EXHIBIT 10.7
Shown below are the persons and shares that are subject to the
Lock-Up/Leak-Out Agreements:
Name Subject Shares
John Walsh 71,000 *
Jason Amos 32,500
Gary Ashurst 30,000
Matthew Cinquanta 90,000
William Emanuel 10,000
Mark McNeely 17,000
David Modica 11,500
* The Company has agreed to exempt 15,592 shares originally held by Mr.
Walsh from his Lock-up/Leak-out Agreement.
LOCK-UP/LEAK-OUT AGREEMENT
THIS LOCK-UP/LEAK-OUT AGREEMENT (the "Agreement") is between 4th GRADE
FILMS, INC., a Utah corporation (the "Company"), and the undersigned person or
entity listed on the Counterpart Signature Page hereof, sometimes referred to
herein as the "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.
WHEREAS, it is intended that the shares of common stock of the Company
covered by this Agreement shall only include the common stock currently owned by
the Shareholder and represented by the stock certificate (or any successor stock
certificate issued on the transfer of such stock certificate) described on the
Counterpart Signature Page hereof (the "Common Stock"); and
WHEREAS, the execution and delivery of this Agreement was a condition of
the purchase by the Shareholder of the Common Stock covered hereby; and
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 the
Shareholder may be otherwise restricted from selling shares of Common Stock
under applicable federal or state securities laws, rules and regulations and
Securities and Exchange Commission (the "SEC") interpretations thereof, the
Shareholder may only sell the Common Stock subject to the following conditions,
commencing on the later of ninety (90) days from the date the Company completes
a "reverse" merger or acquisition with Strainwise, Inc., a Colorado corporation
("Strainwise"), and the date of the filing by the Company's current report with
the SEC under Item 5.01(8) on Form 8-K that contains the "Form 10 Information"
as required therein and in SEC Rule 144(i) (the "Lock-Up Period"). Following the
Lock-Up Period, the Shareholder may sell the Common Stock as follows (the
"Leak-Out Period"):
1.1 Subsequent to the Lock-Up Period, the Shareholder shall be
allowed to sell only 1/6th of such Shareholder's shares of Common Stock that are
covered hereby, per month, during each of the next successive six months
following the Lock-Up 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 cannot be sold in the next successive month
(the "Leak-Out Period").
1.2 Except as otherwise provided herein, all Common Stock shall be
sold by the Shareholder in "broker's transactions" and in compliance with the
"manner of sale" requirements as those terms are defined in Rule 144 of the SEC
during the Leak-Out Period.
1.3 The Shareholder shall not engage in an investment strategy based
upon selling the shares of the Company "short" while the shares of Common Stock
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covered hereby remain unsold, and shall not "short" the Company's Common Stock
while such shares remain unsold
1.4 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 Escrow Shares.
1.5 An appropriate legend describing this Agreement shall be
imprinted on each stock certificate representing Common Stock covered hereby,
and the transfer records of the Company's transfer agent shall reflect such
restrictions.
2. The delivery of a duly executed copy of the Shareholder Resale Agreement
that has been accepted and acknowledged by the Shareholder's broker (Exhibit A
hereto) shall be satisfactory evidence for all purposes of this Agreement that
the Shareholder and the broker will comply with the "brokers' transactions,"
"manner of sale" and "no shorting" requirements of this Agreement, and no
further evidence thereof will be required of the Shareholder; provided, however,
the Company may confirm such compliance with the Shareholder and the
Shareholder's broker, to the extent that it deems reasonably required or
necessary to assure compliance with this Agreement; and provided, however, that
the Shareholder can otherwise provide satisfactory evidence to the Company of
such compliance, subject to the Company's acceptance of any such alternative
compliance evidence.
3. Notwithstanding anything to the contrary set forth herein, the Company
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, all such waivers shall be pro rata, as to all
Shareholders of the Company who have executed a Lock-Up/Leak-Out Agreement as a
condition to the purchase of the Common Stock in any similar transaction
occurring prior to the acquisition of Strainwise. Notwithstanding, the Company
may allow any such Shareholder the right to sell or transfer Common Stock in a
private transaction, subject to receipt of an opinion of legal counsel for the
Company, and subject to any transferee's execution and delivery of a copy of
this Agreement.
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, then this Agreement shall terminate as of the closing of
such event, and the Common Stock restrictions on the resale of the Common Stock
pursuant hereto shall terminate, excluding, however, any merger, consolidation
or reorganization by which the Company becomes a publicly-held company by reason
of a "reverse" merger as mentioned above, which such event or such transaction
shall have no effect on the enforceability of this Agreement.
5. Except as otherwise provided in this Agreement or any other agreements
between the parties, the Shareholder 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.
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6. The number of shares of Common Stock included in any allotment that can
be sold by the Shareholder hereunder shall be appropriately adjusted should the
Company 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 the Company, at 1350
Independence St., Suite 300, Lakewood, CO 80215, and to the Shareholder, at the
address in the Counterpart Signature Page. 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
country-regionplaceUnited States and state securities laws, rules and
regulations.
10. The Company or the 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. The Shareholder agrees that in the event of a breach of any
of the terms and conditions of this Agreement by the 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 Shareholder to cease and desist
from violating the terms and conditions of this Agreement and specifically
requiring the 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 the Company or
any non-defaulting Shareholder 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 and approved by a
majority of the members of the Board of Directors of the Company.
12. This Agreement shall be governed by and construed in accordance with
the laws of the State of Utah applicable to contracts entered into and to be
performed wholly within said State; and the Company and the Shareholder agree
that any action based upon this Agreement may be brought in the United States
federal and state courts situated in Utah only, and that shall each submit 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.
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14. This Agreement shall be binding upon any successors or assigns of the
Common Stock, without qualification, and in the event of any exchange of the
Common Stock under a merger or reorganization or other transaction of the
Company by which the Common Stock is subject to exchange for other securities in
any manner, this Agreement shall remain if full force and effect and shall apply
to any securities received or receivable in exchange for such Common Stock,
without qualification.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered this
Agreement as of the day and year first above written.
4th GRADE FILMS, INC.
Date: August 19, 2014. By: /s/ Erin Phillips
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Erin Phillips, President
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LOCK-UP/LEAK-OUT AGREEMENT
COUNTERPART SIGNATURE PAGE
This Counterpart Signature Page for that certain Lock-Up/Leak-Out Agreement
(the "Agreement") effective as of the latest signature date hereof, among 4th
Grade Films, Inc., a Utah corporation (the "Company"); and the undersigned, 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 the Company set forth below and
represented by the stock certificate described below.
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(Name)
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(Street Address)
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(City and State)
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(Stock Certificate No. and Number of Shares)
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(Date)
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(Signature) (Representative Capacity, if Applicable)
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EXHIBIT A
Form of
Shareholder's Resale Agreement
Company Name and Address
Transfer Agent Name and Address
Re: Resale of __________ shares of common stock of Strainwise,
Inc., formerly 4th Grade Films, Inc., a Utah corporation (the
"Company"), which are represented by Stock Certificate No. __,
representing ________ shares, in the name of and beneficially owned
by __________________ (the "Seller" and the "Customer"), under that
certain Lock-Up/Leak-Out Agreement dated ______, __, 2014, (the
"LULO Agreement")
Dear Ladies and Gentlemen:
In consideration of _____________________ (the "Broker") accepting the
deposit of the above referenced stock certificate and the shares of common stock
represented thereby into the account of the undersigned (the "Customer"), to
allow the Customer to sell the common stock through the Broker in customary
broker "agency" transactions" that are made in accordance with the strict
guidelines of the LULO Agreement, the Customer agrees:
(i) To effect all sales of the Customer's shares covered by the LULO
Agreement in accordance with the "brokers' transactions" and "manner
of sale" requirements of Rule 144, meaning, among other conditions,
that the Customer will pay only the usual and customary brokerage
commission or discount in connection with any such sale and will not
solicit or arrange for the solicitation of orders to buy any of the
Customer's shares;
(ii) Not to engage in an investment strategy based upon selling these or
any other shares of the Company, whether equity, debt or otherwise,
"short" while the Customer's shares covered hereby remain unsold, and
to not "short" the Company's shares while these shares remain unsold;
(iii) The Customer agrees to provide you with reasonable documentation, on
your request to verify compliance with the foregoing, and authorizes
the Broker to provide reasonable documentation to verify compliance
with the terms and provisions hereof.
(iv) The Customer is acting for the Customer's own account in the resale of
any of the Customer's shares, as outlined in the LULO Agreement, and
as represented by the above referenced stock certificate or
certificates or any stock certificate into which the Customer's shares
covered by the LULO Agreement are transferred and not in concert with
any other person whatsoever.
SHAREHOLDER
Date: _______________ --------------------------------------
Signature
ACCEPTED:
Broker
Date: _______________ By:
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Signature