Exhibit 99.1
REDEMPTION, LOCK-UP AND VESTING AGREEMENT
This Redemption, Lock-up and Vesting Agreement (the "Agreement") is
made and entered into as of the 1st day of November 2006 by and between
Environmental Service Professionals, Inc., a Nevada corporation (the "Company"),
and the individual shareholders of the Company listed on Schedule 1 hereto
(collectively the "Executive"), with respect to the following facts:
R E C I T A L S
WHEREAS, the Executive is the record owner of the shares of the
Company's common stock (the "Shares") noted in Schedule 1 of this Agreement,
which represents a portion of their overall ownership of securities in the
Company.
WHEREAS, the Executive and the Company desire to enter into an
agreement which provides for a redemption of a portion of the Shares and lock-up
of the balance of the Shares in order to facilitate the Company's ability to
raise capital.
WHEREAS, in consideration for permitting the Company to redeem and
lock-up the Shares the Company has agreed to attach piggyback registration
rights to the Shares as the Shares are released from the lock-up.
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency to which are hereby acknowledged by the parties to this Agreement,
and in light of the above recitals to this Agreement, the parties to this
Agreement hereby agree as follows:
1. REDEMPTION OF SHARES.
Effective on the date first above written, the Executive will submit
the stock certificate(s) representing the number of Shares set forth on Schedule
1 to this Agreement to the Company, with stock transfer powers endorsed and
attached for submission to the Company's transfer agent for cancellation. The
Company will instruct the transfer agent to record the cancellation of those
Shares on the stock registry records of the Company. The balance of the Shares
will be subject to the lock-up and escrow in accordance with Section 2 of this
Agreement.
2. LOCK-UP AND ESCROW OF SHARES.
Subject to Section 6 of this Agreement, the Shares listed on Schedule 2
of this Agreement will be subject to the escrow, lock-up and release schedule
set forth on Schedule 2 of this Agreement. The lock-up periods indicated on
Schedule 2 are referred to herein as the "Lock-up Period." During the Lock-up
Period, the Executive will not, without the prior written consent of the
Company, directly or indirectly, (i) offer, sell, offer to sell, contract to
sell, hedge, pledge, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase or
sell (or announce any offer, sale, offer of sale, contract of sale, hedge,
pledge, sale of any option or contract to purchase, purchase of any option or
contract of sale, grant of any option, right or warrant to purchase or other
sale or disposition), or otherwise transfer or dispose of (or enter into any
transaction or device that is designed to, or could be expected to, result in
the disposition by any person at any time in the future), any securities of the
Company or securities of the Company into or for which a security of the Company
may be converted, exercised or exchanged, whether by operation of law or
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otherwise (each, a "Successor Security"), beneficially owned, within the meaning
of Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), by the Executive on the date of this Agreement or hereafter
acquired or (ii) enter into any swap or other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of any security of the Company or Successor Security, whether any
such swap or transaction described in clause (i) or (ii) above is to be settled
by delivery of any security of the Company or Successor Security.
Notwithstanding the foregoing, the Executive may transfer any security of the
Company or Successor Security (i) as a bona fide gift or gifts, provided that
prior to such transfer the donee or donees thereof agree in writing to be bound
by the restrictions set forth herein, (ii) to any trust, partnership,
corporation or other entity formed for the direct or indirect benefit of the
undersigned or the immediate family of the undersigned, provided that prior to
such transfer a duly authorized officer, representative or trustee of such
transferee agrees in writing to be bound by the restrictions set forth herein,
and provided further that any such transfer shall not involve a disposition for
value, (iii) if such transfer occurs by operation of law, such as rules of
descent and distribution, statutes governing the effects of a merger or a
qualified domestic order, provided that prior to such transfer the transferee
executes an agreement stating that the transferee is receiving and holding any
security of the Company or Successor Security subject to the provisions of this
Agreement, or (iv) in a private transaction, provided that the transfer is made
in compliance with applicable securities laws and the transferee agrees in
writing to be bound by the provisions of this Section 2. For purposes hereof,
"immediate family" means any relationship by blood, marriage or adoption, not
more remote than first cousin. Shares subject to the lock-up under Section 2 of
this Agreement will be held in escrow by Company corporate legal counsel,
endorsed with signed stock transfer powers having bank medallion guarantee on
the signatures. The escrow agent will release the stock certificates evidencing
Shares released from the lock-up in accordance with this Agreement to the
Executive entitled to them, subject to Section 6 of this Agreement.
3. PIGGYBACK REGISTRATION RIGHTS.
With respect to Shares that are released from the lock-up and the
escrow pursuant to Section 2 of this Agreement, subject to Section 6 of this
Agreement ("Registrable Securities"), if the Company determines to register any
of its securities for its own account, other than a registration relating solely
to employee benefit plans or a registration relating solely to a transaction
pursuant to Rule 145 promulgated under the Securities Act or a registration on
any registration form which does not permit secondary sales, the Company will
promptly give the Executive written notice thereof and include in such
registration (and any related qualification under blue sky laws) and in any
underwriting involved therein, the number of shares of Registrable Securities
specified in a written request made by the Executive within ten (10) days after
receipt of such written notice from the Company (the "Piggyback Registration
Right"). Notwithstanding anything else herein to the contrary, if the
representative of the underwriters in any underwritten registration advises the
Company in writing that marketing factors require a limitation of the number of
Registrable Securities to be underwritten, the representative may (subject to
the limitations set forth below) exclude all Registrable Securities from, or
limit the number of Registrable Securities to be included in, the registration
and underwriting. In connection with any such registration, the Company, the
Executive, and any underwriters participating therein, shall enter into an
indemnification agreement with such terms and conditions as are customary in
similar transactions, provided that in no event shall the liability of the
Executive pursuant to such indemnity exceed the gross proceeds from the offering
received by such holder.
4. COMPANY RIGHT OF FIRST REFUSAL.
Before there can be a valid sale or transfer of any of the Shares, the
Executive must first offer his Shares to the Company in the following manner:
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(a) DELIVERY OF NOTICE.
The Executive shall deliver a notice ("Initial Notice") in
writing in the manner set forth in Section 8 below to the Secretary of the
Company stating the price, terms and conditions of the proposed sale or
transfer, and the identity of the proposed purchaser. For a period of ten (10)
days thereafter, the Company shall have the prior right to elect to purchase all
of the Shares so offered (and not less than all) at the purchase price and
subject to the terms of payment set forth in subparagraph 4(d) below (the
"Purchase Price"), provided, that the Company must close the purchase within ten
(10) days after electing to purchase the Shares. The Company must exercise its
rights by delivering to the Secretary, in the manner set forth in Section 8
below, a written offer to purchase all of the Shares within ten (10) days after
receipt of the Secretary's notice, and by closing the purchase within ten (10)
days thereafter. If the Company does not offer to purchase all of the Shares
being offered for sale by the Executive, then the Secretary shall so notify the
Executive at the termination of the Company's ten (10) day option period.
(b) FAILURE TO PURCHASE ALL SHARES.
If the Company does not offer to purchase all of the Shares
referred to in the Initial Notice to the Secretary having been made in
accordance with the foregoing provisions, the Executive may dispose of all said
Shares to any person or persons he or she may so desire; provided, however, that
(i) the Executive shall not transfer said Shares at a different price or on
different terms than those specified in the Initial Notice; (ii) the
contemplated sale must take place within sixty (60) days from the date the
Secretary gives notice to the Executive as set forth in the last sentence of
subparagraph 4(a) above, or the Executive must again comply with all of the
requirements of this Section 4 of the Agreement, (iii) the sale or transfer may
not occur if it would jeopardize the Subchapter S status of the Company, if the
Company has elected Subchapter S status, and (iv) the sale or transfer may not
occur if the buyer is not a bona-fide buyer. In any sale of Shares, the
Executive shall comply with all federal and state securities laws, rules and
regulations.
(c) WAIVER.
The restrictions on transfer of Shares as provided herein,
other than the restriction relating to the rules and regulations of any state or
federal governmental agency, may be waived by the filing of a written waiver of
said restrictions with the Secretary of the Company, signed by the President or
Chief Executive Officer the Company. The waiver shall designate with
particularity the transaction as to which the waiver is effective.
(d) PAYMENT TERMS FOR PURCHASE BY COMPANY.
Should the Company exercise the right to purchase the Shares
of the Executive, then the Purchase Price shall be the price and terms stated in
the Initial Notice of the Executive to the Secretary of the Company given
pursuant to subparagraph 4(a) above.
(e) PERMITTED TRANSFERS.
Subject to the terms of this Agreement, Shares may be
transferred at any time to Executive's children or to any trust for the benefit
of the Executive or any such relative (provided the Executive is the trustee),
without being subject to a purchase option by the Company; provided, that said
transferees agree in writing to be bound by all of the terms of this Agreement.
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5. LIMITATIONS ON SALES OF SHARES.
During Executive's employment with the Company, Executive covenants
that each month Executive will not sell, transfer, or assign more than 8% of the
released Shares. Executive also covenants that after the termination of
Executive's employment with the Company for any reason, each month Executive
will not sell, transfer or assign more than 4% of the released Shares, after
waiting for a period of 120 days after termination to sell or otherwise dispose
of any Shares, provided, however, that the Company's Chairperson has the
authority to waive the 4% restriction in the case of a voluntary termination.
6. CANCELLATION OF SHARES UPON TERMINATION OF EMPLOYMENT FOR CAUSE.
In the event of the "termination for cause" (as that term is defined in
this Section 6 of the Agreement) of the Executive's employment by the Company,
all unvested Shares on the date of such termination will immediately be
cancelled. For the purposes of this Agreement, "termination for cause" means
termination of Executive's employment by the Company due to (a) Executive's
conviction of, or the entry of a pleading of guilty or nolo contendre by
Executive to, a felony or crime involving moral turpitude, or (b) Executive's
failure to comply with any material provision of this Agreement that results in
material damage to the Company, or (c) an act of fraud committed by Executive
against the Company, or (d) a willful act by Executive as a result of which he
receives a material improper personal benefit at the expense of the Company, or
(e) Executive's demonstration of negligence or willful misconduct in the
execution of his material assigned duties, or (f) a breach of Executive's
fiduciary duty to the Company, to the Board of Directors or to the Company's
shareholders or (g) Executive's imparting confidential information relating to
the Company to a third party, other than in the course of carrying out the
Executive's duties, which has resulted in material damage to the Company,
provided, that the circumstances described in subparagraphs (b) and (e) above
are not as a result of Executive's death, disability or retirement.
7. TERM AND TERMINATION.
This Agreement will be effective as of the date first above written,
and will continue until all of the Shares are vested or the expiration of the
limitation on sales set forth in Section 5 of this Agreement.
8. NOTICES.
Any notice required or permitted to be given pursuant to this Agreement
shall be in writing and shall be:
(a) sent by overnight carrier or facsimile or email
transmission (in which case it shall be deemed delivered upon actual receipt);
or,
(b) placed in the United States mail, certified mail, return
receipt requested, postage prepaid and addressed as provided in this section (in
which case, it shall be deemed delivered five (5) days after such mailing); or,
(c) personally delivered (in which case it shall be deemed
delivered upon actual receipt) to, in all cases under Sections 8(a), (b) and (c)
of this Agreement, the name, address, telephone and/or facsimile numbers set
forth below (or to such other address or addresses as will be specified in any
notice given):
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If to the Company: Environmental Service Professionals, Inc.
0000 Xxxx Xxxxxxxx Xxxxxx Xxx, Xxxxx 000
Xxxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Email Address: xxxxxxxx@xxxxxx.xxx
Attention: Xxxxxx Xxxxxx,
Chief Executive Officer
If to Executive: The address of Executive listed below
Executive's signature to this Agreement.
9. WAIVERS.
If either party shall at any time waive any rights hereunder resulting
from any breach by the other party of any of the provisions of this Agreement,
such waiver is not to be construed as a continuing waiver of other breaches of
the same or other provisions of this Agreement. Resort to any remedies referred
to herein shall not be construed as a waiver of any other rights and remedies to
which such party is entitled under this Agreement or otherwise.
10. SUCCESSORS AND ASSIGNS.
Each covenant and representation of this Agreement shall inure to the
benefit of and be binding upon each of the parties, their personal
representatives, assigns and other successors in interest.
11. ENTIRE AND SOLE AGREEMENT.
This Agreement constitutes the entire agreement between the parties and
supersedes all other agreements, representations, warranties, statements,
promises and undertakings, whether oral or written, with respect to the subject
matter of this Agreement. This Agreement may be modified or amended only by a
written agreement signed by the party against whom the amendment is sought to be
enforced.
12. CHOICE OF LAW AND VENUE.
This Agreement will be governed by the laws of California without
giving effect to applicable conflict of laws provisions. With respect to any
litigation arising out of or relating to this Agreement, each party agrees that
it will be filed in and heard by the state or federal courts with jurisdiction
to hear such suits located in Los Angeles County, California.
13. COUNTERPARTS.
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
14. ATTORNEYS' FEES AND COSTS.
In the event that either party must resort to legal action in order to
enforce the provisions of this Agreement or to defend such action, the
prevailing party shall be entitled to receive reimbursement from the
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nonprevailing party for all reasonable attorneys' fees and all other costs
incurred in commencing or defending such action, or in enforcing this Agreement,
including but not limited to post judgment costs.
15. ASSIGNMENT.
This Agreement shall not be assignable by either party without the
prior written consent of the other party, unless the assignment is to an
affiliate of the party, except that the parties shall have the right to assign
their rights hereunder to any successor in interest whether by merger,
consolidation, purchase of assets or otherwise.
16. REMEDIES.
Except as otherwise expressly provided herein, none of the remedies set
forth in this Agreement are intended to be exclusive, and each party shall have
all other remedies now or hereafter existing at law, in equity, by statute or
otherwise. The election of any one or more remedies shall not constitute a
waiver of the right to pursue other available remedies.
17. SECTION HEADINGS.
The section headings in this Agreement are included for convenience
only, are not a part of this Agreement and shall not be used in construing it.
18. SEVERABILITY.
In the event that any provision or any part of this Agreement is held
to be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall not affect the validity or enforceability of any other
provision or part of this Agreement.
IN WITNESS WHEREOF, this Agreement has been entered into as of the date
first above written.
COMPANY: ENVIRONMENTAL SERVICE PROFESSIONALS, INC.,
a Nevada corporation
By:
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Xxxxxx Xxxxxx, Chief Executive Officer
EXECUTIVE:
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(Signature)
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(Print Name)
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Address
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City State Zip
/
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Telephone Facsimile
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SCHEDULE 1
SHARE OWNERSHIP
NUMBER OF SHARES NUMBER OF SHARES
NAME OF EXECUTIVE REDEEMED REMAINING OWNED
----------------------- ------------------ ----------------
Xxxxxx X. Xxxxxx 43,000 3,007,000
Xxxxxxx Xxxx -- 1,000,000
Xxxxxx X. Xxxxxx -- 1,000,000
Xxxx Xxxxxxx 1,100,000 1,000,000
Xxx Xxxxx 1,380,000 970,000
Xxxx Xxxxxx 1,130,000 970,000
Xxxxx Xxxxxx 1,430,000 420,000
--------- ---------
TOTAL 5,083,000 8,367,000
========= =========
SCHEDULE 2
SHARE LOCK-UP AND RELEASE
NUMBER OF SHARES LOCK-UP PERIOD AND
NAME OF EXECUTIVE SUBJECT TO LOCK-UP RELEASE SCHEDULE
----------------- ---------------------- ------------------------
Xxxxxx X. Xxxxxx 3,007,000 11/1/06 : 601,400
11/1/07 : 601,400
11/1/08 : 601,400
11/1/09 : 601,400
11/1/10 : 601,400
Xxxxxxx Xxxx 1,000,000 11/1/06 : 200,000
11/1/07 : 200,000
11/1/08 : 200,000
11/1/09 : 200,000
11/1/10 : 200,000
Xxxxxx X Xxxxxx 1,000,000 11/1/06 : 200,000
11/1/07 : 200,000
11/1/08 : 200,000
11/1/09 : 200,000
11/1/10 : 200,000
Xxxx Xxxxxxx 1,000,000 11/1/06 : 200,000
11/1/07 : 200,000
11/1/08 : 200,000
11/1/09 : 200,000
11/1/10 : 200,000
Xxx Xxxxx 970,000 11/1/06 : 194,000
11/1/07 : 194,000
11/1/08 : 194,000
11/1/09 : 194,000
11/1/10 : 194,000
Xxxx Xxxxxx 970,000 11/1/06 : 194,000
11/1/07 : 194,000
11/1/08 : 194,000
11/1/09 : 194,000
11/1/10 : 194,000
Xxxxx Xxxxxx 420,000 11/01/06 : 420,000
