LOCK-IN AGREEMENT
EXHIBIT
10.56
| I. |
This
Promotional Shares Lock-In Agreement (“Agreement”), which was entered into
on the
______ day
of ______________, 20___,
by and between Smart Online, Inc. (“Issuer”),
whose principal place of business is located
at 0000 Xxxxxxxx Xxxxxxx, 0xx Xxxxx, Xxxxxx, Xxxxx Xxxxxxxx
00000,
and _______________________(“Security
Holder”) witnesses that:
|
| A. |
The
Issuer has filed an application with the Securities Administrator
of the
Commonwealth of Pennsylvania and the State of
Massachusetts (“Administrators”)
to register certain of its Equity Securities
held by shareholders for sale to public investors who are residents
of
those states (“Registration”);
|
| B. |
The
Security Holder is the owner of the shares of common stock or similar
securities and/or possesses convertible securities, warrants, options
or
rights which
may be converted into, or exercised to purchase shares of common
stock or
similar
securities of Issuer.
|
| C. |
As
a condition to Registration, the Issuer and Security Holder
(“Signatories”) agree
to be bound by the terms of this
Agreement.
|
| II. |
THEREFORE,
the Security Holder agrees not to sell, pledge, hypothecate, assign,
grant
any
option for the sale of, or otherwise transfer or dispose of, whether
or
not for consideration,
directly or indirectly, _________________________(___________)
PROMOTIONAL
SHARES (as defined in the North American
Securities Administrators Association (“NASAA”) Statement of Policy on
Corporate Securities Definitions) and all certificates representing
stock
dividends, stock splits, recapitalizations, and the like, that are
granted
to, or received by, the Security Holder
while such PROMOTIONAL SHARES are subject to this Agreement (“Restricted
Securities”).
Beginning
one year from the effective date of the public offering, two and
one-half
percent
(2 ½%) of the Restricted Securities may be released each quarter pro
rata
among the
Security Holders. All remaining Restricted Securities shall be
released
from this Agreement
on the anniversary of the second year from the effective date of
the
public offering.
|
| III. |
THEREFORE,
the Signatories agree and will cause the
following:
|
| A. |
In
the event of a dissolution, liquidation, merger, consolidation,
reorganization, sale or exchange of the Issuer’s assets or securities
(including by way of tender offer), or any other transaction or proceeding
with a person who is not a Promoter,
which results in the distribution of the Issuer’s assets or securities
(“Distribution”),
while this Agreement remains in effect
that:
|
1
| 1. |
All
holders
of the Issuer’s EQUITY SECURITIES will initially share on a pro
rata, per share basis in the Distribution, in proportion to the amount
of
cash or other consideration that they paid per share for their EQUITY
SECURITIES (provided that the Administrator has accepted the value
of
the
other consideration), until the shareholders who purchased the Issuer’s
EQUITY
SECURITIES pursuant to the public offering (“Public Shareholders”) have
received, or have had irrevocably set aside for them, an amount that
is
equal to one hundred percent (100%) of the public offering’s price per
share times the number of shares of EQUITY SECURITIES that they purchased
pursuant to the public offering and which they still hold at the
time of
the Distribution, adjusted for stock splits, stock dividends
recapitalizations and the like; and
|
| 2. |
All
holders of the Issuer’s EQUITY SECURITIES shall thereafter participate
on an equal, per share basis times the number of shares of EQUITY
SECURITIES they hold at the time of the Distribution, adjusted
for
stock splits, stock dividends, recapitalizations and the
like.
|
| 3. |
The
Distribution may proceed on lesser terms and conditions than the
terms
and conditions stated in paragraphs 1 and 2 above if a majority of
the
EQUITY SECURITIES that are not held by Security Holders, officers,
directors,
or Promoters of the Issuer, or their associates or affiliates vote,
or
consent by consent procedure, to approve the lesser terms and conditions.
|
| B. |
In
the event of a dissolution, liquidation, merger, consolidation,
reorganization, sale or exchange of the Issuer’s assets or securities
(including by way of tender offer), or any other transaction or proceeding
with a person who is a Promoter, which
results in a Distribution while this Agreement remains in effect,
the
Restricted Securities shall remain subject to the terms of this
Agreement.
|
| C. |
Restricted
Securities may be transferred by will, the laws of descent and
distribution, the operation of law, or by order of any court of competent
jurisdiction
and proper venue.
|
| D. |
Restricted
Securities of a deceased Security Holder may be hypothecated to pay
the
expenses of the deceased Security Holder’s estate. The hypothecated
Restricted
Securities shall remain subject to the terms of this Agreement. Restricted
Securities may not be pledged to secure any other
debt.
|
| E. |
Restricted
Securities may be transferred by gift to the Security Holder’s family
members,
provided that the Restricted Securities shall remain subject to the
terms
of
this Agreement.
|
2
| F. |
With
the exception of paragraph A.3 above, the Restricted Securities shall
have
the
same voting rights as similar EQUITY SECURITIES not subject to the
Agreement.
|
| G. |
A
notice shall be placed on the face of each stock certificate of the
Restricted Securities
covered by the terms of the Agreement stating that the transfer of
the
stock
evidenced by the certificate is restricted in accordance with the
conditions set
forth on the reverse side of the certificate;
and
|
| H. |
A
typed
legend shall be placed on the reverse side of each stock certificate
of
the Restricted
Securities representing stock covered by the Agreement which states
that
the sale or transfer of the shares evidenced by the certificate is
subject
to certain
restrictions until July 31, 2009
pursuant to an agreement between the Security Holder (whether beneficial
or of record) and the Issuer, which agreement is on file with the
Issuer
and
the stock transfer agent from which a copy is available upon request
and
without
charge.
|
| I. |
The
term of this Agreement shall begin on the date that the Registration
is
declared
effective by the Administrators (“Effective Date”) and shall terminate:
|
| 1. |
On
the anniversary of the second year from the effective date of the
public
offering; or
|
| 2. |
On
the date the Registration has been terminated if no securities
were sold
pursuant
thereto; or
|
| 3. |
If
the Registration has been terminated, the date that checks representing
all
of the gross proceeds that were derived therefrom and addressed
to the
public
investors have been placed in the U.S. Postal Service with first
class
postage affixed; or
|
| 4. |
On
the date the securities subject to this Agreement become “Covered
Securities,”
as defined under the National Securities Markets Improvement
Act of 1996; or
|
| 5. |
Thirty
(30) days after any of the Restricted Securities no longer are
PROMOTIONAL
SHARES.
|
| J. |
This
Agreement to be modified only with the written approval of the
Administrators.
|
| IV. |
THEREFORE,
the Issuer will cause the
following:
|
| A. |
A
manually signed copy of the Agreement signed by the Signatories to
be
filed with
the Administrators prior to the Effective
Date;
|
3
| B. |
Copies
of the Agreement and a statement of the per share offering price
to be provided to the Issuer’s stock transfer
agent;
|
| C. |
Appropriate
stock transfer orders to be placed with the Issuer’s stock transfer
agent
against the sale or transfer of the shares covered by the Agreement
prior
to its
expiration, except as may otherwise be provided in this
Agreement;
|
| D. |
The
above stock restriction legends to be placed on the periodic statement
sent to the registered owner if the securities subject to this Agreement
are uncertificated securities.
|
Pursuant
to the requirements of this Agreement, the Signatories have entered into this
Agreement,
which may be written in multiple counterparts and each of which shall be
considered an
original. The Signatories have signed the Agreement in the capacities, and
on
the dates, indicated.
IN
WITNESS WHEREOF, the Signatories have executed this Agreement.
SMART
ONLINE, Inc.
By:
_____________________________
Its:
_____________________________
____________________________
Signature
____________________________
Printed Name of Security Holder
____________________________
Title, if applicable
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