EXHIBIT 10.3
INKSURE TECHNOLOGIES, INC.
FORM OF LOCK-UP AGREEMENT
April 8, 2008
InkSure Technologies Inc.
0000 X.X. 00xx Xxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Re: INKSURE TECHNOLOGIES INC. - LOCK-UP AGREEMENT
Dear Sirs:
This Lock-Up Agreement is being delivered to you in connection with the
Amendment, Exchange and Purchase Agreements (the "AMENDMENT, EXCHANGE AND
PURCHASE AGREEMENTS"), dated as of April 8, 2008, by and among InkSure
Technologies Inc. (the "COMPANY") and each of the investors party thereto (the
"BUYERS"), with respect to the issuance to each Buyer of (i) senior secured
convertible notes of the Company (the "NOTES"), which will, among other things,
be convertible into shares of the Company's common stock, $0.01 par value per
share (the "COMMON STOCK", as converted, the "CONVERSION SHARES") in accordance
with the terms of the Notes and (ii) two (2) series of warrants (the
"WARRANTS"), which will be exercisable to purchase shares of Common Stock (as
exercised collectively, the "WARRANT SHARES"). Capitalized terms used herein and
not otherwise defined herein shall have the respective meanings set forth in the
Amendment, Exchange and Purchase Agreements.
In order to induce the Buyers to enter into the Amendment, Exchange and
Purchase Agreements, the undersigned agrees that, commencing on the date hereof
and ending on the date one hundred eighty (180) calendar days after the Closing
Date (the "LOCK-UP PERIOD"), the undersigned will not (i) sell, offer to sell,
contract or agree to sell, hypothecate, pledge, grant any option to purchase,
make any short sale or otherwise dispose of or agree to dispose of, directly or
indirectly, any shares of Common Stock, or establish or increase a put
equivalent position or liquidate or decrease a call equivalent position within
the meaning of Section 16 of the Securities and Exchange Act of 1934, as
amended, and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder with respect to any shares of Common Stock owned directly
by the undersigned (including holding as a custodian) or with respect to which
the undersigned has beneficial ownership within the rules and regulations of the
Securities and Exchange Commission, or (ii) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of any shares of Common Stock, owned directly by the
undersigned (including holding as a custodian) or with respect to which the
undersigned has beneficial ownership within the rules and regulations of the
Securities and Exchange Commission, whether any such transaction is to be
settled by delivery of such securities, in cash or otherwise (collectively, the
"UNDERSIGNED'S SHARES").
The foregoing restriction is expressly agreed to preclude the undersigned
or any affiliate of the undersigned from engaging in any hedging or other
transaction which is designed to or which reasonably could be expected to lead
to or result in a sale or disposition of the Undersigned's Shares even if the
Undersigned's Shares would be disposed of by someone other than the undersigned.
Such prohibited hedging or other transactions would include, without limitation,
any short sale or any purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to any of the Undersigned's
Shares or with respect to any security that includes, relates to, or derives any
significant part of its value from the Undersigned's Shares.
Notwithstanding the foregoing, the undersigned may transfer the
Undersigned's Shares (i) as a BONA FIDE gift or gifts, provided that the donee
or donees thereof agree to be bound in writing by the restrictions set forth
herein or (ii) to any trust for the direct or indirect benefit of the
undersigned or the immediate family of the undersigned, provided that the
trustee of the trust agrees to be bound in writing by the restrictions set forth
herein, and provided further that any such transfer shall not involve a
disposition for value. For purposes of this Lock-Up Agreement, "IMMEDIATE
FAMILY" shall mean any relationship by blood, marriage or adoption, not more
remote than first cousin. The undersigned now has, and, except as contemplated
by clauses (i) and (ii) above, for the duration of this Lock-Up Agreement will
have, good and marketable title to the Undersigned's Shares, free and clear of
all liens, encumbrances, and claims whatsoever. The undersigned also agrees and
consents to the entry of stop transfer instructions with the Company's transfer
agent and registrar against the transfer of the Undersigned's Shares except in
compliance with the foregoing restrictions during the Lock-Up Period, provided
that such stop transfer instructions are automatically removed on the first
(1st) Business Day after the end of the Lock-Up Period.
The undersigned understands and agrees that this Lock-Up Agreement is
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors, and assigns.
This Lock-Up Agreement may be executed in two counterparts, each of which
shall be deemed an original but both of which shall be considered one and the
same instrument.
This Lock-Up Agreement will be governed by and construed in accordance with
the laws of the State of New York, without giving effect to any choice of law or
conflicting provision or rule (whether of the State of New York, or any other
jurisdiction) that would cause the laws of any jurisdiction other than the State
of New York to be applied. In furtherance of the foregoing, the internal laws of
the State of New York will control the interpretation and construction of this
Lock-Up Agreement, even if under such jurisdiction's choice of law or conflict
of law analysis, the substantive law of some other jurisdiction would ordinarily
apply.
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Very truly yours,
____________________________
Exact Name of Stockholder
____________________________
Authorized Signature
____________________________
Title
Agreed to and Acknowledged:
INKSURE TECHNOLOGIES, INC.
By: ____________________________
Name:
Title:
