THISSTANDSTILL AGREEMENT (this “Agreement”) is entered into as of __________________,2005 (the “Effective Date”) by and between Millennium Cell Inc., aDelaware corporation (the “Company”) and The Dow Chemical Company, a Delawarecorporation (“Dow”) together with its Affiliates, successors andassigns,the “Restricted Party”).The foregoing partiesto this Agreement are each a “Party” and collectively the “Parties”. Capitalizedterms not defined herein shall have the meanings ascribed to such termsin the Stock Purchase Agreement (as defined below).
Pursuantto that certain Stock Purchase Agreement (the “Stock Purchase Agreement”) datedas of February 27, 2005 between the Company and Dow, executed simultaneouslyherewith, Dow will obtain the right to receive shares of the Company’s Series APreferred Stock, Series B Preferred Stock and/or warrants to purchase shares ofthe Company’s Common Stock.The Company has required, as a material inducement to its consummation of thetransactions contemplated by the Stock Purchase Agreement, that Dowenter into this Agreement, whereby Dow agreesto limit future acquisitions by the Restricted Party of the capital stock of theCompany for the time periods and on the terms set forth herein.
NOW,THEREFORE, in consideration of the mutual representations, warranties, covenantsand agreements contained herein, and other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, and intending to belegally bound hereby, the Parties agree as follows:
1.1 DefinedTerms.Capitalized terms used in this Agreement shall have the meanings ascribed tosuch terms in the Stock Purchase Agreement. In addition, as used in thisAgreement the following terms shall havethe following meanings:
“CompanyVoting Securities“means, collectively, the Common Stock, any other class of capital stock of theCompany issued and outstanding, and any other securities, warrants or options orrights of any nature (whether or not issued by the Company) that are convertibleinto, exchangeable for, or exercisable for the purchase of, or otherwise givethe holder thereof any rights in respect of any class or series of Companysecurities that is entitled to vote generally for the election ofdirectors.
“ExchangeAct“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 director indirect, voluntary or involuntary, by operation of Applicable Law orotherwise 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 otherwisedispose of.
Eachof the Parties hereby represents and warrants with respect to itself onlythat:
(a) ithas the corporate power and authority to enter into this Agreement and toperform its obligations hereunder;
(b) thisAgreement constitutes its valid and legally binding obligation, enforceable inaccordance with the terms hereof except (a) as limited by applicable bankruptcy,insolvency, reorganization, moratorium, fraudulent conveyance, or other laws ofgeneral application relating to or affecting the enforcement of creditors’rights generally and (b) as limited by laws relating to the availability ofspecific performance, injunctive relief, or other equitable remedies;
(c) neitherthe execution and the delivery of this Agreement, nor the consummation of thetransactions contemplated hereby by it, will (i) violate any Applicable Law orany provision of its certificate of incorporation, bylaws or (ii) conflict with,result in a breach of, constitute a default under, result in the accelerationof, create in any party thereto the right to accelerate, terminate, modify, orcancel, or require any notice under any material agreement, contract, lease,license, instrument or other material arrangement to which it is a party or bywhich it is bound or to which any of its material assets is subject (or resultin the imposition of any lien, security interest or other encumbrance upon anyof its assets);
(d) itneed not give any notice to, make any filing with, or obtain any consent orauthorization of any Person not already been obtained in order to consummate thetransactions contemplated by this Agreement; and
(e) inthe case of Dow, except for agreements expressly contemplated in, or enteredinto for the purpose of consummating the transactions contemplated in, the StockPurchase Agreement, Dow does not currently have any agreement, arrangement orunderstanding with any other Person or group with respect to acquiring, holding,voting or disposing of Company Voting Securities.
(a) Duringthe period commencing on the date hereof and ending on the later of the thirdanniversary of the Effective Date or the first anniversary of the date of thetermination by Dow other than for Cause (as defined in the Joint DevelopmentAgreement) of the Joint Development Agreement pursuant to the terms thereof (the”Acquisition Standstill Period”), except as specifically approved in writing inadvance by the Board of Directors of the Company, the Restricted Party shall notin any manner, directly or indirectly, either individually or acting in concertwith any Person or Persons publicly or privately propose, encourage, solicit orparticipate in the solicitation of any Person to acquire, offer to acquire oragree to acquire, by merger, tender offer, purchase or otherwise, the Company ormore than 50% of the outstanding capital stock or assets of theCompany.
(b) Duringthe period commencing on the date hereof and ending on the first anniversary ofthe Effective Date (the “Solicitation Standstill Period”), except asspecifically approved in writing in advance by the Board of Directors of theCompany, the Restricted Party shall not, in any manner, directly or indirectly,either individually or acting in concert with any Person or Persons make orparticipate in any “solicitation” of “proxies” (as such terms are defined orused in Regulation 14A under the Exchange Act) in opposition to anyrecommendation of the Board of Directors of the Company with respect to theCompany Voting Securities or initiate or become a participant in any shareholderproposal or “election contest” (as such term is defined or used in Rule 14 allunder the Exchange Act) with respect to the Company or any of its successors orinduce others to initiate the same, or otherwise seek to advise or influence anyPerson with respect to the voting of any voting securities of the Company or anyof its successors.
(c) Notwithstandingthe foregoing, if Dow terminates the Joint Development Agreement for Cause (an“Early Termination Event”), then the Acquisition Standstill Period and theSolicitation Standstill Period shall be terminated immediately upon theoccurrence of the Early Termination Event without any further action by theParties.
3.2 Limitation.Notwithstanding anything herein to the contrary, the Restricted Party will notbe 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 inanother stockholder of the Company; (b) transfers or tenders any Company VotingSecurities to any third party which is not an Affiliate of Dow, including,without limitation, in connection with a merger, tender offer, or purchase bysuch third party of the Company or more than 50% of the outstanding capitalstock or assets of the Company or (c) votes Company Voting Securities in anymanner, including, without limitation, in any “solicitation” of “proxies”initiated by any third party which is not an Affiliate of Dow.
4.1 Remedies.Each of the Parties acknowledges and agrees that (a) the provisions of thisAgreement are reasonable and necessary to protect the proper and legitimateinterests of the Parties and (b) the Parties may be irreparably damaged in theevent any of the provisions of this Agreement were not performed in accordancewith their specific terms or were otherwise breached. It is accordingly agreedthat each of the Parties shall be entitled to preliminary and permanentinjunctive relief to prevent breaches of the provisions of this Agreement by anyother Party without the necessity of proving actual damages or of posting anybond, and to enforce specifically the terms and provisions hereof and thereof inany court of the United States or any state thereof having jurisdiction, whichrights shall be cumulative and in addition to any other remedy to which theParties may be entitled hereunder or at law or equity.
4.2 NoThird-Party Beneficiaries.This Agreement shall not confer any rights or remedies upon any Person otherthan the Parties, their respective successors and permitted transferees andassigns.
4.3 EntireAgreement.This Agreement (including the documents referred to herein) constitutes theentire agreement among the Parties with respect to the subject matter hereof andsupersedes any prior understandings, agreements, or representations by or amongthe Parties, written or oral, to the extent they relate in any way to thesubject matter hereof.
4.4 Successionand Assignment.This Agreement shall be binding upon and inure to the benefit of the Parties andtheir respective successors and permitted transferees and assigns. No Party mayassign either this Agreement or any of its rights, interests or obligationshereunder 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 shallbe deemed an original but all of which together will constitute one and the sameinstrument. This Agreement may also be executed and delivered by facsimilesignature and in two or more counterparts, each of which shall be deemed anoriginal, but all of which together shall constitute one and the sameinstrument.
4.6 GoverningLaw.This Agreement shall be governed by and construed in accordance with the laws ofthe State of Delaware, without regard to its principles of conflict oflaws.
4.7 Notices.All notices and other communications given or made pursuant to this Agreementshall be in writing and shall be deemed effectively given: (a) upon personaldelivery to the Party to be notified, (b) when sent by confirmed electronic mailor facsimile if sent during normal business hours of the recipient, and if notso confirmed, then on the next Business Day, (c) five (5) days after having beensent 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. Allcommunications shall be sent to the address or facsimile number set forth belowor to such other address or facsimile number as delivered by notice to the otherin accordance with this Section4.7:
Ifto the Company:
1Industrial Way West
Eatontown,New Jersey 07724
Witha copy to:
DicksteinShapiro Morin & Oshinsky LLP
2101L Street, N.W.
TheDow Chemical Company
Attention:Director, Natural Resources Platform, Dow Ventures
Witha copy to:
TheDow Chemical Company
Attention:Business Counsel, Dow Ventures
King& Spalding LLP
1700Pennsylvania Avenue, N.W.
4.8 Delaysor Omissions.No delay or omission to exercise any right, power or remedy accruing to anyParty under this Agreement, upon any breach or default of any other Party underthis Agreement, shall impair any such right, power or remedy of suchnon-breaching or non-defaulting party nor shall it be construed to be a waiverof any such breach or default, or an acquiescence therein, or of or in anysimilar breach or default thereafter occurring; nor shall any waiver of anysingle breach or default be deemed a waiver of any other breach or defaulttheretofore or thereafter occurring. Any waiver, permit, consent or approval ofany kind or character on the part of any Party of any breach or default underthis Agreement, or any waiver on the part of any Party of any provisions orconditions of this Agreement, must be in writing and shall be effective only tothe extent specifically set forth in such writing. All remedies, either underthis Agreement or by law or otherwise afforded to any party, shall be cumulativeand not alternative.
4.9 DisputeResolution.Any unresolved controversy or claim arising out of or relating to thisAgreement, except as otherwise provided in this Agreement, shall be submitted toarbitration by one arbitrator mutually agreed upon by the Parties, and if noagreement can be reached within 30 days after names of potential arbitratorshave been proposed by the American Arbitration Association (the “AAA”), then by one arbitrator having reasonable experience incorporate finance transactions of the type provided for in this Agreement andwho is chosen by the AAA. The arbitration shall take place in the District ofColumbia, in accordance with the AAA rules then in effect, and judgment upon anyaward rendered in such arbitration will be binding and may be entered in anycourt having jurisdiction thereof. There shall be limited discovery prior to thearbitration hearing as follows: (a) exchange of witness lists and copies ofdocumentary evidence and documents relating to or arising out of the issues tobe arbitrated, (b) depositions of all Party witnesses and (c) such otherdepositions as may be allowed by the arbitrators upon a showing of good cause.Depositions shall be conducted in accordance with the Federal Rules of CivilProcedure, the arbitrator shall be required to provide in writing to the partiesthe basis for the award or order of such arbitrator, and a court reporter shallrecord all hearings, with such record constituting the official transcript ofsuch proceedings. The arbitrator shall be awarded reasonable attorney’s fees,costs, and necessary disbursements in addition to any other relief to which thearbitrator determines a Party to be entitled. Each of the Parties consents topersonal jurisdiction for any equitable action sought in the U.S. District Courtfor the District of Columbia or any court of the District of Columbia havingsubject matter jurisdiction.
4.10 Amendmentsand Waivers.No amendment of any provision of this Agreement shall be valid unless the sameshall be in writing and signed by each of the Parties. No waiver by any Party ofany default, misrepresentation, or breach of warranty or covenant hereunder,whether intentional or not, shall be deemed to extend to any prior or subsequentdefault, misrepresentation, or breach of warranty or covenant hereunder oraffect in any way any rights arising by virtue of any prior or subsequent suchoccurrence.
4.11 Severability.Any term or provision of this Agreement that is invalid or unenforceable in anysituation in any jurisdiction shall not affect the validity or enforceability ofthe remaining terms and provisions hereof or the validity or enforceability ofthe offending term or provision in any other situation or in any otherjurisdiction. Upon any such determination that any term or other provision isinvalid, illegal or incapable of being enforced, the Parties hereto willnegotiate in good faith to modify this Agreement so as to effect the originalintent of the Parties as closely as possible in an acceptable manner to the endthat the obligations and restrictions contemplated by this Agreement areconsummated to the extent possible.
INWITNESS WHEREOF, each of the Parties has executed this Agreement as of the datefirst written above.
THEDOW CHEMICAL COMPANY