EXHIBIT 99(v)
-------------
PROMOTIONAL SHARES LOCK-IN AGREEMENT
I. This Promotional Shares Lock-In Agreement ("Agreement"), which was
entered into on the 16th day of April, 2001, by and between SLS
International Inc. ("Issuer"), whose principal place of business is
located in Springfield, Missouri, and ▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
("Security Holder") and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ law Office, Jefferson
City, Missouri witnesses that:
A. The Issuer has filed an application with the Securities Administrator
of the State of Missouri, ("Administrator") to register certain of its
Equity Securities 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 the PROMOTIONAL SHARES tire subject to this
Agreement ("Restricted Securities").
Beginning two years 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 he released from escrow on the anniversary of the fourth
year from the completion 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. 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
65
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 he transferred by ▇▇▇▇ 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 A.3 above, the Restricted Securities
shall have the same voting rights as similar EQUITY SECURITIES not
subject to the Agreement.
66
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
two years following the completion of the offering 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 fourth year from the completion 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.
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;
B. Copies of the Agreement and a statement of the per share initial public
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;
67
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.
E. The Signatories will deliver their stock certificates to ▇▇▇▇ ▇▇▇▇▇▇▇
who will hold such certificates pursuant to the terms of this
Agreement.
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.
SLS International, Inc.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇
-------------------------
▇▇▇▇ ▇. ▇▇▇▇, President
----------------------------
Signature
/s/ ▇▇▇▇ ▇. ▇▇▇▇
----------------------------
▇▇▇▇ ▇. ▇▇▇▇
----------------------------
Signature
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
68