Exhibit 4.15
MANAGEMENT SUBSCRIPTION AGREEMENT
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MANAGEMENT SUBSCRIPTION AGREEMENT (this "Agreement"), dated as of July 21,
1997, by and between Jordan Telecommunications Products, Inc., a Delaware
corporation (the "Company"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the President and Chief
Executive Officer of the Company (the "Purchaser").
WHEREAS, the Purchaser desires to subscribe for and acquire from the
Company, and the Company desires to issue and sell to the Purchaser, 10,722.2222
shares (the "Shares") of Common Stock, par value $0.01 per share, of the Company
(the "Common Stock") on the terms set forth herein.
NOW, THEREFORE, in order to implement the foregoing and in consideration of
the mutual representations, warranties, covenants and agreements contained
herein, the parties hereto agree as follows:
1. Subscription for and Purchase of Shares.
1.1. Purchase of Shares. (a) Upon the terms and subject to the
conditions set forth in this Agreement, the Purchaser hereby subscribes for and
agrees to purchase, and the Company hereby agrees to issue and sell to the
Purchaser, the Shares. The purchase price for the Shares is payable through the
Purchaser's payment to the Company of cash in the amount of $21,444.44.
(b) The Purchaser acknowledges to the Company that he understands
and agrees, as follows:
THE SHARES HAVE NOT BEEN REGISTERED UNDER FEDERAL OR STATE SECURITIES LAWS.
THE SHARES ARE A HIGHLY SPECULATIVE AND RISKY INVESTMENT. THERE IS NO
PUBLIC OR OTHER MARKET FOR THE SHARES NOR IS ANY LIKELY TO DEVELOP. THE
COMPANY HAS NO PREVIOUS FINANCIAL HISTORY AND HAS BORROWED SUBSTANTIALLY
ALL OF THE FUNDS AVAILABLE TO IT TO OPERATE ITS BUSINESS. THE PURCHASER
ACKNOWLEDGES THAT HE MAY AND CAN AFFORD TO LOSE HIS ENTIRE INVESTMENT AND
THAT HE UNDERSTANDS HE MAY HAVE TO HOLD THIS INVESTMENT INDEFINITELY.
(c) Each certificate evidencing the Shares being issued pursuant
to this Agreement shall bear legends reflecting (i) this Agreement's existence
and (ii) the fact that the Shares have
not been registered under Federal or state securities laws and are subject to
limitations on transfer set forth herein. The Purchaser acknowledges that the
effect of these legends, among other things, is or may be to significantly limit
or diminish the value of the Shares for purposes of sale or for use as loan
collateral. The Purchaser consents to the notation of "stop transfer"
instructions against the Shares being purchased hereunder.
1.2. Pledge of Shares. The Company hereby acknowledges and agrees
that the Shares being purchased hereunder will be pledged to Jordan Industries,
Inc., a Delaware corporation ("Jordan Industries"), as collateral security for,
among other things, the obligation of the Purchaser to pay the principal of and
interest on the promissory note in the form attached hereto as Exhibit A (the
"Promissory Note"), which shall be duly executed and delivered by the Purchaser
to Jordan Industries on the date hereof, pursuant to the terms of a Stock Pledge
Agreement in the form attached hereto as Exhibit B (the "Pledge Agreement"),
which shall be duly executed and delivered by the Purchaser to Jordan Industries
on the date hereof.
1.3. Document Access. The Company has afforded the Purchaser and his
advisors, if any, the opportunity to discuss an investment in the Shares and to
ask questions of representatives of the Company concerning the terms and
conditions of the sale of the Shares, and such representatives have provided
answers to all such questions concerning the sale of the Shares. The Purchaser
has consulted his own financial, tax, accounting and legal advisors, if any, as
to the Purchaser's investment in the Shares and the consequences thereof and
risks associated therewith. The Purchaser and his advisors, if any, have
examined or have had the opportunity to examine before the date hereof all
documents and other information that the Purchaser deems to be material to an
understanding of the business, operations and financial condition of the Company
and the investment in the Shares contemplated hereby.
1.4. Representations and Warranties of the Purchaser. The Purchaser
represents, warrants and covenants to the Company as follows:
(a) the Purchaser has full power and authority to execute and
deliver this Agreement, the Promissory Note and the Pledge Agreement and to
perform his obligations hereunder and thereunder and this Agreement, the
Promissory Note and the Pledge Agreement have been duly executed and delivered
by the Purchaser and are valid, binding and enforceable against the Purchaser in
accordance with their respective terms;
(b) none of the execution, delivery or performance of this
Agreement, the Promissory Note and the Pledge Agreement by
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the Purchaser will result in any material breach of any terms or provisions of,
or constitute a material default under, any material contract, agreement or
instrument to which the Purchaser is a party or by which the Purchaser is bound;
and
(c) The Purchaser will complete, execute and file a form of
election under Section 83(b) of the Internal Revenue Code of 1986, as amended,
with the Internal Revenue Service not later than thirty (30) days after the date
hereof.
2. Investment Representations of the Purchaser.
2.1. Investment Intention. The Purchaser hereby represents and
warrants to the Company that the Purchaser is acquiring the Shares for
investment solely for his own account and not with a view to, or for resale in
connection with, the distribution or other disposition thereof.
2.2. Legend. Each certificate representing Shares shall bear
substantially the following legend:
"THIS CERTIFICATE IS SUBJECT TO, AND IS TRANSFERABLE ONLY UPON
COMPLIANCE WITH, THE PROVISIONS OF A MANAGEMENT SUBSCRIPTION
AGREEMENT, DATED AS OF JULY 21, 1997, BETWEEN THE COMPANY AND THE
ORIGINAL PURCHASER OF THE COMMON STOCK REPRESENTED BY THIS CERTIFICATE
(THE "SUBSCRIPTION AGREEMENT"). THE SUBSCRIPTION AGREEMENT GRANTS
CERTAIN REPURCHASE RIGHTS TO THE COMPANY (OR ITS ASSIGNEES) UPON
TERMINATION OF SUCH PURCHASER'S SERVICE WITH THE COMPANY. A COPY OF
THE ABOVE REFERENCED AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT,
OR AN EXEMPTION FROM REGISTRATION, UNDER SAID ACT."
2.3. Risk Factors.
(a) The Purchaser acknowledges that he knows and understands that
the Company borrowed a substantial portion of the funds used to effect the
acquisition of the Company's subsidiaries. It is unlikely that dividends will be
paid on the Shares; there is no legal requirement or promise made by the Company
to declare or pay such dividends and such dividends may not in any event be paid
if such payment would violate any term of any agreement binding on the Company.
The ability of the Company to make any dividend or
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other payments or distributions in respect of the Shares is restricted by
various agreements and instruments binding on the Company and may be restricted
by future agreements or instruments binding on the Company. If the Purchaser
ceases to be an employee of the Company, the Shares may be subject to certain
rights of the Company to repurchase such Shares under this Agreement. Under the
repurchase payment terms, the Purchaser may not receive full cash payment in
return for his Shares for several years. Furthermore, the Purchaser acknowledges
that he has pledged, pursuant to the Pledge Agreement, the Shares held by him
for the benefit of the Company to secure payment of the amounts due under the
Promissory Note. Under the terms of the Pledge Agreement, the Purchaser may
forfeit his Shares upon certain defaults under the Promissory Note or the Pledge
Agreement.
(b) The Purchaser acknowledges that any financial projections or
forecasts with respect to the Company are subject to many assumptions and
factors beyond the Company's control, and that there are no assurances that
these projections forecasts will be realized. The Purchaser further acknowledges
that any pending or prospective acquisition with respect to the Company are only
possibilities that management has considered, which may never be pursued by the
Company or, if pursued are subject to many conditions and factors outside of the
control of the Company and may never be consummated.
(c) The Purchaser acknowledges that he knows and understands that
his purchase of the Shares is a speculative investment which involves a high
risk of loss and that on and after the date hereof, there will be no public
market for the Shares, and that such a public market may never develop.
(d) The Purchaser understands that Jordan Industries and its
affiliates own in excess of a majority of the outstanding capital stock of the
Company and will have sufficient voting power to exercise control over the
business, policies and affairs of the Company. The Company has entered, and from
time to time may enter, into various agreements and arrangements with Jordan
Industries and its affiliates in exchange for the provision of services to the
Company or to provide financing to the Company. Further, the Purchaser
acknowledges that Jordan Industries and its affiliates, including The Jordan
Company ("Jordan") are engaged in the business of investing in, acquiring and/or
managing businesses for their own accounts, the accounts of their affiliates and
associates and for the account of unaffiliated third parties. No aspect or
element of such activities shall be deemed to be engaged in for the benefit of
the Company or its subsidiaries nor to constitute a conflict of interest. Jordan
Industries and its affiliate shall have no obligation to present any investment
or business opportunities to the attention of the Company or its subsidiaries or
stockholders and the Purchaser hereby waives any
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claim he may have against Jordan Industries or its affiliates for the
failure of Jordan Industries or its affiliates to present any such opportunity
to the Company, its subsidiaries or stockholders or to pursue such opportunity
for the benefit of such parties.
2.4. Securities Law Matters. (a) The Purchaser represents and
warrants that he did not use a "purchaser's representative" (as that term is
used in Regulation D as promulgated by the Securities and Exchange Commission in
connection with the transactions contemplated by this Agreement. The Purchaser
represents and warrants that neither Jordan, Jordan Industries nor any of their
respective employees or affiliates has acted as a representative of the
Purchaser in connection with such transactions. The Purchaser hereby releases
Jordan, Jordan Industries, Jordan/Zalaznick Capital Company and each of their
respective partners, principals, directors, officers, employees, agents and
representatives (collectively, the "Jordan Entities") from and against any
claims in respect of the Purchaser's subscription for the Shares and any related
transactions hereunder. The Purchaser represents and warrants that his decision
to purchase the Shares has been made by the Purchaser independent of any
statements, disclosures or judgments as to the properties, business, prospects
or condition (financial or otherwise) of the Company which may have been made or
given by any person, including any of the Jordan Entities.
(b) The Purchaser acknowledges and represents and warrants to the
Company that he has been advised by the Company that (a) the offer and sale of
the Shares have not been registered under the Securities Act of 1933, as amended
(the "Securities Act"); (b) the Shares must be held indefinitely and the
Purchaser must continue to bear the economic risk of the investment in the
Shares unless the offer and sale of such Shares is subsequently registered under
the Securities Act and all applicable state securities laws or an exemption from
such registration is available; (c) there is no established market for the
Shares and it is not anticipated that there will be any public market for the
Shares in the foreseeable future; (d) Rule 144 promulgated under the Securities
Act is not presently available with respect to the sale of any securities of the
Company, and the Company has made no covenant to make such Rule available; (e)
when and if Shares may be disposed of without registration under the Securities
Act in reliance on Rule 144, such disposition can be made only in limited
amounts and in accordance with the terms and conditions of such Rule; (f) if the
Rule 144 exemption is not available, public offer or sale without registration
will require the availability of an exemption under the Securities Act; (g) a
restrictive legend in the form heretofore set forth shall be placed on the
certificates representing the Shares; and (h) a notation shall be made in the
appropriate records of the Company indicating that the Shares are subject to
restrictions on transfer and, if the Company should at
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some time in the future engage the services of a securities transfer agent,
appropriate stop-transfer instructions will be issued to such transfer agent
with respect to the Shares.
2.5. Additional Investment Representations. The Purchaser represents
and warrants that (a) the Purchaser's financial situation is such that he can
afford to bear the economic risk of holding the Shares for an indefinite period
of time, has adequate means for providing for his current needs and personal
contingencies, and can afford to suffer complete loss of his investment in the
Shares; (b) the Purchaser's knowledge and experience in financial and business
matters are such that he is capable of evaluating the merits and risks of the
investment in the Shares as contemplated by this Agreement; (c) the Purchaser
understands that the Shares are a speculative investment which involve a high
degree of risk of loss of his investment therein, there are substantial
restrictions on the transferability of the Shares, and, on the date hereof and
for an indefinite period, there will be no public market for the Shares and,
accordingly, it may not be possible for the Purchaser to liquidate his
investment in case of emergency, if at all; (d) in making his decision to
purchase the Shares hereby purchased, the Purchaser has relied upon independent
investigations made by him and, to the extent believed by the Purchaser to be
appropriate, his representatives, including his own professional, financial, tax
and other advisors; (e) the Purchaser and his representatives have been given
the opportunity to examine all documents and to ask questions of, and to receive
answers from, the Company and their representatives concerning the terms and
conditions of the purchase of the Shares and to obtain any additional
information which the Purchaser or his representatives deem necessary; (f) the
Purchaser is an officer or key employee of the Company and as such has a high
level of familiarity with the business, operations, financial condition and
prospect of the Company; and (g) the Purchaser understands that no
dividends are expected to be paid on Shares in the foreseeable future.
3. Restrictions on Transfer.
3.1. General Restrictions on Transfer. (a) The Purchaser agrees that
he will sell, transfer, assign, pledge, hypothecate or otherwise dispose of
("Transfer") all or any portion of the Shares only in accordance with the terms
of the Agreement. The Purchaser agrees that in no event will the Purchaser
Transfer any Shares (other than a Transfer pursuant to Section 3.3) unless and
until (i) the Purchaser shall have furnished the Company with an opinion of
counsel satisfactory to the Company to the effect that (a) such Transfer will
not require registration of such Shares under the Securities Act, (b) such
Transfer is in accordance with an exemption under the Securities Act, and (c)
appropriate action
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necessary for compliance with the Securities Act has been taken, and (ii) the
Company shall have waived, expressly and in writing, its rights, if any, under
Section 4 of this Agreement. The Purchaser further agrees that, except as
contemplated by the Pledge Agreement, Shares subject to the call rights
described in Sections 4.1, 4.2 and 4.3 below may not be Transferred.
(b) The Company shall not be required (i) to reflect on its
books any purported Transfer of Shares in violation of any of the provisions set
forth in this Agreement (ii) to treat any purported transferee of such Shares as
a record owner of such Shares or (iii) to afford such purported transferee any
right to vote, or to receive dividends in respect of, such Shares.
3.2. First Refusal Rights. At least sixty (60) days prior to making
any Transfer of Shares (other than a Transfer pursuant to Section 3.3), the
Purchaser will deliver a written notice (the "Sale Notice") to the Company. The
Sale Notice will state the number of Shares to be Transferred, the identity of
the proposed transferee, the terms and conditions of the proposed Transfer and
that such proposed transferee is committed to acquire the stated number of
Shares on the stated price, terms and conditions. The Company may elect to
purchase all or a portion of the Shares to be Transferred upon the same terms
and conditions as those set forth in the Sale Notice by delivering a written
notice (the "Purchase Notice") of such election to the Purchaser within sixty
(60) days after its receipt of the applicable Sale Notice (the "Refusal
Period"), which notice shall specify the time, place and date of settlement of
such purchase. If the Company does not elect to purchase all of the Shares
specified in the Sale Notice, the Company may assign such right to any third
party provided that such right shall not extend beyond the Refusal Period. If
exercised by an assignee pursuant hereto, the right to purchase shall be
exercised by delivery to the Purchaser of a Purchase Notice signed by the
exercising assignee, which notice shall specify the time, place and date for
settlement of such purchase. The Purchaser shall sell to the Company or its
assignees that number of Shares which either of them elects to purchase, such
sale to be consummated within ninety (90) days after the date of the applicable
Purchase Notice. If purchased by the Company, the purchase price of such Shares
may be paid, at the option of the Company, in cash, Three Year Junior Notes (as
defined in Section 7) or a combination thereof. If purchased by an assignee, the
purchase price shall be paid in cash. If some or all of the Shares specified in
the Sale Notice are not purchased by the Company or its assignee, the Purchaser
may, subject to the provisions of Section 3.5, Transfer such Shares at a price
and on terms no more favorable to the transferee(s) thereof than are specified
in the Sale Notice during the sixty (60) day period immediately following the
Refusal Period. If the Purchaser does not consummate the Transfer within such
period, the right of first refusal provided
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hereby shall be deemed to be revived and no Transfer of such Shares may be
effected without first offering the Shares in accordance with the terms hereof.
3.3. Certain Permitted Transfers. The restrictions contained in
Section 3.2 will not apply with respect to Transfers of Shares (a) to or by
Jordan Industries pursuant to the Stock Pledge Agreement or (b) by gift, will or
intestate succession to any Permitted Transferee (as hereinafter defined);
provided, however, that as a condition to any Transfer to a Permitted
Transferee, the Permitted Transferee shall execute and deliver to the Company a
valid and binding agreement satisfactory to the Company and its legal counsel to
the effect that any Shares so Transferred shall continue to be subject to all of
the provisions and conditions of this Agreement and the Pledge Agreement and
that such Permitted Transferee agrees to be jointly and severally bound with the
Purchaser hereby and by the Promissory Note and the Pledge Agreement as if an
original party hereto and thereto; and further provided that no Transfer to any
Permitted Transferee shall relieve the Purchaser of any obligation or liability
under this Agreement, the Promissory Note or the Pledge Agreement. For purposes
of the Agreement, "Permitted Transferee" means the Purchaser's spouse and/or
descendants, any trust or similar entity all of the beneficiaries of which are,
or a corporation, partnership or limited liability company all of the
stockholders, partners or members of which are, the Purchaser and/or the
Purchaser's spouse and descendants.
3.4. Discharge of Indebtedness. Anything to the contrary in this
Agreement notwithstanding, any Transfer of Shares, directly or indirectly, by
the Purchaser or any Permitted Transferee to any transferee other than a
Permitted Transferee, the Company, any assignee of the Company or Jordan
Industries pursuant to the Stock Pledge Agreement shall be void and of no effect
unless and until any outstanding indebtedness of the Purchaser under the
Promissory Note shall have been paid in full.
3.5. Termination of Restrictions. The restrictions on Transfer set
forth in Section 3.2 will terminate upon the earlier of (a) the Sale of the
Company (as defined in Section 7), (b) the closing of a bona fide, firm
commitment underwritten public offering of the Common Stock or (c) any Transfer
to Jordan Industries pursuant to the Stock Pledge Agreement.
4. Repurchase Provisions.
4.1. Call at Cost Upon Termination for Cause. If Purchaser's
employment with the Company is terminated at any time for Cause the Company may
repurchase all or any portion of the Shares purchased by Purchaser pursuant to
this Agreement at a price
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per Share equal to $2.00 ("Cost Call Right For Cause").
The purchase price for the Shares to be purchased pursuant to this
Section 4.1 is payable, at the option of the Company in cash, Three Year Junior
Notes or a combination thereof.
4.2. Call at Cost Upon Termination For Other Than Cause. If the
Purchaser ceases to be employed by the Company on a full time basis for no or
any reason other than Cause prior to the fifth anniversary of the Commencement
Date (as defined in Section 7) the Shares purchased by Purchaser pursuant to
this Agreement may be repurchased by the Company in accordance with the terms
described below ("Cost Call Right Other Than For Cause").
(a) If termination occurs for no or any reason other than Cause
prior to the second anniversary of the Commencement Date, the Company may
purchase up to 100% of the Shares at a price per Share equal to $2.00.
(b) If termination occurs for no or any reason other than Cause
during the period commencing on the second anniversary of the Commencement Date
and ending immediately prior to the third anniversary of the Commencement Date,
the Company may purchase up to 70% of the Shares at a price per Share equal to
$2.00.
(c) If termination occurs for no or any reason other than Cause
during the period commencing on the third anniversary of the Commencement Date
and ending immediately prior to the fourth anniversary of the Commencement Date,
the Company may purchase up to 60% of the Shares at a price per Share equal to
$2.00.
(d) If termination occurs for no or any reason other than Cause
during the period commencing on the fourth anniversary of the Commencement Date
and ending immediately prior to the fifth anniversary of the Commencement Date,
the Company may purchase up to 50% of the Shares at a price per Share equal to
$2.00.
The purchase price for the Shares to be purchased pursuant to the Cost Call
Right Other Than For Cause is payable, at the option of the Company in cash,
Three Year Junior Notes or a combination thereof.
4.3. Call at Fair Market Value Upon Termination. If Purchaser ceases
to be employed by the Company on a full time basis at any time for any or no
reason other than Cause, the Shares not subject to the Cost Call Right Other
Than For Cause may be repurchased by the Company at a price per Share equal to
the Fair Market Value (as defined in Section 7) ("FMV Call Right"). The
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purchase price for the Shares to be purchased pursuant to the FMV Call Right is
payable, at the option of the Company, in cash, Three Year Junior Notes or a
combination thereof.
4.4. Payment of Promissory Note; Right of Set Off. The Purchaser
hereby authorizes and directs the Company to apply any amounts payable to the
Purchaser upon the repurchase of Shares pursuant to Section 3.2 or this Section
4 first to Jordan Industries in satisfaction of the outstanding principal,
interest and any other amounts outstanding under the Promissory Note and the
Pledge Agreement. The Company shall further be entitled to set off and reduce
any amounts payable to the Purchaser upon the repurchase of Shares pursuant to
Section 3.2 or this Section 4 for any obligations or liabilities of the
Purchaser to the Company under this Agreement, or any other agreement, written
or oral, between the Company and the Purchaser.
4.5. Expiration and Closing of Call Rights. If the Company has not
delivered to the Purchaser written notice (a "Call Notice") of its intention to
exercise the call rights set forth in Section 4.1, 4.2 or 4.3 within six months
of the Purchaser's termination of full-time employment with the Company, such
call rights shall automatically expire. The closing of any purchase pursuant to
such call rights shall take place at the time and place designated by the
Company in the Call Notice, which date, subject to the final sentence of this
Section 4.5, shall not be more than twelve (12) months after the delivery of the
notice in the event the consideration to be paid by the Company consists
exclusively of cash and not more than ninety (90) days after the delivery of the
Call Notice in the event such consideration shall include Three Year Junior
Notes. The FMV Call Right set forth in Section 4.3 shall terminate upon the
closing of a bona fide, firm commitment underwritten public offering of the
Common Stock and this Section 4 shall terminate in its entirety upon a Sale of
the Company (as defined in Section 7). If (i) the Company is prohibited from
purchasing Shares pursuant to the Cost Call Right For Cause, the Cost Call Right
Other Than For Cause or the FMV Call Right under, or such a purchase would
result in a breach or default of, any debt instrument or agreement relating to
any indebtedness or preferred stock of the Company or its subsidiaries or (ii)
the Board of Directors otherwise determines that purchasing such Shares would be
inadvisable given the then existing financial condition of the Company and its
subsidiaries, the Company may defer the closing of such purchase until the
earliest date on which neither of the conditions described in the foregoing
clauses (i) and (ii) shall exist.
5. "Market Stand-Off" Agreement. The Purchaser hereby agrees that during the
period (which period shall not exceed 180 days) specified by the Company and the
underwriter or underwriters of
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capital stock of the Company following the effective date of a registration
statement of the Company filed under the Securities Act, the Purchaser shall
not, to the extent requested by the Company and such underwriter, directly or
indirectly, sell, offer or contract to sell (including, without limitation, any
short sale), grant any option to purchase or otherwise transfer or dispose of
(other than to Permitted Transferees or pursuant to gifts to donees who agree to
be similarly bound) any securities of the Company at any time during such period
except shares of Common Stock covered by such registration statement; provided,
however, that (a) such agreement shall be applicable only to the first such
registration statement of the Company which covers capital stock to be sold on
its behalf to the public in an underwritten offering and (b) all executive
officers and directors of the Company holding securities of the Company shall
have entered into similar agreements. In order to enforce the foregoing
covenant, the Company may impose stop-transfer instructions with respect to
Common stock held by the Purchaser until the end of such period.
6. Purchaser's Representative. In the event that in the future the Company
engages in any negotiation or transaction (including a merger or consolidation
or other reorganization by or of the Company) in which Regulation D promulgated
by the Securities and Exchange Commission may or will be available to the
Company, the Purchaser agrees irrevocably (and with the knowledge and intention
that the other holders of the Company's stock of all classes will rely thereon
in making their respective present investment decisions) that he will, within
five (5) business days of written notice from the Company, which may be given in
the sole discretion of the Company, appoint a purchaser's representative or
representatives who shall be qualified and acceptable to the Company and any
other person(s) who is (are) involved in the proposed transaction so that the
maximum benefits of Regulation D shall be available to the Company and all of
its stockholders. The Purchaser shall bear the costs and expenses of such
purchaser's representative and shall be liable to the Company and all of the
Company's other stockholders for any damage or loss that may or might be
incurred by such parties if the Purchaser fails to perform this covenant.
7. Definitions.
(a) "Cause" shall mean a termination of the Purchaser by the
Company due to (i) the failure or refusal of the Purchaser (other than by reason
of death or Disability) to perform his duties as determined in good faith by the
Board of Directors of the Company, provided that such failure or refusal shall
continue for thirty (30) days following written notice thereof to the Purchaser
from the Company, (ii) the Purchaser's willful
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dereliction of duty or intentional and malicious conduct contrary to the best
interests of the Company or its business, provided that such dereliction or
conduct shall continue for thirty (30) days following written notice thereof to
the Purchaser from the Company, (iii) the Purchaser's conviction of, or guilty
plea or confession to, any felony or any misdemeanor, provided that such
misdemeanor involves the property of the Company or (iv) the material breach by
the Purchaser of this Agreement, the Promissory Note or the Pledge Agreement,
provided that such breach shall continue for thirty (30) days following written
notice thereof to the Purchaser from the Company.
(b) "Commencement Date" shall mean September 1, 1996.
(c) "Determination Period" shall mean the four full fiscal
quarters of the Company immediately preceding the termination of employment
giving rise to the FMV Call Right pursuant to Section 4.3.
(d) "Disability" shall mean the inability of the Purchaser to
perform substantially his duties to the Company by reason of physical or mental
disability or infirmity that, in the reasonable judgment of the Board of
Directors of the Company, is documented by medical evidence.
(e) "EBITDA" shall mean for any period, the consolidated net
income (or loss) of the Company (after eliminating all extraordinary or non-
recurring items of income or loss), as reflected in the Company's financial
statements for such period, plus (i) interest and other expense in respect of
indebtedness for borrowed money and similar expense in respect of capitalized
leases, charged, accrued or otherwise allocated against such net income (or
loss), plus (ii) expenses for income taxes (whether paid, accrued or deferred)
charged or otherwise allocated against such net income, plus (iii) depreciation
and amortization of any assets or other non-cash charges (including, without
limitation, any depreciation, amortization and other non-cash charges relating
to purchase accounting adjustments, and any amortization or write-off or
intangible assets, transaction costs or goodwill) charged, allocated or
otherwise accrued against such net income (or loss), plus, without duplication,
(iv) non-cash expenses attributable to the issuance of stock, options or
warrants by the Company to any of its directors, officer, employees, dealers or
others or the exercise thereof, charged, accrued or allocated against such net
income (or loss), plus (v) expenses attributable to investment banking or
consulting fees paid or payable to Jordan and charged, accrued or otherwise
allocated against such net income (or loss), in each case, excluding any such
interest, depreciation, amortization costs and expenses previously taken into
account in determining EBITDA during any period preceding such period, all as
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determined in accordance with generally accepted accounting principles,
consistently applied.
(f) "Fair Market Value" shall mean, for any Determination Period,
the Quotient obtained by dividing (i) an amount equal to (A) six (6) multiplied
by EBITDA for the Determination Period less (B) the aggregate amount of
indebtedness for borrowed money and capitalized leases of the Company as of the
end of the Determination Period (including, without limitation, interest accrued
but unpaid as of the end of the Determination Period) less (C) the aggregate
liquidation value of shares of preferred stock of the Company outstanding at the
end of the Determination Period (including, without limitation, dividends
secured but unpaid in respect of such stock as of the end of the Determination
Period) less (D) the aggregate amount that would have been payable by the
Company in respect of any equity appreciation or similar rights outstanding as
of the end of the Determination Period assuming the exercise in full of any and
all such rights (whether vested or not) as of such date by (ii) the aggregate
number of shares of Common Stock issued and outstanding on a fully-diluted basis
as of the date of the termination of employment giving rise to the calculation
of Fair Market Value.
(g) "Sale of the Company" means the sale of the Company to an
independent third party or group of third parties pursuant to which such party
or parties acquire (i) capital stock of the Company possessing the voting power
under normal circumstances to elect a majority of the Company's Board of
Directors (whether by merger, consolidation or sale or transfer of the Company's
capital stock) or (ii) all or substantially all of the Company's assets
determined on a consolidated basis.
(h) "Three Year Junior Notes" shall mean a promissory note of the
Company in the form attached hereto as Exhibit C.
8. Miscellaneous.
8.1. Binding Effect. The provisions of this Agreement shall be
binding upon the parties hereto and their respective heirs, legal
representatives, successors and assigns. Neither this Agreement nor any
purchase or sale of Shares pursuant hereto shall create, or be construed or
deemed to create, any right to employment in favor of the Purchaser or any other
person by the Company. The language used in this Agreement will be deemed to be
the language chosen by the parties hereto to express their mutual intent, and so
a rule of strict construction will be applied against any person.
8.2. Severability. The invalidity, illegality or
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unenforceability of one or more of the provisions of this Agreement in any
jurisdiction shall not affect the validity, legality or enforceability of the
remainder of this Agreement in such jurisdiction or the validity, legality or
enforceability of this Agreement, including any such provision, in any other
jurisdiction, it being intended that all rights and obligations of the parties
hereunder shall be enforceable to the fullest extent permitted by law.
8.3. Amendment. This Agreement may be amended only by a written
instrument signed by the Company and the Purchaser.
8.4. Notices. All notices and other communications provided for
herein shall be dated and in writing and shall be deemed to have been duly given
when delivered, if delivered personally, sent by registered or certified mail,
return receipt requested, postage prepaid or sent by confirmed telecopy and when
received if delivered otherwise, to the party to whom it is directed:
(a) If to the Company, to it at the following address:
Jordan Telecommunications Products, Inc.
ArborLake Centre, Suite 550
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
Winston & ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(b) If to the Purchaser, to him at the following address:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Jordan Telecommunications Products, Inc.
ArborLake Centre, Suite 550
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or at such other address as the parties hereto shall have specified by notice in
writing to the other parties (provided that such notice of change of address
shall be deemed to have been duly given only when actually received). Delivery
of a copy of the notice solely to a party's attorney does not constitute proper
notice
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hereunder.
8.5. Applicable Law; Waiver of Jury Trial. THIS AGREEMENT SHALL BE
GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS OF ANY STATE.
EACH PARTY AGREES THAT JURISDICTION AND VENUE WILL BE PROPER IN CHICAGO,
ILLINOIS AND WAIVES ANY OBJECTIONS BASED UPON FORUM NON CONVENIENS. EACH PARTY
WAIVES PERSONAL SERVICE OF PROCESS AND AGREES THAT A SUMMONS AND
COMPLAINT COMMENCING AN ACTION OR PROCEEDING SHALL BE PROPERLY SERVED AND SHALL
CONFER PERSONAL JURISDICTION IF SERVED BY REGISTERED OR CERTIFIED MAIL TO THE
PARTY AT THE ADDRESS SET FORTH IN THIS AGREEMENT, OR AS OTHERWISE PROVIDED BY
THE LAWS OF THE STATE OF ILLINOIS OR THE UNITED STATES. THE CHOICE OF FORUM SET
FORTH IN THIS SECTION 8.5 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY
JUDGMENT OBTAINED IN OTHER FORUM OR THE TAKING OF ANY ACTION UNDER THIS
AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE JURISDICTION.
IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR
ARISING OUT OF THIS AGREEMENT, THE PROMISSORY NOTE OR THE PLEDGE AGREEMENT, OR
THE VALIDITY, INTERPRETATION OR ENFORCEMENT THEREOF OR ANY OTHER CLAIM OR
DISPUTE HOWEVER ARISING BETWEEN THE COMPANY AND THE PURCHASER, THE PURCHASER TO
THE FULLEST EXTENT THAT HE MAY EFFECTIVELY DO SO, WAIVES ANY RIGHT TO TRIAL BY
JURY. THE PURCHASER AGREES THAT THIS SECTION 8.5 IS A SPECIFIC AND MATERIAL
ASPECT OF THIS AGREEMENT AND ACKNOWLEDGES THAT THE COMPANY WOULD NOT ENTER INTO
THIS AGREEMENT IF THIS SECTION 8.5 WERE NOT A PART THEREOF.
8.6. Arbitration. Any dispute between or among the parties to this
Agreement relating to or in respect of this Agreement, its negotiation,
execution, performance, subject matter, or any course of conduct or dealing or
actions under or in respect of this Agreement, including without limitation any
claim under the Securities Act, the Securities Exchange Act of 1934, as amended,
any other state or federal law relating to securities or fraud or both, the
Racketeer Influenced and Corrupt Organizations Act, or federal or state common
law, shall be submitted to, and resolved exclusively pursuant to, arbitration in
accordance with the commercial arbitration rules of the American Arbitration
Association. Such arbitration shall take place in Chicago, Illinois. Decisions
as to findings of fact pursuant to such arbitration shall be final, conclusive
and binding on the parties. Within thirty (30) days following the award of any
arbitrator hereunder, any party may apply to a court of competent jurisdiction
for a resolution of any questions of law bearing on such award, and no such
award shall be binding and enforceable unless the arbitrator's determinations as
to such questions of such law have been judicially approved or until the passage
of such thirty (30) day period without such application having been made. Any
final
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award shall be enforceable as a judgment of a court of record.
8.7. Integration. This Agreement and the documents referred to herein
or delivered pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to the subject matter hereof. There
are no restrictions, agreements, promises, representations, warranties,
conditions, covenants or undertakings with respect to the subject matter hereof
other than those expressly set forth herein or in the Promissory Note or the
Pledge Agreement. This Agreement, the Promissory Note and the Pledge Agreement
supersede all prior agreements and understandings between the parties with
respect to the subject matter referred to herein and therein.
8.8. Descriptive Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein.
8.9. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same instrument.
8.10. Expenses. The Company and the Purchaser shall each pay their own
costs in connection with the preparation, negotiation, execution and delivery of
this Agreement, the Promissory Note and the Pledge Agreement and in connection
with the issuance of any securities hereunder, including, but not limited to,
all taxes, fees or other charges which may be payable in connection with the
purchase or sale of the Shares pursuant to this Agreement and all costs in
connection with the preparation, execution and delivery of any waiver, amendment
or consent (whether or not executed) relating to this Agreement, including
reasonable fees and disbursements of counsel.
8.11. Rights Cumulative; Waiver. The rights and remedies of the
Purchaser and the Company under this Agreement shall be cumulative and not
exclusive of any rights or remedies which either would otherwise have hereunder
or at law or in equity or by statute, and no failure or delay by either party in
exercising any right or remedy shall impair any such right or remedy or operate
as a waiver of such right or remedy, nor shall any single or partial exercise of
any power or right preclude such party's other or further exercise or the
exercise of any other power or right. The waiver by any party hereto of a breach
of any provision of this Agreement shall not operate or be construed as a waiver
of any preceding or succeeding breach and no failure by either party to exercise
any right or privilege hereunder shall be deemed a waiver of such party's rights
or privileges hereunder or shall be deemed a waiver of such party's rights to
exercise the same at any subsequent time or times hereunder.
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8.12. Specific Performance. Each of the parties hereto acknowledges
and agrees that in the event of any breach of this Agreement, the non-breaching
party would be irreparably harmed and could not be made whole by monetary
damages. It is accordingly agreed that the parties hereto will waive the defense
in any action for specific performance that a remedy at law would be adequate
and that the parties hereto, in addition to any other remedy to which they may
be entitled at law or in equity, shall be entitled to compel specific
performance of this Agreement in any action instituted in the United States
District Court for any District located in the State of Illinois, or, in the
event such court would not have jurisdiction of such action, in any court of the
United States or any state thereof having subject matter jurisdiction of such
action.
8.13. Limited Obligation. The Purchaser acknowledges and agrees that
the obligations of the Company under this Agreement are solely the obligations
of the Company, and that none of the Company's stockholders, directors, officers
or lenders will have any obligation or liability, contingent or otherwise, in
respect of this Agreement and the subject matter hereof.
[signature page follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
JORDAN TELECOMMUNICATIONS PRODUCTS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman
PURCHASER
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇