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EXHIBIT 10.12
LOCK-UP AGREEMENT
This Lock-up Agreement, dated as of October 8, 1999, is by and among
PentaStar Communications, Inc. (the "Company"), Xxxxxxxxx Securities, Inc. (the
"Representative"), BACE Investments, LLC ("BACE"), Black Diamond Capital, LLC
("Black Diamond"), Xxxxxx X. Xxxxxxx ("Xxxxxxx") and Xxxxxxx X. Xxxxx ("Xxxxx;"
BACE, Black Diamond, Xxxxxxx and Xxxxx being collectively referred to
hereinafter as the "Founding Shareholders").
WHEREAS, on or about March 17, 1999, the Company entered into a lock-up
agreement with BACE (the "Prior Lock-up Agreement"); and
WHEREAS, on March 31, 1999, the Company entered into stock purchase
agreements ("Stock Purchase Agreements") together with addendums ("Addendums")
thereto, with Black Diamond, Xxxxxxx and Xxxxx (collectively, the "Stock
Purchase Agreements and Addendums"); and
WHEREAS, as a result of discussions with various state securities
administrators concerning the lockup provisions of the Prior Lock-up Agreement
and the Stock Purchase Agreements and Addendums, the parties have determined to
enter into this Lock-up Agreement, which shall supercede in its entirety the
Prior Lock-up Agreement and the Addendums to the Stock Purchase Agreements; and
WHEREAS, the Representative has agreed to become a party to this
Lock-up Agreement such that the Representative shall have an enforceable
interest hereunder;
NOW THEREFORE, in consideration of the mutual agreements and covenants
of the parties herein contained, and of other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by all of the
parties hereto, the parties agree as follows:
1. The following shares of Common Stock of the Company that are owned
by the Founding Shareholders shall be subject to the terms of this Agreement:
NUMBER OF SHARES SUBJECT
FOUNDING SHAREHOLDER TO LOCK-UP AGREEMENT
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BACE Investments, LLC.................................. 1,674,800
Black Diamond Capital, LLC............................. 732,419
Xxxxxx X. Xxxxxxx...................................... 469,499
Xxxxxxx X. Xxxxx....................................... 219,100
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Total.................................................. 3,095,818
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Such 3,095,818 shares of Common Stock of the Company owned by the
Founding Shareholders are hereinafter referred to as the "Shares."
2. Except as otherwise provided herein, the Founding Shareholders agree
that they shall not transfer, sell, pledge, hypothecate, encumber, contract to
sell, grant any option for the sale of, grant any security interest in, or
otherwise sell or dispose of any of the Shares which shall expressly include any
stock dividends issued by the Company and attributable to the Shares during the
term hereof, for a period of three years from the effective date (the "Effective
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Date") of the Company's Registration Statement on Form SB-2 (SEC File No.
333-85281). Moreover, the Company shall not recognize any attempted transfer,
sale, pledge, hypothecation or encumbrance of the Shares for a period of three
years from the Effective Date except as otherwise provided herein.
3. Provided that the Shares remain subject to the terms hereof
following any transfer authorized in this Paragraph 3, the Founders may transfer
the Shares (i) by gift to family members, not more remote than first cousins,
(ii) to trusts, limited partnerships or other estate planning entities of which
the transferring Founder is the beneficiary for estate planning purposes, (iii)
any charitable organization that qualifies for receipt of charitable
contributions under Section 170(c) of the Internal Revenue Code of 1986, as
amended, (iv) by any method or transaction approved by majority of the
shareholders of the Company other than the Founders, or (v) among or between any
Founders or Founder that is a party hereto.
4. After the expiration of 24 months from the Effective Date, each
Founder shall have released to him and shall be eligible to sell in accordance
with applicable federal and state securities laws 33.33% of such Founder's
Shares, or an aggregate total of 1,031,836 Shares. Upon the expiration of 36
months from the Effective Date, each Founder shall be eligible to sell an
additional 16.67% of such Founder's Shares, or an aggregate of 516,073 Shares.
The remaining 1,547,909 Shares shall be eligible for sale by the Founders only
upon the earlier to occur of (i) the sale of substantially all of the assets or
stock of the Company, or (ii) five years after the completion of the public
offering.
5. Notwithstanding any other language to the contrary set forth
elsewhere herein, this Lock-up Agreement and the restrictions set forth herein
shall automatically be released if (i) for 60 consecutive trading days
commencing at least 90 days after the Effective Date, the Company's securities
trade in a public market at a price of not less than 150% of the offering price
per share of the Company's Common Stock, (ii) for 90 consecutive trading days
commencing at least 12 months after the Effective Date, the Company's securities
trade in a public market at a price of not less than 110% of the offering price
per share of Common Stock, (iii) for any fiscal year ending after the Effective
Date, the Company has earnings per share of at least (a) 5% of the public
offering price per share of Common Stock for that fiscal year, (b) 4% of the
public offering price per share of Common Stock for that fiscal year and for the
prior fiscal year, calculated independently, whether or not such prior fiscal
year ended after the Effective Date, or (c) 3% of the public offering price per
share of Common Stock for that fiscal year and for each of the two prior fiscal
years, calculated independently, whether or not such prior fiscal years ended
after the Effective Date, or (iv) the securities become "covered securities" as
that term is defined in subsection 18(b)(1)(a) of the Securities Act of 1933.
6. During the term of this Lock-up Agreement, the Founders shall
continue to have all voting and other rights to which they are entitled by
ownership of the Shares. In the event a Founder sells any of the Shares in
violation of this Agreement, any profits realized by such selling Founder shall
inure to and be recoverable by the Company.
7. The Representative shall not agree or permit the waiver or
modification of any of the terms of this Lock-up Agreement. In addition, the
Company's Registration Statement, as amended, shall include disclosure providing
that the Representative will not waive, shorten or otherwise modify the transfer
restrictions agreed to by the parties hereto.
IN WITNESS WHEREOF, and based upon which the Representative shall
undertake the public offering of the Company's Common Stock, the parties have
executed this Lock-Up
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Agreement to be effective on the date specified above.
THE COMPANY: THE REPRESENTATIVE:
PENTASTAR COMMUNICATIONS, INC. XXXXXXXXX SECURITIES, INC.
By: By:
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Xxxxx X. Xxxxxxxx, President Xxxxxx X. X'Xxxxxx, President
THE FOUNDERS:
BACE INVESTMENTS, LLC
By:
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Xxxxx X. Xxxxxxxx, Managing Member
BLACK DIAMOND CAPITAL, LLC
By:
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Xxxxx X. XxXxx, Managing Member
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Xxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxx
