<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
PENTASTAR COMMUNICATIONS, INC.
----------------------------------
(NAME OF ISSUER)
COMMON STOCK, PAR VALUE $.0001 PER SHARE
--------------------------------------------
(TITLE OF CLASS OF SECURITIES)
709632 10 3
------------------
(CUSIP NUMBER)
RICHARD M. TYLER
BACE INVESTMENTS, LLC
1522 BLAKE STREET, DENVER, COLORADO 80202
TELEPHONE NUMBER: (303) 620-9090
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(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS)
OCTOBER 26, 1999
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(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person previously filed a statement on Schedule 13G to report the
acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box .
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7(b) for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however see the Notes).
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CUSIP No.: 709632 10 3
- --------------------------------------------------------------------------------
1 Name of Reporting Person
I.R.S. Identification Nos. of Above Persons (entities only)
BACE Investments, LLC
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2 Check the Appropriate Box if a Member of a Group (see Instructions):
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 Source of Funds (see Instructions)
WC
- --------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
[ ]
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
Colorado
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7 Sole Voting Power
Number of
1,674,800
Shares -------------------------------------------------
8 Shared Voting Power
Beneficially
Owned by 0
------------------------------------------------
Each 9 Sole Dispositive Power
Reporting
0
Person ------------------------------------------------
10 Shared Dispositive Power
With:
1,674,800
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11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,674,800
- --------------------------------------------------------------------------------
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
[ ]
- --------------------------------------------------------------------------------
13 Percent Class Represented by Amount in Row (11):
35.3%
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14 Type of Reporting Person
OO (limited liability company)
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CUSIP No.: 709632 10 3
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1 Name of Reporting Person
I.R.S. Identification Nos. of Above Persons (entities only)
Richard M. Tyler
- --------------------------------------------------------------------------------
2 Check the Appropriate Box if a Member of a Group (see Instructions):
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 Source of Funds (see Instructions)
WC
- --------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
[ ]
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
United States
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7 Sole Voting Power
Number of
0
Shares -------------------------------------------------
8 Shared Voting Power
Beneficially
Owned by 1,674,800
------------------------------------------------
Each 9 Sole Dispositive Power
Reporting
0
Person ------------------------------------------------
10 Shared Dispositive Power
With:
1,674,800
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11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,674,800
- --------------------------------------------------------------------------------
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
[ ]
- --------------------------------------------------------------------------------
13 Percent Class Represented by Amount in Row (11):
35.3%
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14 Type of Reporting Person
IN
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CUSIP No.: 709632 10 3
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1 Name of Reporting Person
I.R.S. Identification Nos. of Above Persons (entities only)
Craig J. Zoellner
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2 Check the Appropriate Box if a Member of a Group (see Instructions):
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 Source of Funds (see Instructions)
WC
- --------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
[ ]
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6 Citizenship or Place of Organization
United States
- --------------------------------------------------------------------------------
7 Sole Voting Power
Number of
0
Shares -------------------------------------------------
8 Shared Voting Power
Beneficially
Owned by 1,674,800
------------------------------------------------
Each 9 Sole Dispositive Power
Reporting
0
Person ------------------------------------------------
10 Shared Dispositive Power
With:
1,674,800
- -------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,674,800
- --------------------------------------------------------------------------------
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
[ ]
- --------------------------------------------------------------------------------
13 Percent Class Represented by Amount in Row (11):
35.3%
- --------------------------------------------------------------------------------
14 Type of Reporting Person
IN
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Item 1. SECURITY AND ISSUER
This Statement relates to the shares of common stock, par value $.0001
per share (the "Shares"), of PentaStar Communications, Inc. (hereinafter the
"Issuer"). The address of the principal executive offices of the Issuer is 1522
Blake Street, Denver, Colorado 80202.
Item 2. IDENTITY AND BACKGROUND
This statement is filed by BACE Investments, LLC, a Colorado limited
liability company ("BACE"), and Richard M. Tyler and Craig J. Zoellner, citizens
of the United States (collectively the "Reporting Persons"). The principal
business address of the Reporting Persons is 1522 Blake Street, Denver, CO
80202.
BACE is a Colorado limited liability company that is engaged in the
business of investing in, among other things, the equity securities of various
entities. Richard M. Tyler and Craig J. Zoellner are the sole members and the
only executive officers of BACE. In addition, Messrs. Tyler and Zoellner are
directors and officers of the Issuer and are also member of BACE Industries,
LLC, a private company that has completed consolidations in several industries.
BACE Industries does not beneficially own any of the Shares.
On October 28, 1999, the Issuer completed an initial public offering of
1,250,000 Shares (the "Offering").
None of the Reporting Persons or executive officers, directors or
controlling persons of BACE has, during the last five years, been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding 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 a
finding of any violation with respect to such laws.
Item 3: SOURCE OF FUNDS OR OTHER CONSIDERATION
The 1,674,800 Shares of the Issuer to which this Statement relates were
purchased by BACE in a private transaction for $500. The source of funding for
the purchase of these Shares is general working capital.
Item 4: PURPOSE OF TRANSACTION
The Shares were acquired in connection with the formation of the
Issuer. The Reporting Persons have acquired the Shares of the Issuer for
investment purposes. Except as described in this Item 4 and in Item 6, the
Reporting Persons have no plans to effect any actions or events specified in
clauses (a) through (j) of Item 4 of Schedule 13D.
Notwithstanding the foregoing, and subject to the restrictions
described in Item 6, the Reporting Persons may determine to change their
investment intent with respect to the Issuer at any time in the future. In
particular, the Reporting Persons may purchase additional Shares or may sell
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Shares from time to time in public or private transactions and/or may enter into
privately negotiated derivative transactions with institutional counterparties
to hedge the market risk of some or all of its positions in the Shares or other
securities. In determining from time to time whether to purchase or sell any of
the Shares (and in what amounts) or to retain such shares, the Reporting Persons
will take into consideration such factors as they deem relevant, including the
business and prospects of the Issuer, anticipated future developments concerning
the Issuer, existing and anticipated market conditions from time to time,
general economic conditions and other opportunities available to the Reporting
Persons.
Item 5. INTEREST IN SECURITIES OF THE ISSUER
(a) After giving effect to the issuance of 1,250,000 Shares in the
Offering, the Reporting Persons may be deemed to beneficially
own in the aggregate 1,674,800 Shares representing
approximately 35.3% of the Issuer's outstanding Shares (based
upon the Shares stated to be outstanding as of the completion
of the Offering as reported by the Issuer in the Issuer's Form
SB-2 filing filed with the Securities and Exchange Commission
on October 28, 1999). The Reporting Persons have direct
beneficial ownership of the Shares as follows:
Name Number of Approximate Percentage
Shares Of Outstanding Shares
BACE 1,674,800 35.3%
Messrs. Tyler and Zoellner, by virtue of their relationships
to BACE (as disclosed in Item 2), may be deemed to beneficially own (as that
term is defined in Rule 13d-3 under the Act) the Shares which BACE directly
beneficially owns. Each of Messrs. Tyler and Zoellner disclaims beneficial
ownership of such Shares for all other purposes.
(b) BACE has the sole voting power with regard to the 1,674,800
Shares beneficially owned directly by it. BACE has the sole
dispositive power with regard to no Shares beneficially owned
directly by it and shared dispositive power with regard to
1,674,800 Shares beneficially owned by it. Mr. Tyler has
shared voting power and shared dispositive power with regard
to 1,674,800 Shares. Mr. Zoellner has shared voting power and
shared dispositive power with regard to 1,674,800 Shares.
(c) None of the Reporting Persons has effected any transactions
with respect to the Shares during the past 60 days, except for
the transactions described in Item 6 below.
(d) No other person has the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the
sale of any Shares that the Reporting Persons may be deemed to
beneficially own.
(e) Not applicable.
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Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
The Reporting Persons are party to a Joint Filing Agreement, a copy of
which is attached hereto as Exhibit 1, with respect to the filing of this
Statement and any amendments thereto.
In connection with the Offering, BACE entered into an Escrow Agreement,
dated as of October 20, 1999, with the Issuer, the underwriter in the Offering,
other significant shareholders of the Issuer and American Securities Transfer &
Trust, Inc., as escrow agent, pursuant to which BACE has deposited 140,000
Shares to be held in escrow until the earlier of: (i) the Issuer achieving pro
forma (based on a full 12-month period for all acquired operations, giving
effect to such acquisitions as if they had occurred on January 1, 2000) adjusted
diluted earnings per share of $0.50 in fiscal year 2000; (ii) the Issuer
achieving pro forma (based on a full 12-month period for all acquired
operations, giving effect to such acquisitions as if they had occurred on
January 1, 2001) adjusted diluted earnings per share of $1.25 in fiscal year
2001; (iii) a merger, acquisition or exchange in which the Issuer is not the
surviving entity or in which the shareholders of the Issuer own less than 50% of
the outstanding capital stock of the surviving entity following that transaction
or the sale of all or substantially all of the assets of the Issuer that is
approved by a majority of the holders of the outstanding shares, excluding the
shares held in the escrow account; or (iv) October 26, 2006. The shares of
common stock held in escrow are not transferable or assignable, although they
may be voted by the shareholders.
In connection with the Offering, BACE entered into a Lock-Up Agreement,
dated as of October 8, 1999, with the Issuer, other significant shareholders and
the underwriter in the Offering pursuant to which BACE has agreed not to sell or
otherwise dispose of any of the 1,674,800 Shares beneficially owned by it or any
stock dividends issued on those Shares, until October 25, 2001. BACE may sell up
to 33.33% of the Shares after October 25, 2001, and additional 16.67% after
October 25, 2002 and the remaining 50% only at the earlier of October 25, 2004
or a bonafide tender offer, offer to merge or acquisition of the Issuer's equity
securities by an unaffiliated purchaser, effected pursuant to a vote in favor of
the transaction by a majority of the shareholders, pursuant to which: (i) if the
transaction occurs before October 26, 2001, the public shareholders of the
Issuer receive cash or securities that are listed or to be listed, or qualified
in all respects for listing, on the New York Stock Exchange, the American Stock
Exchange or the Nasdaq National Market7 equal in value to at least two times the
initial public offering price per share of the Shares; or (ii) if the
transaction occurs on or after October 26, 2001, the public shareholders of the
Issuer receive cash or securities equal in value to at least one and one-half
times the initial public offering price per share of the Shares. The
restrictions on sale described in this paragraph will not apply: (i) if for 60
consecutive trading days commencing at least 90 days after the date of the
Offering, the Shares trade in the public market at a price of not less than 150%
of the initial public offering per share; (ii) if for 90 consecutive trading
days commencing October 26, 2000, the Shares trade in the public market at a
price of not less than 110% of the initial public offering price per share;
(iii) if for any fiscal year ending after October 26, 1999, the Issuer has
earnings per share of at least (x) 5% of the initial public offering price per
share of the Shares for that fiscal year, (y) 4% of the initial public offering
price per share of the Shares for that fiscal year and for the prior fiscal
year, calculated independently, whether or not the prior fiscal year ended after
the date of the Offering, or (z) 3% of the initial public offering price per
share of the Shares for that fiscal year and for each of the two prior fiscal
years, calculated independently, whether or not the prior fiscal years ended
after the date of the Offering;
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(iv) if the Shares become a "covered security" as that term is defined in
subsection 18(b)(1)(a) of the Securities Act of 1933; (v) to any transfers by
will or descent and distribution; (vi) to any transfers by court order; (vii) to
any transfers among the parties to the agreement; (viii) to charitable
contributions, or (ix) to any transaction approved by a majority of the
shareholders of the Issuer other than BACE, Black Diamond Capital, LLC, Robert
S. Lazzeri and Jeffery A. Veres.
On March 31, 1999, Mr. Lazzeri, entered into an Option Agreement with
BACE pursuant to which Mr. Lazzeri purchased for $10.00 options to buy 167,480
shares of the Issuer's common stock held by BACE. The option became effective
upon the completion of the Offering and can be exercised upon the earlier of a
sale of all or substantially all of the Issuer's assets or stock or March 31,
2000. The option terminates on March 31, 2004. The exercise price per share is
equal to the public offering price of $10.00 per share.
BACE is a party to a Stock Purchase Agreement dated as of March 17,
1999, with an employee of an affiliate of BACE, pursuant to which BACE has the
right to acquire 34,179 shares owned by such employee or any shares thereafter
acquired until March 17, 2004, if employee is not employed by BACE or an
affiliate of BACE. The purchase right expires on the earlier of: (i) a sale of
substantially all of the stock or assets of the Issuer; (ii) March 17, 2004 or
(iii) the death or disability of the employee.
The foregoing descriptions of the Escrow Agreement, the Lock-Up
Agreement, the Option Agreement and the Stock Purchase Agreement are qualified
in their entirety by reference to the Escrow Agreement, the Lock-Up Agreement,
the Option Agreement and the Stock Purchase Agreement, copies of which are
attached as Exhibits 2, 3, 4 and 5, respectively, and are incorporated by
reference. Except as described herein, none of the Reporting Persons is a party
to any contract, arrangement, understanding or relationship with respect to any
securities of the Issuer.
Item 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1 - Joint Filing Agreement pursuant to 17 C.F.R. 13d-1(f)(1).
Exhibit 2 - Escrow Agreement, dated as of October 20, 1999, among BACE,
Black Diamond Capital, LLC, the Issuer, Schneider Securities, Inc. and American
Securities Transfer & Trust, Inc.
Exhibit 3 - Lock-Up Agreement, dated as of October 8, 1999, among BACE,
the Issuer, Schneider Securities, Inc., Black Diamond Capital, LLC, Robert S.
Lazzeri and Jeffery A. Veres.
Exhibit 4 - Option Agreement dated as of March 31, 1999 between BACE
and Robert S. Lazzeri.
Exhibit 5 - Stock Purchase Agreement dated as of March 17, 1999.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in the Statement to this Schedule 13D, is
true, correct and complete.
BACE INVESTMENTS, LLC
Date: November 5, 1999 /s/ Richard M. Tyler
--------------------------------
Title: Member
/s/ Richard M. Tyler
--------------------------------
Richard M. Tyler
/s/ Craig J. Zoellner
--------------------------------
Craig J. Zoellner
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EXHIBIT INDEX
<TABLE>
Exhibit Description
- ------- -----------
<S> <C>
1 Joint Filing Agreement pursuant to 17 C.F.R. 13d-1(f)(1).
2 Escrow Agreement, dated as of October 20, 1999, among BACE,
Black Diamond Capital, LLC, the Issuer, Schneider Securities,
Inc. and American Securities Transfer & Trust, Inc.
3 Lock-Up Agreement, dated as of October 8, 1999, among BACE
the Issuer, Schneider Securities, Inc., Black Diamond Capital,
LLC, Robert S. Lazzeri and Jeffery A. Veres.
4 Option Agreement dated as of March 31, 1999 between BACE
and Robert S. Lazzeri
5 Stock Purchase Agreement dated as of March 17, 1999.
</TABLE>
<PAGE> 1
EXHIBIT 1
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(k) under the Securities Exchange Act of
1934, as amended, each of the persons named below agree to the joint filing of a
statement on Schedule 13D, including amendments thereto, with respect to the
common stock, par value $.0001 per share, of PentaStar Communications, Inc., and
further agree that this Joint Filing Agreement be included as an exhibit to such
filings, provided that, as contemplated by Section 13d-1(k)(1)(ii), no person
shall be responsible for the completeness or accuracy of the information
concerning the other persons making the filing, unless such person knows or has
reason to believe that such information is inaccurate.
BACE INVESTMENTS, LLC
/s/ Richard M. Tyler
--------------------------------
Title: Member
/s/ Richard M. Tyler
--------------------------------
Richard M. Tyler
/s/ Craig J. Zoellner
--------------------------------
Craig J. Zoellner
<PAGE> 1
EXHIBIT 2
ESCROW AGREEMENT
ESCROW AGREEMENT, effective as of the 20th day of October, 1999, by and
among certain of the shareholders listed on Exhibit A to this Escrow Agreement
(the "Shareholders" or "Shareholder") of PENTASTAR COMMUNICATIONS, INC., a
Delaware corporation, (the "Company"), SCHNEIDER SECURITIES, INC. (the
"Representative") and AMERICAN SECURITIES TRANSFER & TRUST, INC. (the "Escrow
Agent").
WHEREAS, the Shareholders are the record and beneficial owners of
certain of the Company's $0.0001 par value common stock ("Common Stock") all as
more fully reflected on Exhibit A to this Escrow Agreement;
WHEREAS, the Company and the Representative of the several underwriters
(the "Underwriters") intend to enter into an underwriting agreement (the
"Underwriting Agreement") pursuant to which the Company will sell Common Stock
in a public offering pursuant to the registration provisions of the Securities
Act of 1933, as amended (the "1933 Act");
WHEREAS, as a condition to closing the proposed public offering of the
Company (the "Offering"), the Representative has required the Shareholders to
deposit an aggregate of 200,000 shares of Common Stock owned by such
Shareholders in Escrow with the Escrow Agent as reflected on Exhibit A (the
"Escrow Shares"); and
WHEREAS, the Shareholders wish to deposit the Escrow Shares in Escrow
in order to fulfill the requirements of the Underwriting Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, terms and conditions hereinafter set forth, the parties to this
Escrow Agreement agree as follows:
SECTION 1. DESIGNATION AND DEPOSIT OF ESCROW SHARES.
a. The Escrow Shares to be deposited in Escrow pursuant to
this Escrow Agreement consist of 200,000 shares of Common Stock of the
Company and are owned of record as of the date of this Escrow Agreement
by the Shareholders identified on Exhibit A.
b. On the date on which the Securities and Exchange Commission
declares the Company's Registration Statement on Form SB-2 (Reg. No.
333- 85281) effective under the 1933 Act (the "Effective Date"), the
Shareholders shall deliver to the Escrow Agent any and all certificates
representing the Escrow Shares and a stock power endorsed in blank with
a medallion guarantee. Promptly after the Effective Date, the Escrow
Agent shall deliver a receipt therefor and, if requested by a
Shareholder, a new certificate representing each
<PAGE> 2
Shareholder's shares of Common Stock represented by the certificates
delivered but which are not subject to this Escrow Agreement.
SECTION 2. TITLE OF ACCOUNT. All certificates representing the Escrow
Shares delivered to the Escrow Agent pursuant to this Agreement shall be
deposited on the Effective Date by the Escrow Agent in an account designated
substantially as follows: "PentaStar Communications, Inc. Escrow Share Account"
(the "Escrow Account").
SECTION 3. TRANSFER OF ESCROW SHARES DURING ESCROW PERIOD.
a. During the Escrow Period (as defined below) none of the
Escrow Shares deposited in the Escrow Account shall be sold, pledged,
hypothecated or otherwise transferred or delivered out of the Escrow
Account except:
i. transfers by operation of law; and
ii. transfers of ownership of certificates
representing the Escrow Shares, certificates for which have
been deposited to the Escrow Account, shall remain subject to
the restrictions imposed hereby, including those persons, if
any, who become holders, by any means provided herein, of the
Escrow Shares during the Escrow Period.
SECTION 4. DURATION OF ESCROW PERIOD.
a. The Escrow Period shall commence on the Effective Date and
shall terminate on the earlier of the date on which all Escrow Shares
have been returned to the Shareholders pursuant to Sections 6(a), 6(b),
6(c) or 6(d) below.
b. This Agreement shall be of no force or effect in the event
the Underwriting Agreement is not executed on the Effective Date in
accordance with its terms.
SECTION 5. RECEIPT OF DISTRIBUTIONS AND DIVIDENDS. During the term of
the Escrow Period, if the Company issues any distributions, dividends, rights or
other property with respect to the Common Stock, then, in such event, the
Company shall be authorized to send evidence of such distributions, dividends,
rights or other property directly to the Escrow Agent, which is hereby
authorized to hold and retain possession of all such evidences of distributions,
dividends, rights or other property until termination of the Escrow Period in
accordance with Section 6 below. In the event the Escrow Shares are distributed
to the Shareholders pursuant to Sections 6(a), 6(b), 6(c), 6 (d), 6(e) or 6(f)
below, then the Escrow Agent will distribute evidences of such distributions,
dividends, rights, or other property in the form the Escrow Agent received such
distributions, dividends, rights or other property from the
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Company. If the Company recapitalizes, splits or combines its shares, such
shares shall be substituted, on a pro rata basis for the Escrow Shares. The
Company will notify the Escrow Agent of the occurrence of the events listed in
this section.
SECTION 6. RELEASE AND DELIVERY OF ESCROW SHARES.
a. In the event the Escrow Agent receives written notice from
the Representative and the Company confirming that the Company had pro
forma (based on a full 12-month period for all acquired operations,
giving effect to such acquisitions as if they had occurred on the first
day of fiscal year 2000 and giving retroactive effect for the period
from the first day of fiscal year 2000 to the date of acquisition to
prospective changes to salaries, bonuses, benefits, lease payments and
other expenses in a manner consistent with that used in the preparation
of the Unaudited Pro Forma Condensed Combined Financial Information of
the Company set forth in the prospectus used in connection with the
Offering) diluted earnings per share of $0.50 in fiscal year 2000, the
Escrow Agent shall return to each Shareholder a certificate for its
share of the Escrow Shares as are listed on Exhibit A. The Escrow Agent
shall return the Escrow Shares only to the entity named as the holder
of record in Exhibit A to this Escrow Agreement, as modified by any
transfers made pursuant to Section 3 above.
b. In the event the Escrow Agent receives written notice from
the Representative and the Company confirming the Company had pro forma
(based on a full 12-month period for all acquired operations, giving
effect to such acquisitions as if they had occurred on the first day of
fiscal year 2001 and giving retroactive effect for the period from the
first day of fiscal year 2001 to the date of acquisition to prospective
changes to salaries, bonuses, benefits, lease payments and other
expenses in a manner consistent with that used in the preparation of
the Unaudited Pro Forma Condensed Combined Financial Information of the
Company set forth in the prospectus used in connection with the
Offering) diluted earnings per share of $1.25 in fiscal year 2001, the
Escrow Agent shall return to each Shareholder a certificate for its
share of the Escrow Shares as are listed on Exhibit A. The Escrow Agent
shall return each certificate only to the entity named as the holder of
record in Exhibit A hereto, as modified by any transfers made pursuant
to Section 3 above.
c. In the event the Escrow Agent receives written notice from
the Representative and the Company confirming that the Company has been
merged or consolidated, or has executed a share exchange, with another
company which is the survivor to the transaction or in which the
stockholders of the Company own less than 50% of the outstanding
capital stock of the surviving entity, or that the Company has sold all
or substantially all of its assets and the relevant transaction was
approved by the holders of a majority of the Company's outstanding
voting
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<PAGE> 4
securities exclusive of the Escrow Shares held hereunder, the Escrow
Agent shall contemporaneously with the closing of any such transaction
return to each Shareholder a certificate for its share of the Escrow
Shares as are listed on Exhibit A. The Escrow Agent shall return each
certificate only to the person named as the holder of record in Exhibit
A hereto, as modified by any transfers made pursuant to Section 3
above.
d. In the event none of the criteria for release specified in
subparagraphs (a), (b) or (c) above is reached by the Company, the
Escrow Shares shall remain in the Escrow Account until a date that is
seven years from the Effective Date. Upon termination of the Escrow
Period pursuant to the provisions of this Section 6(d), the Escrow
Agent shall, as promptly as possible, return to each Shareholder a
certificate for its share of the Escrow Shares as are listed on Exhibit
A. The Escrow Agent shall return each certificate only to the person
named as the holder of record in Exhibit A hereto, as modified by any
transfers made pursuant to Section 3 above.
e. At such time as the Escrow Agent shall have returned all
Escrow Shares as provided in this Section, the Escrow Agent shall be
discharged completely and released from any and all further liabilities
and responsibilities under this Escrow Agreement.
f. The determination of the criteria described above shall be
solely the responsibility of the Company and the Representative, and
the Escrow Agent shall have no liability or responsibility therefor.
SECTION 7. VOTING RIGHTS. During the Escrow Period, each Shareholder,
or any transferee receiving all or a portion of the Escrow Shares of such
Shareholder pursuant to Section 3 of this Escrow Agreement, shall have the right
to vote such Escrow Shares (to the extent the Escrow Shares have voting rights)
in the Escrow Account at any and all shareholder meetings without restriction.
SECTION 8. LIMITATION OF LIABILITY OF ESCROW AGENT. In acting pursuant
to this Escrow Agreement, the Escrow Agent shall be protected fully in every
reasonable exercise of its discretion and shall have no obligation hereunder to
either the Shareholders or to any other party except as expressly set forth
herein. In performing any of its duties hereunder, the Escrow Agent shall not
incur any liability to any person for any damages, losses or expenses, except
for willful default or negligence and it shall, accordingly, not incur any such
liability with respect to (1) any action taken or omitted in good faith upon
advice of its counsel, counsel for the Company or counsel for the Representative
given with respect to any question relating to the duties and responsibilities
of the Escrow Agent under this Agreement, and (2) any action taken or omitted in
reliance upon any instrument, including written notices provided for herein, not
only to its due execution and validity and effectiveness of its provisions,
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<PAGE> 5
but also to the truth and accuracy of any information contained therein, which
the Escrow Agent shall in good faith believe to be genuine, to have been signed
and presented by a proper person or persons and to be in compliance with the
provisions of this Agreement.
SECTION 9. INDEMNIFICATION. The Company, the Representative and the
Shareholders shall indemnify and hold harmless the Escrow Agent against any and
all losses, claims, damages, liabilities and expenses, including reasonable
costs of investigation and counsel fees and disbursements, which may be imposed
upon the Escrow Agent or incurred by the Escrow Agent in connection with its
acceptance of appointment as Escrow Agent or the performance of its duties
hereunder, including any litigation arising from this Escrow Agreement or
involving the subject matter of this Escrow Agreement.
SECTION 10. PAYMENT OF FEES. The Company shall be responsible for all
reasonable fees and expenses of the Escrow Agent incurred by it in the course of
performing under this Escrow Agreement.
SECTION 11. CHANGE OF ESCROW AGENT. In the event the Escrow Agent
notifies the Company and the Representative that its acceptance of the duties of
Escrow Agent has been terminated by the Escrow Agent, or in the event the Escrow
Agent files for protection under the United States Bankruptcy Code or is
liquidated or ceases operations for any reason, the Company and the
Representative shall have the right to jointly designate a replacement Escrow
Agent who shall succeed to the rights and duties of the Escrow Agent hereunder.
Any such replacement Escrow Agent shall be a trust or stock transfer company
experienced in stock transfer, escrow and related matters and shall have a
minimum net worth of $5 million. Upon appointment of such successor Escrow
Agent, the Escrow Agent shall be discharged from all duties and responsibilities
hereunder.
SECTION 12. NOTICES. All notices, demands or requests required or
authorized hereunder shall be deemed given sufficiently if in writing and sent
by registered mail or certified mail, return receipt requested and postage
prepaid and by facsimile or cable:
In the case of the Representative to:
Schneider Securities, Inc.
The Chancery
1120 Lincoln Street, Suite 900
Denver, Colorado 80203
Attention: Thomas J. O'Rourke, President
-5-
<PAGE> 6
With a copy to (which shall not constitute notice):
Robert W. Walter, Esq.
Berliner Zisser Walter & Gallegos, P.C.
One Norwest Center, Suite 4700
1700 Lincoln Street
Denver, Colorado 80203-4547
In the case of the Escrow Agent to:
American Securities Transfer & Trust, Inc.
12039 West Alameda Parkway, Suite Z-2
Lakewood, Colorado 80228
Attn: Corporate Trust Department
In the case of the Company to:
PentaStar Communications, Inc.
1522 Blake Street
Denver, Colorado 80202
With a copy to (which shall not constitute notice):
B. Scott Pullara, Esq.
Sherman & Howard L.L.C.
633 Seventeenth Street, Suite 3000
Denver, Colorado 80202
In the case of the Shareholders to:
BACE Investments, LLC
1522 Blake Street
Denver, Colorado 80202
Black Diamond Capital, LLC
7101 LaVista Place, Suite 100
Niwot, Colorado 80503
SECTION 13. DISPUTES. In the event of any disputes between the parties
hereto as to the facts of default, the validity of the instructions contained
herein or any other fact or matter relating to this Agreement, the Escrow Agent
is instructed as follows:
-6-
<PAGE> 7
a. No Obligation to Act. That it shall be under no obligation
to act, except under process or order of court, or until it has been
adequately indemnified to its full and complete satisfaction, and shall
sustain no liability for its failure to act pending such process or
court order or indemnification.
b. Interpleader. That it may, in its sole and absolute
discretion, deposit the property described herein or so much thereof as
remains in its hands with the then Clerk, or acting Clerk, of the
District Court of the City and County of Denver, State of Colorado, and
interplead the parties thereto, and upon so depositing such property
and filing its complaint in interpleader it shall be relieved of all
liability under the terms hereof as to the property so deposited and
shall be entitled to recover in such interpleader action, from the
other parties thereto, its reasonable attorney fees and related costs
and expenses incurred in commencing such action and furthermore, the
parties hereto for themselves, their successors and assigns do hereby
submit themselves to the jurisdiction of said court and do hereby
appoint the then Clerk, or acting Clerk, of said court as their Agent
for the Service of all process in connection with such proceedings. The
institution of any such interpleader action shall not impair the rights
of the Escrow Agent as provided under the terms of this Agreement.
SECTION 14. OTHER AGREEMENTS. The termination of this Escrow Agreement
pursuant to Section 6 shall not affect any other agreement, contract, lock-up
arrangement, etc., that the Company has executed with the Representative. Such
other agreements shall continue in full force and effect pursuant to such
agreement's terms.
SECTION 15. COUNTERPARTS. This Escrow Agreement may be executed in
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same Escrow Agreement. Facsimile signatures shall
be accepted as original signatures for all purposes.
SECTION 16. GOVERNING LAW. The validity, interpretation and
construction of this Escrow Agreement and of each part hereof shall be governed
by the laws of the State of Colorado.
-7-
<PAGE> 8
IN WITNESS WHEREOF, the Shareholders, the Company, the Representative
and the Escrow Agent have executed this Escrow Agreement to be effective as of
the day and year first above written.
AMERICAN SECURITIES TRANSFER &
TRUST, INC.
By: /s/ Jennifer Owens
--------------------------------
Title: Corporate Trust Officer
-----------------------------
By: /s/ Margo Ankele
--------------------------------
Title: Marketing Officer
-----------------------------
PENTASTAR COMMUNICATIONS, INC.
By: /s/ Craig J. Zoellner
--------------------------------
Title: President
-----------------------------
SCHNEIDER SECURITIES, INC.
By: /s/ Thomas J. O'Rourke
--------------------------------
Title: President
-----------------------------
THE SHAREHOLDERS:
BACE INVESTMENTS, LLC
By: /s/ Craig J. Zoellner
--------------------------------
Craig J. Zoellner
BLACK DIAMOND CAPITAL, LLC
By: /s/ Blair W. McNea
--------------------------------
Blair W. McNea
-8-
<PAGE> 9
EXHIBIT A
TO ESCROW AGREEMENT
NAME TOTAL SHARES
---- ------------
BACE INVESTMENTS, LLC 140,000
BLACK DIAMOND CAPITAL, LLC 60,000
<PAGE> 1
EXHIBIT 3
LOCK-UP AGREEMENT
This Lock-up Agreement, dated as of October 8, 1999, is by and among
PentaStar Communications, Inc. (the "Company"), Schneider Securities, Inc. (the
"Representative"), BACE Investments, LLC ("BACE"), Black Diamond Capital, LLC
("Black Diamond"), Robert S. Lazzeri ("Lazzeri") and Jeffrey A. Veres ("Veres;"
BACE, Black Diamond, Lazzeri and Veres 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, Lazzeri and Veres (collectively, the "Stock
Purchase Agreements and Addendums"); and
WHEREAS, as a result of discussions with various state securities
administrators concerning the lock-up 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
-------------------- ------------------------
BACE Investments, LLC........................ 1,674,800
Black Diamond Capital, LLC................... 732,419
Robert S. Lazzeri............................ 469,499
Jeffrey A. Veres............................. 219,100
---------
Total........................................ 3,095,818
=========
Such 3,095,818 shares of Common Stock of the Company owned by the
Founding Shareholders are hereinafter referred to as the "Shares."
1
<PAGE> 2
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 (i)
any stock dividends issued by the Company and attributable to the Shares during
the term hereof, and (ii) any shares of capital stock of the Company issued or
issuable as a result of stock splits, for a period of three years from the
effective date (the "Effective 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) a Transaction (hereinafter defined), or (ii)
five years after the completion of the public offering. A "Transaction" shall be
defined to include a bonafide tender offer, offer to merge or acquisition of the
Company's equity securities by an unaffiliated purchaser, effected pursuant to a
vote in favor of such Transaction by a majority of the shareholders under which
(i) if the Transaction occurs within 24 months of the Effective Date, the public
shareholders of the Company shall receive cash, or securities that are listed or
to be listed, or qualified in all respects for listing, on the New York Stock
Exchange, the American Stock Exchange, or The Nasdaq National Market(R), such
cash or securities to be equal in value to at least two times the public
offering price per share of Common Stock upon consummation of the Transaction,
or (ii) if the transaction occurs more than 24 months after the Effective Date,
the public shareholders of the Company will receive cash or securities in value
equal to 1.5 times the public offering price per share of Common Stock upon
consummation of the Transaction.
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
2
<PAGE> 3
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. In the event that the Shares become subject to release from the
terms hereof in accordance with paragraph 4(i) or paragraph 5 above, the Shares
shall be automatically released from this Agreement and any restrictive legend
placed on certificates representing the Shares may be removed upon the Company
filing with the Arizona Corporation Commission, Texas State Securities Board,
Missouri Securities Division of the Office of Secretary of State and the
Securities Division of the Department of Financial Institutions of the State of
Washington (collectively, the "State Securities Commissions"), any one of the
following: (i) if subject to release under paragraph 5(i), 5(ii) or 5(iv) above,
a written representation from the Company and a majority of the Founders
indicating compliance therewith, (ii) if subject to release under paragraph
5(iii) above, a written representation from the Company and a majority of the
Founders indicating compliance with such subsection accompanied by financial
statements, prepared in accordance with generally accepted accounting principles
and audited and reported upon by an independent certified public accountant,
that indicate compliance therewith, (iii) if subject to release under paragraph
4(i), a written representation from the Company and a majority of the Founders
indicating compliance with such subsection accompanied by any offering
materials, proxy statements or similar documents relating to the specified
Transaction. The Shares may also be transferred by will or pursuant to the laws
of descent and distribution or by court order, in which event the Company shall
furnish to the State Securities Commissions a certified copy of an order issued
by a court of competent jurisdiction that orders the release or transfer of the
Shares, a certified copy of an instrument of distribution filed by a court of
competent jurisdiction, or a written representation from the Company and the
personal representatives or executors of the estate of a deceased Founder
stating that the Shares were transferred pursuant to a will or the laws of
descent or distribution.
7. 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.
8. 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.
3
<PAGE> 4
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 Agreement to be effective on the date specified above.
THE COMPANY: THE REPRESENTATIVE:
PENTASTAR COMMUNICATIONS, INC. SCHNEIDER SECURITIES, INC.
By: /s/ Craig J. Zoellner By: /s/ Thomas J. O'Rourke
------------------------- -----------------------
Name: Craig J. Zoellner Name: Thomas J. O'Rourke
----------------------- ---------------------
Title: President Title: President
---------------------- --------------------
THE FOUNDERS:
BACE INVESTMENTS, LLC
By: /s/ Craig J. Zoellner
-------------------------
Name: Craig J. Zoellner
-----------------------
Title: Managing Member
----------------------
BLACK DIAMOND CAPITAL, LLC
By: /s/ Blair W. McNea
-------------------------
Name: Blair W. McNea
-----------------------
Title: Managing Member
----------------------
By: /s/ Robert S. Lazzeri
-------------------------
Name: Robert S. Lazzeri
-----------------------
By: /s/ Jeffery A. Veres
-------------------------
Name: Jeffery A. Veres
-----------------------
4
<PAGE> 1
EXHIBIT 4
OPTION AGREEMENT
This option agreement ("Agreement") is entered into this 31st day of
March, 1999 by BACE Investments, LLC ("BACE") and Robert S. Lazzeri ("Lazzeri").
Whereas BACE and Lazzeri are founders of Optimal Communications, Inc.
("Optimal");
Whereas BACE owns 490 shares of common stock in Optimal ("BACE
Shares");
Whereas BACE desires to sell Lazzeri an option to purchase 50 of the
BACE Shares ("Lazzeri Shares");
Whereas Lazzeri desires to purchase said option.
Now, therefore in consideration of the payment of $10.00 and the mutual
covenants contained herein, the receipt and sufficiency of which hereby are
acknowledged, the parties agree as follows:
A. BACE hereby sells to Lazzeri an option to acquire the Lazzeri Shares
for $10.00 ("Option").
B. The Option shall expire five years after the date of this Agreement
unless sooner exercised.
C. The price to be paid by Lazzeri to BACE for the Lazzeri Shares shall
equal the price of the Lazzeri Shares at the initial public offering of
Optimal's common stock after adjusting for stock splits ("Exercise
Price").
D. The Option shall not be exercisable until the earlier of a sale of
substantially all of Optimal's assets or stock, or one year from the
date of this Agreement.
E. If Lazzeri exercises the Option and subsequently sells the Lazzeri
Shares he shall be responsible for any and all taxes owing on the
difference between the Exercise Price and the sales price. BACE shall
be responsible for any and all taxes owing on the difference between
its basis in the Lazzeri Shares and the Exercise Price.
F. The Lazzeri Shares shall be subject to the following restrictions:
Lazzeri shall not sell, transfer or otherwise dispose of, hypothecate
or otherwise encumber (voluntarily or involuntarily) (any such sale, transfer,
disposition, hypothecation or encumbrance being referred to as a "transfer") any
<PAGE> 2
Option Agreement
BACE Investments, LLC and Robert S. Lazzeri
March 31, 1999
Page 2 of 2
of the Lazzeri Shares without the written approval of Optimal except as
expressly permitted in any subsection of this Section F.
(a) Lazzeri may transfer the Lazzeri Shares to an immediate family
member or an entity owned by Lazzeri and their immediate family members (an
"Affiliate"); provided, that (i) Lazzeri first delivers to Optimal the written
representation of Lazzeri and such Affiliate, expressly for the benefit of
Optimal, BACE and Lazzeri, that such transfer is not being made for purposes of
circumventing the provisions of this Section F. and that such Affiliate agrees
to be bound by the terms and provisions of this Agreement and (ii) Optimal
determines, in its reasonable discretion, that such representation is true.
(b) Lazzeri may transfer the Lazzeri Shares pursuant to a
registered public offering or pursuant to Rule 144 (other than Subsection (k)
thereof) promulgated under the Securities Act or any successor rule or
regulation then in place.
(c) Any purported transfer of the Lazzeri Shares by a party which
is not permitted by the foregoing provisions of this Section, or which is in
violation of such provisions, shall be void and of no force and effect
whatsoever.
In witness hereof the parties have hereunto set their hands as of the
date first above written.
/s/ Robert S. Lazzeri
- ---------------------------------------
Robert S. Lazzeri
BACE Investments, LLC
BY: /s/ Craig J. Zoellner
------------------------------------
Its: Member
-----------------------------------
<PAGE> 1
EXHIBIT 5
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement"), dated as of March 17,
1999, is between BACE Investments, LLC, a Colorado limited liability company
("BACE") and Theresa M. Slancik ("Slancik") (BACE and Slancik are collectively
"the Parties").
RECITALS
Whereas, BACE owns capital stock consisting of 500 shares of Class A
Common Stock of Optimal Communications, Inc. ("Optimal") having the rights and
power set forth in Optimal's Certificate of Incorporation (as amended from time
to time);
Whereas, Slancik has been gifted 10 shares of Optimal's Class A Common
Stock from BACE;
Whereas, BACE and Slancik have agreed to make certain provisions to
restrict the transfer of Slancik's stock and to provide for confidentiality and
buyback rights;
Now, therefore, in consideration of the covenants and agreements made
herein, Slancik and BACE agree as follows:
ARTICLE I
CONFIDENTIALITY AND NON-DISCLOSURE
1.1 Slancik acknowledges that information, observations and data
obtained by Slancik concerning the business or affairs of BACE and Optimal (the
"Confidential Information") are the property of BACE and Optimal. Slancik will
not disclose to any person or use for its own account any Confidential
Information without the written consent of BACE. Nothing herein shall prevent
the disclosure of Confidential Information (i) which becomes generally known to
and available for use by the public other than as a result of a disclosure by
Slancik, (ii) with respect to which Slancik's duty of confidentiality is waived
by BACE, (iii) if required by applicable law, regulation or order of any
governmental agency or court of competent jurisdiction, (iv) which was known to
the public when received by Slancik, or (v) which is lawfully obtained by
Slancik from other sources. Slancik agrees that upon the written request of
BACE, it will deliver to BACE all memoranda, notes, plans, records, reports and
other documents containing Confidential Information, and all copies thereof,
that Slancik may then possess or have under its control. The obligations set
forth in this Confidentiality and Non-Disclosure paragraph shall continue for a
period of three years.
<PAGE> 2
Stock Purchase Agreement
Page 2 of 4
ARTICLE II
BUYBACK PROVISION
2.1 Buyback Provision. BACE has the right to purchase the 10 shares of
Optimal Stock from Slancik for $1 per share within five years from the date of
this Agreement if Slancik is not employed by BACE or an affiliate of BACE. This
purchase right shall expire at the earlier to occur of a) the sale of
substantially all of the stock or assets of Optimal, b) at the end of said five
year period, or c) at the death or disability of Slancik. For purposes of this
2.1, disability means that Slancik has become disabled to an extent which
substantially impairs Slancik's ability to perform employment obligations, as
determined in good faith by BACE.
ARTICLE III
TRANSFERS
3.1 Transfers. Slancik shall not sell, transfer or otherwise dispose
of, hypothecate or otherwise encumber (voluntarily or involuntarily) (any such
sale, transfer, disposition, hypothecation or encumbrance being referred to as a
"transfer") any common stock of Optimal ("Common Stock") without the written
approval of BACE.
ARTICLE IV
MISCELLANEOUS
4.1 Equitable Relief. Slancik and BACE recognize that the obligations
imposed on them in this Agreement are special, unique, and of extraordinary
character, and that in the event of breach by any party, damages will be an
insufficient remedy; consequently, it is agreed that Slancik and BACE may have
specific performance, injunction, injunctive or other equitable relief (in
addition to damages) as a remedy for the enforcement hereof, without providing
damages.
4.2 Assignment. Except as otherwise expressly provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and permitted assigns of Slancik and
BACE. No such assignment shall relieve the assignor from any liability
hereunder. No assignment hereof shall be effective until Slancik making an
assignment hereof delivers to BACE an executed counterpart of this Agreement by
the transferee or an agreement in writing executed by the transferee to be bound
by the terms hereof to the same extent as if such transferee was Slancik hereto.
4.3 Shares Subject to this Agreement. All shares of Common Stock now
owned or hereafter acquired by Slancik shall be subject to the terms of this
Agreement.
4.4 Legend. Certificates evidencing shares of Common Stock owned by the
Parties shall bear a legend in substantially the following form:
<PAGE> 3
Stock Purchase Agreement
Page 3 of 4
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY NOT BE OFFERED OR SOLD, UNLESS IT HAS BEEN
REGISTERED UNDER SUCH SECURITIES ACT OR UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE. THIS SECURITY IS SUBJECT TO RESTRICTIONS ON
TRANSFER AND OTHER TERMS AND CONDITIONS SET FORTH IN THE STOCK PURCHASE
AGREEMENT BETWEEN BACE INVESTMENTS, LLC AND THERESA M. SLANCIK, DATED
AS OF MARCH 17, 1999, AS IT MAY BE AMENDED FROM TIME TO TIME, A COPY OF
WHICH MAY BE OBTAINED FROM THE CORPORATION AT ITS PRINCIPAL EXECUTIVE
OFFICES.
4.5 Notices. Any and all notices, designations, consents, offers,
acceptances or any other communications provided for herein shall be given in
writing by personal delivery, overnight courier or facsimile, which shall be
addressed, or sent, to the respective addresses set forth on the signature pages
hereto or such other address as designated by the Parties by like notice from
time to time.
4.6 Counterparts. This Agreement may be executed in two or more
counterparts and each counterpart shall be deemed to be an original and which
counterparts together shall constitute one and the same agreement of the Parties
hereto.
4.7 Section Headings. Headings contained in this Agreement are inserted
only as a matter of convenience and in no way define, limit or extend the scope
or intent of this Agreement or any provisions hereof.
4.8 Governing Law. This Agreement shall be governed by the laws of the
State of Colorado, without giving effect to the conflicts of laws principles
thereof.
4.9 Entire Agreement. This Agreement contains the entities
understanding of the Parties hereto respecting the subject matter hereof, and
supersedes all prior agreements, discussions and understandings.
4.10 Cumulative Rights. The rights of Slancik and BACE under this
Agreement are cumulative and in addition to all similar and other rights of the
Parties under other agreements, including the Investment Agreement.
4.11 Severability. Should any particular provision of this Agreement be
adjudicated to be invalid or unenforceable, such provision shall be deemed
deleted and the reminder of the Agreement, nevertheless, shall remain unaffected
and fully enforceable; further, to the extent any provision herewith is deemed
unenforceable by virtue of its scope but may be made enforceable by limitation
thereof, the Parties hereto agree the same shall, nevertheless, be enforceable
to the fullest extent possible.
4.12 No Waiver. No delay on the part of any party hereunder in
exercising any right, power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude other or further exercise thereof, or
the exercise of any other right, power of privilege.
<PAGE> 4
Stock Purchase Agreement
Page 4 of 4
4.13 Headings. The headings in this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
4.14 Attorneys' Fees. In the event of any action or suit based upon or
arising out of any actual or alleged breach by any party of any representation,
warranty or agreement in this Agreement, the prevailing party shall be entitled
to recover its reasonable attorneys' fees and expenses of such action or suit
from the other party, in addition to any other relief ordered by the court.
SLANCIK:
Theresa M. Slancik
/s/ Theresa M. Slancik
- ---------------------------------------
BACE INVESTMENTS, LLC
By: /s/ Richard M. Tyler
------------------------------------
Richard M. Tyler
- ---------------------------------------
(Print Name)
Title: Member
Address of Record: 1522 Blake Street, Denver, Colorado 80202
