LOCK-UP AGREEMENT
November
3, 2010
Ladies
and Gentlemen:
The undersigned is a current or former
director, executive officer or beneficial owner of shares of capital stock, or
securities convertible into or exercisable or exchangeable for the capital stock
(each, a “Company
Security”) of 0xx0.xxx, Inc., a Delaware corporation (the “Company”). The
undersigned understands that the Company will merge (the “Merger”) with a
wholly-owned subsidiary of FTOH Corp., a publicly traded Delaware company
(“Parent”),
concurrently with the private placement by Parent of a minimum of $6,000,000 and
a maximum of $10,000,000 shares of Parent’s common stock (the “Shares”), for a
purchase price of $1.00 per Share (the “Funding
Transaction”). The undersigned understands that the Company, Parent and
the investors in the Funding Transaction will proceed with the Funding
Transaction in reliance on this Letter Agreement.
1. In
recognition of the benefit that the Funding Transaction will confer upon the
undersigned, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agrees, for the
benefit of the Company, Parent, and each investor in the Funding Transaction,
that, during the period beginning on the final closing and termination of the
Funding Transaction (the “Closing Date”) and
ending twelve (12) months after such date (the “Lockup Period”), the
undersigned will not, without the prior written consent of Xxxxxx Capital
Marketing, LLC (“MCM”) (the “Majority Investors”),
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 Parent (each, a “Parent Security”),
beneficially owned, within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), by
the undersigned on the date hereof 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 Parent
Security, whether any such swap or transaction described in clause (i) or (ii)
above is to be settled by delivery of any Parent Security (each of the
foregoing, a “Prohibited Sale.This Letter Agreement shall apply to all Parent
Shares issued to the undersigned in connection with the Merger (including,
without limitation, those shares referred to as Management Restricted A or
Performance A Stock (as defined below)) and Parent Shares in replacement thereof
issued under the Company’s Plan which are exchanged for Parent Shares which
shall be governed by this Letter Agreement and will additionally be subject to
the vesting and clawback restrictions set forth in such Restricted Stock
Grant. For purposes hereof, “Company Plan” shall mean the Company’s
incentive plan under which an aggregate of 3,500,000 shares of common stock of
the Company were issued to certain persons and as set forth on the signature
page hereto under the column labeled “Perf A” (“Management Restricted A Stock”),
as assumed by Parent, subject to certain restrictions, vesting and clawback
rights, and which, upon the consummation of the Merger, will be assumed by the
Parent and shall continue to be bound by all the terms and provisions thereof,
including any additional terms included in such grant under the Parent’s
assumption of the Company Plan.Notwithstanding anything herein to the contrary,
the Lockup Period for Management Restricted A Stock (Perf A shares, as set forth
below) shall terminate at the time any vesting or clawback restrictions under
the Company Plan have been achieved.
2. Leak Out
Provision. If (i) the Parentraises in excess of Ten Million
Dollars ($10,000,000) (excluding any amount raised in the Funding Transaction)
within twelve (12) months from the date hereof or (ii) the Parent’scommon stock
achieves an average daily trading value (such trading value shall be calculated
by multiplying the daily volume by the average bid and ask prices for that day)
over any thirty (30) day period within the twelve (12) months from the date
hereof equal to or greater than Two Hundred Thousand Dollars ($200,000) of (iii)
commencement of trading of Parent’s common stock on NASDAQ, then the lock up
restrictions related to Management Restricted A Stock of this Letter Agreement
shall terminate. MCM shall have a right of first refusal for any
proposed transfer, sale or assignment of any Parent Security issued to the
undersigned at or prior to the Closing Date. In the event of such
proposed sale, the undersigned will provide MCM with at least twenty-four (24)
hours advance written notice of the terms of the proposed sale, including
minimum acceptable price and payment, and MCM shall have the right, within
forty-eight (48) hours or receipt of such notice to elect irrevocably to
purchase such shares on the same proposed terms and conditions. If
not sold within fourteen (14) days on the terms offered to MCM, such Parent
Securities shall be reoffered to MCM.
3. For
a period of twelve (12) months from the date hereof, the undersigned agrees it
will not seek or permit the Parent Securities owned by the undersigned, and
Company agrees that it shall not file, any Registration Statement on Form S-8
with the Securities and Exchange Commission. The undersigned agrees
that for a period of twelve (12) months from the date hereof, he shall neither
authorize or approve any Form S-8 Registration Statement filing without the
prior written consent of MCM.
4.
Notwithstanding the foregoing, the undersigned (and any transferee of the
undersigned) may transfer any shares of a Company Security or a Parent 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) to non-profit organizations
qualified as charitable organizations under Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended, or (iv) 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 Company Security or Parent Security subject to the
provisions of this agreement. For purposes hereof, “immediate family” shall mean
any relationship by blood, marriage or adoption, not more remote than first
cousin. In addition, the foregoing shall not prohibit privately
negotiated transactions, provided the transferees agree, in writing, to be bound
to the terms of the lock-up agreements for the balance of the Lockup Period, and
provided that MCMis provided with its right of first refusal in accordance with
Section 2 hereof.
5. Opinion
of Counsel. Any Parent Security of the undersigned shall contain a
restrictive “lock-up” legend governed by the terms of this Letter
Agreement. The Parent’s transfer agent shall only accept an opinion
of counsel to remove such legend from counsel acceptable to MCM. An
opinion from Xxxxxx Xxxxxx, Esq. and any firm with which he is associated shall
be deemed acceptable counsel to MCM.
6. This
Letter Agreement shall be governed by and construed in accordance with the laws
of the New York.
7 This
Letter Agreement will become a binding agreement among the undersigned as of the
date hereof. In the event that no closing of the Funding Transaction
occurs, this Letter Agreement shall be null and void. This Letter Agreement (and
the agreements reflected herein) may be terminated by the mutual agreement of
Parent, MCM, and the undersigned, and if not sooner terminated, will terminate
upon the expiration date of the Lockup Period. This Letter Agreement may be duly
executed by facsimile and in any number of counterparts, each of which shall be
deemed an original, and all of which together shall be deemed to constitute one
and the same instrument. Signature pages from separate identical counterparts
may be combined with the same effect as if the parties signing such signature
page had signed the same counterpart. This Letter Agreement may be modified or
waived only by a separate writing signed by each of the parties hereto expressly
so modifying or waiving such agreement and MCM.
.[SIGNATURE
PAGES FOLLOW]
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Very
truly yours,
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Number of
shares of Common Stock owned:
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Management
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Perf A | Perf B |
Certificate
Numbers: __________________________________________
Accepted
and Agreed to:
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By:
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Name:
Xxxxx Xxxxxxx
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Title:
Chief Executive Officer
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0xx0.xxx,
Inc.
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By:
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Name:
Xxxxx Xxxxxxx
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Title:
Chief Executive
Officer
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