PROMOTIONAL SHARES LOCK-IN AGREEMENT
This Promotional Shares Lock-In Agreement (the "Agreement"), was
entered into as of February 15, 2000, by and among eAcceleration Corp., a
Delaware corporation (the "Issuer"), Xxxxx Xxxxxxx and Xxxxx X. Xxxxxxx
(together with Xxxxx Xxxxxxx, the "Security Holders").
WHEREAS, the Issuer has filed an application with the Securities
Administrator of several states (the "Administrators") to register certain of
its shares of Common Stock, par value $0.0001 per share ("Common Stock") for
sale to public investors who are residents of those states ("Registration") in
connection with the initial public offering by the Issuer of shares of its
Common Stock (the "Offering");
WHEREAS, the Securities Holders together own all right, title and
interest in 100% of the issued and outstanding shares of Common Stock, as of the
date hereof; and
WHEREAS, as a condition to the Registration, the Issuer and Security
Holders (the "Signatories") agree to be bound by the terms of this Agreement.
NOW, THEREFORE, it is agreed as follows:
1. Each of the Security Holders agrees not to sell, pledge,
hypothecate, assign, grant any option for the sale of, or otherwise transfer or
dispose of, whether or not for consideration, directly or indirectly, 34,191,059
Promotional Shares (as defined in the North American Securities Administrators
Association Statement of Policy on Corporate Securities Definitions) and all
certificates representing stock dividends, stock splits, recapitalizations, and
the like, that are granted to, or received by, the Security Holders while the
Promotional Shares are subject to this Agreement (the "Restricted Securities").
2. Beginning one year from the completion date of the Offering, two
and one-half percent (2 1/2%) of the Restricted Securities shall be released
from the provisions set forth in paragraph 1 above as of the last day of each
fiscal quarter, pro rata among the Security Holders. All remaining Restricted
Securities shall be released from escrow on the second anniversary of the
completion date of the Offering.
3. In the event of a dissolution, liquidation, merger, consolidation,
reorganization, sale or exchange of the Issuer's assets or securities (including
by way of tender offer), or any other transaction or proceeding with a person
who is not one of the Security Holders, which results in the distribution of the
Issuer's assets or securities ("Distribution"), while this Agreement remains in
effect that:
(a) All holders of the Issuer's Common Stock will
initially share on a pro rata, per share basis in the
Distribution, in proportion to the amount of cash or other
consideration that they paid per share for their Common Stock
(provided that the Administrators have accepted the value of the
other consideration), until the shareholders who purchased the
Issuer's Common Stock pursuant to the Offering ("Public
Stockholders") have received, or have had irrevocably set aside
for them, an amount that is equal to one hundred percent (100%)
of the public offering's price per share times the number of
shares of Common Stock that they purchased pursuant to the public
offering and which they still hold at the time of the
Distribution, adjusted for stock splits, stock dividends
recapitalizations and the like; and
(b) All holders of the Issuer's Common Stock shall
thereafter participate on an equal, per share basis times the
number of shares of Common Stock they hold at the time of the
Distribution, adjusted for stock splits, stock dividends,
recapitalizations and the like.
(c) The Distribution may proceed on lesser terms and
conditions than the terms and conditions stated in paragraphs 1
and 2 above if a majority of the Common Stock that are not held
by the Security Holders, officers or directors, of the Issuer, or
their associates or affiliates vote, or consent by consent
procedure, to approve the lesser terms and conditions.
4. In the event of a dissolution, liquidation, merger, consolidation,
reorganization, sale or exchange of the Issuer's assets or securities (including
by way of tender offer), or any other transaction or proceeding with a person
who is are of the Security Holders which results in a Distribution while this
Agreement remains in effect, the Restricted Securities shall remain subject to
the terms of this Agreement.
5. Restricted Securities may be transferred by will, the laws of descent
and distribution, the operation of law, or by order of any court of competent
jurisdiction and proper venue.
6. Restricted Securities of a deceased Security Holder may by
hypothecated to pay the expenses of the deceased Security Holder's estate. The
hypothecated Restricted Securities shall remain subject to the terms of this
Agreement. Restricted Securities may not be pledged to secure any other debt.
7. Restricted Securities may be transferred by gift to the Security
Holder's family members, provided that the Restricted Securities shall remain
subject to the terms of this Agreement.
8. With the exception of paragraph 3(c) above, the Restricted Securities
shall have the same voting rights as similar equity secutities not subject to
the Agreement.
9. A notice shall be placed on the face of each stock certificate of the
Restricted Securities covered by the terms of the Agreement stating that the
transfer of the stock evidenced by the certificate is restricted in accordance
with the conditions set forth on the reverse side of
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the certificate; and
10. A typed legend shall be placed on the reverse side of each stock
certificate of the Restricted Securities representing stock covered by the
Agreement which states that the sale or transfer of the shares evidenced by the
certificate is subject to certain restrictions pursuant to an agreement between
the Security Holder (whether beneficial or of record) and the Issuer, which
agreement is on file with the Issuer and the stock transfer agent from which a
copy is available upon request and without charge.
11. The term of this Agreement shall begin on the date that the
Registration is declared effective by the Administrators ("Effective Date") and
shall terminate:
(a) On the second anniversary of the completion date of the Offering;
or
(b) On the date the Registration has been terminated if no securities
were sold pursuant thereto; or
(c) If the Registration has been terminated, the date that checks
representing all of the gross proceeds that were derived
therefrom and addressed to the public investors have been
placed in the U.S. Postal Service with first class postage
affixed; or
(d) On the date the securities subject to this Agreement
become "Covered Securities," as defined under the National
Securities Markets Improvement Act of 1996.
12. This Agreement can only be modified with the written approval of the
Administrators.
13. The Issuer will cause the following:
(a) A copy of the Agreement signed by the Signatories to be filed
with the Administrators prior to the Effective Date;
(b) Copies of the Agreement and a statement of the per share initial
public offering price to be provided to the Issuer's stock
transfer agent;
(c) Appropriate stock transfer orders to be placed with the Issuer's
stock transfer agent against the sale or transfer of the shares
covered by the Agreement prior to its expiration, except as
may otherwise be provided in this Agreement;
(d) The above stock restriction legends to be placed on the periodic
statement sent to the registered owner if the securities
subject to this Agreement are uncertificated securities.
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Pursuant to the requirements of this Agreement, the Signatories have
entered into this Agreement, which may be written in multiple counterparts and
each of which shall be considered an original. The Signatories have signed the
Agreement in the capacities, and on the dates, indicated.
IN WITNESS WHEREOF, the Signatories have executed this Agreement as of
the date first written above.
eAcceleration Corp.
/s/ Xxxxx Xxxxxxx
By: --------------------------------------
Xxxxx Xxxxxxx
President and Chief Executive Officer
/s/ Xxxxx Xxxxxxx
--------------------------------------
Xxxxx Xxxxxxx
/s/ Xxxxx X. Xxxxxx
--------------------------------------
Xxxxx X. Xxxxxxx
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