Exhibit 10.10
STOCKHOLDER LOCKUP
AGREEMENT
THIS
AGREEMENT (the “Agreement”) is dated October 27, 2006
(the “Effective Date”), and is made by and between the
entities and individuals whose names appear on the signature pages
of this Agreement (collectively the “Stockholders” or
individually a “Stockholder”) and Material
Technologies, Inc., a Delaware corporation (the
“Company”).
The
Stockholders are the holders of outstanding Shares of Common Stock
and rights to acquire Common Stock of the Company (the
“Shares”). The Company is a publicly-held
corporation. The Stockholders and the Company wish to make
special provisions for the relationships between and among the
Stockholders and between themselves and the Company. They
have reached agreement about certain procedures about the transfer
of Shares. They believe that these provisions, as set forth
in this Agreement, are necessary and desirable and serve the best
interests of the Stockholders and the Company. The Company
and certain parties which have agreed to provide financial
accommodations to the Company have required that the undersigned
Stockholders enter into this Agreement. In consideration of
these premises and the mutual covenants expressed in this
Agreement, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged the parties agree
as follows.
Section 1. Share Transfer Restrictions
Section 1.01.
Prohibition Against Any Transfers Except as Authorized in This
Agreement . Except as otherwise provided in
Section 1.02 of this Agreement, an interest in the Shares of
the Company may not be voluntarily or involuntarily transferred,
assigned, hypothecated or sold, by operation of law or otherwise,
by any Stockholder for a period of three years from the Effective
Date of this Agreement. Notwithstanding the foregoing, in the
event the Company shall pay or convert in full its Class A Senior
Secured Convertible Debentures, then this Agreement shall be
terminated at the option of the Company.
All
Stockholders signing this Agreement shall be subject to the
restrictions on the sale or transfer of their Common Stock
regarding the Stockholders of the Company whether or not any other
stockholder of the Company signed this Agreement.
Section 1.02.
Exempted Transfers . The prohibition in
Section 1.01 shall not apply to a transfer of an interest in
the Shares of the Company, with restrictive legends, so long as the
transferee of such Shares agrees to be bound by this Agreement, and
executes an Agreement substantially identical to this
Agreement: (i) to the Company; (ii) to any other
holder of Shares; (iii) to members of a Stockholder’s
immediate family, which immediate family for the purposes of this
section shall mean a Stockholder’s spouse, parents, lineal
descendants (including adopted children and stepchildren) and the
spouse of any lineal descendant and brothers and sisters;
(iv) to a trust treated as owned by a grantor who is a person
listed in Section 1.02(iii) above under Sections 671-679 of
the Internal Revenue Code,
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(v) that has been approved in writing by the Company;
(vi) to any executor or administrator upon the death of a
Stockholder; or (vii) by merger or share exchange or an
exchange of existing Shares for other Shares of the same or a
different class or series in the Company; or (viii) the sale,
transfer or pledge of Shares by a Stockholder to a bank or other
financial institution or person for the purpose of obtaining funds
to be loaned to the Company. Notwithstanding anything
contained herein to the contrary, an interest in the Shares of the
Company may not be voluntarily or involuntarily transferred, by
operation of law or otherwise, if such transfer would result in a
violation of the Securities Act of 1933, as amended (the
“Act”), as may be applicable.
Notwithstanding
the foregoing, after the Company has successfully raised at least
$2.5 million in financing, the Stockholder may sell up to
$2,500,000 worth of Shares in an arm’s length transaction
with a third-party, at a discount of no more than fifty percent
(50%) of the lowest closing bid price for the ten (10) prior
trading days, without restriction and without the necessity of the
buyer thereof becoming subject to this Agreement.
Section
1.03. Attempted Transfers in Violation of Share Transfer
Restrictions . An attempt to transfer an interest in the
Shares of the Company in violation of Section 1 shall be void and
the Company shall refuse to register the Shares in question in the
name of the transferee on the books of the Company. The
Company shall place stop transfer instructions on the Shares in an
effort to monitor compliance with this Agreement.
Section 2. Miscellaneous
Section
2.01. Binding Effect . This Agreement
shall be binding upon the parties and their heirs, executors,
administrators, successors, assigns and any other transferee and
the spouse of any individual Stockholder. Each transferee and
the spouse each transferee shall sign the form in Exhibit A
evidencing their consent to be bound by the terms of this Agreement
as a prerequisite to registration of any Shares in the name of the
transferee. Failure to sign shall not, however, in any way
prevent this Agreement from being binding on the transferee and the
transferee’s spouse.
Section 2.02.
Shares Covered by this Agreement . This Agreement
shall apply to all Shares that are now or hereafter registered in
the Company’s records in the name of a Stockholder and to all
Shares now or hereafter beneficially owned by a Stockholder
pursuant to a trust under which the Stockholder is a beneficiary,
other than shares purchased by a Stockholder in an open-market
transaction through a broker/dealer, in a transaction that was not
pre-arranged with another Stockholder that has executed an
Agreement similar to this Agreement. It shall also apply to
any stock options and any warrants, stock conversion privileges or
any other Share rights actually or beneficially now or hereafter
owned by a Stockholder in the Company and all Shares or rights to
Shares of any other corporation into which such Shares may be
changed, or for which they may be exchanged, whether through
reorganization recapitalization, stock split-up, combinations of
Shares, merger or consolidation. Any Shares acquired by means
of stock options, warrants, conversion privilege or other right
exercised subsequent to any sale pursuant to this Agreement shall
be offered for sale at the same price and on the
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identical other terms as the Shares owned or previously owned by
the Stockholder acquiring such Shares.
Section
2.03. Remedies . Any controversy or claim
arising out of or related to this Agreement or other documents or
agreements between the Company and one or more of the Stockholders,
or the governance of the Company shall be settled, except as may
otherwise be provided herein, by binding arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration
Association in a proceeding to be held in Los Angeles,
California. Any dispute as to whether a controversy or claim
is subject to arbitratio
