PROCESS TECHNOLOGY SYSTEMS, INC.
LOCK-UP/LEAK-OUT AGREEMENT
THIS LOCK-UP/LEAK-OUT AGREEMENT (the "Agreement") is made and
entered into as of the ___ day of March, 2005, between Process Technology
Systems, Inc., a Nevada corporation ("Process"), and the individuals that
execute and deliver a Counterpart Signature Page hereof, and sometimes
collectively referred to herein as the "Shareholders" and each, a
"Shareholder." For all purposes of this Agreement, "Shareholder" includes any
"affiliate, controlling person of Shareholder, agent, representative or other
person with whom Shareholder is acting in concert with.
WHEREAS, it is contemplated that certain persons will be acquiring a
substantial portion of the authorized Common Stock of Process pursuant to
written Subscription Agreements to which this Agreement is attached as Exhibit
B thereto (the "Buyers"); and
WHEREAS, subsequent to the acceptance of such Subscription
Agreements, the Company is planning to enter into a reorganization
transaction, meaning a material acquisition, reorganization, merger or other
transaction such that the Company will no longer be considered to be a "blank
check company" as defined in Rule 504(a)(3) of the Securities and Exchange
Commission (the "Reorganization Transaction"); and
WHEREAS, in order to facilitate the consummation of the transactions
contemplated by the Reorganization Transaction and to protect the Company,
the Shareholders have agreed to enter into this Agreement and to restrict the
public 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. 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 publicly sell Common Stock subject to the
following conditions commencing on the execution and delivery of this
Agreement and for the twenty-four (24) month period from the filing of a Form
8-K12g-3 ("successor issuer" 8-K Current Report) reporting the closing of the
Reorganization Transaction (the "Lock-Up/Leak-Out Period"):
1.1 Each Shareholder shall not be allowed to sell any of
the shares of common stock purchased pursuant to the Subscription Agreements
for a period of twelve (12) months from the filing of the Form 8-K12g-3 (the
"Lock-up Period").
1.2 Each Shareholder shall be allowed to sell 1/12th of
such Shareholder's shares of Common Stock per month during the last twelve
(12) months of the twenty-four (24) month Lock-Up/Leak-Out Period (the
"Leak-Out Period"), on a non-cumulative basis, meaning that if no Common Stock
was sold during one month while Common Stock was qualified to be sold, such
shares of Common Stock could not be sold in the next successive monthly
Leak-out Period.
1.3 Except as otherwise provided herein, all Common Stock
shall only be sold in "broker's transactions" and each Shareholder must 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.
1.4 An appropriate legend describing this Agreement shall
be imprinted on each stock certificate representing Common Stock covered
hereby, and the transfer records of Process' transfer agent shall reflect such
appropriate restrictions.
1.5 The Shareholders agree that they will not engage in any
short selling of the Common Stock during the Lock-Up/Leak-Out Period.
1.6 During the Lock-Up/Leak/Out Period, Process 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.
1.7 During the Lock-Up/Leak-Out Period, each Shareholder
will be required to submit a legal opinion to the Company with any requested
transfer hereunder to the effect that any monthly sale is being made in
compliance with this Agreement.
1.8 Process shall timely file the 8-K12g-3 Current Report
with the Securities and Exchange Commission.
2. The delivery of a duly executed copy of the Broker/Dealer
Agreement by a selling Shareholder's broker and a duly executed Seller's
Resale Agreement by the selling Shareholder in the forms attached hereto shall
be satisfactory evidence for all purposes of this Agreement that such selling
Shareholder and its broker will comply with the "broker's transactions" and
"manner of sale" requirements of this Agreement, and no further evidence
thereof will be required of any selling Shareholder; provided, however,
Process may confirm such compliance with any Shareholder and any selling
Shareholder's broker, to the extent that it deems reasonably required or
necessary to assure compliance with this Agreement.
3. Notwithstanding anything to the contrary set forth herein,
Process may, in its sole discretion and in good faith, 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. Unless otherwise agreed by the Shareholders, all such waivers
shall be pro rata, as to all of the Shareholders who executed a
Lock-Up/Leak-Out Agreement in connection with the execution and delivery of
the Subscription Agreements whose Common Stock can, at the time of any such
waiver, be publicly sold in accordance with the Securities Act of 1933, as
amended (the "Securities Act"), or Rule 144 promulgated thereunder by the
Securities and Exchange Commission or otherwise.
4. Other than the contemplated Reorganization Transaction or any
merger with a subsidiary, in the event of: (a) a completed tender offer to
purchase all or substantially all of Process' issued and outstanding
securities; or (b) a merger, consolidation or other reorganization of Process
with or into an unaffiliated entity, then this Agreement shall terminate as of
the closing of such event and the Common Stock 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 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.
6. The number of shares of Common Stock included in any monthly
allotment that can be sold by a Shareholder shall be appropriately adjusted
should Process make a dividend or distribution, undergo a forward split or a
reverse split or otherwise reclassify its shares of Common Stock.
7. 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.
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 certified mail, return receipt requested, overnight delivery or
hand-delivered to all parties to this Agreement, to Process, at 0000 Xxxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 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.
9. 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.
10. Process 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 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 Process or the non-defaulting
Shareholders may suffer as a result of any breach or continuation thereof.
11. 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.
12. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada applicable to contracts
entered into and to be performed wholly within said State; and Process and the
Shareholders agree that any action based upon this Agreement may be brought in
the United States and state courts of Nevada only, and each submits
himself/herself/itself to the jurisdiction of such courts for all purposes
hereunder.
13. 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.
14. This Agreement shall only apply to the Common Stock that is
being acquired by the undersigned pursuant to the Subscription Agreement to
which this Agreement is attached and incorporated by reference as Exhibit B
thereto.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement as of the day and year first above written.
PROCESS TECHNOLOGY SYSTEMS, INC.
Date:_______________. By_________________________________
Its________________________________
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 ________________,
2005, among Process Technology Systems, Inc., a Nevada corporation
("Process"); and certain persons who are "Shareholders" of Process, 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 Process set forth below or hereafter
acquired during the Lock-Up/Leak-Out Period as defined in the Agreement.
_____________________________________________
(Entity Name, if Applicable)
____________________________________________
(Printed Name)
______________________________________________
(Signature)
______________________________________________
(Street Address)
______________________________________________
(City and State)
______________________________________________
(Number of Shares Owned or Underlying Other Securities)
______________________________________________
(Date)
BROKER/DEALER AGREEMENT
Computer Share Trust
Process Technology Systems, Inc.
0000 Xxxxxxxx Xxx., Xxx. 000
Xxxxxxx, XX 00000
Re: Resale restriction of certain shares of common stock of Process
Technology System, Inc., a Nevada corporation ("Process" or 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 owned by _____________________________________________ (the "Customer").
In consideration of transferring these securities free of any
legend or other notation respecting the resale of these securities so that the
undersigned broker can effect a sale of such shares (a "Company Approved
Sale"), the undersigned broker agrees:
(i) That all sales of these securities or any other
securities of Process on deposit in the accounts of the Customer will be made
in "broker's transactions" only as that term is defined in Rule 144 of the
Securities and Exchange Commission until _____________, 200_ (the "Resale
Restriction Period");
(ii) That there will be no legend removal or DTC's of any
securities of the Customer prior to a Company Approved Sale during the "Resale
Restrictions Period";
(iii) That if any of the securities of the Company are
ordered out by the Customer for delivery prior to the expiration of the Resale
Restriction Period, that instructions will be given to the Company's transfer
agent to re-issue the stock certificates for the Customer with the appropriate
restriction or restrictions as are outlined in the Letter Agreement of the
Customer, and to the effect that such securities can only be sold in "broker's
transactions."
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 ______________________________________
SELLER'S RESALE AGREEMENT
Computer Share Trust
Process Technology Systems, Inc.
0000 Xxxxxxxx Xxx., Xxx. 000
Xxxxxxx, XX 00000
Re: Resale restriction of certain shares of common stock of Process
Technology System, Inc., a Nevada corporation ("Process" or the "Company")
Dear Ladies and Gentlemen:
The undersigned agrees to effect all sales of shares of common
stock of Stock Certificate No. ______________ representing _______________
shares of common stock of Process in accordance with the "manner of sale"
requirements of Rule 144 as outlined in Schedule 1 hereto until on or before
______________, 200__.
DATED this ________ day of _____________________, 200__.
Very truly yours,
________________________________________
Broker/Dealer
________________________________________
Address
________________________________________
City, State, Zip
Date: ______________________ By: _______________________________________
Its: _______________________________________
_______________________________________
Address
_______________________________________
City, State, Zip
SCHEDULE 1
SELLER'S REQUIREMENTS IN "BROKERS' TRANSACTIONS"
RULE 144 "MANNER OF SALE" REQUIREMENTS
The securities shall be sold in "brokers' transactions" within the
meaning of Section 4(4) of the Securities Act or in transactions directly with
a "market maker," as that term is defined in Section 3(a)(38) of the
Securities Exchange Act of 1934, and the person selling the securities shall
not (1) solicit or arrange for the solicitation of orders to buy the
securities in anticipation of or in connection with such transaction, or (2)
make any payment in connection with the offer or sale of the securities to any
person other than the broker who executes the order to sell the securities.
