LOCK-UP/LEAK-OUT AGREEMENT
THIS LOCK-UP/LEAK-OUT AGREEMENT (the "Agreement") is made and
entered into as of the 11th day of September, 2003, between Brenex Oil
Corporation, a Utah corporation ("Brenex"), and the individuals and entities
that execute and deliver a Counterpart Signature Page hereof, each a
shareholder of Brenex, and sometimes collectively referred to herein as the
"Shareholders" and each, a "Shareholder."
WHEREAS, Brenex intends to enter into an Agreement and Plan of
Reorganization between Brenex, CinemaElectric, Inc., a Delaware corporation
("Cinema"), and the Cinema Stockholders (the "Reorganization Agreement")
pursuant to which the execution and delivery of this Agreement is a condition
precedent to the closing of the Reorganization Agreement; and
WHEREAS, in order to facilitate the consummation of the
transactions contemplated by the Reorganization Agreement and to provide for
an orderly market for the Common Stock of Brenex subsequent to the closing of
the Reorganization Agreement, the 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, a
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 for the fifteen (15) month period from the closing of the
Reorganization Agreement (the "Lock-Up/Leak-Out Period"):
2.1 No Shareholder may sell any Common Stock for a period of
ninety (90) days (the "90 Day Blackout Period"), unless approved in a prior
writing by the Board of Directors of Brenex, pro rata as to all Shareholders,
with respect to all Shareholders covered hereby, and all sales shall be made
in "broker's transactions" as that term is defined in Rule 144 of the
Securities and Exchange Commission.
2.2 If a Shareholder has an approved brokerage account meaning
an account with a broker/dealer who has executed and delivered to Brenex a
broker/dealer agreement in a form satisfactory to Brenex, 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 Brenex and the Shareholders (the "Approved
Broker/Dealer"), then the Common Stock of the Shareholder that can be sold or
has qualified to be sold hereunder will be delivered to the Shareholder's
account at the Approved Broker Dealer through the Depository Trust Corporation
("DTC") or by paper delivery; and provided, however, that if the Shareholder
does not have an account with an Approved Broker/Dealer, the Common Stock of
the Shareholder that can be sold or has qualified to be sold hereunder will be
delivered to the 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 Following the expiration of the 90 Day Blackout Period, each
Shareholder shall be allowed to sell 1/12th of such Shareholder's 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 2/12ths of such Shareholder's shares of
Common Stock could be sold in the next successive month and so forth. Each
Shareholder agrees that all sales will be made at no less than the best
"asked" prices, and no sales will be made at the "bid" prices for the Common
Stock.
2.4 The Shareholders agree that they will not engage in any
short selling of the Common Stock during the Lock-Up/Leak-Out Period.
2.5 During the Lock-Up/Leak/Out Period, Brenex shall maintain
its "reporting" status with the Securities and Exchange Commission; 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"), 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 Brenex Common Stock that such 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 Brenex Common
Stock of which each Shareholder become the beneficial owner of during the
Lock-Up/Leak-Out Period.
4. Notwithstanding anything to the contrary set forth herein,
Brenex may, in its sole discretion, 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 Brenex'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 Brenex
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 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 Brenex 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 Brenex, at 0000 Xxxxx
Xxxxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxx Xxxx, Xxxx 00000, and to the
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. Brenex or each 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 Shareholder agrees that in the event of a
breach of any of the terms and conditions of this Agreement by any such
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, without bond or other surety, and an order of a court requiring
such defaulting Shareholder to cease and desist from violating the terms and
conditions of this Agreement and specifically requiring such 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 Brenex or the non-defaulting
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 Utah applicable to contracts entered
into and to be performed wholly within said State; and Brenex and the
Shareholders agree that any action based upon this Agreement may be brought in
the United States and state courts of Utah 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.
BRENEX OIL CORPORATION
Date: 9/11/03 By /s/ Xxxxxxxx X. Xxxxxxxx
--------------------------------
Its Secretary/Treasurer
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 September, 2003,
among Brenex Oil Corporation, a Utah corporation ("Brenex"); and certain
persons who are "Shareholders" of Brenex, 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 Brenex set forth below or hereafter acquired during the
Lock-Up/Leak-Out Period as defined in the Agreement.
/s/ Xxxxx X. Xxxx
/s/ Xxxxxx X. Xxxxxxx
/s/ Xxxxx X. Xxxxxx
/s/ Xxxxxx Sydenham
Exhibit A
Broker/Dealer Agreement
Atlas Stock Transfer Company
0000 Xxxxx Xxxxx Xxxxxx
Xxxxxx, Xxxx 00000
Attention: Xxx Xxxx
Re: Lock-Up/Leak-Out Agreement respecting the resale of certain shares
of common stock of Brenex Oil Corporation, a Utah corporation (the
"Company")
Dear Ladies and Gentlemen:
The undersigned broker hereby acknowledges receipt of stock
certificates representing shares of common stock of the Company that are
described in Exhibit A attached hereto and incorporated herein by reference
and owned by a "Shareholder" or "Shareholders" of the Company that are party
to the above referenced Lock-Up/Leak-Out Agreement.
In consideration of transferring these securities free of any
legend or other notation respecting the said Lock-Up/Leak-Out Agreement so
that the undersigned broker can effect a sale of each such Shareholder's
shares, the undersigned broker agrees:
(i) It will sell the securities in accordance with the
instructions of each such Shareholder only, solely in compliance with the
terms and conditions of the Lock-Up/Leak-Out Agreement;
(ii) That all sales of these securities will be made in
"broker's transactions" only during the period covered by the Lock-Up/Leak-Out
Agreement;
(iii) That there will be no journal entries or DTC's of any
securities of any Shareholder during the period covered by the
Lock-Up/Leak-Out Agreement;
(iv) That the undersigned broker will not allow any
Shareholder to maintain a "short" position in any of the securities of the
Company during the period of the Lock-Up/Leak-Out Agreement;
(v) That the undersigned broker will not maintain a
"short" position in any of the securities of the Company during the period of
the Lock-Up/Leak-Out Agreement except for daily transactions in our trading
accounts, which shall all be covered no later than the end of three trading
days following the occurrence of any such "short position"; and
(vi) That if any of the securities of the Company are
ordered out by any Shareholder for delivery prior to the expiration of the
Lock-Up/Leak-Out Agreement, that instructions will be given to the Company's
transfer agent to re-issue the stock certificates for any such Shareholder
with the appropriate restriction or restrictions as are outlined in the
Lock-Up/Leak-Out Agreement.
The undersigned broker further agrees that we will provide you
with reasonable documentation on your request to verify our compliance with
this Letter Agreement.
Very truly yours,
_____________________________________
Broker/Dealer
_____________________________________
Address
_____________________________________
City, State, Zip
Date: ______________________ By___________________________________
Its___________________________________
