Exhibit 10.9


 


FORM OF


SALE PARTICIPATION AGREEMENT


 


November    , 2005


 


 


To:      The Person whose name is 

set forth on the signature page hereof


 


 


Dear Sir or
Madam:


 


You have
entered into a Management Stockholder’s Agreement, dated as of the date hereof
between Accellent Holdings Corp., a Delaware corporation (the “Company”),
and you (the “Stockholder’s Agreement”) relating to (i) the
granting to you by the Company of Options (as defined in the Stockholder’s
Agreement) to purchase shares of common stock, par value $0.01 per share, of
the Company (the “Common Stock”) and, where applicable, (ii) the
purchase by you of the Purchased Stock (as defined in the Stockholder’s
Agreement).  The undersigned, Accellent
Holdings LLC, a Delaware limited liability company (the “Investor”),
hereby agrees with you as follows, effective upon your execution of the
Rollover Agreement with the Company:


 


1.             In
the event that at any time the Investor (together with any of its respective
affiliates, to the extent provided for in Paragraph 8 hereof, the “Selling
Investors”) proposes to sell for cash or any other consideration any shares
of Common Stock owned by it, in any transaction other than a Public Offering
(as defined in the Stockholder’s Agreement) or a sale to an affiliate of the
Selling Investors, the Selling Investor(s) will notify you or your Management
Stockholder’s Estate or Management Stockholder’s Trust (as such terms are
defined in Section 7(c) of the Stockholder’s Agreement, and
collectively with you, the “Management Stockholder Entities”), as the
case may be, in writing (a “Notice”) of such proposed sale (a “Proposed
Sale”) and the material terms including, without limitation, the
representations, warranties, indemnification and other agreements, of the
Proposed Sale as of the date of the Notice (the “Material Terms”)
promptly, and in any event not less than 15 days prior to the consummation of
the Proposed Sale and not more than 5 days after the execution of the
definitive agreement relating to the Proposed Sale, if any (the “Sale
Agreement”).  If, within 10 days
after the Management Stockholder Entities’ receipt of such Notice, the Selling
Investor receives from the Management Stockholder Entities a written request (a
“Request”) to include Common Stock held by the Management Stockholder
Entities in the Proposed Sale (which Request shall be irrevocable unless (a) there
shall be a material change in the Material Terms or (b) otherwise mutually
agreed to in writing by the Management Stockholder Entities and the Selling
Investor), the Common Stock held by you will be so included as provided herein;
provided that only one Request, which shall be executed by the Management
Stockholder Entities, may be delivered with respect to any single Proposed Sale
for Common Stock held by the Management Stockholder Entities.  Promptly after the execution of the Sale
Agreement, the Selling Investors will furnish the Management Stockholder
Entities with a copy of the Sale Agreement, if any.


 





















 


2.             (a) The
number of shares of Common Stock which the Management Stockholder Entities will
be permitted to include in a Proposed Sale pursuant to a Management Stockholder
Request will be the sum of the number of shares of Common Stock then actually
owned (or deemed owned) by the Management Stockholder Entities plus all
shares of Common Stock which you are then entitled to acquire under any
unexercised portion of the Options, to the extent such Options are then
exercisable or would become exercisable as a result of the consummation of the
Proposed Sale, multiplied by a fraction (x) the numerator of which shall be the
aggregate number of shares of Common Stock which a Selling Investor or the
Selling Investors propose to sell in the Proposed Sale (after giving effect to
the applicable provisions of the Stockholder’s Agreement and any other written
agreement between the Selling Investors and any holder of shares of Common
Stock that gives the right to such holder to participate in the Proposed Sale
(each, including the Management Stockholder Entities, an “Eligible Holder”))
and (y) the denominator of which shall be the total number of shares of Common
Stock owned by such Selling Investor or the Selling Investors, as the case may
be.


 


(b) If one or more
Eligible Holders elect not to include the maximum number of shares of Common
Stock which such holders would have been permitted to include in a Proposed
Sale pursuant to Paragraph 2(a) (such non-included shares, the “Eligible
Shares”), then each of the Selling Investors, or the remaining Eligible
Holders, or any of them, will have the right to sell in the Proposed Sale a
number of additional shares of their Common Stock equal to their pro rata
portion of the number of Eligible Shares, based on the relative number of
shares of Common Stock then actually held (or deemed held) by each such holder plus
all shares of Common Stock which such holder is then entitled to acquire under
any unexercised portion of the Options, to the extent such Options are then
exercisable or would become exercisable as a result of the consummation of the
Proposed Sale, and such additional shares of Common Stock which any such holder
or holders propose to sell shall be included in any calculation made pursuant
to this Paragraph 2 for the purpose of determining the number of shares of
Common Stock which the Management Stockholder Entities will be permitted to
include in a Proposed Sale.  The Selling
Investors, the Eligible Holders, or any of them, will have the right to sell in
the Proposed Sale additional shares of Common Stock owned by them equal to the
number, if any, of remaining Eligible Shares which will not be included in the
Proposed Sale pursuant to the foregoing.


 


(c)  In the event
that the per share consideration to be received by the Selling Investors
pursuant to a Sale Agreement (the “Sale Price”) is less than the Base
Price (as defined in the Stockholder’s Agreement), then, the Management
Stockholder Entities shall be paid a cash bonus in an amount so that the
Management Stockholder Entities would suffer the same percentage loss on the original
difference between the exercise price of the “Rollover Option” and the “Base
Price” (as those terms are defined in the Stockholder’s Agreement), as the
percentage loss realized by the Selling Investors pursuant to the sale of its
shares under such Sale Agreement; provided, however, that such
bonus shall only be paid if the payment of such bonus would not result in
taxation or penalty under Section 409A of the Internal Revenue Code of
1986, as amended.  Such amount shall be
calculated in accordance with Schedule A hereto.


 


3.             Except
as may otherwise be provided herein, shares of Common Stock subject to a
Request will be included in a Proposed Sale pursuant hereto and in any
agreements with purchasers relating thereto on the same terms and subject to the
same conditions applicable to the


 


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shares of Common
Stock which the Selling Investor proposes to sell in the Proposed Sale.  Such terms and conditions shall include,
without limitation:  the pro rata
reduction of the number of shares of Common Stock to be included in the
Proposed Sale if required by the party proposing such sale; the sale price; the
pro rata payment of fees, commissions and expenses; the provision of, and
representation and warranty as to, information reasonably requested by the
Selling Investor covering matters regarding the Management Stockholder Entities’
ownership of shares; and the provision of requisite indemnification; provided
that any indemnification provided by the Management Stockholder Entities shall
be pro rata (on a several not joint basis) in proportion with the number of
shares of Common Stock to be sold; and provided  further, that,
except as set forth in the following sentence, the Management Stockholder
Entities shall not be obligated to join in any indemnification or other
obligation with respect to an amount in excess of the lesser of (i) the
pro rata portion of any liabilities actually paid and (ii) the sum of (x)
the net cash proceeds received by the Management Stockholder Entities in
respect of such Proposed Sale and (y) an amount equal to the fair market value
of the non-cash proceeds received by the Management Stockholder Entities in
respect of such Proposed Sale.  With respect
to indemnification and other obligations that relate solely to a Management
Stockholder Entity (“Management Stockholder Obligations”), such as
indemnification with respect to representations and warranties given by such
the Management Stockholder Entity regarding such Management Stockholder Entity’s
title and ownership of Common Stock and authority to enter into any agreement,
the limitations set forth in the last proviso of the previous sentence shall
not apply.  Each Management Stockholder
Entity shall only be required to make representations and warranties solely
with respect to the ownership of its Common Stock, authority to enter into
agreements related to the Proposed Sale, tax status, the absence of brokers and
the absence of conflicts with respect to the Management Stockholder Entity’s
obligations to perform the contract.


 


4.             Upon
delivering a Request, the Management Stockholder Entities, will, if requested
by the Selling Investor, execute and deliver a custody agreement and power of
attorney in form and substance reasonably satisfactory to the Selling Investor
with respect to the shares of Common Stock which are to be sold by the
Management Stockholder Entities, pursuant hereto (a “Custody Agreement and
Power of Attorney”).  The Custody
Agreement and Power of Attorney will provide, among other things, that the
Management Stockholder Entities will deliver to and deposit in custody with the
custodian and attorney-in-fact named therein a certificate or certificates
representing such shares of Common Stock (duly endorsed in blank by the registered
owner or owners thereof) and appoint said custodian and attorney-in-fact as the
Management Stockholder Entities’ agent and attorney-in-fact with full power and
authority to act under the Custody Agreement and Power of Attorney on the
Management Stockholder Entities’ behalf with respect to the matters specified
therein.


 


5.             The
Management Stockholder Entities’ rights pursuant hereto to participate in a
Proposed Sale shall be contingent on the Management Stockholder Entities’
compliance with each of the provisions hereof and the Management Stockholder
Entities’ respective willingness to execute such documents in connection
therewith as may be reasonably requested by the Selling Investor.


 


6.             (a) In
the event of a Proposed Sale of 50% or more of the Common Stock held by the
Selling Investor and its affiliates pursuant to Section 1 hereof, the
Selling Investors may


 


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elect, by so
specifying in the Notice, to require the Management Stockholder Entities to, and
the Management Stockholder Entities shall, participate in such Proposed Sale to
the same extent calculated pursuant to Section 2(a) above, in
accordance with the terms and provisions of Section 3 hereof; provided,
however, that in such event, the order in which the shares of Common
Stock held by the Management Stockholder Entities, shall be required to be sold
shall be: first, any shares of Common Stock then held by the Management
Stockholder Entities; and second, any shares of Common Stock acquired pursuant
to the exercise of any exercisable Options.


 


(b) In the event of
a transaction which results in a Change in Control (as defined in the
Stockholder’s Agreement) but is not a Proposed Sale in which the Selling
Investors have exercised their rights pursuant to Paragraph 6(a) or the
Management Stockholder Entities have exercised their rights pursuant to
Paragraph 1 (each, a “Proposed Transaction”) you agree on behalf of the
Management Stockholder Entities, to bear, on a several and not joint basis,
your pro rata share of any fees, commissions, adjustments to purchase price,
expenses or indemnities (collectively, the “Obligations”) borne by the
Selling Investors up to the amount of proceeds received by you in the Proposed
Transaction; provided, however, that the foregoing limitation on
Obligations shall not apply to Obligations incurred by the Selling Investors as
a result of the Management Stockholder Entity’s breach of a Management
Stockholder Obligation.  Your pro rata
share of any amount to be paid pursuant to Paragraphs 3 or 6(b) shall be
based upon the number of shares of Common Stock actually held (or deemed held)
by the Management Stockholder Entities plus the number of shares of Common
Stock you would have the right to acquire under any unexercised portion of the
Options which is then vested or would become vested as a result of the Proposed
Sale or Proposed Transaction.


 


7.             The
obligations of the Selling Investors hereunder shall extend only to the
Management Stockholder Entities, and none of the Management Stockholder
Entities’ successors or assigns shall have any rights pursuant hereto.


 


8.             If
the Selling Investors or any of them transfer any of their interests in the
Company to an affiliate of any of the Selling Investors, such affiliate shall
assume the obligations hereunder of the Selling Investors.


 


9.             This
Agreement shall terminate and be of no further force and effect on the fifth
anniversary of the first occurrence of a Public Offering (as defined in the
Stockholder’s Agreement).


 


10.           All
notices and other communications provided for herein shall be in writing and
shall be deemed to have been duly given when delivered to the party to whom it
is directed:


 


If to the Selling Investors, to them at the following
address:


 


Accellent Holdings LLC

c/o Kohlberg Kravis Roberts & Co. L.P.

2800 Sand Hill Road, Suite 200

Menlo Park, California 94025

Attn:  Michael W. Michelson


 


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with a copy to:


 


Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York  10017

Attn:  Sean D. Rodgers, Esq.


 


If to the Company, at the following address:


 


Accellent Holdings Corp.

c/o Kohlberg Kravis Roberts & Co. L.P.

2800 Sand Hill Road, Suite 200

Menlo Park, California 94025

Attn:  Michael W. Michelson


 


with a copy to:


 


Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York  10017

Attn:  Sean D. Rodgers, Esq.


 


If to you, to
you at the address first set forth above herein;


 


If to your
Management Stockholder’s Estate or Management Stockholder’s Trust, at the
address provided to the Company by such entity;


 


or at such
other address as any of the above shall have specified by notice in writing
delivered to the others by certified mail.


 


11.           The
laws of the State of New York shall govern the interpretation, validity and
performance of the terms of this Agreement. 
In the event of any controversy among the parties hereto arising out of,
or relating to, this Agreement which cannot be settled amicably by the parties,
such controversy shall be finally, exclusively and conclusively settled by
mandatory arbitration conducted expeditiously in accordance with the American
Arbitration Association rules, by a single independent arbitrator.  Such arbitration process shall take place
within 100 miles of the New York City metropolitan area.  The decision of the arbitrator shall be final
and binding upon all parties hereto and shall be rendered pursuant to a written
decision, which contains a detailed recital of the arbitrator’s reasoning.  Judgment upon the award rendered may be
entered in any court having jurisdiction thereof.  Each party shall bear its own legal fees and
expenses, unless otherwise determined by the arbitrator.  You hereby irrevocably waive any right that
you may have had to bring an action in any court, domestic or foreign, or
before any similar domestic or foreign authority with respect to this
Agreement.


 


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12.           This
Agreement may be executed in counterparts, and by different parties on separate
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.


 


13.           It
is the understanding of the undersigned that you are aware that no Proposed
Sale presently is contemplated and that such a sale may never occur.


 


[Signatures
on next page.]


 


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If the
foregoing accurately sets forth our agreement, please acknowledge your
acceptance thereof in the space provided below for that purpose.


 


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ACCELLENT HOLDINGS LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  



 


 


Sale Participation Agreement


 


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Accepted and agreed this          
day of


 


                 
200  .


 


 


	
   

  	
   

  	 

	
  /s/

  	
   

  	
   

  
				



 


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Schedule A


 


Bonus
Formula


 


1.             If
the Sale Price is less than the Base Price and is greater than or equal to the
Exercise          Price:


 


S(N) - (S - E)


 


2.             If the Sale Price is
less than the Exercise Price:


 


S(N)


 


 


S = Sale Price


 


E = the
exercise price of the Rollover Option (the “Exercise Price”)


 


N = (Base Price – Exercise Price) / Base Price


 


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