Document:

exv10w4

 

Exhibit 10.4

EXECUTION COPY

MANAGEMENT STOCKHOLDERS AGREEMENT

DATED as of August 9, 2004.

AMONG:

COMMERCIAL VEHICLE GROUP, INC.,

a Delaware corporation (the “Corporation”),

- and -

ONEX AMERICAN HOLDINGS II LLC,

a Delaware limited liability company (“Onex”),

- and -

The individuals named on Schedule I to this
Agreement and each additional management
employee of the Operating Company (as hereinafter
defined) who, at any time, acquires securities of the
Corporation and executes a counterpart of this
Agreement or otherwise agrees to be bound by this
Agreement (individually, a “Managementholder”
and collectively, the “Managementholders”).

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WHEREAS:

     A. As of August 9, 2004 the issued and outstanding capital of the
Corporation consists of:

	(i)	 	45,106.007 shares of Class A Common Stock, par value $.01 per
share (the “Class A Common”);
	 
	(ii)	 	149,228.315 shares of Class B Common Stock, par value $.01
per share (the “Class B Common”); and
	 
	(iii)	 	35,892.750 shares of Class C Common Stock, par value $.01
per share (the “Class C Common”);
	 
	(iv)	 	97,964.000 shares of Class D-1 Common Stock, par value $.01
per share (the “Class D-1 Common”);
	 
	(v)	 	0.000 shares of Class D-2 Common Stock, par value $.01 per
share (the “Class D-2 Common”); and
	 
	(vi)	 	24,491.000 shares of Class E Common Stock, par value $.01 per
share (the “Class E Common”).

     B. Each of the Managementholders is an employee of the Corporation and/or
a subsidiary of the Corporation and has acquired or is acquiring certain shares
of Class A Common.

     C. In order to provide for the stability of the Corporation and to
restrict the manner and means by which the Class A Common held by the
Managementholders may be transferred, voted and otherwise dealt with the
parties wish to enter into this Agreement.

     D. Certain terms used in this Agreement are defined in Article Six of this
Agreement.

     THEREFORE, for good and valuable consideration the receipt and sufficiency
of which are acknowledged the parties agree as follows:

ARTICLE ONE

Managementholder’s Common Stock Generally

               1.1 Managementholder’s General Representations and Warranties. Each
Managementholder represents and warrants that:

               (a) he has acquired and is holding, or will acquire and hold, all
Managementholder’s Stock held by him as sole principal and for investment only,
and not in trust in any manner for or on behalf of any other person or persons;
and

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               (b) he is not a party to or bound by any agreement regarding or affecting
his Managementholder’s Stock or his rights as a holder of Managementholder’s
Stock other than this Agreement, a pledge, if any, of Managementholder’s Stock
in accordance with Section 1.5 or an agreement, if any, to effect a transfer of
Managementholder’s Stock in accordance with this Agreement.

               1.2 Transfers in Accordance with this Agreement. Each Managementholder
agrees that Managementholder’s Stock held by him will not be transferred in
violation of this Agreement, the Securities Act of 1933, as amended (the “1933
Act”), or any other applicable law.

               1.3 Registration of Transfers. The Corporation may refuse to register any
transfer by the registered holder of Managementholder’s Stock in its transfer
books if such transfer is not in accordance with this Agreement, the 1933 Act,
or any other applicable law.

               1.4 Restrictions on Transfer. Except as expressly provided in this
Agreement, the Managementholder’s Stock may not be transferred without the
consent of the Corporation. The Managementholder’s Stock may be transferred
only in a sale for cash or cash plus assumption of indebtedness in accordance
with Section 2.1 or in accordance with the other provisions of this Agreement.
Any purported transfer in any manner contrary to the terms of this Agreement
shall be void.

               1.5 Sales to be Free of Encumbrances.

               (a) In connection with any sale of Managementholder’s Stock pursuant to
this Agreement, the Managementholder shall deliver the Managementholder’s Stock
being sold free and clear of any claim, mortgage, charge, pledge, lien,
security interest or other encumbrance of any kind.

               (b) If the Managementholder fails to comply with subsection (a), the
purchaser may withhold from the purchase price for the Managementholder’s Stock
an amount equal to the indebtedness secured by any such claim, mortgage,
charge, pledge, lien, security interest or other encumbrance or, if the amount
of such indebtedness is not known by the purchaser, an amount equal to the
purchaser’s good faith estimate thereof, and shall pay such withheld amount to
the person to whom such indebtedness is owed. Any such payment of such
withheld amount shall discharge the purchaser’s obligation to make payment for
the purchased shares to the extent of such withheld amount.

               1.6 Closings of Sales of Managementholder’s Stock.

               (a) At the closing of any sale of Managementholder’s Stock pursuant to
this Agreement, the Managementholder selling Managementholder’s Stock shall
deliver to the purchaser the share certificates and other instruments
representing such Managementholder’s Stock, together with stock powers and
other instruments transferring such Common Stock, duly endorsed for transfer
and free and clear of any claim, mortgage, charge, pledge, lien, security
interest or encumbrance of any kind, and the purchaser shall deliver to the
Managementholder the consideration payable upon closing. If subsection 2.3(b)
of this Agreement is applicable to the sale and the purchaser is other than the
Corporation or the Investors, the purchaser shall also

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deliver to the Managementholder an undertaking to pay the increased
purchase price for the Managementholder’s Stock in accordance with subsection
2.3(b) in the events therein described, as if such purchaser were a party to
this Agreement.

               (b) If the Managementholder is not present at the closing, or is present
but for any reason fails to produce and deliver to the purchaser, in accordance
with subsection (a), the certificates or other instruments representing any of
the Managementholder’s Stock being transferred or any other document required
under subsection (a), then the purchaser may deposit the applicable
consideration payable to such Managementholder, as and when payable under this
Agreement. into a special account in trust for the Managementholder at a branch
of the Corporation’s bankers. Such deposit shall constitute valid and
effective payment to the Managementholder of the purchase price for such Common
Stock notwithstanding the fact that the Managementholder may have voluntarily
attempted to encumber or dispose of any of the Common Stock contrary to the
terms hereof, or that one or more certificates or other evidences of ownership
of the Common Stock may have been delivered to any other person. From and
after the date of such deposit (even though the share certificates in the name
of the such Managementholder or other instruments representing such Common
Stock have not been delivered to the purchaser), the purchase and transfer of
the Common Stock shall be deemed to have been fully completed and all right,
title, benefit and interest of the Managementholder in and to all such Common
Stock, both at law and in equity, shall be conclusively deemed to have been
transferred and assigned to and become vested in the purchaser.

               (c) Where the purchaser has made a deposit in accordance with subsection
(b), the Managementholder shall be entitled to receive the consideration for
his Managementholder’s Stock deposited with the Corporation’s bankers, without
interest, upon delivery to the Corporation of (i) the certificates or other
instruments representing the Managementholder’s Stock duly endorsed for
transfer in the manner required by subsection (a) and (ii) any other document
required under subsection (a) to be delivered by him at the closing including,
without limitation, the release or discharge of any encumbrance relating to the
Managementholder’s Stock being sold.

               (d) Each Managementholder irrevocably constitutes and appoints the
Secretary from time to time of the Corporation (the “Secretary”) as his
attorney and agent authorized, in his name and on his behalf, to execute and
deliver (i) all such assignments, transfers, deeds and instruments as may be
necessary to effectively transfer the Common Stock being transferred to the
purchaser on the books of the Corporation and (ii) any other document required
under subsection (a) to be delivered by him at closing. Such appointment and
power of attorney, being coupled with an interest, shall not be revoked by the
insolvency, bankruptcy, death or incapacity of the Managementholder, and the
Managementholder hereby agrees to ratify and confirm any act taken by the
Secretary on his behalf hereunder and agrees that the receipt of the Secretary
as attorney shall be a good discharge to the Managementholder.

               (e) The Secretary of the Corporation (or another officer designated by the
Board of Directors to act in his stead) shall, at all times, hold the
certificates representing all Managementholder’s Stock. The Secretary or such
other officer shall hold such certificates in safekeeping to the order of the
registered holder of the Common Stock represented by the certificates (but
subject to the terms of this Agreement); provided that, upon being satisfied
that a

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lender reasonably requires possession of any certificate for the purposes
of an arrangement permitted by Section 1.5, the Secretary may release the
certificate to the lender upon receipt of an irrevocable direction from the
registered holder to the lender to return the certificates to the Secretary if
the registered holder would otherwise be entitled to the return of the
certificates.

               (f) Nothing in this Section is intended to limit any other remedy
available to a purchaser of Managementholder’s Stock.

               1.7 Application of the Agreement. For greater certainty, it is
acknowledged and agreed that this Agreement shall apply in respect of all
Common Stock now or hereafter acquired and held by a Managementholder
including, but not limited to, Common Stock acquired pursuant to Section 3.5,
but not including Common Stock purchased by a Managementholder through the
facilities of a securities exchange on which the Common Stock is then listed or
quoted in the NASDAQ System or the over-the-counter market after the
Corporation has become a Public Company.

ARTICLE TWO

Sale of Managementholder’s Stock

               2.1 Sales to Another Managementholder or Management Employee.

               (a) If a Managementholder desires to transfer Managementholder’s Stock at
any time pursuant to a bona fide written offer to purchase his
Managementholder’s Stock for cash or for cash and the assumption of
indebtedness referred to in Section 1.5 (an “Offer”) from another
Managementholder or a management employee of the Operating Company who in
either case is acceptable to the Board of Directors, in its sole discretion (an
“Offeror”), he shall give the Corporation and the Investors notice thereof (a
“Notice”) attaching a copy of such Offer.

               (b) If a Notice is given, the Corporation, or at the Corporation’s option,
the Investors, shall have the option, exercisable by notice to the
Managementholder within 30 days after the date of receipt of the Notice by the
Corporation and the Investors, to purchase all or any part of the
Managementholder’s Stock proposed to be sold pursuant to the Offer for the same
price per share and on the same terms as the Offer.

               (c) If the Corporation or the Investors do not exercise the option
referred to in subsection (b) within the 30-day option period provided in
subsection (b), and the Board of Directors of the Corporation has consented to
the proposed sale to the Offeror pursuant to the Offer, the Managementholder
shall have the right, exercisable at any time within 60 days after the
expiration of such 30-day option period, to sell any of the Managementholder’s
Stock as to which the option referred to in subsection (b) was not exercised to
the Offeror in accordance with the terms of the Offer. Notwithstanding the
foregoing, the consent of the Board of Directors shall not be required for such
proposed sale if the Offeror is, at the time of the sale, a Managementholder
bound by this Agreement. If the Managementholder’s Stock as to which the
option referred to in subsection (b) was not exercised remains unsold at the
end of such 60-day period, such Managementholder’s Stock may not thereafter be
transferred unless the Managementholder again complies with this Section 2.1.

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               (d) Any Offeror who acquires Common Stock pursuant to an Offer shall, by
its purchase of such Common Stock and acceptance of the certificates therefor,
be deemed to agree to, and shall be bound by, the provisions of this Agreement
and shall at the time of closing of the purchase of any Common Stock execute
such documents as may be, in the reasonable opinion of the Corporation,
required in order to evidence such agreement.

               2.2 Sale When the Corporation is a Public Company.

               (a) Notwithstanding Section 2.1, at any time when the Corporation is a
Public Company, except during any l80-day period following any final
qualification or registration of securities of the Corporation for a public
offering, a Managementholder shall, after complying in full with the provisions
of this Section 2.2, be entitled during any 90-day period to sell up to 5% of
the Managementholder’s Stock then held by him through the facilities of any
securities exchange on which the Common Stock is then listed or quoted in the
NASDAQ System or the over-the-counter market, subject to compliance with
applicable securities laws and with the by-laws and regulations of such
exchange (such a sale is hereinafter referred to as a “Market Sale”). No
Managementholder shall, however, sell in the aggregate pursuant to this Section
2.2 more than a maximum of one-third of the aggregate number of
Managementholder’s Stock acquired to such date by such Managementholder,
provided that the Board of Directors may, on the recommendation of the
President of the Corporation, permit the Managementholder to sell in excess of
the foregoing maximum proportion of his Managementholder’s Stock.

               (b) Not less than five and not more than ten business days before
effecting any Market Sale, the Managementholder shall first give notice to the
Investors (a “Market Sale Notice”) offering to sell to the Corporation, or at
the Corporation’s option, to the Investors all of that number of shares of
Managementholder’s Stock which it proposes to sell, at a price per share of
Common Stock equal to the average closing price per share on such securities
exchange on which the Common Stock is then listed or which is quoted or the
NASDAQ System or the over-the-counter market for the ten trading days thereon
immediately preceding the date of the Market Sale Notice (the “Market Price”).

               (c) If the Corporation or the Investors, wish to accept an offer made
pursuant to a Market Sale Notice they shall do so by notice of election to
purchase (a “Market Exercise Notice”), given to the Managementholder within
three business days after receipt by the Investors of the Market Sale Notice,
which designates the number of shares of Managementholder’s Stock to be
purchased, and the Managementholder shall thereupon be bound to sell such
Managementholder’s Stock to the Corporation or the Investors, as the case may
be, and the Corporation or the Investors, as the case may be, shall be
obligated to buy such shares of Managementholder’s Stock at the Market Price.
If the Corporation or the Investors elect to purchase a part, only, of the
number of the Managementholder’s Stock which the Managementholder offered to
sell, the Managementholder may sell the balance of the shares of
Managementholder’s Stock which were offered, through the facilities of any
securities exchange on which the Common Stock is then listed or quoted on the
NASDAQ System or the over-the-counter market, on any of the five consecutive
business days commencing on the fifth business day after receipt by the
Investors of the Market Sale Notice.

               2.3 Sale Upon Cessation of Employment.

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               (a) If a Managementholder ceases to be employed in a full-time capacity by
the Operating Company for any reason (including but not limited to the
Managementholder’s voluntary termination, termination by the Operating Company
with or without cause, or the Managementholders’ death, permanent disability or
retirement) prior to the time the Corporation becomes a Public Company, the
Corporation (or, if the Corporation so elects, the Investors) shall purchase,
and the Managementholders shall sell, all of the Managementholder’s Stock owned
by such Managementholder. The Purchase Price payable per share in any sale of
Common Stock pursuant to this Section 2.3 shall be equal to Book Value Per
Share.

               (b) If the Corporation effects a public offering of securities of the same
class as the Managementholder’s Stock purchased pursuant to this Section 2.3
within six months after the closing of such purchase, the purchase price per
share shall be increased by an amount equal to the excess, if any, of the
public offering price per share pursuant to such public offering (after
deduction of any applicable underwriters’ commissions or discounts and expenses
of such offering on a per share basis) over the Book Value Per Share used in
calculating the original purchase price.

               (c) The purchase price for Managementholder’s Stock purchased pursuant to
this Section 2.3 shall be paid 100% in cash at the closing of such purchase.

               2.4 Sale Upon Cessation of Employment When the Corporation is a Public
Company.

               Notwithstanding Section 2.3, if a Managementholder ceases to be employed
in a fulltime capacity by the Operating Company for any reason (including but
not limited to the Managementholder’s voluntary termination, termination by the
Operating Company, with or without cause, or the Managementholder’s death,
permanent disability or retirement) after the time the Corporation has become a
Public Company, the Managementholder shall be entitled to sell his
Managementholder’s Stock through the facilities of any securities exchange on
which the Common Stock is then listed or quoted on the NASDAQ system or
over-the-counter market, provided such sales are made in the normal course and
in a manner which complies with applicable securities laws and regulations and
stock exchange rules and provided further that no more than one-half of his
Managementholder’s Stock may be sold prior to the first anniversary of such
termination of employment. Notwithstanding the previous sentence, (a) in the
event of the death of the Managementholder, his executors or administrators
shall not be restricted as to the proportion of his Managementholder’s Stock
that may be sold during the year following termination of employment, (b) in
the event of the termination of his employment by reason of his permanent
disability, the Managementholder shall not be restricted as to the proportion
of his Managementholder’s Stock that may be sold during the year following
termination of employment, and (c) in the event of the retirement of the
Managementholder, up to 75% of his Managementholder’s Stock may be sold during
the year following termination of employment.

               2.5 Defined Terms and Expressions. As used in this Article:

               (a) “permanent disability” means the inability of a Managementholder to
fulfill his duties as an employee of the Operating Company as a result of
illness, accident or

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physical or mental disability either for a period of six consecutive
months or for any 180 days in any 365-day period.

               (b) “retirement” means retirement of a Managementholder in accordance with
the retirement policy provided for in the Operating Company’s employment
policies in effect from time to time.

               (c) “termination by the Operating Company without cause” shall mean
termination by the Operating Company on grounds other than gross or continued
neglect of duty, serious and wilful misconduct, theft, embezzlement, fraud,
breach of fiduciary duty or other like cause.

               2.6 “termination by the Operating Company” shall include a refusal by the
Operating Company to renew an employment contract at the end of its stated
term.

               2.7 Closing.

               (a) The closing of any purchase and sale of Managementholder’s Stock
pursuant to exercise by the Corporation or the Investors of a right, or
fulfillment of an obligation, under Section 2.1, 2.2, or 2.3 shall be held at
the registered office of the Corporation at a date and time designated by the
purchaser, but in any event not later than 60 days (or, in the case of a
purchase and sale pursuant to subsection 2.3(e), 120 days) after the date of
receipt of the Notice, receipt of the Market Sale Notice, cessation of
employment or date of acquisition of Common Stock following termination of
employment referred to in subsection 2.3(e), as the case may be.

               (b) Any Managementholder’s Stock purchased by the Investors or the
Corporation, pursuant to the exercise of a right, or fulfillment of an
obligation, under Section 2.1, 2.2, or 2.3 shall be free and clear of all
liens, charges, encumbrances or restrictions with the exception of any
restrictions imposed by this Agreement where such Managementholder’s Stock are
purchased by the Investors.

               2.8 Investor Purchasers. Any opportunity for the Investors to purchase
Common Stock pursuant to this Agreement shall be offered to each Investor pro
rata based on the aggregate number of shares of Common Stock each such Investor
owns or has the right to acquire (either through exercise, conversion, exchange
or otherwise) at the time of such offer. If an Investor fails to elect to
purchase its pro rata share, any remaining shares of Common Stock shall be
referred to the subscribing Investors on the same pro rata basis until all such
shares are allocated or no Investor desires to elect to purchase any more of
such shares. For purposes hereof, all shares of Common Stock owned by any
general partner of any Investor who is a partnership shall be deemed to be
owned by such Investor.

               2.9 Non-Disclosure of Confidential Information. Each Managementholder
acknowledges that, in the course of performing and fulfilling his duties and as
an employee of the Operating Company (which in this section includes its
affiliates), he may have access to and may be entrusted with confidential
information concerning its activities, business operations and its customers
and clients, which information is not generally known in the industry in which
the Operating Company does business (“Confidential Information”). The
disclosure of any Confidential Information to competitors of the Operating
Company or to other persons would be

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highly detrimental to the interests of the Operating Company. Each
Managementholder further acknowledges and agrees that the right to maintain
confidential such Confidential Information is a proprietary right which the
Operating Company is entitled to protect. Accordingly, each Managementholder
covenants and agrees with the Operating Company that (a) he will not during the
continuance of his employment by the Operating Company disclose any such
Confidential Information to any person, nor shall he use the same, except as
required in the normal course of his employment by the Operating Company, and
(b) after the termination or expiration of his employment by the Operating
Company, he will not disclose or make any use of same without the consent of
the Operating Company, provided, however, that he shall not be prohibited by
this paragraph from using the personal skills and knowledge developed by him
prior to and during his employment by the Operating Company. Each
Managementholder acknowledges that the above covenants are reasonable and
agrees that, in addition to any other remedies at law it may have (which other
remedies such Managementholder acknowledges to be inadequate to protect its
legitimate interests), the Operating Company shall be entitled to injunctive
relief in the event of a breach thereof.

ARTICLE THREE

Sale of Common Stock by Onex and the Corporation

               3.1 Piggy-Back Right.

               (a) Except as provided in Section 3.4, if at any time the Board of
Directors approves a Sale of the Company (an “Approved Sale”), the Corporation
shall, at least 20 days prior to the Approved Sale, give notice (a “Sale
Notice”) to the Management Representatives (as hereinafter defined) on behalf
of the Managementholders describing the terms of the Approved Sale in
reasonable detail, including the identity of the proposed purchaser, and
stating that each Managementholder has (and each Managementholder shall then
have) the option to sell to the proposed purchaser his Managementholder’s
Stock, simultaneously with and conditional upon the closing of the Approved
Sale, at the price per share and on the other terms consistent with the rights
and preferences of the Common Stock set forth in the Corporation’s Certificate
of Incorporation as is reasonably determined by the Board of Directors.

               (b) The option pursuant to subsection (a) shall be exercised by notice to
the Corporation given not later than the date specified therefor in the Sale
Notice, which shall be not less than 10 business days after such Sale Notice is
given. If a Managementholder gives notice of his election to sell he shall be
obligated to sell the shares of Managementholders’ Stock specified in his
notice upon the terms specified in subsection (a) to the proposed purchaser,
conditional upon the closing of the Approved Sale.

               (c) If the proposed purchaser pursuant to the Approved Sale has specified
a limited number of shares of Common Stock which it is willing to purchase in
the aggregate, each Managementholder shall have the right to sell to the
proposed purchaser up to that number of shares of Common Stock which is in the
same proportion to all shares of Common Stock being purchased by the proposed
purchaser as the number of shares of Common Stock then owned by such
Managementholder is of the total number of shares of Common Stock then
outstanding (in

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each case, assuming the conversion or exchange of all securities
convertible into or exchangeable for Common Stock).

               3.2 Drag-Along Right. If at any time the Board of Directors proposes an
Approved Sale, the Corporation may, by so notifying the Management
Representatives on behalf of the Managementholders in the Sale Notice, require
each Managementholder to sell his Managementholder’s Stock, simultaneously with
and conditional upon the closing of such Approved Sale, at the price (whether
in cash or other consideration) per share and other terms consistent with the
rights and preferences of the Common Stock set forth in the Corporation’s
Certificate of Incorporation as is reasonably determined by the Board of
Directors, and each Managementholder shall thereupon be obligated to sell such
Managementholder’s Stock. If the form of consideration to be received on such
Approved Sale is, in the reasonable opinion of the Board of Directors after
consultation with the Management Representatives, inappropriate as a form of
consideration for Managementholders, the Corporation shall use its best efforts
to have such consideration converted to cash or more appropriate consideration
at a fair value.

               3.3 Representations and Warranties on a Disposition. In connection with
any Approved Sale, in which Managementholder’s Stock is to be sold by a
Managementholder, the Corporation may require the Managementholder to enter
into agreements with the purchaser representing and warranting that, except as
specifically disclosed to the purchaser in writing, such Managementholder, at
the time of the closing of the Approved Sale, does not have actual knowledge
that any representation or warranty made by the Corporation or any other
shareholder in connection with the Approved Sale was untrue in any material
respect when made or is untrue in any material respect as of such closing; the
liability of the selling Managementholder under such representation and
warranty shall be limited to the amount which he receives from the sale of his
Managementholder’s Stock in connection with the Approved Sale and shall be pro
rata in accordance with the number of shares of Common Stock sold by the
Managementholder in relation to the shares of Common Stock being sold by all
shareholders as part of the Approved Sale.

               3.4 Exceptions to the Piggy-Back Right. Section 3.1 shall not apply to
any sale as part of a public offering of Common Stock.

               3.5 Piggy-Back Right on a Public Offering.

               (a) If the Corporation proposes to effect a public offering of shares of
Common Stock in which shares of the Corporation’s Common Stock held by the
Investors are to be included, the Corporation shall, prior to the proposed
initial filing or registration, give notice thereof and of the manner of
offering contemplated thereby (“Public Offering Notice”) to each of the
Managementholders unless a determination has been made by the managing
underwriter(s) pursuant to sub-section (g) of this Section 3.5 to the effect
that there is reasonable cause to believe that the inclusion of the
Managementholders’ Stock might adversely affect the offering.

               (b) The Corporation shall not be required to give a Public Offering Notice
in accordance with subsection (a) or to register Managementholder’s Stock in
accordance with subsection (c) if the distribution of shares of Common Stock
being proposed cannot, under applicable law and regulations, be combined
(pursuant to the form of prospectus or registration

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Statement proposed to be used) with a distribution of shares of
Managementholder’s Stock or if and to the extent that such distribution of
Managementholder’s Stock would contravene an agreement with a security holder
that prohibits or restricts the inclusion of securities to be sold by others.

               (c) If a Public Offering Notice is given, then, on written notice to the
Corporation (a “Holder’s Request”) from a Managementholder within 10 days after
the receipt of the Public Offering Notice (which Holder’s Request shall specify
the number of shares of Management holder’s Stock which the Managementholder
wishes to sell and distribute, which number shall not represent a greater
proportion of such Managementholder’s Stock than the proportion of all shares
of Common Stock held by the Investors which is proposed to be sold and
distributed pursuant to such public offering) the Corporation will use its best
efforts to register the shares of Managementholder’s Stock stated in the
Holder’s Request (or, if less, the Pro Rata Number of such Managementholder’s
Stock) for distribution pursuant to the proposed public offering in addition to
the shares of Common Stock being offered by the Investors. If the number of
shares of Common Stock which the Investors, the Managementholders and other
holders of Common Stock wish to sell and distribute exceeds the number thereof
which, in the opinion of the managing underwriter(s), is the maximum number
thereof that might be included with the offering without adversely affecting
the offering, then the excess above such maximum number shall not be included
with the offering, and the number of shares of Common Stock of the Investors
and each Managementholder wishing to sell, to be sold with the offering, shall
be proportionate to their respective holdings of Common Stock. If any of the
Managementholders is thereby entitled to sell more shares of Common Stock than
he wishes to sell, the Investors and each remaining Managementholder shall be
entitled to make up the difference pro-rata from its or his respective
holdings, provided that any such Managementholder shall have confirmed his
desire to make up his pro-rata proportion of the difference out of his holdings
within 5 days after notice of his entitlement to do so is given to him.

               (d) As used in this Section 3.5, the term “Pro Rata Number” shall mean the
product of (i) the total number of shares of Common Stock held by the
Managementholder and (ii) a fraction, the numerator of which is the aggregate
number of shares of Common Stock which are to be so registered and the
denominator of which is the aggregate number of shares of Common Stock
outstanding.

               (e) On a sale pursuant to this Section 3.5, Managementholders shall sell
their shares of Common Stock through the underwriters on the same terms as the
Investors or the Corporation generally are selling their or its shares of
Common Stock.

               (f) The Corporation shall be responsible for the preparation of the
preliminary prospectus, the prospectus or registration statement and related
papers and filings (including any Blue Sky filings) in connection with the
proposed public offering.

               (g) Notwithstanding the provisions of this Section 3.5, the Corporation
(i) may at any time delay, abandon or withdraw such prospectus or registration
statement relating to a proposed offering, and (ii) shall not be required to
register Managementholder’s Stock pursuant to subsection (c) in connection with
any proposed offering if, in the opinion of the managing

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underwriter(s), there is reasonable cause to believe that the inclusion of
such Managementholder’s Stock might adversely affect the offering.

               (h) Each participating Managementholder shall supply the Corporation with
such information as the Corporation may reasonably request in order to prepare
any preliminary prospectus, prospectus and registration statement required in
connection with the proposed public offering, to prepare any related papers and
filings, to effect the qualifications required by this Section 3.5 and to
comply with applicable securities laws.

               (i) Each Managementholder’s registration rights are limited solely to the
rights set forth in this Section 3.5.

               3.6 Costs of Public Offering. Each Managementholder who participates in a
public offering of Common Stock of the Corporation pursuant to any provision of
this Article 3 shall bear a portion of all costs incurred in connection with
such offering including, without limitation, the fees of investment bankers,
lawyers and accountants in the same proportion as the number of shares of
Common Stock sold by such Managementholder is of all the Common Stock sold
pursuant to such public offering unless such costs are to be borne by the
Corporation. Each Managementholder shall, in any event, pay the underwriting
discounts or commissions applicable to the sale of his Common Stock in such
public offering and, where required, execute the applicable underwriting
agreement and all related documents.

ARTICLE FOUR

Legending and Voting

               4.1 Legending of Stock Certificates. All certificates representing shares
of Common Stock held by Managementholders shall bear the following legend:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND
CERTAIN RESTRICTIONS ON THE VOTING OF SUCH SECURITIES
CONTAINED IN THE MANAGEMENT STOCKHOLDERS AGREEMENT,
DATED AS OF                        , 2004 AMONG THE ISSUER OF
SUCH SECURITIES (THE “COMPANY”) AND CERTAIN OF THE
COMPANY’S STOCKHOLDERS, A COPY OF SUCH MANAGEMENT
STOCKHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT
CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON
WRITTEN REQUEST.”

               4.2 Voting of Managementholder’s Stock. Each Managementholder shall at
all times vote his Managementholder’s Stock (to the extent they are entitled to
vote) in the same manner as the Common Stock held by Onex is voted, on the
election of directors and on all other matters which are submitted to a vote
(or consent in lieu of voting) of the Corporation’s stockholders, and for this
purpose, shall execute and deliver to Onex (or its designees) proxies to vote
such Managementholder’s Stock in the same manner as the Common Stock held by
Onex is

12

 

voted. To the extent permitted by law, each Managementholder, by his
execution of this Agreement, irrevocably constitutes and appoints the person
who is at any time the president of Onex, his proxy to vote all of his
Managementholder’s Stock at any meeting of stockholders of the Corporation, or
to give consent in lieu of voting, on any matter which is submitted for a vote
or consent to the stockholders, provided that such Managementholder’s Stock is
voted or consent is given with respect to them in the same manner as the Common
Stock held by Onex. Notwithstanding anything contained in this Section 4.2,
Managementholder’s Stock shall not, except with the express consent of the
Managementholder, be voted in favor of any resolution the effect of which will
be to change the Managementholder’s Stock or Onex Stock, or convert or exchange
the Managementholder’s Stock or Onex Stock into or for different securities,
unless in every such case the Managementholder’s Stock and the Onex Stock are
thereby changed identically or converted into or exchanged for the same type of
securities in proportion to their respective holdings of Common Stock, in each
case on terms consistent with the rights and preferences set forth in the
Corporation’s Certificate of Incorporation as is reasonably determined by Onex.

               4.3 Management Representatives. Each of the Managementholders hereby
irrevocably constitutes and appoints the Management Representatives (as defined
in this Section 4.3) as his representatives to take all actions on his behalf
in connection with this Agreement, in their sole and absolute discretion,
including but not limited to executing any consents or waivers in connection
with, or any amendments to, this Agreement (with the exception of any decision
to sell his Managementholder’s Stock pursuant to Section 2.1, 2.2, 3.1, or
3.5). In the event of a disagreement among the Management Representatives, a
majority of them shall have all authority granted to the Management
Representatives by the Managementholder under this Agreement. The term
“Management Representatives” shall mean the Chief Executive Officer of the
Corporation and any two Vice-Presidents of any Operating Company designated
from time to time by the Chief Executive Officer.

ARTICLE FIVE

Covenants of the Corporation

               5.1 Mergers, Consolidations, Etc. The Corporation shall not merge,
consolidate or reorganize with another corporation, or sell all or
substantially all of its assets to another person, if pursuant thereto any
Investor shall receive equity securities as full or partial consideration for
its Common Stock, unless all Managementholders shall have the right to receive
the same securities in proportion to their respective holdings of Common Stock,
in each case on terms consistent with the rights and preferences set forth in
the Corporation’s Certificate of Incorporation as is reasonably determined by
the Board of Directors.

               5.2 Financial Statements. The Corporation shall deliver to each
Managementholder so long as he owns Managementholder’s Stock:

               (a) within 120 days after the end of each fiscal year of the Corporation,
a consolidated balance sheet of the Corporation and its subsidiaries as at the
end of such fiscal year, and consolidated statements of income and of cash
flows of the Corporation and its

13

 

subsidiaries for such fiscal year, accompanied by a report thereon of
independent certified public accountants; and

               (b) within 45 days after the end of each fiscal quarter of the
Corporation, a consolidated balance sheet of the Corporation and its
subsidiaries as at the end of such quarter, and consolidated statements of
income and of cash flows of the Corporation and its subsidiaries for such
quarter, and a certificate of an officer of the Corporation certifying that, in
his opinion, the statements fairly present the financial position and results
of operation of the Corporation and its subsidiaries and have been prepared in
accordance with generally accepted accounting principles (except that such
statements need not include complete notes).

               (c) Except as otherwise required by any applicable law or judicial order
or decree or by any governmental agency or authority, each Managementholder
entitled to receive information regarding the Corporation and its subsidiaries
under this Section 5.2 shall maintain the confidentiality of all nonpublic
information obtained by such Managementholder hereunder which the Corporation
has reasonably designated as proprietary or confidential in nature; provided
that each such Managementholder may, to the extent required by law, disclose
such information in connection with the sale or transfer of Common Stock if
such Managementholder’s transferee agrees in writing to be bound by the
provisions hereof.

ARTICLE SIX

Interpretation

               6.1 Definitions. When used in this Agreement the following terms shall
have the respective meanings shown:

               (a) “affiliate” means, with respect to any person, any of (i) a director
or executive officer of such person, (ii) a spouse, parent, sibling or
descendant of such person (or spouse, parent, sibling or descendant of any
director or executive office of such person), and (iii) any other person that,
directly or indirectly, controls, or is controlled by or is under common
control with such person (for purposes of this definition, “control” (including
with correlative meanings, the terms “controlling,” “controlled by” and “under
common control with”), as 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 the
ownership of voting securities or by contract or agency or otherwise);

               (b) “Board of Directors” means the board of directors of the Corporation;

               (c) “business day” means any day which is neither a Saturday or Sunday nor
a legal holiday on which the banks are authorized or required to be closed in
New York City;

               (d) “Book Value Per Share” as of any date means the quotient obtained by
dividing (i) consolidated common stockholders’ equity of the Corporation and
its subsidiaries as of the end of the fiscal quarter immediately subsequent to
the date of the event that required the purchase and sale pursuant to Section
2.3 determined in accordance with generally accepted accounting principles in
effect in the United States on the date of this Agreement by (ii) the number of
shares of Common Stock outstanding on such date. In making calculations for

14

 

purposes of clauses (i) and (ii) it shall be assumed that all options and
rights to purchase shares of Common Stock and securities convertible or
exchangeable into Common Stock outstanding on the date as of which the
calculation is being made had been exercised or converted to the extent that
the exercise price or conversion price (expressed in terms of principal amount
of debt or liquidation preference in the case of shares) does not exceed Book
Value Per Share (determined without regard to this sentence) and any purchase
price for shares of Common Stock payable upon such exercise had been paid. The
determination of Book Value Per Share shall be based upon the audited (in the
case of the end of a fiscal year) or unaudited (in the case of the end of any
of the first three quarters of a fiscal year) balance sheet of the Corporation
as at the end of the fiscal quarter in question. Notwithstanding the
foregoing, Book Value Per Share shall be equitably adjusted by the Board of
Directors if a stock dividend, recapitalization or other material event occurs
outside of the ordinary course of business after the end of such fiscal quarter
and before the closing of the sale in respect of which the determination is
being made;

               (e) “Common Stock” means (i) any Class A Common, Class B Common, Class C
Common, Class D-1 Common, Class D-2 Common, or Class E Common and any other
common stock of the Corporation outstanding from time to time and (ii) any
equity securities issued or issuable, directly or indirectly, with respect to
the securities referred to in clause (i) above by any of stock divided or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization;

               (f) “Independent Third Party” means any person who, immediately prior to
the contemplated transaction, does not own in excess of 5% of the Corporation’s
common stock on a fully-diluted basis (a “5% Owner”) and who is not an
affiliate of a 5% Owner;

               (g) “Investors” means each of Onex, the persons listed on Schedule III
attached hereto and their respective affiliated permitted transferees of Common
Stock;

               (h) “Management Representatives” shall have the meaning given to it in
Section 4.3;

               (i) “Managementholder’s Stock” means the Common Stock owned at any
particular time by any Managementholder other than Common Stock purchased by a
Managementholder through the facilities of a securities exchange on which the
Common Stock is then listed or quoted in the NASDAQ System or the
over-the-counter market after the Corporation has become a Public Company;

               (j) “Onex” means Onex American Holdings II LLC or any affiliate of Onex
American Holdings II LLC;

               (k) “Onex Stock” means the Common Stock owned at any particular time by
Onex other than Common Stock purchased by Onex through the facilities of a
securities exchange on which the Common Stock is then listed or quoted in the
NASDAQ System or the over-the-counter market after the Corporation has become a
Public Company;

               (l) “Operating Company” means anyone or more of the Corporation and its
subsidiaries;

15

 

               (m) “person” includes an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof;

               (n) “Public Company” means a corporation which has effected a public
offering;

               (o) “public offering” means public offering and sale of Common Stock
pursuant to an effective registration under the 1933 Act;

               (p) “Sale of the Company” means the sale of the Corporation to an
Independent Third Party or a group of Independent Third Parties pursuant to
which such party or parties acquire (i) capital stock of the Corporation
possessing the voting power to elect a majority of the Corporation’s board of
directors (whether by merger, consolidation, recapitalization, reorganization
or sale of a majority of the Corporation’s outstanding Common Stock and Common
Stock equivalents) or (ii) all or substantially all of the Corporation’s
consolidated assets;

               (q) “subsidiary” means, with respect to any person, any corporation of
which the shares of stock having fifty percent (50%) or more of the general
voting power in electing the board of directors are, at the time of which the
determination is being made, owned by such person either directly or indirectly
through subsidiaries; and

               (r) “transfer” includes any sale, exchange, assignment, gift, bequest,
pledge, creation of a lien or security interest, disposition, encumbrance, or
other arrangement by which possession, legal title or beneficial ownership
passes from one person to another, or to the same person in a different
capacity, whether or not voluntary and whether or not for value.

               6.2 Extended Meanings. In this Agreement, words importing the singular
number include the plural and vice versa and words importing gender include all
genders.

               6.3 Governing Law. This Agreement and all amendments hereof and waivers
and consents hereunder shall be governed by the internal law, and not the law
of conflicts, of the State of Delaware.

               6.4 Captions. The captions in this Agreement are for convenience of
reference only and shall not be given any effect in the interpretation of this
Agreement.

               6.5 Severability. The provisions of this Agreement are intended to be and
shall be deemed to be severable. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such
invalid or unenforceable provision were omitted.

               6.6 Time. Time shall be of the essence in this Agreement.

16

 

ARTICLE SEVEN

Miscellaneous

               7.1 Termination. This Agreement shall terminate if the Investors in the
aggregate cease to hold at least one-third of the outstanding shares of Common
Stock of the Corporation and this Agreement shall terminate as to any person
when that person no longer owns any shares of Managementholder’s Stock, or
rights to acquire shares of Common Stock to which this Agreement shall apply
under Section 1.8.

               7.2 Notices. All notices, consents and other communications required or
permitted to be given under or by reason of this Agreement shall be in writing
and shall be delivered personally or by telex or telecopy as described below,
and shall be deemed given on the date on which delivery is made. If delivered
by telex or telecopy, such notices or communications shall be confirmed by a
registered or certified letter (return receipt requested), postage prepaid.
Any such delivery shall be addressed to the intended recipient at the following
addresses (or at such other address for a party as shall be specified by such
party by like notice to the other parties):

	(a)	 	if to the Corporation:

Commercial Vehicle Group, Inc.

6530 Campus Way

New Albany, Ohio 43054

Attention: President

with a copy to:

Hidden Creek Industries

4508 IDS Center

Minneapolis, Minnesota 55402

Attention: Carl E. Nelson

Telecopy: (612) 332-2012

and

Kirkland & Ellis LLP

200 East Randolph Drive

Chicago, Illinois 60601

Attention: John A. Schoenfeld

Telecopy: (312) 861-2200

	(b)	 	if to Investors:

Onex American Holdings II LLC

161 Bay Street

(P.O. Box 700)

49th Floor

Toronto, Canada M5J 2S1

17

 

Attention: President

Telecopy: (416) 362-5765

with a copy to:

Kirkland & Ellis LLP

200 East Randolph Drive

Chicago, Illinois 60601

Attention: John A. Schoenfeld

Telecopy: (312) 861-2200

               (c) if to any Managementholder, to him at his address as appears on
Schedule I attached hereto or as otherwise shown on the records of the
Corporation.

               7.3 No Waiver. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. No purported waiver shall be
effective unless in writing. The waiver by any party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of
any subsequent or other breach.

               7.4 Exclusive Agreement and Amendment. This Agreement supersedes all
prior agreements among the parties with respect to its subject matter, is
intended as a complete and exclusive statement of the terms of the Agreement
among the parties with respect thereto and cannot be changed or terminated
orally. This Agreement may only be amended or altered by the mutual agreement
of the parties hereto, such amendments or alterations to become effective when
reduced to writing and signed by the Investors holding a majority of the voting
Common Stock, the Corporation, and a majority of the Management Representatives
or by the Corporation and the holders of at least 75% of the shares of
Managementholders’ Stock.

               7.5 Further Assurances. Each party agrees to take all such actions and to
execute all such documents as may be necessary or advisable to implement the
provisions of this Agreement fully and effectively.

               7.6 Assignment.

               (a) Any Investor may assign this Agreement and all of its rights hereunder
to any other Investor to whom such assigning Investor simultaneously transfers
all of the Common Stock owned by such assigning Investor, provided that the
transferee shall, at that same time, execute and deliver to the Corporation an
agreement in writing whereby such transferee assumes all of the obligations of
such assigning Investor under this Agreement to all other parties hereto.

               (b) Notwithstanding any provision of this Agreement, a Managementholder
may transfer all or any of his Managementholder’s Stock to a Managementholder
Corporation (as hereinafter defined), which is then controlled by the
transferor, provided that simultaneously with or prior to such transfer such
Managementholder Corporation shall have agreed in writing with the other
parties to this Agreement to assume all of the obligations of the transferor
hereunder with respect to such shares of Managementholder’s Stock and provided
that the

18

 

transferor agrees to guarantee the performance of such obligations to the
other parties hereto, in each case by a written instrument reasonably
satisfactory to the Board of Directors, in which case references herein to
Managementholders shall thenceforth include any such Managementholder
Corporation so long as it shall continue to hold any Managementholder’s Stock.
In this Section, “Managementholder Corporation” means (i) a corporation, all of
the shares of which are legally and beneficially owned by one or more of the
transferor, his spouse, either of their children, and/or any spouse of any of
the children, or (ii) any trust exclusively in favor of any of the foregoing
persons. A Managementholder Corporation may, at any time, and shall forthwith
in the event that such Managementholder Corporation ceases to be controlled by
the transferor or ceases to qualify as a Managementholder Corporation under the
foregoing definition, transfer back to the transferor all of the
Managementholder’s Stock, held by it. For purposes of Sections 2.3 and 2.4,
Managementholder’s Stock owned by a Managementholder Corporation shall be
deemed to be owned by the transferor.

               (c) Subject to the foregoing, no party may assign any of its rights or
delegate any of its duties under this Agreement.

               7.7 Counterparts.

               (a) This Agreement may be executed in counterparts, each of which shall be
considered an original, but all of which together shall constitute one and the
same instrument.

               (b) Any Managementholder may also execute this Agreement by executing and
delivering to the Corporation a Counterpart and Acknowledgment in the form set
out as Schedule II to this Agreement, whereupon such Managementholder shall
become bound by, and entitled to the benefits of, this Agreement as fully and
effectively as though such Managementholder had executed a Counterpart of this
Agreement together with the other parties to this Agreement.

               7.8 Binding Effect. This Agreement shall be binding upon, and shall inure
to the benefit of the parties to this Agreement and their respective heirs,
executors, administrators, personal representatives, successors and permitted
assigns.

               7.9 Decisions of Board of Directors. All decisions and determinations
permitted or required to be made by the Corporation hereunder shall be made by
the Board of Directors in its sole unfettered discretion and all such decisions
and determinations shall be conclusive and binding on the parties hereto.

* * * * *

19

 

               IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto, all as of the date first above written.

	 	 	 	 	 	 	 
	 	 	COMMERCIAL VEHICLE GROUP, INC.
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ Daniel F. Moorse
	 	 	 	 	

	

	 	Its:	 	 	 	 
	 	 	 	 	

	 
	 	 	 	 	 	 
	 	 	ONEX AMERICAN HOLDINGS II LLC
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ Donald F. West
	 	 	 	 	

	

	 	Its:
	 	 	 	Director
	 	 	 	 	

	 
	 	 	 	 	 	 
	 	 	MANAGEMENTHOLDERS:
	 
	 	 	 	 	 	 
	

	 	 	 	 	 	/s/ Jerry Armstrong
	 	 	

	 	 	Jerry Armstrong
	 
	 	 	 	 	 	 
	

	 	 	 	 	 	/s/ Clint Arney
	 	 	

	 	 	Clint Arney
	 
	 	 	 	 	 	 
	

	 	 	 	 	 	/s/ Robert Averitt
	 	 	

	 	 	Robert Averitt

20

 

	 	 	 	 	 
	

	 	 	 	/S/ Cleve S. Blunt
	 	 	

	 	 	Cleve S. Blunt
	 
	 	 	 	 
	

	 	 	 	/s/ Mervin Dunn
	 	 	

	 	 	Mervin Dunn
	 
	 	 	 	 
	

	 	 	 	/s/ Jim Lindsey
	 	 	

	 	 	Jim Lindsey
	 
	 	 	 	 
	

	 	 	 	/s/ Frank Lolli
	 	 	

	 	 	Frank Lolli
	 
	 	 	 	 
	

	 	 	 	/s/ Don Lorraine
	 	 	

	 	 	Don Lorraine
	 
	 	 	 	 
	

	 	 	 	/s/ Jim Pritz
	 	 	

	 	 	Jim Pritz
	 
	 	 	 	 
	

	 	 	 	/s/ Kevin D. Richards
	 	 	

	 	 	Kevin Richards
	 
	 	 	 	 
	

	 	 	 	/s/ Tim Schwartz
	 	 	

	 	 	Tim Schwartz
	 
	 	 	 	 
	

	 	 	 	/s/ Mike Slobe
	 	 	

	 	 	Mike Slobe
	 
	 	 	 	 
	

	 	 	 	/s/ Bryan Stiles
	 	 	

	 	 	Bryan Stiles
	 	 	

	 
	 	 	 	 
	 	 	Michael Szczepanski
	 
	 	 	 	 
	

	 	 	 	/s/ Bob Tavener
	 	 	

	 	 	Bob Tavener
	 
	 	 	 	 
	

	 	 	 	/s/ Patrick Turner
	 	 	

	 	 	Patrick Turner
	 
	 	 	 	 
	

	 	 	 	/s/ Chad M. Utrup
	 	 	

	 	 	Chad Utrup
	 
	 	 	 	 
	

	 	 	 	/s/ Jeff Vogel
	 	 	

	 	 	Jeff Vogel

21

 

	 	 	 	 	 
	

	 	 	 	/s/ James Williams
	 	 	

	 	 	James Williams

22

 

SCHEDULE I

Names and Address of Managementholders

23

 

SCHEDULE II

MANAGEMENT STOCKHOLDERS AGREEMENT

COUNTERPART AND ACKNOWLEDGMENT

	 	 	 
	TO:

	 	COMMERCIAL VEHICLE GROUP, INC.
	

	 	THE INVESTORS
	

	 	THE MANAGEMENTHOLDERS

	 	 	 
	RE:

	 	The Management Stockholders Agreement (the “Agreement”) dated as
of                                       ,                     between Commercial Vehicle Group, Inc.
the “Investors” and the Managementholders” (each, as defined in the
Agreement)

                      The undersigned hereby agrees to be bound by the terms of the Agreement as
a party to the Agreement, and shall be entitled to all benefits of a
Managementholder pursuant to the Agreement, as fully and effectively as though
the undersigned had executed a counterpart of the Agreement together with the
other parties to the Agreement. The undersigned hereby acknowledges having
received and reviewed a copy of the Agreement.

                      DATED this                     day of                                       , 200  .

	 	 	 
	

	 	

	

	 	Signature of Managementholder
	 
	 	 
	

	 	

	

	 	Name of Managementholder
	

	 	(Please Print)

24

 

SCHEDULE III

Schedule of Investors

25exv10w5

 

Exhibit 10.5

COMMERCIAL VEHICLE GROUP, INC.

EQUITY INCENTIVE PLAN

1. Purpose.

          This plan shall be known as the Commercial Vehicle Group, Inc. Equity
Incentive Plan (the “Plan”). The purpose of the Plan shall be to promote the
long-term growth and profitability of Commercial Vehicle Group, Inc. (the
“Company”) and its Subsidiaries by (i) providing certain directors, officers
and employees of, and certain other individuals who perform services for, or to
whom an offer of employment has been extended by, the Company and its
Subsidiaries with incentives to maximize stockholder value and otherwise
contribute to the success of the Company and (ii) enabling the Company to
attract, retain and reward the best available persons for positions of
responsibility. Grants of incentive or non-qualified stock options, stock
appreciation rights (“SARs”), either alone or in tandem with options,
restricted stock, performance awards or any combination of the foregoing may be
made under the Plan.

2. Definitions.

          (a) “Board of Directors” and “Board” mean the board of directors of the
Company.

          (b) “Cause” shall, with respect to any participant, have the equivalent
meaning as the term “cause” or “for cause” in any employment, consulting, or
independent contractor’s agreement between the participant and the Company or
any Subsidiary, or in the absence of such an agreement that contains such a
defined term, shall mean the occurrence of one or more of the following events:

               (i) Conviction of any felony or any crime or offense lesser than a felony
involving the property of the Company or a Subsidiary; or

               (ii) Deliberate or reckless conduct that has caused demonstrable and
serious injury to the Company or a Subsidiary, monetary or otherwise, or any
other serious misconduct of such a nature that the participant’s continued
relationship with the Company or a Subsidiary may reasonably be expected to
adversely affect the business or properties of the Company or any Subsidiary;
or

               (iii) Willful refusal to perform or reckless disregard of duties properly
assigned, as determined by the Company; or

               (iv) Breach of duty of loyalty to the Company or a Subsidiary or other act
of fraud or dishonesty with respect to the Company or a Subsidiary.

          For purposes of this Section 2(b), any good faith determination of “Cause”
made by the Committee shall be binding and conclusive on all interested
parties.

 

 

          (c) “Change in Control” means the occurrence of one of the following
events:

               (i) if any “person” or “group” as those terms are used in Sections 13(d)
and 14(d) of the Exchange Act or any successors thereto, other than an Exempt
Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act or any successor thereto), directly or indirectly, of
securities of the Company representing more than 50% of either the then
outstanding shares or the combined voting power of the then outstanding
securities of the Company; or

               (ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board and any new directors whose
election by the Board or nomination for election by the Company’s stockholders
was approved by at least two-thirds of the directors then still in office who
either were directors at the beginning of the period or whose election was
previously so approved, cease for any reason to constitute a majority thereof;
or

               (iii) the consummation of a merger or consolidation of the Company with
any other corporation or other entity, other than a merger or consolidation
which would result in all or a portion of the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation; or

               (iv) the consummation of a plan of complete liquidation of the Company or
an agreement for the sale or disposition by the Company of all or substantially
all the Company’s assets, other than a sale to an Exempt Person.

          (d) “Code” means the Internal Revenue Code of 1986, as amended.

          (e) “Committee” means the Compensation Committee of the Board, which shall
consist solely of two or more members of the Board, and each member of the
Committee shall be (i) a “non-employee director” within the meaning of Rule
16b-3 under the Exchange Act, unless administration of the Plan by
“non-employee directors” is not then required in order for exemptions under
Rule 16b-3 to apply to transactions under the Plan, (ii) an “outside director”
within the meaning of Section 162(m) of the Code, unless administration of the
Plan by “outside directors” is not then required in order to qualify for tax
deductibility under Section 162(m) of the Code, and (iii) independent, as
defined by the rules of the Nasdaq National Market or any national securities
exchange on which any securities of the Company are listed for trading, and if
not listed for trading, by the rules of the Nasdaq National Market.

          (f) “Common Stock” means the Common Stock, par value $.01 per share, of
the Company, and any other shares into which such stock may be changed by
reason of a recapitalization, reorganization, merger, consolidation or any
other change in the corporate structure or capital stock of the Company.

2

 

          (g) “Competition” is deemed to occur if a person whose employment with the
Company or its Subsidiaries has terminated obtains a position as a full-time or
part-time employee of, as a member of the board of directors of, or as a
consultant or advisor with or to, or acquires an ownership interest in excess
of 2% of, a corporation, partnership, firm or other entity that engages, in any
state in which the Company or any Subsidiary is doing business at the time of
such person’s termination of employment, in any business which competes with
any product or service of the Company or any Subsidiary.

          (h) “Disability” means a disability that would entitle an eligible
participant to payment of monthly disability payments under any Company
disability plan or any agreement between the eligible participant and the
Company as otherwise determined by the Committee.

          (i) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          (j) “Exempt Person” means (i) Onex Corporation, (ii) any person, entity or
group controlled by or under common control with any party included in clause
(i), or (iii) any employee benefit plan of the Company or any Subsidiary, or a
trustee or other administrator or fiduciary holding securities under an
employee benefit plan of the Company or any Subsidiary.

          (k) “Family Member” has the meaning given to such term in General
Instructions A.1(a)(5) to Form S-8 under the Securities Act of 1933, as
amended, and any successor thereto.

          (l) “Fair Market Value” of a share of Common Stock of the Company means,
as of the date in question, the officially-quoted closing selling price of the
stock (or if no selling price is quoted, the bid price) on the principal
securities exchange on which the Common Stock is then listed for trading
(including for this purpose the Nasdaq National Market) (the “Market”) for the
applicable trading day or, if the Common Stock is not then listed or quoted in
the Market, the Fair Market Value shall be the fair value of the Common Stock
determined in good faith by the Board; provided, however, that when shares
received upon exercise of an option are immediately sold in the open market,
the net sale price received may be used to determine the Fair Market Value of
any shares used to pay the exercise price or applicable withholding taxes and
to compute the withholding taxes.

          (m) “Good Reason” shall, with respect to any participant, have the
equivalent meaning as the term “good reason” or “for good reason” in any
employment, consulting, or independent contractor’s agreement between the
participant and the Company or any Subsidiary, or in the absence of such an
agreement that contains such a defined term, shall mean (i) the assignment to
the participant of any duties materially inconsistent with the participant’s
duties or responsibilities as assigned by the Company (or a Subsidiary), or any
other action by the Company (or a Subsidiary) which results in a material
diminution in such duties or responsibilities, excluding for this purpose any
isolated, insubstantial and inadvertent actions not
taken in bad faith and which are remedied by the Company (or a Subsidiary)
promptly after receipt of notice thereof given by the participant; (ii) any
material failure by the Company (or a Subsidiary) to make any payment of
compensation or pay any benefits to the participant that have been agreed upon
between the Company (or a Subsidiary) and the participant in writing, other
than an isolated, insubstantial and inadvertent failure not occurring in bad
faith and which is

3

 

remedied by the Company (or a Subsidiary) promptly after
receipt of notice thereof given by the participant; or (iii) the Company’s (or
Subsidiary’s) requiring the participant to be based at any office or location
outside of fifty miles from the location of employment or service as of the
date of award, except for travel reasonably required in the performance of the
participant’s responsibilities.

          (n) “Incentive Stock Option” means an option conforming to the
requirements of Section 422 of the Code and any successor thereto.

          (o) “Non-Employee Director” has the meaning given to such term in Rule
16b-3 under the Exchange Act and any successor thereto.

          (p) “Non-qualified Stock Option” means any stock option other than an
Incentive Stock Option.

          (q) “Other Company Securities” mean securities of the Company other than
Common Stock, which may include, without limitation, unbundled stock units or
components thereof, debentures, preferred stock, warrants and securities
convertible into or exchangeable for Common Stock or other property.

          (r) “Performance Award” means a right, granted to a participant under
Section 12 hereof, to receive awards based upon performance criteria specified
by the Committee.

          (s) “Retirement” means retirement as defined under any Company pension
plan or retirement program or termination of one’s employment on retirement
with the approval of the Committee.

          (t) “Share” means a share of Common Stock that may be issued pursuant to
the Plan.

          (u) “Subsidiary” means a corporation or other entity of which outstanding
shares or ownership interests representing 50% or more of the combined voting
power of such corporation or other entity entitled to elect the management
thereof, or such lesser percentage as may be approved by the Committee, are
owned directly or indirectly by the Company.

3. Administration.

     The Plan shall be administered by the Committee; provided that the Board
may, in its discretion, at any time and from time to time, resolve to
administer the Plan, in which case the term “Committee” shall be deemed to mean
the Board for all purposes herein. Subject to the
provisions of the Plan, the Committee shall be authorized to (i) select
persons to participate in the Plan, (ii) determine the form and substance of
grants made under the Plan to each participant, and the conditions and
restrictions, if any, subject to which such grants will be made, (iii) certify
that the conditions and restrictions applicable to any grant have been met,
(iv) modify the terms of grants made under the Plan, (v) interpret the Plan and
grants made thereunder, (vi) make any adjustments necessary or desirable in
connection with grants made under the Plan to eligible participants located
outside the United States and (vii) adopt, amend, or rescind
such rules and

4

 

regulations, and make such other determinations, for carrying out the Plan as
it may deem appropriate. Decisions of the Committee on all matters relating to
the Plan shall be in the Committee’s sole discretion and shall be conclusive
and binding on all parties. The validity, construction, and effect of the Plan
and any rules and regulations relating to the Plan shall be determined in
accordance with applicable federal and state laws and rules and regulations
promulgated pursuant thereto. No member of the Committee and no officer of the
Company shall be liable for any action taken or omitted to be taken by such
member, by any other member of the Committee or by any officer of the Company
in connection with the performance of duties under the Plan, except for such
person’s own willful misconduct or as expressly provided by statute.

     The expenses of the Plan shall be borne by the Company. The Plan shall not
be required to establish any special or separate fund or make any other
segregation of assets to assume the payment of any award under the Plan, and
rights to the payment of such awards shall be no greater than the rights of the
Company’s general creditors.

4. Shares Available for the Plan; Limit on Awards.

     Subject to adjustments as provided in Section 19, the number of Shares
that may be issued pursuant to the Plan as awards shall not exceed 1,000,000 in
the aggregate. Such Shares may be in whole or in part authorized and unissued
or held by the Company as treasury shares. If any grant under the Plan expires
or terminates unexercised, becomes unexercisable or is forfeited as to any
Shares, or is tendered or withheld as to any Shares in payment of the exercise
price of the grant or the taxes payable with respect to the exercise, then such
unpurchased, forfeited, tendered or withheld Shares shall thereafter be
available for further grants under the Plan unless, in the case of options
granted under the Plan, related SARs are exercised.

     Without limiting the generality of the foregoing provisions of this
Section 4 or the generality of the provisions of Sections 3, 6 or 21 or any
other section of this Plan, the Committee may, at any time or from time to
time, and on such terms and conditions (that are consistent with and not in
contravention of the other provisions of this Plan) as the Committee may, in
its sole discretion, determine, enter into agreements (or take other actions
with respect to the options) for new options containing terms (including
exercise prices) more (or less) favorable than the outstanding options.

     In any one calendar year, the Committee shall not grant to any one
participant awards to purchase or acquire a number of Shares in excess of
twenty percent (20 %) of the total number of Shares authorized under the Plan
pursuant to this Section 4.

5. Participation.

     Participation in the Plan shall be limited to those directors (including
Non-Employee Directors), officers (including non-employee officers) and
employees of, and other individuals performing services for, or to whom an
offer of employment has been extended by, the Company and its Subsidiaries
selected by the Committee (including participants located outside the United
States). Nothing in the Plan or in any grant thereunder shall confer any right
on a participant to

5

 

continue in the employ as a director or officer of or in
the performance of services for the Company or shall interfere in any way with
the right of the Company to terminate the employment or performance of services
or to reduce the compensation or responsibilities of a participant at any time.
By accepting any award under the Plan, each participant and each person
claiming under or through him or her shall be conclusively deemed to have
indicated his or her acceptance and ratification of, and consent to, any action
taken under the Plan by the Company, the Board or the Committee.

     Incentive Stock Options or Non-qualified Stock Options, SARs alone or in
tandem with options, restricted stock awards, performance awards, or any
combination thereof, may be granted to such persons and for such number of
Shares as the Committee shall determine (such individuals to whom grants are
made being sometimes herein called “optionees” or “grantees,” as the case may
be). Determinations made by the Committee under the Plan need not be uniform
and may be made selectively among eligible individuals under the Plan, whether
or not such individuals are similarly situated. A grant of any type made
hereunder in any one year to an eligible participant shall neither guarantee
nor preclude a further grant of that or any other type to such participant in
that year or subsequent years.

6. Incentive and Non-qualified Options and SARs.

     The Committee may from time to time grant to eligible participants
Incentive Stock Options, Non-qualified Stock Options, or any combination
thereof; provided that the Committee may grant Incentive Stock Options only to
eligible employees of the Company or its subsidiaries (as defined for this
purpose in Section 424(f) of the Code or any successor thereto). The options
granted shall take such form as the Committee shall determine, subject to the
following terms and conditions.

     It is the Company’s intent that Non-qualified Stock Options granted under
the Plan not be classified as Incentive Stock Options, that Incentive Stock
Options be consistent with and contain or be deemed to contain all provisions
required under Section 422 of the Code and any successor thereto, and that any
ambiguities in construction be interpreted in order to effectuate such intent.
If an Incentive Stock Option granted under the Plan does not qualify as
such for any reason, then to the extent of such non-qualification, the stock
option represented thereby shall be regarded as a Non-qualified Stock Option
duly granted under the Plan, provided that such stock option otherwise meets
the Plan’s requirements for Non-qualified Stock Options.

          (a) Price. The price per Share
deliverable upon the exercise of each option (“exercise price”) shall be
established by the Committee, except that in the case of the grant of any
Incentive Stock Option, the exercise price may not be less than 100% of the
Fair Market Value of a share of Common Stock as of the date of grant of the
option, and in the case of the grant of any Incentive Stock Option to an
employee who, at the time of the grant, owns more than 10% of the total
combined voting power of all classes of stock of the Company or any of its
Subsidiaries, the exercise price may not be less than 110% of the Fair Market
Value of a share of Common Stock as of the date of grant of the option, in each
case unless otherwise permitted by Section 422 of the Code or any successor
thereto.

6

 

          (b) Payment. Options may be
exercised, in whole or in part, upon payment of the exercise price of the
Shares to be acquired. Unless otherwise determined by the Committee, payment
shall be made (i) in cash (including check, bank draft, money order or wire
transfer of immediately available funds), (ii) by delivery of outstanding
shares of Common Stock with a Fair Market Value on the date of exercise equal
to the aggregate exercise price payable with respect to the options’ exercise,
(iii) by simultaneous sale through a broker reasonably acceptable to the
Committee of Shares acquired on exercise, as permitted under Regulation T of
the Federal Reserve Board, (iv) by authorizing the Company to withhold from
issuance a number of Shares issuable upon exercise of the options which, when
multiplied by the Fair Market Value of a share of Common Stock on the date of
exercise, is equal to the aggregate exercise price payable with respect to the
options so exercised or (v) by any combination of the foregoing.

          In the event a grantee elects to pay the exercise price payable with
respect to an option pursuant to clause (ii) above, (A) only a whole number of
share(s) of Common Stock (and not fractional shares of Common Stock) may be
tendered in payment, (B) such grantee must present evidence acceptable to the
Company that he or she has owned any such shares of Common Stock tendered in
payment of the exercise price (and that such tendered shares of Common Stock
have not been subject to any substantial risk of forfeiture) for at least six
months prior to the date of exercise, and (C) Common Stock must be delivered to
the Company. Delivery for this purpose may, at the election of the grantee, be
made either by (A) physical delivery of the certificate(s) for all such shares
of Common Stock tendered in payment of the price, accompanied by duly executed
instruments of transfer in a form acceptable to the Company, or (B) direction
to the grantee’s broker to transfer, by book entry, such shares of Common Stock
from a brokerage account of the grantee to a brokerage account specified by the
Company. When payment of the exercise price is made by delivery of Common
Stock, the difference, if any, between the aggregate exercise price payable
with respect to the option being exercised and the Fair Market Value of the
shares of Common Stock tendered in payment (plus
any applicable taxes) shall be paid in cash. No grantee may tender shares
of Common Stock having a Fair Market Value exceeding the aggregate exercise
price payable with respect to the option being exercised (plus any applicable
taxes).

          In the event a grantee elects to pay the exercise price payable with
respect to an option pursuant to clause (iv) above, (A) only a whole number of
Share(s) (and not fractional Shares) may be withheld in payment and (B) such
grantee must present evidence acceptable to the Company that he or she has
owned a number of shares of Common Stock at least equal to the number of Shares
to be withheld in payment of the exercise price (and that such owned shares of
Common Stock have not been subject to any substantial risk of forfeiture) for
at least six months prior to the date of exercise. When payment of the
exercise price is made by withholding of Shares, the difference, if any,
between the aggregate exercise price payable with respect to the option being
exercised and the Fair Market Value of the Shares withheld in payment (plus any
applicable taxes) shall be paid in cash. No grantee may authorize the
withholding of Shares having a Fair Market Value exceeding the aggregate
exercise price payable with respect to the option being exercised (plus any
applicable taxes). Any withheld Shares shall no longer be issuable under such
option (except pursuant to any Reload Option (as defined below) with respect to
any such withheld Shares).

7

 

          (c) Terms of Options. The term
during which each option may be exercised shall be determined by the Committee,
but if required by the Code and except as otherwise provided herein, no option
shall be exercisable in whole or in part more than ten years from the date it
is granted, and no Incentive Stock Option granted to an employee who at the
time of the grant owns more than 10% of the total combined voting power of all
classes of stock of the Company or any of its Subsidiaries shall be exercisable
more than five years from the date it is granted. All rights to purchase
Shares pursuant to an option shall, unless sooner terminated, expire at the
date designated by the Committee. The Committee shall determine the date on
which each option shall become exercisable and may provide that an option shall
become exercisable in installments. The Shares constituting each installment
may be purchased in whole or in part at any time after such installment becomes
exercisable, subject to such minimum exercise requirements as may be designated
by the Committee. Prior to the exercise of an option and delivery of the
Shares represented thereby, the optionee shall have no rights as a stockholder
with respect to any Shares covered by such outstanding option (including any
dividend or voting rights).

          (d) Limitations on Grants. If
required by the Code, the aggregate Fair Market Value (determined as of the
grant date) of Shares for which an Incentive Stock Option is exercisable for
the first time during any calendar year under all equity incentive plans of the
Company and its Subsidiaries (as defined in Section 422 of the Code or any
successor thereto) may not exceed $100,000.

          (e) Termination.

               (i) Death or Disability. Except
as otherwise determined by the Committee, if a participant ceases to be a
director, officer or employee of, or to perform other services for, the Company
and any Subsidiary due to death or Disability, all of the participant’s options
and SARs that were exercisable on the date of such cessation shall remain so
for a period of 180 days from the date of such death or Disability, but in no
event after the expiration date of the options or SARs; provided that the
participant does not engage in Competition during such 180-day period unless he
or she received written consent to do so from the Board or the Committee.
Notwithstanding the foregoing, if the Disability giving rise to the termination
of employment is not within the meaning of Section 22(e)(3) of the Code or any
successor thereto, Incentive Stock Options not exercised by such participant
within 90 days after the date of termination of employment will cease to
qualify as Incentive Stock Options and will be treated as Non-qualified Stock
Options under the Plan if required to be so treated under the Code.

               (ii) Retirement. Except as
otherwise determined by the Committee, if a participant ceases to be a
director, officer or employee of, or to perform other services for, the Company
and any Subsidiary upon the occurrence of his or her Retirement, (A) all of the
participant’s options and SARs that were exercisable on the date of Retirement
shall remain exercisable for, and shall otherwise terminate at the end of, a
period of 90 days after the date of Retirement, but in no event after the
expiration date of the options or SARs; provided that the participant does not
engage in Competition during such 90-day period unless he or she receives
written consent to do so from the Board or the Committee, and (B) all of the
participant’s options and SARs that were not exercisable on the date of
Retirement shall be forfeited immediately

8

 

upon such Retirement; provided,
however, that such options and SARs may become fully vested and exercisable in
the discretion of the Committee. Notwithstanding the foregoing, Incentive
Stock Options not exercised by such participant within 90 days after Retirement
will cease to qualify as Incentive Stock Options and will be treated as
Non-qualified Stock Options under the Plan if required to be so treated under
the Code.

               (iii) Discharge for Cause. Except as otherwise determined by the Committee, if a participant ceases to be
a director, officer or employee of, or to perform other services for, the
Company or a Subsidiary due to Cause, or if a participant does not become a
director, officer or employee of, or does not begin performing other services
for, the Company or a Subsidiary for any reason, all of the participant’s
options and SARs shall expire and be forfeited immediately upon such cessation
or non-commencement, whether or not then exercisable.

               (iv) Other Termination. Except as otherwise determined by the Committee, if a participant
ceases to be a director, officer or employee of, or to otherwise perform
services for, the Company or a Subsidiary for any reason other than death,
Disability, Retirement or Cause, (A) all of the participant’s options and SARs
that were exercisable on the date of such cessation shall remain exercisable
for, and shall otherwise terminate at the end of, a period of 90 days after the
date of such cessation, but in no event after the expiration date of the
options or SARs; provided that the participant does not engage in Competition
during such 90-day period unless he or she receives written consent to do so
from the Board or the Committee, and (B) all of the participant’s options and
SARs that were not exercisable on the date of such cessation shall be forfeited
immediately upon such cessation.

          (f) Grant of Reload Options. The Committee may provide (either at the time of grant or exercise of an option),
in its discretion, for the grant to a grantee who exercises all or any portion
of an option (“Exercised Options”) and who pays all or part of such exercise
price with shares of Common Stock, of an additional option (a “Reload Option”)
for a number of shares of Common Stock equal to the sum (the “Reload Number”)
of the number of shares of Common Stock tendered or withheld in payment of such
exercise price for the Exercised Options plus, if so provided by the Committee,
the number of shares of Common Stock, if any, tendered or withheld by the
grantee or withheld by the Company in connection with the exercise of the
Exercised Options to satisfy any federal, state or local tax withholding
requirements. The terms of each Reload Option, including the date of its
expiration and the terms and conditions of its exercisability and
transferability, shall be the same as the terms of the Exercised Option to
which it relates, except that (i) the grant date for each Reload Option shall
be the date of exercise of the Exercised Option to which it relates and (ii)
the exercise price for each Reload Option shall be the Fair Market Value of the
Common Stock on the grant date of the Reload Option.

          (g) Options Exercisable for Restricted Stock. The Committee shall have the discretion to grant options which are
exercisable for Shares of restricted stock. Should the participant cease to be
a director, officer or employee of, or to perform other services for, the
Company or any Subsidiary while holding such Shares of restricted stock, the
Company shall have the right to repurchase, at the exercise price paid per
share, any or all of those Shares of restricted stock. The terms upon which
such repurchase right shall be exercisable (including the

9

 

period and procedure
for exercise and the appropriate vesting schedule for the purchased shares)
shall be established by the Committee and set forth in the document evidencing
such repurchase right.

7. Stock Appreciation Rights.

     The Committee shall have the authority to grant SARs under this Plan,
either alone or to any optionee in tandem with options (either at the time of
grant of the related option or thereafter by amendment to an outstanding
option). SARs shall be subject to such terms and conditions as
the Committee may specify, but no SAR shall be exercisable in whole or in
part more than ten years from the date it is granted.

     No SAR may be exercised unless the Fair Market Value of a share of Common
Stock of the Company on the date of exercise exceeds the exercise price of the
SAR or, in the case of SARs granted in tandem with options, any options to
which the SARs correspond. Prior to the exercise of the SAR and delivery of
the cash and/or Shares represented thereby, the participant shall have no
rights as a stockholder with respect to Shares covered by such outstanding SAR
(including any dividend or voting rights).

     SARs granted in tandem with options shall be exercisable only when, to the
extent and on the conditions that any related option is exercisable. The
exercise of an option shall result in an immediate forfeiture of any related
SAR to the extent the option is exercised, and the exercise of an SAR shall
cause an immediate forfeiture of any related option to the extent the SAR is
exercised.

     Upon the exercise of an SAR, the participant shall be entitled to a
distribution in an amount equal to the difference between the Fair Market Value
of a share of Common Stock on the date of exercise and the exercise price of
the SAR or, in the case of SARs granted in tandem with options, any option to
which the SAR is related, multiplied by the number of Shares as to which the
SAR is exercised. The Committee shall decide whether such distribution shall
be in cash, in Shares having a Fair Market Value equal to such amount, in Other
Company Securities having a Fair Market Value equal to such amount or in a
combination thereof.

     All SARs will be exercised automatically on the last day prior to the
expiration date of the SAR or, in the case of SARs granted in tandem with
options, any related option, so long as the Fair Market Value of a share of
Common Stock on that date exceeds the exercise price of the SAR or any related
option, as applicable. An SAR granted in tandem with options shall expire at
the same time as any related option expires and shall be transferable only
when, and under the same conditions as, any related option is transferable.

8. Restricted Stock.

     The Committee may at any time and from time to time grant Shares of
restricted stock under the Plan to such participants and in such amounts as it
determines. Each grant of restricted stock shall specify the applicable
restrictions on such Shares, the duration of such restrictions (which shall be
at least six months except as otherwise determined by the Committee or provided

10

 

in the third paragraph of this Section 8), and the time or times at which such
restrictions shall lapse with respect to all or a specified number of Shares
that are part of the grant.

     The participant will be required to pay the Company the aggregate par
value of any Shares of restricted stock (or such larger amount as the Board may
determine to constitute capital under Section 154 of the Delaware General
Corporation Law, as amended, or any successor thereto) within ten days of the
date of grant, unless such Shares of restricted stock are treasury shares. Unless otherwise determined by the Committee, certificates
representing Shares of restricted stock granted under the Plan will be held in
escrow by the Company on the participant’s behalf during any period of
restriction thereon and will bear an appropriate legend specifying the
applicable restrictions thereon, and the participant will be required to
execute a blank stock power therefor. Except as otherwise provided by the
Committee, during such period of restriction the participant shall have all of
the rights of a holder of Common Stock, including but not limited to the rights
to receive dividends and to vote, and any stock or other securities received as
a distribution with respect to such participant’s restricted stock shall be
subject to the same restrictions as then in effect for the restricted stock.

     At such time as a participant ceases to be a director, officer, or
employee of, or to otherwise perform services for, the Company and its
Subsidiaries due to death, Disability or Retirement during any period of
restriction, all restrictions on Shares granted to such participant shall
lapse. At such time as a participant ceases to be, or in the event a
participant does not become, a director, officer or employee of, or otherwise
performing services for, the Company or its Subsidiaries for any other reason,
all Shares of restricted stock granted to such participant on which the
restrictions have not lapsed shall be immediately forfeited to the Company.

9. Deferred Shares.

     The Committee is authorized to grant deferred Shares to participants,
which are rights to receive Shares, cash, or a combination thereof at the end
of a specified deferral period, subject to terms and conditions as the
Committee may specify.

     Satisfaction of an award of deferred Shares shall occur upon expiration of
the deferral period specified for such deferred Shares by the Committee (or, if
permitted by the Committee, as elected by the participant). In addition,
deferred Shares shall be subject to such restrictions (which may include a risk
of forfeiture) as the Committee may impose, if any, which restrictions may
lapse at the expiration of the deferral period or at earlier specified times
(including based on achievement of performance goals and/or future service
requirements), separately or in combination, in installments or otherwise, as
the Committee may determine. Deferred Share awards may be satisfied by
delivery of Stock, cash equal to the Fair Market Value of the specified number
of Shares covered by the deferred Share award, or a combination thereof, as
determined by the Committee at the date of grant or thereafter. Prior to
satisfaction of an award of deferred Shares, an award of deferred shares
carries no voting or dividend or other rights associated with share ownership.

     Except as otherwise determined by the Committee, if a participant ceases
to be a director, officer or employee of, or to perform other services for, the
Company or any Subsidiary during

11

 

the applicable deferral period thereof to
which forfeiture conditions apply (as provided in the award agreement
evidencing the deferred Shares), the participant’s deferred Shares that are at
that time subject to deferral (other than a deferral at the election of the
participant) shall be forfeited; provided that the Committee may provide, by
rule or regulation or in any award agreement, or may determine in any
individual case, that restrictions or forfeiture conditions
relating to deferred Shares shall be waived in whole or in part in the
event of terminations resulting from specified causes, and the Committee may in
other cases waive in whole or in part the forfeiture of deferred Shares.

10. Dividend Equivalents.

     The Committee is authorized to grant dividend equivalents to a participant
entitling the participant to receive cash, Shares, other awards, or other
property equal in value to dividends paid with respect to a specified number of
shares of Common Stock of the Company, or other periodic payments. Dividend
equivalents may be awarded on a free-standing basis or in connection with
another award. The Committee may provide that dividend equivalents shall be
paid or distributed when accrued or shall be deemed to have been reinvested in
additional shares of Common Stock of the Company, awards, or other investment
vehicles, and subject to such restrictions on transferability and risks of
forfeiture, as the Committee may specify.

11. Other Stock-Based Awards.

     The Committee is authorized, subject to limitations under applicable law,
to grant to participants such other awards that may be denominated or payable
in, valued in whole or in part by reference to, or otherwise based on, or
related to, shares of Common Stock of the Company, as deemed by the Committee
to be consistent with the purposes of the Plan, including, without limitation,
convertible or exchangeable debt securities, other rights convertible or
exchangeable into Shares, purchase rights for Shares, awards with value and
payment contingent upon performance of the Company or any other factors
designated by the Committee, and awards valued by reference to the book value
of Shares or the value of securities of or the performance of specified
Subsidiaries. The Committee shall determine the terms and conditions of such
awards. Shares delivered pursuant to an award in the nature of a purchase right
granted under this Section 11 shall be purchased for such consideration
(including without limitation loans from the Company or a Subsidiary to the
extent permissible under the Sarbanes Oxley Act of 2002 and other applicable
law), paid for at such times, by such methods, and in such forms, including,
without limitation, cash, Shares, other awards or other property, as the
Committee shall determine. Cash awards, as an element of or supplement to any
other award under the Plan, may also be granted pursuant to this Section 11.

12. Performance Awards.

     The Committee is authorized to make Performance Awards payable in cash,
Shares, or other awards, on terms and conditions established by the Committee,
subject to the provisions of this Section 12.

12

 

     The performance goals for such Performance Awards shall consist of one or
more business criteria and a targeted level or levels of performance with
respect to each of such criteria, or such other personal or business goals and
objectives, as the Committee shall determine. The Committee may determine that
such Performance Awards shall be granted, exercised and/or settled upon
achievement of any one performance goal or that two or more of the performance
goals must be achieved as a condition to grant, exercise and/or settlement of
such Performance Awards. Performance goals may differ for Performance Awards
granted to any one participant or to different participants.

     Achievement of performance goals in respect of such Performance Awards
shall be measured over any performance period determined by the Committee.
During the performance period, the Committee shall have the authority to adjust
the performance goals and objectives for such performance period for such
reasons as it deems equitable.

     The Committee may establish a Performance Award pool, which shall be an
unfunded pool, for purposes of measuring Company performance in connection with
Performance Awards. The amount of such Performance Award pool shall be based
upon the achievement of a performance goal or goals during the given
performance period, as specified by the Committee. The Committee may specify
the amount of the Performance Award pool as a percentage of any of such
business criteria, a percentage thereof in excess of a threshold amount, or as
another amount which need not bear a strictly mathematical relationship to such
business criteria.

     Settlement of Performance Awards shall be in cash, Shares, other awards or
other property, in the discretion of the Committee. The Committee may, in its
discretion, reduce the amount of a settlement otherwise to be made in
connection with such Performance Awards. The Committee shall specify the
circumstances in which such Performance Awards shall be paid or forfeited in
the event of termination of the participant’s employment or service prior to
the end of a performance period or settlement of Performance Awards.

13. Change in Control.

     Unless otherwise determined by the Committee, if there is a Change in
Control of the Company and a participant’s employment or service as a director,
officer, or employee of the Company or a Subsidiary, is terminated (1) by the
Company without Cause, (2) by reason of the participant’s death, Disability, or
Retirement, or (3) by the participant for Good Reason, within twelve months
after such Change in Control:

               (i) any award carrying a right to exercise that was not previously vested
and exercisable as of the time of the Change in Control, shall become
immediately vested and exercisable, and shall remain so for up to 180 days
after the date of termination (but in no event after the expiration date of the
award), subject to applicable restrictions;

               (ii) any restrictions, deferral of settlement, and forfeiture conditions
applicable to any other award granted under the Plan shall lapse and such
awards shall be deemed
fully vested as of the time of the Change in Control, except to the extent
of any waiver by the participant, and subject to applicable restrictions; and

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               (iii) with respect to any outstanding Performance Award, the Committee
may, within its discretion, deem the performance goals and other conditions
relating to the Performance Award as having been met as of the date of the
Change in Control.

     Notwithstanding the foregoing, or any other provision of this Plan to the
contrary, in connection with any transaction of the type specified by clause
(iii) of the definition of a Change in Control in Section 2(c), the Committee
may, in its discretion, (i) cancel any or all outstanding options under the
Plan in consideration for payment to the holders thereof of an amount equal to
the portion of the consideration that would have been payable to such holders
pursuant to such transaction if their options had been fully exercised
immediately prior to such transaction, less the aggregate exercise price that
would have been payable therefor, or (ii) if the amount that would have been
payable to the option holders pursuant to such transaction if their options had
been fully exercised immediately prior thereto would be equal to or less than
the aggregate exercise price that would have been payable therefor, cancel any
or all such options for no consideration or payment of any kind. Payment of
any amount payable pursuant to the preceding sentence may be made in cash or,
in the event that the consideration to be received in such transaction includes
securities or other property, in cash and/or securities or other property in
the Committee’s discretion.

14. Withholding Taxes.

          (a) Participant Election. Unless otherwise determined by the Committee, a participant may elect to deliver
shares of Common Stock (or have the Company withhold shares acquired upon
exercise of an option or SAR or deliverable upon grant or vesting of restricted
stock, as the case may be) to satisfy, in whole or in part, the amount the
Company is required to withhold for taxes in connection with the exercise of an
option or SAR or the delivery of restricted stock upon grant or vesting, as the
case may be. Such election must be made on or before the date the amount of
tax to be withheld is determined. Once made, the election shall be
irrevocable. The fair market value of the shares to be withheld or delivered
will be the Fair Market Value as of the date the amount of tax to be withheld
is determined. In the event a participant elects to deliver or have the Company
withhold shares of Common Stock pursuant to this Section 14(a), such delivery
or withholding must be made subject to the conditions and pursuant to the
procedures set forth in Section 6(b) with respect to the delivery or
withholding of Common Stock in payment of the exercise price of options.

          (b) Company Requirement. The Company may require, as a condition to any grant or exercise under the Plan or
to the delivery of certificates for Shares issued hereunder, that the grantee
make provision
for the payment to the Company, either pursuant to Section 14(a) or this
Section 14(b), of federal, state or local taxes of any kind required by law to
be withheld with respect to any grant or delivery of Shares. The Company, to
the extent permitted or required by law, shall have the right to deduct from
any payment of any kind (including salary or bonus) otherwise due to a grantee,
an amount equal to any federal, state or local taxes of any kind required by
law to be withheld with respect to any grant or delivery of Shares under the
Plan.

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15. Written Agreement; Vesting.

          Each employee to whom a grant is made under the Plan shall enter into a
written agreement with the Company that shall contain such provisions,
including without limitation vesting requirements, consistent with the
provisions of the Plan, as may be approved by the Committee. Unless the
Committee determines otherwise and except as otherwise provided in Sections 6,
7, and 8 in connection with a Change in Control or certain occurrences of
termination, no grant under this Plan may be exercised, and no restrictions
relating thereto may lapse, within six months of the date such grant is made.

16. Transferability.

     Unless the Committee determines otherwise, no option, SAR, performance
award or restricted stock granted under the Plan shall be transferable by a
participant other than by will or the laws of descent and distribution or to a
participant’s Family Member by gift or a qualified domestic relations order as
defined by the Code. Unless the Committee determines otherwise, an option, SAR
or performance award may be exercised only by the optionee or grantee thereof;
by his or her Family Member if such person has acquired the option, SAR or
performance award by gift or qualified domestic relations order; by the
executor or administrator of the estate of any of the foregoing or any person
to whom the Option is transferred by will or the laws of descent and
distribution; or by the guardian or legal representative of any of the
foregoing; provided that Incentive Stock Options may be exercised by any Family
Member, guardian or legal representative only if permitted by the Code and any
regulations thereunder. All provisions of this Plan shall in any event continue
to apply to any option, SAR, performance award or restricted stock granted
under the Plan and transferred as permitted by this Section 16, and any
transferee of any such option, SAR, performance award or restricted stock shall
be bound by all provisions of this Plan as and to the same extent as the
applicable original grantee.

17. Listing, Registration and Qualification.

     If the Committee determines that the listing, registration or
qualification upon any securities exchange or under any law of Shares subject
to any option, SAR, performance award or restricted stock grant is necessary or
desirable as a condition of, or in connection with, the granting of same or the
issue or purchase of Shares thereunder, no such option or SAR may be
exercised in whole or in part, no such performance award may be paid out,
and no Shares may be issued, unless such listing, registration or qualification
is effected free of any conditions not acceptable to the Committee.

18. Transfers Between Company and Subsidiaries.

     The transfer of an employee, consultant or independent contractor from the
Company to a Subsidiary, from a Subsidiary to the Company, or from one
Subsidiary to another shall not be considered a termination of employment or
services; nor shall it be considered a termination of employment if an employee
is placed on military or sick leave or such other leave of absence which is
considered by the Committee as continuing intact the employment relationship.

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19. Adjustments.

     In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, distribution of assets,
or any other change in the corporate structure or shares of the Company, the
Committee shall make such adjustment as it deems appropriate in the number and
kind of Shares or other property available for issuance under the Plan
(including, without limitation, the total number of Shares available for
issuance under the Plan pursuant to Section 4), in the number and kind of
options, SARs, Shares or other property covered by grants previously made under
the Plan, and in the exercise price of outstanding options and SARs. Any such
adjustment shall be final, conclusive and binding for all purposes of the Plan.
In the event of any merger, consolidation or other reorganization in which the
Company is not the surviving or continuing corporation or in which a Change in
Control is to occur, all of the Company’s obligations regarding options, SARs,
performance awards, and restricted stock that were granted hereunder and that
are outstanding on the date of such event shall, on such terms as may be
approved by the Committee prior to such event, be assumed by the surviving or
continuing corporation or canceled in exchange for property (including cash).

20. Amendment and Termination of the Plan.

     The Board of Directors or the Committee, without approval of the
stockholders, may amend or terminate the Plan, except that no amendment shall
become effective without prior approval of the stockholders of the Company if
stockholder approval would be required by applicable law or regulations,
including if required for continued compliance with the performance-based
compensation exception of Section 162(m) of the Code or any successor thereto,
under the provisions of Section 422 of the Code or any successor thereto, or by
any listing requirement of the principal stock exchange on which the Common
Stock is then listed.

21. Amendment or Substitution of Awards under the Plan.

     The terms of any outstanding award under the Plan may be amended from time
to time by the Committee in its discretion in any manner that it deems
appropriate (including, but not limited to, any reduction in the exercise price
of any options or SARs awarded under the Plan or any acceleration of the date
of exercise of any award and/or payments thereunder or of the date of lapse of
restrictions on Shares); provided that, except as otherwise provided in Section
16, no such amendment shall adversely affect in a material manner any right of
a participant under the award without his or her written consent. The
Committee may, in its discretion, permit holders of awards under the Plan to
surrender outstanding awards in order to exercise or realize rights under other
awards, or in exchange for the grant of new awards, or require holders of
awards to surrender outstanding awards as a condition precedent to the grant of
new awards under the Plan.

22. Commencement Date; Termination Date.

     The date of commencement of the Plan shall be the date of the closing of
the Company’s initial public offering of its Common Stock. If required by the
Code, the Plan will also be subject to reapproval by the shareholders of the
Company prior to the fifth anniversary of such commencement date.

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     Unless previously terminated upon the adoption of a resolution of the
Board terminating the Plan, the Plan shall terminate at the close of business
on the tenth anniversary of the date of commencement. No termination of the
Plan shall materially and adversely affect any of the rights or obligations of
any person, without his or her written consent, under any grant of options or
other incentives theretofore granted under the Plan.

23. Severability.

     Whenever possible, each provision of the Plan shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of the Plan is held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of the Plan.

24. Governing Law.

     The Plan shall be governed by the corporate laws of the State of Delaware,
without giving effect to any choice of law provisions that might otherwise
refer construction or interpretation of the Plan to the substantive law of
another jurisdiction.

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