LOCK-UP/LEAK-OUT AGREEMENT
THIS
LOCK-UP/LEAK-OUT AGREEMENT (the "Agreement") is made and entered into this
20th
day of November 2008, by and between Red Oak Concepts, Inc., a Nevada
corporation (the "Company"), and _______________ (the "Shareholder")
and.
All
capitalized terms not defined herein shall have the meanings ascribed to them
in
that certain Share Exchange Agreement dated the date hereof between the Company,
on the one hand, and The Vinyl Fence Company, Inc. ("TVFC") and the holders
of
all of the outstanding shares of the capital stock of TVFC, on the other,
pursuant to which the Company is acquiring all of the outstanding shares of
TVFC
capital stock from said holders in exchange for shares of the Company's common
stock, par value $.0001 per share ("Common Stock"), and agreeing to register
for
public resale under the Securities Act of 1933, as amended (the "Securities
Act") all shares issued to the TVFC shareholders pursuant to said
agreement.
RECITALS
WHEREAS,
the
Shareholder is the registered owner of the number of shares of Common Stock
set
forth on the signature page hereof that were issued pursuant to the Share
Exchange Agreement (the "Shares"); and
WHEREAS,
as a
material inducement to the Company to register the register the Shares for
public resale under the Securities Act, the Company and the Shareholder have
agreed to enter into this Agreement and to restrict the sale, assignment,
transfer, conveyance, hypothecation or alienation of the Shares, 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, the Shareholder may transfer its Shares
to
its affiliates or associates (individually, a “Transferee”), at such value as
determined by the Shareholder to be appropriate, 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 in connection with
the resale of any Shares, in form and substance reasonably satisfactory to
and
to be executed by the Company. Transfers pursuant to this Section 1 shall not
be
subject to the requirements of Section 2. Upon completion of a transfer under
this Section 1, the Transferee shall be a “Shareholder” under this Agreement for
all purposes.
2. Except
as
otherwise expressly provided herein, and except as the Shareholder may be
otherwise restricted from selling Shares under applicable United States Federal
or state securities laws, rules and regulations, the Shareholder may only sell
Shares subject to the following conditions:
2.1. For
the
six months after the effective date of the registration statement filed with
the
Securities and Exchange Commission ("SEC") that registers the Shares under
the
Securities Act, the Shareholder may not sell, pledge, hypothecate, transfer,
assign or in any other manner dispose of the Shares.
2.2. Upon
the
expiration of the six-month period described in subsection 2.1, above, for
a
period of thirty six months thereafter, the Shareholder shall be allowed to
sell
1/36th
of the
Shares during each month thereafter. Upon the expiration of said thirty-six
month period, the Shareholder shall be entitled to sell or otherwise dispose
of
its Shares in any manner it sees fit.
2.3. All
Shares shall be sold on a non-cumulative basis, meaning that if the Shareholder
did not sell all of the Shares it was entitled to sell during a particular
month, it may not cumulate the unsold portion of that month's allotment to
the
next month's allotment, and so forth. 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 Shares.
2.4. Except
as
otherwise provided herein, all Shares shall be sold in “broker’s transactions”
and the Shareholder will comply with the “manner of sale” requirements as those
terms are defined in Rule 144 of the Securities and Exchange Commission during
the Lock-Up/Leak-Out Period.
2.5. An
appropriate legend describing this Agreement shall be imprinted on each stock
certificate representing the Shares, and the transfer records of the Company’s
transfer agent shall reflect such appropriate restrictions.
2.6. Shareholder
agrees that it will not engage in any short selling of the Common Stock during
the term of this Agreement.
3. Notwithstanding
anything to the contrary set forth herein, the Company 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. Upon issuance of such waiver the
Shareholder shall be promptly notified of the waiver given and the time frame
during which such waiver shall be effective. Any waiver shall be specific to
the
period described in the notice.
4. In
the
event of: (a) a completed tender offer to purchase all or substantially all
of
the Company’s issued and outstanding securities or (b) a merger, consolidation
or other reorganization of the Company with or into an unaffiliated entity
that
results in a subsequent change in control of the Company, then this Agreement
shall terminate as of the closing of such event and the Shares restricted
pursuant hereto shall be released from such restrictions.
5. Except
as
otherwise provided in this Agreement or any other agreements between the
parties, the Shareholder shall be entitled to exercise its beneficial rights
of
ownership of its Shares, including the right to vote its Shares for any and
all
purposes.
6. The
number of Shares that may be sold during any month by the Shareholder shall
be
appropriately adjusted should the Company declare a dividend or distribution,
undergo a forward split or a reverse split or otherwise reclassify its class
of
Common Stock.
7. If
the
Shareholder fails to fully adhere to the terms and conditions of this Agreement,
then it shall be liable to the Company for any damages suffered by reason of
any
such breach of the terms and conditions hereof. Shareholder agrees that in
the
event of a breach of any of the terms and conditions of this Agreement by it,
that in addition to all other remedies that may be available in law or in equity
to the Company, a preliminary and permanent injunction, without bond or surety,
and an order of a court requiring Shareholder to cease and desist from violating
the terms and conditions of this Agreement and specifically requiring
Shareholder to perform 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 the Company may suffer as a result
of
any breach or continuation thereof by Shareholder. If the Company prevails
in an
action to enforce this Agreement, it shall be entitled to receive from a the
Shareholder reimbursement for all fees and expenses incurred in connection
therewith, including reasonable fees of counsel.
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8. All
notices, instructions or other communications required or permitted to be given
pursuant to this Agreement shall be given in writing and delivered by facsimile,
certified mail, return receipt requested or overnight courier by a nationally
recognized courier service:
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If to the Company:
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Vinyl Products, Inc.
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0000
Xxxxx Xxxxxx Xxxxxx
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Xxxxx
Xxx Xxxxxxxxxx 00000
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Attn.:
Xx. Xxxxxx Xxxxx
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Facsimile
No.: 000-000-0000
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If
to the
Shareholder: at
addresses on file for it with the Company's transfer agent.
All
notices shall be deemed to be given on the same day if delivered by facsimile,
on the following business day if sent by overnight delivery or on the third
business day following the date of mailing.
9. The
resale restrictions on the Shares 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.
10. 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.
11. This
Agreement shall be governed by and construed in accordance with the laws of
the
State of California applicable to contracts entered into and to be performed
wholly within said State; and the Company and Shareholder agrees that any action
based upon this Agreement may be brought in the United States and state courts
of Orange County, California only, and Shareholder submits to the jurisdiction
of such courts for all purposes hereunder.
12. In
the
event of default hereunder, the non-defaulting parties shall be entitled to
recover all fees and expenses incurred in connection with the enforcement of
this Agreement, including reasonable fees of counsel.
13. This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to
the
other party, it being understood that both parties need not sign the same
counterpart.
REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOLLOWS
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IN
WITNESS WHEREOF, the undersigned have duly executed and delivered this Agreement
as of the day and year first above written.
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By:
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Xxxxxx
Xxxxx, President
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SHAREHOLDER:
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By:
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