Unassociated Document


    LOCK-UP
      AND REDEMPTION AGREEMENT

    


    THIS
      LOCK-UP AND REDEMPTION AGREEMENT
      (the
“Agreement”) is made and entered into as of the date set forth on the signature
      page below, between SENTRY
      POWER TECHNOLOGY, INC.,
      a Nevada
      corporation (“Sentry Power”), POWER
      TECHNOLOGY, INC.,
      a Nevada
      corporation (“Power”) and SENTRY
      POWER SYSTEMS, LLC,
      a
      Delaware limited liability company (the “Holder”).

     

    RECITALS:

    


    WHEREAS,
      the
      Holder has agreed to exchange certain assets associated or used in connection
      with the operation of its automotive battery backup systems to provide emergency
      power to residential and business property in exchange for 6,075,949 shares
      of
      Power common stock (the “Power Shares”) pursuant to an Asset Purchase Agreement
      dated April 11, 2006, as Amended on May 1, 2006 and May 12, 2006 (the “Purchase
      Agreement”); and

    


    WHEREAS,
      the
      Holder shall be entitled to receive the Power Shares upon the closing of the
      Purchase Agreement (the “Closing Date”) which is conditioned upon, among other
      things, the execution and delivery of this Agreement; and

    


    WHEREAS,
      the
      Holder has agreed to enter into this Agreement to restrict the sale, assignment,
      transfer, conveyance, or hypothecation of the Power Shares and to provide for
      certain redemption and exchange rights between the parties, all on the terms
      set
      forth below; and

    


    WHEREAS,
      any
      capitalized terms not defined herein shall have the meaning set for in the
      Purchase Agreement.

    


    NOW,
      THEREFORE,
      in
      consideration of the foregoing premises and the mutual covenants contained
      herein, and other good and valuable consideration, the receipt and sufficiency
      of which are hereby acknowledged, the parties hereto agree as
      follows:

    


    1.  The
      Holder agrees that it may not sell, pledge, hypothecate, transfer, assign or
      in
      any other manner dispose of the Power Shares for a period of twenty-four (24)
      months from the Closing Date, except for 1,582,279 Power Shares which the Holder
      has agreed to pledge to Power as collateral for a Guaranty Stock Pledge
      Agreement as provided for in the Purchase Agreement,. The Holder acknowledges
      that the certificates representing the Power Shares will contain certain
      restrictive legends reflecting this resale restriction.

    


    2.  The
      restrictions set forth in Paragraph 1 above shall terminate and this Agreement
      shall be of no further force or effect if Sentry Power is not “Cash Flow
      Positive” as defined below twelve (12) months after the Closing Date and Power
      exercises its right, by written notice to Holder within fifteen (15) days of
      the
      end of the twelve (12) months period to call for redemption and exchange of
      all
      of the Power Shares held by the Holder in exchange for 65% of the shares then
      outstanding of Sentry Power (the “Power Redemption and Exchange Right”). In the
      event that Power elects to exercise the Power Redemption and Exchange Right
      then
      it shall have the right, but not the obligation, to require the Holder to file,
      at Power’s expense, a Registration Statement with the Securities and Exchange
      Commission (the “SEC”) to register for resale the 35% remaining shares of Sentry
      Power then held by Power (or its shareholders).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    3. In
      the
      event that Power does not elect to exercise the Power Redemption and Exchange
      Right, then after twenty-four (24) months from the Closing Date the restrictions
      set forth in Paragraph 1 shall terminate and Holder shall own the Power Shares
      free and clear of any of the restrictions imposed by this Agreement or the
      Purchase Agreement. In addition, for a period of fifteen (15) days commencing
      twenty-four (24) months after the Closing Date, Holder shall have the right,
      with written notice to Power, to require Power to exchange 65% of the shares
      then outstanding of Sentry Power for all of the Power Shares (the “Holder
      Exchange Right”). In the event that the Holder elects to exercise the Holder
      Exchange Right then Power shall have the right, but not the obligation, to
      demand that Sentry Power file, at Sentry Power’s expense, a Registration
      Statement with the SEC to register for resale the 35% remaining shares of Sentry
      Power held by Power (or its shareholders).

    


    4. For
      purposes of this Agreement Sentry Power shall be considered “Cash Flow Positive”
where, in the preceding twelve months, Sentry Power has accrued positive
      earnings when earnings are calculated
      in accordance with generally accepted accounting procedures (1) before the
      deduction of interest and the amortization of principal due on the Promissory
      Note in the amount of $235,000, payable to CSI Business Finance, Inc.; (2)
      before the deduction of Federal Income Taxes payable by Sentry Power; and (3)
      before the deduction of depreciation expense. 

    


    5. The
      Holder agrees that it will not engage in any short selling of Power Shares
      during the term of this Agreement.

    


    6. Except
      as
      otherwise provided in this Agreement or any other agreements between the
      parties, the Holder shall be entitled to its beneficial rights of ownership
      of
      the Power Shares, including the right to vote the Power Shares for any and
      all
      purposes. 

    


    7. The
      resale restrictions on the Power Shares 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.

    


    8. If
      Power,
      Sentry Power, or the Holder fails to fully adhere to the terms and conditions
      of
      this Agreement, such party 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 parties agree that in the event of a breach of any of the terms
      and
      conditions of this Agreement, 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 and an order of a court requiring the defaulting party
      to
      cease and desist from violating the terms and conditions of this Agreement
      and
      specifically requiring the party to perform its obligations hereunder is fair
      and reasonable by reason of the inability of the other parties to this Agreement
      to presently determine the type, extent or amount of damages that they may
      suffer as a result of any breach or continuation thereof. 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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    9. 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.

    


    10. This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Texas; and all of the parties hereto agree that any action based upon
      this Agreement may be brought in the federal or state courts located in Harris
      County, Texas only, and each submits itself to the jurisdiction of such courts
      for all purposes hereunder.

    


    


    IN
      WITNESS WHEREOF,
      the
      undersigned have duly executed and delivered this Agreement as of the day and
      year first above written.

     

     

    
      	 	 	 
	 	
              SENTRY
                POWER TECHNOLOGY, INC.

            
	 
 	 
 	 
 
	Date: May
              16,
              2006	By:  	/s/ Bernard
              J. Walter
	 	
              
Bernard
              J. Walter, President
	 	       


    

    
      	 	 	 
	 	 	 
	 	 	 
	 	
              POWER
                TECHNOLOGY, INC.

            
	 
 	 
 	 
 
	 	By:  	/s/ Bernard
              J. Walter
	 	
              
Bernard
              J. Walter, President
	 	
            


    

    
      	 	 	 
	 	 	 
	 	 	 
	 	SENTRY
              POWER SYSTEMS, LLC
	 
 	 
 	 
 
	 	By:  	/s/ Michael
              Julian
	 	
              
Michael
              Julian, Manager


    

    
      	 	 	 
	 	 
	 
 	 
 	 
 
	 	
              Number
                of Power Shares Subject to this
                Agreement:

              1,582,279