Document:

exv4w1

 

Exhibit 4.1

	 	 	 
	NUMBER	 

	SHARES

	 	 	 
	THIS
CERTIFIES THAT:
	INCORPORATED UNDER THE LAWS
OF THE STATE OF
FLORIDA
 
COMMON STOCK	SEE REVERSE FOR CERTAIN
DEFINITIONS
CUSIP
254575 10 3

is the owner of

FULLY PAID
AND NON-ASSESSABLE SHARES OF COMMON STOCK, $.01 PAR VALUE PER SHARE, OF

DIRECTED
ELECTRONICS, INC.

transferable
on the books of the Corporation in person or by attorney upon
surrender of this certificate duly
endorsed or assigned. This certificate and the shares represented
hereby are subject to the laws of the State of Florida and to the
Articles of Incorporation and Bylaws of the Corporation, as now or
hereafter amended.
This certificate is not valid until countersigned and registered by
the Transfer Agent and Registrar.

     WITNESS
the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.

DATED:

	 	 
	PRESIDENT	SECRETARY

 

 

[DIRECTED  ELECTRONICS, INC. CORPORATE SEAL]

 

COUNTERSIGNED
AND REGISTERED:

                    AMERICAN
STOCK TRANSFER

                    AND TRUST COMPANY

TRANSFER
AGENT

AND REGISTRAR

AUTHORIZED
SIGNATURE

 

 

THIS
CERTIFICATE EVIDENCES SHARES OF COMMON STOCK OF THE CORPORATION. OTHER
CLASSES OF SHARES OF THE CORPORATION ARE OR MAY IN THE FUTURE BE
AUTHORIZED AND THOSE CLASSES MAY CONSIST OF ONE OR MORE SERIES OF
SHARES EACH WITH DIFFERENT RELATIVE RIGHTS, PREFERENCES, AND
LIMITATIONS. THE
CORPORATION WILL FURNISH TO ANY SHAREHOLDER, UPON REQUEST AND WITHOUT
CHARGE, A FULL STATEMENT OF THE DESIGNATIONS, RELATIVE RIGHTS,
PREFERENCES, AND LIMITATIONS OF THE SHARES OF EACH CLASS AND SERIES
AUTHORIZED TO BE ISSUED, SO FAR AS THE SAME HAVE BEEN DETERMINED,
AND OF THE AUTHORITY, IF ANY, OF THE BOARD TO DIVIDE THE SHARES INTO
CLASSES OR SERIES AND TO DETERMINE AND CHANGE THE RELATIVE RIGHTS,
PREFERENCES AND LIMITATIONS OF ANY CLASS OR SERIES. SUCH REQUEST MAY
BE MADE TO THE SECRETARY OF THE CORPORATION OR TO THE TRANSFER AGENT
NAMED ON THIS CERTIFICATE.

     The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were
written out in full according to applicable laws or regulations:

	 	 	 	 	 
	TEN COM

	 	—
	 	as tenants in common
	TEN ENT

	 	—
	 	as tenants by the entireties
	JT TEN

	 	—
	 	as joint tenants with right
of survivorship and not as tenants
in common

	 	 	 	 	 
	UNIF GIFT MIN ACT

	 	—
	 	                     Custodian                     
	 

	 	 	 	     (Cust)                          (Minor)
	 

	 	 	 	under Uniform Gifts to Minors
	 

	 	 	 	Act                               
	 

	 	 	 	                (State)

Additional abbreviations may also be used though not in the above list.

For Value Received,
                    
hereby sell, assign and transfer
unto  

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

      

      

      

 

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

 

 

 

 

	 	 	 
	 	 	Shares
	 	 	 
	 
	 	 

of the stock represented by the within Certificate, and do hereby irrevocably constitute and appoint

	 	 	 
	 	 	Attorney
	 	 	 
	 
	 	 

to transfer the said stock
on the books of the within named Corporation with full power of substitution in the
premises.

Dated                                         

 

	 	 	 	 	 
	 	 	 
	 

	 	NOTICE:
	 	THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF

THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER.

Signature(s) Guaranteed:

 

THE
SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

      

     KEEP
THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR DESTROYED, THE CORPORATION
WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE.<PAGE>
                                                                    EXHIBIT 10.5

                                  KEY EMPLOYEE
                              SALE BONUS AGREEMENT

      THIS SALE BONUS AGREEMENT (this "Agreement"), is made and entered into as
of December __, 2004, between DEI HOLDINGS, INC. (the "Company") and
_____________________ (the "Key Employee").

                                    Recitals

      A.    The parties are entering into this Agreement for the purpose of
providing the Key Employee an incentive to increase the value of the Company by
granting him the right to receive a percentage of the proceeds received by the
Company's shareholders as a result of certain liquidity events.

      B.    The parties' intent is that upon specified liquidity events, the
Company pay to the Key Employee a percentage of the proceeds distributable to
common holders (not warrant holders) as follows:

            (i)   the Key Employee shall not receive any percentage of the net
                  proceeds necessary to "repay" a "base equity amount" equal to
                  the sum of (x) $89,750,000 (i.e., the sum of the agreed upon
                  equity value of the Company following its June 2004
                  recapitalization plus the $6.0 million of equity contributed
                  to the Company in September 2004), plus (y) any additional
                  equity contributed after the date hereof, together with a 12%
                  annual "preferred return" on such additional equity; and

            (ii)  the Key Employee shall receive __% of all net proceeds
                  distributable to common holders in excess of such base equity
                  amount.

      C.    Attached as Annex A are certain examples showing the payment due the
Key Employee under various sale scenarios.

                                    Agreement

      NOW THEREFORE, intending to be legally bound, the parties hereby agree as
follows.

      1.    Definitions. Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to such terms in the Employment Agreement. In
addition, the following terms when used in this Agreement have the meanings set
forth below:

            (a)   "Base Equity Amount" shall mean an amount equal to the sum of
(i) $89,750,000, plus (ii) the Preferential New Equity Amount.

            (b)   "Net Equity Proceeds" shall mean an amount equal to the
remainder of (i) the Proceeds Available for Distribution to Shareholders, less
(ii) the Base Equity Amount.

            (c)   "Preferential New Equity Amount" shall mean the dollar amount
of equity contributions to the Company subsequent to the date hereof, which
amount shall increase at a rate of twelve percent (12%) per annum from the date
of each applicable equity issuance through the date of consummation of the Sale
Event.

            (d)   "Proceeds Available for Distribution to Shareholders" shall
mean the total gross proceeds and other consideration actually paid to or
received by the holders of the Company's equity securities (in their capacity as
such) other than holders of the Company's currently outstanding warrants in
connection with a Sale Event and after payment of all debt, all transaction
expenses (including all payments to James E. Minarik under the Company's
December 7, 2004 Sale Bonus Agreement with such executive except the "Third Gain
Share Payment" reflected therein), and all proceeds payment due to

<PAGE>

holders of the Company's currently outstanding warrants, including, without
limitation, (i) cash, and (ii) notes, securities and other property. Non-cash
consideration shall be valued as follows: (x) publicly traded securities shall
be valued at the average of their closing prices (as reported in the Wall Street
Journal) for the ten trading days prior to the closing of the Sale Event, and
(y) any other non-cash consideration shall be valued at the fair market value
thereof as determined in good faith by the Board and the Key Employee.

            (e)   "Sale Event" shall mean:

                  (i)   the sale of all, or substantially all, of DEI's
consolidated assets in any single transaction or series of related transactions;
or

                  (ii)  the sale, or series of related sales, of common stock of
the Company or DEI possessing the ordinary voting power (on a fully-diluted
basis) to elect a majority of the board of directors of the Company or the
Board, as the case may be, to an independent third party or a group of
affiliated independent third parties; or

                  (iii) any merger or consolidation of the Company or DEI with
or into another corporation or other business entity (regardless of which entity
is the surviving corporation) if, after giving effect to such merger or
consolidation, the holders of the Company's or DEI's, as the case may be, voting
securities (on a fully-diluted basis) immediately prior to the merger or
consolidation own voting securities of the surviving or resulting corporation or
other business entity representing less than a majority of the ordinary voting
power to elect directors of the surviving or resulting corporation (on a
fully-diluted basis).

            (f)   "Trivest Investors" shall mean Trivest Fund II, Ltd., Trivest
Equity Partners II, Ltd., Trivest Principals Fund II, Ltd., Trivest Fund III,
L.P., Trivest Equity Partners III, L.P., Trivest Fund Cayman III, L.P., Trivest
Principals Fund III, L.P., Trivest-DEI Co-Investment Fund, Ltd., and any of
their respective successors and assigns.

      2.    Sale Bonus. Upon the consummation of any Sale Event, the Company
shall pay (or cause to be paid) to the Key Employee an amount (the "Sale Bonus")
equal to __% of the Net Equity Proceeds.

      3.    Public Offering. In the event of an initial public offering of
equity securities by the Company or DEI registered under the Securities Act of
1933, as amended, the Company's Board of Directors (the "Board") shall in good
faith negotiate with the Key Employee to determine a fair compensation
arrangement to compensate Key Employee in accordance with the purpose and intent
of this Agreement.

      4.    Nature of the Right.

            (a)   The Key Employee shall have the right to receive a Sale Bonus
only if a Sale Event is consummated (i) while Key Employee is an employee of the
Company or any of its subsidiaries, (ii) if the Key Employee's employment is
terminated without "Cause," within three (3) months of such termination, or
(iii) if the Key Employee's employment by reason of death or permanent
disability, within six (6) months of such termination. For purposes hereof, the
term "Cause" shall mean (i) the failure by the Key Employee to perform his
duties as employee as reasonably requested by the Company's President, as
documented in writing to the Key Employee, (ii) the failure by the Key Employee
to observe all material policies of the Company generally applicable to
executives of the Company, (iii) gross negligence or willful misconduct by the
Key Employee in the performance of his duties, (iv) the commission by the Key
Employee of an act of fraud or embezzlement against the Company or the
conviction of any felony or act involving moral turpitude, (v) material breach
by the Key Employee of his obligations under any contract or agreement with the
Company, (vi) chronic absenteeism, or (vii) substance abuse.

                                       2
<PAGE>

            (b)   The Sale Bonus shall be satisfied in the same form of
consideration as is received by the Trivest Investors. If the Trivest Investors
receive a combination of cash and property, the Sale Bonus shall be satisfied in
such forms in the same proportion as is received by the Trivest Investors.

            (c)   If all or a portion of the consideration payable by reason of
a Sale Event is payable over time or based upon the existence or occurrence of
events in the future, the amount of the Sale Bonus shall be computed based on
the actual consideration received by the Company's equity holders at closing and
the Sale Bonus shall include the right to receive the percentage of the Proceeds
Available for Distribution to Shareholders applied to such future consideration
as and when such consideration is received.

      5.    Modification to Right. In the event of an extraordinary corporate
transaction, including, by way of example, any material acquisition or
disposition of assets or securities other than in the ordinary course of
business, or any material financing transaction, the Board shall in good faith
review for reasonableness the Sale Bonus formula specified in Section 2 hereof
and shall take such action, if any, as the Board in good faith deems necessary
to adjust such formula in light of the circumstances existing at such time.

      6.    Term. The Company's obligation to pay the Sale Bonus (or portion
thereof) granted hereunder shall terminate upon the earlier to occur of: (a) the
Key Employee's termination for Cause, death or permanent disability, (b) the Key
Employee's voluntary resignation, (c) three (3) months after the Key Employee's
termination without Cause, or (d) seven years from the date hereof.

      7.    Non-Transferability. Key Employee's rights under this Agreement may
not be sold, pledged, assigned, hypothecated, gifted, transferred or disposed of
in any manner either voluntarily or involuntarily by operation of law.

      8.    Withholding. The Company reserves the right to withhold, in
accordance with any applicable laws, from any consideration payable or property
transferable to the Key Employee, any taxes required to be withheld by federal,
state or local law as a result of the entering into this Agreement or the
receipt of cash or property upon a Sale Event. If the amount of any
consideration payable to the Key Employee is insufficient to pay such taxes or
if no consideration is payable to the Key Employee, upon the request of the
Company, the Key Employee shall pay to the Company an amount sufficient for the
Company to satisfy any federal, state or local tax withholding requirements it
may incur, as a result of the entering into of this Agreement or the receipt of
cash or property upon a Sale Event.

      9.    Employment. This Agreement shall not confer upon the Key Employee
any right to continue in the service of the Company or any subsidiary or limit,
in any respect, the right of the Company or any subsidiary to discharge the Key
Employee at any time, with or without Cause and with or without notice.

      10.   Governing Law. This Agreement shall be construed in accordance with
the laws of the State of California, without regard to the application of the
principles of conflicts of laws.

      11.   Amendment. This Agreement may only be amended by a writing signed by
each of the parties hereto.

                                       3
<PAGE>

      IN WITNESS WHEREOF, this Agreement has been executed by the parties as of
the date set forth above.

                                         DEI HOLDINGS, INC.

                                         By:
                                            ------------------------------------
                                             James E. Minarik,
                                             President

                                         ---------------------------------------
                                         [KEY EMPLOYEE]

                                       4
<PAGE>
Schedule to Exhibit 10.5: The form of Key Employee Sale Bonus Agreement was
executed by the following persons:

Employee
--------
Kevin Duffy
Glenn Busse
Mark Rutledge
Michael Smith
Rich Hirshberg
KC Bean
Jim Jardin
Mike Wilhelm
Al Fontane
Jeff Blair
Arlene Watson
Patricia Merson
James Turner
Kevin Hunter
Chris Rudder
Jeff Burt
Ralf Engelbrecht
Mark Chasey
Minas Minassian

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