Exhibit 10.3
SENSEIT CORP.
STOCKHOLDERS’
AGREEMENT
This Stockholders’
Agreement (this “Agreement”), dated as of October
27, 2006, is by and among (a) SenseIt Corp. , a Delaware
corporation (the “Company”), (b) Christopher
Toffales , an individual residing at 21 Motts Hollow Road, Port
Jefferson, New York 11777 (“Toffales”), (c) Isonics
Corporation , a California corporation having its principal
place of business at 5906 McIntyre Street, Golden, Colorado 80403
(“Isonics”), and (d) each other holder of equity
securities of the Company who becomes a party to this Agreement,
subject to the conditions set forth herein, by executing an
Instrument of Accession (“Instrument of Accession”) in
the form attached as Schedule I to this Agreement (each, an
“Investor Stockholder”).
WHEREAS, pursuant to a Stock Exchange Agreement, of even
date herewith (as same may be amended or supplemented, the
“Toffales Exchange Agreement”), between Toffales and
the Company, Toffales shall, simultaneously with the execution of
this Agreement by the Company, Toffales and Isonics, exchange all
100 shares (the “Original Toffales Shares”) of the
common stock, par value $0.001 per share (the “Original
Common Stock”), of the Company (which Original Toffales
Shares constitute all of the issued and outstanding shares of
Original Common Stock) for 100 shares of Class B Common Stock, par
value $0.001 per share (the “Class B Common
Stock”);
WHEREAS, pursuant to a Stock Purchase Agreement, of even
date herewith (as the same may be amended or supplemented, the
“Isonics Purchase Agreement”), between the Company and
Isonics, (a) Isonics shall purchase from the Company (i)
simultaneously with the consummation of the exchange transaction
contemplated by the Toffales Exchange Agreement, an aggregate of
425,000 shares of Class A Common Stock, par value $0.001 per share
(the “Class A Common Stock”), of the Company by, among
other transactions, (A) assigning to the Company all of Isonics
rights, title and interest in that certain Development and
Licensing Agreement, dated as of September 28, 2005, as amended
effective as of July 31, September 1, September 29, and October 16,
2006 (collectively, as so amended, the “Lucent
Agreement”), between Lucent Technologies Inc.
(“Lucent”) and Isonics, as more fully described in the
Lucent Agreement, and (B) tendering to the Company a cash payment
of $250,000, (ii) an aggregate 25,000 shares of Class A Common
Stock upon tendering to the Company a cash payment of $250,000
within three business days of the date on which Isonics shall
receive financing from Cornell Capital Partners, L.P.
(“Cornell”) pursuant to the Securities Purchase
Agreement, dated as of May 30, 2006 between Isonics and Cornell,
but in no event later than December 31, 2006, (iii) an aggregate
100,000 shares of Class A Common Stock on or prior to January 11,
2007 in consideration of a cash payment of $1,000,000, and (iv)
50,000 shares of Class A Common Stock upon tendering to the Company
a cash payment of $500,000 on or before February 14, 2007 (or such
lesser number of shares and payment amount to reflect
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any issuance of Credit Shares based
upon a credit issued by Lucent resulting in the creation of a
Credit Amount (as such terms are defined in the Isonics Purchase
Agreement)) and (b) the Company may be required to issue Credit
Shares in the event that Lucent issues a credit against amounts due
under the Lucent Agreement resulting in the creation of a Credit
Amount; and
WHEREAS, Toffales, Isonics and the Company desire to
promote their mutual interests by imposing certain restrictions and
obligations on the Company and each party to this Agreement (each,
a “Stockholder”).
NOW, THEREFORE,
the parties to this Agreement hereby
agree as follows:
ARTICLE I
DEFINITIONS
Section
1.1
Certain Capitalized Terms Defined. For all purposes of this Agreement,
including the preamble, terms defined elsewhere in this Agreement
shall have their assigned meanings and each of the following terms
shall have the following meanings (such definitions to be
applicable to both the plural and singular of the terms
defined):
“Board of Directors”
shall mean the board of directors of the Company.
“Business Day” shall
mean any day other than (a) a Saturday, (b) a Sunday, (c) a public
holiday under the laws of the State of New York or (d) any other
day on which banking institutions are authorized to close in the
State of New York.
“Certificate of
Incorporation” shall mean the Certificate of Incorporation of
the Company, as amended from time to time.
“Class A Director” shall
have the meaning ascribed to such term in paragraph
3.1(b).
“Class B Director” shall
have the meaning ascribed to such term in paragraph
3.1(b).
“Common Stock” shall
mean the common stock, par value $0.001 per share (the
“Common Stock”), of the Company.
“Employment Agreement”
shall mean that certain Employment Agreement, dated as of even date
herewith, between the Company and Toffales, and each and every
amendment and supplement to such agreement or any succeeding
employment agreement entered into by the Company and Toffales
during the term of this Agreement.
“Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended.
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“Offered Securities”
shall mean the Securities that are the subject of a proposed
Transfer.
“Person” shall mean an
individual, partnership, corporation, limited liability company,
association, trust, joint venture, unincorporated organization, or
any government, governmental department or agency or political
subdivision thereof.
“Public Offering” shall
mean a public offering pursuant to an effective registration
statement under the Securities Act covering the offer and sale of
shares of Common Stock.
“Public Sale” shall mean
any sale of Common Stock to the public pursuant to a Public
Offering or to the public through a broker or market-maker pursuant
to the provisions of Rule 144 (or any successor rule) adopted under
the Securities Act.
“Securities” shall mean
each share Class A Common Stock, Class B Common Stock and Common
Stock and all securities issued by the Company that are convertible
into, exercisable or exchangeable for shares of Class A Common
Stock, Class B Common Stock and/or Common Stock.
“Securities Act” shall
mean the Securities Act of 1933, as amended.
“Stockholder” shall mean
each party to this Agreement other than the Company.
“Transfer” or
“Transferred” shall mean and include any sale,
assignment, encumbrance, hypothecation, pledge, conveyance in
trust, gift, transfer by request, devise or descent, or other
transfer or disposition of any kind, including, but not limited to,
transfers to receivers, levying creditors, trustees or receivers in
bankruptcy proceedings or general assignees for the benefit of
creditors, whether voluntary or by operation of law, directly or
indirectly, of any of the Securities.
ARTICLE II
TRANSFERS OF SECURITIES
Section 2.1.
General.
(a)
No Transfer of any Securities made
in violation of this Agreement shall be effective, and no such
Transfer shall be recorded on the stock record books of the
Company. The Company shall not recognize any transferee
receiving any Securities in violation of the terms of this
Agreement as a stockholder of the Company, nor shall any such
transferee have any rights as a stockholder of the Company or under
this Agreement.
(b)
Any Transfer by a Stockholder of
Securities to a Person who is not a party to this Agreement shall
be made only pursuant to the terms of this Agreement and on
the
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condition that such Person shall
become a party to this Agreement, agreeing in writing to be bound
by all of its terms, by executing and delivering to the Company a
duly completed, dated and executed Instrument and
Accession.
(c)
All such Transfers shall be
conducted in accordance with all applicable federal and state
securities laws.
(d)
Notwithstanding anything to the
contrary contained in this Agreement, Isonics may, upon not less
than ten business days’ prior notice to the Corporation
(which notice shall be accompanied by a duly completed, dated and
executed Instrument of Accession), Transfer all (but not less than
all) of the Securities then owned by Isonics to Isonics Homeland
Security and Defense Corporation, a Delaware corporation
(“IHSDC”), provided that, at the effective time of such
Transfer, IHSDC is a wholly-owned subsidiary of Isonics.
Nothing in this paragraph 2.1(d) shall affect in any manner,
Isonics’ obligations, agreements and covenants contained in
the Isonics Purchase Agreement.
Section
2.2.
Restrictions on Transfer. Each Stockholder agrees that such
Stockholder shall not Transfer any Securities owned by such
Stockholder other than in full compliance with the terms and
provisions of this Agreement. Notwithstanding anything
contained in this Agreement (and except as provided in paragraph
2.1(d)), no Transfer of any Securities shall be permitted prior to
the first anniversary of the date of this Agreement.
Section
2.3.
Right of First Refusal.
(a)
Effective as of the first
anniversary of the date of the Agreement and thereafter through the
remainder of the term of this Agreement, each Stockholder (the
“Transferring Stockholder”) desiring to Transfer any of
the Securities owned by the Transferring Stockholder shall give the
Company and each other Stockholder (each, an “Other
Stockholder”) notice of the terms of any proposed bona fide
sale of Offered Securities, including (i) the number and type of
Securities that are proposed to be Transferred, (ii) the
anticipated date of the proposed Transfer, (iii) the name and
address of each Person to whom the Transfer is proposed to be made
and (iv) the material terms of the proposed Transfer, including the
cash and/or other consideration to be received with respect to such
Transfer, at least 30 days prior to the consummation of such
proposed Transfer (a “Transfer Notice”);
provided , however , that in connection with a
Transfer pursuant to a Public Sale, the Transferring Stockholder
shall deliver the Transfer Notice to the Company and each Other
Stockholder at least ten business days, or any other time period as
may be mutually agreed upon by the parties to this Agreement, prior
to the consummation of such proposed Transfer pursuant to a Public
Sale. Any such Transfer Notice shall be deemed an irrevocable
bona fide offer to sell such shares to the Company, initially, and,
thereafter, the Other Stockholders, on such terms as set forth in
such Transfer Notice and shall be deemed a representation by the
Transferring Stockholder that the proposed Transfer is a bone fide
transaction.
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(b)
The Company shall have a period of
(i) five business days, in connection with a Transfer pursuant to a
Public Sale, or (ii) fifteen business days, in connection with any
other Transfer, from the giving of the Transfer Notice with respect
to such Transfer within which to elect to purchase all or any
portion of the Offered Securities at the same price and subject to
the same material terms and conditions as described in the Transfer
Notice. The Company may exercise such purchase option, and
thereby purchase all or any portion of the Offered Securities, by
notifying the Transferring Stockholder in writing, before the
expiration of such five or fifteen business day period, as the case
may be, as to the number and kind of such Securities that the
Company wishes to purchase. If the Company gives the
Transferring Stockholder notice that the Company desires to
purchase all or a portion of the Offered Securities, then payment
for the Offered Securities shall be in cash, by check or wire
transfer or in such other consideration as set forth in the
Transfer Notice, against delivery of the Offered Securities to be
purchased at a place, at a time and on a date agreed upon by the
Transferring Stockholder and the Company, or, if the parties are
unable to agree on the place, time and date of such purchase and
sale, at 10:00 am (local time) on the 25th business day after the
expiration of such five or fifteen business day period at the
principal offices of the Company. Neither the Transferring
Stockholder nor any member of the Board of Directors elected by
holders of a class of securities of the Company in which the
Transferring Stockholder owns of record or beneficially a majority
of the outstanding shares of such class of securities may
participate in the determination by the Company whether of not to
purchase the Offered Securities pursuant to this paragraph
2(b).
(c)
If the Company shall have failed to
elect to purchase all of the Offered Securities by giving the
Transferring Stockholder the notice contemplated by paragraph
2.3(b), the Other Stockholders shall have a period of (i) ten
business days, in connection with a Transfer pursuant to a Public
Sale, and (ii) 25 business days, in connection with any other
Transfer, from the giving of the Transfer Notice with respect to
such Transfer within which to elect to purchase their respective
pro rata shares of the Offered Securities not being purchased by
the Company, at the same price and subject to the same material
terms and conditions as described in the Transfer Notice.
Each Other Stockholder may exercise such purchase option, and
thereby purchase all or any portion of its pro rata share of the
Offered Securities not being purchased by the Company, by notifying
the Transferring Stockholder in writing, before the expiration of
such ten or 25 business day period, as the case may be, as to the
number of such shares that the Other Stockholder desires to
purchase. For the purpose of the preceding sentence, each
Other Stockholder’s pro rata share shall be a fraction of the
Offered Securities not being purchased by the Company, the
numerator of which shall be the number of shares of Common Stock
issuable upon conversion of Class A Common Stock and Class B Common
Stock upon the occurrence of a Threshold Event (as such term is
defined in the Certificate of Incorporation of the Company) and the
number of shares of Common Stock owned by such Other Stockholder on
the date of the Transfer
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Notice and the denominator of which
shall be the total number of shares of Common Stock then
outstanding plus the number of shares of Common Stock
issuable upon conversion of Class A Common Stock and Class B Common
Stock upon the occurrence of a Threshold Event then owned by all
Other Stockholders, each as of the date of the Transfer
Notice. Each participating Other Stockholder shall have a
right of reallotment such that, if any Other Stockholder fails to
exercise the right to purchase such other Stockholder’s full
pro rata share of the Offered Securities, each participating Other
Stockholders may exercise an additional right to purchase, on a pro
rata basis, the Offered Securities not previously purchased.
If a participating Other Stockholder gives the Transferring
Stockholder notice that the participating Other Stockholder desires
to purchase its pro rata share of the Offered Securities and, as
the case may be, its reallotment, then payment for the Offered
Securities shall be in cash, by check or wire transfer or in such
other consideration as set forth in the Transfer Notice, against
delivery of the Offered Securities to be purchased at a place, at a
time and on a date agreed upon by the Transferring Stockholder and
the Company, or, if the parties are unable to agree on the place,
time and date of such purchase and sale, at 10:00 am (local time)
on the fifth business day after the expiration of such ten or 25
business day period at the principal offices of the
Company.
(d)
If all the Offered Securities are
not so purchased by the Company and Other Stockholders, the
Transferring Stockholder shall be free for a period of 90 days
after expiration of the time periods referred to in this Section
2.3 to consummate the proposed transaction upon terms not more
favorable to the Transferring Stockholder than those set forth in
the Transfer Notice with respect to any Offered Securities not sold
to the Company and the Other Stockholders pursuant to this Section
2.3. Promptly upon the consummation of any such transaction,
the Transferring Stockholder shall confirm in writing to the
Company and Other Stockholders the terms of the transaction as so
consummated, including the number and kind of Securities involved,
the consideration received, and the name of the party to whom the
Transfer was made. After the expiration of said 90 day sale period,
subject to the time period set forth in paragraph 2.3(a), if such
Transferring Stockholder again wishes to Transfer any Securities,
such Transferring Stockholder shall again offer the Securities in
accordance with the provisions of this Section 2.3.
(e)
Should the purchase price specified
in the Transfer Notice be payable in property other than cash or
evidences of indebtedness, the Company and Other Stockholders shall
have the right to pay the purchase price in the form of cash equal
in amount to the value of such property. If the Transferring
Stockholder and the Company and such Other Stockholders cannot
agree on such cash value within fifteen business days after the
receipt of the Transfer Notice, the valuation shall be made by an
appraiser of recognized standing selected by the Company. The
cost of such appraisal shall be shared equally by the Company, such
Other Stockholders and the Transferring Stockholder.
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Section
2.4.
Drag Along Rights.
(a)
Effective as of the first
anniversary of the date of this Agreement and thereafter through
the remainder of the term of this Agreement, in the event the
holders of a majority of the then outstanding shares of Class A
Common Stock or Class B Common Stock (and, following the occurrence
of a Threshold Event, the Common Stock) (in either case, the
“Control Group”) elect to transfer all of the
Securities owned by the members of the Control Group to an
unaffiliated third party (a “Third Party”) (including
any transfer of shares that is being effected by a merger or
consolidation of the Company with another person), the Control
Group shall have the right (the “Drag-Along Right”) to
cause each of the other Stockholders as a group to transfer all of
their Securities to the Third Party (or to exchange such Securities
pursuant to the terms of such merger or consolidation) at the same
price and on the same terms and conditions as the Control Group
Transfer their Securities to the Third Party; provided ,
however , that, in connection with the exercise of a
Drag-Along Right prior to the occurrence of a Threshold Event, the
holders of Class B Common Stock shall be entitled to receive, in
aggregate, no less than 10% of the total consideration being
tendered by the Third Party in connection with such
transaction.
(b)
The Control Group may elect to
exercise the Drag-Along Right by delivering written notice to all
of the other Stockholders and the Company 30 days prior to the
consummation of the Transfer described in paragraph 2.4(a), such
notice to be accompanied by a copy of the definitive documentation
pursuant to which the Securities will be transferred to the Third
Party by the Control Group and will state (i) the bona fide
intention of the Control Group to effect the Transfer described in
paragraph 2.4(a), (ii) the name and address of the Third Party and
(iii) the expected closing date of such Transfer. The notice
delivered pursuant to this paragraph 2.4(b) shall also be deemed a
Transfer Notice under paragraph 2.3(a) and the Company and all
other Stockholders shall have all of the rights granted under
Section 2.3 with respect to the Securities owned by the Control
Group.
(c)
Each Stockholder as part of its
participation in the Transfer pursuant to a duly exercised
Drag-Along Right shall deliver to the Third Party at a closing to
be held at the offices of the Company (or such other place as the
parties agree), one or more certificates, properly endorsed for
transfer, which represent all of the Securities owned by such
Stockholder and each Stockholder shall make such representations
and warranties, and shall enter into such agreements, as are
customary and reasonable in the context of the proposed sale,
including, without limitation, representations and warranties (and
indemnities with respect thereto) that the transferee of the
Securities (or interests therein) is receiving good and marketable
title to such Securities (or interests therein), free and clear of
all pledges, security interests, or other liens; provided ,
however , that with respect to any matter as to which a
Stockholder shall agree to provide indemnification
(other
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