[Form of 10-year Lock-Up Agreement] EXHIBIT 10.21
INTEGRATED ALARM SERVICES GROUP, INC.
Initial Public Offering of Common Stock
---------------------------------------
,2003
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
XxXXXX XXXXX & CO., INC.
as Representatives of the several Underwriters
c/o Friedman, Billings, Xxxxxx & Co., Inc.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
This letter is being delivered to you in connection with the proposed
Underwriting Agreement (the "Underwriting Agreement"), between Integrated Alarm
Services Group, Inc, a Delaware corporation (the "Company"), and
each of you as representatives of a group of Underwriters named therein,
relating to an underwritten public offering of Common Stock, $0.001 par value
(the "Common Stock"), of the Company.
In order to induce you and the other Underwriters to enter into the
Underwriting Agreement, the undersigned will not, without the prior written
consent of Friedman, Billings, Xxxxxx & Co., Inc., offer, sell, contract to
sell, pledge or otherwise dispose of, (or enter into any transaction which is
designed to, or might reasonably be expected to, result in the disposition
(whether by actual disposition or effective economic disposition due to cash
settlement or otherwise) by the undersigned or any affiliate of the undersigned
or any person in privity with the undersigned or any affiliate of the
undersigned), directly or indirectly, including the filing (or participation in
the filing) of a registration statement with the Securities and Exchange
Commission in respect of, or establish or increase a put equivalent position or
liquidate or decrease a call equivalent position within the meaning of Section
16 of the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder
with respect to, or publicly announce an intention to effect any such
transaction with respect to the amount of shares set forth opposite the
respective undersigned's name (the "10-year Lock-Up Shares") set forth on
Schedule I attached hereto for a period of 10 years after the date of this
Agreement. In the event that the Company achieves certain pre-determined Net
Income hurdles certain of the 10-year lock-up may be eligible for release from
the 10-year lock-up. For purposes of this agreement, Net Income shall have the
meaning ascribed to it under GAAP, as further amended by adding back to Net
Income any expenses associated with the early termination of debt or other costs
directly attributable to the Company's IPO. The 10-Year Lock-Up Shares, or a
portion thereof, may be disposed of earlier than such 10 year period if:
(i) in eighteen months ending December 31, 2004:
a. the Company earns $22 million in Net Income,
then the 10-year lock-up shall be released
completely as to 30% of the 10-Year Lock-Up
Shares (this 30% shall be referred to as the
"2003 Lock-Up Shares")
b. the Company earns $19.8 million in Net Income,
then the 10-year lock-up shall terminate
completely as to 75% of the 2003 Lock-Up
Shares.
c. the Company earns $17.6 million in Net Income,
then the 10-year lock-up shall terminate
completely as to 50% of the 2003 Lock-Up
Shares.
(ii) in 2005:
a. the Company earns $24 million in Net Income,
then the 10-year lock-up shall terminate
completely as to 30% of the 10-Year Lock-Up
Shares (the "2005 Lock-Up Shares").
b. the Company earns $21.6 million in Net Income,
then the 10-year lock-up shall terminate
completely as to 75% of the 2005 Lock-Up
Shares.
c. the Company earns $19.2 million in Net Income,
then the 10-year lock-up shall terminate
completely as to 50% of the 2005 Lock-Up
Shares.
(iii) in 2006:
a. the Company earns $33 million in Net Income,
then the 10-year lock-up shall terminate
completely as to 40% of the 10-Year Lock-Up
Shares (the "2006 Lock-Up Shares").
b. Should the Company earn $29.7 million in Net
Income, then the 10-year lock-up shall
terminate completely as to 75% of the 2006
Lock-Up Shares.
c. the Company earns $26.4 million in Net
Income, then the 10-year lock-up shall
terminate completely as to 50% of the 2006
Lock-Up Shares.
(iv) Any 10-Year Lock-Up Shares not released from
the 10-year lock-up in each of the eighteen
months ending December 31, 2004, 2005 or
2006, are eligible for release from the
10-Year Lock-Up if the COmpany meets the net
income hurdles on a cumulative basis. By
way of example, if cumulative Net Income for
the eighteen months ending December 31, 2004
and 2005 is greater than $46 million,
then the 10-year lock-up shall terminate
completely as to 60% of the 10-Year Lock-Up
Shares. Likewise, if cumulative Net Income
for 2006 exceeds $79 million, then the
10-year lock-up shall completely terminate
as to 100% of the 10-Year Lock-Up Shares.
4. Recapitalization. Any new, substituted or additional
securities or other property (including cash paid other than as a regular cash
dividend) which is by reason of any Recapitalization distributed with respect to
the 10-Year Lock-Up Shares shall be immediately subject to the same lock-up
provisions. Appropriate adjustments to reflect such distribution shall be made
to the number of 10-Year Lock-Up Shares subject to this Agreement.
5. Corporate Transaction.
(a) The restriction on transfer hereunder shall
automatically terminate in its entirety, and all the 10-Year Lock-Up
Shares shall be free from restriction hereunder immediately prior to
the consummation of:
(i) a merger or consolidation in which
securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding securities are
transferred to a person or persons different from the persons holding
those securities immediately prior to such transaction, or
(ii) the sale, transfer or other disposition
of all or substantially all of the Corporation's assets in complete
liquidation or dissolution of the Corporation any Corporate
Transaction.
6. GENERAL PROVISIONS
1. Notices. Any notice required to be given under this
Agreement shall be in writing and shall be deemed effective upon personal
delivery or upon deposit in the U.S. mail, registered or certified, postage
prepaid and properly addressed to the party entitled to such notice at the
address indicated below such party's signature line on this Agreement or at such
other address as such party may designate by ten (10) days advance written
notice under this paragraph to all other parties to this Agreement.
2. No Waiver. No waiver of any breach or condition of this
Agreement shall be deemed to be a waiver of any other or subsequent breach or
condition, whether of like or different nature.
7. MISCELLANEOUS PROVISIONS
1. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without resort
to that State's conflict-of-laws rules.
2. Stockholder Undertaking. Stockholder hereby agrees to take
whatever additional action and execute whatever additional documents the Company
may deem necessary or advisable in order to carry out or effect one or more of
the obligations or restrictions imposed on either the Stockholder or the 10-Year
Lock-Up Shares pursuant to the provisions of this Agreement.
3. Agreement is Entire Contract. This Agreement constitutes
the entire contract between the parties hereto with regard to the subject matter
hereof.
4. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument
5. Successors and Assigns. The provisions of this Agreement
shall inure to the benefit of, and be binding upon, the Company and its
successors and assigns and upon the Stockholder, Stockholder's assigns and the
legal representatives, heirs and legatees of Stockholder's estate, whether or
not any such person shall have become a party to this Agreement and have agreed
in writing to join herein and be bound by the terms hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first indicated above.
____________________________
Xxxxxxx X. XxXxxx
____________________________
Address
____________________________
Xxxxx X. Xxxxx
____________________________
Address
____________________________
Xxxxxx X. Few, Sr.
____________________________
Address
____________________________
Xxxxxx X. Xxxxx
____________________________
Address
____________________________
Xxxxx X. Xxxxxxx
____________________________
Address
____________________________
Xxxx X. Xxxxx
____________________________
Address
____________________________
Xxxx X. Xxxxxxx
____________________________
Address
____________________________
Xxxxx X. Speed
____________________________
Address
____________________________
Xxxxxxx X. Xxxxxxxx
____________________________
Address
____________________________
Xxxxxxx X. Xxxxxx
____________________________
Address
Schedule 1
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10-Year Lock-Up Shares
Name Number of 10-Year Lock-Up Shares
---- --------------------------------
Xxxxxxx X. XxXxxx 159,037
Xxxxx X. Xxxxx 159,036
Xxxxxx X. Few, Sr. 114,199
Xxxxxx X. Xxxxx 11,663
Xxxxx X. Xxxxxxx 3,202
Xxxx X. Xxxxx 2,228
Xxxx X. Xxxxxxx 2,228
Xxx Xxxxxx 1,623
Xxxxx X. Speed 1,113
Xxxxxxx X. Xxxxxxxx 216
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED _____________ hereby sell(s), assign(s) and
transfer(s) unto Integrated Alarm Services Group, Inc. (the "Corporation"),
_____________ (_______) shares of the common stock of the Corporation standing
in his or her name on the books of the Corporation represented by Certificate
No. ____________ herewith and do(es) hereby irrevocably constitute and appoint
____________________ Attorney to transfer the said stock on the books of the
Corporation with full power of substitution in the premises.
Dated:____________
_______________________________
Signature
Instruction: Please do not fill in any blanks other than the signature line.
Please sign exactly as you would like your name to appear on the issued stock
certificate. The purpose of this assignment is to enable the Corporation to
exercise its right to foreclose on Restricted Shares that become subject to
forfeiture without requiring additional signatures by the part of the
Stockholder.
