LOCK-UP AGREEMENT
THIS LOCK-UP AGREEMENT (the "Lock-up Agreement") is entered into
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effective as of December 4 2003, by and between Xxxxxx Xxxxxx (the
"Stockholder"), a Stockholder or optionholder of Zanett, Inc., a Delaware
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corporation (the "Company"), and the Company;
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WHEREAS, Stockholder beneficially owns (within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934, as amended) sixty-four
thousand seven hundred eighty-eight (64,788) shares of common stock, par
value $0.001 per share of the Company (the "Common Stock");
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WHEREAS, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Stockholder has agreed to enter into this
Lock-up Agreement.
NOW, THEREFORE, in consideration of the foregoing, the parties
hereto agree as follows:
1. Lock-up on Transfer of Shares
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(a) The Stockholder agrees not, directly or indirectly, to
sell, offer to sell, contract to sell, assign, pledge, hypothecate, encumber
or otherwise transfer, or enter into any contract, option or other
arrangement or understanding with respect to the sale, assignment, pledge or
other disposition of (collectively, "Transfer") any rights with respect to
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(i) any Common Stock currently owned by Stockholder and (ii) any Common Stock
owned by Stockholder as a result of additional issuances for a period
commencing on the date hereof and continuing through November 30, 2008 (the
"Lock-up Period") except as expressly provided herein. The foregoing
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restriction has been expressly agreed to preclude Stockholder from engaging
in any hedging or other transaction during the Lock-up Period that is
designed to or reasonably expected to lead to or result in a Transfer of the
Common Stock. Such prohibited hedging or other transaction would include,
without limitation, any short sale (whether or not against the box) or any
purchase, sale, or grant of any right (including, without limitation, any put
or call option) with respect to the Common Stock or with respect to any
security (other than a broad-based market basket or index) that includes,
relates to or derives any significant part of its value from the Common
Stock.
(b) The Stockholder also agrees and consents to the entry
of stop transfer instructions with the Company's Transfer Agent and Registrar
against the Transfer of Common Stock held by Stockholder except in compliance
with the terms and conditions of this Lock-up Agreement.
(c) The restrictions contained in this Lock-up Agreement
shall apply to Stockholder with respect to any and all Transfers of any of
the Company's Common Stock with the exception of that Common Stock acquired
by the Stockholder on the open market. Any and all other Transfers are
prohibited by this Agreement.
2. Early Termination of Lock-Up Period; Price Gateways.
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(a) In the event that both Xxxxxxx Xxxxxxxx and Xxxxx X.
XxXxxxxx (collectively, the "Investment Banker") solely determine that the
release of shares of Common Stock from the restrictions contained in this
Lock-Up Agreement would not have an adverse short-term or long-term effect on
the market price for the Common Stock, then the Investment Banker may, but is
not obligated to, release shares of Common Stock from the restrictions
contained in this Lock-Up Agreement in such amount and on such terms as the
Investment Banker determines in its sole discretion. This Early Termination
clause is at the sole discretion of the Investment Banker, and requires no
consultation of, nor approval by, the Board of Directors of the Company, nor
any approval by the other stockholders of the Company. This Early
Termination clause is applicable in whole or in part, with respect to the
amount of shares owned by a single Stockholder, and its applicability towards
one Stockholder does not constitute any obligation what-so-ever towards any
or all other stockholders which may have signed the same, or similar, Lock-Up
Agreements.
(b) In the event any Common Stock of Stockholder is
subject to any involuntary transfer, whether by reason of death, bankruptcy
or divorce proceedings or otherwise, the transferee of such Common Stock
shall take such Common Stock subject to this Lock-Up Agreement. Any
purported transfer of any Common Stock of Stockholder that is not in
accordance with this Lock-Up Agreement shall be null and void, and shall not
operate to transfer any right, title or interest in such Common Stock to the
purported transferee. The Company agrees that the Company shall not cause or
permit the transfer of any Common Stock of Stockholder to be made on its
books unless the transfer is permitted by this Lock-Up Agreement and has been
made in accordance with its terms.
(c) The restrictions contained in this Lock-up Agreement
shall not apply to any Transfer by Stockholder (i) with respect to transfers
of any Common Stock acquired on the open market or (ii) for which the
Investment Banker has provided written consent as detailed in Section 2(a)
above
3. Price Gateways.
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Notwithstanding anything contained herein to the contrary, at such
time as the closing price of the Common Stock (NASDAQ: XXXX) on the NASDAQ
SmallCap Market, or such other market as the Common Stock is then publicly
traded, equals or exceeds each price target (the "Gateway Price") set forth
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on Schedule A hereto, the corresponding percentage of Common Stock (the
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"Release Percentage") set forth on Schedule A multiplied by the total number
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of shares of Common Stock (the "Total Number") subject to this Agreement
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shall be released from the restrictions in this Lock-up Agreement for so long
as the price of the Common Stock remains equal to, or exceeds such Gateway
Price. The shares underlying unexercised Options shall not be included in the
calculation of the Total Number. Any sale of Common Stock so released shall
require duplicate confirmation (by Stockholder's broker and the Company) to
the effect that it was consummated at or above the relevant Gateway Price.
4. Representations, Warranties and Covenants of the Stockholder.
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Stockholder represents and warrants to, and agrees with, the
Company that:
(a) This Lock-up Agreement has been duly executed and
delivered by Stockholder and constitutes a valid and binding obligation of
Stockholder enforceable in accordance with its terms.
(b) Neither the execution and delivery of this Lock-up
Agreement nor the consummation of the transactions contemplated hereby will
result in any breach or violation of, be in conflict with or constitute a
default under any agreement or instrument to which Stockholder is a party or
by which Stockholder may be affected or is bound.
(c) Stockholder is not subject to or obligated under any
provisions of any law, regulation, order, judgment or decree which would be
breached or violated by the execution, delivery and performance of this Lock-
up Agreement by Stockholder and the consummation of the transactions
contemplated hereby.
(d) Stockholder is now, and will be at all times up to the
termination of this Lock-up Agreement, the record and beneficial owner of the
Common Stock which at such time is subject to Transfer restrictions pursuant
to the terms hereof, free and clear of any pledge, lien, security interest,
mortgage, charge, claim, equity, option, proxy, voting restriction, right of
first refusal, limitation on disposition, adverse claim of ownership or use
or encumbrance of any kind, other than pursuant to this Lock-up Agreement.
5. Miscellaneous
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(a) Specific Performance. Stockholder acknowledges that
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damages would be an inadequate remedy for any breach of the provisions of
this Lock-up Agreement and agrees that the obligations of Stockholder
hereunder shall be specifically enforceable and Stockholder shall not take
any action to impede the Company from seeking to enforce such right of
specific performance. Stockholder agrees that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of his
obligations in this Lock-up Agreement and hereby agrees to waive in any
action for specific performance of any such obligation, the defense that a
remedy at law would be adequate.
(b) Notices. All notices, demands and other
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communications to be given or delivered under or by reason of the provisions
of this Lock-up Agreement shall be in writing and shall be given and shall be
deemed to have been given when personally delivered or three days after being
mailed, if mailed by first class mail, return receipt requested, or one day
after being sent by reputable overnight delivery service, or when receipt is
acknowledged, if sent by facsimile, telecopy or other electronic transmission
device. Notices, demands and communications to Stockholder and the Company
will, unless another address is specified in writing, be sent to the address
indicated below, except that notices of change of address shall only be
effective upon receipt:
If to Stockholder:
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Delta Communications Group
00 Xxxxxxxxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000
If to the Company:
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Zanett, Inc.
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Chief Legal Officer
Fax: (000) 000-0000
(c) Assignment. This Lock-up Agreement and all of the
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provisions hereof will be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, except
that neither this Lock-up Agreement nor any of the rights, interests or
obligations hereunder may be assigned by either party hereto without the
prior written consent of the Investment Banker.
(d) Governing Law. The internal law, without regard for
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conflicts of law principles, of the State of Delaware will govern all
questions concerning the construction, validity and interpretation of this
Lock-up Agreement and the performance of the obligations imposed by this
Lock-up Agreement.
(e) Counterparts. This Lock-up Agreement may be executed
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in one or more counterparts, any one of which need not contain the signatures
of more than one party, but all such counterparts taken together shall
constitute one and the same instrument.
(f) Severability. Whenever possible, each provision of
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this Lock-up Agreement will be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Lock-up
Agreement is held to be prohibited by or invalid under applicable law, such
provision will be ineffective only to the extent of such provision or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Lock-up Agreement.
(g) Amendment; Waiver. This Lock-up Agreement may not be
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amended or waived except, (i) in a writing executed by the party against
which such amendment or waiver is sought to be enforced, and (ii) without the
expressed written consent of the Investment Banker. No course of dealing
between or among any persons having any interest in this Lock-up Agreement
will be deemed effective to modify or amend any part of this Lock-up
Agreement or any rights or obligations of any person under or by reason of
this Lock-up Agreement.
(h) Complete Agreement. This Lock-up Agreement contains
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the complete agreement between the parties hereto and supersedes any prior
understandings, agreements or representations by or between the parties,
written or oral, which may have related to the subject matter hereof in any
way.
IN WITNESS WHEREOF, the parties hereby have executed this Lock-up
Agreement as of the date first written above.
ZANETT, INC. XXXXXX XXXXXX
By: /s/ Pierre-Xxxxxxx Xxx /s/ Xxxxxx Xxxxxx
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Name: Pierre-Xxxxxxx Xxx
Title: Chief Legal Officer
SCHEDULE A
Gateway Price 1 Release Percentage
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$6.85 10%
$ 9.70 20%
$12.85 30%
$17.95 40%
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1 Subject to adjustment as a result of stock dividends, splits,
recapitalizations and similar events.
