Document:

Exhibit 10.7

 

 

CPI HOLDINGS I, INC.

 

 

AMENDED AND RESTATED

 

2007 STOCK OPTION PLAN

 

[Conformed Copy, as Amended through September 28, 2015]

 

 

CPI HOLDINGS I, INC. AMENDED AND RESTATED 2007 STOCK OPTION PLAN

 

Article 1.                                            Establishment, Objectives and Duration

 

1.1                               Establishment of the Plan.  CPI Holdings I, Inc., a Delaware corporation, has adopted this “CPI Holdings I, Inc. Amended and Restated 2007 Stock Option Plan.”  Capitalized terms will have the meanings given to them in Article 2.  The Plan permits the grant of nonqualified stock options that are not intended to meet the requirements of Code Section 422.

 

1.2                               Objectives of the Plan.  The Plan’s purpose is to optimize the profitability and growth of the Company through long-term incentives that are consistent with the Company’s objectives and that link Participants’ interests to those of the Company’s stockholders; to give Participants an incentive for excellence in individual performance; and to give the Company a significant advantage in attracting and retaining key employees, directors and consultants.

 

1.3                               Effective Date and Term of the Plan.  The Plan will be effective October 26, 2007.  The Board may make Awards and issue Shares under the Plan at any time after the Plan’s Effective Date and before the date fixed herein for termination of the Plan.  The Plan will terminate upon the earliest of (i) the tenth anniversary of the Effective Date, (ii) the date on which all Shares available for issuance under the Plan have been issued pursuant to the exercise of Options under the Plan, or (iii) the date specified by action of the Board.  Upon such Plan termination, all Awards outstanding under the Plan will continue to have full force and effect in accordance with the terms of the Award Agreement evidencing such Award.

 

Article 2.                                            Definitions

 

Whenever used in the Plan, the following terms have the meanings set forth below, and when the meaning is intended, the initial letter of the word will be capitalized:

 

“Affiliate” means any Person that (directly or indirectly) is controlled by, controls or is under common control with the Company.

 

“Award” means, individually or collectively, a grant under this Plan to a Participant of Options.

 

“Award Agreement” means an agreement entered into between the Company and a Participant setting forth the terms and provisions applicable to an Award or Awards granted to the Participant.

 

“Base Rate” means an interest rate equal to the prime interest rate announced by J.P. Morgan Chase Bank on the first day of each calendar year.  When the Base Rate is used to compute interest hereunder, such Base Rate will be the Base Rate in effect for the calendar month during which interest first accrues, and will be subsequently adjusted to the then-current Base Rate at each anniversary of such initial interest accrual.

 

“Board” or “Board of Directors” means the Board of Directors of the Company.

 

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“Cause” means the Participant’s (i) conviction of (or plea of nolo contendere to) a felony or a crime involving moral turpitude; (ii) embezzlement, or misappropriation of property of any Company Party, or any other act involving fraud with respect to any Company Party; (iii) other material breach by the Participant of any agreement relating to the Participant’s employment with any Company Party which is not cured within ten (10) days after notice of such breach to the Participant; (iv) gross or willful misconduct that is injurious to any Company Party or (v) repeated failure, after written notice to the Participant, to follow the reasonable directives of a supervisor or the Board.

 

“Change in Control” means either (i) the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the assets of the Company (other than a collateral assignment by the Company of such assets to any lender as security for the Company’s obligations to such lender), or (ii) a transaction or series of transactions (including by way of merger, consolidation, sale of stock, recapitalization or otherwise) the result of which is that the beneficial owners (as such term is defined in Rule 13d-3 and Rule 13d-5 promulgated under the Exchange Act) of the securities of the Company immediately prior to the transaction no longer own, directly or indirectly, an equity interest in the Company that represents at least fifty percent (50%) of the Company’s outstanding Shares, or at least fifty percent (50%) of the equity interests of an entity that is a successor to the Company.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

“Committee” means a committee designated by the Board to administer the Plan pursuant to Article 3 hereof or, if no such committee has been designated, the Board.

 

“Common Stock” means the Company’s common stock, $0.001 par value per share, and any successor securities thereto, including pursuant to a stock dividend, a stock split, reclassification or like action, or pursuant to an exchange (including a merger).

 

“Company” means CPI Holdings I, Inc., a Delaware corporation, and any successor thereto as provided in Article 12.

 

“Company Parties” means, collectively and without duplication, the Company and any of its Affiliates.

 

“Consultant” means a consultant, advisor or other independent service provider engaged by a Company Party to render services to any of the Company Parties and who is not a Director or an Employee.

 

“Designated Beneficiary” means the Person or Persons the Participant designates (who may be designated contingently or successively) from time to time on a signed form prescribed by the Board, filed with the Company during the Participant’s lifetime, as the beneficiary of any amounts or benefits the Participant owns or is to receive under the Plan.  Each beneficiary designation will revoke all prior designations by the same Participant.  If the Participant has not designated a beneficiary under the Plan, or if the Participant’s Designated Beneficiary is not living on the relevant date hereunder, the Company will treat the Participant’s estate as the Designated Beneficiary.

 

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“Director” means any individual who is a member of the board of directors of any Company Party.

 

“Distribution Account” means a bookkeeping account maintained by the Company that reflects the Redemption Value of a Participant’s vested and exercisable Options, with respect to which the Company exercised a Redemption Right or which have been converted to a Distribution Account upon a Participant’s termination of Service.

 

“Effective Date” means October 26, 2007.

 

“Employee” means a person employed by any Company Party in a common law employee-employer relationship.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.

 

“Exercise Price” means the price at which a Participant may purchase a Share pursuant to an Option.

 

“Fair Market Value” means on any date, as it relates to Share (i) for purposes of determining the value of a Share upon or after a Participant’s termination of service including, but not limited to, using Shares to pay Exercise Price and related withholding taxes under Sections 6.6 or 11.2, determining Redemption Value upon the Company’s exercise of its Redemption Right under Article 7, and determining the value of Share under Section 8, an amount equal to the product of: a multiple of EBITDA at such time plus cash and cash equivalents of the Company and the Subsidiaries as of such time minus the amount of indebtedness of the Company and the Subsidiaries as of such date and the aggregate Liquidation Preference for all of the then outstanding Shares of Series A Preferred Stock divided by the fully-diluted amount of Common Stock outstanding as of the time of such calculation or (ii) for all other purposes of the Plan, the value determined by any means determined fair and reasonable by the Board, which determination shall be final and binding on all parties.  For purposes of clause (i), the multiple of EBITDA used for purposes of the determining Fair Market Value will initially equal 7.25 and may be adjusted from time to time by the Board.

 

“Fiscal Year” means the 12-consecutive month period coinciding with the calendar year, which is the Company’s fiscal year.

 

“GAAP” means U.S. generally accepted accounting principles, consistently applied.

 

“Liquidation Preference” has the meaning set forth in the Stockholders Agreement.

 

“Option” means an option to purchase Shares granted under Article 6.

 

“Owned Shares” means Shares that a Participant has acquired through the exercise of an Option, in accordance with Article 6, and the terms of any Award Agreement.

 

“Participant” means a person selected by the Board to receive an Award under the Plan, pursuant to Section 5.2, or who has an outstanding Award granted under the Plan.

 

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“Person” means any individual, partnership, limited partnership, corporation, limited liability company or partnership, association, joint stock company, trust, joint venture, unincorporated organization, or the United States of America or any other nation, any state or other political subdivision thereof, or any entity exercising executive, legislative, judicial, regulatory or administrative functions of government.

 

“Plan” means the CPI Holdings I, Inc. Amended and Restated 2007 Stock Option Plan, as set forth in this document, as from time to time amended.

 

“Promote Shares” has the meaning set forth in the Stockholders Agreement.

 

“Public Offering” means a public offering of Common Stock (or the securities of any successor to the Company) pursuant to an effective registration statement under the Securities Act.

 

“Redemption Value” means the amount the Company will pay to the Participant in redemption of the Participant’s vested and unexercised Options, following the Participant’s termination of Service or the Company’s exercise of its Redemption Right pursuant to Article 7.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time, or any successor act thereto.

 

“Series A Preferred Stock” has the meaning set forth in the Stockholders Agreement.

 

“Service” means the provision of services in the capacity of (i) an Employee, (ii) Director, or (iii) a Consultant.

 

“Settlement Date” means a date within 30 days after the last day of the month in which the Company exercises its Redemption Right or the date on which Options are converted to a Distribution Account.

 

“Shares” means the shares of Common Stock or any securities convertible into Common Stock.

 

“Stockholders Agreement” means the Stockholders Agreement of the Company dated June 28, 2007, as amended, restated or replaced from time to time.

 

Article 3.                                            Administration.

 

3.1                               The Board, or a Committee designated by the Board, will administer the Plan. The Board may designate a Committee consisting of not less than two members of the Board to administer the Plan.

 

3.2                               Except as limited by law and subject to the provisions of this Plan, the Board will have full power to: (i) select eligible persons to participate in the Plan; (ii) determine the sizes and types of Awards; (iii) determine the terms and conditions of Awards in a manner consistent with the Plan; (iv) construe and interpret the Plan and any agreement or instrument entered into under the Plan; (v) establish, amend or waive rules and regulations for the Plan’s administration; 

 

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(vi) specify the Exercise Price; and (vii) subject to the provisions of Article 10, amend the Plan or the terms and conditions of any outstanding Award to the extent the terms are within the Board’s discretion under in the Plan.  Further, the Board will make all other determinations that may be necessary or advisable to administer the Plan.

 

3.3                               It is the Company’s intent that Awards are not to be treated as deferred compensation under Code Section 409A (or any regulations or other guidance promulgated thereunder) and that any ambiguities in construction be interpreted in order to effectuate such intent.  Awards under the Plan shall contain such terms as the Board determines are appropriate to avoid the application of Code Section 409A.  In the event that, after the issuance of an Award under the Plan, Code Section 409A or regulations thereunder are issued or amended, or the Internal Revenue Service or Treasury Department issues additional guidance interpreting Code Section 409A, the Board may (but shall have no obligation to do so) amend or modify the terms of any such previously issued Award to the extent the Board determines that such amendment or modification is necessary to avoid the application of, or to comply with, Code Section 409A.

 

3.4                               Decisions Binding.  All determinations and decisions made by the Board pursuant to the provisions of the Plan will be final, conclusive and binding on all Persons, including, without limitation, the Company, its stockholders, its Board of Directors, all Affiliates, Employees, Participants and their estates and beneficiaries.

 

Article 4.                                            Shares Subject to the Plan and Maximum Awards

 

4.1                               Number of Shares Available for Grants.  Subject to adjustment as provided in Section 4.3, no more than 2,090,000 Shares may be subject to Awards under the Plan (reflecting the Company’s 22 to 1 stock split effected on September 3, 2015). No Awards may be granted under the Plan following the completion of a sale of the Company’s Shares pursuant to a Public Offering.

 

4.2                               Lapsed Awards.  If any Award granted under this Plan is canceled, terminates, expires or lapses for any reason, any Shares subject to the Award will again be available for the grant of an Award under the Plan.  Any Shares underlying an Option that is surrendered by a Participant in a cashless exercise transaction will again be available for the grant of an Award under the Plan.

 

4.3                               Adjustments in Authorized Shares.  If the Shares, as currently constituted, are changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation (whether because of merger, consolidation, recapitalization, reclassification, split, reverse split, combination of shares, or otherwise, but not including a sale of the Company’s Shares or other equity pursuant to a Public Offering, or other capital infusion from any source) or if the number of Shares is increased through the payment of a stock dividend, then the Board will substitute for or add to each Option or Share previously appropriated, later subject to, or which may become subject to, an Award, the number and kind of shares of stock or other securities into which each outstanding Share was changed, for which each such Share was exchanged, or to which each such Share is entitled, as the case may be.

 

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Article 5.                                            Eligibility and Participation

 

5.1                               Eligibility.  The following persons are eligible to receive Awards under this Plan: (a) any Employee; (b) any Consultant; and (c) any Director.  No Employee, Consultant, Director or Participant will have the right to receive an Award under this Plan, or, having received any Award, to receive a future Award.

 

5.2                               Actual Participation.  The Board will determine, within the limits set forth below, those Employees, Directors or Consultants to whom it will grant Awards.  Each Employee, Director or Consultant selected by the Board to receive an Award will become a Participant in the Plan upon execution of an Award Agreement.

 

Article 6.                                            Stock Options

 

6.1                               Grant of Options.  Subject to the terms and provisions of the Plan, the Board may grant Options to any Employee, Director or Consultant, in the number, and upon the terms, and at any time and from time to time, as the Board determines and sets forth in an Award Agreement.

 

6.2                               Award Agreement.  Each Option grant will be evidenced by an Award Agreement that specifies the duration of the Option, the number of Shares to which the Option pertains, the manner, time, and rate of exercise and/or vesting of the Option, and such other provisions as the Board determines.

 

6.3                               Exercise Price.  Each Option grant and Award Agreement will specify the Exercise Price for each Share subject to an Option, which must be greater than or equal to (and not less than) the Fair Market Value of a Share on the date the Option is granted.

 

6.4                               Duration of Options.  Each Option will expire at the time determined by the Board at the time of grant and specified in the Award Agreement, but no later than the tenth anniversary of the date of its grant.

 

6.5                               Exercise of Options.  Options will become vested and exercisable at such times and be subject to such restrictions and conditions as the Board in each instance approves and sets forth in each Award Agreement. In addition, notwithstanding anything to the contrary contained in an Award Agreement, following the completion of a sale of the Company’s Shares pursuant to a Public Offering, Options that are vested in accordance with the terms of such Award Agreement, whether they vest prior to or after the completion of such a Public Offering, will be exercisable following the completion of such a Public Offering.

 

6.6                               Payment.  The holder of an Option may exercise the Option only by delivering a written notice of exercise to the Company setting forth the number of Shares as to which the Option is to be exercised, together with full payment of the Exercise Price for the Shares as to which the Option is exercised and any withholding tax relating to the exercise of the Option.

 

The Exercise Price and any related withholding taxes will be payable to the Company in full: (i) in United States dollars, in cash or by personal check payable to the order of the 

 

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Company; (ii) if permitted in the governing Award Agreement, with Shares owned by the Participant for at least six months (or, with the prior consent of the Committee, which consent may be refused for any reason, with Shares owned by the Participant for less than six months) with a Fair Market Value equal to the Exercise Price and any related withholding taxes being duly endorsed for transfer to the Company free and clear of any encumbrance; (iii) by surrendering to the Company vested and exercisable Options with an aggregate value equal to the Exercise Price and any related withholding taxes (the aggregate value of any surrendered Options being the spread between the aggregate Exercise Price of the surrendered Options and the aggregate Fair Market Value of the Shares underlying the surrendered Options); or (iv) any combination of cash, personal check, Shares and/or vested and exercisable Options meeting the requirements of (i) through (iii) above.

 

6.7                               Restrictions on Share Transferability.  The Board may impose such restrictions on any Shares acquired through exercise of an Option as it deems necessary or advisable, including, without limitation, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which the Shares are then listed and/or traded, and under any blue sky or state securities laws applicable to the Shares.

 

6.8                               Stockholders Agreement.  The Participant will be required to enter into a Stockholders Agreement with respect to any Shares acquired through exercise of an Option as a condition of such exercise, and the Participant and all such Shares will be subject to terms and provisions of the Stockholders Agreement, which may impose such restrictions, limitations and obligations on the Participant as is deemed necessary or advisable.

 

6.9                               Termination of Service.  Each Award Agreement will set forth the extent to which the Participant has the right to exercise the Option after his or her termination of Service.  These terms will be determined by the Board in its sole discretion and may reflect, among other things, distinctions based on the reasons for termination of Service.

 

6.10                        Nontransferability of Options.  Except as otherwise provided in a Participant’s Award Agreement, no Option granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.  Further, except as otherwise provided in a Participant’s Award Agreement, all Options will be exercisable during the Participant’s lifetime only by the Participant or his or her guardian or legal representative.  The Board may, in its discretion, require a Participant’s guardian or legal representative to supply it with the evidence the Board deems necessary to establish the authority of the guardian or legal representative to act on behalf of the Participant.

 

Article 7.                                            Purchase and Sales Rights

 

7.1                               Company’s Redemption Right.  Any and all of a Participant’s vested and unexercised Options granted in an Award will be converted into the Redemption Value (i) upon the Participant’s termination of Service for any reason or (ii) upon the Company’s exercise of the right (a “Redemption Right”), exercisable at such times and under such circumstances as a Participant’s Award Agreement specifies, to convert such options.  The Redemption Value for such vested and unexercised Options will be reflected in the Participant’s Distribution Account.

 

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7.2                               Company’s Call Right.  The Company may exercise one or more repurchase options with respect to a Participant’s Owned Shares in accordance with the terms of the Stockholders Agreement.

 

7.3                               Commencement of Participants’ Distributions.  Unless otherwise provided in any Award Agreement, and subject to the conditions of Section 7.4, distribution of a Participant’s Distribution Account will commence to a Participant as soon as reasonably practicable after the later of (i) 60 days after the Settlement Date, or (ii) the second anniversary of the Plan’s Effective Date.

 

7.4                               Form and Amount of Distribution.  The amount in the Participant’s Distribution Account will be distributed to the Participant in cash, in one of the following methods, as determined by the Board: (i) in a lump sum payment; (ii) in installment payments over a period not to exceed five years; or (iii) over such longer period as may be required under the terms of the Company’s credit facilities then in effect.

 

(a)                                 Distribution Account.  Where distribution of a Participant’s Distribution Account is made in installment payments, interest will be credited to the amount in the Participant’s Distribution Account at the Base Rate.  Such interest will accrue beginning on the Settlement Date and will be credited to the Distribution Account quarterly.

 

(b)                                 Participant’s Death.  If a Participant dies before complete distribution of his or her Distribution Account, the remaining amount in such Distribution Account will be distributed to the Participant’s Designated Beneficiary over the same period as distributions were being made to the Participant.

 

(c)                                  Change in Control.  If a Change in Control occurs before complete distribution of his or her Distribution Account, the remaining amount in such Distribution Account will be distributed to the Participant upon consummation of such Change in Control.

 

Notwithstanding the foregoing, if payment of the Distribution Account is in installments, the Company may, in its sole discretion, at any time during the installment period, distribute the remaining amount of a Participant’s Distribution Account in a single lump sum cash payment.

 

7.5                               Drag-Along Rights.  Upon a Change in Control at any time after the Effective Date, the Company will have the right (the “Drag-Along Right”), but not the obligation, to cause each Participant to (i) exercise any vested and unexercised Options, and (ii) tender for purchase any or all Owned Shares (including any Shares acquired pursuant to clause (i) of this sentence), in the same proportion, for the same consideration, at the same price and on the same terms and conditions as apply to the beneficial owners of the Company’s outstanding voting stock.  The Drag-Along Right will apply to the Participant’s vested Options and Owned Shares in the same proportion as the ratio of the vested and unexercised Options, Owned Shares and Common Stock of the beneficial owners of the Company’s outstanding voting stock proposed to be transferred bears to the total number of shares held by the beneficial owners of the Company’s outstanding voting stock.

 

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If the Company elects to exercise the Drag-Along Right, it will notify each Participant in writing (the “Drag-Along Notice”).  Such Drag-Along Notice will set forth the name and address of the proposed purchaser, the proposed amount and form of consideration and other terms and conditions of transfer offered by the proposed purchaser, the aggregate number of Owned Shares proposed to be purchased by such purchaser, and a calculation of the purchase price applicable to the Participant.  Upon the receipt of a Drag-Along Notice, the Participant will be obligated to transfer the Shares free and clear of any encumbrances to the proposed purchaser on the terms and for the price set forth in the Drag-Along Notice.

 

7.6                               Change in Control.

 

(a)                                 Upon a Change in Control, each holder of vested and exercisable Options to acquire Shares will be given an opportunity to exercise such Options in connection with the Change in Control and participate in such transaction as a holder of such Shares.

 

(b)                                 If the Change in Control is structured as a (i) merger or consolidation, the Participant will waive any dissenters rights, appraisal rights or similar rights in connection with such merger or consolidation or (ii) sale of shares, each Participant will agree to sell all of his or her Owned Shares and vested and exercisable Options on the terms and conditions approved by the Board and comparable to the terms applicable to the beneficial owners of the Company’s outstanding voting stock.  All Participants will take all actions the Board considers necessary or desirable in connection with the consummation of the Change in Control.

 

7.7                               Nontransferability.  The Company will not be required (i) to transfer on its books any Shares that have been sold or transferred, or (ii) to treat as owner of such Shares, to accord the right to vote, if any, or to pay dividends to any transferee to whom such Shares have been transferred, in violation of the Plan, the Award Agreement, or the Stockholders Agreement.  Any transferee must consent in writing to being bound by all of the terms and conditions of the Plan and any Award Agreement.

 

7.8                               Legend.  Each certificate evidencing Owned Shares and each certificate issued in exchange for or upon the transfer of any Owned Shares before a Public Offering will be stamped or otherwise imprinted with such legend as the Board requires.

 

7.9                               Expiration of this Article.  The provisions of this Article 7, except for the Company’s obligation to distribute Participants’ Distribution Accounts, will terminate upon the completion of a sale of the Company’s Shares pursuant to a Public Offering.

 

7.10                        Code Section 409A.  Notwithstanding any other provision of this Plan, all payments to the Participant, including, without limitation, distributions from a Participant’s Distribution Account pursuant to this Article 7, will be made in accordance with the requirements of Code Section 409A.

 

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Article 8.                                            Breach of Restrictive Covenants

 

An Award Agreement will provide that, notwithstanding any other provision of this Plan to the contrary, if the Participant breaches the confidentiality, non-competition or nonsolicitation of customers, suppliers, licensees, licensors or other business relations provisions of the Award Agreement, whether during or after termination of Service, the Participant will forfeit:

 

(a)                                 any and all Awards granted or transferred to him or her under the Plan, including Awards that have become vested and exercisable;

 

(b)                                 the profit the Participant has realized on the exercise of any Options, which is the difference between (i) the Exercise Price of the Options the Participant exercised after terminating Service and within the six month period immediately preceding the Participant’s termination of Service and (ii) the applicable Fair Market Value of the Shares purchased under such Options; and

 

(c)                                  any and all rights to receive any remaining installment payments due to the Participant from his or her Distribution Account, pursuant to Section 7.4.

 

Article 9.                                            Rights of Participants

 

Nothing in the Plan will interfere with or limit in any way the right of any Company Party to terminate any Participant’s Service at any time, or confer upon any Participant any right to continue in the Service of any Company Party.

 

Article 10.                                     Amendment, Modification and Termination

 

10.1                        The Board may at any time and from time to time, alter, amend, modify or terminate the Plan in whole or in part.  Subject to the terms and conditions of the Plan, the Board may modify, extend or renew outstanding Awards under the Plan, or accept the surrender of outstanding Awards (to the extent not already exercised) and grant new Awards in substitution of them (to the extent not already exercised).  Notwithstanding the foregoing, no modification of an Award will, without the prior written consent of the Participant, materially and adversely alter or impair any rights or obligations under any Award already granted under the Plan.

 

10.2                        Adjustment of Awards Upon the Occurrence of Certain Events.

 

(a)                                 Equity Restructurings.  If the outstanding Shares are increased, decreased, changed into or exchanged for a different number or kind of securities of the Company through a non-reciprocal transaction, such as a reorganization, distribution or other similar transaction, between the Company and its stockholders that causes the per Share fair value underlying an Award to change, a proportionate adjustment will be made to the number or kind of Shares or other securities allocated to Awards that have been granted prior to any such change.  Any such adjustment in an outstanding Option will be made without change in the aggregate Exercise Price applicable to the unexercised portion of such Option but with a corresponding adjustment in the Exercise Price for each Share or other security covered by such Option.

 

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(b)                                 Reciprocal Transactions.  The Board may, but shall not be obligated to, make an appropriate and proportionate adjustment to an Award or to the Exercise Price of any outstanding Option, and/or grant an additional Award to the holder of any outstanding Award, to compensate for the diminution in the intrinsic value of the Shares resulting from any reciprocal transaction, such as a merger or other similar transaction.

 

(c)                                  Certain Unusual or Nonrecurring Events.  In recognition of unusual or nonrecurring events affecting the Company or its financial statements, or in recognition of changes in applicable laws, regulations, or accounting principles, and, whenever the Board determines that adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, the Board may, using reasonable care, make adjustments in the terms and conditions of, and the criteria included in, Awards.

 

(d)                                 Fractional Shares and Notice. Fractional Shares resulting from any adjustment in Awards pursuant to this Section 10.2 may be settled in cash or otherwise as the Board determines.  The Company will give notice of any adjustment to each Participant who holds an Award that has been adjusted and the adjustment (whether or not such notice is given) will be effective and binding for all Plan purposes.

 

Article 11.                                     Withholding

 

11.1                        Tax Withholding.  The Company will have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount (either in cash or Shares) sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising under this Plan.

 

11.2                        Share Withholding.  With respect to withholding required upon the exercise of Options, or upon any other taxable event arising as a result of Awards granted hereunder, the Company may satisfy the minimum withholding requirement for supplemental wages, in whole or in part, by withholding Shares having a Fair Market Value, determined as of (i) the last day of the calendar month ending on or immediately preceding the date the Participant recognizes taxable income on the Award, or (ii) the end of the Company’s most recently concluded Fiscal Year, whichever date produces the lower Fair Market Value figure, equal to the minimum amount of withholding tax required to be collected on the transaction.  The Participant may elect to deliver the necessary funds to satisfy the withholding obligation to the Company, in which case there will be no reduction in the Shares otherwise distributable to the Participant.

 

Article 12.                                     Successors

 

All obligations of the Company under the Plan or any Award Agreement will be binding on any successor to the Company, whether the existence of the successor results from a direct or indirect purchase of all or substantially all of the Company’s shares, or a merger, consolidation, or otherwise.

 

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Article 13.                                     Legal Construction

 

13.1                        Number.  Except where otherwise indicated by the context, any plural term used in this Plan includes the singular and a singular term includes the plural.

 

13.2                        Severability.  If any provision of the Plan is held illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be construed and enforced as if the illegal or invalid provision had not been included.

 

13.3                        Requirements of Law.  The granting of Awards and the issuance of Shares and/or cash payouts under the Plan will be subject to all applicable laws, rules, and regulations, and to any approvals by governmental agencies or national securities exchanges as may be required.

 

13.4                        Securities Law Compliance.  As to any individual who is, on the relevant date, an officer, director or ten percent beneficial owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, all as defined under Section 16 of the Exchange Act, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3 under the Exchange Act, or any successor rule.  To the extent any provision of the Plan or action by the Board fails to so comply, it will be deemed null and void, to the extent permitted by law and deemed advisable by the Board.

 

13.5                        Unfunded Status of the Plan.  The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation.  With respect to any payments or deliveries of Shares not yet made to a Participant by the Company, the Participant’s rights are no greater than those of a general creditor of the Company.  The Board may authorize the establishment of trusts or other arrangements to meet the obligations created under the Plan, so long as the arrangement does not cause the Plan to lose its legal status as an unfunded plan.

 

13.6                        Awards to Foreign Nationals and Employees Outside the United States.  To the extent the Board deems it necessary, appropriate or desirable to comply with foreign law or practice and to further the purposes of this Plan, the Board may, without amending the Plan, (i) establish rules applicable to Awards granted to Participants who are foreign nationals, are employed outside the United States, or both, including rules that differ from those set forth in this Plan, and (ii) grant Awards to such Participants in accordance with those rules that would require the application of the law of any other jurisdiction.

 

13.7                        Governing Law.  To the extent not preempted by federal law, the Plan and all agreements hereunder will be construed and enforced in accordance with, and governed by, the laws of the State of Delaware, without giving effect to its conflicts of laws principles that would require the application of the law of any other jurisdiction.

 

12Exhibit 10.8

 

EXECUTION VERSION

 

EMPLOYMENT AND NON-COMPETITION AGREEMENT

 

THIS EMPLOYMENT AND NON-COMPETITION AGREEMENT (this “Agreement”), is effective as of June 22, 2015, by and between CPI Acquisition, Inc., a Delaware corporation (“CPI Acquisition”), and David Brush, an individual (the “Employee”).

 

RECITALS

 

A.                                    CPI Acquisition and its subsidiaries, divisions and Affiliates as they may exist from time to time (collectively, the “Company”) are engaged in the business of manufacturing, personalizing, fulfilling, designing, distributing, packaging, selling and marketing plastic cards, including, without limitation, credit cards, debit cards, ATM cards, loyalty cards, gift cards, access cards, ID cards, contactless cards, chip cards, EMV cards, dual interface cards, and prepaid debit cards and provides instant issuance hardware, software and solutions and data management and various software applications (the “Business”); and

 

B.                                    CPI Acquisition desires to employ the Employee on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and mutual agreements set forth below, and upon the terms and subject to the conditions contained in this Agreement, the Employee and the Company agree as follows:

 

Section 1.  Definitions.  Unless otherwise defined herein, capitalized terms used herein shall have the meaning set forth below.

 

1.1                               Affiliates.  “Affiliates” means with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with the first Person, including without limitation CPI (as hereinafter defined).  For the purposes of this definition, (a) “control,” when used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing, and (b) in the case of an individual, the term “Affiliate” shall include the members of the immediate family (i.e. parents, spouse and children) of such individual.

 

1.2                               Audit Committee. “Audit Committee” means the audit committee of the board of directors of CPI Holdings.

 

1.3                               Board.  “Board” means the board of directors of CPI Holdings and CPI Acquisition.

 

1.4                               Compensation Committee. “Compensation Committee” means the compensation committee of the board of directors of CPI Holdings.

 

1.5                               Confidential Information. “Confidential Information” means information that constitutes a trade secret under the Uniform Trade Secrets Act or that otherwise is not generally known to the public and that is developed, owned or obtained by the Company and includes, without limitation, the following information: financial information, including but not limited to earnings, assets, debts, prices, cost information, budgets, sales and profit projections or other financial data; growth, merger, acquisition and/or divestiture plans; marketing information, including but not limited to details about ongoing or proposed marketing strategies, marketing forecasts, or information about impending transactions; product

 

 

information, including but not limited to development plans, product designs, manufacturing and process information, product costs and pricing policies; information regarding actual or potential customers; employee information, compensation information and recruiting plans.  Confidential Information includes information developed by the Employee in the course of performing service to the Company.  Confidential Information does not include information which was in the public domain or generally available to the public prior to receipt thereof by the Employee from the Company, or which subsequently becomes part of the public domain or generally available to the public other than as a result of a breach of this Agreement by the Employee.  The Employee acknowledges that such information is confidential whether or not it is labeled as such by the Company.

 

1.6                               CPI.  “CPI” means CPI Holdings I, Inc. (“CPI Holdings”) and its wholly owned subsidiaries.

 

1.7                               Governmental Authority.  “Governmental Authority” means any government or political subdivision, whether federal, state, local or foreign, or any agency, commission, instrumentality or other authority of any such government or political subdivision, or any federal, state, local or foreign court or arbitrator.

 

1.8                               Person.  “Person” means any individual, partnership, corporation, association, joint stock company, trust joint venture, limited liability company, Governmental Authority or other entity or organization.

 

1.9                               Restricted Territory.  “Restricted Territory” means the United States of America, the United Kingdom, Canada and Europe.

 

1.10                        Stockholders Agreement. “Stockholders Agreement” means that certain Stockholders Agreement dated as of June 28, 2007 by and among CPI Holdings and the stockholders of CPI Holdings signatory thereto, as amended by that certain First Amendment to Stockholders Agreement, dated as of January 15, 2008, and as further amended by that certain Second Amendment to Stockholders Agreement, dated as of December 5, 2008, as further amended from time to time.

 

1.11                        Work Product.  “Work Product” means any and all promotional and advertising materials, catalogs, brochures, plans, customer lists, distributor lists, supplier lists, manuals, handbooks, information of distributors or their employees, inventions, discoveries, improvements, trade secrets, secret processes and any technology, know-how or intellectual property made or developed or conceived of by the Employee, in whole or in part, alone or with others, which results from any work he may do for, or at the request of, the Company or which relates to the business, operations, activities, research, investigations or obligations of the Company regardless of whether made, developed or conceived prior to or during the Term.

 

Section 2.  Employment.

 

2.1                               Term.  The Company shall employ the Employee, and the Employee shall serve the Company, for a continuous term beginning on June 22, 2015 (the “Effective Date”) and ending on the June 22, 2020 anniversary thereof (the “Original Term”), and this Agreement shall automatically be renewed on the same terms and conditions set forth herein (as modified from time to time) for additional one-year periods commencing upon the expiration of the Original Term, unless (i) the Employee gives the Company written notice in accordance with the terms herein of his election not to renew the term at least thirty (30) days prior to the end of the Original Term or any such renewal term or (ii) the Company informs the Employee of its election not to renew this Agreement at least thirty (30) days prior to the end 

 

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of the Original Term or any such renewal term (a “Company Non-Renewal Notice”), or unless sooner terminated pursuant to the provisions of this Agreement (the “Term”).

 

2.2                               Duties.

 

(a)                                 Capacity.  The Employee will be employed as the Chief Financial Officer of CPI, and the Employee will perform the responsibilities and duties that are usual to the position of Chief Financial Officer, including such reasonable responsibilities and duties as may be assigned to him hereafter from time to time by the Company’s Chief Executive Officer (“CEO”) or the Audit Committee, consistent with the Employee’s position.  The Employee will report to the CEO.  The Employee will use his best efforts to promote the interests, prospects and condition (financial and otherwise) and welfare of the Company and shall perform his duties and responsibilities to the best of his ability in a diligent, trustworthy, businesslike and efficient manner.

 

(b)                                 Schedule and Location.  The Employee will be employed on a full-time basis and shall devote his best efforts and his full business time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity) to the business and affairs of the Company. The Employee shall render his services in accordance with such policies as the Company may establish from time to time for the conduct of its employees.  The Employee shall perform his duties under this Agreement predominantly at the Company’s headquarters in Littleton, Colorado and shall travel to such other places in the United States and elsewhere as required to perform his duties or from time to time as may be reasonably needed.

 

(c)                                  Exclusivity.  Without limiting the generality of the foregoing, the Employee shall not, without the prior written approval of the CEO and the Audit Committee of the Board, render material services of a business, professional or commercial nature for compensation or otherwise to any Person other than the Company.

 

2.3                               Compensation.  As compensation for the services to be rendered and the other obligations undertaken by the Employee under this Agreement, the Company shall pay the Employee the following compensation:

 

(a)                                 Salary.  During the Term, and in accordance with the Company’s policies in effect from time to time, the Company shall pay to the Employee an annual base salary (the “Annual Base Salary”) of $450,000 payable in installments in accordance with the policies of the Company.  The Annual Base Salary will be adjusted based upon performance reviews performed by the CEO and the Compensation Committee not less than annually.

 

(b)                                 Incentive Compensation.  During the Term, the Employee shall be eligible to participate in the Company’s incentive cash bonus program on the same basis as similarly compensated senior executives of the Company, subject to the terms and conditions therein.  Pursuant to the incentive cash bonus program, the Employee will have the opportunity for an incentive bonus at a target of up to 50% of the Annual Base Salary per year, depending on performance metrics to be agreed upon in writing by the CEO and the Compensation Committee (the “Annual Bonus”), with such performance to be determined in good faith by the Compensation Committee.  Any incentive bonus payable to the Employee for the calendar year 2015 shall be pro-rated for the portion of calendar year 2015 that the Employee was employed by the Company.  Incentive compensation is not guaranteed, and the Employee must be employed by the Company at the close of the applicable calendar year to be eligible for any such incentive compensation.  Any incentive bonus payable under this Section 2.3(b) shall be paid to the Employee no later than April 1 following the end of the calendar year for which such bonus relates (or the next business day if April 1 does not fall on a business day).  Following an initial public offering of CPI, 

 

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the Employee may participate in any incentive bonus plan for senior executives determined and authorized by the Compensation Committee.

 

(c)                                  Equity Incentive.  CPI Holdings grants to the Employee 6,712 restricted shares of common stock of CPI Holdings (the “Restricted Shares”) pursuant to a Restricted Stock Award Agreement, dated as of the date hereof, by and between the Employee and CPI Holdings.  The Restricted Shares will vest in three (3) equal installments on June 22, 2016, June 22, 2017 and June 22, 2018 so long as the Employee is employed by the Company through such vesting date.  Subject to Section 6.2(b), any unvested Restricted Shares at the time of the termination or non-renewal of the Employee’s employment or this Agreement will be forfeited and the Employee will have no rights, and CPI will have no obligations, with respect thereto.  Following an initial public offering of CPI, the Employee will participate in any equity incentive plan for senior executives on the same basis as similarly compensated senior executives of the Company as determined and authorized by the Compensation Committee.

 

(d)                                 Expenses; Vacation.  During the Term, the Company shall reimburse Employee for his reasonable travel (in the case of air travel, on commercial airlines) and entertainment expenses in connection with his employment by the Company in accordance with the policies of the Company in effect from time to time.  Employee will receive four (4) weeks paid vacation per year and such other fringe benefits, including, without limitation, paid holidays in accordance with the policies of the Company.

 

(e)                                  Additional Benefits.  During the Term, the Employee and the Employee’s eligible dependents (with respect to health benefits only) shall be entitled to participate in each insurance, health, disability, major medical insurance, 401(k) plan or other arrangement the Company adopts for the general benefit of its eligible executive-level employees on the same basis as similarly compensated senior executives of the Company to the extent permitted by law and to the extent the Employee is otherwise entitled to participate based upon the Employee’s age, service, compensation, job classification and any other factors determining eligibility to participate under each such plan.  The insurance and benefit plans are subject to such general modifications, increases or reductions in such employee benefit plans and fringe benefits as may be made from time to time by the Company.

 

Section 3.  Restrictive Covenants.

 

3.1                               Confidential Information.  The Employee acknowledges and agrees that in the performance of his duties under this Agreement, he will be brought into frequent contact, either in person, by telephone, electronically or through the mails, with existing and potential customers of the Company. The Employee further agrees that any Confidential Information gained by the Employee during his employment with the Company has been developed by the Company through substantial expenditures of time and money and constitutes valuable and unique property of the Company. The Employee further understands and agrees that the foregoing makes it necessary for the protection of the Business that the Employee not compete with the Company during the Term and not compete with the Company for a reasonable period after such employment, as further provided in the following sections.

 

3.2                               Non-Competition During Term.  During the Term and any renewal term or other period of employment with the Company, the Employee shall not, in any of the United States of America, Canada, the United Kingdom or anywhere else in the world:

 

(a)                                 enter into or engage in any business that competes with the Business;

 

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(b)                                 solicit customers, active prospects, business or patronage for any business, wherever located, that competes with the Business or sell any products or services for any business, wherever located, that competes with the Business or could then be provided by the Business;

 

(c)                                  solicit, divert, entice or otherwise take away any customers, former customers, active prospects, business, patronage or orders of the Company or attempt to do so; or

 

(d)                                 counsel, promote or assist, financially or otherwise, any Person, engaged in any business that competes with the Business.

 

3.3                               Non-Competition After Term and Following Employment.

 

(a)                                 For a period of one (1) year following the termination of the Employee’s employment with the Company for any reason, the Employee shall not:

 

(i)                                     enter into or engage in any business that directly competes with the Business within the Restricted Territory;

 

(ii)                                  solicit customers, active prospects, business or patronage for any business, wherever located, that competes with the Business within the Restricted Territory or sell any products or services for any business, wherever located, that competes with the Business or could then be provided by the Business within the Restricted Territory;

 

(iii)                               solicit, divert, entice or otherwise take away any customers, former customers, active prospects, business, patronage or orders of the Company within the Restricted Territory or attempt to do so; or

 

(iv)                              counsel, promote or assist, financially or otherwise, any Person engaged in any business that competes with the Business within the Restricted Territory.

 

3.4                               Employee Non-Solicitation.  During the Term, any renewal term or other period of employment with the Company and for a period of one (1) year following termination of Employee’s employment with the Company for any reason, the Employee shall not, and shall cause each of his Affiliates not to, directly or indirectly, solicit or induce or attempt to solicit or induce any employee, representative, contractor or agent of the Company to terminate his or its employment, representation, engagement or other association with the Company.

 

3.5                               Non-Competition - Direct or Indirect.  The Employee will be in violation of Sections 3.2, 3.3 and 3.4 if he engages in any or all of the activities set forth in those sections directly as an individual on his own account, or indirectly for any other Person and whether as partner, joint venturer, employee, agent, salesperson, employee, contractor, consultant, officer and/or director of any Person or as an equity holder of any Person in which the Employee or the Employee’s spouse, child or parent owns, directly or indirectly, any of the outstanding equity interests.

 

3.6                               Return or Destruction.  Upon any termination of employment, the Employee shall not remove from any premises at which the Business is conducted any property of the Company, including, without limitation, any Confidential Information, and shall return, in good condition, all the property of the Company, including, without limitation, all tangible embodiments of the Confidential Information.

 

3.7                               Reasonableness of Restrictions.                     The Employee acknowledges: (a) that the scope and duration of the restrictions on the Employee’s activities under this Agreement are reasonable and 

 

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necessary to protect the legitimate business interests of the Company; (b) that the Employee will be reasonably able to earn a living without violating the terms of this Agreement; (c) that the geographic restrictions are reasonable and appropriate given the Company’s scope of business; and (d) the restrictions in this Agreement have served as a material inducement to the Company to hire the Employee.

 

Section 4.  Development of Inventions, Improvements or Know-How.

 

4.1                               Disclosure Obligation.  The Employee or his heirs, assigns and representatives, as appropriate, shall disclose fully and promptly to the Company any and all Work Product developed during the course and scope of the Employee’s employment, including, without limitation, any and all facts, test data, findings, designs, formulas, processes, sketches, drawings, models and figures.

 

4.2                               Assignment.  All Work Product is deemed a “work of hire” in accordance with the U.S. Copyright Act and is owned exclusively by the Company.  If, and to the extent, any of the Work Product is not considered a “work of hire,” the Employee does hereby assign to the Company and shall, without further compensation, assign to the Company, the Employee’s entire right, title and interest in and to all Work Product.  At the Company’s expense and at the Company’s request, the Employee shall provide reasonable assistance and cooperation, including, without limitation, the execution of documents in order to obtain, enforce and/or maintain the Company’s proprietary rights in the Work Product throughout the world.  The Employee appoints the Company as his agent and grants the Company a power of attorney for the limited purpose of executing all such documents.

 

4.3                               Publication.  The Employee shall not publish or submit for publication, or otherwise disclose to any Person other than the Company, any data or results from the Employee’s work on behalf of the Company without the prior written consent of the CEO or unless pursuant to previously authorized instruction or duty of the Employee.

 

Section 5.  Non-Disclosure.  The Employee shall keep in strict confidence, and shall not, directly or indirectly, at any time, during or after the Term or after the termination of this Agreement, disclose, furnish, disseminate, make available or, except in the course of performing his duties of employment under this Agreement in accordance with the terms hereof, use any Confidential Information, without limitation as to when or how the Employee may have acquired such information. The Employee specifically acknowledges that with respect to any Confidential Information, whether reduced to writing, maintained on any form of electronic media, or maintained in the mind or memory of the Employee and whether compiled by the Company and/or the Employee: (a) such Confidential Information derives independent economic value from not being readily known to or ascertainable by proper means by others who can obtain economic value from its disclosure or uses; (b) reasonable efforts have been put forth by the Company to maintain the secrecy of such information; (c) such information is and will remain the sole property of the Company; and (d) any retention and use of such information during or after the termination of his employment with the Company will constitute a misappropriation of the Company’s trade secrets.  The Employee’s confidentiality and non-disclosure obligations under this Section 5 extend beyond the Term, any renewal term, or other period of the Employee’s employment, no matter the reason for the termination of the Employee’s employment, for as long as such Confidential Information is not generally known to the public.

 

Section 6.  Termination of Employment.

 

6.1                               Right to Terminate.

 

(a)                                 Death.  The Employee’s employment by the Company and this Agreement shall terminate upon the Employee’s death.

 

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(b)                                 Disability.  In the event that the Employee, because of accident, disability or physical or mental illness, is incapable of performing his duties under this Agreement with reasonable accommodations pursuant to the Americans with Disabilities Act, as amended (“ADA”), the Company has the right to terminate the Employee’s employment by the Company and this Agreement upon thirty (30) days’ prior written notice to the Employee.  For purposes of this Section 6.1(b), the Employee will be deemed to have become incapable of performing his duties under this Agreement if, in the professional opinion of a physician selected the Company in good faith, he is incapable of so doing with reasonable accommodations pursuant to the ADA for (i) a continuous period of 180 days and remains so incapable at the end of such 180-day period, or (ii) periods amounting in the aggregate to 180 days within any one period of 365 days and remains so incapable at the end of such aggregate period of 180 days.

 

(c)                                  Cause.  The Company has the right to terminate the Employee’s employment by the Company and this Agreement for cause, subject to the last sentence of this Section 6.1(c), upon prior written notice to the Employee upon any (i) conviction of (or plea of nolo contendere to) a felony or a crime involving moral turpitude; (ii) embezzlement, or misappropriation of property of the Company or any other act involving fraud; (iii) material breach by the Employee of this Agreement, or any other agreement relating to the Employee’s employment with the Company; (iv) serious neglect or negligence in the performance of the Employee’s duties; (v) conduct that is materially injurious to the Company or (vi) failure to follow the reasonable and lawful directives of the CEO or the Board.  No “cause” for termination under clauses (iii), (iv) and (vi) of this Section 6.1(c) shall exist unless the Company has provided the Employee written notice describing with reasonable particularity the circumstances giving rise to “cause” and, solely to the extent cure is possible, the Employee has failed to cure such circumstances within thirty (30) days of receiving such notice.  For avoidance of doubt, if any such circumstances are not curable, the Company may terminate the Employee for “cause” upon delivery of such notice.

 

(d)                                 Otherwise by the Company.  The Company has the right to terminate the Employee’s employment by the Company and this Agreement for any other reason not specified in this Section 6.1 upon thirty (30) days written notice to Employee.

 

(e)                                  By Employee for Good Reason.  Employee has the right to terminate his employment with the Company for good reason upon any (i) material diminution in his base salary; (ii) material diminution of his duties, responsibilities, or authority; (iii) a material change in geographic location at which the Employee is required to perform his position; or (iv) any other action or inaction by the Company which constitutes a material breach of this Agreement or any other agreement with Employee; provided, however, that notwithstanding anything else herein, no act or failure to act by the Company shall give rise to a good reason for Employee’s resignation unless Employee informs the Company in writing of his intent to resign for good reason within thirty (30) days of the act or failure to act, and the Company fails to cure the act or failure to act within thirty (30) days of receiving such written notice.  For the purpose of this Agreement, resignation by the Employee for good reason shall be considered termination of the Employee’s employment without “cause.”

 

(f)                                   Otherwise By Employee.  The Employee has the right to terminate his employment under this Agreement at any time upon ninety (90) days’ prior written notice to the Company.

 

6.2                               Rights and Obligations of Employee Upon Termination.

 

(a)                                 Payment Obligation.  Upon the termination by the Company of the Employee’s employment pursuant to Section 6.1(c), the termination by the Employee of the Employee’s employment pursuant to Section 6.1(f) or non-renewal by the Employee under Section 2.1, the Company will have no 

 

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further obligation to the Employee under this Agreement except to distribute to the Employee (i) the unpaid installments of Annual Base Salary due pursuant to Section 2.3(a) up to the date of termination and (ii) the benefits due the Employee as of the date of termination, if any, under the Company’s then existing employee benefit plans, policies or programs in which he participates.  Upon the termination of the Employee’s employment pursuant to Section 6.1(a) or (b), by the Company pursuant to Section 6.1(d) or by the Employee pursuant to Section 6.1(e) or non-renewal by the Company under Section 2.1, the Company shall have no further obligation to Employee under this Agreement except to distribute to the Employee (A) the unpaid installments of Annual Base Salary due pursuant to Section 2.3(a) up to the date of termination and (B) the benefits due the Employee as of the date of termination, if any, under the Company’s then existing employee benefit plans, policies or programs in which he participates and (C) the payments identified in Section 6.2(b), if any.

 

(b)                                 Severance Benefits.  Upon (i) any termination by the Company of the Employee’s employment pursuant to Section 6.1(d), (ii) non-renewal by the Company under Section 2.1, (iii) Employee’s termination of employment for good reason pursuant to Section 6.1(e), or (iv) termination of the Employee’s employment pursuant to Section 6.1(a) or (b) (each, a Severance Termination Event”), and the execution and delivery by the Employee or the Employee’s legal representative to the Company of a general release in form and substance satisfactory to the Company in its reasonable discretion, the Company shall pay to the Employee or, in the event of the Employee’s death, the Employee’s designated beneficiary or estate a severance payment calculated by using the then current Base Salary plus the Employee’s estimated Annual Bonus amount, as determined by the Board in good faith in accordance with the short term incentive plan design then in effect. The severance payment will be made in equal installments during the Severance Period in a manner consistent with the Company’s usual payroll cycle. Subject to the terms of the applicable plan documents, and in accordance with the Company’s policies applicable to similarly situated employees, medical, prescription drug, dental, vision and health benefits coverage shall be continued on behalf of Employee and his covered dependents until the end of the Severance Period on the same terms as were provided to the Employee by the Company immediately prior to such termination or non-renewal.  In the event of a Severance Termination Event, (A) the Restricted Shares shall continue to vest in accordance with the terms set forth in the Restricted Stock Award Agreement identified in Section 2.3(c) during the Severance Period and (B) the aggregate number of shares or units under any individual time-vesting equity or long-term incentive awards granted under the Company’s incentive plan (“LTI Award”) held by the Employee will be no less than (without duplication of the prior vesting of any portion of such award) (I) the number of time-vesting LTI Awards granted to the Employee by the Company multiplied by (II) a fraction, (x) the numerator of which is the number of days that the Employee was employed by the Company from the date the LTI Awards were granted to the date of the Employee’s termination and (y) the denominator of which is the total number of days that represents the full vesting period in the aggregate with respect to such time-vesting LTI Award.  The parties hereto agree that if any award agreement with respect to such time-vesting LTI Award shall provide terms that are more favorable than as set forth herein with respect to any time-vesting LTI Award of the Company, any such award agreement shall control.

 

(c)                                  Notwithstanding the foregoing, the Company is not obligated to pay any severance payments to the Employee if the Employee violates Sections 3, 4 or 5.

 

(d)                                 Release.  In connection with payments under Sections 6.2(b), the Company shall deliver a release to the Employee or the Employee’s legal representative within ten (10) days of the Employee’s termination of employment.  No payments pursuant to Sections 6.2(b) shall be made prior to the date that both (i) the Employee has delivered an original, signed release to the Company and (ii) the revocability period (if any) has elapsed; provided, however, that any payments that would otherwise have been made prior to such date but for the fact that the Employee had not yet delivered an original, signed release (or the revocability period had not yet elapsed) shall be made as soon as administratively 

 

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practicable after the signed release has been delivered and the revocability period has elapsed, but not later than the seventy-fourth (74th) day following the Employee’s termination of employment.  If the Employee does not deliver an original, signed release to the Company within twenty-one (21) business days (or such longer period if required by law) after receipt of the same from the Company, (A) the Employee’s rights shall be limited to those made available to the Employee under Section 6.2(a), and (B) the Company shall have no obligation to pay or provide to the Employee any amount or benefits described in Sections 6.2(b), or any other monies on account of the termination of the Employee’s employment.

 

(e)                                  For purposes of this Section 6, “Severance Period” shall mean the shorter of (i) the twelve (12) month period commencing on the date of the Employee’s termination of employment and (ii) the period commencing on the date of the Employee’s termination of employment and ending on the date that the Employee violates any of Sections 3, 4 or 5.

 

Section 7.  Section 409A of the Internal Revenue Code.

 

(a)                                 Except to the extent earlier payment is permitted by Section 409A of the Internal Revenue Code (the “Code”) and the regulations promulgated thereunder, in the event that any amount due to the Employee hereunder after the termination of his employment shall be considered to be deferred compensation pursuant to Section 409A of the Code, and it is determined that the Employee is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, then the Company shall delay the payment of such amount for six (6) months after the termination of his employment (or until his death, if earlier) or for such other amount of time as may be necessary to comply with the requirements of Section 409A(a)(2)(B)(i) of the Code.

 

(b)                                 This Agreement is intended to comply and shall be administered in a manner that is intended to comply with Section 409A of the Code and the interpretative guidance thereunder, including the exceptions for short-term deferrals, separation pay arrangements, reimbursements, and in-kind distributions.  This Agreement shall be construed and interpreted in accordance with such intent.  In addition, each payment shall be considered a separate payment for purposes of Section 409A of the Code and any termination of employment under this Agreement shall mean a separation from service as defined in Section 409A of the Code and Treas. Reg. §1.409A-1(h)(1)(ii) (or other similar or successor provision).  The parties agree to make such other amendments to this Agreement as are necessary to comply with the requirements of Section 409A of the Code.

 

(c)                                  To the extent that the Employee’s consideration period for executing a general release spans two (2) calendar years, no payment of any severance amount or benefit that is (i) considered to be nonqualified deferred compensation with the meaning of Section 409A and (ii) conditioned upon execution of a general release shall be made before the first day of the second calendar year regardless of when the release is actually executed and returned to the Company.

 

Section 8.  Miscellaneous.

 

8.1                               Amendment.  This Agreement may be amended only by a writing executed by the parties to this Agreement.

 

8.2                               Entire Agreement.  This Agreement and the other agreements referred to in this Agreement set forth the entire understanding of the parties regarding this subject matter and supersede all prior contracts, agreements, arrangements, communications, discussions, representations and warranties, whether oral or written, between the parties regarding this subject matter.

 

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8.3                               Notices.  All notices and other communications required or permitted under this Agreement will be in writing and will be deemed to have been duly given when delivered in person or when dispatched by telegram or electronic facsimile transfer (confirmed in writing by mail simultaneously dispatched) or one business day after having been dispatched by a nationally recognized overnight courier service to the appropriate party at the address specified below:

 

	
If to the Company:
    	
CPI   Acquisition, Inc.
    
	
 
    	
10368 W Centennial Road
    
	
 
    	
Littleton, CO 80127
    
	
 
    	
Fax: (303) 973-8420
    
	
 
    	
Attention:  Lisa Jacoba
    
	
 
    	
 
    
	
With copies to
    	
 
    
	
CPI   Acquisition, Inc.:
    	
Winston &   Strawn LLP
    
	
 
    	
35 West Wacker Drive
    
	
 
    	
Chicago, IL 60601
    
	
 
    	
Fax: (312) 558-5700
    
	
 
    	
Attention:  Andrew McDonough
    

 

If to the Employee, at the address of the Employee as set forth on the signature page hereto.

 

8.4                               At-Will.  The Employee’s employment with the Company will be “at-will”.  “At-will” means that either the Employee or the Company are each free to terminate the employment relationship at any time, for any reason.  This Agreement does not change the nature of Employee’s “at-will” employment and does not guarantee employment for any specific period of time.  Employee’s status as an “at-will” employee cannot be modified except by written agreement signed by the Company.

 

8.5                               Assignment.  This Agreement is binding upon and inures to the benefit of the heirs, successors, representatives and assigns of each party, but no rights, obligations or liabilities of either party under this Agreement will be assignable without the prior written consent of the other party, provided the consent of the Employee shall not be withheld unreasonably.

 

8.6                               Governing Law.  This Agreement will in all respects be governed by, and construed in accordance with, the laws of the State of Illinois, without regard to conflict of laws principles that would require the application of the laws of any other jurisdiction.

 

8.7                               Severability.  Each section and subsection of this Agreement constitutes a separate and distinct provision of this Agreement. It is the intent of the parties that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applicable in each jurisdiction in which enforcement is sought. Accordingly, if any provision of this Agreement is adjudicated to be invalid, ineffective or unenforceable, the remaining provisions will not be affected by such adjudication. The invalid, ineffective or unenforceable provision will, without further action by the parties, be automatically amended to effect the original purpose and intent of the invalid, ineffective or unenforceable provision; provided, however, that such amendment will apply only with respect to the operation of such provision in the particular jurisdiction with respect to which such adjudication is made.

 

8.8                               Waivers.  None of the terms of this Agreement will be deemed to be waived or amended by either party unless such a waiver or amendment specifically references this Agreement and the related provision(s) and is in writing signed by an authorized representative of the party to be bound.  Any such signed waiver will be effective only in the specific instance and for the specific purpose for which it was made or given.

 

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8.9                               Counterparts.  This Agreement may be executed in any number of counterparts, including counterparts transmitted by electronic mail or facsimile transmission, each of which will be deemed to be an original and all of which together will constitute one and the same instrument.

 

8.10                        Headings.  The headings in this Agreement are solely for convenience of reference and are not to be given any effect in the construction or interpretation of this Agreement.

 

8.11                        Third Parties.  Nothing expressed or implied in this Agreement is intended, or may be construed, to confer upon or give any Person other than the Company and the Employee (and their respective permitted successors and assigns) any rights or remedies under, or by reason of, this Agreement.

 

8.12                        Income Tax Reporting.  The Employee shall report the Annual Base Salary and all payments made to Employee pursuant to Section 2.3 as ordinary income for Federal, state and local income tax purposes, as required.

 

8.13                        Disclosure.  During the Term and for three (3) years after such Term, the Employee shall not communicate the contents of this Agreement to any Person that he intends to be employed by, associated with or represent and that is engaged in a business that is competitive to the Business, except that the Employee shall disclose to such a Person the Employee’s continuing obligations to the Company pursuant to Sections 3 and 5.

 

8.14                        Remedies.  The Employee acknowledges that his failure to comply with any provision of this Agreement will irreparably harm the Business and that the Company will not have an adequate remedy at law in the event of such non-compliance.  Therefore, the Employee acknowledges that the Company will be entitled to injunctive relief and/or specific performance without the posting of bond or other security, in addition to whatever other remedies it may have, at law or in equity, in any court of competent jurisdiction against any acts of non-compliance by the Employee under this Agreement.

 

8.15                        Survival of Certain Obligations.  The obligations of the Company and the Employee set forth in this Agreement that by their terms extend beyond or survive the termination of this Agreement will not be affected or diminished in any way by the termination of this Agreement.

 

8.16                        Legal Counsel.  Each party hereby agrees and acknowledges that it has had full opportunity to consult with counsel and tax advisors of its selection in connection with the preparation and negotiation of this Agreement.  Accordingly, the language contained within and comprising this Agreement shall not be construed in favor of or against any one party on the grounds that the party drafted the Agreement.

 

8.17                        Attorneys’ Fees.  In the event an action or proceeding is instituted to enforce or interpret the provisions of this Agreement, the prevailing party shall be entitled to such reasonable attorneys’ fees as the court may award.

 

8.18                        Headings.  Section, paragraph and other captions or headings contained in this Agreement are inserted as a matter of convenience and for reference, and in no way define, limit, extend or otherwise describe the scope or intent of this Agreement or any provision hereof and shall not affect in any way the meaning or interpretation of this Agreement.  References to sections under this Agreement shall refer to sections of this Agreement unless specifically identified otherwise.

 

[signature pages follow]

 

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IN WITNESS WHEREOF, the Company has caused this Employment and Non-competition Agreement to be duly executed and delivered by its duly authorized officer, and the Employee has duly executed and delivered this Employment and Non-competition Agreement, as of the date first written above.

 

	
 
    	
 
    
	
 
    	
EMPLOYEE:
    
	
 
    	
 
    
	
 
    	
/s/   David Brush
    
	
 
    	
David   Brush
    
	
 
    	
Address:
    	
777   Washington Road
    
	
 
    	
 
    	
Lake   Forest, Illinois 60045
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
CPI   ACQUISITION, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Steven Montross
    
	
 
    	
Name:
    	
Steven   Montross
    
	
 
    	
Title:
    	
President   and Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
CPI HOLDINGS:
    
	
 
    	
 
    
	
 
    	
CPI HOLDINGS   I, INC., solely for purposes of Section 2.3(c) hereof
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Steven Montross
    
	
 
    	
Name:
    	
Steven   Montross
    
	
 
    	
Title:
    	
President   and Chief Executive Officer
    
				

 

[Signature Page to Employment and Non-Competition Agreement]

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