EXHIBIT 10.5
LOCK-UP AGREEMENT
THIS AGREEMENT (this
"Agreement"), dated as
of August 31, 2004 by and
among Systems Evolution Inc., an Idaho
corporation
(the "Company"), and the
shareholders of the Company listed on
Schedule A attached hereto (collectively,
the "Shareholders")
WHEREAS, to induce
certain investors (the
"Investors") to enter
into
that certain Note and Warrant Purchase Agreement dated as of the date hereof
(the "Purchase Agreement") by and among the Company and the Investors, the
Shareholders have agreed not to sell any shares of
the common
stock, no par
value per share, of the Company that such Shareholders presently own or may
acquire after the date hereof (the "Common
Stock"), except in accordance with
the terms and conditions set forth herein.
Capitalized terms used herein without
definition shall have the meanings assigned to such terms in the Purchase
Agreement.
NOW, THEREFORE,
in consideration of the covenants and conditions
hereinafter contained, the parties hereto
agree as follows:
1. Restriction on Transfer; Term. The Shareholders hereby agree with
the Company that the Shareholders will not offer, sell, contract to sell,
assign, transfer, hypothecate, pledge or grant a security interest in, or
otherwise dispose of, or enter into any
transaction
which is designed
to, or
might reasonably be expected to, result in
the disposition of (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company), directly or
indirectly, any of the shares of Common Stock for a period of two (2)
years
following the date of this Agreement (the
"Period").
2. Ownership.
During the Period,
the Shareholders shall retain all
rights of ownership in the Common Stock,
including, without
limitation, voting
rights and the right to receive any
dividends,
if any, that may be
declared in
respect thereof.
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3. Company and
Transfer Agent.
The Company is hereby
authorized
to
disclose the existence of this Agreement to
its transfer agent.
The Company and
its transfer agent are hereby authorized to decline to make any
transfer of the
Common Stock if such transfer would constitute a violation or breach
of this
Agreement and the Purchase Agreement.
4. Notices. All notices, demands, consents, requests, instructions and
other communications to be given or
delivered or permitted under or by reason of
the provisions of this Agreement or in connection with the transactions
contemplated hereby shall be in writing and
shall be deemed to be delivered and
received by the intended recipient as
follows: (i) if personally delivered, on
the business day of such delivery (as evidenced by the receipt of the
personal
delivery service), (ii) if mailed certified or registered mail
return receipt
requested, four (4) business days after being mailed, (iii) if delivered by
overnight courier (with all charges having
been prepaid), on the business day of
such delivery (as evidenced by the receipt
of the overnight
courier service of
recognized standing), or (iv) if delivered by facsimile
transmission,
on the
business day of such delivery if sent by 6:00 p.m. in the time zone of the
recipient, or if sent after that time, on the
next succeeding
business day (as
evidenced by the printed confirmation of delivery generated by the sending
party's telecopier machine). If any notice, demand, consent, request,
instruction or other communication cannot be delivered because of a changed
address of which no notice was given (in
accordance with this Section 4), or the
refusal to accept same, the notice,
demand, consent, request, instruction or
other communication shall be deemed received on the second
business day the
notice is sent (as evidenced by a sworn affidavit of the sender). All such
notices, demands, consents, reques
