Exhibit 10.7
PROMOTIONAL SHARES LOCK-IN AGREEMENT
This Promotional Shares Lock-In Agreement ("Agreement") is entered into as of
the ________ day of June, 2002 by and between Xxxx'x, Inc., a Delaware
corporation ("Company"), and ___________ ("Security Holder").
The Company has filed an application with the Securities Administrator of
certain states ("Administrators") to register certain of its Equity Securities
for sale to public investors who are residents of those states ("Registration");
The Security Holder is the owner of shares of common stock and/or possesses
convertible securities, warrants, options or rights which may be converted into,
or exercised to purchase shares of common stock of Company, of which ___________
shares of common stock and options to purchase __________ shares of common stock
of Company (the "Promotional Shares") are the subject of this Agreement.
As a condition to Registration, the Company and Security Holder ("Signatories")
agree to be bound by the terms of this Agreement with respect to the Promotional
Shares.
THEREFORE, the parties hereto agree as follows:
1. 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, any of the Promotional Shares, and all
certificates representing stock dividends, stock splits, recapitalizations, and
the like, that are granted to, or received by, the Security Holder with respect
to the Promotional Shares, while the Promotional Shares are subject to this
Agreement (collectively, the "Restricted Securities"). Beginning one year from
the completion date of the public offering, two and one-half percent (2 1/2%) 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 completion date of
the public offering.
2. Signatories agree and will cause the following:
A. In the event of a dissolution, liquidation, merger, consolidation,
reorganization, sale or exchange of the Company'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
Company's assets or securities ("Distribution"), while this Agreement remains in
effect that:
i. All holders of the Company'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 Company'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
ii. All holders of the Company'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.
iii. 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 Company, 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 Company'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.
F. With the exception of paragraph 2A.iii 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 __________ (insert date of termination of
the Agreement) pursuant to an
agreement between the Security Holder (whether beneficial or of record) and the
Company, which agreement is on file with the Company 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:
i. On the anniversary of the second year from the completion date of the public
offering; or
ii. On the date the Registration has been terminated if no securities were sold
pursuant thereto; or
iii. 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
iv. On the date the securities subject to this Agreement become "Covered
Securities," as defined under the National Securities Markets Improvement Act of
1996.
J. This Agreement maybe modified only with the written approval of the
Administrators.
3. The Company will cause the following:
A. A manually signed copy of the Agreement signed by the Signatories shall be
filed with the Administrators prior to the Effective Date;
B. Copies of the Agreement and a statement of the per share initial public
offering price shall be provided to the Company's stock transfer agent;
C. Appropriate stock transfer orders shall be placed with the Company'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 shall 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.
XXXX'X, INC.
By ___________________________
Xxxxxxxxxxx Xxxx, President
SECURITY HOLDER:
_____________________________
