Lockup Agreement
Whereas, Pipeline Data Inc., a Delaware corporation (the "Buyer"), Northern
Merchants Services, Inc., a New York corporation (the "Company") and the
Stockholders named on Schedule A hereto (the "Sellers") have entered an
Acquisition Agreement, dated as of August 26, 2002 (the "Acquisition
Agreement");
Whereas, Pipeline believes that its ability to trade its securities will be
enhanced if the individuals party hereto agree to refrain from selling their
current shareholdings in Pipeline subject to the terms and conditions set forth
herein;
Whereas, the parties hereto are substantial stockholders in Pipeline and
are amenable to having their share holdings being so restricted;
Now therefore, in consideration of the foregoing and for other good and
valuable consideration, the sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. Restriction of Shares: Each of the parties hereto, severally and not
jointly, hereby agrees that during the period commencing on the Closing Date,
and for the period stated below with respect to each individual party (such
periods referred to as the "Lockup Period(s)"), that such individual's present
beneficial holdings shareholdings (as set forth beside the signature of such
individual) in Pipeline, may not be offered, sold, transferred, assigned,
pledged, hypothecated, or otherwise alienated, nor may any executory interest be
created which would allow, or permit any of the foregoing during the Lockup
Period.
2. Individual Lockup Periods:
As to the Sellers. From the Closing Date.
Until 90 days after the Closing Date - 0%
Upon 90 days after the Closing Date - 15%
Upon 180 days after the Closing Date - 25%
For each of the 6 months commencing on the 361st day after the Closing Date
- 10% per month.
3. Definition of beneficial ownership: For the purposes of this Agreement,
"beneficial ownership" shall have the same meaning as that set forth in Rule
13d-3, as in effect on the date hereof, promulgated under the Securities and
Exchange Act of 1934, as amended.
4. Successors and assigns: The restrictions set forth herein shall be
binding upon the parties, their successors, assigns, legal representatives,
distributees, and any other person, whether a natural person or a legal entity,
who shall be vested with any interest in the Restricted Shares.
5. Shares to be Legended: The shares subject to this Agreement shall be
marked with a prominent legend stating that such shares are subject to the terms
and conditions hereof, and may only be transferred subject to the prior
presentation of a legal opinion of counsel to the transferor, satisfactory to
Pipeline and its counsel, to the effect that any such transfer may be validly
effected under the terms of this Agreement and other applicable law.
6. Governing law and submission to jurisdiction: By their execution below,
the parties hereto acknowledge that this Agreement shall be governed by the
internal laws of the State of New York, determined without reference to
principles of conflicts of laws, and that any legal proceeding with respect to
this Agreement shall be subject to the jurisdiction of the federal and/or state
courts located in the Borough of Manhattan, New York
7. Counterparts and Facsimile Delivery: This Agreement may be executed in
one or more counterparts with all such counterparts to constitute but one and
the same agreement, and facsimile transmission of signature pages shall be
effective as manual delivery thereof.
8. Additional Share Award Acknowledgement: The Sellers acknowledge that
they may be awarded additional shares pursuant to certain earn-in provisions of
the Acquisition Agreement. The Sellers agree and acknowledge that these share
are subject to the terms and conditions of this Agreement. It is further
acknowledged that the lock-up periods shall commence from the date their shares
are issued to them.
Dated as of August 26, 2002
Pipeline Data, Inc.
By:/s/ XxxXxxxxxxx Xxxxx
Name:XxxXxxxxxxx Xxxxx
Title:Chief Executive Officer
/s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
( 500,000 Shares)
/s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
( 500,000 Shares)
