LOCK-UP/LEAK-OUT
AGREEMENT
THIS LOCK-UP/LEAK-OUT AGREEMENT (the "Agreement") is made and
entered into as of the _____ day of ______________, 2004 between SECURED
SERVICES, Inc., a Delaware corporation ("SSI"), and the individuals and entities
that execute and deliver a Counterpart Signature Page hereof, each an SSI
Stockholder (as defined below) and sometimes collectively referred to herein as
the "Shareholders" and each, a "Shareholder."
WHEREAS, the SSI Shareholders currently own shares of SSI's
common stock, par value $0.0001 per share (the "Common Stock") or warrants to
purchase Common Stock or preferred stock or debt instruments that may be
convertible into shares of Common Stock; and
WHEREAS, in order to facilitate an orderly market for the
Common Stock of SSI, the SSI Shareholders have agreed to enter into this
Agreement and to restrict the sale, assignment, transfer, conveyance,
hypothecation or alienation of the Common Stock, all on the terms set forth
below.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants contained herein, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Notwithstanding anything contained in this Agreement, an
SSI Shareholder may transfer his/her/its shares of Common Stock to his/her/its
affiliates, partners in a partnership, subsidiaries and trusts, or spouses and
lineal descendants for estate planning purposes provided that the transferee (or
the legal representative of the transferee) executes an agreement to be bound by
all of the terms and conditions of this Agreement.
2. Except as otherwise expressly provided herein, and except
as each Shareholder may be otherwise restricted from selling shares of Common
Stock, each Shareholder may only sell Common Stock subject to the following
conditions during the eighteen (18) month period beginning on the date of this
Agreement is executed (the "LOCK-UP/LEAK-OUT PERIOD"):
2.1 No Shareholder may sell any Common Stock except as covered by this
Agreement, unless approved in a prior writing by the Board of
Directors of SSI, pro rata as to all Shareholders, with respect to
all SSI Shareholders covered hereby.
2.2 If an SSI Shareholder has an approved brokerage account (meaning
an account with a broker/dealer who has executed and delivered to
SSI a broker/dealer agreement in a form satisfactory to SSI, a
reasonable facsimile of which is attached hereto as Exhibit A and
incorporated herein
by reference (the "BROKER/DEALER AGREEMENT"),) to the effect that
any such broker/dealer will comply with and monitor the terms and
conditions of this Agreement for the benefit of SSI and the SSI
Shareholders (the "APPROVED BROKER/DEALER"), then the Common Stock
of the SSI Shareholder that can be sold or has qualified to be
sold hereunder will be delivered to the SSI Shareholder's account
at the Approved Broker Dealer through the Depository Trust
Corporation ("DTC") or by paper delivery; and provided, however,
that if the SSI Shareholder does not have an account with an
Approved Broker/Dealer, the Common Stock of the SSI Shareholder
that can be sold or has qualified to be sold hereunder will be
delivered to the SSI Shareholder in the form of an actual stock
certificate that is imprinted with a legend indicating that resale
of the Common Stock is subject to the terms and conditions of this
Agreement, one of which shall be a resale through an Approved
Broker/Dealer.
2.3 Each SSI Shareholder shall be allowed to sell no more than 3,000
shares of Common Stock per month during the Lock-Up/Leak-Out
Period, on a cumulative basis, meaning that if no Common Stock was
sold during one month while Common Stock was qualified to be sold,
up to 6,000 shares of Common Stock could be sold in the next
successive month and so forth; provided, however, with respect to
(i) shares of Common Stock that are "restricted securities" that
SSI has agreed to register for resale with the Securities and
Exchange Commission (the "SEC"), the commencement of the right of
any such SSI Shareholder to sell shares of Common Stock and to
cumulate unsold Common Stock into sales in the next successive
month hereunder shall begin on the earlier of the month in which
the Securities and Exchange Commission grants SSI an effective
date (the "EFFECTIVE DATE") on any such registration statement, or
in the month in which any such SSI Shareholder qualifies in all
respects to sell the Common Stock under RULE 144 of the SEC and
with respect to (ii) shares of Common Stock that are "restricted
securities" that SSI has not agreed to register for resale with
the SEC, in the month in which any such Shareholder qualifies in
all respects to sell the Common Stock under RULE 144 of the SEC
(the "RESALE QUALIFICATION DATES"). All SSI Shareholders fully
understand that certain shares of Common Stock covered by this
Agreement have already satisfied the Resale Qualification Dates
(approximately 280,000 shares of Common Stock held by five (5)
persons); that the Resale Qualification Date of some other shares
of Common Stock that may be allowed to be registered by SSI for
resale on Form S-3 of the SEC (Common Stock that can be acquired
on the exercise of warrants or the conversion of preferred stock
or debt instruments may qualify for use of Form S-3) may be
earlier than Common Stock required to be registered on some other
Form; and that Common Stock required to be registered on some
other Form of the SEC, like Form SB-2, may not have a Resale
Qualification Date for up to six (6) to nine (9) months, depending
upon the time involved in the SEC review and comment process.
2.4 The Common Stock may only be sold at or above the lowest "offer"
or "ask" prices stated by the relevant market maker for the Common
Stock on the OTC Bulletin Board or any nationally recognized
medium on which the Common Stock is publicly traded. Each SSI
Shareholder agrees that no sales will be made at the "bid" prices
for the Common Stock.
2.5 The Common Stock may not be sold at a price below $2.00 per share
(the "PRICE FLOOR").
2.6 The Shareholders agree that they will not engage in any short
selling of the Common Stock during the Lock-Up/Leak-Out Period.
2.7 From the date hereof and for a period of not less than eighteen
(18) months from the expiration of the Lock-Up/Leak/Out Period,
SSI shall maintain its "reporting" status with the SEC; file all
reports that are required to be filed by it during such period;
and use its "best efforts" to ensure that the Common Stock is
continually quoted for public trading on a nationally recognized
medium of no less significance than the OTC Electronic Bulletin
Board of the National Association of Securities Dealers, Inc. (the
"NASD"), or if its existence ceases, the BBX, the NASDAQ Small Cap
or a recognized national stock exchange.
3. By executing this Agreement, each Shareholder represents
that the Common Stock set forth in his/her/its Counterpart Signature Page is all
of the shares of SSI Common Stock that such SSI Shareholder beneficially owns as
of the date hereof. In addition to the Common Stock set forth in the Counterpart
Signature Page, this Agreement shall apply to all Common Stock of which each SSI
Shareholder becomes the beneficial owner of during the Lock-Up/Leak-Out Period.
4. Notwithstanding anything to the contrary set forth herein,
SSI may, at any time and from time to time, waive any of the conditions or
restrictions contained herein to increase the liquidity of the Common Stock or
if such waiver would otherwise be in the best interests of the development of
the trading market for the Common Stock.
5. In the event of a tender offer to purchase all or
substantially all of SSI's issued and outstanding securities, or a merger,
consolidation or other reorganization with or into an unaffiliated entity, and
if the requisite number of the record and beneficial owners of SSI securities
then outstanding are voted in favor of such tender offer, merger, consolidation
or reorganization, and such tender offer, merger, consolidation or
reorganization is completed this Agreement shall terminate as of the closing of
such event and the Common Stock restricted pursuant hereto shall be released
from such restrictions.
6. Except as otherwise provided in this Agreement or any other
agreements between the parties, the SSI Shareholders shall be entitled to their
respective beneficial rights of ownership of the Common Stock, including the
right to vote the Common Stock for any and all purposes.
7. The Common Stock and per share price restrictions covered
by this Agreement shall be appropriately adjusted should SSI make a dividend or
distribution, undergo a forward split or a reverse split or otherwise reclassify
its shares of Common Stock.
8. No transfer of any of the shares of Common Stock that are
subject to this Agreement shall be made in any transaction other than a
"broker's transaction" unless the transferee executes and delivers a copy of
this Agreement prior to the transfer of any stock certificate representing any
of the Common Stock so transferred.
9. This Agreement may be executed in any number of counterparts
with the same force and effect as if all parties had executed the same document.
10. All notices, instructions or other communications required
or permitted to be given pursuant to this Agreement shall be given in writing
and delivered by certified mail, return receipt requested, overnight delivery or
hand-delivered to all parties to this Agreement, to SSI, at 0000 Xxxxx Xxxxxxx
Xxxx Xxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxx X0X 0X0, and to the SSI Shareholders, at
the addresses in their Counterpart Signature Pages. All notices shall be deemed
to be given on the same day if delivered by hand or on the following business
day if sent by overnight delivery or the second business day following the date
of mailing.
11. The resale restrictions on the Common Stock set forth in
this Agreement shall be in addition to all other restrictions on transfer
imposed by applicable United States and state securities laws, rules and
regulations.
12. SSI or each SSI Shareholder who fails to fully adhere to
the terms and conditions of this Agreement shall be liable to every other party
for any damages suffered by any party by reason of any such breach of the terms
and conditions hereof. Each SSI Shareholder agrees that in the event of a breach
of any of the terms and conditions of this Agreement by any such SSI
Shareholder, that in addition to all other remedies that may be available in law
or in equity to the non-defaulting parties, a preliminary and permanent
injunction and an order of a court requiring such defaulting SSI Shareholder to
cease and desist from violating the terms and conditions of this Agreement and
specifically requiring such SSI Shareholder to perform his/her/its obligations
hereunder is fair and reasonable by reason of the inability of the parties to
this Agreement to presently determine the type, extent or amount of damages that
SSI or the non-defaulting SSI Shareholders may suffer as a result of any breach
or continuation thereof.
13. This Agreement sets forth the entire understanding of the
parties hereto with respect to the subject matter hereof, and may not be amended
except by a written instrument executed by the parties hereto.
14. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts
entered into and to be performed wholly within said State; and SSI and the SSI
Shareholders agree that any action based upon this Agreement may be brought in
the United States and state courts of Delaware only, and each submits
himself/herself/itself to the jurisdiction of such courts for all purposes
hereunder.
15. In the event of default hereunder, the non-defaulting
parties shall be entitled to recover reasonable attorney's fees incurred in
the enforcement of this Agreement.
IN WITNESS WHEREOF, the undersigned have duly executed and
delivered this Agreement as of the day and year first above written.
Date: _______________. SECURED SERVICES, INC.
By_______________________________________
Its_______________________________________
LOCK-UP/LEAK-OUT AGREEMENT
COUNTERPART SIGNATURE PAGE
This Counterpart Signature Page for that certain
Lock-Up/Leak-Out Agreement (the "Agreement") dated as of the day of
______________, among SecureD Services, Inc., a Delaware corporation ("SSI");
and certain persons who are "Shareholders" of SSI, by which the undersigned,
through execution and delivery of this Counterpart Signature Page, intends to be
legally bound by the terms of the Agreement, as a Shareholder, of the number of
shares of SSI set forth below or hereafter acquired during the Lock-Up/Leak-Out
Period as defined in the Agreement.
____________________________________
(Printed Name)
____________________________________
(Signature)
____________________________________
(Street Address)
(City and State)
____________________________________
(Number of Shares Owned or
Underlying Other Securities)
(Date)
