EXHIBIT 10.5
FORM OF
MANAGEMENT STOCKHOLDERS AGREEMENT
DATED AS OF JANUARY ____, 2004
among
CPI ACQUISITION CORP.
CYPRESS MERCHANT BANKING PARTNERS II L.P.
CYPRESS MERCHANT BANKING II C.V.
55TH STREET PARTNERS L.P.
CYPRESS SIDE-BY-SIDE LLC
and
THE MANAGEMENT STOCKHOLDERS NAMED HEREIN
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS...................................................................... 2
Section 1.1. Definitions........................................................ 2
ARTICLE II CERTAIN RESTRICTIONS ON TRANSFERS............................................... 6
Section 2.1. Transfers in Accordance with this Agreement........................ 6
Section 2.2. Transfer Restriction Period........................................ 7
Section 2.3. Share Register..................................................... 7
Section 2.4. Transfers to Permitted Transferees................................. 7
Section 2.5. Tag-Along Right.................................................... 7
Section 2.6. Drag-Along Right................................................... 8
ARTICLE III ADDITIONAL RIGHTS AND OBLIGATIONS OF MANAGEMENT STOCKHOLDERS AND THE COMPANY... 9
Section 3.1. Right of First Refusal............................................. 9
Section 3.2. Registration Rights................................................ 10
Section 3.3. Call Rights........................................................ 10
Section 3.4. Covenant Not to Compete; Non-Solicitation.......................... 12
Section 3.5. Confidential Information........................................... 14
Section 3.6. Representations and Warranties of the Management Stockholders...... 15
ARTICLE IV MISCELLANEOUS................................................................... 16
Section 4.1. No Inconsistent Agreements......................................... 16
Section 4.2. Voting Agreement................................................... 16
Section 4.3. Employment by the Company.......................................... 17
Section 4.4. Taxes.............................................................. 17
Section 4.5. Successors and Assigns............................................. 17
Section 4.6. No Waivers, Amendments............................................. 17
Section 4.7. Notices............................................................ 18
Section 4.8. Term of Agreement.................................................. 19
Section 4.9. Inspection......................................................... 19
SECTION 4.10. GOVERNING LAW; SUBMISSION TO JURISDICTION......................... 19
Section 4.11. Section Headings.................................................. 19
Section 4.12. Entire Agreement.................................................. 19
Section 4.13. Severability...................................................... 20
Section 4.14. Counterparts...................................................... 20
Section 4.15. Parties in Interest............................................... 20
Section 4.16. Enforcement; Further Assurances................................... 20
Section 4.17. Advice of Counsel................................................. 20
ARTICLE I DEFINITIONS...................................................................... 1
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Section 1.1. Definitions........................................................ 1
ARTICLE II REGISTRATION RIGHTS............................................................. 2
Section 2.1. Piggy-Back Registration............................................ 2
Section 2.2. Reduction of Offering.............................................. 2
ARTICLE III REGISTRATION PROCEDURES........................................................ 3
Section 3.1. Filings; Information............................................... 3
Section 3.2. Registration Expenses.............................................. 6
ARTICLE IV INDEMNIFICATION AND CONTRIBUTION................................................ 6
Section 4.1. Indemnification by the Company..................................... 6
Section 4.2. Indemnification by Holders of Registrable Securities............... 7
Section 4.3. Conduct of Indemnification Proceedings............................. 7
Section 4.4. Contribution....................................................... 8
ARTICLE V MISCELLANEOUS.................................................................... 9
Section 5.1. Participation in Underwritten Registrations........................ 9
Section 5.2. Rule 144........................................................... 9
Section 5.3. Holdback Agreements................................................ 10
Section 5.4. Other Registration Rights.......................................... 10
SCHEDULES
Schedule I Management Stockholders
Schedule II Senior Managers
EXHIBITS
Exhibit A Management Stockholder Form of Agreement to be Bound
Exhibit B Permitted Transferee Form of Agreement to be Bound
Exhibit C Registration Rights
Exhibit D Form of Consent of Spouse
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MANAGEMENT STOCKHOLDERS AGREEMENT
MANAGEMENT STOCKHOLDERS AGREEMENT dated as of January __, 2004
(this "Agreement") among CPI Acquisition Corp., a Delaware corporation (the
"Company"), Cypress Merchant Banking Partners II L.P., a Delaware limited
partnership ("Cypress Onshore"), Cypress Merchant Banking II C.V., a Netherlands
limited partnership ("Cypress Offshore"), 55th Street Partners II L.P., a
Delaware limited partnership ("Cypress 55th Street"), Cypress Side-by-Side LLC,
a Delaware limited liability company ("Cypress Side-by-Side," and together with
Cypress Onshore, Cypress Offshore, Cypress 55th Street, "Cypress"), and certain
management stockholders of the Company listed on Schedule I hereto (each such
management stockholder, together with any other management stockholder who shall
become a party to this Agreement by executing and delivering to the Company an
instrument in form of Exhibit A hereto, or otherwise reasonably satisfactory to
the Company, agreeing to be bound hereby as a "Management Stockholder" is
hereinafter referred to as a "Management Stockholder"). Capitalized terms used
but not otherwise defined herein have the meanings given to them in the Merger
Agreement (as hereinafter defined).
WITNESSETH:
WHEREAS, the Company acquired Communications & Power
Industries Holding Corporation ("Holding") pursuant to an Agreement and Plan of
Merger, dated as of November 17, 2003 (the "Merger Agreement"), among Holding,
the Company, CPI Merger Sub Corp., a Delaware corporation and wholly-owned
Subsidiary (as hereinafter defined) of the Company prior to the Merger (as
hereinafter defined) ("Merger Sub"), and Green Equity Investors II L.P., as
Securityholders' Representative, pursuant to which Merger Sub merged with and
into Holding on the date hereof with Holding as the surviving corporation (the
"Merger") and a wholly-owned Subsidiary of the Company;
WHEREAS, in connection with the Merger, certain Management
Stockholders have entered into Option Rollover Agreements with the Company, each
such agreement dated as of the date hereof, pursuant to which the Company agreed
to convert certain options to acquire shares of Holding held by each such
Management Stockholder prior to the Merger into options to acquire Shares (as
hereinafter defined) ("Rollover Options");
WHEREAS, the parties hereto desire to restrict the sale,
assignment, transfer, encumbrance or other disposition of the Shares and to
provide for certain rights and obligations and other agreements in respect of
the Shares and the Company, all as hereinafter provided.
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement, the
following terms have the following meanings:
"Affiliate", as applied to any Person, shall mean any other
Person directly or indirectly controlling, controlled by, or under common
control with, that Person. For the purposes of this definition "control"
(including, with correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting securities (the ownership of more than 50% of the voting
securities of an entity shall for purposes of this definition be deemed to be
"control"), by contract or otherwise.
"Agreement" shall have the meaning set forth in the preamble
of this Agreement.
"Business Day" shall mean any day that is not a Saturday or
Sunday or a day on which banks located in New York City are authorized or
required to be closed.
"Buyout Notice" shall have the meaning set forth in Section
2.6.
"Call Exercise Notice" shall have the meaning set forth in
Section 3.3(b).
"Call Right" shall have the meaning set forth in Section
3.3(a).
"Call Right Period" shall have the meaning set forth in
Section 3.3(a).
"Cause" shall mean (i) the Management Stockholder's continued
failure to perform such Management Stockholder's duties (other than as a result
of total or partial incapacity due to physical or mental illness) which is not
cured for a period of 10 days following written notice by the Company or its
Affiliates to the Management Stockholder of such failure, (ii) conviction or
plea of guilty or no contest to a (x) felony, or (y) crime involving moral
turpitude or the property or business of the Company or its Affiliates, (iii)
willful malfeasance or willful misconduct in performance of duties to the
Company or its Affiliates, or (iv) breach by the Management Stockholder of the
material terms of any non-compete, non-solicitation or confidentiality
provisions of this Agreement.
"Change of Control" shall mean (i) the sale or disposition, in
one or a series of related transactions, of all or substantially all of the
assets of the Company to any "person" or "group" (as such terms are defined in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) other than Cypress or its
Affiliates, or (ii) any person or group, other than Cypress or its Affiliates,
is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act), directly or indirectly, of more than 50% of the total voting
power of the voting stock of the Company, including by way of merger,
consolidation or otherwise and Cypress or its Affiliates ceases to control the
board of directors of the Company.
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"Code" shall mean the U.S. Internal Revenue Code of 1986, as
amended, and the regulations thereunder.
"Common Stock" shall mean the common stock, par value $0.01
per share, of the Company.
"Company" shall have the meaning set forth in the preamble of
this Agreement.
"Company Call Right" shall have the meaning set forth in
Section 3.3(a).
"Company Call Right Period" shall have the meaning set forth
in Section 3.3(a).
"Competitive Business" shall have the meaning set forth in
Section 3.4(b).
"Confidential Information" shall have the meaning set forth in
Section 3.5(c).
"Contract Date" shall have the meaning set forth in Section
3.1(d).
"Cypress" shall have the meaning set forth in the preamble of
this Agreement.
"Cypress Call Right" shall have the meaning set forth in
Section 3.3(a).
"Cypress Call Right Period" shall have the meaning set forth
in Section 3.3(a).
"Cypress Onshore" shall have the meaning set forth in the
preamble of this Agreement.
"Cypress Offshore" shall have the meaning set forth in the
preamble of this Agreement.
"Cypress Side-by-Side" shall have the meaning set forth in the
preamble of this Agreement.
"Cypress 55th Street" shall have the meaning set forth in the
preamble of this Agreement.
"Employment Agreement" shall mean an employment agreement
between a Management Stockholder and the Company or any of its Subsidiaries that
is in effect as of the date hereof and continues to be effective thereafter in
accordance with its terms.
"Employment" shall mean (i) a Management Stockholder's
employment if the Management Stockholder is an employee of the Company or any of
its Affiliates, (ii) a Management Stockholder's services as an non-employee
director, if the Management Stockholder is a non-employee member of the board of
directors of the Company or an Affiliate or (iii) a Management Stockholder's
services as an independent contractor, vendor or third-party service provider,
if the Management Stockholder is an independent contractor, vendor or
third-party service provider to the Company or any of its Affiliates; provided,
however, that unless otherwise determined by a committee of the board of
directors of the Company, a change in a
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Management Stockholder's status from employee to a consultant shall constitute a
termination of employment hereunder.
"Exchange Act" shall mean the United States Securities and
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
"Fair Market Value" shall mean (i) if there is a public market
for the Shares on such date, the average of the high and low closing bid prices
of the Common Stock on such stock exchange on which the Shares are principally
trading on the date in question, or, if there were no sales on such date, on the
closest preceding date on which there were sales of Common Stock, or (ii) if
there is no public market for the Shares on such date, the fair market value of
the Shares as determined in good faith by the board of directors of the Company;
provided that if the relevant Management Stockholder disagrees with the board of
directors' determination, he or she may require the Company to retain an
independent investment banker to determine the fair market value, which
determination shall be binding on such Management Stockholder and the Company.
The Company will bear the cost of such appraisal, unless the appraised value is
110% or less of the board of directors' determination of the fair market value,
in which case the Management Stockholder will bear the cost of such appraisal.
"First ROFR Option Period" shall have the meaning set forth in
Section 3.1(b).
"HSR" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Holding" shall have the meaning set forth in the recitals of
this Agreement.
"Initial Public Offering" shall mean the initial Public
Offering (other than pursuant to a registration statement on Form S-8 (or
comparable form for a private issuer or otherwise relating to equity securities
issuable under any employee benefit plan)) of the Common Stock.
"Lapse Date" shall have the meaning set forth in Section 2.1.
"Majority Management Stockholders" shall mean, at any time,
Management Stockholders and their Permitted Transferees holding a majority of
the number of Shares (including any Shares issuable upon the conversion,
exchange or exercise of Share Equivalents) then outstanding and held by the
Management Stockholders and their Permitted Transferees.
"Management Stockholder" shall have the meaning set forth in
the preamble of this Agreement.
"Merger" shall have the meaning set forth in the recitals of
this Agreement.
"Merger Agreement" shall have the meaning set forth in the
recitals of this Agreement.
"Merger Sub" shall have the meaning set forth in the recitals
of this Agreement.
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"Offer" shall have the meaning set forth in Section 3.1(a).
"Offered Securities" shall have the meaning set forth in
Section 3.1(a).
"Offering Notice" shall have the meaning set forth in Section
3.1(a).
"Offeror" shall have the meaning set forth in Section 3.1(a).
"Permitted Transferee" shall mean: (i) with respect to
Cypress, (a) any Affiliate (other than an individual), any general or limited
partner, member, director, officer or employee of Cypress (or its Permitted
Transferees), (b) the heirs, executors, administrators, testamentary trustees,
legatees or beneficiaries of Cypress (or its Permitted Transferees), (c) for
estate planning purposes, any trust, the beneficiaries of which include only
Permitted Transferees referred to in clauses (a), (b) and (c) and spouses and
lineal descendants of Permitted Transferees referred to in clause (a), (d) a
corporation, partnership or other entity, a majority of the equity of which is
owned and controlled by Cypress (or its Permitted Transferees) and (e) any bank
or financial institution to which a bona fide pledge of Shares is made, provided
that immediately following any foreclosure upon such pledged Shares, such bank
or financial institution shall cease to be a Permitted Transferee for all
purposes of this Agreement; and (ii) with respect to any Management Stockholder,
(a) in the event of such Management Stockholder's death, the heirs, executors,
administrators, testamentary trustees, legatees or beneficiaries of such
Management Stockholder (or their Permitted Transferees), (b) such Management
Stockholder's spouse and lineal descendants and (c) trusts, partnerships,
limited liability companies or other entities of which such Management
Stockholder and/or such Management Stockholder's spouse or lineal descendants
are the sole owners and beneficiaries; provided, further that any such Permitted
Transferee referred to in the foregoing clauses agrees in writing to be bound by
the terms of this Agreement in accordance with Section 2.4.
"Person" shall mean an individual, partnership, corporation,
business trust, joint stock company, limited liability company, unincorporated
association, joint venture or other entity of whatever nature.
"Public Offering" shall mean any public offering of equity
securities of the Company pursuant to an effective registration statement under
the Securities Act.
"Qualified Public Offering" shall mean the first firm
commitment underwritten Public Offering that results in a number of shares sold
in such Public Offering equal to at least 20% of the issued and outstanding
shares of Common Stock following such Public Offering.
"Restricted Period" shall have the meaning set forth in
Section 3.4(a).
"ROFR Option Periods" shall have the meaning set forth in
Section 3.1(b).
"Rollover Options" shall have the meaning set forth in the
recitals of this Agreement.
"Second ROFR Option Period" shall have the meaning set forth
in Section 3.1(b).
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"Securities Act" shall mean the United States Securities Act
of 1933, as amended, and the rules and regulations promulgated thereunder.
"Selling Management Stockholders" shall have the meaning set
forth in Section 3.1(a).
"Senior Manager" shall mean each of the persons listed on
Schedule II hereto.
"Share Equivalents" shall mean securities of any kind
(including "phantom" securities) issued by the Company convertible into or
exchangeable for Shares or options, warrants or other rights to purchase or
subscribe for Shares or securities convertible into or exchangeable for Shares.
"Shares" shall mean, with respect to any Stockholder, any and
all shares of Common Stock, whether now owned or hereafter acquired (including
upon exercise of options, preemptive rights or otherwise), held by such
Stockholder.
"Stockholder" shall mean each of Cypress and the Management
Stockholders.
"Subsidiary" shall mean, with respect to any Person, any
corporation or other entity of which a majority of the capital stock or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar function at the time
directly or indirectly owned by such Person.
"Third Party" shall mean any prospective Transferee of Shares
(other than the Company) that is not a Permitted Transferee of the Stockholder
proposing the Transfer of such Shares to such prospective Transferee.
"Transfer" shall have the meaning set forth in Section 2.1.
"Transferee" shall mean any Person who or which acquires
Shares from a Management Stockholder or a Transferee (including Permitted
Transferees) of a Management Stockholder subject to this Agreement.
ARTICLE II
CERTAIN RESTRICTIONS ON TRANSFERS
Section 2.1. Transfers in Accordance with this Agreement. No
Management Stockholder (or Permitted Transferee of a Management Stockholder)
shall, directly or indirectly, transfer, sell, assign, pledge, hypothecate,
encumber, or otherwise dispose of, all or any portion of any Shares or any
economic interest therein (including without limitation by means of any
participation or swap transaction) (each, a "Transfer") to any Person unless
this Agreement expressly permits such Transfer. Any attempt to Transfer any
Shares in violation of the terms of this Agreement shall be null and void, and
neither the Company nor any transfer agent shall register upon its books any
Transfer of Shares by a Management Stockholder to any Person except a Transfer
in accordance with this Agreement.
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Section 2.2. Transfer Restriction Period. No Management
Stockholder (or Permitted Transferee of a Management Stockholder) shall Transfer
any Shares prior to the earliest to occur of (i) a Qualified Public Offering,
(ii) the occurrence of a Change of Control and (iii) the seventh anniversary of
the date hereof (the earliest of such dates being referred to as the "Lapse
Date"); provided that any Transfer of Shares by a Management Stockholder (or
Permitted Transferee of a Management Stockholder) to the Company or Cypress (and
its Permitted Transferees) or pursuant to Section 2.5 or 2.6 shall be permitted
at any time after the date hereof.
Section 2.3. Share Register. A copy of this Agreement shall be
kept with the records of the Company, and the share register of the Company
shall, so long as it is true, contain a notation, with respect to all Shares
subject to this Agreement reading substantially as follows:
THE SHARES OF CPI ACQUISITION CORP. (THE "COMPANY") HAVE NOT
BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS AND MAY BE
OFFERED AND SOLD ONLY IF SO REGISTERED OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THESE SHARES ALSO ARE SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER AS SET FORTH IN THE MANAGEMENT STOCKHOLDERS
AGREEMENT, DATED AS OF JANUARY __, 2004, COPIES OF WHICH MAY
BE OBTAINED FROM THE COMPANY. NO TRANSFER OF SUCH SHARES WILL
BE MADE ON THE SHARE REGISTER OF THE COMPANY OR OTHERWISE BE
EFFECTIVE UNLESS THE BOARD OF DIRECTORS OF THE COMPANY IS
SATISFIED THAT THE TRANSFER HAS BEEN MADE IN COMPLIANCE WITH
THE TERMS OF SUCH AGREEMENT.
Section 2.4. Transfers to Permitted Transferees. None of the
restrictions contained in this Agreement with respect to Transfers of Shares
(other than Sections 2.2, 2.3 and 2.4(b)) shall apply to any Transfer of Shares
by any Management Stockholder to a Permitted Transferee of such Management
Stockholder; provided that prior to any such Transfer, such Permitted Transferee
shall have executed and delivered to the Company, as a condition precedent to
such Transfer, an instrument in the form of Exhibit B hereto or otherwise
reasonably satisfactory to the Company agreeing to be bound hereby as a
Permitted Transferee of such Management Stockholder.
Section 2.5. Tag-Along Right. (a) If at any time prior to a
Qualified Public Offering Cypress (and/or its Permitted Transferees) proposes to
Transfer, in one or a series of related transactions, more than 25% of the
Shares then held by Cypress (and its Permitted Transferees) to a Third Party,
then Cypress shall send written notice to the Management Stockholders (and their
Permitted Transferees) which shall state (i) that Cypress and/or its Permitted
Transferees desires to make such a Transfer, (ii) the identity of the Third
Party and the number of Shares proposed to be sold or otherwise transferred,
(iii) the proposed purchase price per Share to be paid and the other material
terms and conditions of such Transfer and (iv) the
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projected closing date of such Transfer, which in no event shall be prior to 15
days after the giving of such written notice to the Management Stockholders.
(b) For a period of 15 days after the giving of the
notice pursuant to clause (a) above, each Management Stockholder (and his/her
Permitted Transferees) shall have the right to sell to the Third Party in such
Transfer at the same price and upon the same terms and conditions as Cypress
(and/or its Permitted Transferees) (which may include making representations or
providing indemnities; provided, however, that in no event shall any Management
Stockholder (or his/her Permitted Transferees) be required to make any
representations or provide any indemnities (i) other than on a proportionate
basis or (ii) with respect to matters relating solely to Cypress (and/or its
Permitted Transferees), such as representations as to title to Shares to be
transferred by Cypress (or its Permitted Transferees)) that percentage of the
total number of Shares held by such Management Stockholder equal to the
percentage of the total number of Shares then held by Cypress (and its Permitted
Transferees) to be Transferred to such Third Party.
(c) The rights of the Management Stockholders (and their
Permitted Transferees) under Section 2.5(b) shall be exercisable by delivering
written notice thereof, prior to the expiration of the 15-day period referred to
in clause (b) above, to Cypress with a copy to the Company. The failure of any
Management Stockholder (or his/her Permitted Transferees) to respond within such
period to Cypress shall be deemed to be a waiver of such non-responding party's
rights under this Section 2.5 with respect to that Transfer, so long as such
Transfer takes place on the terms and conditions contained in the notice
pursuant to clause (b) above within a period of 180 days following the
expiration of such 15-day period.
Section 2.6. Drag-Along Right. If at any time prior to a
Qualified Public Offering Cypress (and/or its Permitted Transferees) proposes to
sell or causes the sale of, in one or a series of related transactions, more
than 25% of the Shares then held by Cypress to a Third Party, then Cypress shall
have the right to deliver a written notice (a "Buyout Notice") to each
Management Stockholder (and his/her Permitted Transferees) which shall state (i)
that Cypress proposes to effect such transaction, (ii) the identity of the Third
Party and the proposed purchase price per Share to be paid and any other
material terms and conditions, and (iii) the projected closing date of such
sale. Each Management Stockholder (and his/her Permitted Transferees) agrees
that, upon receipt of a Buyout Notice, such Management Stockholder (and his/her
Permitted Transferees) shall be obligated to sell in such transaction the same
percentage of the Shares held by such Management Stockholder (and his/her
Permitted Transferees) as Cypress and its Permitted Transferees propose to sell
upon the terms and conditions of such transaction (and otherwise take all
necessary action to cause consummation of the proposed transaction); provided
that in no event shall any Management Stockholder (or his/her Permitted
Transferees) be required to make any representations or provide any indemnities
(A) other than on a proportionate basis and (B) with respect to matters relating
solely to Cypress (and/or its Permitted Transferees), such as representations as
to title to Shares to be transferred by Cypress (or its Permitted Transferees).
ARTICLE III
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ADDITIONAL RIGHTS AND OBLIGATIONS
OF MANAGEMENT STOCKHOLDERS AND THE COMPANY
Section 3.1. Right of First Refusal.
(a) Right. At any time following the Lapse Date and prior
to a Qualified Public Offering, if any Management Stockholder (and/or his/her
Permitted Transferees) proposes to Transfer Shares then held by such Management
Stockholder (and his/her Permitted Transferees) to any Person (other than a
Permitted Transferee), and such Management Stockholder (together with his/her
Permitted Transferees, a "Selling Management Stockholder") has received an arm's
length offer (the "Offer") to purchase all or any portion of his/her Shares (the
"Offered Securities") from any Person (the "Offeror") which the Selling
Management Stockholder wishes to accept, such Selling Management Stockholder
shall cause the Offer to be reduced to writing and shall notify the Company and
Cypress in writing of his/her wish to accept the Offer (the "Offering Notice").
The Offering Notice shall contain an irrevocable offer to sell the Shares to the
Company and Cypress at a price equal or equivalent (as determined in the manner
set forth in Section 3.1(b)(i) below) to the price contained in, and otherwise
on the same terms and conditions of, the Offer and shall be accompanied by a
copy of the Offer (which shall identify the Offeror).
(b) Rightholder Option; Exercise.
(i) For a period of 15 Business Days after the
date upon which the Company shall have received the Offering Notice
(the "First ROFR Option Period"), the Company shall have the right to
elect to purchase the Offered Securities either (A) at the same price
and on the same terms and conditions as the Offer or (B) if the Offer
includes any consideration other than cash, then at the sole option of
the Company, at the equivalent cash price, determined in good faith by
the board of directors of the Company. If the Company does not
subscribe for all of the Offered Securities pursuant to this Section
3.1(b) or if it fails to exercise such right during the First ROFR
Option Period, then Cypress shall have the right to purchase the
Offered Securities on the terms and conditions set forth above for a
period commencing on the date of the expiration of the First ROFR
Option Period and ending 15 Business Days thereafter (the "Second ROFR
Option Period" and, together with the First ROFR Option Period, the
"ROFR Option Periods"). If Cypress does not subscribe for all of the
Offered Securities pursuant to this Section 3.1(b), then the Selling
Management Stockholder may, Transfer all of the Offered Securities to
the Offeror in accordance with Section 3.1(d).
(ii) The right of the Company or Cypress, as the
case may be, to purchase the Offered Securities under Section 3.1(b)(i)
shall be exercisable by delivering written notice of the exercise
thereof, prior to the expiration of the applicable ROFR Option Period,
to the Selling Management Stockholder. The failure of the Company or
Cypress to respond within the applicable ROFR Option Period to the
Selling Management Stockholder shall be deemed to be a waiver of the
Company's or Cypress's rights under Section 3.1(b)(i); provided that
the Company and Cypress may each waive its rights under this Section
3.1(b)(ii) prior to the expiration of the applicable ROFR Option Period
by giving written notice to the Selling Management Stockholder.
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(c) Closing. The closing of the purchases of Offered
Securities subscribed for by the Company or Cypress, as applicable, under
Section 3.1(b) shall be held at the executive office of the Company at 11:00
a.m., local time, on the 30th Business Day after the receipt of the Offering
Notice pursuant to Section 3.1(a) or at such other time and place as the Company
or Cypress, as applicable, and the Selling Management Stockholder may agree. At
such closing, the Selling Management Stockholder shall deliver certificates
representing the Offered Securities, duly endorsed for transfer and accompanied
by all requisite transfer taxes, if any, and such Offered Securities shall be
free and clear of any encumbrances or liens (other than those arising hereunder
and those attributable to actions by the purchasers thereof) and the Selling
Management Stockholder shall so represent and warrant, and shall further
represent and warrant that it is the sole beneficial and record owner of such
Offered Securities. The Company or Cypress, as applicable, shall deliver at the
closing payment in full in immediately available funds for the Offered
Securities purchased by it. At such closing, the Company or Cypress, as
applicable, and the Selling Management Stockholder shall execute such additional
documents as are otherwise necessary or appropriate. Notwithstanding the
foregoing, any closing pursuant to this Section 3.1(c) may be delayed in
connection with any required HSR filing or similar filing in any jurisdiction;
provided that each filing Person shall be required to seek all appropriate
clearances in connection therewith as soon as possible, including seeking early
approval of the proposed purchase or termination of any applicable waiting
period, as applicable.
(d) Transfer to the Offeror. Unless the Company or
Cypress elects to purchase all of the Offered Securities under Section 3.1(b),
the Selling Management Stockholder may Transfer all of the Offered Securities to
the Offeror on terms and conditions no less favorable to the Selling Management
Stockholder than those set forth in the Offering Notice; provided, however, that
such Transfer is bona fide and made pursuant to a contract entered into within
60 days after the earlier to occur of (i) the waiver by each of the Company and
Cypress of its option to purchase the Offered Securities and (ii) the expiration
of the Second ROFR Option Period (the "Contract Date"); and provided, further,
that such Transfer shall not be consummated unless and until (A) such Offeror
shall represent in writing to the Company and Cypress that it is aware of the
rights and obligations of the Stockholders contained in this Agreement and (B)
prior to the purchase by such Offeror of any of such Offered Securities, such
Offeror shall have executed and delivered to the Company, as a condition
precedent to such Transfer, an instrument or instruments in form and substance
reasonably satisfactory to the Company confirming that the Offeror agrees to be
bound by the terms of this Agreement with respect to the Shares so Transferred
to the same extent applicable to the Selling Management Stockholder. If such
Transfer is not consummated within 60 days after the Contract Date for any
reason, then the restrictions provided for herein shall again become effective,
and no transfer of such Offered Securities may be made thereafter by the Selling
Management Stockholder without again offering the same to the Company and, if
applicable, Cypress, in accordance with this Section 3.1.
Section 3.2. Registration Rights. The Company hereby grants to
the Management Stockholders (and their Permitted Transferees) the registration
and other rights set forth in, and the Management Stockholders (and their
Permitted Transferees) agree to comply with the terms and conditions contained
in, Exhibit C hereto.
Section 3.3. Call Rights.
10
(a) Prior to the occurrence of the Lapse Date, upon the
termination of a Management Stockholder's Employment with the Company or any of
its Subsidiaries for any reason, the Company shall have the right (the "Company
Call Right"), for a period of 181 days from the later of (i) the date of such
termination of Employment or (ii) in the case of Shares issued upon the exercise
of Share Equivalents, the date of the exercise of such Share Equivalents (the
"Company Call Right Period"), to purchase from such Management Stockholder and
his/her Permitted Transferees all or a portion of their Shares. Upon the
expiration of the Company Call Right Period, if the Company does not exercise
the Company Call Right, Cypress shall have the right (the "Cypress Call Right"
and, together with the Company Call Right, the "Call Right") to purchase from
such Management Stockholder and his/her Permitted Transferees all or a portion
of their Shares for a period of 30 days from the expiration of the Company Call
Right Period (the "Cypress Call Right Period" and, together with the Company
Call Right Period, the "Call Right Period"). All references to Shares in this
Section 3.3 shall include Shares issuable upon the conversion, exchange or
exercise of Share Equivalents.
(b) The Company or Cypress, as applicable, will exercise
its rights hereunder with respect to any particular Shares by sending written
notice, not later than the expiration of the applicable Call Right Period (the
"Call Exercise Notice"), to the relevant Management Stockholder of its intention
to purchase the Shares. The closing of the purchase shall be held at the
executive office of the Company, on the 30th day after the receipt of the Call
Exercise Notice or at such other time and place as the Company or Cypress, as
applicable, and the relevant Management Stockholder may agree. At such closing,
such Management Stockholder and his/her Permitted Transferees shall deliver
certificates representing the Shares subject to the Call Right, duly endorsed
for transfer and accompanied by all requisite transfer taxes, if any, and such
Shares shall be free and clear of any encumbrances or liens (other than those
arising hereunder and those attributable to actions by the purchasers thereof)
and such Management Stockholder and his/her Permitted Transferees shall so
represent and warrant, and shall further represent and warrant that they are the
sole beneficial and record owner of such Shares. The Company or Cypress, as
applicable, shall deliver at the closing payment in full in immediately
available funds for the Shares purchased by it. At such closing, the Company or
Cypress, as applicable, and such Management Stockholder and his/her Permitted
Transferees shall execute such additional documents as are otherwise necessary
or appropriate. Notwithstanding the foregoing, any closing pursuant to this
Section 3.3(b) may be delayed in connection with any required Hart Scott Rodino
filing or similar filing in any jurisdiction; provided that each filing Person
shall be required to seek all appropriate clearances in connection therewith as
soon as possible, including seeking early approval of the proposed purchase or
termination of any applicable waiting period, as applicable.
(c) The purchase price paid pursuant to Section 3.3(b) by
the Company or Cypress, as applicable, shall be (i) the Fair Market Value per
share on the date of exercise of such Call Right upon the termination of a
Management Stockholder's Employment under any circumstances other than for
Cause; provided that with respect to the Shares held by the Management
Stockholder on the date hereof and the Shares issued upon exercise of the
Rollover Options, the purchase price shall be no less than the imputed price per
share paid by the Company pursuant to the Merger Agreement, and (ii) the lower
of the cost and the Fair Market Value per share on the date of exercise of such
Call Right upon the termination of a Management Stockholder's Employment for
Cause. The purchase price may be paid in cash, or, in respect of
11
a Company Call Right, if and only to the extent the Company is prohibited from
paying cash under any financing arrangement, (i) by a note payable in
installments of up to five years, bearing interest at the prime rate published
in The Wall Street Journal on the date of purchase or (ii) by delaying the
exercise of the Company Call Right until such financing restrictions expire;
provided, however, that if the Company elects to pay with a note, the Management
Stockholder may elect to either accept the note or allow the Company to delay
the exercise of the Company Call Right (it being understood that if the exercise
of the Company Call Right is so delayed, the date of the exercise shall be the
day the Company Call Right is actually exercised following such delay).
Section 3.4. Covenant Not to Compete; Non-Solicitation. Each
Senior Manager acknowledges and recognizes the highly competitive nature of the
businesses of the Company and its Subsidiaries and accordingly agrees that, if
such Senior Manager is subject to an Employment Agreement, he/she will abide by
the non-competition and non-solicitation covenants contained therein which are
incorporated herein by reference with respect to such Senior Manager. If no such
covenants are contained in the Employment Agreement or if there is no such
agreement, then each Senior Manager agrees, subject to Section 3.4(f), as
follows:
(a) During the term of Employment by the Company or any
of its Subsidiaries and for the period of time set forth on Schedule II opposite
such Senior Manager's name following the date such Senior Manager ceases to be
employed by the Company for any reason (the "Restricted Period"), such Senior
Manager will not, whether on his/her own behalf or on behalf of or in
conjunction with any Person, directly or indirectly solicit or assist in
soliciting in competition with the Company or any of its Subsidiaries, the
business of any client or prospective client:
(i) with whom such Senior Manager had personal
contact or dealings on behalf of the Company or its Subsidiaries during
the one year period preceding such Senior Manager's termination of
Employment;
(ii) with whom employees reporting to such Senior
Manager have had personal contact or dealings on behalf of the Company
or any of its Subsidiaries during the one year immediately preceding
such Senior Manager's termination of Employment; or
(iii) for whom such Senior Manager had direct or
indirect responsibility during the one year immediately preceding such
Senior Manager's termination of Employment.
(b) During the Restricted Period, such Senior Manager
will not directly or indirectly:
(i) engage in any business that competes with
the business of the Company or its Subsidiaries (including, without
limitation, businesses which the Company or its Subsidiaries have
specific plans to conduct in the future and as to which such Senior
Manager is aware of such planning) in any geographic area in which the
Company or its Subsidiaries conducts such business (a "Competitive
Business");
12
(ii) enter the employ of, or render any services
to, any Person (or any division or controlled or controlling Affiliate
of any Person) who or which engages in a Competitive Business;
(iii) acquire a financial interest in, or
otherwise become actively involved with, any Competitive Business,
directly or indirectly, as an individual, partner, shareholder,
officer, director, principal, agent, trustee or consultant; or
(iv) interfere with, or attempt to interfere
with, business relationships (whether formed before, on or after the
date of this Agreement) between the Company or any of its Subsidiaries,
on the one hand, and customers, clients, suppliers partners, members or
investors of the Company or its Subsidiaries, on the other hand.
(c) During the Restricted Period, such Senior Manager
will not, whether on such Senior Manager's own behalf or on behalf of or in
conjunction with any Person, directly or indirectly:
(i) solicit or encourage any employee of the
Company or its Subsidiaries to leave the Employment of the Company or
its Subsidiaries; or
(ii) hire any such employee who was employed by
the Company or its Subsidiaries as of the date of such Senior Manager's
termination of Employment with the Company or who left the Employment
of the Company or its Subsidiaries coincident with, or within one year
prior to, the termination of such Senior Manager's Employment with the
Company (other than any such employee whose Employment with the Company
is terminated by the Company without Cause).
(d) During the Restricted Period, such Senior Manager
will not, directly or indirectly, encourage or solicit to cease to work with the
Company or its Subsidiaries any consultant then under contract with the Company
or its Subsidiaries.
(e) Notwithstanding anything to the contrary in this
Agreement, any Senior Manager may, directly or indirectly own, solely as an
investment, securities of any Person engaged in the business of the Company or
its Subsidiaries which are publicly traded on a national or regional stock
exchange or on the over-the-counter market if the Senior Manager (i) is not a
controlling person of, or a member of a group which controls, such person and
(ii) does not, directly or indirectly, own 5% or more of any class of securities
of such Person.
(f) It is expressly understood and agreed that although
the Senior Managers and the Company consider the restrictions contained in this
Section 3.4 to be reasonable, if a final judicial determination is made by a
court of competent jurisdiction that the time or territory or any other
restriction contained in this Agreement is an unenforceable restriction against
the relevant Senior Manager, the provisions of this Agreement will not be
rendered void but will be deemed amended to apply as to such maximum time and
territory and to such maximum extent as such court may judicially determine or
indicate to be enforceable. Alternatively, if any court of competent
jurisdiction finds that any restriction contained in this Agreement is
unenforceable, and such restriction cannot be amended so as to make it
enforceable, such finding will not affect the enforceability of any of the other
restrictions contained herein.
13
Section 3.5. Confidential Information. (a) No Management
Stockholder will at any time (whether during or after such Management
Stockholder's employment with the Company) (i) retain or use for the benefit,
purposes or account of such Management Stockholder or any other Person; or (ii)
disclose, divulge, reveal, communicate, share, transfer or provide access to any
Person outside the Company (other than its professional advisers who are bound
by confidentiality obligations), any non-public, proprietary or confidential
information - including without limitation trade secrets, know-how, research and
development, software, databases, inventions, processes, business strategies,
formulae, technology, designs and other intellectual property, information
concerning finances, investments, profits, pricing, costs, products, services,
vendors, customers, clients, partners, investors, personnel, compensation,
recruiting, training, advertising, sales, marketing, promotions, government and
regulatory activities and approval - concerning the past, current or future
business, activities and operations of the Company, its subsidiaries, Affiliates
or any third party that has disclosed or provided any of same to the Company on
a confidential basis ("Confidential Information") without the prior written
authorization of the board of directors of the Company.
(b) "Confidential Information" will not include any
information that is (i) generally known to the industry or the public other than
as a result of such Management Stockholder's breach of this covenant or any
breach of other confidentiality obligations by third parties; (ii) made
legitimately available to the Management Stockholder by a third party without
breach of any confidentiality obligation; or (iii) required by law or a court of
competent jurisdiction to be disclosed; provided that such Management
Stockholder will give prompt written notice to the Company of such requirement,
disclose no more information than is so required, and cooperate with any
attempts by the Company to obtain a protective order or similar treatment.
(c) Except as required by law or a court of competent
jurisdiction, no Management Stockholder will disclose to anyone, other than such
Management Stockholder's legal, tax and financial advisors, the existence or
contents of this Agreement; provided that each Management Stockholder may
disclose to any prospective future employer the provisions of Sections 3.4 and
3.5 of this Agreement, provided that they agree to maintain the confidentiality
of such terms. Notwithstanding anything herein to the contrary, any party to
this Agreement (and any employee, representative, or other agent of any party to
this Agreement) may disclose to any and all Persons, without limitation of any
kind, the tax treatment and tax structure of transactions entered into by the
Company or any of its subsidiaries and all materials of any kind (including
opinions or other tax analyses) that are provided to it relating to such tax
treatment and tax structure. However, any such information relating to the tax
treatment or tax structure is required to be kept confidential to the extent
necessary to comply with any applicable federal or state securities laws.
(d) Upon termination of such Management Stockholder's
employment for any reason, the Management Stockholder will (i) cease and not
thereafter commence use of any Confidential Information or intellectual property
(including without limitation, any patent, invention, copyright, trade secret,
trademark, trade name, logo, domain name or other source indicator) owned or
used by the Company or its Affiliates; (ii) immediately destroy, delete, or
return to the Company, at the Company's option, all originals and copies in any
form or medium (including memoranda, books, papers, plans, computer files,
letters and other data) in such
14
Management Stockholder's possession or control (including any of the foregoing
stored or located in the Management Stockholder's office, home, laptop or other
computer, whether or not Company property) that contain Confidential Information
or otherwise relate to the business of the Company and its Affiliates, except
that such Management Stockholder may retain only those portions of any personal
notes, notebooks and diaries that do not contain any Confidential Information;
and (iii) notify and fully cooperate with the Company regarding the delivery or
destruction of any other Confidential Information of which the Management
Stockholder is or becomes aware.
Section 3.6. Representations and Warranties of the Management
Stockholders. Each Management Stockholder represents and warrants to the Company
as follows:
(a) Such Management Stockholder is acquiring the Shares
for the Management Stockholder's own account and not with a view to distributing
or reselling the Shares in any transaction that would be in violation of any
federal or state securities laws.
(b) Such Management Stockholder understands that the
Shares have not been registered under the Securities Act, or registered or
qualified under the securities laws of any state, and that the Management
Stockholder may not sell or otherwise transfer the Shares unless the Shares are
subsequently registered under the Securities Act and registered or qualified
under applicable state securities laws, or unless an exemption is available that
permits the sale or transfer without such registration and qualification.
(c) Such Management Stockholder acknowledges that he/she
has been advised that (i) a restrictive legend in the form set forth in Section
2.3 will be placed on any certificate representing the Shares and (ii) a
notation will be made in the appropriate records of the Company indicating that
the Shares are subject to restrictions on transfer and appropriate stop transfer
restrictions will be issued to the Company's transfer agent with respect to the
Shares.
(d) If any Shares are to be disposed of in accordance
with Rule 144 under the Securities Act or otherwise, such Management Stockholder
will promptly notify the Company of such intended disposition and will deliver
to the Company at or prior to the time of such disposition such 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 Commission.
(e) Such Management Stockholder is as of the date hereof
an employee of the Company and in such capacity has acquired at least a general
understanding of the Company and its business. Such Management Stockholder has
been given the opportunity to obtain any additional information or documents
(and to ask questions and receive answers about such information and documents)
about the Company and its business which s/he deems necessary to evaluate the
merits and risks related to his/her investment in the Shares.
(f) In making his/her decision to invest in the Company,
such Management Stockholder has relied upon independent investigations made by
him/her and, to the extent believed by the Management Stockholder to be
appropriate, his/her representatives, including his/her own professional,
financial, tax and other advisors.
15
(g) Such Management Stockholder is able to bear the
economic risk of a total loss of such Management Stockholder's investment in the
Company, and such Management Stockholder has adequate means of providing for
such Management Stockholder's current needs and foreseeable personal
contingencies and has no need for such Management Stockholder's investment in
the Shares to be liquid.
(h) Such Management Stockholder understands that an
investment in the Company is a speculative investment which involves a high
degree of risk of loss of his/her investment therein, there are substantial
restrictions on the transferability of the Shares, and, on the date hereof and
for an indefinite period following the date hereof, there will be no public
market for the Shares and, accordingly, it may not be possible for such
Management Stockholder to liquidate his/her investment in case of emergency, if
at all.
(i) Such Management Stockholder understands and has taken
cognizance of all risk factors related to the retention of the Shares, and such
Management Stockholder has such knowledge and experience in financial and
business matters that s/he is capable of evaluating the merits and risks of
his/her purchase of the Shares as contemplated by this Agreement.
(j) If such Management Stockholder is resident in a
community property state, such Management Stockholder's spouse, if any, has duly
executed or will duly execute a Consent of Spouse, a form of which is attached
hereto as Exhibit D, and such Consent of Spouse has been delivered as of the
date of this Agreement, or, if later, the date such party became a party. Such
Consent of Spouse was duly authorized, executed and delivered by such Spouse and
effectively binds such spouse to the terms set forth therein.
ARTICLE IV
MISCELLANEOUS
Section 4.1. No Inconsistent Agreements. The Company will not
hereafter enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the Management Stockholders in this
Agreement.
Section 4.2. Voting Agreement.
(a) Each Management Stockholder and each of his/her
Permitted Transferees hereby agrees that, until the Lapse Date, s/he will (i)
vote all of the Shares owned or held of record by him/her, either in person or
by proxy, whether at a meeting of the Company's stockholders or by executing a
written consent, consistent with the vote of Cypress or as Cypress directs and
(ii) ratify, approve and adopt any and all actions adopted or approved by the
board of directors of the Company.
(b) Until the Lapse Date, each Management Stockholder and
each of his/her Permitted Transferees, in his/her capacity as a stockholder,
hereby irrevocably appoints the Company or any designee of the Company the
lawful agent, attorney-in-fact and proxy of such Management Stockholder and
Permitted Transferees during the term of this Agreement (which proxy shall be
automatically revoked without any further action on the part of such Stockholder
upon the termination of this Agreement or the Lapse Date, whichever is earlier)
to vote the
16
Shares of such Management Stockholder and Permitted Transferees in accordance
with the agreement to vote Shares set forth in Section 4.2(a) of this Agreement
at any meeting of the Company's stockholders. Each such Management Stockholder
and Permitted Transferee intends this proxy to be irrevocable and coupled with
an interest and will take such further action or execute such other instruments
as may be necessary to effectuate the intent of this proxy and hereby revokes
any proxy previously granted by such Management Stockholder or Permitted
Transferee with respect to his/her Shares.
(c) Nothing contained in this Agreement shall be deemed
to vest in the Company any direct or indirect ownership or incidence of
ownership of, or with respect to, any Shares. All rights, ownership and economic
benefits of and relating to the Shares of any Management Stockholder and
Permitted Transferee of a Management Stockholder shall remain vested in and
belong to such Management Stockholder or Permitted Transferee, and the Company
shall have no authority to exercise any power or authority to direct the
Management Stockholders or Permitted Transferees in the voting of any of the
Shares, except as otherwise provided herein, or in the performance of the
Management Stockholders' and Permitted Transferees' duties or responsibilities
as stockholders of the Company.
Section 4.3. Employment by the Company. Nothing contained in
this Agreement or any option agreement entered into by the Company and any
Management Stockholder (a) obligates the Company or any Subsidiary or Affiliate
of the Company to employ any Management Stockholder or his/her Permitted
Transferees in any capacity whatsoever or (b) prohibits or restricts the Company
(or any such Subsidiary or Affiliate) from terminating the Employment of any
Management Stockholder at any time or for any reason whatsoever, with or without
Cause, and each of the Management Stockholders and their Permitted Transferees
hereby acknowledges and agrees that neither the Company nor any other Person has
made any representations or promises whatsoever to such Management Stockholder
or Permitted Transferee concerning such person's Employment or continued
Employment by the Company or any Subsidiary or Affiliate of the Company.
Section 4.4. Taxes. The Company will have the right to deduct
from any cash payment made under this Agreement to any Management Stockholder
any federal, state or local income or other taxes required by law to be withheld
with respect to such payment.
Section 4.5. Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto, and their
respective successors and permitted assigns.
Section 4.6. No Waivers, Amendments. (a) Except as expressly
set forth herein, no failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
(b) Any amendment, modification or supplement to this
Agreement shall not be enforced against any party hereto unless such amendment,
modification or supplement is
17
signed by the Company and the Majority Management Stockholders, provided,
however that notwithstanding the foregoing, any amendment, modification or
supplement to this Agreement with respect to a matter that does not directly or
indirectly adversely affect the rights of any of the Management Stockholders
shall be enforceable without requiring that such amendment, modification or
supplement be signed by the Majority Management Stockholders.
(c) Any provision of this Agreement may be waived if, but
only if, such waiver is in writing and is signed by the party against whom the
enforcement of such waiver is sought.
Section 4.7. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including telex,
telecopier or similar writing) and shall be given to such party at its address
or telecopier number set forth below, or such other address or telecopier number
as such party may hereinafter specify for the purpose to the party giving such
notice. Each such notice, request or other communication shall be effective (a)
if given by telecopy, when such telecopy is transmitted to the telecopy number
specified in this Section and the appropriate answerback is received or, (b) if
given by overnight courier or express mail service, when delivery is confirmed
or, (c) if given by any other means, when delivered at the address specified in
this Section 4.7. In each case, notice shall be sent to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(i) if to the Company:
CPI Acquisition Corp.
811 Hansen Way, Mail Stop A-028
Palo Alto, California 94303
Attention: Joel A. Littman
Telecopier: (650) 846-3276
with a copy to:
The Cypress Group L.L.C.
65 East 55th Street
New York, New York 10022
Attention: Michael F. Finley
Telecopier: (212) 705-0199
and
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
Attention: Marni J. Lerner
Telecopier: (212) 455-2502
(ii) if to Cypress:
c/o The Cypress Group L.L.C.
18
65 East 55th Street
New York, New York 10022
Attention: Michael F. Finley
Telecopier: (212) 705-0199
with a copy to:
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
Attention: Marni J. Lerner
Telecopier: (212) 455-2502
(iii) if to a Management Stockholder, at the
address for such Management Stockholder listed below such Management
Stockholder's signature hereto.
Section 4.8. Term of Agreement. This Agreement shall terminate
(a) in full on the earlier to occur of (i) the tenth anniversary of the date
hereof (provided that the registration rights in Exhibit C hereto shall survive
any such termination until such time as all Management Stockholders hold no
Registrable Securities) and (ii) when all Management Stockholders cease to
beneficially own any Shares, and, if earlier, (b) with respect to any Management
Stockholder, when such Management Stockholder ceases to beneficially own any
Shares; provided that any termination pursuant to this Section 4.8 will not
relieve any party for any liability arising from a breach of representation,
warranty, covenant or agreement occurring prior to such termination.
Section 4.9. Inspection. So long as this Agreement shall be in
effect, this Agreement and any amendments hereto shall be made available for
inspection by any Management Stockholder at the principal offices of the
Company.
SECTION 4.10. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE. Each of the parties hereto hereby (a) submits to the
jurisdiction of the courts of the State of Delaware and the United States
District Court for the District of Delaware with respect to matters arising out
of or relating hereto, (b) agrees that all claims with respect to such matters
may be heard and determined in an action or proceeding in such Delaware courts,
and (c) agrees that a final judgment in any such action or proceeding will be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
Section 4.11. Section Headings. The section headings contained
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
Section 4.12. Entire Agreement. This Agreement (including the
Exhibits hereto) constitutes the entire agreement and understanding among the
parties hereto and supersedes any and all prior agreements and understandings,
written or oral, relating to the subject matter hereof.
19
Section 4.13. Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdictions, it
being intended that all rights and obligations of the parties hereunder shall be
enforceable to the fullest extent permitted by law.
Section 4.14. Counterparts. This Agreement may be signed in
counterparts, each of which shall constitute an original and which together
shall constitute one and the same agreement.
Section 4.15. Parties in Interest. This Agreement and all the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and Permitted Transferees. Except as
expressly set forth herein, neither this Agreement nor any of their rights
hereunder shall be assigned by any of the parties hereto who are not Permitted
Transferees without the prior written consent of the other parties.
Section 4.16. Enforcement; Further Assurances. (a) The parties
hereto agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms. It is accordingly agreed that the parties shall be entitled to
specific performance of the terms hereof, this being in addition to any other
remedy to which they are entitled at law or in equity.
(b) The parties hereto agree to execute, acknowledge,
deliver, file and record such further certificates, amendments, instruments,
agreements and documents, and to do all such other acts and things, as may be
required by law or as may be necessary or advisable to carry out the intent and
purposes of this Agreement.
Section 4.17. Advice of Counsel. Each Management Stockholder
and Permitted Transferee of a Management Stockholder acknowledges that, in
executing this Agreement, he or she has had the opportunity to seek the advice
of independent legal counsel, and has read and understood all of the terms and
provisions of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
20
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date set forth above.
CPI ACQUISITION CORP.
By: ______________________________
Name:
Title:
CYPRESS MERCHANT BANKING PARTNERS
II L.P.
By: Cypress Associates II LLC,
as general partner
By: ______________________________
Name:
Title:
CYPRESS MERCHANT BANKING II C.V.
By: Cypress Associates II LLC,
as managing general partner
By: ______________________________
Name:
Title:
CYPRESS SIDE-BY-SIDE LLC
By: ______________________________
Name:
Title:
55TH STREET PARTNERS II L.P.
By: Cypress Associates II LLC,
as general partner
By: ______________________________
Name:
Title:
Joe Caldarelli
__________________________________
Address: _________________________
_________________________
Robert Fickett
__________________________________
Address: _________________________
_________________________
Don Coleman
__________________________________
Address: _________________________
_________________________
Joel Littman
__________________________________
Address: _________________________
_________________________
Mike Cheng
__________________________________
Address: _________________________
_________________________
2
John Beighley
__________________________________
Address: _________________________
_________________________
3
SCHEDULE I
MANAGEMENT STOCKHOLDERS
Joe Caldarelli
Robert Fickett
Don Coleman
Joel Littman
Mike Cheng
John Beighley
SCHEDULE II
SENIOR MANAGERS
Name Restricted Period
Joe Caldarelli 18 months
Robert Fickett 18 months
Don Coleman 12 months
Joel Littman 18 months
Mike Cheng 12 months
John Beighley 12 months
EXHIBIT A
MANAGEMENT STOCKHOLDER
FORM OF AGREEMENT TO BE BOUND
[DATE]
To the Parties to the
Management Stockholders Agreement
dated as of January __, 2004
Ladies and Gentlemen:
Reference is made to the Management Stockholders Agreement,
dated as of January __, 2004 (as may be amended, supplemented or modified from
time to time in accordance with the terms thereof, the "Management Stockholders
Agreement"), among CPI Acquisition Corp., Cypress Merchant Banking Partners II
L.P., Cypress Merchant Banking II C.V., 55th Street Partners II L.P., Cypress
Side-by-Side LLC, and the other stockholders party thereto and each other person
who shall become party to the Management Stockholders Agreement as provided
therein, as the same may be subsequently modified, supplemented or amended in
accordance with its terms. Capitalized terms used herein and not defined have
the meanings ascribed to them in the Management Stockholders Agreement.
In consideration of the mutual covenants and agreements
contained in the Management Stockholders Agreement, the undersigned hereby
confirms and agrees that it shall be bound by all of the provisions thereof as a
Management Stockholder.
This letter shall be construed and enforced in accordance with
the laws of Delaware.
Very truly yours,
__________________________________
[Management Stockholder]
EXHIBIT B
PERMITTED TRANSFEREE
FORM OF AGREEMENT TO BE BOUND
[DATE]
To the Parties to the
Management Stockholders Agreement
dated as of January __, 2004
Ladies and Gentlemen:
Reference is made to the Management Stockholders Agreement,
dated as of January __, 2004 (as may be amended, supplemented or modified from
time to time in accordance with the terms thereof, the "Management Stockholders
Agreement"), among CPI Acquisition Corp., Cypress Merchant Banking Partners II
L.P., Cypress Merchant Banking II C.V., 55th Street Partners II L.P., Cypress
Side-by-Side LLC, and the other stockholders party thereto and each other person
who shall become party to the Management Stockholders Agreement as provided
therein, as the same may be subsequently modified, supplemented or amended in
accordance with its terms. Capitalized terms used herein and not defined have
the meanings ascribed to them in the Management Stockholders Agreement.
In consideration of the mutual covenants and agreements
contained in the Management Stockholders Agreement, the undersigned hereby
confirms and agrees that it shall be bound by all of the provisions thereof as a
Permitted Transferee of [Name of Transferor].
This letter shall be construed and enforced in accordance with
the laws of Delaware.
Very truly yours,
__________________________________
[Permitted Transferee]
EXHIBIT C
REGISTRATION RIGHTS
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Terms defined in the Management
Stockholders Agreement, dated as of January __, 2004 (as may be amended,
supplemented or modified from time to time in accordance with the terms thereof,
the "Management Stockholders Agreement"), among CPI Acquisition Corp., Cypress
Merchant Banking Partners II L.P., a Delaware limited partnership, Cypress
Merchant Banking II C.V., 55th Street Partners II L.P., Cypress Side-by-Side
LLC, and the stockholders listed on Schedule I thereto and each other person who
shall become party to the Management Stockholders Agreement as provided therein,
are used herein as therein defined. In addition, the following terms shall have
the meanings ascribed to them below:
"Commission" means the United States Securities and Exchange
Commission.
"Exchange Act" means the United States Securities Exchange Act
of 1934, as amended.
"Holder" means any Management Stockholder and any Permitted
Transferee of a Management Stockholder, in each case holding Registrable
Securities.
"Indemnified Party" has the meaning set forth in Section 4.3.
"Indemnifying Party" has the meaning set forth in Section 4.3.
"Inspectors" has the meaning set forth in Section 3.1(h).
"Piggy-Back Registration" has the meaning set forth in Section
2.1.
"Records" has the meaning set forth in Section 3.1(h).
"Registrable Security" means any outstanding shares of Common
Stock held by a Holder until (i) a registration statement covering such Common
Stock has been declared effective by the Commission and such stock has been
disposed of pursuant to such effective registration statement or (ii) such stock
is sold pursuant to Rule 144 (or any similar provisions then in force) under the
Securities Act.
"Registration Expenses" has the meaning set forth in Section
3.2.
"Selling Holder" means a Holder who is selling Registrable
Securities pursuant to a registration statement under the Securities Act.
"Underwriter" means a securities dealer who purchases any
Registrable Securities as principal in an underwritten offering and not as part
of such dealer's market-making activities.
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ARTICLE II
REGISTRATION RIGHTS
Section 2.1. Piggy-Back Registration. If at any time following
the consummation of an Initial Public Offering the Company proposes to file a
registration statement under the Securities Act with respect to an offering by
the Company for its own account and/or for the account of any of its security
holders of any common stock (other than (i) a registration statement on Form S-4
(or F-4) or S-8 (or any substitute form that may be adopted by the Commission)
or (ii) a registration statement filed in connection with an exchange offer or
an offering of securities solely to the Company's existing securityholders),
then the Company shall give written notice of such proposed filing to the
Holders as soon as practicable (but in no event less than 15 days before the
anticipated filing date), and such notice shall identify the anticipated filing
date and offer such Holders the opportunity to register such number of shares of
Registrable Securities as each such Holder may request (which request shall
specify the Registrable Securities intended to be disposed of by such Holder and
the intended method of distribution thereof and shall be delivered to the
Company at least two days prior to the anticipated filing date) (a "Piggy-Back
Registration"). The Company shall use its commercially reasonable efforts to
cause the managing Underwriter or Underwriters of a proposed underwritten
offering to permit the Registrable Securities requested to be included in a
Piggy-Back Registration to be included on the same terms and conditions to
permit the sale or other disposition of such Registrable Securities in
accordance with the intended method of distribution thereof. Any Holder shall
have the right to withdraw its request for inclusion of its Registrable
Securities in any registration statement pursuant to this Section 2.1 by giving
written notice to the Company of its request to withdraw. The Company may
withdraw a Piggy-Back Registration at any time prior to the time it becomes
effective, provided that, in such event, the Company shall reimburse Holders
requested to be included in such Piggy-Back Registration for all Registration
Expenses (including reasonable counsel fees and expenses) incurred prior to such
withdrawal.
Section 2.2. Reduction of Offering. Notwithstanding anything
contained herein, if the managing Underwriter(s) of an offering described in
Section 2.1 determine that the offering that the Holders, the Company and/or
such other Persons intend to make is such that the success of the offering would
be materially and adversely affected by inclusion of the Registrable Securities
requested to be included, then the Company shall include in such registration:
(i) first, the shares, if any, proposed to be registered by the Company for its
own account or for the account of a holder exercising "demand registration
rights"; and (ii) second, an amount of securities requested to be included in
such registration (including pursuant to Section 2.1) by the holders exercising
"piggy-back registration rights" (such amount to be allocated among such holders
in proportion to the number of shares of Common Stock held by such holders).
Holders may not sell shares in a Public Offering if the managing Underwriter(s)
determine in their reasonable business judgment that such participation will
have an adverse impact on such Public Offering. Notwithstanding any provision in
this Agreement to the contrary, no Holder may exercise piggyback registration
rights to the extent it would otherwise result in the sale by him or her, on a
cumulative basis taking into account all prior sales, of a greater percentage of
the Common Stock that has ever been held by him than the percentage sold by
Cypress. The Holders agree that they will not sell any shares in an Initial
Public Offering.
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ARTICLE III
REGISTRATION PROCEDURES
Section 3.1. Filings; Information. Whenever the Holders have
requested that any Registrable Securities be registered pursuant to this
agreement, the Company will use its reasonable efforts to effect the
registration of such Registrable Securities in accordance with the intended
method of disposition thereof as quickly as practicable, and in connection with
any such request:
(a) The Company will as expeditiously as practicable
prepare and file with the Commission a registration statement on any form for
which the Company then qualifies or which counsel for the Company shall deem
appropriate and which form shall be available for the sale of the Registrable
Securities to be registered thereunder in accordance with the intended method of
distribution thereof (it being understood that the Company shall use Form S-3
(or any replacement form) if such form is then available), and use its
commercially reasonable efforts to cause such filed registration statement to
become effective.
(b) The Company will prepare and file with the Commission
such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement until such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the
Selling Holder or Selling Holders thereof set forth in such registration
statement.
(c) The Company will, prior to filing a registration
statement or prospectus or any amendment or supplement thereto, furnish to each
Selling Holder, counsel representing any Selling Holders, and each Underwriter,
if any, of the Registrable Securities covered by such registration statement
copies of such registration statement as proposed to be filed, together with
exhibits thereto, which documents will be subject to review by the foregoing
within 5 Business Days after delivery, and thereafter furnish to such Selling
Holder, counsel and Underwriter, if any, such number of copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto and documents incorporated by reference therein),
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such Selling Holder or
Underwriter may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Selling Holder.
(d) After the filing of the registration statement, the
Company will promptly notify each Selling Holder covered by such registration
statement of any stop order issued or threatened by the Commission and take all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered.
(e) The Company will use its commercially reasonable
efforts to (i) register or qualify the Registrable Securities under such other
securities or blue sky laws of such jurisdictions in the United States and such
other jurisdictions as any Selling Holder reasonably (in light of such Selling
Holder's intended plan of distribution) requests and (ii) cause such
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Registrable Securities to be registered with or approved by such other
governmental agencies or authorities in the United States as may be necessary by
virtue of the business and operations of the Company and do any and all other
acts and things that may be reasonably necessary or advisable to enable such
Selling Holder to consummate the disposition of the Registrable Securities owned
by such Selling Holder; provided that the Company will not be required to (A)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph (d), (B) subject itself
to taxation in any such jurisdiction or (C) consent to general service of
process in any such jurisdiction.
(f) The Company will immediately notify each Selling
Holder of such Registrable Securities, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the occurrence
of an event requiring the preparation of a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and will promptly
make available to each Selling Holder any such supplement or amendment.
(g) The Company will enter into customary agreements
(including, if applicable, an underwriting agreement in customary form) and take
such other actions as are reasonably required in order to expedite or facilitate
the disposition of such Registrable Securities in accordance with the intended
plan of distribution of the Selling Holders.
(h) The Company will deliver promptly to each Selling
Holder of such Registrable Securities and each Underwriter, if any, subject to
restrictions imposed by the United States federal government or any agency or
instrumentality thereof, copies of all correspondence between the Commission and
the Company and its counsel or auditors and all memoranda relating to
discussions with the Commission or its staff with respect to the registration
statement and make available for inspection by any Selling Holder of such
Registrable Securities, any Underwriter participating in any disposition
pursuant to such registration statement and any attorney, accountant or other
professional retained by any such Selling Holder or Underwriter (collectively,
the "Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records"), as shall
be reasonably necessary to enable them to perform a reasonable and customary due
diligence investigation, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any Inspectors in
connection with such registration statement. Records which the Company
determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (i)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in such registration statement or (ii) the disclosure or release of
such Records is requested or required pursuant to oral questions,
interrogatories, requests for information or documents or a subpoena or other
order from a court of competent jurisdiction or other process; provided that
prior to any disclosure or release pursuant to clause (ii), the Inspectors shall
provide the Company with prompt notice of any such request or requirement so
that the Company may seek an appropriate protective order or waive such
Inspectors' obligation not to disclose such Records; and provided, further, that
if failing the entry of a protective order or the waiver by the Company
permitting the disclosure or release of such Records, the Inspectors, upon
advice of counsel, are compelled to disclose such Records, the
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Inspectors may disclose that portion of the Records which counsel has advised
the Inspectors that the Inspectors are compelled to disclose. Each Selling
Holder of such Registrable Securities agrees that it will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction, give
notice to the Company and allow the Company at its expense, to undertake
appropriate action to prevent disclosure of the Records deemed confidential.
(i) The Company will furnish to each Underwriter, if any,
(i) an opinion or opinions of counsel to the Company and (ii) a comfort letter
or comfort letters from the Company's independent public accountants, each in
customary form and covering such matters of the type customarily covered by
opinions or comfort letters, as the case may be, as the managing Underwriter, if
any, therefor reasonably requests.
(j) The Company will use its commercially reasonable
efforts to comply with all applicable rules and regulations of the Commission,
and make available to its securityholders, as soon as reasonably practicable, an
earnings statement covering a period of 12 months, beginning within three months
after the effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder.
(k) The Company will use its commercially reasonable
efforts (a) to cause all such Registrable Securities to be listed on a national
securities exchange (if such shares are not already so listed) and on each
additional national securities exchange on which similar securities issued by
the Company are then listed (if any), if the listing of such Registrable
Securities is then permitted under the rules of such exchange or (b) to secure
designation of all such Registrable Securities covered by such registration
statement as a NASDAQ "national market system security" within the meaning of
Rule 11Aa2-1 of the Commission or, failing that, to secure NASDAQ authorization
for such Registrable Securities and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register as such with
respect to such Registrable Securities with the NASD.
(l) The Company will appoint a transfer agent and
registrar for all such Registrable Securities covered by such registration
statement not later than the effective date of such registration statement.
The Company may require each Selling Holder of Registrable
Securities to promptly furnish in writing to the Company such information
regarding the distribution of the Registrable Securities as the Company may from
time to time reasonably request and such other information as may be legally
required in connection with such registration.
Each Selling Holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
3.1(f) hereof, such Selling Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Selling Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3.1(f) hereof, and,
if so directed by the Company such Selling Holder will deliver to the Company
all copies, other than permanent file copies then in such Selling Holder's
possession, of the most recent prospectus covering such Registrable Securities
at the time of receipt of such notice. In the event the
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Company shall give such notice, the Company shall extend the period during which
such registration statement shall be maintained effective (including the period
referred to in Section 3.1(a) hereof) by the number of days during the period
from and including the date of the giving of notice pursuant to Section 3.1(f)
hereof to the date when the Company shall make available to the Selling Holders
of Registrable Securities covered by such registration statement a prospectus
supplemented or amended to conform with the requirements of Section 3.1(f)
hereof.
Section 3.2. Registration Expenses. In connection with any
registration statement filed pursuant to Section 2.1, the Company shall pay the
following registration expenses incurred in connection with the registration
hereunder (the "Registration Expenses"): (i) all registration and filing fees,
(ii) fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), (iii) printing expenses, (iv) the
Company's internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
(v) fees and expenses incurred in connection with the listing of the Registrable
Securities, (vi) reasonable fees and disbursements of counsel for the Company
and not more than one counsel for the Selling Holders, as may be chosen by a
majority of the Selling Holders, and customary fees and expenses for independent
certified public accountants retained by the Company (including the expenses of
any comfort letters or costs associated with the delivery by independent
certified public accountants of a comfort letter or comfort letters requested
pursuant to Section 3.1(i) hereof) and (vii) reasonable fees and expenses of any
special experts retained by the Company in connection with such registration.
The Company shall have no obligation to pay any underwriting fees, discounts or
commissions attributable to the sale of Registrable Securities.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
Section 4.1. Indemnification by the Company. To the fullest
extent permitted by law, the Company agrees to indemnify and hold harmless each
Selling Holder of Registrable Securities, its officers, directors, employees and
agents, and each person, if any, who controls such Selling Holder within the
meaning of the Securities Act from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including, but
not limited to, any loss, claim, damage, liability or action relating to
purchases and sales of Common Stock) to which such Selling Holder, officer,
director, employee or agent or controlling Person may become subject under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any registration statement,
preliminary prospectus or final prospectus or any amendment or supplement
thereto relating to the Registrable Securities or (ii) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading and shall reimburse each
Selling Holder and each such officer, director, employee, agent and controlling
Person for any legal and other expenses reasonably incurred by that Selling
Holder, officer, director, employee, agent or controlling Person in connection
with investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred, except insofar
as the same are contained in any information furnished in writing to the Company
by such Selling Holder expressly for use therein; provided, however, that the
Company shall not be liable to any
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Selling Holder or such Person's directors, officers, agents or controlling
Persons, in any such case for any such loss, claim, damage or liability to the
extent that it arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in connection with such
registration statement, preliminary prospectus, final prospectus or amendments
or supplements thereto, in conformity with written information relating to such
Selling Holder furnished to the Company by such Selling Holder expressly for
inclusion therein in connection with such registration; and, provided, further,
that as to any preliminary prospectus or any final prospectus, this indemnity
agreement shall not inure to the benefit of any Selling Holder or such Person's
directors, officers, agents or controlling Persons, on account of any loss,
claim, damage or liability arising from the sale of Registrable Securities to
any Person by such Selling Holder if such Selling Holder or its representatives
failed to send or give a copy of the final prospectus or a prospectus
supplement, as the case may be (excluding documents incorporated by reference
therein), as the same may be amended or supplemented, to that Person within the
time required by the Securities Act, and the untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact in such preliminary prospectus or final prospectus was corrected in the
final prospectus or such prospectus supplement, as the case may be (excluding
documents incorporated by reference therein), unless such failure resulted from
the non-compliance by the Company with Section 3.1(f). The Company also agrees
to indemnify any Underwriters of the Registrable Securities, their officers and
directors and each Person who controls such Underwriters on substantially the
same basis as that of the indemnification of the Selling Holders provided in
this Section 4.1. The indemnities provided by this Section 4.1 shall remain in
full force and effect regardless of any investigation made by or on behalf of
such Selling Holder or Underwriter.
Section 4.2. Indemnification by Holders of Registrable
Securities. To the fullest extent permitted by law, each Selling Holder agrees,
severally but not jointly, to indemnify and hold harmless the Company its
officers, directors and agents and each Person, if any, who controls the Company
within the meaning of the Securities Act to the same extent as the indemnity
from the Company to such Selling Holder pursuant to clauses (i) and (ii) of
Section 4.1, but only with reference to information related to such Selling
Holder furnished in writing by such Selling Holder or on such Selling Holder's
behalf expressly for use in any registration statement or prospectus relating to
the Registrable Securities, or any amendment or supplement thereto, or any
preliminary prospectus; provided that the obligation to indemnify will be
individual to each Selling Holder and will be limited to the net amount of
proceeds received by such Selling Holder from the sale of Registrable Securities
pursuant to such Registration Statement. Each Selling Holder also agrees to
indemnify and hold harmless Underwriters of the Registrable Securities, their
officers and directors and each Person who controls such Underwriters on
substantially the same basis as that of the indemnification of the Company
provided in this Section 4.2, subject to the proviso in the first sentence of
this Section 4.2. Notwithstanding the foregoing, the indemnity set forth in this
Section 4.2, shall not apply to amounts paid in settlements effected without the
consent of such Selling Holder (which consent shall not be unreasonably withheld
or delayed).
Section 4.3. Conduct of Indemnification Proceedings. Promptly
after receipt by any person in respect of which indemnity may be sought pursuant
to Section 4.1 or 4.2 (an "Indemnified Party") of notice of any claim or the
commencement of any action, the Indemnified Party shall, if a claim in respect
thereof is to be made against the person against whom such
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indemnity may be sought (an "Indemnifying Party") notify the Indemnifying Party
in writing of the claim or the commencement of such action, provided that the
failure to notify the Indemnifying Party shall not relieve it from any liability
which it may have to an Indemnified Party otherwise than under Section 4.1 or
4.2, except to the extent of any actual prejudice resulting therefrom. If any
such claim or action shall be brought against an Indemnified Party, and it shall
notify the Indemnifying Party thereof, the Indemnifying Party shall be entitled
to participate therein, and, to the extent that it wishes, jointly with any
other similarly notified Indemnifying Party, to assume the defense thereof with
counsel satisfactory to the Indemnified Party. After notice from the
Indemnifying Party to the Indemnified Party of its election to assume the
defense of such claim or action, the Indemnifying Party shall not be liable to
the Indemnified Party for any legal or other expenses subsequently incurred by
the Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation; provided that the Indemnified Party shall
have the right to employ separate counsel to represent the Indemnified Party and
its controlling Persons who may be subject to liability arising out of any claim
in respect of which indemnity may be sought by the Indemnified Party against the
Indemnifying Party, but the fees and expenses of such counsel shall be for the
account of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel or
(ii) in the reasonable judgment of such Indemnified Party representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any claim or
pending or threatened proceeding in respect of which the Indemnified Party is or
could have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability arising out of such claim or
proceeding.
Section 4.4. Contribution. If the indemnification provided for
in this Article IV is unavailable to the Indemnified Parties in respect of any
losses, claims, damages, liabilities or expenses referred to herein, then each
such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages, liabilities or expenses (i) as between the
Company and the Selling Holders on the one hand and the Underwriters on the
other, in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Holders on the one hand and the
Underwriters on the other from the offering of the Registrable Securities, or if
such allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits but also the relative
fault of the Company and the Selling Holders on the one hand and of the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations and (ii) as between the Company on the one
hand and each Selling Holder on the other, in such proportion as is appropriate
to reflect the relative fault of the Company and of each Selling Holder in
connection with such statements or omissions, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Holders on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total proceeds from the offering (net
of underwriting discounts and commissions but before deducting expenses)
received by the Company and the Selling Holders bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the prospectus. The relative fault of
the
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Company and the Selling Holders on the one hand and of the Underwriters on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
and the Selling Holders or by the Underwriters. The relative fault of the
Company on the one hand and of each Selling Holder on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Selling Holders agree that it would not be
just and equitable if contribution pursuant to this Section 4.4 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 4.4, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Selling Holder
shall be required to contribute any amount in excess of the amount by which the
total price at which the Registrable Securities of such Selling Holder were
offered to the public (less underwriting discounts and commissions) exceeds the
amount of any damages which such Selling Holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. Each Selling
Holder's obligations to contribute pursuant to this Section 4.4 are several in
proportion to the proceeds of the offering received by such Selling Holder and
not joint.
ARTICLE V
MISCELLANEOUS
Section 5.1 Participation in Underwritten Registrations. No
Person may participate in any underwritten registration hereunder unless such
Person (a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and these
Registration Rights.
Section 5.2. Rule 144. The Company covenants that it will file
any reports required to be filed by it under the Securities Act and the Exchange
Act and that it will take such further action as any Holder may reasonably
request, all to the extent required from time to time
9
C-10
to enable Holders to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule 144
under the Securities Act, as such Rules may be amended from time to time, or (b)
any similar rule or regulation hereafter adopted by the Commission. Upon the
request of any Holder, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.
Section 5.3. Holdback Agreements. If any registration
hereunder shall be in connection with an underwritten public offering, each
Holder of Registrable Securities agrees not to effect any sale or distribution
of the securities being registered or of a similar security of the Company or
any securities convertible into or exchangeable or exercisable for such
securities, including a sale pursuant to Rule 144 under the Securities Act,
during the 14 days prior to, and during (i) the 180-day period beginning on the
consummation of the Initial Public Offering, unless the investment banks or
underwriters managing the public offering otherwise agree, and (ii) the 90-day
period beginning on, the effective date of any other public offering to be
underwritten on a firm commitment basis (except as part of such underwritten
registration), unless the investment banks or underwriters managing the public
offering otherwise agree.
Section 5.4. Other Registration Rights. Notwithstanding
anything contained in this agreement or the Management Stockholders Agreement to
the contrary, no provision herein or therein shall be interpreted to limit (i)
the right of the Company to grant Cypress or any other Person any right of
registration in respect of any securities of the Company (provided, however,
that the Company shall not enter into any agreement with respect to the
Registrable Securities which would prevent the Company from complying with its
obligations under this Agreement or (ii) the number of times the Company may
grant any such right of registration under the Securities Act to any Person
(including Cypress).
10
EXHIBIT D
FORM OF CONSENT OF SPOUSE
Reference is made to the Management Stockholders Agreement,
signed by _________________ (the "Management Stockholder") and dated January __,
2004 (the "Management Stockholders Agreement"), among CPI Acquisition Corp.,
Cypress Merchant Banking Partners II L.P., Cypress Merchant Banking II C.V.,
55th Street Partners II L.P., Cypress Side-by-Side LLC, and the stockholders
listed on Schedule I thereto and each other person who shall become party to the
Management Stockholders Agreement as provided therein, as the same may be
subsequently modified, supplemented or amended in accordance with its terms.
Capitalized terms used but not otherwise defined herein will have the meanings
set forth in the Management Stockholders Agreement.
The undersigned is the spouse of the Management Stockholder
and hereby acknowledges that s/he has read the attached Management Stockholders
Agreement and knows its content. The undersigned is aware that by its
provisions, his/her spouse agrees to sell all or a portion of his/her Shares,
whether now owned or later acquired through the exercise of stock options or
otherwise, including his/her community property interest therein, if any, upon
the occurrence of certain events. The undersigned hereby consents to the sale,
approves the provisions of the Management Stockholders Agreement, and agrees
that those securities and his/her interest in them, if any, are subject to the
provisions of the Management Stockholders Agreement and that s/he will take no
action at any time to hinder operation of the Management Stockholders Agreement
on those securities or his/her interest, if any, in them, and, to the extent
required, will take any further action that is necessary to effectuate the
provisions of the Management Stockholders Agreement.
__________________________________
Name