Act) in opposition to any
recommendation of the Board of Directors of the Company with respect to the
Company Voting Securities or initiate or become a participant in any shareholder
proposal or "election contest" (as such term is defined or used in Rule 14 all
under the Exchange Act) with respect to the Company or any of its successors or
induce others to initiate the same, or otherwise seek to advise or influence any
Person with respect to the voting of any voting securities of the Company or any
of its successors.
(c)
Notwithstanding
the foregoing, if Dow terminates the Joint Development Agreement for Cause (an
“Early Termination Event”), then the Acquisition Standstill Period and the
Solicitation Standstill Period shall be terminated immediately upon the
occurrence of the Early Termination Event without any further action by the
Parties.
3.2
Limitation.
Notwithstanding anything herein to the contrary, the Restricted Party will not
be deemed to be in breach or violation of this Agreement if the Restricted Party
(a) acquires another stockholder of the Company or any voting interests in
another stockholder of the Company; (b) transfers or tenders any Company Voting
Securities to any third party which is not an Affiliate of Dow, including,
without limitation, in connection with a merger, tender offer, or purchase by
such third party of the Company or more than 50% of the outstanding capital
stock or assets of the Company or (c) votes Company Voting Securities in any
manner, including, without limitation, in any “solicitation” of “proxies”
initiated by any third party which is not an Affiliate of Dow.
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ARTICLE
IV.
MISCELLANEOUS
4.1
Remedies.
Each of the Parties acknowledges and agrees that (a) the provisions of this
Agreement are reasonable and necessary to protect the proper and legitimate
interests of the Parties and (b) the Parties may be irreparably damaged in the
event any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that each of the Parties shall be entitled to preliminary and permanent
injunctive relief to prevent breaches of the provisions of this Agreement by any
other Party without the necessity of proving actual damages or of posting any
bond, and to enforce specifically the terms and provisions hereof and thereof in
any court of the United States or any state thereof having jurisdiction, which
rights shall be cumulative and in addition to any other remedy to which the
Parties may be entitled hereunder or at law or equity.
4.2
No
Third-Party Beneficiaries.
This Agreement shall not confer any rights or remedies upon any Person other
than the Parties, their respective successors and permitted transferees and
assigns.
4.3
Entire
Agreement.
This Agreement (including the documents referred to herein) constitutes the
entire agreement among the Parties with respect to the subject matter hereof and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they relate in any way to the
subject matter hereof.
4.4
Succession
and Assignment.
This Agreement shall be binding upon and inure to the benefit of the Parties and
their respective successors and permitted transferees and assigns. No Party may
assign either this Agreement or any of its rights, interests or obligations
hereunder without the prior written approval of the other Parties.
4.5
Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original but all of which together will 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.
4.6
Governing
Law.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Delaware, without regard to its principles of conflict of
laws.
4.7
Notices.
All notices and other communications given or made pursuant to this Agreement
shall be in writing and shall be deemed effectively given: (a) upon personal
delivery to the Party to be notified, (b) when sent by confirmed electronic mail
or facsimile if sent during normal business hours of the recipient, and if not
so confirmed, then on the next Business Day, (c) five (5) days after having been
sent by registered or certified mail, return receipt requested, postage prepaid,
or (d) one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All
communications shall be sent to the address or facsimile number set forth below
or to such other address or facsimile number as delivered by notice to the other
in accordance with this Section
4.7:
If
to the Company:
▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
President
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
With
a copy to:
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇
▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇,
▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile:
202.887.0689
If
to Dow:
The
Dow Chemical Company
▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Director, Natural Resources Platform, Dow Ventures
Facsimile:
989.638.7133
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With
a copy to:
The
Dow Chemical Company
▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Business Counsel, Dow Ventures
Facsimile:
989.636.7594
King
& Spalding LLP
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇,
▇.▇. ▇▇▇▇▇
Attention:
▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile:
202.626.3737
4.8
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.
4.9
Dispute
Resolution.
Any unresolved controversy or claim arising out of or relating to this
Agreement, except as otherwise provided in this Agreement, shall be submitted to
arbitration by one arbitrator mutually agreed upon by the Parties, and if no
agreement can be reached within 30 days after names of potential arbitrators
have been proposed by the American Arbitration Association (the “AAA”), then by one arbitrator having reasonable experience in
corporate finance transactions of the type provided for in this Agreement and
who is chosen by the AAA. The arbitration shall take place in the District of
Columbia, in accordance with the AAA rules then in effect, and judgment upon any
award rendered in such arbitration will be binding and may be entered in any
court having jurisdiction thereof. There shall be limited discovery prior to the
arbitration hearing as follows: (a) exchange of witness lists and copies of
documentary evidence and documents relating to or arising out of the issues to
be arbitrated, (b) depositions of all Party witnesses and (c) such other
depositions as may be allowed by the arbitrators upon a showing of good cause.
Depositions shall be conducted in accordance with the Federal Rules of Civil
Procedure, the arbitrator shall be required to provide in writing to the parties
the basis for the award or order of such arbitrator, and a court reporter shall
record all hearings, with such record constituting the official transcript of
such proceedings. The arbitrator shall be awarded reasonable attorney’s fees,
costs, and necessary disbursements in addition to any other relief to which the
arbitrator determines a Party to be entitled. Each of the Parties consents to
personal jurisdiction for any equitable action sought in the U.S. District Court
for the District of Columbia or any court of the District of Columbia having
subject matter jurisdiction.
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4.10
Amendments
and Waivers.
No amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by each of the Parties. No waiver by any Party of
any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
4.11
Severability.
Any term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction. Upon any such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the Parties hereto will
negotiate in good faith to modify this Agreement so as to effect the original
intent of the Parties as closely as possible in an acceptable manner to the end
that the obligations and restrictions contemplated by this Agreement are
consummated to the extent possible.
[Signature
page follows.]
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IN
WITNESS WHEREOF, each of the Parties has executed this Agreement as of the date
first written above.
BY:
_______________________________
Name:
Title:
THE
DOW CHEMICAL COMPANY
By:
__________________________
Name:
Title:
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