EXHIBIT 10.16
KILOVAC CORPORATION
FIRST AMENDMENT
TO
STOCK SUBSCRIPTION AND PURCHASE AGREEMENT
This FIRST AMENDMENT TO STOCK SUBSCRIPTION AND PURCHASE AGREEMENT (this
"AMENDMENT") dated as of August 26 , 1996 is made and entered into by and among
CII TECHNOLOGIES INC., a Delaware corporation ("CIIT"), COMMUNICATIONS
INSTRUMENTS, INC., a North Carolina corporation ("BUYER"), KILOVAC
CORPORATION, a California corporation (the "COMPANY"), and the shareholders
executing this Amendment (individually, a "SELLING SHAREHOLDER" and
collectively, the "SELLING SHAREHOLDERS").
W I T N E S S E T H :
WHEREAS, the parties hereto other than CIIT are parties to the Stock
Subscription and Purchase Agreement dated as of September 20, 1995 (the
"AGREEMENT"), which provides for redemption by the Company of 80% of its
outstanding Class A Common Shares, no par value (the "COMMON STOCK"), and the
purchase by Buyer of an equal number of shares of Common Stock; and
WHEREAS, the Agreement contains certain provisions relating to the shares of
Common Stock retained by the Selling Shareholders following the redemption
(such shares as defined in the Agreement, the "CONTINUING SHARES"); and
WHEREAS, CIIT, an affiliate of Buyer, desires to proceed with the sale of a
portion of its common stock ("CIIT STOCK") in an initial public offering (the
"IPO") registered with the Securities and Exchange Commission under the
provisions of the Securities Act of 1933, as amended (the "ACT"); and
WHEREAS, after reviewing the provisions of the Agreement regarding the
proportion of CIIT Stock that the holders of the Continuing Shares will be
entitled to receive on completion of an IPO of CIIT Stock, CIIT has determined
that the terms of the exchange ratio may need to be adjusted to allow for an
IPO at this time; and
WHEREAS, CIIT, Buyer and the Selling Shareholders have agreed that the
Selling Shareholders will agree to certain amendments to the Agreement in
consideration of the Selling Shareholders receiving, shares of CIIT Stock with
an aggregate initial public offering price of $4,500,000 based on the price at
which the CIIT Stock is offered in the IPO; and
WHEREAS, the Selling Shareholders, as holders of the Continuing Shares, have
determined that it is in the best interests of the Selling Shareholders to
proceed with an IPO of the CIIT Stock at this time, and in furtherance thereof
it is in the best interests of the Selling Shareholders to agree to certain
amendments of the Agreement set forth herein; and
WHEREAS, Buyer and CIIT have determined that it is in their best interests
to proceed with an IPO of the CIIT Stock at this time, and in furtherance
thereof it is in each of their best interests to agree to certain amendments
of the Agreement set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants, agreements, terms and conditions
contained herein, the parties hereto do hereby agree as follows:
1. Effectiveness of Amendment. The modifications to the Agreement set forth
herein shall be effective upon the execution and delivery of this Amendment by
all of the parties hereto. If CIIT has not completed an IPO of the CIIT Stock
on or before December 31, 1996 or if the Continuing Shares are not exchanged
for shares
1
of CIIT Stock in connection therewith pursuant to the Agreement, as modified
by this Amendment, the modifications to the Agreement contained herein (other
than the provisions of Section 7 hereof) shall lapse and be void and of no
further force or effect. Thereafter, the provisions of the Agreement shall be
effective in accordance with their terms and without reference to this
Amendment (other than the provisions of Section 7 hereof), as if this
amendment to the Agreement had not been made. If CIIT completes an IPO of the
CIIT Stock on or before December 31, 1996 and the Continuing Shares are
converted into CIIT Stock in accordance with the provisions of the Agreement,
as modified by this Amendment, the condition subsequent set forth in the
foregoing sentences shall terminate effective on the closing of the IPO (the
"IPO CLOSING").
2. IPO Exchange. Notwithstanding the provisions of Section 1.7.5 of the
Agreement, at the time of and concurrent with the IPO Closing, the Continuing
Shares shall be exchanged for CIIT Stock having an aggregate value of
$4,500,000 (such shares of CIIT Stock, the "EXCHANGE STOCK") in accordance
with the formula set forth below. Each Continuing Share shall be exchanged for
the number of shares of CIIT Stock equal to the result of: $4,500,000 divided
by the initial per share offering price to the public of CIIT Stock in the IPO
(the "IPO PRICE") and dividing such result by 24,957 (the number of Continuing
Shares).
For example, if the IPO Price is $10, then 450,000 shares of CIIT Stock
will be exchanged for the Continuing Shares at a ratio of 18.031 shares of
CIIT Stock for each Continuing Share.
No fractional shares of Exchange Stock shall be issued. Selling Shareholders
who would otherwise be entitled to receive a fractional share of the Exchange
Stock shall receive in lieu thereof an amount in cash determined by
multiplying such fraction by the IPO Price.
3. Participation of the Selling Shareholders in the IPO. Notwithstanding the
provisions of Sections 1.7.5.1 and 1.7.5.2 of the Agreement, so long as CIIT
is the only seller of CIIT Stock in the IPO, the Selling Shareholders shall
have no right to sell any shares of the Exchange Stock in the IPO. The Selling
Shareholders shall have the right to participate in any secondary offering of
CIIT registered pursuant to the Act pari passu with all other holders of
unregistered CIIT Stock, and CIIT undertakes to use its best efforts to cause a
registration statement with respect to the Exchange Stock to be filed with the
Securities and Exchange Commission and become effective as soon as is reasonably
practicable following the first anniversary of the closing of the IPO.
4. Termination of Redemption Provisions. Notwithstanding the provisions of
Sections 1.7.3 and 1.7.4 of the Agreement, neither Buyer nor CIIT shall have
any obligation to purchase and redeem the Continuing Shares (or the Exchange
Stock) pursuant to Section 1.7.3 or Section 1.7.4 of the Agreement.
5. Manner of Exchange. CIIT and Buyer acknowledge that the conversion of
shares provided for in the Agreement and Plan of Merger among CIIT, CII and
Kilovac shall supersede Section 1.7.5.4 of the Agreement.
6. Restrictions on Sale of Exchange Stock. Each of the Selling Shareholders
other than the Kilovac Corporation Employee Stock Bonus Plan (the "ESBP")
agrees to enter into an agreement (the "LOCKUP AGREEMENT") in the form of
EXHIBIT A hereto with William Blair & Company, L.L.C. and Furman Selz LLC, as
representatives of the underwriters of the IPO, which Lockup Agreement shall
restrict the sale of Exchange Stock by each Selling Shareholder other than the
ESBP for a period of 365 days after the IPO Closing. Delivery of such Lockup
Agreement shall be conditioned upon the delivery of a substantially identical
Lockup Agreement by each and every beneficial owner of CIIT Stock or
securities convertible into CIIT Stock (other than the Selling Shareholders
and the ESBP), including optionees under currently outstanding options for the
purchase of CIIT Stock, which will not be registered in the IPO. Each of the
Selling Shareholders other than the ESBP specifically acknowledges and
agrees that Douglas L. Campbell (referred to herein as "CAMPBELL" or "PAYING
AGENT"), as attorney-in-fact for such Selling Stockholder pursuant to the
Paying Agent Agreement (as defined in the Agreement), has the power and
authority to execute and deliver the Lockup Agreement in the name of and on
behalf of such Selling Shareholder.
7. Indemnity. CIIT and Buyer, jointly and severally, agree to indemnify
Campbell, to the fullest extent possible under law, for any and all claims,
demands, losses, costs, charges, expenses, obligations, liabilities, actions,
suits, damages, judgments and deficiencies, including interest and penalties,
reasonable counsels' fees and costs and all reasonable amounts paid in
furtherance of the transactions contemplated herein or in settlement of any
claim, action or suit (collectively referred to as "CLAIMS") which may be
sustained, suffered or incurred
2
by Campbell, arising out of or by reason of this Amendment and the
modifications to the Agreement contained herein or the preparation or
distribution of documents, instruments and materials necessary for the
consummation of this Amendment or the solicitation of the agreement of the
Selling Shareholders to this Amendment or the transactions contemplated
hereby. CIIT and Buyer, jointly and severally, agree to indemnify Campbell, to
the fullest extent possible under law, for any and all expenses incurred by
Campbell in implementing the modifications to the Agreement contemplated
herein and representing the interests of the Selling Shareholders in
connection therewith, such as legal fees and expenses incurred in connection
with the matters contemplated pursuant to Section 1.7.5.4 of the Agreement,
the costs of a fairness opinion and any other expenses incurred by Campbell
which he deems reasonable and necessary to complete the modifications to the
Agreement contained herein and the exchange of Continuing Shares into Exchange
Stock. The provisions of this Section 7 shall survive the IPO Closing or the
termination of this Amendment pursuant to Section 1.
8. Share Sale Adjustment. The parties acknowledge for the benefit of the
Share Escrow Holder pursuant to Section 1.7.2 of the Agreement that the IPO
Closing and the consummation of the exchange contemplated herein shall
constitute a Liquidity Event (as defined in the Agreement) and, on the
occurrence of such events, the Share Escrow Holder is to deliver to or at the
direction of the Paying Agent the Escrowed Continuing Shares. This
acknowledgement shall constitute a joint certification to the Share Escrow
Holder, as contemplated in Section 1.7.2.1 of the Agreement.
9. Miscellaneous.
9.1 Notices. Any notice or other communication required or permitted
hereunder shall be given in the manner provided in the Agreement. The address
of CIIT for notices shall be as follows:
If to CIIT: CII Technologies Inc. c/o
Stonebridge Partners Westchester
Financial Center 50 Main Street
White Plains, New York 10606
Attention: Michael S. Bruno, Jr.
Telecopy No.: (914) 682-0834
Telephone No.: (914) 682-2285
with a copy to:
Simpson Thacher & Bartlett 425
Lexington Avenue New York, New York
10017 Attention: Richard C.
Weisberg, Esq. Telecopy No.: (212)
455-2502 Telephone No.: (212) 455-
3240
9.2 Counterparts. This Amendment shall be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.3 Continuation of Agreement. Except as specifically modified hereby, all
provisions of the Agreement shall remain unaltered and in full force and
effect. From and after the date hereof, any reference in the Agreement (and in
any agreement referred to or contemplated in the Agreement) to the Agreement
and concerning a time from and after the date hereof shall be deemed to be a
reference to the Agreement as amended hereby.
9.4 Entire Agreement. This Amendment embodies the entire agreement and
understanding between the parties hereto with respect to the modification of
the Agreement and supersedes all prior negotiations, understandings and
agreements between the parties with respect thereto.
9.5 Defined Terms. All defined terms in this Amendment shall have the same
meaning which they have in the Agreement, unless otherwise defined in this
Amendment.
3
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
Stock Subscription and Purchase Agreement to be duly executed as of the date
first above written.
CII Technologies Inc.
Attest ______________________________ By___________________________________
Ramzi A. Dabbagh,
Its Chief Executive Officer
Communications Instruments, Inc.
Attest ______________________________ By___________________________________
Ramzi A. Dabbagh,
Its President
Kilovac Corporation
Attest ______________________________
By___________________________________
Douglas Campbell,
Its President
SELLING SHAREHOLDERS
Witness _____________________________________
Douglas L. Campbell,
Trustee of the Kilovac Corporation
Employee Stock Bonus Plan
Witness _____________________________________
Douglas L. Campbell,
as Trustee of the Campbell
Charitable Remainder Unitrust
Witness _____________________________________
Milo Filip,
as Trustee of the Erin Campbell
Trust
Witness _____________________________________
Douglas L. Campbell
Witness _____________________________________
Ronald D. Klingensmith,
as Trustee of the Donald C.
Campbell Charitable Unitrust
4
Witness
_____________________________________
Pat McPherson
Witness
_____________________________________
Robert Helman
Witness
_____________________________________
Dan McAllister
Witness
_____________________________________
Rick Danchuk
Witness
_____________________________________
Harry Jabagchourian
Witness
_____________________________________
John Stewart
Witness
_____________________________________
Rick Steen
Witness
_____________________________________
Susan Claire Anderson Reid
Witness
_____________________________________
Robin Hamilton
Witness
_____________________________________
Gary Clancy
Witness
_____________________________________
Hugh Vos
Witness
_____________________________________
Norm Blankenship
EXHIBIT A
LOCK-UP AGREEMENT
_______, 1996
William Blair & Company L.L.C.
Furman Selz LLC
as Representatives of the
Several Underwriters
c/o William Blair & Company, L.L.C.
222 West Adams Street
Chicago, Illinois 60606-5312
CII Technologies, Inc.
1396 Charlotte Highway
Fairview, North Carolina 28730-0520
Ladies and Gentlemen:
Reference is made to that certain Underwriting Agreement by and among
CII Technologies, Inc. (the "Company"), and William Blair & Company, L.L.C. and
Furman Selz LLC as representatives (the "Representatives") of the several
Underwriters (the "Underwriters") named in Schedule A thereto. The Underwriting
Agreement provides for an initial public offering (the "Offering") of certain
shares of the Company's Common Stock, $.01 par value per share (the "Common
Stock") by the Underwriters, including the Representatives. The shares of
Common Stock to be sold in the Offering are being registered under the
Securities Act of 1933, as amended, pursuant to a registration statement on Form
S-1.
Please be advised that the undersigned (or an account over which the
undersigned has investment authority) is (or may become) the beneficial owner of
shares of Common Stock. In consideration of the Underwriters' management of the
Offering and for other good and valuable consideration, the receipt and
sufficiency of which is acknowledged, the undersigned agrees that without the
prior written consent of the Representatives, it will not (nor will it agree to)
assign, transfer, hypothecate, sell or otherwise dispose of any shares of Common
Stock or securities convertible into Common Stock (including Common Stock issued
pursuant to currently outstanding options), for a period of 365 days after the
date of this letter.
The undersigned understands that the Company may decline to register any
transfer of shares of Common Stock inconsistent with this letter ageement and
that stop transfer instructions will be given to the Company's transfer agent
with respect to shares of Common Stock subject to this letter agreement.
The undersigned also represents and warrants that it has full power and
authority to enter into this letter agreement, and that, upon request, the
undersigned will execute any additional documents necessary or desirable in
connection with the enforcement hereof. All authority herein conferred or
agreed to be conferred shall survive the death or incapacity of the undersigned
and any obligations of the undersigned shall be binding upon its heirs, personal
representatives, successors, and assigns.
Very truly yours,
----------------------------
Name:
-----------------------
Owner: shares
----------------
of Common Stock