LOCK-UP/LEAK-OUT AGREEMENT
THIS
LOCK-UP/LEAK-OUT AGREEMENT (the “Agreement”) is made and entered into as of July
15, 2008, between those individuals set forth on Schedule A attached hereto
(each, a “Shareholder;” collectively, the “Shareholders”) and Platinum Studios,
Inc., a California corporation (the “Company”).
RECITALS
WHEREAS,
the Shareholders collectively own all of the issued and outstanding membership
interest in WOWIO, LLC, a Pennsylvania limited liability company (the
“Membership Interests”);
WHEREAS,
simultaneously herewith, the Company has entered into an Acquisition Agreement
with the Shareholders pursuant to which the Company is acquiring all of the
Membership Interests (the “Acquisition Agreement”);
WHEREAS,
all capitalized terms not defined herein shall have the meanings ascribed to
them in the Acquisition Agreement;
WHEREAS,
in consideration for the sale and transfer of the Membership Interests, the
Shareholders have agreed to accept shares of common stock of the Company in
the
form of Purchase Price Shares and Earn Out Shares (collectively, the
“Acquisition Stock”), some of which shall be issued as of the Closing Date and
some of which shall be issued after the Closing Date, all in accordance with
the
terms of the Acquisition Agreement;
WHEREAS,
as a material inducement for the Company to issue the Acquisition Stock as
consideration for the sale of the Membership Interests, and as a condition
precedent to the closing of the purchase and sale of the Membership Interests
under the Acquisition Agreement, the Company and the Shareholders have agreed
to
enter into this Agreement and to restrict the sale, assignment, transfer,
conveyance, hypothecation or alienation of the Acquisition 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. Notwithstanding
anything contained in this Agreement, each of the Shareholders may transfer
such
Shareholder’s shares of Acquisition Stock to such Shareholder’s affiliates,
partners in a partnership, subsidiaries and trusts, or spouses and lineal
descendants (individually, a “Transferee”) for estate planning purposes, at such
value as determined by such 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 of the Acquisition Stock. 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 Shareholders may be
otherwise restricted from selling shares of the Acquisition Stock under
applicable United States or state securities laws, rules and regulations, the
Shareholders may only sell shares of the Acquisition Stock subject to the
following conditions for the twelve (12) month period following the lapsing
of
the Rule 144 holding period applicable to the Acquisition Stock (the
“Lock-Up/Leak-Out Period”), it being acknowledged that because the Acquisition
Stock is issuable over a period of time at and following the Closing Date,
each
issuance of Acquisition Stock shall have a separate, applicable Lock-Up/Leak
Out
Period :
2.1 Each
Shareholder shall be allowed to sell 1/12th
of such
Shareholder’s shares of Acquisition Stock per month for the twelve (12) months
of the applicable Lock-Up/Leak-Out Period.
2.2 All
shares of a Shareholder’s Acquisition Stock shall be sold on a non-cumulative
basis, meaning that if no shares of Acquisition Stock was sold by such
Shareholder during a month while Acquisition Stock was qualified to be sold
by
such Shareholder, those unsold shares could not be sold in the next successive
month; and likewise, if part of the Acquisition Stock that could be sold during
any monthly period was sold, such Shareholder may not cumulate the unsold
portion of that month’s allotment to the next month, and so forth. Each
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 Acquisition Stock.
2.3 Except
as
otherwise provided herein, all Acquisition Stock shall be sold in “broker’s
transactions” and each 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 applicable Lock-Up/Leak-Out Period.
2.4 An
appropriate legend describing this Agreement shall be imprinted on each stock
certificate representing the Acquisition Stock covered hereby, and the transfer
records of the Company’s transfer agent shall reflect such appropriate
restrictions.
2.5 Each
Shareholder agrees that such Shareholder will not engage in any short selling
of
the Acquisition Stock during the applicable Lock-Up/Leak-Out
Period.
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 Acquisition
Stock
or if such waiver would otherwise be in the best interests of the development
of
the trading market for the Acquisition Stock. Such waiver shall be applicable
equally to all of the Shareholders, and upon issuance of such waiver all
Shareholders shall be promptly notified of the waiver given and the time frame
during which such waiver shall be effective.
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 Acquisition 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, each Shareholder shall be entitled such Shareholder’s respective
beneficial rights of ownership of such Shareholder’s shares of Acquisition
Stock, including the right to vote such Shareholder’s shares of Acquisition
Stock for any and all purposes.
6. The
number of shares of Acquisition Stock included in any monthly allotment that
can
be sold by a Shareholder and the per share price restrictions covered by this
Agreement shall be appropriately adjusted should the Company declare 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 the Company: |
00000
X.
Xxxxxxx Xxxx.
00xx
Xxxxx
Xxx
Xxxxxxx, XX 00000
Fax:
(000) 000-0000
| to Shareholders: |
at
addresses set forth for each Shareholder on Schedule
A
|
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 Acquisition 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. If
a
Shareholder fails to fully adhere to the terms and conditions of this Agreement,
then such Shareholder shall be liable to the Company for any damages suffered
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 such Shareholder, 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 such
Shareholder to cease and desist from violating the terms and conditions of
this
Agreement and specifically requiring such Shareholder to perform such
Shareholder’s 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 such Shareholder.
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 California applicable to contracts entered into and to be performed
wholly within said State; and the Company and each Shareholder agrees that
any
action based upon this Agreement may be brought in the United States and state
courts of Los Angeles, County, California only, and each Shareholder submits
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 be of no further force and effect, and the transfer restrictions
described herein shall not apply, in the event of a material breach of the
Acquisition Agreement by Company, including but not limited to a failure by
Company to direct the transfer agent to issue any Purchase Price Shares or
Earn
Out Shares to the Shareholders (the “Transfer Agent Instructions”), within the
specific timelines set forth in the Acquisition Agreement, even in the absence
of bad faith; provided that the Shareholders must give notification of such
breach to the Company in writing and the Company shall have 20 days following
such notice to cure such breach unless such breach involves the Transfer Agent
Instructions and then such cure period shall be only five business days.
IN
WITNESS WHEREOF, the undersigned have duly executed and delivered this Agreement
as of the day and year first above written.
“Company”
By:
________________________________
Xxxxx
Xxxxxxxxx, President
“Shareholders”
_____________________________________________
Xxxxxxx
Xxxxxxx
_____________________________________________
Xxxx
Xxxxx
_____________________________________________
Xxxxx
Learned
EXTREME
HOLDINGS, INC.
By:
__________________________________________
Xxxxx
Xxxxx, Co-President
ALMARMAL,
LLC
By:
__________________________________________
Xxxxx
Xxxxxxx, President
________________________________________________
Xxxxxxxx
Xxxxxxxxxx
[SIGNATURE
PAGE TO LOCK-UP/LEAK-OUT AGREEMENT]
______________________________________________
Xxxxxxx
Xxxxxx
______________________________________________
Xxxxx
Xxxxxxx
______________________________________________
Xxxxxx
Kingslyn
______________________________________________
Xxxx
Xxxxxxx
______________________________________________
Xxxx
Xxxxxxx II
______________________________________________
Xxxxxx
X.
Xxxxxxx
______________________________________________
Xxxxx
X.
Xxxxxx III
[SIGNATURE
PAGE TO LOCK-UP//LEAK OUT AGREEMENT]
