EXHIBIT 10.2
SUBSCRIPTION AGREEMENT
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FOR RAMZI A. DABBAGH
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This Subscription Agreement (the "Agreement") is entered into as of this
1st day of December, 1995 between Communications Instruments Holdings, Inc., a
Delaware corporation (the "Company"), and Ramzi A. Dabbagh, an individual (the
"Purchaser"). The Company and the Purchaser are sometimes collectively referred
to herein as the "Parties."
RECITALS
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The Purchaser desires to subscribe for and purchase, and the
Company desires to issue and sell to the Purchaser, the number of shares of its
Common Stock, par value $.01 per share (the "Common Stock"), set forth opposite
the name of the Purchaser on the signature page hereof for the consideration
hereinafter set forth (the "Purchase Price"). The term "Purchase Date" as used
herein, shall mean the date on which the Purchaser shall purchase the Common
Stock.
AGREEMENT
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In order to implement the foregoing and in consideration of the mutual
agreements contained herein and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Parties agree as
follows:
1. Subscription for and Purchase of Common Stock. Subject to the terms
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and conditions hereinafter set forth, the Purchaser hereby subscribes for and
agrees to purchase, and the Company hereby agrees to sell to the Purchaser the
number of shares of Common Stock set forth opposite the name of the Purchaser on
the signature page hereof at a price of $1.14 per share.
2. Purchaser's Representations, Warranties and Agreements.
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a. No Resales. The Purchaser hereby represents and warrants that he
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is acquiring the Common Stock for investment for his own account and not with a
view to, or for resale in connection with, the distribution or other disposition
thereof. Except for those transfers permitted pursuant to Section 2(b) hereof,
the Purchaser agrees and acknowledges that he will not, directly or indirectly,
offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of
(hereinafter, "Transfer") any shares of Common Stock unless such Transfer
complies with Section 3 of this Agreement and (i) the Transfer is pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
and the rules and regulations in effect thereunder (the "Act"), or (ii) counsel
for the Purchaser (which counsel shall be reasonably acceptable to the Company
and may be
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counsel to the Company) shall have furnished the Company with an opinion,
reasonably satisfactory in form and substance to the Company, to the effect that
no such registration is required because of the availability of an exemption
from registration under the Act.
b. Certain Permitted Transfers. Notwithstanding the general
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prohibition on Transfers contained in Sections 2(a) and 3 hereof, the Company
acknowledges and agrees that the following Transfers of Common Stock may be made
at any time and are deemed to be in compliance with the Act and this Agreement
and no opinion of counsel (except as otherwise specified in this Section 2(b))
is required in connection therewith:
(1) a Transfer of Common Stock made by the Purchaser to the
Company pursuant to Sections 3, 4 and 6 hereof;
(2) a Transfer of Common Stock made in compliance with the Act
to a trust the beneficiaries of which may include only the Purchaser,
his spouse and/or his lineal descendants (a "Purchaser's Trust") or a
Transfer made to such a trust by a person who has become a holder of
the Common Stock in accordance with the terms of this Agreement;
provided, however, that no such Transfer shall be of any force or
effect or shall be given effect on the books of the Company unless
the transferee shall deliver to the Company a valid undertaking to be
bound by the terms of this Agreement;
(3) a Transfer of Common Stock upon the death of the Purchaser to
his lineal descendants or a Transfer to the lineal descendants of a
person who has become a holder of the Common Stock in accordance with
the terms of this Agreement, and subject to Section 3 hereof;
provided, however, that no such Transfer shall be of any force or
effect or shall be given effect on the books of the Company unless
the transferee shall deliver to the Company a valid undertaking to be
bound by the terms of this Agreement; or
(4) a pledge or hypothecation by the Purchaser of the Common
Stock or his interest therein to a bank, the Company or other
financial institution to secure a loan by such bank or financial
institution to him for the purchase of the Common Stock, or the
refinancing of any such indebtedness, provided, however, that such
bank, investment banking firm or financial institution accepts the
Common Stock or interest therein subject to all of the terms and
conditions of this Agreement.
c. Legend. Each certificate representing shares of the Stock shall
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bear the following legend:
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"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS
SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF A SUBSCRIPTION AGREEMENT
DATED AS OF DECEMBER 1, 1995 (A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY). EXCEPT AS OTHERWISE PROVIDED IN SUCH
AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE MAY
BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR (B) IF
THE COMPANY HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL
FOR THE HOLDER THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF
SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS IN EFFECT
THEREUNDER."
d. Common Stock Unregistered. The Purchaser acknowledges that he has
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been advised that (i) the Common Stock has not been registered under the Act,
(ii) the Common Stock must be held for an indefinite period and the Purchaser
must continue to bear the economic risk of the investment in the Common Stock
unless it is subsequently registered under the Act or an exemption from such
registration is available, (iii) it is not anticipated that there will be any
public market for the Common Stock, (iv) Rule 144 promulgated under the Act does
not presently permit any sales of any securities of the company, and the Company
has made no covenant to make such Rule available in the future, (v) when and if
shares of the Common Stock may be disposed of without registration in reliance
on Rule 144, such disposition can be made only in limited amounts in accordance
with the terms and conditions of such Rule, (vi) if the Rule 144 exemption is
not available, public sale without registration will require compliance with an
exemption under the Act, (vii) a restrictive legend in the applicable form
heretofore set forth shall be placed on the certificates representing the Common
Stock and (viii) a notation shall be made in the appropriate records of the
Company indicating that the Common Stock is subject to restrictions on transfer
and, if the Company should at some time in the future engage the services of a
stock transfer agent, appropriate stop transfer restrictions will be issued to
such transfer agent with respect to the Common Stock.
e. Rule 144 Sales. The Purchaser agrees that, if he intends to
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dispose of any shares of the Common Stock in accordance with Rule 144 under the
Act or otherwise, he will promptly notify the Company of such intended
disposition and will deliver to the Company at or prior to the time of such
disposition documentation as the Company may reasonably request in connection
with such sale and, in the case of a disposition pursuant to Rule 144, will
deliver to the Company an executed copy of any notice on Form 144 required to be
filed with the Securities and Exchange Commission.
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f. Resales Prohibited During Public Offerings. The Purchaser agrees
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that, if any shares of the capital stock of the Company are offered to the
public pursuant to an effective registration statement under the Act, he will
not effect any public sale or distribution of any shares of the Common Stock
that are not covered by such registration statement within 7 days prior to, or
within 90 days after, the effective date of such registration statement.
g. Additional Investment Representations. The Purchaser further
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represents and warrants that with respect to the Common Stock to be purchased by
him hereunder (i) he has received and reviewed the Communications Instruments
Confidential Financing Memorandum (the "Memorandum") relating to the Common
Stock and the documents referred to therein, (ii) he has been given the
opportunity to obtain any additional information or documents and to ask
questions and receive answers about such documents, the Company and the business
and prospects of the Company as he deems necessary to evaluate the merits and
risks related to his investment in the Common Stock and to verify the
information contained in the Memorandum and no representations concerning such
matters or any other matters have been made to the Purchaser except as set forth
in the Memorandum and in this Agreement, (iii) his net worth and his financial
condition is such that he can afford to bear the economic risk of holding the
unregistered Common Stock for an indefinite period of time and has adequate
means for providing for his current needs and personal contingencies, (iv) he
can afford to suffer a complete loss of his investment in the Common Stock, (v)
all information which he has provided to the Company concerning himself and his
financial position is correct and complete as of the date of this Agreement,
(vi) he understands and has taken cognizance of all risk factors related to the
purchase of the Common Stock, (vii) his knowledge and experience in financial
and business matters are such that he is capable of evaluating the merits and
risks of his purchase of the Common Stock as contemplated by this Agreement and
(viii) he is the sole party in interest to this Agreement and is acquiring the
Common stock for his own account.
3. Restrictions on Transfer; Right of First Refusal.
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a. General. Except for Transfers otherwise contemplated by Section
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2(b) of this Agreement and until the earlier of (i) the date of closing of a
public offering of shares of common stock of the Company pursuant to an
effective registration statement (other than with respect to an employee benefit
plan) which has been filed after the Purchase Date under the Act (a "Public
offering") or (ii) the fifth anniversary of the Purchase Date, the Purchaser
agrees that he will not transfer any shares of the Common Stock at any time. No
Transfer of any shares of Common Stock in violation of this Agreement shall be
made or recorded on the books of the Company and any such Transfer shall be void
and of no effect.
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b. Right of First Refusal - A Purchaser or Transferor (as defined in
----------------------
section 4 hereof) may transfer all or part of his Common Stock after the fifth
anniversary hereof only after first offering them to the Company as described in
this Section 3(b). The obligations of Purchaser and Transferor under this
Section 3(b) shall expire upon a Public Offering.
(1) Offer to Purchase Common Stock: In the event any Purchaser or
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Transferor receives a bona fide written offer to purchase all or any
portion of his Common Stock, and desires to accept the offer, he
shall first deliver to the Company an identical offer in writing (the
"Offer") which shall set forth (i) the Purchaser's desire to make
such transfer; (ii) the name, residence address and business address
of the proposed transferee; (iii) the number of shares proposed to be
transferred (the "Offered Shares"); and (iv) the price proposed to be
paid by such transferee and the precise terms of payment.
(2) Action on Offer by Corporation: Within 30 days after receipt
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of the offer, the Company shall give written notice to the offering
Purchaser (the "Purchaser's Notice") of its election to purchase the
Offered Shares for the consideration and on the terms stated in the
Offer. In the event that the Company elects to purchase the Offered
Shares, it shall specify in the Purchaser's Notice a closing date for
the purchase, determined in accordance with paragraph 3 below. The
Closing shall take place at the principal office of the Company. At
such place, the Company shall deliver a certified bank check or
checks in the requisite amount payable to the order of the Purchaser
or Transferor against delivery of the certificate or other
instruments representing the shares of the Common Stock sold, free
and clear of any liens, claims and encumbrances.
(3) Closing Date: The closing date for purchase of the Offered
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Shares under this Section 3 by the Company shall be a date not less
than 20 nor more than 30 days after the date the Purchaser's Notice
is given.
(4) Expiration of Right of First Refusal. The Company's right of
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first refusal to elect to purchase the Offered Shares shall expire 30
days after it receives the Offer.
(5) Release from Restriction. If, upon the expiration of the
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right of first refusal, the Offer has not been accepted as to all of
the Offered Shares by the Company, the offering Purchaser may
transfer to the transferee named in the Offer exactly that number of
shares specified in the Offer, no more and no less. The transfer
shall be made in strict accordance with the price and terms stated in
the Offer. The transfer must take place within 30 days following the
expiration of the right of first refusal.
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Each transferee shall receive and hold the Offered Shares subject to
all of the provisions and restrictions of this Agreement theretofore
applicable to the Purchaser, and by the receipt of the Offered Shares
shall be deemed to consent to the terms of and be a party to this
Agreement. If the transferor Purchaser shall fail to consummate the
transfer of all of the Offered Shares within 30 days following the
expiration of the right of first refusal, then all of the Offered
Shares shall remain subject to all the restrictions of this
Agreement, and the transfer by the transferor Purchaser of any such
Shares shall constitute a breach of this Agreement.
4. Repurchase Common Stock by the Company.
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a. General. The Purchaser, the Purchaser's Estates and the
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Purchaser's Trusts and the Purchaser's lineal descendants are referred to in
this Section 4 as "Transferors." The completion of the purchases by the Company
pursuant to this Section 4, if any, shall take place at the principal offices of
the Company. At such place, the Company shall deliver a certified bank check or
checks in the requisite amount payable to the order of the Transferor against
delivery of the certificates or other instruments representing the shares of the
Common Stock sold, free and clear of all liens, claims and encumbrances. For
purposes of this Agreement, the determination of whether the Purchaser shall be
deemed to have a "disability" or have been terminated "for cause" shall be made
by the Board of Directors of the Company in good faith which determination shall
be final and conclusive.
b. Purchaser's Death, Disability or Voluntary Termination of
Employment. ---------------------------------------------------------
- ----------
If at any time before the earlier of the fifth anniversary of the
Purchase Date or prior to the date of the closing of a Public Offering the
Purchaser separates from service to the Company for any reason, including, (i)
the Purchaser's employment is terminated other than "for cause" or the Purchaser
voluntarily leaving the employ of the Company or, (ii) the Purchaser either dies
or becomes disabled (as defined above), then the Purchaser, the Purchaser's
Estate or the Purchaser's Trust, or the Purchaser's lineal descendants, as the
case may be, shall sell immediately following the date of termination of
employment, permanent disability or death (as applicable, the "Termination
Date") to the Company, and the Company shall have the obligation, on such
occasion, to purchase all of the shares of Common Stock then held (as of the
Termination Date) by the Purchaser, the Purchaser's Trust or the Purchaser's
Estate, or the Purchaser's lineal descendants, as the case may be, at the
Repurchase Price, as defined in Section 5 hereof. Such Purchaser, such
Purchaser's Estate such Purchaser's Trust, and/or such Purchaser's lineal
descendants, as the case may be, shall inform by written notice the Company of
its obligation to purchase shares of Common Stock pursuant to this Section 4(b)
no later than 30 days after the Termination Date.
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c. Purchaser's Termination of Employment "For Cause or Voluntary
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Termination of Employment by Purchaser. If at any time before the earlier of
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the fifth anniversary of the Purchase Date or prior to the date of the closing
of a Public Offering the Purchaser is terminated "for cause" or the Purchaser
voluntarily leaves the employ of the Company, then the Purchaser, the
Purchaser's Estate or the Purchaser's Trust, or the Purchaser's lineal
descendants, as the case may be, shall have the obligation immediately following
the date of termination of employment to sell to the Company, and the Company
shall have the option, on such occasion, to purchase all of the shares of Common
Stock then held (as of the Termination Date) by the Purchaser, the Purchaser's
Trust and/or the Purchaser's Estate, or the Purchaser's lineal descendants, as
the case may be, at the Repurchase Price, as defined in Section 5 hereof. Such
Purchaser, such Purchaser's Estate, such Purchaser's Trust, and/or such
Purchaser's lineal descendants, as the case may be, shall be informed by written
notice of the exercise by the Company of its option to purchase the shares of
Common Stock pursuant to this Section 4(c) no later than 30 days after the
Termination Date.
5. Determination of Repurchase Price.
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a. Date of determination of Repurchase Price. The Repurchase Price
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shall be determined for the purposes of Section 4 hereof as of the last day of
the fiscal quarter immediately preceding the quarter during which the event
giving rise to a repurchase obligation or option occurred (hereinafter called
the "Repurchase Calculation Date"). Any determination of the Repurchase Price
pursuant to this Section 5 shall be made by the Chief Financial Officer of the
Company, and approved by the Board of Directors of the Company, whose
determination shall be final and conclusive.
b. Calculation of Repurchase Price. The Repurchase Price per share
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of Common Stock for the purposes of Section 4 hereof shall be equal to:
(1) if a termination of employment by the Purchaser in the event
of the death or disability of the Purchaser prior to the fifth
anniversary of the Purchase Date or for any other reason other than
"for cause" or the voluntary termination of employment by Purchaser
prior to the fifth anniversary of the Purchase Date, then the higher
of the Purchase Price and Book Value Per Share. The Book Value Per
Share shall be equal to the stockholders' common equity per share of
all common stock of the Company, as of the Repurchase Calculation
Date, determined in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods. The
computation of Book Value Per Share shall be based on the unaudited
financial statements of the Company as of the Repurchase Calculation
Date.
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(2) if a voluntary termination by Purchaser of employment or
termination or Purchaser "for cause" before the fifth anniversary of
the Purchase Date, then the lower of the Purchase Price and Book
Value per share.
6. "Piggyback" Registration Rights.
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a. Purchaser's Right to Request Registration. If, at any time after
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the Purchase Date, the Company plans to register any shares of Common Stock held
by any of the holders of the capital stock of the Company for public offering
pursuant to the Act, the Company will promptly notify the Purchaser in writing
(a "Notice") of such proposed registration (a "Proposed Registration"). If
within 10 business days of the receipt by the Purchaser of such Notice the
Company receives from the Purchaser a written request (a "Request") to register
a specific number of shares of Common Stock (which Request will be irrevocable
unless otherwise mutually agreed to in writing by the Purchaser and the
Company), shares of Common Stock will be so registered as provided in this
Section 6.
b. Number of Shares of Common Stock to be Registered. The number of
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shares of Common Stock that will be registered pursuant to a Request will be the
lesser of (i) the number of shares of Common Stock then held by the Purchaser
which the Purchaser specifies in his Request (which for purposes of this Section
6 shall include shares held by such Purchaser's Estate or such Purchaser's
Trust) or (ii) the sum of the shares of Common Stock specified in the Request by
such Purchaser multiplied by a percentage calculated by dividing the number of
shares of capital stock of the Company being registered by the holders of such
capital stock in the Proposed Registration by the total number of shares of
capital stock of the Company beneficially owned by such holders.
c. Terms of Registration. The shares of Common Stock to be
---------------------
registered will be registered by the Company and offered to the public pursuant
to this Section 6 on the same terms and subject to the same conditions
applicable to the registration in a Proposed Registration of shares of Common
Stock of Communications Instruments Holdings, Inc., a Delaware company, except
that the Purchaser shall not be required to pay the costs of the registration,
other than its pro rata share of the underwriter's discounts or commissions.
d. Other Agreements. The Purchaser including shares of Common Stock
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in a registration shall execute and deliver such other agreements and
instruments as are reasonably and customarily required by the managing
underwriter (or the Company if there is not an underwritten offering) of selling
shareholders in a public offering.
7. The Company's Representations and Warranties. The Company represents
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and warrants to the Purchaser that:
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a. this Agreement has been duly authorized, executed and delivered by
the Company, (b) the Common Stock, when issued and delivered in accordance with
the terms hereof, will be duly and validly issued, fully paid and nonassessable,
and (c) the description of the capitalization of the Company contained in the
Memorandum is true, correct and complete.
8. Miscellaneous.
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a. State Securities Laws. The Company hereby agrees to use its best
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efforts to comply with all state securities or "blue sky" laws which might be
applicable to the sale of the Common Stock to the Purchaser.
b. Binding Effect. The provisions of this Agreement shall be binding
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upon and accrue to the benefit of the Parties and their respective heirs, legal
representatives, successors and assigns. In the case of a transferee permitted
under Section 2(b)(iv) hereof, such transferee shall be deemed to be at
Purchaser hereunder for purposes of obtaining the benefits or enforcing the
rights of the Purchaser hereunder; provided, however, that no transferee
(including, without limitation, transferees referred to in Section 2(b)(ii),
(iii) and (iv) hereof) shall derive any rights under this Agreement unless and
until such transferee has delivered to the Company a valid undertaking to be
bound by the terms of this Agreement.
c. Amendment. This Agreement may be amended only by a written
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instrument signed by all of the Parties.
d. Applicable Law. This Agreement shall be governed by, and
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construed in accordance with, the internal laws of the State of Delaware
(without reference to the laws and cases providing for the choice of the law of
another forum).
e. Notices. All notices and other communications provided for herein
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shall be in writing and shall be deemed to have been duly given if delivered
personally or sent by registered or certified mail, return receipt requested,
postage prepaid, to the Party to whom it is directed:
(1) If to the Company, to:
CII
1396 Charlotte Highway
P.O. Box 520
Fairview, North Carolina 28730
Attention: President
with copies to:
Stonebridge Partners
Westchester Financial Center
50 Main Street
10
White Plains, New York 10606
Attention: David A. Zackrison
and
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017-3909
Attention: Richard C. Weisberg, Esq.
(2) If to the Purchaser, to him at the address set forth on the
signature page hereof under his signature or at such other address as
the Parties shall have specified by notice in writing to each of the
others.
f. Time and Place of Purchases by and Sales to the Company. Except as
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otherwise provided herein, the closing of each purchase and sale of shares of
Common Stock pursuant to this Agreement shall take place at the principal office
of the Company on the third business day following delivery of the notice by the
Company of its exercise of the right to purchase such Common Stock hereunder.
Whenever the Company is given a right to purchase hereunder, it may assign such
right in all or in part to any employee of the Company.
g. Remedies for Violations. The shares of Common Stock cannot be
-----------------------
readily purchased or sold on the open market and for this reason, among others,
the Parties will be irreparably damaged in the event that this Agreement is not
followed by the parties. In the event of any controversy concerning the right or
obligation to purchase or sell such shares, such right or obligation shall be
enforceable in a court of equity by decree of specific performance.
h. No Conflict with Loan Agreements. Notwithstanding any obligation
--------------------------------
of the Company to make payments hereunder, the Company shall not be required to
make such payments to the extent the same would cause a breach of any of its
agreements or its subsidiaries' agreements or undertakings for the borrowing of
monies, provided, however, that the Company shall be obligated to make such
payments as soon as practicable when the same would not cause a breach of any of
its agreements or undertakings for the borrowing of monies.
i. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
j. Section Headings. The section headings of this Agreement are for
----------------
convenience of reference only and shall not be deemed to alter or affect any
provision hereof.
IN WITNESS WHEREOF, the Parties have executed this
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Agreement as of the date first above written.
The Company: /s/ Michael S. Bruno, Jr.
- ----------- By: ____________________________________
Michael S. Bruno, Jr.
President
Purchaser: /s/ Ramzi A. Dabbagh
- --------- By: ___________________________________
Ramzi A. Dabbagh
16 Cedar Hill Drive
Asheville, NC 28803
No. of Shares of Common
Stock Purchased Hereunder:
10,000
- ------
Total Consideration:
$11,400.00
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SUBSCRIPTION AGREEMENT
----------------------
FOR MICHAEL A. STEINBACK
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This Subscription Agreement (the "Agreement") is entered into as of this
1st day of December, 1995 between Communications Instruments Holdings, Inc., a
Delaware corporation (the "Company"), and MICHAEL A. STEINBACK, an individual
(the "Purchaser"). The Company and the Purchaser are sometimes collectively
referred to herein as the "Parties."
RECITALS
--------
The Purchaser desires to subscribe for and purchase, and the Company
desires to issue and sell to the Purchaser, the number of shares of its Common
Stock, par value $.01 per share (the "Common Stock"), set forth opposite the
name of the Purchaser on the signature page hereof for the consideration
hereinafter set forth (the "Purchase Price"). The term "Purchase Date" as used
herein, shall mean the date on which the Purchaser shall purchase the Common
Stock.
AGREEMENT
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In order to implement the foregoing and in consideration of the mutual
agreements contained herein and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Parties agree as
follows:
1. Subscription for and Purchase of Common Stock. Subject to the
---------------------------------------------
terms and conditions hereinafter set forth, the Purchaser hereby subscribes for
and agrees to purchase, and the Company hereby agrees to sell to the Purchaser
the number of shares of Common Stock set forth opposite the name of the
Purchaser on the signature page hereof at a price of $1.14 per share.
2. Purchaser's Representations, Warranties and Agreements.
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a. No Resales. The Purchaser hereby represents and warrants
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that he is acquiring the Common Stock for investment for his own account and not
with a view to, or for resale in connection with, the distribution or other
disposition thereof. Except for those transfers permitted pursuant to Section
2(b) hereof, the Purchaser agrees and acknowledges that he will not, directly or
indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise
dispose of (hereinafter, "Transfer") any shares of Common Stock unless such
Transfer complies with Section 3 of this Agreement and (i) the Transfer is
pursuant to an effective registration statement under the Securities Act of
1933, as amended, and the rules and regulations in effect thereunder (the
"Act"), or (ii) counsel for the Purchaser (which counsel shall be reasonably
acceptable to the Company and may be
2
counsel to the Company) shall have furnished the Company with an opinion,
reasonably satisfactory in form and substance to the Company, to the effect that
no such registration is required because of the availability of an exemption
from registration under the Act.
b. Certain Permitted Transfers. Notwithstanding the general
---------------------------
prohibition on Transfers contained in Sections 2(a) and 3 hereof, the Company
acknowledges and agrees that the following Transfers of Common Stock may be made
at any time and are deemed to be in compliance with the Act and this Agreement
and no opinion of counsel (except as otherwise specified in this Section 2(b))
is required in connection therewith:
(1) a Transfer of Common Stock made by the Purchaser to the
Company pursuant to Sections 3, 4 and 6 hereof;
(2) a Transfer of Common Stock made in compliance with the Act
to a trust the beneficiaries of which may include only the Purchaser,
his spouse and/or his lineal descendants (a "Purchaser's Trust") or a
Transfer made to such a trust by a person who has become a holder of the
Common Stock in accordance with the terms of this Agreement; provided,
however, that no such Transfer shall be of any force or effect or shall
be given effect on the books of the Company unless the transferee shall
deliver to the Company a valid undertaking to be bound by the terms of
this Agreement;
(3) a Transfer of Common Stock upon the death of the Purchaser
to his lineal descendants or a Transfer to the lineal descendants of a
person who has become a holder of the Common Stock in accordance with
the terms of this Agreement, and subject to Section 3 hereof; provided,
however, that no such Transfer shall be of any force or effect or shall
be given effect on the books of the Company unless the transferee shall
deliver to the Company a valid undertaking to be bound by the terms of
this Agreement; or
(4) a pledge or hypothecation by the Purchaser of the Common
Stock or his interest therein to a bank, the Company or other financial
institution to secure a loan by such bank or financial institution to
him for the purchase of the Common Stock, or the refinancing of any such
indebtedness, provided, however, that such bank, investment banking firm
or financial institution accepts the Common Stock or interest therein
subject to all of the terms and conditions of this Agreement.
c. Legend. Each certificate representing shares of the Stock
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shall bear the following legend:
3
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
COMPLIES WITH THE PROVISIONS OF A SUBSCRIPTION AGREEMENT DATED AS OF
DECEMBER 1, 1995 (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY). EXCEPT AS OTHERWISE PROVIDED IN SUCH AGREEMENT, NO TRANSFER,
SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR (B) IF THE COMPANY HAS BEEN FURNISHED WITH A
SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE
PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS IN EFFECT
THEREUNDER."
d. Common Stock Unregistered. The Purchaser acknowledges that he
-------------------------
has been advised that (i) the Common Stock has not been registered under the
Act, (ii) the Common Stock must be held for an indefinite period and the
Purchaser must continue to bear the economic risk of the investment in the
Common Stock unless it is subsequently registered under the Act or an exemption
from such registration is available, (iii) it is not anticipated that there will
be any public market for the Common Stock, (iv) Rule 144 promulgated under the
Act does not presently permit any sales of any securities of the company, and
the Company has made no covenant to make such Rule available in the future, (v)
when and if shares of the Common Stock may be disposed of without registration
in reliance on Rule 144, such disposition can be made only in limited amounts in
accordance with the terms and conditions of such Rule, (vi) if the Rule 144
exemption is not available, public sale without registration will require
compliance with an exemption under the Act, (vii) a restrictive legend in the
applicable form heretofore set forth shall be placed on the certificates
representing the Common Stock and (viii) a notation shall be made in the
appropriate records of the Company indicating that the Common Stock is subject
to restrictions on transfer and, if the Company should at some time in the
future engage the services of a stock transfer agent, appropriate stop transfer
restrictions will be issued to such transfer agent with respect to the Common
Stock.
e. Rule 144 Sales. The Purchaser agrees that, if he intends to
--------------
dispose of any shares of the Common Stock in accordance with Rule 144 under the
Act or otherwise, he will promptly notify the Company of such intended
disposition and will deliver to the Company at or prior to the time of such
disposition documentation as the Company may reasonably request in connection
with such sale and, in the case of a disposition pursuant to Rule 144, will
deliver to the Company an executed copy of any notice on Form 144 required to be
filed with the Securities and Exchange Commission .
4
f. Resales Prohibited During Public Offerings. The Purchaser
------------------------------------------
agrees that, if any shares of the capital stock of the Company are offered to
the public pursuant to an effective registration statement under the Act, he
will not effect any public sale or distribution of any shares of the Common
Stock that are not covered by such registration statement within 7 days prior
to, or within 90 days after, the effective date of such registration statement.
g. Additional Investment Representations. The Purchaser further
-------------------------------------
represents and warrants that with respect to the Common Stock to be purchased by
him hereunder (i) he has received and reviewed the Communications Instruments
Confidential Financing Memorandum (the "Memorandum") relating to the Common
Stock and the documents referred to therein, (ii) he has been given the
opportunity to obtain any additional information or documents and to ask
questions and receive answers about such documents, the Company and the business
and prospects of the Company as he deems necessary to evaluate the merits and
risks related to his investment in the Common Stock and to verify the
information contained in the Memorandum and no representations concerning such
matters or any other matters have been made to the Purchaser except as set forth
in the Memorandum and in this Agreement, (iii) his net worth and his financial
condition is such that he can afford to bear the economic risk of holding the
unregistered Common Stock for an indefinite period of time and has adequate
means for providing for his current needs and personal contingencies, (iv) he
can afford to suffer a complete loss of his investment in the Common Stock, (v)
all information which he has provided to the Company concerning himself and his
financial position is correct and complete as of the date of this Agreement,
(vi) he understands and has taken cognizance of all risk factors related to the
purchase of the Common Stock, (vii) his knowledge and experience in financial
and business matters are such that he is capable of evaluating the merits and
risks of his purchase of the Common Stock as contemplated by this Agreement and
(viii) he is the sole party in interest to this Agreement and is acquiring the
Common stock for his own account.
3. Restrictions on Transfer; Right of First Refusal.
------------------------------------------------
a. General. Except for Transfers otherwise contemplated by
-------
Section 2(b) of this Agreement and until the earlier of (i) the date of closing
of a public offering of shares of common stock of the Company pursuant to an
effective registration statement (other than with respect to an employee benefit
plan) which has been filed after the Purchase Date under the Act (a "Public
offering") or (ii) the fifth anniversary of the Purchase Date, the Purchaser
agrees that he will not transfer any shares of the Common Stock at any time. No
Transfer of any shares of Common Stock in violation of this Agreement shall be
made or recorded on the books of the Company and any such Transfer shall be void
and of no effect.
5
b. Right of First Refusal - A Purchaser or Transferor (as
----------------------
defined in section 4 hereof) may transfer all or part of his Common Stock after
the fifth anniversary hereof only after first offering them to the Company as
described in this Section 3(b). The obligations of Purchaser and Transferor
under this Section 3(b) shall expire upon a Public Offering.
(1) Offer to Purchase Common Stock: In the event
------------------------------
any Purchaser or Transferor receives a bona fide written offer to purchase
all or any portion of his Common Stock, and desires to accept the offer, he
shall first deliver to the Company an identical offer in writing (the
"Offer") which shall set forth (i) the Purchaser's desire to make such
transfer; (ii) the name, residence address and business address of the
proposed transferee; (iii) the number of shares proposed to be transferred
(the "Offered Shares"); and (iv) the price proposed to be paid by such
transferee and the precise terms of payment.
(2) Action on Offer by Corporation: Within 30 days
------------------------------
after receipt of the offer, the Company shall give written notice to the
offering Purchaser (the "Purchaser's Notice") of its election to purchase
the Offered Shares for the consideration and on the terms stated in the
Offer. In the event that the Company elects to purchase the Offered Shares,
it shall specify in the Purchaser's Notice a closing date for the purchase,
determined in accordance with paragraph 3 below. The Closing shall take
place at the principal office of the Company. At such place, the Company
shall deliver a certified bank check or checks in the requisite amount
payable to the order of the Purchaser or Transferor against delivery of the
certificate or other instruments representing the shares of the Common Stock
sold, free and clear of any liens, claims and encumbrances.
(3) Closinq Date: The closing date for purchase of the
------------
Offered Shares under this Section 3 by the Company shall be a date not less
than 20 nor more than 30 days after the date the Purchaser's Notice is
given.
(4) Expiration of Right of First Refusal. The
------------------------------------
Company's right of first refusal to elect to purchase the Offered Shares
shall expire 30 days after it receives the Offer.
(5) Release from Restriction. If, upon the expiration
------------------------
of the right of first refusal, the Offer has not been accepted as to all of
the Offered Shares by the Company, the offering Purchaser may transfer to
the transferee named in the Offer exactly that number of shares specified in
the Offer, no more and no less. The transfer shall be made in strict
accordance with the price and terms stated in the Offer. The transfer must
take place within 30 days following the expiration of the right of first
refusal.
6
Each transferee shall receive and hold the Offered Shares subject to all of
the provisions and restrictions of this Agreement theretofore applicable to
the Purchaser, and by the receipt of the Offered Shares shall be deemed to
consent to the terms of and be a party to this Agreement. If the transferor
Purchaser shall fail to consummate the transfer of all of the Offered Shares
within 30 days following the expiration of the right of first refusal, then
all of the Offered Shares shall remain subject to all the restrictions of
this Agreement, and the transfer by the transferor Purchaser of any such
Shares shall constitute a breach of this Agreement.
4. Repurchase Common Stock by the Company.
-------------------------------------
a. General. The Purchaser, the Purchaser's Estates and the
-------
Purchaser's Trusts and the Purchaser's lineal descendants are referred to in
this Section 4 as "Transferors." The completion of the purchases by the Company
pursuant to this Section 4, if any, shall take place at the principal offices of
the Company. At such place, the Company shall deliver a certified bank check or
checks in the requisite amount payable to the order of the Transferor against
delivery of the certificates or other instruments representing the shares of the
Common Stock sold, free and clear of all liens, claims and encumbrances. For
purposes of this Agreement, the determination of whether the Purchaser shall be
deemed to have a "disability" or have been terminated "for cause" shall be made
by the Board of Directors of the Company in good faith which determination shall
be final and conclusive.
b. Purchaser's Death, Disability or Voluntary Termination of
---------------------------------------------------------
Employment. If at any time before the earlier of the fifth anniversary of the
- ----------
Purchase Date or prior to the date of the closing of a Public Offering the
Purchaser separates from service to the Company for any reason, including, (i)
the Purchaser's employment is terminated other than "for cause" or the Purchaser
voluntarily leaving the employ of the Company or, (ii) the Purchaser either dies
or becomes disabled (as defined above), then the Purchaser, the Purchaser's
Estate or the Purchaser's Trust, or the Purchaser's lineal descendants, as the
case may be, shall sell immediately following the date of termination of
employment, permanent disability or death (as applicable, the "Termination
Date") to the Company, and the Company shall have the obligation, on such
occasion, to purchase all of the shares of Common Stock then held (as of the
Termination Date) by the Purchaser, the Purchaser's Trust or the Purchaser's
Estate, or the Purchaser's lineal descendants, as the case may be, at the
Repurchase Price, as defined in Section 5 hereof. Such Purchaser, such
Purchaser's Estate such Purchaser's Trust, and/or such Purchaser's lineal
descendants, as the case may be, shall inform by written notice the Company of
its obligation to purchase shares of Common Stock pursuant to this Section 4(b)
no later than 30 days after the Termination Date.
7
c. Purchaser's Termination of Employment "For Cause or
---------------------------------------------------
Voluntary Termination Of Employment by Purchaser. If at any time before the
- ------------------------------------------------
earlier of the fifth anniversary of the Purchase Date or prior to the date of
the closing of a Public Offering the Purchaser is terminated "for cause" or the
Purchaser voluntarily leaves the employ of the Company, then the Purchaser, the
Purchaser's Estate or the Purchaser's Trust, or the Purchaser's lineal
descendants, as the case may be, shall have the obligation immediately following
the date of termination of employment to sell to the Company, and the Company
shall have the option, on such occasion, to purchase all of the shares of Common
Stock then held (as of the Termination Date) by the Purchaser, the Purchaser's
Trust and/or the Purchaser's Estate, or the Purchaser's lineal descendants, as
the case may be, at the Repurchase Price, as defined in Section 5 hereof. Such
Purchaser, such Purchaser's Estate, such Purchaser's Trust, and/or such
Purchaser's lineal descendants, as the case may be, shall be informed by written
notice of the exercise by the Company of its option to purchase the shares of
Common Stock pursuant to this Section 4(c) no later than 30 days after the
Termination Date.
5. Determination of Repurchase Price.
---------------------------------
a. Date of determination of Repurchase Price. The Repurchase
-----------------------------------------
Price shall be determined for the purposes of Section 4 hereof as of the last
day of the fiscal quarter immediately preceding the quarter during which the
event giving rise to a repurchase obligation or option occurred (hereinafter
called the "Repurchase Calculation Date"). Any determination of the Repurchase
Price pursuant to this Section 5 shall be made by the Chief Financial Officer of
the Company, and approved by the Board of Directors of the Company, whose
determination shall be final and conclusive.
b. Calculation of Repurchase Price. The Repurchase Price per
-------------------------------
share of Common Stock for the purposes of Section 4 hereof shall be equal to:
(1) if a termination of employment by the Purchaser in the
event of the death or disability of the Purchaser prior to the fifth
anniversary of the Purchase Date or for any other reason other than "for
cause" or the voluntary termination of employment by Purchaser prior to the
fifth anniversary of the Purchase Date, then the higher of the Purchase
Price and Book Value Per Share. The Book Value Per Share shall be equal to
the stockholders' common equity per share of all common stock of the
Company, as of the Repurchase Calculation Date, determined in accordance
with generally accepted accounting principles applied on a basis consistent
with prior periods. The computation of Book Value Per Share shall be based
on the unaudited financial statements of the Company as of the Repurchase
Calculation Date.
8
(2) if a voluntary termination by Purchaser of employment
or termination or Purchaser "for cause" before the fifth anniversary of the
Purchase Date, then the lower of the Purchase Price and Book Value per
share.
6. "Piggyback" Registration Rights.
------------------------------
a. Purchaser's Right to Request Registration. If, at any time
-----------------------------------------
after the Purchase Date, the Company plans to register any shares of Common
Stock held by any of the holders of the capital stock of the Company for public
offering pursuant to the Act, the Company will promptly notify the Purchaser in
writing (a "Notice") of such proposed registration (a "Proposed Registration").
If within 10 business days of the receipt by the Purchaser of such Notice the
Company receives from the Purchaser a written request (a "Request") to register
a specific number of shares of Common Stock (which Request will be irrevocable
unless otherwise mutually agreed to in writing by the Purchaser and the
Company), shares of Common Stock will be so registered as provided in this
Section 6.
b. Number of Shares of Common Stock to be Registered. The
-------------------------------------------------
number of shares of Common Stock that will be registered pursuant to a Request
will be the lesser of (i) the number of shares of Common Stock then held by the
Purchaser which the Purchaser specifies in his Request (which for purposes of
this Section 6 shall include shares held by such Purchaser's Estate or such
Purchaser's Trust) or (ii) the sum of the shares of Common Stock specified in
the Request by such Purchaser multiplied by a percentage calculated by dividing
the number of shares of capital stock of the Company being registered by the
holders of such capital stock in the Proposed Registration by the total number
of shares of capital stock of the Company beneficially owned by such holders.
c. Terms of Registration. The shares of Common Stock to be
---------------------
registered will be registered by the Company and offered to the public pursuant
to this Section 6 on the same terms and subject to the same conditions
applicable to the registration in a Proposed Registration of shares of Common
Stock of Communications Instruments Holdings, Inc., a Delaware company, except
that the Purchaser shall not be required to pay the costs of the registration,
other than its pro rata share of the underwriter's discounts or commissions.
d. Other Agreements. The Purchaser including shares of Common
----------------
Stock in a registration shall execute and deliver such other agreements and
instruments as are reasonably and customarily required by the managing
underwriter (or the Company if there is not an underwritten offering) of selling
shareholders in a public offering.
7. The Company's Representations and Warranties. The Company
--------------------------------------------
represents and warrants to the Purchaser that:
9
a. this Agreement has been duly authorized, executed and
delivered by the Company, (b) the Common Stock, when issued and delivered in
accordance with the terms hereof, will be duly and validly issued, fully paid
and nonassessable, and (c) the description of the capitalization of the Company
contained in the Memorandum, is true, correct and complete.
8. Miscellaneous
-------------
a. State Securities Laws. The Company hereby agrees to use its
---------------------
best efforts to comply with all state securities or "blue sky" laws which might
be applicable to the sale of the Common Stock to the Purchaser.
b. Binding Effect. The provisions of this Agreement shall be
--------------
binding upon and accrue to the benefit of the Parties and their respective
heirs, legal representatives, successors and assigns. In the case of a
transferee permitted under Section 2(b)(iv) hereof, such transferee shall be
deemed to be at Purchaser hereunder for purposes of obtaining the benefits or
enforcing the rights of the Purchaser hereunder; provided, however, that no
transferee (including, without limitation, transferees referred to in Section
2(b)(ii), (iii) and (iv) hereof) shall derive any rights under this Agreement
unless and until such transferee has delivered to the Company a valid
undertaking to be bound by the terms of this Agreement.
c. Amendment. This Agreement may be amended only by a written
---------
instrument signed by all of the Parties.
d. Applicable Law. This Agreement shall be governed by, and
--------------
construed in accordance with, the internal laws of the State of Delaware
(without reference to the laws and cases providing for the choice of the law of
another forum).
e. Notices. All notices and other communications provided for
-------
herein shall be in writing and shall be deemed to have been duly given if
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid, to the Party to whom it is directed:
(1) If to the Company, to:
CII
1396 Charlotte Highway
P.O. Box 520
Fairview, North Carolina 28730
Attention: President
with copies to:
Stonebridge Partners
Westchester Financial Center
50 Main Street
10
White Plains, New York 10606
Attention: David A. Zackrison
and
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017-3909
Attention: Richard C. Weisberg, Esq.
(2) If to the Purchaser, to him at the address set forth on
the signature page hereof under his signature or at such other address as
the Parties shall have specified by notice in writing to each of the others.
f. Time and Place of Purchases by and Sales to the Company.
-------------------------------------------------------
Except as otherwise provided herein, the closing of each purchase and sale of
shares of Common Stock pursuant to this Agreement shall take place at the
principal office of the Company on the third business day following delivery of
the notice by the Company of its exercise of the right to purchase such Common
Stock hereunder. Whenever the Company is given a right to purchase hereunder, it
may assign such right in all or in part to any employee of the Company.
g. Remedies for Violations. The shares of Common Stock cannot be
-----------------------
readily purchased or sold on the open market and for this reason, among others,
the Parties will be irreparably damaged in the event that this Agreement is not
followed by the parties. In the event of any controversy concerning the right or
obligation to purchase or sell such shares, such right or obligation shall be
enforceable in a court of equity by decree of specific performance.
h. No Conflict with Loan Agreements. Notwithstanding any
--------------------------------
obligation of the Company to make payments hereunder, the Company shall not be
required to make such payments to the extent the same would cause a breach of
any of its agreements or its subsidiaries' agreements or undertakings for the
borrowing of monies, provided, however, that the Company shall be obligated to
make such payments as soon as practicable when the same would not cause a breach
of any of its agreements or undertakings for the borrowing of monies.
i. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
j. Section Headings. The section headings of this Agreement are
----------------
for convenience of reference only and shall not be deemed to alter or affect any
provision hereof.
IN WITNESS WHEREOF, the Parties have executed this
11
Agreement as of the date first above written.
The Company: By: /s/ Michael S. Bruno Jr.
- ------------ ------------------------
Michael S. Bruno, Jr.
President
Purchaser: By: /s/ Michael A. Steinback
- ---------- ------------------------
Michael A. Steinback
339 Red Fox Circle
Asheville, NC 28803
No. of Shares of Common
Stock Purchased Hereunder:
10, 000
- --------------------
Total Consideration:
$11,400.00
- ------------------------------
SUBSCRIPTION AGREEMENT
----------------------
FOR DAVID HENNING
-----------------
This Subscription Agreement (the "Agreement") is entered into as of this
1st day of December, 1995 between Communications Instruments Holdings, Inc., a
Delaware corporation (the "Company"), and DAVID HENNING, an individual (the
"Purchaser"). The Company and the Purchaser are sometimes collectively referred
to herein as the "Parties."
RECITALS
--------
The Purchaser desires to subscribe for and purchase, and the Company
desires to issue and sell to the Purchaser, the number of shares of its Common
Stock, par value $.01 per share (the "Common Stock"), set forth opposite the
name of the Purchaser on the signature page hereof for the consideration
hereinafter set forth (the "Purchase Price"). The term "Purchase Date" as used
herein, shall mean the date on which the Purchaser shall purchase the Common
Stock.
AGREEMENT
---------
In order to implement the foregoing and in consideration of the mutual
agreements contained herein and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Parties agree as
follows:
1. Subscription for and Purchase of Common Stock. Subject to the
---------------------------------------------
terms and conditions hereinafter set forth, the Purchaser hereby subscribes for
and agrees to purchase, and the Company hereby agrees to sell to the Purchaser
the number of shares of Common Stock set forth opposite the name of the
Purchaser on the signature page hereof at a price of $1.14 per share.
2. Purchaser's Representations, Warranties and Agreements.
------------------------------------------------------
a. No Resales. The Purchaser hereby represents and warrants that
----------
he is acquiring the Common Stock for investment for his own account and not with
a view to, or for resale in connection with, the distribution or other
disposition thereof. Except for those transfers permitted pursuant to Section
2(b) hereof, the Purchaser agrees and acknowledges that he will not, directly or
indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise
dispose of (hereinafter, "Transfer") any shares of Common Stock unless such
Transfer complies with Section 3 of this Agreement and (i) the Transfer is
pursuant to an effective registration statement under the Securities Act of
1933, as amended, and the rules and regulations in effect thereunder (the
"Act"), or (ii) counsel for the Purchaser (which counsel shall be reasonably
acceptable to the Company and may be
counsel to the Company) shall have furnished the Company with an opinion,
reasonably satisfactory in form and substance to the Company, to the effect that
no such registration is required because of the availability of an exemption
from registration under the Act.
b. Certain Permitted Transfers. Notwithstanding the general
---------------------------
prohibition on Transfers contained in Sections 2(a) and 3 hereof , the Company
acknowledges and agrees that the following Transfers of Common Stock may be made
at any time and are deemed to be in compliance with the Act and this Agreement
and no opinion of counsel (except as otherwise specified in this Section 2(b))
is required in connection therewith:
(1) a Transfer of Common Stock made by the Purchaser to the
Company pursuant to Sections 3, 4 and 6 hereof;
(2) a Transfer of Common Stock made in compliance with the
Act to a trust the beneficiaries of which may include only the Purchaser, his
spouse and/or his lineal descendants (a "Purchaser's Trust") or a Transfer made
to such a trust by a person who has become a holder of the Common Stock in
accordance with the terms of this Agreement; provided, however, that no such
Transfer shall be of any force or effect or shall be given effect on the books
of the Company unless the transferee shall deliver to the Company a valid
undertaking to be bound by the terms of this Agreement;
(3) a Transfer of Common Stock upon the death of the Purchaser
to his lineal descendants or a Transfer to the lineal descendants of a person
who has become a holder of the Common Stock in accordance with the terms of this
Agreement, and subject to Section 3 hereof; provided, however, that no such
Transfer shall be of any force or effect or shall be given effect on the books
of the Company unless the transferee shall deliver to the Company a valid
undertaking to be bound by the terms of this Agreement; or
(4) a pledge or hypothecation by the Purchaser of the Common
Stock or his interest therein to a bank, the Company or other financial
institution to secure a loan by such bank or financial institution to him for
the purchase of the Common Stock, or the refinancing of any such indebtedness,
provided, however, that such bank, investment banking firm or financial
institution accepts the Common Stock or interest therein subject to all of the
terms and conditions of this Agreement.
c. Legend. Each certificate representing shares of the Stock
------
shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS
SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF A SUBSCRIPTION AGREEMENT
DATED AS OF DECEMBER 1, 1995 (A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY). EXCEPT AS OTHERWISE PROVIDED IN SUCH
AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE MADE
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR (B) IF THE COMPANY
HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER
THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND
THE RULES AND REGULATIONS IN EFFECT THEREUNDER."
d. Common Stock Unregistered. The Purchaser acknowledges that he
-------------------------
has been advised that (i) the Common Stock has not been registered under the
Act, (ii) the Common Stock must be held for an indefinite period and the
Purchaser must continue to bear the economic risk of the investment in the
Common Stock unless it is subsequently registered under the Act or an exemption
from such registration is available, (iii) it is not anticipated that there will
be any public market for the Common Stock, (iv) Rule 144 promulgated under the
Act does not presently permit any sales of any securities of the company, and
the Company has made no covenant to make such Rule available in the future, (v)
when and if shares of the Common Stock may be disposed of without registration
in reliance on Rule 144, such disposition can be made only in limited amounts in
accordance with the terms and conditions of such Rule, (vi) if the Rule 144
exemption is not available, public sale without registration will require
compliance with an exemption under the Act, (vii) a restrictive legend in the
applicable form heretofore set forth shall be placed on the certificates
representing the Common Stock and (viii) a notation shall be made in the
appropriate records of the Company indicating that the Common Stock is subject
to restrictions on transfer and, if the Company should at some time in the
future engage the services of a stock transfer agent, appropriate stop transfer
restrictions will be issued to such transfer agent with respect to the Common
Stock.
e. Rule 144 Sales. The Purchaser agrees that, if he intends to
--------------
dispose of any shares of the Common Stock in accordance with Rule 144 under the
Act or otherwise, he will promptly notify the Company of such intended
disposition and will deliver to the Company at or prior to the time of such
disposition documentation as the Company may reasonably request in connection
with such sale and, in the case of a disposition pursuant to Rule 144, will
deliver to the Company an executed copy of any notice on Form 144 required to be
filed with the Securities and Exchange Commission.
f. Resales Prohibited During Public Offerings. The Purchaser
------------------------------------------
agrees that, if any shares of the capital stock of the Company are offered to
the public pursuant to an effective registration statement under the Act, he
will not effect any public sale or distribution of any shares of the Common
Stock that are not covered by such registration statement within 7 days prior
to, or within 90 days after, the effective date of such registration statement.
g. Additional Investment Representations. The Purchaser further
-------------------------------------
represents and warrants that with respect to the Common Stock to be purchased by
him hereunder (i) he has received and reviewed the Communications Instruments
Confidential Financing Memorandum (the "Memorandum") relating to the Common
Stock and the documents referred to therein, (ii) he has been given the
opportunity to obtain any additional information or documents and to ask
questions and receive answers about such documents, the Company and the business
and prospects of the Company as he deems necessary to evaluate the merits and
risks related to his investment in the Common Stock and to verify the
information contained in the Memorandum and no representations concerning such
matters or any other matters have been made to the Purchaser except as set forth
in the Memorandum and in this Agreement, (iii) his net worth and his financial
condition is such that he can afford to bear the economic risk of holding the
unregistered Common Stock for an indefinite period of time and has adequate
means for providing for his current needs and personal contingencies, (iv) he
can afford to suffer a complete loss of his investment in the Common Stock, (v)
all information which he has provided to the Company concerning himself and his
financial position is correct and complete as of the date of this Agreement,
(vi) he understands and has taken cognizance of all risk factors related to the
purchase of the Common Stock, (vii) his knowledge and experience in financial
and business matters are such that he is capable of evaluating the merits and
risks of his purchase of the Common Stock as contemplated by this Agreement and
(viii) he is the sole party in interest to this Agreement and is acquiring the
Common Stock for his own account.
3. Restrictions on Transfer; Right of First Refusal.
------------------------------------------------
a. General. Except for Transfers otherwise contemplated by Section
-------
2(b) of this Agreement and until the earlier of (i) the date of closing of a
public offering of shares of common stock of the Company pursuant to an
effective registration statement (other than with respect to an employee benefit
plan) which has been filed after the Purchase Date under the Act (a "Public
Offering") or (ii) the fifth anniversary of the Purchase Date, the Purchaser
agrees that he will not transfer any shares of the Common Stock at any time. No
Transfer of any shares of Common Stock in violation of this Agreement shall be
made or recorded on the books of the Company and any such Transfer shall be void
and of no effect.
5
b. Right of First Refusal - A Purchaser or Transferor (as defined
----------------------
in section 4 hereof) may transfer all or part of his Common Stock after the
fifth anniversary hereof only after first offering them to the Company as
described in this Section 3(b). The obligations of Purchaser and Transferor
under this Section 3(b) shall expire upon a Public Offering.
(1) Offer to Purchase Common Stock: In the event any Purchaser
------------------------------
or Transferor receives a bona fide written offer to purchase all or any portion
of his Common Stock, and desires to accept the offer, he shall first deliver to
the Company an identical offer in writing (the "Offer") which shall set forth
(i) the Purchaser's desire to make such transfer; (ii) the name, residence
address and business address of the proposed transferee; (iii) the number of
shares proposed to be transferred (the "Offered Shares"); and (iv) the price
proposed to be paid by such transferee and the precise terms of payment.
(2) Action on Offer by Corporation: Within 30 days after
------------------------------
receipt of the offer, the Company shall give written notice to the offering
Purchaser (the "Purchaser's Notice") of its election to purchase the Offered
Shares for the consideration and on the terms stated in the Offer. In the event
that the Company elects to purchase the Offered Shares, it shall specify in the
Purchaser's Notice a closing date for the purchase, determined in accordance
with paragraph 3 below. The Closing shall take place at the principal office of
the Company. At such place, the Company shall deliver a certified bank check or
checks in the requisite amount payable to the order of the Purchaser or
Transferor against delivery of the certificate or other instruments representing
the shares of the Common Stock sold. free and clear of any liens, claims and
encumbrances.
(3) Closing Date: The closing date for purchase of the
------------
Offered Shares under this Section 3 by the Company shall be a date not less than
20 nor more than 30 days after the date the Purchaser's Notice is given.
(4) Expiration of Right of First Refusal. The Company's right
------------------------------------
of first refusal to elect to purchase the Offered Shares shall expire 30 days
after it receives the Offer.
(5) Release from Restriction. If, upon the expiration of the
------------------------
right of first refusal, the Offer has not been accepted as to all of the Offered
Shares by the Company, the offering Purchaser may transfer to the transferee
named in the Offer exactly that number of shares specified in the Offer, no more
and no less. The transfer shall be made in strict accordance with the price and
terms stated in the Offer. The transfer must take place within 30 days following
the expiration of the right of first refusal.
6
Each transferee shall receive and hold the Offered Shares subject to all
of the provisions and restrictions of this Agreement theretofore
applicable to the Purchaser, and by the receipt of the Offered Shares
shall be deemed to consent to the terms of and be a party to this
Agreement. If the transferor Purchaser shall fail to consummate the
transfer of all of the Offered Shares within 30 days following the
expiration of the right of first refusal, then all of the Offered Shares
shall remain subject to all the restrictions of this Agreement, and the
transfer by the transferor Purchaser of any such Shares shall constitute
a breach of this Agreement.
4. Repurchase Common Stock by the Company.
--------------------------------------
a. General. The Purchaser, the Purchaser's Estates and the
-------
Purchaser's Trusts and the Purchaser's lineal descendants are referred to in
this Section 4 as "Transferors." The completion of the purchases by the Company
pursuant to this Section 4, if any, shall take place at the principal offices of
the Company. At such place, the Company shall deliver a certified bank check or
checks in the requisite amount payable to the order of the Transferor against
delivery of the certificates or other instruments representing the shares of the
Common Stock sold, free and clear of all liens, claims and encumbrances. For
purposes of this Agreement, the determination of whether the Purchaser shall be
deemed to have a "disability" or have been terminated "for cause" shall be made
by the Board of Directors of the Company in good faith which determination shall
be final and conclusive.
b. Purchaser's Death, Disability or Voluntary Termination of
Employment. ---------------------------------------------------------
- ----------
If at any time before the earlier of the fifth anniversary of
the Purchase Date or prior to the date of the closing of a Public Offering the
Purchaser separates from service to the Company for any reason, including, (i)
the Purchaser's employment is terminated other than "for cause" or the Purchaser
voluntarily leaving the employ of the Company or, (ii) the Purchaser either dies
or becomes disabled (as defined above), then the Purchaser, the Purchaser's
Estate or the Purchaser's Trust, or the Purchaser's lineal descendants, as the
case may be, shall sell immediately following the date of termination of
employment, permanent disability or death (as applicable, the "Termination
Date") to the Company, and the Company shall have the obligation, on such
occasion, to purchase all of the shares of Common Stock then held (as of the
Termination Date) by the Purchaser, the Purchaser's Trust or the Purchaser's
Estate, or the Purchaser's lineal descendants, as the case may be, at the
Repurchase Price, as defined in Section 5 hereof. Such Purchaser, such
Purchaser's Estate such Purchaser's Trust, and/or such Purchaser's lineal
descendants, as the case may be, shall inform by written notice the Company of
its obligation to purchase shares of Common Stock pursuant to this Section 4(b)
no later than 30 days after the Termination Date.
c. Purchaser's Termination of Employment "For Cause or Voluntary
-------------------------------------------------------------
Termination Of Employment by Purchaser." If at any time before the earlier
- --------------------------------------
of the fifth anniversary of the Purchase Date or prior to the date of the
closing of a Public Offering the Purchaser is terminated "for cause" or the
Purchaser voluntarily leaves the employ of the Company, then the Purchaser, the
Purchaser's Estate or the Purchaser's Trust, or the Purchaser's lineal
descendants, as the case may be, shall have the obligation immediately following
the date of termination of employment to sell to the Company, and the Company
shall have the option, on such occasion, to purchase all of the shares of Common
Stock then held (as of the Termination Date) by the Purchaser, the Purchaser's
Trust and/or the Purchaser's Estate, or the Purchaser's lineal descendants, as
the case may be, at the Repurchase Price, as defined in Section 5 hereof. Such
Purchaser, such Purchaser's Estate, such Purchaser's Trust, and/or such
Purchaser's lineal descendants, as the case may be, shall be informed by written
notice of the exercise by the Company of its option to purchase the shares of
Common Stock pursuant to this Section 4(c) no later than 30 days after the
Termination Date.
5. Determination of Repurchase Price.
---------------------------------
a. Date of determination of Repurchase Price. The Repurchase
-----------------------------------------
Price shall be determined for the purposes of Section 4 hereof as of the last
day of the fiscal quarter immediately preceding the quarter during which the
event giving rise to a repurchase obligation or option occurred (hereinafter
called the "Repurchase Calculation Date"). Any determination of the Repurchase
Price pursuant to this Section 5 shall be made by the Chief Financial Officer of
the Company, and approved by the Board of Directors of the Company, whose
determination shall be final and conclusive.
b. Calculation of Repurchase Price. The Repurchase Price per
-------------------------------
share of Common Stock for the purposes of Section 4 hereof shall be equal to:
(1) if a termination of employment by the Purchaser in the
event of the death or disability of the Purchaser prior to the fifth
anniversary of the Purchase Date or for any other reason other than "for
cause" or the voluntary termination of employment by Purchaser prior to
the fifth anniversary of the Purchase Date, then the higher of the
Purchase Price and Book Value Per Share. The Book Value Per Share shall
be equal to the stockholders' common equity per share of all common
stock of the Company, as of the Repurchase Calculation Date, determined
in accordance with generally accepted accounting principles applied on a
basis consistent with prior periods. The computation of Book Value Per
Share shall be based on the unaudited financial statements of the
Company as of the Repurchase Calculation Date.
8
(2) if a voluntary termination by Purchaser of employment or
termination or Purchaser "for cause" before the fifth anniversary of the
Purchase Date, then the lower of the Purchase Price and Book Value per
share.
6. "Piggyback" Registration Rights.
-------------------------------
a. Purchaser's Right to Request Registration. If, at any time
-----------------------------------------
after the Purchase Date, the Company plans to register any shares of Common
Stock held by any of the holders of the capital stock of the Company for public
offering pursuant to the Act, the Company will promptly notify the Purchaser in
writing (a "Notice") of such proposed registration (a "Proposed Registration").
If within 10 business days of the receipt by the Purchaser of such Notice the
Company receives from the Purchaser a written request (a "Request") to register
a specific number of shares of Common Stock (which Request will be irrevocable
unless otherwise mutually agreed to in writing by the Purchaser and the
Company), shares of Common Stock will be so registered as provided in this
Section 6.
b. Number of Shares of Common Stock to be Registered. The number
-------------------------------------------------
of shares of Common Stock that will be registered pursuant to a Request will be
the lesser of (i) the number of shares of Common Stock then held by the
Purchaser which the Purchaser specifies in his Request (which for purposes of
this Section 6 shall include shares held by such Purchaser's Estate or such
Purchaser's Trust) or (ii) the sum of the shares of Common Stock specified in
the Request by such Purchaser multiplied by a percentage calculated by dividing
the number of shares of capital stock of the Company being registered by the
holders of such capital stock in the Proposed Registration by the total number
of shares of capital stock of the Company benefically owned by such holders.
c. Terms of Registration. The shares of Common Stock to be
---------------------
registered by the Company and offered to the public pursuant to this Section 6
on the same terms and subject to the same conditions applicable to the
registration in a Proposed Registration of shares of Common Stock of
Communications Instruments Holdings, Inc., a Delaware company, except that the
Purchaser shall not be required to pay the costs of the registration, other than
its pro rata share of the underwriter's discounts or commissions.
d. Other Agreements. The Purchaser including shares of Common
----------------
Stock in a registration shall execute and deliver such other agreements and
instruments as are reasonably and customarily required by the managing
underwriter (or the Company if there is not an underwritten offering) of selling
shareholders in a public offering.
7. The Company's Representations and Warranties. The Company
--------------------------------------------
represents and warrants to the Purchaser that:
9
a. this Agreement has been duly authorized, executed and delivered
by the Company, (b) the Common Stock, when issued and delivered in accordance
with the terms hereof, will be duly and validly issued, fully paid and
nonassessable, and (c) the description of the capitalization of the Company
contained in the Memorandum, is true, correct and complete.
8. Miscellaneous.
-------------
a. State Securities Laws. The Company hereby agrees to use its
---------------------
best efforts to comply with all state securities or "blue sky" laws which might
be applicable to the sale of the Common Stock to the Purchaser.
b. Binding Effect. The provisions of this Agreement shall be
--------------
binding upon and accrue to the benefit of the Parties and their respective
heirs, legal representatives, successors and assigns. In the case of a
transferee permitted under Section 2(b)(iv) hereof, such transferee shall be
deemed to be at Purchaser hereunder for purposes of obtaining the benefits or
enforcing the rights of the Purchaser hereunder; provided, however, that no
transferee (including, without limitation, transferees referred to in Section
2(b)(ii), (iii) and (iv) hereof) shall derive any rights under this Agreement
unless and until such transferee has delivered to the Company a valid
undertaking to be bound by the terms of this Agreement.
c. Amendment. This Agreement may be amended only by a written
---------
instrument signed by all of the Parties.
d. Applicable Law. This Agreement shall be governed by, and
--------------
construed in accordance with, the internal laws of the State of Delaware
(without reference to the laws and cases providing for the choice of the law of
another forum).
e. Notices. All notices and other communications provided for herein
-------
shall be in writing and shall be deemed to have been duly given if delivered
personally or sent by registered or certified mail, return receipt requested,
postage prepaid, to the Party to whom it is directed:
(1) If to the Company, to:
CII
1396 Charlotte Highway
P.O. Box 520
Fairview, North Carolina 28730
Attention: President
with copies to:
Stonebridge Partners
Westchester Financial Center
50 Main Street
10
White Plains, New York 10606
Attention: David A. Zackrison
and
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017-3909
Attention: Richard C. Weisberg, Esq.
(2) If to the Purchaser, to him at the address set forth on the
signature page hereof under his signature or at such other address as the
Parties shall have specified by notice in writing to each of the others.
f. Time and Place of Purchases by and Sales to the Company. Except as
-------------------------------------------------------
otherwise provided herein, the closing of each purchase and sale of shares of
Common Stock pursuant to this Agreement shall take place at the principal office
of the Company on the third business day following delivery of the notice by the
Company of its exercise of the right to purchase such Common Stock hereunder.
Whenever the Company is given a right to purchase hereunder, it may assign such
right in all or in part to any employee of the Company.
g. Remedies for Violations. The shares of Common Stock cannot be
-----------------------
readily purchased or sold on the open market and for this reason, among others,
the Parties will be irreparably damaged in the event that this Agreement is not
followed by the parties. In the event of any controversy concerning the right or
obligation to purchase or sell such shares, such right or obligation shall be
enforceable in a court of equity by decree of specific performance.
h. No Conflict with Loan Agreements. Notwithstanding any obligation
--------------------------------
of the Company to make payments hereunder, the Company shall not be required to
make such payments to the extent the same would cause a breach of any of its
agreements or its subsidiaries' agreements or undertakings for the borrowing of
monies, provided, however, that the Company shall be obligated to make such
payments as soon as practicable when the same would not cause a breach of any of
its agreements or undertakings for the borrowing of monies.
i. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
j. Section Headings. The section headings of this Agreement are for
----------------
convenience of reference only and shall not be deemed to alter or affect any
provision hereof.
IN WITNESS WHEREOF, the Parties have executed this
11
Agreement as of the date first above written.
The Company: /s/ Michael S. Bruno, Jr.
- ----------- By: ______________________________________
Michael S. Bruno, Jr.
President
Purchaser: /s/ David Henning
- --------- By: ______________________________________
David Henning
740 Ruskin Drive
Elk Grove, IL 60004
No. of Shares of Common
Stock Purchased Hereunder:
10,000
- ------
Total Consideration:
$11,400.00
- ----------
SUBSCRIPTION AGREEMENT
----------------------
FOR THEODORE A. ANDERSON, JR.
-----------------------------
This Subscription Agreement (the "Agreement") is entered into as of this
1st day of December, 1995 between Communications Instruments Holdings, Inc., a
Delaware corporation (the "Company"), and THEODORE A. ANDERSON, JR., an
individual (the "Purchaser"). The Company and the Purchaser are sometimes
collectively referred to herein as the "Parties."
RECITALS
--------
The Purchaser desires to subscribe for and purchase, and the Company
desires to issue and sell to the Purchaser, the number of shares of its Common
Stock, par value $.01 per share (the "Common Stock"), set forth opposite the
name of the Purchaser on the signature page hereof for the consideration
hereinafter set forth (the "Purchase Price"). The term "Purchase Date" as used
herein, shall mean the date on which the Purchaser shall purchase the Common
Stock.
AGREEMENT
---------
In order to implement the foregoing and in consideration of the mutual
agreements contained herein and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Parties agree as
follows:
1. Subscription for and Purchase of Common Stock. Subject to the terms
---------------------------------------------
and conditions hereinafter set forth, the Purchaser hereby subscribes for and
agrees to purchase, and the Company hereby agrees to sell to the Purchaser the
number of shares of Common Stock set forth opposite the name of the Purchaser on
the signature page hereof at a price of $1.14 per share.
2. Purchaser's Representations, Warranties and Agreements.
------------------------------------------------------
a. No Resales. The Purchaser hereby represents and warrants that he
----------
is acquiring the Common Stock for investment for his own account and not with a
view to, or for resale in connection with, the distribution or other disposition
thereof. Except for those transfers permitted pursuant to Section 2(b) hereof,
the Purchaser agrees and acknowledges that he will not, directly or indirectly,
offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of
(hereinafter, "Transfer") any shares of Common Stock unless such Transfer
complies with Section 3 of this Agreement and (i) the Transfer is pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
and the rules and regulations in effect thereunder (the "Act"), or (ii) counsel
for the Purchaser (which counsel shall be reasonably acceptable to the company
and may be
2
counsel to the Company) shall have furnished the Company with an opinion,
reasonably satisfactory in form and substance to the Company, to the effect that
no such registration is required because of the availability of an exemption
from registration under the Act.
b. Certain Permitted Transfers. Notwithstanding the general
---------------------------
prohibition on Transfers contained in Sections 2(a) and 3 hereof, the Company
acknowledges and agrees that the following Transfers of Common Stock may be made
at any time and are deemed to be in compliance with the Act and this Agreement
and no opinion of counsel (except as otherwise specified in this Section 2(b))
is required in connection therewith:
(1) a Transfer of Common Stock made by the Purchaser to the
Company pursuant to Sections 3, 4 and 6 hereof;
(2) a Transfer of Common Stock made in compliance with the Act
to a trust the beneficiaries of which may include only the Purchaser, his
spouse and/or his lineal descendants (a "Purchaser's Trust") or a Transfer
made to such a trust by a person who has become a holder of the Common Stock
in accordance with the terms of this Agreement; provided, however, that no
such Transfer shall be of any force or effect or shall be given effect on
the books of the Company unless the transferee shall deliver to the Company
a valid undertaking to be bound by the terms of this Agreement;
(3) a Transfer of Common Stock upon the death of the Purchaser
to his lineal descendants or a Transfer to the lineal descendants of a
person who has become a holder of the Common Stock in accordance with the
terms of this Agreement, and subject to Section 3 hereof; provided, however,
that no such Transfer shall be of any force or effect or shall be given
effect on the books of the Company unless the transferee shall deliver to
the Company a valid undertaking to be bound by the terms of this Agreement;
or
(4) a pledge or hypothecation by the Purchaser of the Common
Stock or his interest therein to a bank, the Company or other financial
institution to secure a loan by such bank or financial institution to him
for the purchase of the Common Stock, or the refinancing of any such
indebtedness, provided, however, that such bank, investment banking firm or
financial institution accepts the Common Stock or interest therein subject
to all of the terms and conditions of this Agreement.
c. Legend. Each certificate representing shares of the Stock shall
------
bear the following legend:
3
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
COMPLIES WITH THE PROVISIONS OF A SUBSCRIPTION AGREEMENT DATED AS OF
DECEMBER 1, 1995 (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY). EXCEPT AS OTHERWISE PROVIDED IN SUCH AGREEMENT, NO TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR (B) IF THE COMPANY HAS BEEN FURNISHED WITH A
SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE
PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS IN EFFECT
THEREUNDER."
d. Common Stock Unregistered. The Purchaser acknowledges that he
-------------------------
has been advised that (i) the Common Stock has not been registered under the
Act, (ii) the Common Stock must be held for an indefinite period and the
Purchaser must continue to bear the economic risk of the investment in the
Common Stock unless it is subsequently registered under the Act or an exemption
from such registration is available, (iii) it is not anticipated that there will
be any public market for the Common Stock, (iv) Rule 144 promulgated under the
Act does not presently permit any sales of any securities of the company, and
the Company has made no covenant to make such Rule available in the future, (v)
when and if shares of the Common Stock may be disposed of without registration
in reliance on Rule 144, such disposition can be made only in limited amounts in
accordance with the terms and conditions of such Rule, (vi) if the Rule 144
exemption is not available, public sale without registration will require
compliance with an exemption under the Act, (vii) a restrictive legend in the
applicable form heretofore set forth shall be placed on the certificates
representing the Common Stock and (viii) a notation shall be made in the
appropriate records of the Company indicating that the Common Stock is subject
to restrictions on transfer and, if the Company should at some time in the
future engage the services of a stock transfer agent, appropriate stop transfer
restrictions will be issued to such transfer agent with respect to the Common
Stock.
e. Rule 144 Sales. The Purchaser agrees that, if he intends to
--------------
dispose of any shares of the Common Stock in accordance with Rule 144 under the
Act or otherwise, he will promptly notify the Company of such intended
disposition and will deliver to the Company at or prior to the time of such
disposition documentation as the Company may reasonably request in connection
with such sale and, in the case of a disposition pursuant to Rule 144, will
deliver to the Company an executed copy of any notice on Form 144 required to be
filed with the Securities and Exchange Commission.
4
f. Resales Prohibited During Public Offerings. The Purchaser
------------------------------------------
agrees that, if any shares of the capital stock of the Company are offered to
the public pursuant to an effective registration statement under the Act, he
will not effect any public sale or distribution of any shares of the Common
Stock that are not covered by such registration statement within 7 days prior
to, or within 90 days after, the effective date of such registration statement.
g. Additional Investment Representations. The Purchaser further
-------------------------------------
represents and warrants that with respect to the Common Stock to be purchased by
him hereunder (i) he has received and reviewed the Communications Instruments
Confidential Financing Memorandum (the "Memorandum") relating to the Common
Stock and the documents referred to therein, (ii) he has been given the
opportunity to obtain any additional information or documents and to ask
questions and receive answers about such documents, the Company and the business
and prospects of the Company as he deems necessary to evaluate the merits and
risks related to his investment in the Common Stock and to verify the
information contained in the Memorandum and no representations concerning such
matters or any other matters have been made to the Purchaser except as set forth
in the Memorandum and in this Agreement, (iii) his net worth and his financial
condition is such that he can afford to bear the economic risk of holding the
unregistered Common Stock for an indefinite period of time and has adequate
means for providing for his current needs and personal contingencies, (iv) he
can afford to suffer a complete loss of his investment in the Common Stock, (v)
all information which he has provided to the Company concerning himself and his
financial position is correct and complete as of the date of this Agreement,
(vi) he understands and has taken cognizance of all risk factors related to the
purchase of the Common Stock, (vii) his knowledge and experience in financial
and business matters are such that he is capable of evaluating the merits and
risks of his purchase of the Common Stock as contemplated by this Agreement and
(viii) he is the sole party in interest to this Agreement and is acquiring the
Common stock for his own account.
3. Restrictions on Transfer; Right of First Refusal.
------------------------------------------------
a. General. Except for Transfers otherwise contemplated by Section
-------
2(b) of this Agreement and until the earlier of (i) the date of closing of a
public offering of shares of common stock of the Company pursuant to an
effective registration statement (other than with respect to an employee benefit
plan) which has been filed after the Purchase Date under the Act (a "Public
offering") or (ii) the fifth anniversary of the Purchase Date, the Purchaser
agrees that he will not transfer any shares of the Common Stock at any time. No
Transfer of any shares of Common Stock in violation of this Agreement shall be
made or recorded on the books of the Company and any such Transfer shall be void
and of no effect.
5
b. Right of First Refusal - A Purchaser or Transferor (as defined
----------------------
in section 4 hereof) may transfer all or part of his Common Stock after the
fifth anniversary hereof only after first offering them to the Company as
described in this Section 3(b). The obligations of Purchaser and Transferor
under this Section 3(b) shall expire upon a Public Offering.
(1) Offer to Purchase Common Stock: In the event any Purchaser
------------------------------
or Transferor receives a bona fide written offer to purchase all or any
portion of his Common Stock, and desires to accept the offer, he shall first
deliver to the Company an identical offer in writing (the "Offer") which
shall set forth (i) the Purchaser's desire to make such transfer; (ii) the
name, residence address and business address of the proposed transferee;
(iii) the number of shares proposed to be transferred (the "Offered
Shares"); and (iv) the price proposed to be paid by such transferee and the
precise terms of payment.
(2) Action on Offer by Corporation: Within 30 days after
------------------------------
receipt of the offer, the Company shall give written notice to the offering
Purchaser (the "Purchaser's Notice") of its election to purchase the Offered
Shares for the consideration and on the terms stated in the Offer. In the
event that the Company elects to purchase the Offered Shares, it shall
specify in the Purchaser's Notice a closing date for the purchase,
determined in accordance with paragraph 3 below. The Closing shall take
place at the principal office of the Company. At such place, the Company
shall deliver a certified bank check or checks in the requisite amount
payable to the order of the Purchaser or Transferor against delivery of the
certificate or other instruments representing the shares of the Common Stock
sold, free and clear of any liens, claims and encumbrances.
(3) Closing Date: The closing date for purchase of the Offered
------------
Shares under this Section 3 by the Company shall be a date not less than 20
nor more than 30 days after the date the Purchaser's Notice is given.
(4) Expiration of Right of First Refusal. The Company's right
------------------------------------
of first refusal to elect to purchase the Offered Shares shall expire 30
days after it receives the Offer.
(5) Release from Restriction. If, upon the expiration of the
------------------------
right of first refusal, the Offer has not been accepted as to all of the
Offered Shares by the Company, the offering Purchaser may transfer to the
transferee named in the Offer exactly that number of shares specified in the
Offer, no more and no less. The transfer shall be made in strict accordance
with the price and terms stated in the Offer. The transfer must take place
within 30 days following the expiration of the right of first refusal.
6
Each transferee shall receive and hold the Offered Shares subject to all of
the provisions and restrictions of this Agreement theretofore applicable to
the Purchaser, and by the receipt of the Offered Shares shall be deemed to
consent to the terms of and be a party to this Agreement. If the transferor
Purchaser shall fail to consummate the transfer of all of the Offered Shares
within 30 days following the expiration of the right of first refusal, then
all of the Offered Shares shall remain subject to all the restrictions of
this Agreement, and the transfer by the transferor Purchaser of any such
Shares shall constitute a breach of this Agreement.
4. Repurchase Common Stock by the Company.
--------------------------------------
a. General. The Purchaser, the Purchaser's Estates and the
-------
Purchaser's Trusts and the Purchaser's lineal descendants are referred to in
this Section 4 as "Transferors." The completion of the purchases by the Company
pursuant to this Section 4, if any, shall take place at the principal offices of
the Company. At such place, the Company shall deliver a certified bank check or
checks in the requisite amount payable to the order of the Transferor against
delivery of the certificates or other instruments representing the shares of the
Common Stock sold, free and clear of all liens, claims and encumbrances. For
purposes of this Agreement, the determination of whether the Purchaser shall be
deemed to have a "disability" or have been terminated "for cause" shall be made
by the Board of Directors of the Company in good faith which determination shall
be final and conclusive.
b. Purchaser's Death, Disability or Voluntary Termination of
---------------------------------------------------------
Employment. If at any time before the earlier of the fifth anniversary of the
- ----------
Purchase Date or prior to the date of the closing of a Public Offering the
Purchaser separates from service to the Company for any reason, including, (i)
the Purchaser's employment is terminated other than "for cause" or the Purchaser
voluntarily leaving the employ of the Company or, (ii) the Purchaser either dies
or becomes disabled (as defined above), then the Purchaser, the Purchaser's
Estate or the Purchaser's Trust, or the Purchaser's lineal descendants, as the
case may be, shall sell immediately following the date of termination of
employment, permanent disability or death (as applicable, the "Termination
Date") to the Company, and the Company shall have the obligation, on such
occasion, to purchase all of the shares of Common Stock then held (as of the
Termination Date) by the Purchaser, the Purchaser's Trust or the Purchaser's
Estate, or the Purchaser's lineal descendants, as the case may be, at the
Repurchase Price, as defined in Section 5 hereof. Such Purchaser, such
Purchaser's Estate such Purchaser's Trust, and/or such Purchaser's lineal
descendants, as the case may be, shall inform by written notice the Company of
its obligation to purchase shares of Common Stock pursuant to this Section 4(b)
no later than 30 days after the Termination Date.
7
c. Purchaser's Termination of Employment "For Cause or Voluntary
-------------------------------------------------------------
Termination Of Employment by Purchaser. If at any time before the earlier of the
- --------------------------------------
fifth anniversary of the Purchase Date or prior to the date of the closing of a
Public Offering the Purchaser is terminated "for cause" or the Purchaser
voluntarily leaves the employ of the Company, then the Purchaser, the
Purchaser's Estate or the Purchaser's Trust, or the Purchaser's lineal
descendants, as the case may be, shall have the obligation immediately following
the date of termination of employment to sell to the Company, and the Company
shall have the option, on such occasion, to purchase all of the shares of Common
Stock then held (as of the Termination Date) by the Purchaser, the Purchaser's
Trust and/or the Purchaser's Estate, or the Purchaser's lineal descendants, as
the case may be, at the Repurchase Price, as defined in Section 5 hereof. Such
Purchaser, such Purchaser's Estate, such Purchaser's Trust, and/or such
Purchaser's lineal descendants, as the case may be, shall be informed by written
notice of the exercise by the Company of its option to purchase the shares of
Common Stock pursuant to this Section 4(c) no later than 30 days after the
Termination Date.
5. Determination of Repurchase Price.
---------------------------------
a. Date of determination of Repurchase Price. The Repurchase Price
-----------------------------------------
shall be determined for the purposes of Section 4 hereof as of the last day of
the fiscal quarter immediately preceding the quarter during which the event
giving rise to a repurchase obligation or option occurred (hereinafter called
the "Repurchase Calculation Date"). Any determination of the Repurchase Price
pursuant to this Section 5 shall be made by the Chief Financial Officer of the
Company, and approved by the Board of Directors of the Company, whose
determination shall be final and conclusive.
b. Calculation of Repurchase Price. The Repurchase Price per share
-------------------------------
of Common Stock for the purposes of Section 4 hereof shall be equal to:
(1) if a termination of employment by the Purchaser in the
event of the death or disability of the Purchaser prior to the fifth
anniversary of the Purchase Date or for any other reason other than "for
cause" or the voluntary termination of employment by Purchaser prior to the
fifth anniversary of the Purchase Date, then the higher of the Purchase
Price and Book Value Per Share. The Book Value Per Share shall be equal to
the stockholders' common equity per share of all common stock of the
Company, as of the Repurchase Calculation Date, determined in accordance
with generally accepted accounting principles applied on a basis consistent
with prior periods. The computation of Book Value Per Share shall be based
on the unaudited financial statements of the Company as of the Repurchase
Calculation Date.
8
(2) if a voluntary termination by Purchaser of employment or
termination or Purchaser "for cause" before the fifth anniversary of the
Purchase Date, then the lower of the Purchase Price and Book Value per
share.
6. "Piggyback" Registration Rights.
------------------------------
a. Purchaser's Right to Request Registration. If, at any time
-----------------------------------------
after the Purchase Date, the Company plans to register any shares of Common
Stock held by any of the holders of the capital stock of the Company for public
offering pursuant to the Act, the Company will promptly notify the Purchaser in
writing (a "Notice") of such proposed registration (a "Proposed Registration").
If within 10 business days of the receipt by the Purchaser of such Notice the
Company receives from the Purchaser a written request (a "Request") to register
a specific number of shares of Common Stock (which Request will be irrevocable
unless otherwise mutually agreed to in writing by the Purchaser and the
Company), shares of Common Stock will be so registered as provided in this
Section 6.
b. Number of Shares of Common Stock to be Registered. The number of
-------------------------------------------------
shares of Common Stock that will be registered pursuant to a Request will be the
lesser of (i) the number of shares of Common Stock then held by the Purchaser
which the Purchaser specifies in his Request (which for purposes of this Section
6 shall include shares held by such Purchaser's Estate or such Purchaser's
Trust) or (ii) the sum of the shares of Common Stock specified in the Request by
such Purchaser multiplied by a percentage calculated by dividing the number of
shares of capital stock of the Company being registered by the holders of such
capital stock in the Proposed Registration by the total number of shares of
capital stock of the Company beneficially owned by such holders.
c. Terms of Registration. The shares of Common Stock to be
---------------------
registered will be registered by the Company and offered to the public pursuant
to this Section 6 on the same terms and subject to the same conditions
applicable to the registration in a Proposed Registration of shares of Common
Stock of Communications Instruments Holdings, Inc., a Delaware company, except
that the Purchaser shall not be required to pay the costs of the registration,
other than its pro rata share of the underwriter's discounts or commissions.
d. Other Agreements. The Purchaser including shares of Common Stock
----------------
in a registration shall execute and deliver such other agreements and
instruments as are reasonably and customarily required by the managing
underwriter (or the Company if there is not an underwritten offering) of selling
shareholders in a public offering.
7. The Company's Representations and Warranties. The Company represents
--------------------------------------------
and warrants to the Purchaser that:
9
a. this Agreement has been duly authorized, executed and delivered
by the Company, (b) the Common Stock, when issued and delivered in accordance
with the terms hereof, will be duly and validly issued, fully paid and
nonassessable, and (c) the description of the capitalization of the Company
contained in the Memorandum is true, correct and complete.
8. Miscellaneous.
-------------
a. State Securities Laws. The Company hereby agrees to use its best
---------------------
efforts to comply with all state securities or "blue sky" laws which might be
applicable to the sale of Common Stock to the Purchaser.
b. Binding Effect. The provisions of this Agreement shall be
--------------
binding upon and accrue to the benefit of the Parties and their respective
heirs, legal representatives, successors and assigns. In the case of a
transferee permitted under Section 2(b)(iv) hereof, such transferee shall be
deemed to be at Purchaser hereunder for purposes of obtaining the benefits or
enforcing the rights of the Purchaser hereunder; provided, however, that no
transferee (including, without limitation, transferees referred to in Section
2(b)(ii), (iii) and (iv) hereof) shall derive any rights under this Agreement
unless and until such transferee has delivered to the Company a valid
undertaking to be bound by the terms of this Agreement.
c. Amendment. This Agreement may be amended only by a written
---------
instrument signed by all of the Parties.
d. Applicable Law. This Agreement shall be governed by, and
--------------
construed in accordance with, the internal laws of the State of Delaware
(without reference to the laws and cases providing for the choice of the law of
another forum).
e. Notices. All notices and other communications provided for
-------
herein shall be in writing and shall be deemed to have been duly given if
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid, to the Party to whom it is directed:
(1) If to the Company, to:
CII
1396 Charlotte Highway
P.O. Box 520
Fairview, North Carolina 28730
Attention: President
with copies to:
Stonebridge Partners
Westchester Financial Center
50 Main Street
10
White Plains, New York 10606
Attention: David A. Zackrison
and
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017-3909
Attention: Richard C. Weisberg, Esq.
(2) If to the Purchaser, to him at the address set forth on the
signature page hereof under his signature or at such other address as the
Parties shall have specified by notice in writing to each of the others.
f. Time and Place of Purchases by and Sales to the Company. Except
-------------------------------------------------------
as otherwise provided herein, the closing of each purchase and sale of shares of
Common Stock pursuant to this Agreement shall take place at the principal office
of the Company on the third business day following delivery of the notice by the
Company of its exercise of the right to purchase such Common Stock hereunder.
Whenever the Company is given a right to purchase hereunder, it may assign such
right in all or in part to any employee of the Company
g. Remedies for Violations. The shares of Common Stock cannot be
-----------------------
readily purchased or sold on the open market and for this reason, among others,
the Parties will be irreparably damaged in the event that this Agreement is not
followed by the parties. In the event of any controversy concerning the right or
obligation to purchase or sell such shares, such right or obligation shall he
enforceable in a court of equity by decree of specific performance.
h. No Conflict with Loan Agreements. Notwithstanding any obligation
--------------------------------
of the Company to make payments hereunder, the Company shall not be required to
make such payments to the extent the same would cause a breach of any of its
agreements or its subsidiaries' agreements or undertakings for the borrowing of
monies, provided, however, that the Company shall be obligated to make such
payments as soon as practicable when the same would not cause a breach of any of
its agreements or undertakings for the borrowing of monies.
i. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
j. Section Headings. The section headings of this Agreement are for
----------------
convenience of reference only and shall not be deemed to alter or affect any
provision hereof.
IN WITNESS WHEREOF, the Parties have executed this
11
Agreement as of the date first above written.
The Company: By: /s/ Michael S. Bruno, Jr.
- ------------ -----------------------------
Michael S. Bruno, Jr.
President
Purchaser: By: /s/ Theodore A. Anderson, Jr.
- ---------- -----------------------------
THEODORE A. ANDERSON, JR.
11539 Jacquelin Ann
El Paso, TX 79936
No. of Shares of Common
Stock Purchased Hereunder:
5,000
- -------------------
Total Consideration:
$5,700.00
- -------------------------
SUBSCRIPTION AGREEMENT
----------------------
FOR GARY L. McGILL
------------------
This Subscription Agreement (the "Agreement") is entered into as of this 1st
day of December, 1995 between Communications Instruments Holdings, Inc., a
Delaware corporation (the "Company"), and GARY L. McGILL, an individual (the
"Purchaser"). The Company and the Purchaser are sometimes collectively referred
to herein as the "Parties."
RECITALS
--------
The Purchaser desires to subscribe for and purchase, and the Company desires
to issue and sell to the Purchaser, the number of shares of its Common Stock,
par value $.01 per share (the "Common Stock"), set forth opposite the name of
the Purchaser on the signature page hereof for the consideration hereinafter set
forth (the "Purchase Price"). The term "Purchase Date" as used herein, shall
mean the date on which the Purchaser shall purchase the Common Stock.
AGREEMENT
---------
In order to implement the foregoing and in consideration of the mutual
agreements contained herein and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Parties agree as
follows:
1. Subscription for and Purchase of Common Stock. Subject to the terms and
---------------------------------------------
conditions hereinafter set forth, the Purchaser hereby subscribes for and agrees
to purchase, and the Company hereby agrees to sell to the Purchaser the number
of shares of Common Stock set forth opposite the name of the Purchaser on the
signature page hereof at a price of $1.14 per share
2. Purchaser's Representations, Warranties and Agreements.
------------------------------------------------------
a. No Resales. The Purchaser hereby represents and warrants that he is
----------
acquiring the Common Stock for investment for his own account and not with a
view to, or for resale in connection with, the distribution or other disposition
thereof. Except for those transfers permitted pursuant to Section 2(b) hereof,
the Purchaser agrees and acknowledges that he will not, directly or indirectly,
offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of
(hereinafter, "Transfer") any shares of Common Stock unless such Transfer
complies with Section 3 of this Agreement and (i) the Transfer is pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
and the rules and regulations in effect thereunder (the "Act"), or (ii) counsel
for the Purchaser (which counsel shall be reasonably acceptable to the Company
and may be
2
counsel to the Company) shall have furnished the Company with an opinion,
reasonably satisfactory in form and substance to the Company, to the effect that
no such registration is required because of the availability of an exemption
from registration under the Act
b. Certain Permitted Transfers. Notwithstanding the general prohibition on
---------------------------
Transfers contained in Sections 2(a) and 3 hereof, the Company acknowledges and
agrees that the following Transfers of Common Stock may be made at any time and
are deemed to be in compliance with the Act and this Agreement and no opinion of
counsel (except as otherwise specified in this Section 2(b)) is required in
connection therewith:
(1) a Transfer of Common Stock made by the Purchaser to the Company pursuant
to Sections 3, 4 and 6 hereof;
(2) a Transfer of Common Stock made in compliance with the Act to a trust the
beneficiaries of which may include only the Purchaser, his spouse and/or his
lineal descendants (a "Purchaser's Trust") or a Transfer made to such a trust by
a person who has become a holder of the Common Stock in accordance with the
terms of this Agreement; provided, however, that no such Transfer shall be of
any force or effect or shall be given effect on the books of the Company unless
the transferee shall deliver to the Company a valid undertaking to be bound by
the terms of this Agreement;
(3) a Transfer of Common Stock upon the death of the Purchaser to his lineal
descendants or a Transfer to the lineal descendants of a person who has become a
holder of the Common Stock in accordance with the terms of this Agreement, and
subject to Section 3 hereof; provided, however, that no such Transfer shall be
of any force or effect or shall be given effect on the books of the Company
unless the transferee shall deliver to the Company a valid undertaking to be
bound by the terms of this Agreement; or
(4) a pledge or hypothecation by the Purchaser of the Common Stock or his
interest therein to a bank, the Company or other financial institution to secure
a loan by such bank or financial institution to him for the purchase of the
Common Stock, or the refinancing of any such indebtedness, provided, however,
that such bank, investment banking firm or financial institution accepts the
Common Stock or interest therein subject to all of the terms and conditions of
this Agreement.
c. Legend. Each certificate representing shares of the Stock shall bear the
------
following legend:
3
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER,
SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE
PROVISIONS OF A SUBSCRIPTION AGREEMENT DATED AS OF DECEMBER 1, 1995 (A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY). EXCEPT AS OTHERWISE
PROVIDED IN SUCH AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION
OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE MADE
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR (B) IF THE COMPANY HAS BEEN FURNISHED
WITH A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE
PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS IN EFFECT
THEREUNDER."
d. Common Stock Unregistered. The Purchaser acknowledges that he has been
-------------------------
advised that (i) the Common Stock has not been registered under the Act, (ii)
the Common Stock must be held for an indefinite period and the Purchaser must
continue to bear the economic risk of the investment in the Common Stock unless
it is subsequently registered under the Act or an exemption from such
registration is available, (iii) it is not anticipated that there will be any
public market for the Common Stock, (iv) Rule 144 promulgated under the Act does
not presently permit any sales of any securities of the company, and the Company
has made no covenant to make such Rule available in the future, (v) when and if
shares of the Common Stock may be disposed of without registration in reliance
on Rule 144, such disposition can be made only in limited amounts in accordance
with the terms and conditions of such Rule, (vi) if the Rule 144 exemption is
not available, public sale without registration will require compliance with an
exemption under the Act, (vii) a restrictive legend in the applicable form
heretofore set forth shall be placed on the certificates representing the Common
Stock and (viii) a notation shall be made in the appropriate records of the
Company indicating that the Common Stock is subject to restrictions on transfer
and, if the Company should at some time in the future engage the services of a
stock transfer agent, appropriate stop transfer restrictions will be issued to
such transfer agent with respect to the Common Stock.
e. Rule 144 Sales. The Purchaser agrees that, if he intends to dispose of any
--------------
shares of the Common Stock in accordance with Rule 144 under the Act or
otherwise, he will promptly notify the Company of such intended disposition and
will deliver to the Company at or prior to the time of such disposition
documentation as the Company may reasonably request in connection with such sale
and, in the case of a disposition pursuant to Rule 144, will deliver to the
Company an executed copy of any notice on Form 144 required to be filed with the
Securities and Exchange Commission.
4
f. Resales Prohibited During Public Offerings. The Purchaser agrees that, if
------------------------------------------
any shares of the capital stock of the Company are offered to the public
pursuant to an effective registration statement under the Act, he will not
effect any public sale or distribution of any shares of the Common Stock that
are not covered by such registration statement within 7 days prior to, or within
90 days after, the effective date of such registration statement.
g. Additional Investment Representations. The Purchaser further represents and
-------------------------------------
warrants that with respect to the Common Stock to be purchased by him hereunder
(i) he has received and reviewed the Communications Instruments Confidential
Financing Memorandum (the "Memorandum") relating to the Common Stock and the
documents referred to therein, (ii) he has been given the opportunity to obtain
any additional information or documents and to ask questions and receive answers
about such documents, the Company and the business and prospects of the Company
as he deems necessary to evaluate the merits and risks related to his investment
in the Common Stock and to verify the information contained in the Memorandum
and no representations concerning such matters or any other matters have been
made to the Purchaser except as set forth in the Memorandum and in this
Agreement, (iii) his net worth and his financial condition is such that he can
afford to bear the economic risk of holding the unregistered Common Stock for an
indefinite period of time and has adequate means for providing for his current
needs and personal contingencies, (iv) he can afford to suffer a complete loss
of his investment in the Common Stock, (v) all information which he has provided
to the Company concerning himself and his financial position is correct and
complete as of the date of this Agreement, (vi) he understands and has taken
cognizance of all risk factors related to the purchase of the Common Stock,
(vii) his knowledge and experience in financial and business matters are such
that he is capable of evaluating the merits and risks of his purchase of the
Common Stock as contemplated by this Agreement and (viii) he is the sole party
in interest to this Agreement and is acquiring the Common stock for his own
account.
3. Restrictions on Transfer; Right of First Refusal.
------------------------------------------------
a. General. Except for Transfers otherwise contemplated by Section 2(b) of
-------
this Agreement and until the earlier of (i) the date of closing of a public
offering of shares of common stock of the Company pursuant to an effective
registration statement (other than with respect to an employee benefit plan)
which has been filed after the Purchase Date under the Act (a "Public offering")
or (ii) the fifth anniversary of the Purchase Date, the Purchaser agrees that he
will not transfer any shares of the Common Stock at any time. No Transfer of any
shares of Common Stock in violation of this Agreement shall be made or recorded
on the books of the Company and any such Transfer shall be void and of no
effect.
5
b. Right of First Refusal - A Purchaser or Transferor (as defined in section 4
----------------------
hereof) may transfer all or part of his Common Stock after the fifth anniversary
hereof only after first offering them to the Company as described in this
Section 3(b). The obligations of Purchaser and Transferor under this Section
3(b) shall expire upon a Public Offering.
(1) Offer to Purchase Common Stock: In the event any Purchaser or Transferor
------------------------------
receives a bona fide written offer to purchase all or any portion of his Common
Stock, and desires to accept the offer, he shall first deliver to the Company an
identical offer in writing (the "Offer") which shall set forth (i) the
Purchaser's desire to make such transfer; (ii) the name, residence address and
business address of the proposed transferee; (iii) the number of shares proposed
to be transferred (the "Offered Shares"); and (iv) the price proposed to be paid
by such transferee and the precise terms of payment.
(2) Action on Offer by Corporation: Within 30 days after receipt of the offer,
------------------------------
the Company shall give written notice to the offering Purchaser (the
"Purchaser's Notice") of its election to purchase the Offered Shares for the
consideration and on the terms stated in the Offer. In the event that the
Company elects to purchase the Offered Shares, it shall specify in the
Purchaser's Notice a closing date for the purchase, determined in accordance
with paragraph 3 below. The Closing shall take place at the principal office of
the Company. At such place, the Company shall deliver a certified bank check or
checks in the requisite amount payable to the order of the Purchaser or
Transferor against delivery of the certificate or other instruments representing
the shares of the Common Stock sold, free and clear of any liens, claims and
encumbrances.
(3) Closing Date: The closing date for purchase of the Offered Shares under
------------
this Section 3 by the Company shall be a date not less than 20 nor more than 30
days after the date the Purchaser's Notice is given.
(4) Expiration of Right of First Refusal. The Company's right of first refusal
------------------------------------
to elect to purchase the Offered Shares shall expire 30 days after it receives
the Offer.
(5) Release from Restriction. If, upon the expiration of the right of first
------------------------
refusal, the Offer has not been accepted as to all of the Offered Shares by the
Company, the offering Purchaser may transfer to the transferee named in the
Offer exactly that number of shares specified in the Offer, no more and no less.
The transfer shall be made in strict accordance with the price and terms stated
in the Offer. The transfer must take place within 30 days following the
expiration of the right of first refusal.
6
Each transferee shall receive and hold the Offered Shares subject to all of the
provisions and restrictions of this Agreement theretofore applicable to the
Purchaser, and by the receipt of the Offered Shares shall be deemed to consent
to the terms of and be a party to this Agreement. If the transferor Purchaser
shall fail to consummate the transfer of all of the Offered Shares within 30
days following the expiration of the right of first refusal, then all of the
Offered Shares shall remain subject to all the restrictions of this Agreement,
and the transfer by the transferor Purchaser of any such Shares shall constitute
a breach of this Agreement.
4. Repurchase Common Stock by the Company.
--------------------------------------
a. General. The Purchaser, the Purchaser's Estates and the Purchaser's Trusts
-------
and the Purchaser's lineal descendants are referred to in this Section 4 as
"Transferors." The completion of the purchases by the Company pursuant to this
Section 4, if any, shall take place at the principal offices of the Company. At
such place, the Company shall deliver a certified bank check or checks in the
requisite amount payable to the order of the Transferor against delivery of the
certificates or other instruments representing the shares of the Common Stock
sold, free and clear of all liens, claims and encumbrances. For purposes of this
Agreement, the determination of whether the Purchaser shall be deemed to have a
"disability" or have been terminated "for cause" shall be made by the Board of
Directors of the Company in good faith which determination shall be final and
conclusive.
b. Purchaser's Death, Disability or Voluntary Termination of Employment. If at
--------------------------------------------------------------------
any time before the earlier of the fifth anniversary of the Purchase Date or
prior to the date of the closing of a Public Offering the Purchaser separates
from service to the Company for any reason, including, (i) the Purchaser's
employment is terminated other than "for cause" or the Purchaser voluntarily
leaving the employ of the Company or, (ii) the Purchaser either dies or becomes
disabled (as defined above), then the Purchaser, the Purchaser's Estate or the
Purchaser's Trust, or the Purchaser's lineal descendants, as the case may be,
shall sell immediately following the date of termination of employment,
permanent disability or death (as applicable, the "Termination Date") to the
Company, and the Company shall have the obligation, on such occasion, to
purchase all of the shares of Common Stock then held (as of the Termination
Date) by the Purchaser, the Purchaser's Trust or the Purchaser's Estate, or the
Purchaser's lineal descendants, as the case may be, at the Repurchase Price, as
defined in Section 5 hereof. Such Purchaser, such Purchaser's Estate such
Purchaser's Trust, and/or such Purchaser's lineal descendants, as the case may
be, shall inform by written notice the Company of its obligation to purchase
shares of Common Stock pursuant to this Section 4(b) no later than 30 days after
the Termination Date.
7
c. Purchaser's Termination of Employment "For Cause or Voluntary Termination
-------------------------------------------------------------------------
Of Employment by Purchaser. If at any time before the earlier of the fifth
- --------------------------
anniversary of the Purchase Date or prior to the date of the closing of a Public
Offering the Purchaser is terminated "for cause" or the Purchaser voluntarily
leaves the employ of the Company, then the Purchaser, the Purchaser's Estate or
the Purchaser's Trust, or the Purchaser's lineal descendants, as the case may
be, shall have the obligation immediately following the date of termination of
employment to sell to the Company, and the Company shall have the option, on
such occasion, to purchase all of the shares of Common Stock then held (as of
the Termination Date) by the Purchaser, the Purchaser's Trust and/or the
Purchaser's Estate, or the Purchaser's lineal descendants, as the case may be,
at the Repurchase Price, as defined in Section 5 hereof. Such Purchaser, such
Purchaser's Estate, such Purchaser's Trust, and/or such Purchaser's lineal
descendants, as the case may be, shall be informed by written notice of the
exercise by the Company of its option to purchase the shares of Common Stock
pursuant to this Section 4(c) no later than 30 days after the Termination Date.
5. Determination of Repurchase Price.
---------------------------------
a. Date of Determination of Repurchase Price. The Repurchase Price shall be
-----------------------------------------
determined for the purposes of Section 4 hereof as of the last day of the fiscal
quarter immediately preceding the quarter during which the event giving rise to
a repurchase obligation or option occurred (hereinafter called the "Repurchase
Calculation Date"). Any determination of the Repurchase Price pursuant to this
Section 5 shall be made by the Chief Financial Officer of the Company, and
approved by the Board of Directors of the Company, whose determination shall be
final and conclusive.
b. Calculation of Repurchase Price. The Repurchase Price per share of Common
-------------------------------
Stock for the purposes of Section 4 hereof shall be equal to:
(1) if a termination of employment by the Purchaser in the event of the death
or disability of the Purchaser prior to the fifth anniversary of the Purchase
Date or for any other reason other than "for cause" or the voluntary termination
of employment by Purchaser prior to the fifth anniversary of the Purchase Date,
then the higher of the Purchase Price and Book Value Per Share. The Book Value
Per Share shall be equal to the stockholders' common equity per share of all
common stock of the Company, as of the Repurchase Calculation Date, determined
in accordance with generally accepted accounting principles applied on a basis
consistent with prior periods. The computation of Book Value Per Share shall be
based on the unaudited financial statements of the Company as of the Repurchase
Calculation Date.
8
(2) if a voluntary termination by Purchaser of employment or termination or
Purchaser "for cause" before the fifth anniversary of the Purchase Date, then
the lower of the Purchase Price and Book Value per share.
6. "Piggyback" Registration Rights.
------------------------------
a. Purchaser's Right to Request Registration. If, at any time after the
-----------------------------------------
Purchase Date, the Company plans to register any shares of Common Stock held by
any of the holders of the capital stock of the Company for public offering
pursuant to the Act, the Company will promptly notify the Purchaser in writing
(a "Notice") of such proposed registration (a "Proposed Registration"). If
within 10 business days of the receipt by the Purchaser of such Notice the
Company receives from the Purchaser a written request (a "Request") to register
a specific number of shares of Common Stock (which Request will be irrevocable
unless otherwise mutually agreed to in writing by the Purchaser and the
Company), shares of Common Stock will be so registered as provided in this
Section 6.
b. Number of Shares of Common Stock to be Registered. The number of shares of
-------------------------------------------------
Common Stock that will be registered pursuant to a Request will be the lesser
of (i) the number of shares of Common Stock then held by the Purchaser which
the Purchaser specifies in his Request (which for purposes of this Section 6
shall include shares held by such Purchaser's Estate or such Purchaser's Trust)
or (ii) the sum of the shares of Common Stock specified in the Request by such
Purchaser multiplied by a percentage calculated by dividing the number of
shares of capital stock of the Company being registered by the holders of such
capital stock in the Proposed Registration by the total number of shares of
capital stock of the Company beneficially owned by such holders.
c. Terms of Registration. The shares of Common Stock to be registered will be
---------------------
registered by the Company and offered to the public pursuant to this Section 6
on the same terms and subject to the same conditions applicable to the
registration in a Proposed Registration of shares of Common Stock of
Communications Instruments Holdings, Inc., a Delaware company, except that the
Purchaser shall not be required to pay the costs of the registration, other
than its pro rata share of the underwriter's discounts or commissions.
d. Other Agreements. The Purchaser including shares of Common Stock in a
----------------
registration shall execute and deliver such other agreements and instruments as
are reasonably and customarily required by the managing underwriter (or the
Company if there is not an underwritten offering) of selling shareholders in a
public offering.
7. The Company's Representations and Warranties. The Company represents and
--------------------------------------------
warrants to the Purchaser that:
9
a. this Agreement has been duly authorized, executed and delivered by the
Company, (b) the Common Stock, when issued and delivered in accordance with the
terms hereof, will be duly and validly issued, fully paid and nonassessable, and
(c) the description of the capitalization of the Company contained in the
Memorandum, is true, correct and complete.
8. Miscellaneous.
-------------
a. State Securities Laws. The Company hereby agrees to use its best efforts to
---------------------
comply with all state securities or "blue sky" laws which might be applicable to
the sale of the Common Stock to the Purchaser.
b. Binding Effect. The provisions of this Agreement shall be binding upon and
--------------
accrue to the benefit of the Parties and their respective heirs, legal
representatives, successors and assigns. In the case of a transferee permitted
under Section 2(b)(iv) hereof, such transferee shall be deemed to be at
Purchaser hereunder for purposes of obtaining the benefits or enforcing the
rights of the Purchaser hereunder; provided, however, that no transferee
(including, without limitation, transferees referred to in Section 2(b)(ii),
(iii) and (iv) hereof) shall derive any rights under this Agreement unless and
until such transferee has delivered to the Company a valid undertaking to be
bound by the terms of this Agreement.
c. Amendment. This Agreement may be amended only bY a written instrument
---------
signed by all of the Parties.
d. Applicable Law. This Agreement shall be governed by, and construed in
--------------
accordance with, the internal laws of the State of Delaware (without reference
to the laws and cases providing for the choice of the law of another forum).
e. Notices. All notices and other communications provided for herein shall be
-------
in writing and shall be deemed to have been duly given if delivered personally
or sent by registered or certified mail, return receipt requested, postage
prepaid, to the Party to whom it is directed:
(1) If to the Company, to:
CII
1396 Charlotte Highway
P.O. Box 520
Fairview, North Carolina 28730
Attention: President
with copies to:
Stonebridge Partners
Westchester Financial Center
50 Main Street
10
White Plains, New York 10606
Attention: David A. Zackrison
and
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017-3909
Attention: Richard C. Weisberg, Esq.
(2) If to the Purchaser, to him at the address set forth on the signature page
hereof under his signature or at such other address as the Parties shall have
specified by notice in writing to each of the others.
f. Time and Place of Purchases by and Sales to the Company. Except as
-------------------------------------------------------
otherwise provided herein, the closing of each purchase and sale of shares of
Common Stock pursuant to this Agreement shall take place at the principal office
of the Company on the third business day following delivery of the notice by the
Company of its exercise of the right to purchase such Common Stock hereunder.
Whenever the Company is given a right to purchase hereunder, it may assign such
right in all or in part to any employee of the Company.
g. Remedies for Violations. The shares of Common Stock cannot be readily
-----------------------
purchased or sold on the open market and for this reason, among others, the
Parties will be irreparably damaged in the event that this Agreement is not
followed by the parties. In the event of any controversy concerning the right or
obligation to purchase or sell such shares, such right or obligation shall be
enforceable in a court of equity by decree of specific performance.
h. No Conflict with Loan Agreements. Notwithstanding any obligation of the
--------------------------------
Company to make payments hereunder, the Company shall not be required to make
such payments to the extent the same would cause a breach of any of its
agreements or its subsidiaries' agreements or undertakings for the borrowing of
monies, provided, however, that the Company shall be obligated to make such
payments as soon as practicable when the same would not cause a breach of any of
its agreements or undertakings for the borrowing of monies.
i. Counterparts. This Agreement may be executed in any number of counterparts,
------------
each of which shall be an original, but such counterparts shall together
constitute but one and the same instrument.
j. Section Headings. The section headings of this Agreement are for
----------------
convenience of reference only and shall not be deemed to alter or affect any
provision hereof.
IN WITNESS WHEREOF, the Parties have executed this
11
Agreement as of the date first above written.
The Company: By: /s/ Michael S. Bruno, Jr.
- ------------ ---------------------------
Michael S. Bruno, Jr.
President
Purchaser: By: /s/ Gary L. McGill
- ---------- ---------------------------
GARY L. McGILL
487 Onteora Blvd.
Asheville, NC 28803
No. of Shares of Common
Stock Purchased Hereunder:
1,666
- --------------------
Total Consideration:
$1,909.24
- --------------------
SUBSCRIPTION AGREEMENT
----------------------
FOR JEFFREY W. BOYCE
--------------------
This Subscription Agreement (the "Agreement") is entered into as of this
1st day of December, 1995 between Communications Instruments Holdings, Inc., a
Delaware corporation (the "Company"), and JEFFREY W. BOYCE, an individual (the
"Purchaser"). The Company and the Purchaser are sometimes collectively referred
to herein as the "Parties."
RECITALS
--------
The Purchaser desires to subscribe for and purchase, and the Company
desires to issue and sell to the Purchaser, the number of shares of its Common
Stock, par value $.01 per share (the "Common Stock"), set forth opposite the
name of the Purchaser on the signature page hereof for the consideration
hereinafter set forth (the "Purchase Price"). The term "Purchase Date" as used
herein, shall mean the date on which the Purchaser shall purchase the Common
Stock.
AGREEMENT
---------
In order to implement the foregoing and in consideration of the mutual
agreements contained herein and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Parties agree as
follows:
1. Subscription for and Purchase of Common Stock. Subject to the terms
---------------------------------------------
and conditions hereinafter set forth, the Purchaser hereby subscribes for and
agrees to purchase, and the Company hereby agrees to sell to the Purchaser the
number of shares of Common Stock set forth opposite the name of the Purchaser on
the signature page hereof at a price of $1.14 per share.
2. Purchaser's Representations, Warranties and Agreements.
------------------------------------------------------
a. No Resales. The Purchaser hereby represents and warrants that he
----------
is acquiring the Common Stock for investment for his own account and not with a
view to, or for resale in connection with, the distribution or other disposition
thereof. Except for those transfers permitted pursuant to Section 2(b) hereof,
the Purchaser agrees and acknowledges that he will not, directly or indirectly,
offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of
(hereinafter, "Transfer") any shares of Common Stock unless such Transfer
complies with Section 3 of this Agreement and (i) the Transfer is pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
and the rules and regulations in effect thereunder (the "Act"), or (ii) counsel
for the Purchaser (which counsel shall be reasonably acceptable to the Company
and may be
2
counsel to the Company) shall have furnished the Company with an opinion,
reasonably satisfactory in form and substance to the Company, to the effect that
no such registration is required because of the availability of an exemption
from registration under the Act.
b. Certain Permitted Transfers. Notwithstanding the general
---------------------------
prohibition on Transfers contained in Sections 2(a) and 3 hereof, the Company
acknowledges and agrees that the following Transfers of Common Stock may be made
at any time and are deemed to be in compliance with the Act and this Agreement
and no opinion of counsel (except as otherwise specified in this Section 2(b))
is required in connection therewith:
(1) a Transfer of Common Stock made by the Purchaser to the
Company pursuant to Sections 3, 4 and 6 hereof;
(2) a Transfer of Common Stock made in compliance with the Act
to a trust the beneficiaries of which may include only the Purchaser,
his spouse and/or his lineal descendants (a "Purchaser's Trust") or a
Transfer made to such a trust by a person who has become a holder of the
Common Stock in accordance with the terms of this Agreement; provided,
however, that no such Transfer shall be of any force or effect or shall
be given effect on the books of the Company unless the transferee shall
deliver to the Company a valid undertaking to be bound by the terms of
this Agreement;
(3) a Transfer of Common Stock upon the death of the Purchaser
to his lineal descendants or a Transfer to the lineal descendants of a
person who has become a holder of the Common Stock in accordance with
the terms of this Agreement, and subject to Section 3 hereof; provided,
however, that no such Transfer shall be of any force or effect or shall
be given effect on the books of the Company unless the transferee shall
deliver to the Company a valid undertaking to be bound by the terms of
this Agreement; or
(4) a pledge or hypothecation by the Purchaser of the Common
Stock or his interest therein to a bank, the Company or other financial
institution to secure a loan by such bank or financial institution to
him for the purchase of the Common Stock, or the refinancing of any such
indebtedness, provided, however, that such bank, investment banking firm
or financial institution accepts the Common Stock or interest therein
subject to all of the terms and conditions of this Agreement.
c. Legend. Each certificate representing shares of the Stock shall bear
------
the following legend:
3
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER,
SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE
PROVISIONS OF A SUBSCRIPTION AGREEMENT DATED AS OF DECEMBER 1, 1995 (A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY). EXCEPT AS OTHERWISE
PROVIDED IN SUCH AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION
OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE MADE
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR (B) IF THE COMPANY HAS BEEN FURNISHED
WITH A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE
PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS IN EFFECT
THEREUNDER."
d. Common Stock Unregistered. The Purchaser acknowledges that he has
-------------------------
been advised that (i) the Common Stock has not been registered under the Act,
(ii) the Common Stock must be held for an indefinite period and the Purchaser
must continue to bear the economic risk of the investment in the Common Stock
unless it is subsequently registered under the Act or an exemption from such
registration is available, (iii) it is not anticipated that there will be any
public market for the Common Stock, (iv) Rule 144 promulgated under the Act does
not presently permit any sales of any securities of the company, and the Company
has made no covenant to make such Rule available in the future, (v) when and if
shares of the Common Stock may be disposed of without registration in reliance
on Rule 144, such disposition can be made only in limited amounts in accordance
with the terms and conditions of such Rule, (vi) if the Rule 144 exemption is
not available, public sale without registration will require compliance with an
exemption under the Act, (vii) a restrictive legend in the applicable form
heretofore set forth shall be placed on the certificates representing the Common
Stock and (viii) a notation shall be made in the appropriate records of the
Company indicating that the Common Stock is subject to restrictions on transfer
and, if the Company should at some time in the future engage the services of a
stock transfer agent, appropriate stop transfer restrictions will be issued to
such transfer agent with respect to the Common Stock.
e. Rule 144 Sales. The Purchaser agrees that, if he intends to
--------------
dispose of any shares of the Common Stock in accordance with Rule 144 under the
Act or otherwise, he will promptly notify the Company of such intended
disposition and will deliver to the Company at or prior to the time of such
disposition documentation as the Company may reasonably request in connection
with such sale and, in the case of a disposition pursuant to Rule 144, will
deliver to the Company an executed copy of any notice on Form 144 required to be
filed with the Securities and Exchange Commission.
4
f. Resales Prohibited During Public Offerings. The Purchaser agrees
------------------------------------------
that, if any shares of the capital stock of the Company are offered to the
public pursuant to an effective registration statement under the Act, he will
not effect any public sale or distribution of any shares of the Common Stock
that are not covered by such registration statement within 7 days prior to, or
within 90 days after, the effective date of such registration statement.
g. Additional Investment Representations. The Purchaser further
-------------------------------------
represents and warrants that with respect to the Common Stock to be purchased by
him hereunder (i) he has received and reviewed the Communications Instruments
Confidential Financing Memorandum (the "Memorandum") relating to the Common
Stock and the documents referred to therein, (ii) he has been given the
opportunity to obtain any additional information or documents and to ask
questions and receive answers about such documents, the Company and the business
and prospects of the Company as he deems necessary to evaluate the merits and
risks related to his investment in the Common Stock and to verify the
information contained in the Memorandum and no representations concerning such
matters or any other matters have been made to the Purchaser except as set forth
in the Memorandum and in this Agreement, (iii) his net worth and his financial
condition is such that he can afford to bear the economic risk of holding the
unregistered Common Stock for an indefinite period of time and has adequate
means for providing for his current needs and personal contingencies, (iv) he
can afford to suffer a complete loss of his investment in the Common Stock, (v)
all information which he has provided to the Company concerning himself and his
financial position is correct and complete as of the date of this Agreement,
(vi) he understands and has taken cognizance of all risk factors related to the
purchase of the Common Stock, (vii) his knowledge and experience in financial
and business matters are such that he is capable of evaluating the merits and
risks of his purchase of the Common Stock as contemplated by this Agreement and
(viii) he is the sole party in interest to this Agreement and is acquiring the
Common stock for his own account.
3. Restrictions on Transfer; Right of First Refusal.
------------------------------------------------
a. General. Except for Transfers otherwise contemplated by Section
-------
2(b) of this Agreement and until the earlier of (i) the date of closing of a
public offering of shares of common stock of the Company pursuant to an
effective registration statement (other than with respect to an employee benefit
plan) which has been filed after the Purchase Date under the Act (a "Public
offering") or (ii) the fifth anniversary of the Purchase Date, the Purchaser
agrees that he will not transfer any shares of the Common Stock at any time. No
Transfer of any shares of Common Stock in violation of this Agreement shall be
made or recorded on the books of the Company and any such Transfer shall be void
and of no effect.
5
b. Right of First Refusal - A Purchaser or Transferor (as defined in
----------------------
section 4 hereof) may transfer all or part of his Common Stock after the fifth
anniversary hereof only after first offering them to the Company as described in
this Section 3(b). The obligations of Purchaser and Transferor under this
Section 3(b) shall expire upon a Public Offering.
(1) Offer to Purchase Common Stock: In the event any Purchaser
------------------------------
or Transferor receives a bona fide written offer to purchase all or any
portion of his Common Stock, and desires to accept the offer, he shall
first deliver to the Company an identical offer in writing (the "Offer")
which shall set forth (i) the Purchaser's desire to make such transfer;
(ii) the name, residence address and business address of the proposed
transferee; (iii) the number of shares proposed to be transferred (the
"Offered Shares"); and (iv) the price proposed to be paid by such
transferee and the precise terms of payment.
(2) Action on Offer by Corporation: Within 30 days after receipt
------------------------------
of the offer, the Company shall give written notice to the offering
Purchaser (the "Purchaser's Notice") of its election to purchase the
Offered Shares for the consideration and on the terms stated in the
Offer. In the event that the Company elects to purchase the Offered
Shares, it shall specify in the Purchaser's Notice a closing date for
the purchase, determined in accordance with paragraph 3 below. The
Closing shall take place at the principal office of the Company. At such
place, the Company shall deliver a certified bank check or checks in the
requisite amount payable to the order of the Purchaser or Transferor
against delivery of the certificate or other instruments representing
the shares of the Common Stock sold, free and clear of any liens, claims
and encumbrances.
(3) Closing Date: The closing date for purchase of the Offered
------------
Shares under this Section 3 by the Company shall be a date not less than
20 nor more than 30 days after the date the Purchaser's Notice is given.
(4) Expiration of Right of First Refusal. The Company's right of
------------------------------------
first refusal to elect to purchase the Offered Shares shall expire 30
days after it receives the Offer.
(5) Release from Restriction. If, upon the expiration of the
------------------------
right of first refusal, the Offer has not been accepted as to all of the
Offered Shares by the Company, the offering Purchaser may transfer to
the transferee named in the Offer exactly that number of shares
specified in the Offer, no more and no less. The transfer shall be made
in strict accordance with the price and terms stated in the Offer. The
transfer must take place within 30 days following the expiration of the
right of first refusal.
6
Each transferee shall receive and hold the Offered Shares subject to all
of the provisions and restrictions of this Agreement theretofore
applicable to the Purchaser, and by the receipt of the Offered Shares
shall be deemed to consent to the terms of and be a party to this
Agreement. If the transferor Purchaser shall fail to consummate the
transfer of all of the Offered Shares within 30 days following the
expiration of the right of first refusal, then all of the Offered Shares
shall remain subject to all the restrictions of this Agreement, and the
transfer by the transferor Purchaser of any such Shares shall constitute
a breach of this Agreement.
4. Repurchase Common Stock by the Company.
--------------------------------------
a. General. The Purchaser, the Purchaser's Estates and the
-------
Purchaser's Trusts and the Purchaser's lineal descendants are referred to in
this Section 4 as "Transferors." The completion of the purchases by the Company
pursuant to this Section 4, if any, shall take place at the principal offices of
the Company. At such place, the Company shall deliver a certified bank check or
checks in the requisite amount payable to the order of the Transferor against
delivery of the certificates or other instruments representing the shares of the
Common Stock sold, free and clear of all liens, claims and encumbrances. For
purposes of this Agreement, the determination of whether the Purchaser shall be
deemed to have a "disability" or have been terminated "for cause" shall be made
by the Board of Directors of the Company in good faith which determination shall
be final and conclusive.
b. Purchaser's Death, Disability or Voluntary Termination of
---------------------------------------------------------
Employment. If at any time before the earlier of the fifth anniversary of the
- ----------
Purchase Date or prior to the date of the closing of a Public Offering the
Purchaser separates from service to the Company for any reason, including, (i)
the Purchaser's employment is terminated other than "for cause" or the Purchaser
voluntarily leaving the employ of the Company or, (ii) the Purchaser either dies
or becomes disabled (as defined above), then the Purchaser, the Purchaser's
Estate or the Purchaser's Trust, or the Purchaser's lineal descendants, as the
case may be, shall sell immediately following the date of termination of
employment, permanent disability or death (as applicable, the "Termination
Date") to the Company, and the Company shall have the obligation, on such
occasion, to purchase all of the shares of Common Stock then held (as of the
Termination Date) by the Purchaser, the Purchaser's Trust or the Purchaser's
Estate, or the Purchaser's lineal descendants, as the case may be, at the
Repurchase Price, as defined in Section 5 hereof. Such Purchaser, such
Purchaser's Estate such Purchaser's Trust, and/or such Purchaser's lineal
descendants, as the case may be, shall inform by written notice the Company of
its obligation to purchase shares of Common Stock pursuant to this Section 4(b)
no later than 30 days after the Termination Date.
7
c. Purchaser's Termination of Employment "For Cause or Voluntary
-------------------------------------------------------------
Termination Of Employment by Purchaser. If at any time before the earlier of the
- --------------------------------------
fifth anniversary of the Purchase Date or prior to the date of the closing of a
Public Offering the Purchaser is terminated "for cause" or the Purchaser
voluntarily leaves the employ of the Company, then the Purchaser, the
Purchaser's Estate or the Purchaser's Trust, or the Purchaser's lineal
descendants, as the case may be, shall have the obligation immediately following
the date of termination of employment to sell to the Company, and the Company
shall have the option, on such occasion, to purchase all of the shares of Common
Stock then held (as of the Termination Date) by the Purchaser, the Purchaser's
Trust and/or the Purchaser's Estate, or the Purchaser's lineal descendants, as
the case may be, at the Repurchase Price, as defined in Section 5 hereof. Such
Purchaser, such Purchaser's Estate, such Purchaser's Trust, and/or such
Purchaser's lineal descendants, as the case may be, shall be informed by written
notice of the exercise by the Company of its option to purchase the shares of
Common Stock pursuant to this Section 4(c) no later than 30 days after the
Termination Date.
5. Determination of Repurchase Price.
---------------------------------
a. Date of determination of Repurchase Price. The Repurchase Price
-----------------------------------------
shall be determined for the purposes of Section 4 hereof as of the last day of
the fiscal quarter immediately preceding the quarter during which the event
giving rise to a repurchase obligation or option occurred (hereinafter called
the "Repurchase Calculation Date"). Any determination of the Repurchase Price
pursuant to this Section 5 shall be made by the Chief Financial Officer of the
Company, and approved by the Board of Directors of the Company, whose
determination shall be final and conclusive.
b. Calculation of Repurchase Price. The Repurchase Price per share of
-------------------------------
Common Stock for the purposes of Section 4 hereof shall be equal to:
(1) if a termination of employment by the Purchaser in the event
of the death or disability of the Purchaser prior to the fifth
anniversary of the Purchase Date or for any other reason other than "for
cause" or the voluntary termination of employment by Purchaser prior to
the fifth anniversary of the Purchase Date, then the higher of the
Purchase Price and Book Value Per Share. The Book Value Per Share shall
be equal to the stockholders' common equity per share of all common
stock of the Company, as of the Repurchase Calculation Date, determined
in accordance with generally accepted accounting principles applied on a
basis consistent with prior periods. The computation of Book Value Per
Share shall be based on the unaudited financial statements of the
Company as of the Repurchase Calculation Date.
8
(2) if a voluntary termination by Purchaser of employment or
termination or Purchaser "for cause" before the fifth anniversary of the
Purchase Date, then the lower of the Purchase Price and Book Value per
share.
6. "Piggyback" Registration Rights.
-------------------------------
a. Purchaser's Right to Request Registration. If, at any time
-----------------------------------------
after the Purchase Date, the Company plans to register any shares of Common
Stock held by any of the holders of the capital stock of the Company for public
offering pursuant to the Act, the Company will promptly notify the Purchaser in
writing (a "Notice") of such proposed registration (a "Proposed Registration").
If within 10 business days of the receipt by the Purchaser of such Notice the
Company receives from the Purchaser a written request (a "Request") to register
a specific number of shares of Common Stock (which Request will be irrevocable
unless otherwise mutually agreed to in writing by the Purchaser and the
Company), shares of Common Stock will be so registered as provided in this
Section 6.
b. Number of Shares of Common Stock to be Registered. The number
-------------------------------------------------
of shares of Common Stock that will be registered pursuant to a Request will be
the lesser of (i) the number of shares of Common Stock then held by the
Purchaser which the Purchaser specifies in his Request (which for purposes of
this Section 6 shall include shares held by such Purchaser's Estate or such
Purchaser's Trust) or (ii) the sum of the shares of Common Stock specified in
the Request by such Purchaser multiplied by a percentage calculated by dividing
the number of shares of capital stock of the Company being registered by the
holders of such capital stock in the Proposed Registration by the total number
of shares of capital stock of the Company, beneficially owned by such holders.
c. Terms of Registration. The shares of Common Stock to be
---------------------
registered will be registered by the Company and offered to the public pursuant
to this Section 6 on the same terms and subject to the same conditions
applicable to the registration in a Proposed Registration of shares of Common
Stock of Communications Instruments Holdings, Inc., a Delaware company, except
that the Purchaser shall not be required to pay the costs of the registration,
other than its pro rata share of the underwriter's discounts or commissions.
d. Other Agreements. The Purchaser including shares of Common
----------------
Stock in a registration shall execute and deliver such other agreements and
instruments as are reasonably and customarily required by the managing
underwriter (or the Company if there is not an underwritten offering) of selling
shareholders in a public offering.
7. The Company's Representations and Warranties. The Company represents
--------------------------------------------
and warrants to the Purchaser that:
9
a. this Agreement has been duly authorized, executed and delivered by
the Company, (b) the Common Stock, when issued and delivered in accordance with
the terms hereof, will be duly and validly issued, fully paid and nonassessable,
and (c) the description of the capitalization of the Company contained in the
Memorandum, is true, correct and complete.
8. Miscellaneous.
-------------
a. State Securities Laws. The Company hereby agrees to use its best
---------------------
efforts to comply with all state securities or "blue sky" laws which might be
applicable to the sale of the Common Stock to the Purchaser.
b. Binding Effect. The provisions of this Agreement shall be binding
--------------
upon and accrue to the benefit of the Parties and their respective heirs, legal
representatives, successors and assigns. In the case of a transferee permitted
under Section 2(b)(iv) hereof, such transferee shall be deemed to be at
Purchaser hereunder for purposes of obtaining the benefits or enforcing the
rights of the Purchaser hereunder; provided, however, that no transferee
(including, without limitation, transferees referred to in Section 2(b)(ii),
(iii) and (iv) hereof) shall derive any rights under this Agreement unless and
until such transferee has delivered to the Company a valid undertaking to be
bound by the terms of this Agreement.
c. Amendment. This Agreement may be amended only by a written
---------
instrument signed by all of the Parties.
d. Applicable Law. This Agreement shall be governed by, and construed
--------------
in accordance with, the internal laws of the State of Delaware (without
reference to the laws and cases providing for the choice of the law of another
forum).
e. Notices. All notices and other communications provided for herein
-------
shall be in writing and shall be deemed to have been duly given if delivered
personally or sent by registered or certified mail, return receipt requested,
postage prepaid, to the Party to whom it is directed:
(1) If to the Company, to:
CII
1396 Charlotte Highway
P.O. Box 520
Fairview, North Carolina 28730
Attention: President
with copies to:
Stonebridge Partners
Westchester Financial Center
50 Main Street
10
White Plains, New York 10606
Attention: David A. Zackrison
and
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017-3909
Attention: Richard C. Weisberg, Esq.
(2) If to the Purchaser, to him at the address set forth on the
signature page hereof under his signature or at such other address as
the Parties shall have specified by notice in writing to each of the
others.
f. Time and Place of Purchases by and Sales to the Company. Except as
-------------------------------------------------------
otherwise provided herein, the closing of each purchase and sale of shares of
Common Stock pursuant to this Agreement shall take place at the principal office
of the Company on the third business day following delivery of the notice by the
Company of its exercise of the right to purchase such Common Stock hereunder.
Whenever the Company is given a right to purchase hereunder, it may assign such
right in all or in part to any employee of the Company.
g. Remedies for Violations. The shares of Common Stock cannot be
-----------------------
readily purchased or sold on the open market and for this reason, among others,
the Parties will be irreparably damaged in the event that this Agreement is not
followed by the parties. In the event of any controversy concerning the right or
obligation to purchase or sell such shares, such right or obligation shall be
enforceable in a court of equity by decree of specific performance.
h. No Conflict with Loan Agreements. Notwithstanding any obligation
--------------------------------
of the Company to make payments hereunder, the Company shall not be required to
make such payments to the extent the same would cause a breach of any of its
agreements or its subsidiaries' agreements or undertakings for the borrowing of
monies, provided, however, that the Company shall be obligated to make such
payments as soon as practicable when the same would not cause a breach of any of
its agreements or undertakings for the borrowing of monies.
i. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
j. Section Headings. The section headings of this Agreement are for
----------------
convenience of reference only and shall not be deemed to alter or affect any
provision hereof.
IN WITNESS WHEREOF, the Parties have executed this
11
Agreement as of the date first above written.
The Company: By: /s/ Michael S. Bruno, Jr.
- ------------ -------------------------------
Michael S. Bruno, Jr.
President
Purchaser: By: /s/ Jeffrey W. Boyce
- ---------- -------------------------------
JEFFREY W. BOYCE
7-B Cedarwood Drive
Asheville, NC 28803
No. of Shares of Common Stock
Purchased Hereunder:
1,666
- --------------------
Total Consideration:
$1,909.24
- --------------------
SUBSCRIPTION AGREEMENT
----------------------
FOR RAYMOND McCLINTON
---------------------
This Subscription Agreement (the "Agreement") is entered into as of this 1st
day of December, 1995 between Communications Instruments Holdings, Inc., a
Delaware corporation (the "Company"), and RAYMOND McCLINTON, an individual (the
"Purchaser"). The Company and the Purchaser are sometimes collectively referred
to herein as the "Parties."
RECITALS
--------
The Purchaser desires to subscribe for and purchase, and the Company desires
to issue and sell to the Purchaser, the number of shares of its Common Stock,
par value $.01 per share (the "Common Stock"), set forth opposite the name of
the Purchaser on the signature page hereof for the consideration hereinafter set
forth (the "Purchase Price"). The term "Purchase Date" as used herein, shall
mean the date on which the Purchaser shall purchase the Common Stock.
AGREEMENT
---------
In order to implement the foregoing and in consideration of the mutual
agreements contained herein and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Parties agree as
follows:
1. Subscription for and Purchase of Common Stock. Subject to the terms and
---------------------------------------------
conditions hereinafter set forth, the Purchaser hereby subscribes for and agrees
to purchase, and the Company hereby agrees to sell to the Purchaser the number
of shares of Common Stock set forth opposite the name of the Purchaser on the
signature page hereof at a price of $1.14 per share.
2. Purchaser's Representations, Warranties and Agreements.
------------------------------------------------------
a. No Resales. The Purchaser hereby represents and warrants that he is
----------
acquiring the Common Stock for investment for his own account and not with a
view to, or for resale in connection with, the distribution or other disposition
thereof. Except for those transfers permitted pursuant to Section 2(b) hereof,
the Purchaser agrees and acknowledges that he will not, directly or indirectly,
offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of
(hereinafter, "Transfer") any shares of Common Stock unless such Transfer
complies with Section 3 of this Agreement and (i) the Transfer is pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
and the rules and regulations in effect thereunder (the "Act"), or (ii) counsel
for the Purchaser (which counsel shall be reasonably acceptable to the Company
and may be
2
counsel to the Company) shall have furnished the Company with an opinion,
reasonably satisfactory in form and substance to the Company, to the effect that
no such registration is required because of the availability of an exemption
from registration under the Act.
b. Certain Permitted Transfers. Notwithstanding the general prohibition on
---------------------------
Transfers contained in Sections 2(a) and 3 hereof, the Company acknowledges and
agrees that the following Transfers of Common Stock may be made at any time and
are deemed to be in compliance with the Act and this Agreement and no opinion of
counsel (except as otherwise specified in this Section 2(b)) is required in
connection therewith:
(1) a Transfer of Common Stock made by the Purchaser to the Company
pursuant to Sections 3, 4 and 6 hereof;
(2) a Transfer of Common Stock made in compliance with the Act to a
trust the beneficiaries of which may include only the Purchaser, his spouse
and/or his lineal descendants (a "Purchaser's Trust") or a Transfer made to
such a trust by a person who has become a holder of the Common Stock in
accordance with the terms of this Agreement; provided, however, that no
such Transfer shall be of any force or effect or shall be given effect on
the books of the Company unless the transferee shall deliver to the Company
a valid undertaking to be bound by the terms of this Agreement;
(3) a Transfer of Common Stock upon the death of the Purchaser to his
lineal descendants or a Transfer to the lineal descendants of a person who
has become a holder of the Common Stock in accordance with the terms of
this Agreement, and subject to Section 3 hereof; provided, however, that no
such Transfer shall be of any force or effect or shall be given effect on
the books of the Company unless the transferee shall deliver to the Company
a valid undertaking to be bound by the terms of this Agreement; or
(4) a pledge or hypothecation by the Purchaser of the Common Stock or
his interest therein to a bank, the Company or other financial institution
to secure a loan by such bank or financial institution to him for the
purchase of the Common Stock, or the refinancing of any such indebtedness,
provided, however, that such bank, investment banking firm or financial
institution accepts the Common Stock or interest therein subject to all of
the terms and conditions of this Agreement.
c. Legend. Each certificate representing shares of the Stock shall bear
------
the following legend:
3
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
COMPLIES WITH THE PROVISIONS OF A SUBSCRIPTION AGREEMENT DATED AS OF
DECEMBER 1, 1995 (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY). EXCEPT AS OTHERWISE PROVIDED IN SUCH AGREEMENT, NO TRANSFER,
SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR (B) IF THE COMPANY HAS BEEN FURNISHED WITH A
SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE
PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS IN EFFECT
THEREUNDER."
d. Common Stock Unregistered. The Purchaser acknowledges that he has
-------------------------
been advised that (i) the Common Stock has not been registered under the
Act, (ii) the Common Stock must be held for an indefinite period and the
Purchaser must continue to bear the economic risk of the investment in the
Common Stock unless it is subsequently registered under the Act or an
exemption from such registration is available, (iii) it is not anticipated
that there will be any public market for the Common Stock, (iv) Rule 144
promulgated under the Act does not presently permit any sales of any
securities of the Company, and the Company has made no covenant to make
such Rule available in the future, (v) when and if shares of the Common
Stock may be disposed of without registration in reliance on Rule 144, such
disposition can be made only in limited amounts in accordance with the
terms and conditions of such Rule, (vi) if the Rule 144 exemption is not
available, public sale without registration will require compliance with an
exemption under the Act, (vii) a restrictive legend in the applicable form
heretofore set forth shall be placed on the certificates representing the
Common Stock and (viii) a notation shall be made in the appropriate records
of the Company indicating that the Common Stock is subject to restrictions
on transfer and, if the Company should at some time in the future engage
the services of a stock transfer agent, appropriate stop transfer
restrictions will be issued to such transfer agent with respect to the
Common Stock.
e. Rule 144 Sales. The Purchaser agrees that, if he intends to dispose
--------------
of any shares of the Common Stock in accordance with Rule 144 under the Act
or otherwise, he will promptly notify the Company of such intended
disposition and will deliver to the Company at or prior to the time of such
disposition documentation as the Company may reasonably request in
connection with such sale and, in the case of a disposition pursuant to
Rule 144, will deliver to the Company an executed copy of any notice on
Form 144 required to be filed with the Securities and Exchange Commission.
4
f. Resales Prohibited During Public Offerings. The Purchaser agrees
------------------------------------------
that, if any shares of the capital stock of the Company are offered to the
public pursuant to an effective registration statement under the Act, he will
not effect any public sale or distribution of any shares of the Common Stock
that are not covered by such registration statement within 7 days prior to, or
within 90 days after, the effective date of such registration statement.
g. Additional Investment Representations. The Purchaser further
-------------------------------------
represents and warrants that with respect to the Common Stock to be purchased by
him hereunder (i) he has received and reviewed the Communications Instruments
Confidential Financing Memorandum (the "Memorandum") relating to the Common
Stock and the documents referred to therein, (ii) he has been given the
opportunity to obtain any additional information or documents and to ask
questions and receive answers about such documents, the Company and the business
and prospects of the Company as he deems necessary to evaluate the merits and
risks related to his investment in the Common Stock and to verify the
information contained in the Memorandum and no representations concerning such
matters or any other matters have been made to the Purchaser except as set forth
in the Memorandum and in this Agreement, (iii) his net worth and his financial
condition is such that he can afford to bear the economic risk of holding the
unregistered Common Stock for an indefinite period of time and has adequate
means for providing for his current needs and personal contingencies, (iv) he
can afford to suffer a complete loss of his investment in the Common Stock, (v)
all information which he has provided to the Company concerning himself and his
financial position is correct and complete as of the date of this Agreement,
(vi) he understands and has taken cognizance of all risk factors related to the
purchase of the Common Stock, (vii) his knowledge and experience in financial
and business matters are such that he is capable of evaluating the merits and
risks of his purchase of the Common Stock as contemplated by this Agreement and
(viii) he is the sole party in interest to this Agreement and is acquiring the
Common Stock for his own account.
3. Restrictions on Transfer; Right of First Refusal.
------------------------------------------------
a. General. Except for Transfers otherwise contemplated by Section
-------
2(b) of this Agreement and until the earlier of (i) the date of closing of a
public offering of shares of common stock of the Company pursuant to an
effective registration statement (other than with respect to an employee benefit
plan) which has been filed after the Purchase Date under the Act (a "Public
offering") or (ii) the fifth anniversary of the Purchase Date, the Purchaser
agrees that he will not transfer any shares of the Common Stock at any time. No
Transfer of any shares of Common Stock in violation of this Agreement shall be
made or recorded on the books of the Company and any such Transfer shall be void
and of no effect.
5
b. Right of First Refusal - A Purchaser or Transferor (as defined in
----------------------
section 4 hereof) may transfer all or part of his Common Stock after the fifth
anniversary hereof only after first offering them to the Company as described in
this Section 3(b). The obligations of Purchaser and Transferor under this
Section 3(b) shall expire upon a Public Offering.
(1) Offer to Purchase Common Stock: In the event any Purchaser or
------------------------------
Transferor receives a bona fide written offer to purchase all or any
portion of his Common Stock, and desires to accept the offer, he shall
first deliver to the Company an identical offer in writing (the "Offer")
which shall set forth (i) the Purchaser's desire to make such transfer;
(ii) the name, residence address and business address of the proposed
transferee; (iii) the number of shares proposed to be transferred (the
"Offered Shares"); and (iv) the price proposed to be paid by such
transferee and the precise terms of payment.
(2) Action on Offer by Corporation: Within 30 days after receipt of
------------------------------
the offer, the Company shall give written notice to the offering Purchaser
(the "Purchaser's Notice") of its election to purchase the Offered Shares
for the consideration and on the terms stated in the Offer. In the event
that the Company elects to purchase the Offered Shares, it shall specify in
the Purchaser's Notice a closing date for the purchase, determined in
accordance with paragraph 3 below. The Closing shall take place at the
principal office of the Company. At such place, the Company shall deliver a
certified bank check or checks in the requisite amount payable to the order
of the Purchaser or Transferor against delivery of the certificate or other
instruments representing the shares of the Common Stock sold, free and
clear of any liens, claims and encumbrances.
(3) Closing Date: The closing date for purchase of the Offered
------------
Shares under this Section 3 by the Company shall be a date not less than 20
nor more than 30 days after the date the Purchaser's Notice is given.
(4) Expiration of Right of First Refusal. The Company's right of
------------------------------------
first refusal to elect to purchase the Offered Shares shall expire 30 days
after it receives the Offer.
(5) Release from Restriction. If, upon the expiration of the right
------------------------
of first refusal, the Offer has not been accepted as to all of the Offered
Shares by the Company, the offering Purchaser may transfer to the
transferee named in the Offer exactly that number of shares specified in
the Offer, no more and no less. The transfer shall be made in strict
accordance with the price and terms stated in the Offer. The transfer must
take place within 30 days following the expiration of the right of first
refusal.
6
Each transferee shall receive and hold the Offered Shares subject to all of
the provisions and restrictions of this Agreement theretofore applicable to
the Purchaser, and by the receipt of the Offered Shares shall be deemed to
consent to the terms of and be a party to this Agreement. If the transferor
Purchaser shall fail to consummate the transfer of all of the Offered
Shares within 30 days following the expiration of the right of first
refusal, then all of the Offered Shares shall remain subject to all the
restrictions of this Agreement, and the transfer by the transferor
Purchaser of any such Shares shall constitute a breach of this Agreement.
4. Repurchase Common Stock by the Company.
-------------------------------------
a. General. The Purchaser, the Purchaser's Estates and the
-------
Purchaser's Trusts and the Purchaser's lineal descendants are referred to in
this Section 4 as "Transferors." The completion of the purchases by the Company
pursuant to this Section 4, if any, shall take place at the principal offices of
the Company. At such place, the Company shall deliver a certified bank check or
checks in the requisite amount payable to the order of the Transferor against
delivery of the certificates or other instruments representing the shares of the
Common Stock sold, free and clear of all liens, claims and encumbrances. For
purposes of this Agreement, the determination of whether the Purchaser shall be
deemed to have a "disability" or have been terminated "for cause" shall be made
by the Board of Directors of the Company in good faith which determination shall
be final and conclusive.
b. Purchaser's Death, Disability or Voluntary Termination of
---------------------------------------------------------
Employment. If at any time before the earlier of the fifth anniversary of the
- ----------
Purchase Date or prior to the date of the closing of a Public Offering the
Purchaser separates from service to the Company for any reason, including, (i)
the Purchaser's employment is terminated other than "for cause" or the Purchaser
voluntarily leaving the employ of the Company or, (ii) the Purchaser either dies
or becomes disabled (as defined above), then the Purchaser, the Purchaser's
Estate or the Purchaser's Trust, or the Purchaser's lineal descendants, as the
case may be, shall sell immediately following the date of termination of
employment, permanent disability or death (as applicable, the "Termination
Date") to the Company, and the Company shall have the obligation, on such
occasion, to purchase all of the shares of Common Stock then held (as of the
Termination Date) by the Purchaser, the Purchaser's Trust or the Purchaser's
Estate, or the Purchaser's lineal descendants, as the case may be, at the
Repurchase Price, as defined in Section 5 hereof. Such Purchaser, such
Purchaser's Estate such Purchaser's Trust, and/or such Purchaser's lineal
descendants, as the case may be, shall inform by written notice the Company of
its obligation to purchase shares of Common Stock pursuant to this Section 4(b)
no later than 30 days after the Termination Date.
7
c. Purchaser's Termination of Employment "For Cause or Voluntary
------------------------------------------ ------------------
Termination Of Employment by Purchaser. If at any time before the earlier of the
- --------------------------------------
fifth anniversary of the Purchase Date or prior to the date of the closing of a
Public Offering the Purchaser is terminated "for cause" or the Purchaser
voluntarily leaves the employ of the Company, then the Purchaser, the
Purchaser's Estate or the Purchaser's Trust, or the Purchaser's lineal
descendants, as the case may be, shall have the obligation immediately following
the date of termination of employment to sell to the Company, and the Company
shall have the option, on such occasion, to purchase all of the shares of Common
Stock then held (as of the Termination Date) by the Purchaser, the Purchaser's
Trust and/or the Purchaser's Estate, or the Purchaser's lineal descendants, as
the case may be, at the Repurchase Price, as defined in Section 5 hereof. Such
Purchaser, such Purchaser's Estate, such Purchaser's Trust, and/or such
Purchaser's lineal descendants, as the case may be, shall be informed by written
notice of the exercise by the Company of its option to purchase the shares of
Common Stock pursuant to this Section 4(c) no later than 30 days after the
Termination Date.
5. Determination of Repurchase Price.
---------------------------------
a. Date of determination of Repurchase Price. The Repurchase Price
-----------------------------------------
shall be determined for the purposes of Section 4 hereof as of the last day of
the fiscal quarter immediately preceding the quarter during which the event
giving rise to a repurchase obligation or option occurred (hereinafter called
the "Repurchase Calculation Date"). Any determination of the Repurchase Price
pursuant to this Section 5 shall be made by the Chief Financial Officer of the
Company, and approved by the Board of Directors of the Company, whose
determination shall be final and conclusive.
b. Calculation of Repurchase Price. The Repurchase Price per share of
-------------------------------
Common Stock for the purposes of Section 4 hereof shall be equal to:
(1) if a termination of employment by the Purchaser in the event
of the death or disability of the Purchaser prior to the fifth anniversary of
the Purchase Date or for any other reason other than "for cause" or the
voluntary termination of employment by Purchaser prior to the fifth anniversary
of the Purchase Date, then the higher of the Purchase Price and Book Value Per
Share. The Book Value Per Share shall be equal to the stockholders' common
equity per share of all common stock of the Company, as of the Repurchase
Calculation Date, determined in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods. The computation of
Book Value Per Share shall be based on the unaudited financial statements of the
Company as of the Repurchase Calculation Date.
8
(2) if a voluntary termination by Purchaser of employment or
termination or Purchaser "for cause" before the fifth anniversary of the
Purchase Date, then the lower of the Purchase Price and Book Value per
share.
6. "Piggyback" Registration Rights.
------------------------------
a. Purchaser's Right to Request Registration. If, at any time after
-----------------------------------------
the Purchase Date, the Company plans to register any shares of Common Stock held
by any of the holders of the capital stock of the Company for public offering
pursuant to the Act, the Company will promptly notify the Purchaser in writing
(a "Notice") of such proposed registration (a "Proposed Registration"). If
within 10 business days of the receipt by the Purchaser of such Notice the
Company receives from the Purchaser a written request (a "Request") to register
a specific number of shares of Common Stock (which Request will be irrevocable
unless otherwise mutually agreed to in writing by the Purchaser and the
Company), shares of Common Stock will be so registered as provided in this
Section 6.
b. Number of Shares of Common Stock to be Registered. The number of
-------------------------------------------------
shares of Common Stock that will be registered pursuant to a Request will be the
lesser of (i) the number of shares of Common Stock then held by the Purchaser
which the Purchaser specifies in his Request (which for purposes of this Section
6 shall include shares held by such Purchaser's Estate or such Purchaser's
Trust) or (ii) the sum of the shares of Common Stock specified in the Request by
such Purchaser multiplied by a percentage calculated by dividing the number of
shares of capital stock of the Company being registered by the holders of such
capital stock in the Proposed Registration by the total number of shares of
capital stock of the Company beneficially owned by such holders.
c. Terms of Registration. The shares of Common Stock to be
---------------------
registered will be registered by the Company and offered to the public pursuant
to this Section 6 on the same terms and subject to the same conditions
applicable to the registration in a Proposed Registration of shares of Common
Stock of Communications Instruments Holdings, Inc., a Delaware company, except
that the Purchaser shall not be required to pay the costs of the registration,
other than its pro rata share of the underwriter's discounts or commissions.
d. Other Agreements. The Purchaser including shares of Common Stock
----------------
in a registration shall execute and deliver such other agreements and
instruments as are reasonably and customarily required by the managing
underwriter (or the Company if there is not an underwritten offering) of selling
shareholders in a public offering.
7. The Company's Representations and Warranties. The Company
--------------------------------------------
represents and warrants to the Purchaser that:
9
a. this Agreement has been duly authorized, executed and delivered
by the Company, (b) the Common Stock, when issued and delivered in accordance
with the terms hereof, will be duly and validly issued, fully paid and
nonassessable, and (c) the description of the capitalization of the Company
contained in the Memorandum, is true, correct and complete.
8. Miscellaneous.
-------------
a. State Securities Laws. The Company hereby agrees to use its
---------------------
best efforts to comply with all state securities or "blue sky" laws which might
be applicable to the sale of the Common Stock to the Purchaser.
b. Binding Effect. The provisions of this Agreement shall be
--------------
binding upon and accrue to the benefit of the Parties and their respective
heirs, legal representatives, successors and assigns. In the case of a
transferee permitted under Section 2(b)(iv) hereof, such transferee shall be
deemed to be at Purchaser hereunder for purposes of obtaining the benefits or
enforcing the rights of the Purchaser hereunder; provided, however, that no
transferee (including, without limitation, transferees referred to in Section
2(b)(ii), (iii) and (iv) hereof) shall derive any rights under this Agreement
unless and until such transferee has delivered to the Company a valid
undertaking to be bound by the terms of this Agreement.
c. Amendment. This Agreement may be amended only by a written
---------
instrument signed by all of the Parties.
d. Applicable Law. This Agreement shall be governed by, and
--------------
construed in accordance with, the internal laws of the State of Delaware
(without reference to the laws and cases providing for the choice of the law of
another forum).
e. Notices. All notices and other communications provided for
-------
herein shall be in writing and shall be deemed to have been duly given if
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid, to the Party to whom it is directed:
(1) If to the Company, to:
CII
1396 Charlotte Highway
P.O. Box 520
Fairview, North Carolina 28730
Attention: President
with copies to:
Stonebridge Partners
Westchester Financial Center
50 Main Street
10
White Plains, New York 10606
Attention: David A. Zackrison
and
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017-3909
Attention: Richard C. Weisberg, Esq.
(2) If to the Purchaser, to him at the address set forth on the
signature page hereof under his signature or at such other address as the
Parties shall have specified by notice in writing to each of the others.
f. Time and Place of Purchases by and Sales to the Company. Except
-------------------------------------------------------
as otherwise provided herein, the closing of each purchase and sale of shares of
Common Stock pursuant to this Agreement shall take place at the principal office
of the Company on the third business day following delivery of the notice by the
Company of its exercise of the right to purchase such Common Stock hereunder.
Whenever the Company is given a right to purchase hereunder, it may assign such
right in all or in part to any employee of the Company.
g. Remedies for Violations. The shares of Common Stock cannot be
-----------------------
readily purchased or sold on the open market and for this reason, among others,
the Parties will be irreparably damaged in the event that this Agreement is not
followed by the parties. In the event of any controversy concerning the right or
obligation to purchase or sell such shares, such right or obligation shall be
enforceable in a court of equity by decree of specific performance.
h. No Conflict with Loan Agreements. Notwithstanding any obligation
--------------------------------
of the Company to make payments hereunder, the Company shall not be required to
make such payments to the extent the same would cause a breach of any of its
agreements or its subsidiaries' agreements or undertakings for the borrowing of
monies, provided, however, that the Company shall be obligated to make such
payments as soon as practicable when the same would not cause a breach of any of
its agreements or undertakings for the borrowing of monies.
i. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
j. Section Headings. The section headings of this Agreement are for
----------------
convenience of reference only and shall not be deemed to alter or affect any
provision hereof.
IN WITNESS WHEREOF, the Parties have executed this
11
Agreement as of the date first above written.
The Company: By: /s/ MICHAEL S. BRUNO, JR
- ------------ --------------------------
Michael S. Bruno, Jr
President
Purchaser: By: /s/ RAYMOND MCCLINTON
- ---------- ---------------------------
Raymond McClinton
108 Big Spring Drive
Asheville, NC 28804
No. of Shares of Common
Stock Purchased Hereunder:
1,668
- -------------------------
Total Consideration:
$1,911.52
- -------------------------