LEAK-OUT AGREEMENT
Exhibit 10.3
EXECUTION
COPY
THIS Leak-out Agreement (this
“Agreement”),
made as of this 19th day of May, 2021
(the “Effective
Date”), by and among the individuals and entities who
have signed a form of page 7 of this Agreement below (each a
“Signature
Page”, each signatory a “Shareholder” and collectively, the
“Shareholders”)
and NaturalShrimp, Incorporated, a Nevada corporation
(“NSI” or the
“Company”).
W I T N E S S E TH:
WHEREAS, each Shareholder has been
allocated and holds that number of shares of the Company’s
common stock as are set forth next to his, her or its signature on
the Signature Page pursuant to the Patent Purchase Agreement (the
“PPA”) between F&T Water Solutions, LLC and the
Company (the “Shares”).
WHEREAS, the parties hereto desire to
enter into this Agreement upon the terms and conditions contained
hereinafter to set forth conditions pursuant to which the Member
may transfer and sell all or a part of the Shares.
WHEREAS, the parties agree that this
Agreement shall govern the transfer and/or sale of all Shares of
the Company acquired by the Shareholders pursuant to the PPA and
they agree to be bound by the terms and conditions set forth
herein;
WHEREAS, the parties agree that the
terms and conditions set forth herein shall not apply to any
shares or interests in the Company owned by the Shareholders that
were acquired in a manner not directly or indirectly related to the
PPA between F&T Water Solutions, LLC and the Company (the
“Non-PPA Shares”) provided however that F&T will
provide notice of any such intended sale of any Non-PPA Shares to
NSI prior to the sale of such Non-PPA Shares.
NOW, THEREFORE, in consideration of the
mutual premises set forth herein, $10 and for other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by each Shareholder, the parties hereto hereby
agree as follows.
1.
Trading
Period. Each
Shareholder hereby agrees that:
1.1 No Shares
shall be sold or subject to any transfer for six (6) months from
the Closing Date, May 19th , 2021 (the
“Lock-Up Period). Upon the expiration of the Lock-Up Period,
each Shareholder may sell, as set forth herein, up to one-sixth
(1/6) of their Shares (the “Leak-Out Restriction”)
every thirty (30) day period occurring thereafter for the next six
(6) months (the “Leak-Out Period”). After one year from
the Closing Date, there shall be no further restrictions regarding
the sale and/or transfer of the Shares.
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1.2
During the Leak-Out Period:
(1)
Shareholder will not sell any Shares in the first or last 30
minutes of any trading day.
(2)
Shareholder will trade the Shares in multiple trades and not have
the allocated monthly volume be placed as a single order placed on
a trading desk as block trade in the last hour and 30 minutes of
the trading day. The individual trading will be done on a
“dripped procedure” relative to the daily trading
volume. An exemption to this requirement will be if a trade is
placed early in the day and the volume “vanishes” at
the end of the trading day.
The
obligations and restrictions of the Shareholder as set forth in
Sections 1.1 and
1.2 are defined as
the “Trading
Restrictions”.
1.3
“Transfer”
means the direct or indirect, offer for sale, sale, pledge,
hypothecation, transfer, assignment or other disposition of (or to
enter into any transaction or device that is designed to, or could
be expected to, result in the sale, pledge, hypothecation,
transfer, assignment or other disposition at any time) (including,
without limitation, by operation of law), or the entry into any
swap or other derivatives transaction that transfers to another, in
whole or in part, any of the economic benefits or risks of
ownership of the Shares, whether any such transaction is to be
settled by delivery of Shares or other securities, in cash or
otherwise. This includes private transfers to any beneficial owner.
For the sake of clarity, and without limiting any other provision
of this Agreement, the Shareholder agrees and confirms that a
distribution of any Shares to such Shareholder’s security
holders, shareholders, members, or other owners, directly or
indirectly, and by the operation of law or otherwise, shall be
deemed a Transfer hereunder, and shall be prohibited by the terms
of this Agreement. Notwithstanding and without waiving the above
limitations, the Company agrees and acknowledges that the transfer
and or initial distribution of the Shares to F&T Water
Solutions, LLC members through instructions to the Company’s
transfer agent shall not violate this provision under the
Agreement. Additionally, private transfers from the Shareholders to
their members or shareholders within thirty (30) days of this
Agreement shall not violate this provision as long as such
recipients agree and acknowledge to be bound by the terms,
conditions and limitations set forth herein.
1.4
Any attempted Transfer of Shares by any Shareholder which is not in
compliance with this Agreement or which is in violation of the
terms of this Agreement shall be void ab initio.
2.
Representations and
Warranties of Each Shareholder. Each Shareholder
individually, and not jointly or severally, represents, warrants
and agrees that:
2.1. The Shareholder is the sole
record and beneficial owner of the Shares and has good and
marketable title to all of the Shares. Shareholder has sole
managerial and dispositive authority with respect to the Shares and
has not granted any person a proxy or option to buy the Shares that
has not expired or been validly withdrawn.
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2.2. The Shares and any
certificate evidencing such Shares and/or any book-entry notation
representing the Shares, may, at the request of the Company, be
stamped or otherwise imprinted or noted with a conspicuous legend
in substantially the following form:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED AND SUBJECT
TO THE TERMS OF THAT CERTAIN LOCK-UP AND LEAK OUT AGREEMENT)
BETWEEN CERTAIN SHAREHOLDERS OF THE COMPANY, INCLUDING THE HOLDER,
AND THE COMPANY, DATED AS OF MAY __, 2021. A COPY OF THE LOCK-UP
AGREEMENT MAY BE INSPECTED AT THE PRINCIPAL OFFICE OF THE
COMPANY.”
2.3 Beginning on
November 5, 2021, and each month thereafter for a period of six (6)
months the Shareholders of F&T Water Solutions, LLC shall have
Shares released to it by the Company through the Transfer Agent in
an amount equal to one-sixth (1/6) of the total Shares delivered by
the Company to F&T Water Solutions, LLC pursuant to the asset
purchase. The Company shall provide the Transfer Agent the
necessary approval so that the Shares can be released pursuant to
the schedule set forth herein.
3. Right
to Reject Dispositions. In furtherance of the foregoing, the
Company and its Transfer Agent are hereby authorized (i) to decline
to make any transfer of securities if such transfer would
constitute a violation or breach of this Agreement and (ii) to
imprint on any certificate representing Shares beneficially owned
by a Shareholder (or any book-entry relating to such Shares) with a
legend describing the restrictions contained herein.
4. Power
and Authority. Each party hereto respectively represents and
warrants that such party has full power and authority to enter into
this Agreement and that, upon request of the Company, each
Shareholder will execute any additional documents necessary in
connection with the enforcement hereof.
5. No
Assignment; Binding Nature. No party may assign this
Agreement in whole or in part, without the written consent of the
other parties. This Agreement shall be binding upon the parties and
their respective successors and permitted assigns.
6. Inspection
of Records. On the first of each month all Shareholders
shall produce their prior month’s trading records of NSI
Shares subject to this Agreement for inspection for all brokerage
accounts. Failure to timely produce such trading records shall be a
violation of this Trading Agreement and the Company may in its sole
discretion cause the transfer agent to suspend further transfers
and the Company may seek injunctive relief to stop sales of any
shares held in a trading account.
7.
To the extent that a member of F&T Water Solutions, LLC is a
limited liability company and receives Shares pursuant to the PPA,
the manager of such limited liability company will ensure
compliance with this Agreement from each of its members who is
entitled to receive a portion of the Shares prior to distribution
of any Shares to such members.
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8.
Miscellaneous.
8.1
Severability of Invalid
Provision. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction,
the other provisions of this Agreement will remain in full force
and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or
unenforceable.
8.2
Entire Agreement of the
Parties. The Agreement constitutes the entire agreement of
the parties regarding the matters contemplated herein, or related
thereto, and supersedes all prior and contemporaneous agreements,
and understandings of the parties in connection therewith. No
covenant, representations, or conditions, which are not expressed
in the Agreement shall affect, or be effective to interpret,
change, or restrict, the express provisions of this
Agreement.
8.3
Further Assurances.
All parties agree that, from time to time, each of them will take
such other action and to execute, acknowledge and deliver such
contracts or other documents as may be reasonably requested and
necessary or appropriate to carry out the purposes and intent of
this Agreement.
8.4
Specific
Performance. The parties agree that the covenants and
obligations contained in this Agreement relate to special, unique
and extraordinary matters and that a violation of any of the terms
hereof or thereof would cause irreparable injury in an amount which
would be impossible to estimate or determine and for which any
remedy at law would be inadequate. As such, the parties agree that
if either party fails or refuses to fulfill any of its obligations
under this Agreement, then the other party shall have the remedy of
specific performance, which remedy shall be cumulative and
nonexclusive and shall be in addition to any other rights and
remedies otherwise available under any other contract or at law or
in equity and to which such party might be entitled. The
Shareholder therefore agrees that, in the event of any such breach
or threatened breach of this Agreement or the terms and conditions
hereof by the Shareholder, the Company shall be entitled, in
addition to all other available remedies, to an injunction
restraining any breach or threatened breach, without the necessity
of showing economic loss and without any bond or other security
being required.
8.5
Jurisdiction. THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED, INTERPRETED AND
ENFORCED ACCORDING TO, THE LAWS OF THE STATE OF TEXAS, WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS PROVISIONS THEREOF AND
SHALL BE BINDING UPON THE PARTIES HERETO AND THEIR RESPECTIVE
SUCCESSORS AND ASSIGNS. Any judicial proceeding brought by or any
party regarding any dispute arising out of this Agreement or any
matter related hereto may be brought in the courts of the State of
Texas, or in the United States District Court for the State of
Texas and, by execution and delivery of this Agreement, each party
hereby submits to the jurisdiction of such courts.
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8.6
Construction. When
used in this Agreement, unless a contrary intention appears: (i) a
term has the meaning assigned to it; (ii) “or” is
not exclusive; (iii) “including”
means including without limitation; (iv) words in the singular
include the plural and words in the plural include the singular,
and words importing the masculine gender include the feminine and
neuter genders; (v) any agreement, instrument or statute defined or
referred to herein or in any instrument or certificate delivered in
connection herewith means such agreement, instrument or statute as
from time to time amended, modified or supplemented and includes
(in the case of agreements or instruments) references to all
attachments thereto and instruments incorporated therein; (vi) the
words “hereof”,
“herein”
and “hereunder”
and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision
hereof; (vii) references contained herein to Article, Section,
Schedule and Exhibit, as applicable, are references to Articles,
Sections, Schedules and Exhibits in this Agreement unless otherwise
specified; (viii) references to “writing”
include printing, typing, lithography and other means of
reproducing words in a visible form, including, but not limited to
email; (ix) references to “dollars”,
“Dollars”
or “$” in
this Agreement shall mean United States dollars; (x) reference to a
particular statute, regulation or law means such statute,
regulation or law as amended or otherwise modified from time to
time; (xi) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to
time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set
forth herein); (xii) unless otherwise stated in this Agreement, in
the computation of a period of time from a specified date to a
later specified date, the word “from”
means “from and
including” and the words “to”
and “until”
each mean “to but
excluding”; (xiii) references to “days”
shall mean calendar days; and (xiv) the paragraph headings
contained in this Agreement are for convenience only, and shall in
no manner be construed as part of this Agreement.
8.7
Counterparts, Effect of
Facsimile, Emailed and Photocopied Signatures. This
Agreement and any signed agreement or instrument entered into in
connection with this Agreement, and any amendments hereto or
thereto, may be executed in one or more counterparts, all of which
shall constitute one and the same instrument. Any such counterpart,
to the extent delivered by means of a facsimile machine or by .pdf,
..tif, .gif, .jpeg or similar attachment to electronic mail (email)
or downloaded from a website or data room (any such delivery, an
“Electronic
Delivery”) shall be treated in all manner and respects
as an original executed counterpart and shall be considered to have
the same binding legal effect as if it were the original signed
version thereof delivered in person. At the request of any party,
each other party shall re-execute the original form of this
Agreement and deliver such form to all other parties. No party
shall raise the use of Electronic Delivery to deliver a signature
or the fact that any signature or agreement or instrument was
transmitted or communicated through the use of Electronic Delivery
as a defense to the formation of a contract, and each such party
forever waives any such defense, except to the extent such defense
relates to lack of authenticity.
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IN WITNESS WHEREOF, parties have caused
this Agreement to be signed and delivered by their duly authorized
representatives as of the date first set forth above.
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THE COMPANY:
NATURALSHRIMP INCORPORATED
By:
/s/Xxxxxx Xxxxxxxxxx
Its:
President
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Printed Name: Xxxxxx Xxxxxxxxxx
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F&T WATER SOLUTIONS, LLC
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/s/Xxxx
Xxxxxx
Its: Managing Partner
Printed Name: Xxxx Xxxxxx
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