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EXHIBIT 10.5
KEY EMPLOYEE
SALE BONUS AGREEMENT
THIS SALE BONUS
AGREEMENT (this "Agreement"), is made and entered into as
of ________ __, ____, 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
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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
entit
