Doron Roethler Schedule 13D

0001167966-05-000298.txt : 20120626 0001167966-05-000298.hdr.sgml : 20120626 20050224122542 ACCESSION NUMBER: 0001167966-05-000298 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20050224 DATE AS OF CHANGE: 20050224 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Roethler Doron CENTRAL INDEX KEY: 0001318876 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: BUSINESS PHONE: 035755522 MAIL ADDRESS: STREET 1: C/O MICHAL RAVIV, GRANOT STRAUSS ADAR & STREET 2: 28 MENACHEM BEGIN, BETZALEL STREET CITY: RAMAT GAN STATE: L3 ZIP: 52521 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SMART ONLINE INC CENTRAL INDEX KEY: 0001113513 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 954439334 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-80570 FILM NUMBER: 05636528 BUSINESS ADDRESS: STREET 1: 2530 MERIDAN PARKWAY CITY: DURHAM STATE: NC ZIP: 27713 BUSINESS PHONE: 919-806-4521 MAIL ADDRESS: STREET 1: P.O. BOX 12794 CITY: RESEARCH TRIANGLE PARK STATE: NC ZIP: 27709 SC 13D 1 roethler_sc13d.htm DORON ROETHLER SCHEDULE 13D Doron Roethler Schedule 13D

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

Smart Online, Inc.

Common Stock, par value $0.001

83171V 10 0

Doron Roethler

C/o Michal Raviv

Granot Strauss Adar & Company

28 Menachem Begin

Betzalel Street

Ramat Gan 52521

Israel

with a copy to:

James F. Verdonik, Esq.

Daniels Daniels & Verdonik, P.A.

1822 NC Highway 54 East, Suite 200

Durham, North Carolina 27713

(919) 544-5444

February 15, 2005

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box: |_|

Schedule 13D

Page 2 of 6

1.	NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS Doron Roethler
2.	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) o (b) x
3.	SEC USE ONLY
4.	SOURCE OF FUNDS PF
5.	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E):	o
6.	CITIZENSHIP OR PLACE OF ORGANIZATION: United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7. SOLE VOTING POWER: 1,754,735 8. SHARED VOTING POWER: 0 9. SOLE DISPOSITIVE POWER: 1,754,735 10. SHARED DISPOSITIVE POWER: 0
11.	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 1,754,735 See Item 5(a)
12.	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES: p
13.	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 16%
14.	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS): IN

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Schedule 13D

Item 1. Security and Issuer.

This statement on Schedule 13D (this “Schedule 13D”) relates to the Common Stock, par value $0.001 per share (the “Common Stock”), of SmartOnline, Inc., a Delaware corporation (the “Company”). The principal executive office of the Company is located at 2530 Meridian Parkway, Durham, North Carolina 27713.

Item 2. Identity and Background.

(a) This Schedule 13D is being filed on behalf of Doron Roethler (the “Reporting Person”).

(b) The business address of the Reporting Person is c/o Michal Raviv, Granot Strauss Adar & Company, 28 Menachem Begin (Betzalel Street), Ramat Gan 52521 Israel.

(d) The Reporting Person has not, during the five years prior to the date of this Schedule 13D, been convicted in a criminal proceeding.

(e) The Reporting Person has not, during the five years prior to the date of this Schedule 13D, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction, as a result of which the Reporting Person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violation with respect to such laws.

(f) The Reporting Person is a citizen of Holland.

Item 3. Source and Amount of Funds or Other Consideration.

Reporting Person acquired the shares when the Reporting Person purchased shares from the Company and subsequent purchases from another shareholder of the Company paying an aggregate of $956,435 utilizing his personal funds.

Item 4. Purpose of Transaction.

The Reporting Person acquired the shares of Common Stock of the Company for investment purposes.

(a) Except as set forth below in this paragraph (a), the Reporting Person does not have any plans or proposals that relate to, or would result in, the acquisition by any person of additional securities of the Company or the disposition of securities of the Company.

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The securities of the Company held by the Reporting Person constitute a significant portion of the Reporting Person’s total personal net worth. One of the Reporting Person’s investment goals is diversification, which would require some sales of the securities of the Company by the Reporting Person. Accordingly, the Reporting Person may, from time to time, make decisions to sell securities of the Company based upon then-prevailing market conditions.

The Reporting Person entered into Put Agreements dated March 10, 2004 and August 13, 2004 with Atlas Capital, SA (“Atlas”). The Company is not a party to this agreement, but these agreements were entered into at the time of an investment in the Company by Atlas to provide comfort to Atlas that would fulfill its promise to cause its common stock to become publicly traded. The Put Agreements give Atlas the right to require Mr. Roethler and an officer of the Company, Mr. Michael Nouri, to purchase for $2,700,000 the 728,571 shares of common stock and warrants to purchase 188,571 shares of common stock Atlas purchased from the Company in March 2004 and August 2004. The Put Agreements can be exercised in the sole discretion of Atlas during the month of March 2005 or during the month of March 2006, but the Put Agreements terminate and the put options cannot be exercised after (i) the common stock of the Company is listed or quoted for pubic trading, or (ii) the stockholders of the Company vote to approve any action reasonably necessary to cause stock of the Company to be publicly traded, but Atlas votes against the action, or (iii) Atlas transfers any of its common stock or warrants of the Company. The Put Agreements are not assignable and terminate if Atlas transfers the securities covered by the Put Agreements.

The Reporting Person signed a lock-up agreement (the “Lock-up Agreement”) that restrict the sale of certain of the shares owned by the Reporting Person reported in this Report. These transfer restrictions include, among other restrictions, a “lock-up” agreement preventing the sale or transfer of the shares (other than transfers to certain related parties). The restrictions are effective through September 30, 2006, but commencing October 1, 2005, the Reporting Person, subject to the provisions of the Lock-up Agreement may transfer up to 8.5% of such holder’s shares of Common Stock during each calendar month.

(b) The Reporting Person does not have any plans or proposals that relate to or would result in an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries. The Company will, however, be evaluating acquiring all or parts of other companies as part of its business strategy and may from time to time do such acquisitions.

(c) The Reporting Person does not have any plans or proposals that relate to or would result in a sale or transfer of a material amount of assets of the Company or any of its subsidiaries.

(d) The Reporting Person does not have any specific plans to change the present Board of Directors or management of the Company. The Company, however, as a goal to increase the number of independent directors and to add experienced management. The Company will, therefore, be evaluating suitable candidates from time to time.

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(e) The Reporting Person does not have any plans or proposals that relate to or would result in any material change in the present capitalization or dividend policy of the Company, except that the Company may from time to time sell additional securities to raise capital.

(f) The Reporting Person does not have any plans or proposals that relate to or would result in any other material change in the Company’s business or corporate structure.

(g) The Reporting Person does not have any plans or proposals that relate to or would result in changes in the Company’s charter, bylaws or instruments corresponding thereto or other actions that may impede the acquisition of control of the Company by any person.

(h) The Reporting Person does not have any plans or proposals that relate to or would result in causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association.

(i) The Reporting Person does not have any plans or proposals that relate to or would result in a class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended.

(j) The Reporting Person does not have any plans or proposals that relate to or would result in any action similar to any of those enumerated above.

Item 5. Interest in Securities of the Issuer.

(a) The Reporting Person beneficially owns 1,754,735 shares of Common Stock, which represents approximately 16% of the issued and outstanding shares of Common Stock. Of this amount, (i) 1,323,619 shares are owned by Greenleaf Ventures Ltd., a British Virgin Islands company, owned by Doron Roethler, (ii) 121,116 shares are owned by Crystal Management Ltd., a company registered in Anguilla, owned by Doron Roethler, and (iii) 310,000 shares of common stock are owned directly by Doron Roethler.

(b) The Reporting Person has sole power to vote or to direct the vote and sole power to dispose or to direct the disposition of 1,754,735 shares of Common Stock reported in Item 5(a) of this Schedule 13D.

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(d) Not applicable.

(e) Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to the Securities of the Issuer.

Except as disclosed in this Schedule 13D, the Reporting Person does not have any other contracts, arrangements, understandings or other relationships with respect to the securities of the Company. See Answer to Item 4(a) for description of relevant contracts.

Item 7. Material to be Filed as Exhibits.

1. Not applicable.

2. (a) Put Agreement dated March 10, 2004

(b) Put Agreement dated August 13, 2004

(c ) Lock-Up Agreement dated as of January 1, 2004

3. Not applicable.

SIGNATURE

After reasonable inquiry and to the best knowledge and belief of the undersigned, the undersigned certifies that the information set forth in this Statement is true, complete and correct.

Dated: February 22, 2005	/s/ Doron Roethler
	Signature


	Type Name:: Doron Roethler

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EX-99.1 2 ex99-1.htm PUT AGREEMENT - MARCH Put Agreement

Exhibit 99.1

PUT AGREEMENT

This Put Agreement (the “Agreement”) is entered into by and between, Atlas Capital SA (“Holder”), and Michael Nouri and Doron Roethler (the “Grantors”), effective this 10^th day of March, 2004 (the “Effective Date”).

WITNESSETH:

WHEREAS, Holder has agreed to purchase 628,571 shares of common stock (the “Shares”) of Smart Online, Inc., a Delaware corporation (the “Company”) and warrants (the “Warrants”) to purchase 188,571 shares of Common Stock (“Warrant Shares”) of the Company; and

WHEREAS, the Grantors acknowledge that such purchase of the Shares and the Warrants by Holder is conditioned on the Grantors entering into this Agreement.

NOW THEREFORE, in consideration of the premises, and the mutual covenants and agreements set forth below, the parties hereby agree as follows:

1. Put Option. The Grantors hereby grant to Holder the absolute and unconditional right to require the Grantors to repurchase all (but not less than all) of the Company Securities of Holder (the “Put Option”). The amount that the Grantors shall pay to Holder upon exercise of the Put Option shall be equal to an aggregate of two million two hundred thousand dollars ($2,200,000) (the “Put Price”).

2. First Put Option Period. The Put Option may be exercised by Holder by giving written notice of exercise to the Grantors (i) at any time on or after March 1, 2005, and before March 31, 2005 (the “First Put Option Period”) and (ii) at any time on or after March 1, 2006 and before March 31, 2006 (the “Second Put Option Period”), provided, however, that the Put Option shall terminate and no longer be exercisable if (x) at any time prior to exercise of the Put Option, the common stock of the Company is listed or quoted for public trading, or (y) upon the occurrence of any vote or consent or approval by the stockholders of the Company with respect to any action reasonably necessary to achieve the foregoing public trading of the capital stock of the Company, Holder shall fail to vote all Company Securities of Holder in favor of the proposal, or (z) Holder shall transfer any of the Company Securities or any rights to any of the Company securities or cause any option, lien or other encumbrance to exist with respect to any of the Company Securities of Holder. In the event the Put Option is exercised, a closing shall be held at a time mutually agreed to by the Grantors and Holder. The closing shall be held within ninety (90) days from the date of receipt of notice of exercise. At the closing, the Grantors shall deliver to Holder the Put Price, and Holder shall deliver to the Grantors a certificate or certificates representing the Shares, together with reasonable documentation and representations for transfer of good title.

Definitions.

(a) The term “Company” shall mean Smart Online, Inc. and any corporation or other entity into which, or with which, the Company merges or consolidates, or the corporate parent of such corporation or entity, provided Holder owns securities of such corporation or other entity or parent company immediately after the transaction.

(b) The term “Company Securities” means the Shares, the Warrants, the Warrant Shares and any and all securities of the Company Holder receives on account of ownership of any Company Securities, whether in any dividend, split, merger, consolidation, reorganization, conversion, exercise or other event or transaction.

4. Joint and several Liability. The Grantors shall be jointly and severally liable to Holder for the full Put Price payable upon exercise of the Put Option. If either of the Grantors pays more than Fifty (50%) Percent of the Put Price, the other Grantor shall pay to such Grantor within ten days after written request the amount by which payment exceeded Fifty (50%) Percent of the Put Price.

5. Rights in Shares. Subject to the provisions of this Agreement, Holder shall exercise all rights and privileges of a shareholder of the Company with respect to the Company Securities subject to this Agreement.

6. Miscellaneous.

6.1 Binding Effect. This Agreement shall be binding, not only upon the parties to this Agreement, but also on their heirs, executors, administrators, personal representatives, successors and assigns (including any transferee of a party to this Agreement); and the parties agree, for themselves and their successors, assigns and representatives to execute any instrument which may be necessary legally to give effect to the terms and conditions of this Agreement.

6.2 Notices. All notices, requests and amendments under this Agreement, shall be in writing, and notices shall be deemed to have been given when personally delivered or mailed by registered or certified mail, return receipt requested or the next business day after being sent by overnight courier service addressed as follows:

To Holder: As designated on the signature page of this Agreement

To Grantors: As designated on the signature page to this Agreement.

6.3 Severability. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted.

6.4 Governing Law; Jurisdiction. This Agreement shall be governed by the internal laws of North Carolina. The parties hereby consent to the exclusive jurisdiction of the courts of Wake County, North Carolina for purposes of adjudicating any issue hereunder.

6.5 Amendment. Neither this Agreement nor any of the terms and conditions set forth in this Agreement may be altered, or amended verbally, and any such alteration or amendment shall only be effective when reduced to writing and signed by each of the parties.

6.6 Assignment. Except as set forth in Section 2, neither Company nor Holder shall assign this Agreement (whether by actual assignment or operation of law) without the prior written consent of the other party.

6.7 Entire Agreement; Rights and Interest. This Agreement constitutes the entire agreement of the parties with respect to the matters covered hereby, and supersedes any previous agreements, whether written or oral. Further, no such understandings, expectations or agreements which may hereafter arise shall be cognizable or enforceable unless the same shall be reduced to a writing signed by the parties to be charged.

IN WITNESS WHEREOF, the parties to this Agreement have executed this Agreement effective the date and year first above written.

	HOLDER: /s/ Avy Lugassy Name: Atlas Capital SA Address: 116 Rue du Rhone CH-1204 Geneva, Swizterland

	GRANTORS: /s/ Michael Nouri Name: Michael Nouri Address: 500-201 Market Street Chapel Hill, NC 27516 /s/ Doron Roethler Name: Doron Roethler Address: Jan Tooropplein 1 2391 GG Hazerswoude The Netherlands

EX-99.2 3 ex99-2.htm PUT AGREEMENT - AUGUST Put Agreement - August

Exhibit 99.2

081204

PUT AGREEMENT

This Put Agreement (the “Agreement”) is entered into by and between, Atlas Capital SA (“Holder”), and Michael Nouri and Doron Roethler (the “Grantors”), effective this 13^th day of August, 2004 (the “Effective Date”).

WITNESSETH:

WHEREAS, Holder has agreed to purchase one hundred thousand (100,000) shares of common stock (the “Second Closing Shares”) of Smart Online, Inc., a Delaware corporation (the “Company”), of the Company; and

WHEREAS, the Grantors acknowledge that such purchase of the Second Closing Shares by Holder is conditioned on the Grantors entering into this Agreement.

NOW THEREFORE, in consideration of the premises, and the mutual covenants and agreements set forth below, the parties hereby agree as follows:

1. Put Option. The Grantors hereby grant to Holder the absolute and unconditional right to require the Grantors to repurchase all (but not less than all) of the Second Closing Shares of Holder (the “Put Option”). The amount that the Grantors shall pay to Holder upon exercise of the Put Option shall be equal to an aggregate of Five Dollars ($5.00) for each of the Second Closing Shares (the “Put Price”), subject to adjustment for stock dividends, splits, reverse splits, reorganizations and similar events.

2. First Put Option Period. The Put Option may be exercised by Holder by giving written notice of exercise to the Grantors (i) at any time on or after March 1, 2005, and before March 31, 2005 (the “First Put Option Period”) and (ii) at any time on or after March 1, 2006 and before March 31, 2006 (the “Second Put Option Period”), provided, however, that the Put Option shall terminate and no longer be exercisable if (x) at any time prior to exercise of the Put Option, the common stock of the Company is listed or quoted for public trading, or (y) upon the occurrence of any vote or consent or approval by the stockholders of the Company with respect to any action reasonably necessary to achieve the foregoing public trading of the capital stock of the Company, Holder shall fail to vote all securities of Holder in favor of the proposal, or (z) Holder shall transfer any of the securities of the Company purchased by Holder or any rights to any of such securities or cause any option, lien or other encumbrance to exist with respect to any securities of the Company purchased by Holder. In the event the Put Option is exercised, a closing shall be held at a time mutually agreed to by the Grantors and Holder. The closing shall be held within ninety (90) days from the date of receipt of notice of exercise. At the closing, the Grantors shall deliver to Holder the Put Price, and Holder shall deliver to the Grantors a certificate or certificates representing the Second Closing Shares, together with reasonable documentation and representations for transfer of good title.

2. Definitions.

(b) The term “Second Closing Shares” means the Second Closing Shares (as defined above) and any and all securities of the Company Holder receives on account of ownership of any Company Securities, whether in any dividend, split, merger, consolidation, reorganization, conversion, exercise or other event or transaction.

3. Joint and several Liability. The Grantors shall be jointly and severally liable to Holder for the full Put Price payable upon exercise of the Put Option. If either of the Grantors pays more than Fifty (50%) Percent of the Put Price, the other Grantor shall pay to such Grantor within ten days after written request the amount by which payment exceeded Fifty (50%) Percent of the Put Price.

4. Rights in Shares. Subject to the provisions of this Agreement, Holder shall exercise all rights and privileges of a shareholder of the Company with respect to the Company Securities subject to this Agreement.

5. Miscellaneous.

5.1 Binding Effect. This Agreement shall be binding, not only upon the parties to this Agreement, but also on their heirs, executors, administrators, personal representatives, successors and assigns (including any transferee of a party to this Agreement); and the parties agree, for themselves and their successors, assigns and representatives to execute any instrument which may be necessary legally to give effect to the terms and conditions of this Agreement.

5.2 Notices. All notices, requests and amendments under this Agreement, shall be in writing, and notices shall be deemed to have been given when personally delivered or mailed by registered or certified mail, return receipt requested or the next business day after being sent by overnight courier service addressed as follows:

To Holder: As designated on the signature page of this Agreement

To Grantors: As designated on the signature page to this Agreement.

5.3 Severability. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted.

5.4 Governing Law; Jurisdiction. This Agreement shall be governed by the internal laws of North Carolina. The parties hereby consent to the exclusive jurisdiction of the courts of Wake County, North Carolina for purposes of adjudicating any issue hereunder.

5.5 Amendment. Neither this Agreement nor any of the terms and conditions set forth in this Agreement may be altered, or amended verbally, and any such alteration or amendment shall only be effective when reduced to writing and signed by each of the parties.

5.6 Assignment. Except as set forth in Section 2, neither Company nor Holder shall assign this Agreement (whether by actual assignment or operation of law) without the prior written consent of the other party.

5.7 Entire Agreement; Rights and Interest. This Agreement constitutes the entire agreement of the parties with respect to the matters covered hereby, and supersedes any previous agreements, whether written or oral. Further, no such understandings, expectations or agreements which may hereafter arise shall be cognizable or enforceable unless the same shall be reduced to a writing signed by the parties to be charged.

IN WITNESS WHEREOF, the parties to this Agreement have executed this Agreement effective the date and year first above written.

	HOLDER: /s/ Avy Lugassy Avy Lugassy Name: Atlas Capital SA Address: 116 Rue du Rhone CH-1204 Geneva, Swizterland

	GRANTORS: /s/ Michael Nouri Name: Michael Nouri Address: P.O. Box 14034 Durham, NC 27709 /s/ Doron Roethler Name: Doron Roethler Address: Jan Tooropplein 1 2391 GG Hazerswoude The Netherlands

EX-99.3 4 ex99-3.htm LOCK-UP AGREEMENT Lock-up Agreement

Exhibit 99.3

LOCK-UP, PROXY AND RELEASE AGREEMENT FOR COMMON STOCK

This Agreement (the “Agreement”) is made and entered into as of January 1, 2004, by and between Smart Online, Inc., a Delaware corporation (the “Corporation”), and the undersigned stockholder or option holder of the Corporation (“Stockholder”). As used herein, the “Corporation” includes Smart Online, Inc. and any successor to substantially all of its business, whether by way of merger, asset sale or otherwise.

1. Reorganization.

Stockholder hereby agrees that the proposed reorganization that would eliminate the outstanding shares of Series A Preferred Stock will make Stockholder’s shares of Common Stock and/or options to purchase shares of Common Stock more valuable by eliminating certain rights of holders of Series A Preferred Stock, including liquidation preferences and redemption rights. Stockholder is entering into this Agreement because the holders of Series A Preferred Stock require the Corporation to enter into this Agreement with holders of Common Stock as part of the reorganization process. Sections 3 and 4 of this Agreement shall become effective immediately the Corporation ceasing to have any shares of Series A Preferred Stock issued or outstanding (the “Effective Time”).

2. Appointment of Proxy.

(a) The undersigned Stockholder hereby irrevocably constitutes and appoints Michael Nouri attorney and proxy with full power of substitution to act and vote all the shares of the Corporation held by the undersigned in connection with any meeting or written consent of the stockholders of the Corporation to approve the matters described below, and at any adjournment or adjournments thereof, provided such stockholders meeting is held, or written consent is circulated, on or before April 30, 2004. The undersigned hereby directs this proxy to be voted solely with respect to the following matters:

(i)

For approval of the Amendment to the Certificate of Incorporation in the form attached on Schedule A to this Agreement (the “Amendment”).

(ii)

For approval of the conversion of all shares of Series A Preferred Stock of the Corporation into Common Stock as provided in the Amendment.

(b) This proxy is given to induce the Corporation to enter into this Agreement, it being agreed by the undersigned Stockholder that entering into this Agreement causes the appointment of the named proxy to be coupled with an interest.

(c) In the event that, as the result of a stock split or stock dividend or combination of shares or any other change, or exchange for other securities, by reclassification, reorganization, merger, consolidation, recapitalization or otherwise, Stockholder should be entitled to new or additional or different shares of stock or securities, such new or substitute shares or securities shall be subject to this proxy.

3. Lockup Agreement.

(a) Stockholder hereby agrees that, except as permitted under subsection (b) of this Section 3, during the Restricted Period, as defined herein, Stockholder will not:

(i)

Sell any securities of the Corporation or Holding Company.

(ii)

Transfer, assign or otherwise dispose of any securities of the Corporation or Holding Company.

(iii)

Pledge, hypothecate or otherwise create a lien on any securities of the Corporation or the Holding Company.

(iv)

Loan to any person or entity any securities of the Corporation or Holding Company.

(v)

Sell short any securities of the Corporation or Holding Company.

(vi)

Acquire a put option or grant a call option with respect to any securities of the Corporation or Holding Company.

(vii)

Enter into any agreement concerning any of the foregoing transactions, or otherwise facilitate any other person conducting any of the foregoing transactions.

(b) For purposes of this Section 3, Holding Company shall mean any company whose stock is publicly traded (i) with which the Corporation merges or consolidates or (ii) of which the Corporation or its successor becomes a subsidiary. For purposes of this Section 3, the Restricted Period shall mean the period beginning on the Effective Time and ending on September 30, 2006. Commencing October, 1, 2005, Stockholder may sell, during any calendar month until the end of the Restricted Period, up to eight and one half percent (8.5%) of the shares of the Corporation owned by Stockholder or any shares of Holding Company issued in respect of such shares (or options) owned by Stockholder as of September 30, 2005.

(c) Notwithstanding the foregoing, provided the transferee first signs a Lockup Agreement on substantially the terms set forth in this Section 3 and reasonably acceptable to the Corporation or Holding Company, Stockholder may transfer securities of the Corporation or Holding Company without payment or other consideration: (i) if Stockholder is an individual, to any family member, (ii) if Stockholder is a corporation, to any direct or indirect parent or subsidiary or any shareholder of Stockholder, (iii) if Stockholder is a partnership, to any partner of Stockholder, (iv) if Stockholder is a limited liability company, to any member of Stockholder, and (v) if Stockholder is a trust, to any beneficiary of such trust.

(d) Stockholder further agrees that before and after termination of the Restricted Period, Stockholder will comply with all securities laws, rules and regulations when purchasing or reselling securities of the Corporation or Holding Company, including, without limitation, those prohibiting sales and purchases of securities while in possession of material nonpublic information.

(e) The securities of Stockholder shall have a legend in form and substance acceptable to the Corporation and Holding Company referring to the restrictions of this Agreement and the Corporation or Holding Company may instruct the transfer agent of the Corporation Holding Company to stop any transfer of any securities in violation of this Agreement and may take any other action required to avoid violation of this Agreement, including, without limitation, obtaining an injunction.

(f) This Section 3 covers all securities of the Corporation and Holding Company whether currently owned or acquired after the date of this Agreement.

4. Releases.

(a) In consideration of the release provided in subsection (b) below, Stockholder, for himself/herself/itself and for each of Stockholder’s directors, officers, employees, agents, attorneys, legal successors and assigns, hereby absolutely, unconditionally and irrevocably releases and forever discharges the Corporation and its directors, officers, employees, agents, attorneys, legal successors and assigns, individually and jointly, from any and all causes of actions, suits, promises, representations, contracts, obligations, claims, counterclaims, defenses, demands, debts, accounts, reckonings, obligations, costs, rights of set off, demands or liabilities whatsoever, in law or equity, whether the same or whether the facts on which the same may be based are now known or unknown, suspected or unsuspected, which he/she/it, has, may have, has ever had, or hereafter can, shall or may have, for, upon or by reason of any matter, cause or thing whatsoever occurring through the date of this Agreement arising out of Stockholder’s purchase or ownership of any securities of the Corporation (collectively, “Liabilities”).

(b) In consideration of the release provided in subsection (a) above, the Corporation hereby absolutely, unconditionally and irrevocably releases and forever discharges Stockholder and, as applicable, its directors, officers, employees, agents, attorneys, legal successors and assigns, individually and jointly, from any and all causes of actions, suits, promises, representations, contracts, obligations, claims, counterclaims, defenses, demands, debts, accounts, reckonings, obligations, costs, rights of set off, demands or liabilities whatsoever, in law or equity, whether the same or whether the facts on which the same may be based are now known or unknown, suspected or unsuspected, which he/she/it, has, may have, has ever had, or hereafter can, shall or may have, for, upon or by reason of any matter, cause or thing whatsoever occurring through the date of this Agreement arising out of Stockholder’s purchase or ownership of any securities of the Corporation (collectively, “Liabilities”).

(c) It is the parties’ intention in executing this Agreement and in giving and receiving the consideration called for by this Agreement that this Agreement shall be effective as a full and final accord and satisfaction and release of all Liabilities released under subsections (a) or (b) (the “Released Liabilities”). Each party acknowledges that it is aware that it or its attorneys or its accountants may hereafter discover Liabilities or facts in addition to or different from those which it now knows or believes to exist with respect to the Released Liabilities, but that it is its intention hereby to fully, finally, and forever settle and release all disputes and differences with respect to the Released Liabilities. In furtherance of this intention, the releases hereby given shall be and remain in effect as a full and complete release notwithstanding the discovery or existence of any such additional or different Liability or fact.

(d) The above releases shall not be effective for any claims arising from a breach of this Agreement, for any claims relating to fraud or for any claims relating to any untrue statement of a material fact or any failure to disclose a material fact necessary in order to make the statements made with respect to the transactions contemplated by this Agreement, in light of the circumstances under which they were made, not misleading. Nothing contained herein shall be construed to supercede or amend the terms of any confidentiality, noncompetitive or similar agreement between Stockholder and the Corporation.

5. Termination of Existing Agreements. Stockholder and the Corporation hereby agree to terminate the Stock Rights Agreement dated as of August 10, 1999, as amended to date, and the Amended and Restated Stockholders’ Agreement, dated as of August 6, 1999, as amended to date. Termination shall be effective upon the Effective Time.

6. Termination of this Agreement. This Agreement may be terminated by either Stockholder or the Corporation, if the Effective Time does not occur on or before April 30, 2004. Upon termination neither Stockholder nor the Corporation shall have any liability to the other arising out of the Agreement. Termination shall be effective upon receipt of written notice of termination provided by Stockholders to the principal office of the Corporation or by the Corporation to the address of Stockholder set forth below the signature of Stockholder.

7. This Agreement shall be subject to the laws of the State of Delaware.

8. This Agreement may be executed in one or more counterparts.

9. The Corporation may assign this Agreement to any successor to substantially all of its business.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as of the date first above written.

SMART ONLINE, INC.

By: /s/ Michael Nouri

Michael Nouri, Chief Executive Officer

STOCKHOLDER:

/s/ Tamir Sagie

Print Name: Tamir Sagie as attorney in fact

for Doron Roethler

12301 Drew Hill Lane, Chapel Hill, NC 27514

240,000 Number Shares of Common Stock of Stockholder Subject to this Agreement.