KINETIC CONCEPTS, INC.
MANAGEMENT EQUITY PLAN
----------------------
1. Purpose. The Kinetic Concepts, Inc. Management
Equity Plan (the "Plan") is intended to provide an incentive to
certain officers and key employees of Kinetic Concepts, Inc., a
Texas corporation (the "Company"), and its Subsidiaries (as
defined in Section 2) to remain in the employ of the Company and
its Subsidiaries and to increase their interest in the success of
the Company. The Plan provides an opportunity for participants
to obtain a proprietary interest in the Company through the
grant, offering or exchange of shares (the "Management Shares")
of common stock, no par value, of the Company ("Common Stock")
and the grant or exchange of nonqualified stock options (the
"Nonqualified Stock Options"or the "Options"), to purchase shares
of Common Stock. Management Shares and Options are sometimes
referred to herein as "Awards".
2. Definitions. For purposes of the Plan, the
following terms have the following meanings:
"Affiliate" means, with respect to any Person, any
other Person directly or indirectly controlling, controlled
by or under common control with, such Person. For purposes
of this definition, "control" (including, with correlative
meanings, the terms "controlling", "controlled by" or "under
common control with"), as used with respect to any Person,
shall mean 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 otherwise.
"Agreement" means an agreement between the Company and
an officer or key employee of the Company or any of its
Subsidiaries providing for (i) the grant or sale to such
officer or key employee of Management Shares or (ii) the
grant to such officer or key employee of Options and signed
by F Purchaser and B Purchaser to indicate such parties
agreement to be bound by Sections 16 and 17 of the Plan.
"Applicable Management Share Value" as of any date of
determination means the Applicable Value, provided, however,
that if the Company is not a Public Company and such date
falls prior to the fifth anniversary of the Effective Date,
the Applicable Management Share Value shall not exceed the
lesser of the Fair Market Value of such Management Share or
$19.25 plus 7% compounded annually on each anniversary of
the Tender Date.
"Applicable Option Share Value" as of any date of
determination means the Applicable Value, provided, however,
that if the Company is not a Public Company, such date falls
prior to the fifth anniversary of the Effective Date and the
Option Share was obtained through the exercise of an
Exchange Option, the Applicable Option Share Value shall not
exceed the lesser of (A) the Fair Market Value or (B) the
sum of (1) $19.25 less the exercise price of such underlying
Exchange Option (the "Spread") plus 7% of the Spread
compounded annually on each anniversary of the Tender Date
and (2) the exercise price of such Option plus 7% of the
exercise price compounded annually on each anniversary of
the date of exercise.
"Applicable Option Value" as of any date of
determination means the Applicable Value, provided, however,
that if the Company is not a Public Company, such date falls
prior to the fifth anniversary of the Effective Date and the
Option to be valued is an Exchange Option, the Applicable
Value shall not exceed the lesser of (A) the Fair Market
Value of the shares of Common Stock underlying such Exchange
Option less the exercise price of such Exchange Option or
(B) the Spread plus 7% of the Spread compounded annually on
each anniversary of the Tender Date.
"Applicable Value" as of any date of determination
means (i) if the Company is a Public Company, Public Value
and (ii) if the Company is not a Public Company Fair Market
Value.
"B Purchaser" means RCBA PURCHASER I, L.P.
"Beneficial owner" or "beneficially own" has the
meaning given such term in Rule 13d-3 under the 1934 Act.
"Beneficiary" or "Beneficiaries" means the person(s)
designated by a Participant or his Permitted Transferee in
writing to the Company to receive payments pursuant to the
Plan upon the death of a Participant or his Permitted
Transferee. If no Beneficiary is so designated or if no
Beneficiary is living at the time a payment is due pursuant
to the Plan, payments shall be made to the estate of the
Participant or Permitted Transferee. The Participant or
Permitted Transferee, as the case may be, shall have the
right to change the designated Beneficiaries from time to
time by written instrument filed with the Committee in
accordance with such rules as may be specified by the
Committee.
"Board of Directors" means the Board of Directors of
the Company.
"Call Right" means the right of the Company,
exercisable in accordance with Section 10(a) following
termination of a Participant's employment, (i) to purchase,
and to cause a Participant or his Permitted Transferee to
sell, Management Shares and Option Shares beneficially owned
by such Participant or his Permitted Transferee and (ii) to
cause a Participant to surrender for cancellation, in
consideration of the payment provided for in Section 10(a),
unexercised Vested Options granted to such Participant
pursuant to the Plan.
"Cause" means, with respect to any Participant, (a)
"cause" as defined in an employment agreement applicable to
the Participant, or (b) in the case of a Participant who
does not have an employment agreement that defines "cause":
(i) any act or omission that constitutes a material breach
by the Participant of any of his obligations under his
employment agreement (if any) with the Company or any of its
Subsidiaries , the applicable Agreement or any other
material agreement with the Company or any of its
Subsidiaries relating to the Participants employment with
the Company after a written demand from a representative of
the Company for substantial performance is delivered to him;
(ii) the willful and continued failure or refusal of the
Participant substantially to perform the material duties
required of him as an employee of the Company or any of its
Subsidiaries after a written demand from a representative of
the Company for substantial performance is delivered to him;
(iii) any willful material violation by the Participant of
any federal or state law or regulation applicable to the
business of the Company or any of its Subsidiaries or
Affiliates, or the Participant's conviction of a felony, or
any willful perpetration by the Participant of a common law
fraud; or (iv) any other willful misconduct by the
Participant which is materially injurious to the financial
condition or business reputation of, or is otherwise
materially injurious to, the Company or any of its
Subsidiaries or Affiliates.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Commission" means the Securities and Exchange
Commission.
"Committee" has the meaning assigned to such term in
Section 3.
"Date of Grant" means the date of grant of an Award as
set forth in the applicable Agreement.
"Exchange Option" means an Option that was originally
granted under a Company plan other than the Plan and that was
exchanged for an Option to purchase shares of Common Stock under
the Plan.
"Effective Date" has the meaning assigned to such term
in Section 19.
"Eligible Persons" means officers and key employees of
the Company and its Subsidiaries.
"Encumbrance" means any lien, security interest,
pledge, claim, option, right of first refusal, marital right
or other encumbrance with respect to any share of Common
Stock or any Option.
"Fair Market Value" means the value of a share of
Common Stock as determined in good faith by the Board of
Directors or, under the circumstances described in Section
11, as determined in a written report to the Company by an
independent appraisal or investment banking firm selected by
the Board of Directors. For purposes of the definition of
"Fair Market Value", the value to be determined by the Board
of Directors or such appraisal or investment banking firm
shall be the price per share at which a share of Common
Stock would trade on a national securities exchange, NASDAQ
or a similar market, assuming full liquidity and the absence
of any "takeover" or "change in control" premium.
"F Purchaser" means FREMONT PURCHASER II, INC.
"IPO" means a Public Offering that results in more
than 20% of the outstanding Common Stock being traded on a
national securities exchange, NASDAQ or a similar market.
"Involuntary Transfer" means a transfer of a
Participant's Management Shares or Option Shares by
operation of law including, without limitation, as a result
of (i) a sale or other disposition by a trustee or debtor in
possession appointed or retained in a bankruptcy case, (ii)
a sale at any creditors' or judicial sale or (iii) a
transfer arising out of a divorce or separation proceeding.
"Legended Certificate" means a certificate evidencing a
number of shares of Common Stock issued in connection with
an Award and imprinted with a legend to indicate that (i)
such shares are subject to the restrictions on transfer set
forth in the Plan and the applicable Agreement and (ii) if
the offer and sale of such shares have not been registered
under the 1933 Act, such shares may be sold only pursuant to
a registration statement under the 1933 Act or an exemption
from registration under the 1933 Act that the Company has
determined is available for such sale.
"NASDAQ" means the National Association of Securities
Dealers' Automated Quotation System.
"New Option" means an Option to that was originally
granted under this Plan and was not the result of an
exchange for an option to purchase shares of Common Stock
granted under a Company option plan other than the Plan.
"1933 Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the Commission
thereunder.
"1934 Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission
thereunder.
"Option Price" means, with respect to any Option, the
exercise price per share of Common Stock, as determined by
the Committee in its sole discretion and as set forth in the
applicable Agreement.
"Option Shares" means the shares of Common Stock
acquired by a Participant upon exercise of an Option.
"Outstanding", with respect to any share of Common
Stock, means, as of any date of determination, all shares
that have been issued on or prior to such date, other than
shares repurchased or otherwise reacquired by the Company or
any Affiliate thereof, on or prior to such date.
"Participant" means any Eligible Person who has been
granted an Award.
"Permanent Disability", with respect to any Participant
who is an employee of the Company or any of its
Subsidiaries, shall be defined in the same manner as such
term or a similar term is defined in an employment agreement
applicable to the Participant or, in the case of a
Participant who does not have an employment agreement that
defines such term or a similar term, means that the
Participant is unable to perform substantially all his
duties as an employee of the Company or any of its
Subsidiaries by reason of illness or incapacity for a period
of more than six consecutive months, or six months in the
aggregate during any 12-month period, established by medical
evidence reasonably satisfactory to the Company.
"Permitted Transferee" means (A) with respect to
outstanding shares of Common Stock held by any Participant,
(i) the trustee or trustees of a trust revocable solely by
such Participant, (ii) such Participant's guardian or
conservator, (iii) any Person to whom such shares are
transferred by will or the laws of descent and distribution,
or (iv) any Person with respect to which the Board of
Directors shall have adopted a resolution stating that the
Board of Directors has no objection if a transfer of shares
is made to such Person, and (B) with respect to Options, any
Person (other than the Company) to whom an Option has been
transferred in accordance with Section 8(a)(v).
"Person" means an individual, a partnership, a joint
venture, a corporation, an association, a trust, an estate
or other entity or organization, including a government or
any department or agency thereof, or any group deemed to be
a "person" under Section 14(d)(2) of the 1934 Act.
"Prime Rate" means the rate which Bank of America
announces from time to time at its principal office as its
prime lending rate for domestic commercial loans, the Prime
Rate to change when and as such prime lending rate changes.
The Company shall be deemed to be a "Public Company"
after it completes a Public Offering and the Company's
Common Stock is traded on a national securities exchange or
quoted on an automated quotation system.
"Public Offering" means an underwritten public offering
of equity securities of the Company pursuant to an effective
registration statement under the 1933 Act.
The "Public Value" of a share of Common Stock on a
given date shall be the average closing price of a share of
Common Stock on such national securities exchange on which
such shares are traded or, in the event that the Common
Stock is not listed for trading on a national securities
exchange but is quoted on an automated quotation system, the
average closing bid price per share of the Common Stock on
such automated quotation system (the "Average Closing
Price"), in either case for the 30-day period ending on such
date. The Average Closing Price of a share of Common Stock
shall be determined by dividing (i) by (ii), where (i) shall
equal the sum of the closing prices for the Common Stock on
each day that the Common Stock was traded and a closing
price was reported on such national securities exchange or
such automated quotation system, as the case may be, during
the 30-day period, and (ii) shall equal the number of days
on which the Common Stock was traded and a closing price was
reported on such national securities exchange or such
automated quotation system, as the case may be, during the
30-day period.
"Registrable Securities" means all shares of Common
Stock held by Stockholders, and any common stock which may
be issued or distributed in respect thereof, by way of any
recapitalization.
"Registration Expenses" means all out-of-pocket
expenses incident to the Company's performance of or
compliance with Sections 14, 15 and 16, including, without
limitation, all registration and filing fees (including
filing fees with respect to the National Association of
Securities Dealers, Inc.), all fees and expenses of
complying with state securities or "blue sky" laws
(including reasonable fees and disbursements of
underwriters' counsel in connection with the preparation of
any "blue sky" memorandum or survey), all printing expenses,
all listing fees, all registrars' and transfer agents' fees,
the fees and disbursements of counsel for the Company and of
its independent public accountants, including, without
limitation, the expenses of any special audits and/or "cold
comfort" letters required by or incident to such performance
and compliance, the reasonable fees and disbursements of one
outside counsel retained by the holders of Registrable
Securities being registered (which counsel shall be
satisfactory to the holders of a majority of the Registrable
Securities being registered), but excluding underwriting
discounts and commissions and applicable transfer taxes, if
any, which shall be borne by the sellers of the Registrable
Securities being registered in all cases.
"Retirement", with respect to any Participant who is an
employee of the Company or any of its Subsidiaries, means
resignation or termination of employment after attainment of
an age required for payment of an immediate pension pursuant
to the terms of any qualified retirement plan maintained by
the Company or any of its Subsidiaries in which the
Participant participates; provided, however, that no
resignation or termination prior to a Participant's sixty-
fifth birthday shall be deemed a Retirement unless the
Committee so determines in its sole discretion.
"Sale by Fremont/RCBA" means a sale of Common Stock
that is not a Public Offering by either F Purchaser or B
Purchaser that results in F Purchaser and B Purchaser
together holding less than sixty-nine percent of the shares
of Common Stock initially held by F Purchaser and B
Purchaser on the Effective Date, as such number may be
adjusted to reflect stock splits, reverse stock splits,
stock dividends, acquisitions and the exercise of Options.
"Sale of Assets" means a sale (in one transaction or a
series of transactions) by the Company of all or
substantially all its business or assets (or both) to a
third party that is not an Affiliate of the Company.
"Sale of Stock" means a sale (in one transaction or in
a series of transactions) by the Company's stockholders of
at least two-thirds of the outstanding Common Stock to a
Third Party, including any merger with a Public Company
following the consummation of which two-thirds or more of
the voting securities of the surviving entity (which is a
Public Company) in such merger are held by Third Parities.
"Subsidiary" means any corporation if 50% or more of
the total combined voting power of all classes of stock is
owned, either directly or indirectly, by the Company or
another Subsidiary.
"Tender Date" means the last day of the Offer, as such
term is defined in the transaction agreement between F
Purchaser, B Purchaser and the Company.
"Third Party" means, with respect to any Participant,
any Person, other than any Affiliate of (a) such
Participant, (b) the Company and its Subsidiaries or (c) F
Purchaser or B Purchaser.
"Valuation Date" means December 31 and June 30, or such
other date that the Committee may from time to time select.
"Vested Options" means, as of any date, Options which
by their terms are exercisable on such date.
3. Administration of the Plan.
(a) Members of the Committee. The Plan shall be
administered, and Awards shall be granted hereunder, by a
committee (the "Committee") of the Board of Directors comprised
of at least three directors selected by the Board of Directors to
administer the Plan. The composition of the Committee may, in
the discretion of the Board of Directors, be adjusted to the
extent required in order for the Company to rely on the exemptive
relief provided under Rule 16b-3, as it may be amended from time
to time, promulgated pursuant to Section 16 of the 1934 Act.
(b) Authority of the Committee. The Committee shall
adopt such rules as it may deem appropriate in order to carry out
the purpose of the Plan. All questions of interpretation,
administration and application of the Plan shall be determined in
good faith by a majority of the members of the Committee then in
office, except that the Committee may authorize any one or more
of its members, or any officer of the Company, to execute and
deliver documents on behalf of the Committee. The determination
of such majority shall be final and binding in all matters
relating to the Plan.
4. Number of Shares Issued in Connection with Awards.
The maximum aggregate number of shares of Common Stock that may
be issued in connection with Awards granted under the Plan
(together with any shares of Common Stock issued in connection
with Management Shares and Options) is 6.5% of the initial shares
of Common Stock outstanding as of the Effective Date, subject to
adjustment as provided in Section 13. To the fullest extent
permitted under Section 422 of the Code, if any Management Shares
are forfeited or are repurchased by the Company, or if any Option
expires or is surrendered without being exercised in full, such
Management Shares or shares of Common Stock as to which such
Option has not been exercised, as the case may be, may again be
available for issuance in connection with future grants or
offerings of Awards.
5. Eligible Persons. Awards may be granted or
offered only to Eligible Persons. The Chief Executive Officer of
the Company (the "CEO") will recommend for approval by the Board
of Directors the individual Participants to whom Awards may be
granted from among such class of Eligible Persons and to
determine the number and form of Awards to be granted to each
Participant.
6. Agreement. The terms and conditions of each grant
or sale of Awards shall be embodied in an Agreement in a form
approved by the Committee, which shall contain terms and
conditions not inconsistent with the Plan and which shall
incorporate the Plan by reference. Each Agreement shall: (a)
state the date on which the Award was granted or sold, and (i) in
the case of Options, set forth the number of Options being
granted to the Participant and the applicable Option Price or
Option Prices, and (ii) in the case of Management Shares, set
forth the number of Management Shares being granted or offered to
the Participant and, if applicable, the purchase price or other
consideration for such Management Shares; (b) set forth the
vesting schedule; (c) be signed by the recipient of the Award and
a person designated by the Committee; and (d) be delivered to the
recipient of the Award.
7. Restrictions on Transfer. No Management Share,
Option or Option Share may be sold, transferred, assigned,
pledged, or otherwise encumbered or disposed of to any third
party other than the Company except as provided in the Plan or
Award Agreement or to a Permitted Transferee. Each Permitted
Transferee (other than the Company), by will, by the laws of
descent and distribution or otherwise, of any Management Shares,
Options or Option Shares shall, as a condition to the transfer
thereof to such Permitted Transferee, execute an agreement
pursuant to which it shall become a party to the Agreement
applicable to the transferor. Each Permitted Transferee will
succeed to the rights held under the Plan by the transferring
Participant, to the extent that such rights are not limited in
the Plan or the relevant Agreement.
8. Options.
(a) Terms of Options Generally. Options may be
granted to any Eligible Person. Each Option shall entitle the
Participant to whom such Option was granted to purchase, upon
payment of the relevant Option Price, one share of Common Stock.
Payment of the Option Price shall be made in cash, or, in the
sole discretion of the Committee and to the extent provided in
the applicable Agreement, in shares of Common Stock already owned
by the Participant, in other property acceptable to the Committee
or in any combination of cash, shares of Common Stock or such
other property. Options granted under the Plan shall comply with
the following terms and conditions:
(i) Option Price. Each Agreement relating to an
Option shall specify the relevant Option Price.
(ii) Vesting.
(A) Vesting Schedule. The vesting schedule of
each Option shall be set forth in the applicable
Agreement.
(B) Acceleration of Vesting. In the event of a
termination of a Participant's employment with the
Company and its Subsidiaries by reason of death or
Permanent Disability or Retirement, all Options granted
to such Participant shall vest on the date of such
termination. All Options shall immediately vest upon
(i) completion of a Sale of Stock within three years
from the Effective Date and (ii) completion of a Sale
of Assets within three years from the Effective Date.
Fifty percent of all unvested Options, proportionately
per unvested installment per Participant, shall
immediately vest upon (i) completion of an IPO within
three years from the Effective Date or (ii) completion
of a Sale by Fremont/RCBA within three years from the
Effective Date.
(iii) Duration of Options. Each Option shall be
effective for such term as shall be determined by the
Committee and set forth in the applicable Agreement;
provided, however, that the term of any New Option shall not
exceed 7 years from the Date of Grant.
(iv) Exercise Following Termination of Employment.
Upon termination of a Participant's employment with the
Company and its Subsidiaries for any reason, the Participant
(or, in the case of the Participant's death, his
Beneficiary) may exercise any Vested Option, subject to
Section 8(b), at any time until the earlier of (A) 30 days
(180 days upon a termination of employment or status due to
death or Permanent Disability) following the date of such
termination of employment or status (or, if a Vested Option
may not be exercised on the date of such termination of
employment or status because the conditions to exercise set
forth in Section 8(b) are not satisfied, 30 days (180 days
upon a termination of employment or status due to death or
Permanent Disability) following the date on which the
Company notifies the Participant that such conditions have
been satisfied and that the Option may be exercised), and
(B) exercise by the Company of its Call Right under Section
10(a), but in no event after the expiration of the Option
under the provisions of clause (iii) above; provided,
however, that the applicable Agreement may, subject to
clause (iii) above, provide for a longer post-termination
exercise period. Upon the expiration of such period or
exercise of such Call Right, any such Vested Option not
theretofore exercised shall be canceled, and the shares of
Common Stock that had been subject thereto shall again be
available for grants of further Awards under the Plan to the
fullest extent permitted under Section 422 of the Code.
(v) Certain Restrictions. Options granted hereunder
shall not be transferable by the Participant otherwise than
to a Permitted Transferee. A Participant may transfer
Exchange Options to a charity or charitable foundation
(collectively, a "Charity"), subject to the approval of the
Board of Directors, provided however, that the Exchange
Options transferred shall represent more that than 4,000
Option Shares, as such number may be adjusted to reflect
stock splits, reverse stock splits, stock dividends, and
acquisitions. Upon completion of an IPO, Option Shares may
be freely transferred as permitted by applicable laws and
regulations.
(vi) Stockholder Rights. A Participant shall have no
rights as a stockholder with respect to any shares of Common
Stock issuable upon exercise of an Option until a
certificate or certificates evidencing such shares shall
have been issued to such Participant, and no adjustment
shall be made for dividends or distributions or other rights
in respect of any share for which the record date is prior
to the date upon which the Participant shall become the
holder of record thereof.
(vii) Dividends and Distributions. Any shares of
Common Stock or other securities of the Company received by
the Participant as a result of a stock dividend or other
distribution in respect of Option Shares shall be subject to
the same restrictions as such Option Shares.
(viii) Additional Terms and Conditions. Each Option
granted hereunder, and any shares of Common Stock issued in
connection with such Option, shall be subject to such
additional terms and conditions not inconsistent with the
Plan which are prescribed by the Committee and set forth in
the applicable Agreement.
(b) Limitation on Exercise. An Option shall not be
exercisable unless the offer and sale of the shares of Common
Stock subject to the Option have been registered under the 1933
Act and qualified under applicable state "blue sky" laws, or the
Company has determined that an exemption from registration under
the 1933 Act and from qualification under such state "blue sky"
laws is available.
(c) Issuance of Certificate. As soon as practicable
following the exercise of any Options, a Legended Certificate
evidencing the number of Option Shares issued in connection with
such exercise shall be issued in the name of the Participant.
(d) Unvested Options. Upon termination of a
Participant's employment with the Company and its Subsidiaries,
all Options granted to such Participant which have not
theretofore vested (and which do not vest by reason of such
termination of employment or status) shall terminate and be
canceled without any payment therefor.
9. Management Shares.
(a) Terms of Management Shares Generally. Management
Shares may be granted or offered for sale to any Eligible Person.
If Management Shares are offered for sale hereunder, the purchase
price shall be payable in cash, or, in the sole discretion of the
Committee and to the extent provided in the applicable Agreement,
in shares of Common Stock already owned by the Participant, in
other property acceptable to the Committee or in any combination
of cash, shares of Common Stock or such other property. The
Management Shares granted or offered for sale under the Plan
shall comply with the following terms and conditions:
(i) Purchase Price; Offering Period. Management
Shares may be granted for no consideration or offered for
sale at a purchase price determined by the Committee in its
sole discretion at the time of offering and set forth in the
applicable Agreement. Any offer to sell Management Shares
hereunder shall expire no later than 60 days following the
date of such offer to an Eligible Person.
(ii) Stockholder Rights. A Participant shall have all
rights of a stockholder as to the Management Shares,
including the right to receive dividends and the right to
vote in accordance with the Company's Certificate of
Incorporation, subject to the restrictions set forth in the
Plan and the applicable Agreement.
(iii) Dividends and Distributions. Any shares of
Common Stock or other securities of the Company received by
a Participant as a result of a stock distribution to holders
of Management Shares or as a stock dividend on Management
Shares shall be subject to the same restrictions as such
Management Shares and all references to Management Shares
hereunder shall be deemed to include such shares of Common
Stock or other securities.
(iv) Additional Terms and Conditions. Each Management
Share granted or offered for sale hereunder shall be subject
to such additional terms and conditions not inconsistent
with the Plan which are prescribed by the Committee and set
forth in the applicable Agreement.
(v) Restrictions on Transfers. No Participant shall
be permitted to transfer any Management Shares other than as
expressly permitted by this Plan or the relevant Agreement.
Upon the completion of an IPO, Management Shares may be
freely transferred in accordance with all applicable laws
and regulations.
(b) Issuance of Certificate. At the time of grant or
sale of Management Shares to a Participant, a Legended
Certificate evidencing the appropriate number of shares of Common
Stock granted or sold to the Participant as Management Shares
shall be issued in the name of the Participant.
10. Termination of Employment or Status; Involuntary
Transfers.
(a) Company Call Right.
(i) Exercise of Call Right. Unless the Committee in
its sole discretion determines otherwise and so sets forth
in the applicable Agreement, if prior to the completion of
an IPO the employment of a Participant with the Company and
its Subsidiaries terminates for any reason, or an
Involuntary Transfer occurs, the Company shall have a Call
Right, exercisable for a period of 60 days after the date of
such termination or Involuntary Transfer, with respect to
all of the Management Shares, Vested Options and Option
Shares beneficially owned by such Participant and his
Permitted Transferees. The Company may exercise such Call
Right by giving written notice thereof to the Participant or
his Permitted Transferee, as the case may be, prior to the
expiration of such 60-day period. The Company's Call Right
shall become null and void subsequent to the completion of
an IPO.
(ii) Purchase Price. With respect to any exercise of a
Call Right under this Section 10(a), (A) the purchase price
per Management Share to be paid by the Company at the
closing provided for in Section 10(c) shall be the
Applicable Management Share Value, determined as of the
first Valuation Date coincident with or following the date
of termination of the Participant's employment or status or
Involuntary Transfer, (B) the purchase price per Option
Share to be paid by the Company at the closing provided for
in Section 10(c) shall be the Applicable Option Share Value,
determined as of the first Valuation Date coincident with or
following the date of termination of the Participant's
employment or status or Involuntary Transfer and (C) the
consideration to be paid by the Company in respect of Vested
Options surrendered for cancellation at the closing provided
for in Section 10(c) shall be the Applicable Option Share
Value determined as of the first Valuation Date coincident
with or following the date of termination of the
Participant's employment or Involuntary Transfer. The
Company will give notice of the purchase price to be paid
per Management Share or Option Share within a reasonable
time from the date of determination of such price.
(b) Participant Put Right.
(i) Exercise of Put Right. To the extent provided in
the applicable Agreement and subject to Section 10(b)(iii),
if prior to the completion of an IPO the employment of a
Participant with the Company and its Subsidiaries terminates
for any reason, the Participant (or, in the case of the
Participant's death, his Beneficiary) shall have a Put
Right, exercisable for a period of 60 days after the date of
such termination, with respect to all of the Management
Shares, Vested Options and Option Shares beneficially owned
by such Participant and his Permitted Transferees. The
Participant may exercise such Put Right by giving written
notice thereof to the Company prior to the expiration of
such 60-day period. The Participants' Put Rights shall be
null and void subsequent to the completion of an IPO.
(ii) Purchase Price. The Put Right purchase price per
Management Share to be paid by the Company at the closing
provided for in Section 10(c) shall be the Applicable
Management Share Value, determined as of the first Valuation
Date coincident with or following the date of termination of
the Participant's employment or status. The Put Right
purchase price per Option Share to be paid by the Company at
the closing provided for in Section 10(c) shall be the
Applicable Option Share Value, determined as of the first
Valuation Date coincident with or following the date of
termination of the Participant's employment or status. The
consideration to be paid by the Company in respect of Vested
Options surrendered for cancellation at the closing provided
for in Section 10(c) shall be Applicable Option Value,
determined as of the first Valuation Date coincident with or
following the date of termination of the Participant's
employment. The Company will give notice of the
consideration to be paid per Management Share or Option
Share within a reasonable time from the date of
determination of such amount.
(iii) Anything in this Plan to the contrary
notwithstanding, if, at any time, the Board of Directors
shall determine, subject to the written opinion of the
Appraiser (as hereinafter defined) referred to below, the
Company is not financially capable of making some or all of
the aggregate payments to be made thereafter pursuant to the
exercise of Put Rights (the "Put Right Payments"), the
Company shall have the right to defer such Put Right
Payments but only on the terms hereinafter provided in this
Section 10(b)(iii). In the event that the Board of
Directors shall have made such determination with respect to
the Company's financial capability, the Board of Directors
shall, if so requested in writing by at least two
Participants within 10 business days of the date that notice
of such determination has been given (the "Request Period"),
promptly retain an appraisal or investment banking firm, to
be selected by the CEO and reasonably satisfactory to the
Board of Directors (the "Appraiser"), to render a written
opinion as to whether the Company has the financial
capability to make any of, or any portion of, such Put Right
Payments at such time as it would otherwise be required to
make such Put Right Payments. If the Board of Directors'
determination, or the Appraiser's written opinion, if so
required, indicates that, at the time a Put Right Payment
would otherwise be required to be made to a Participant, the
Company would not have the financial capability to make any
of the Put Right Payments that would otherwise then be
required to be made, or shall have the financial capability
to make only a portion of such Put Right Payments, then
payments with respect to such Put Right Payments shall be
made on the following basis: As of the first day following a
determination by the Appraiser of lack of financial
capability in respect of which Put Right Payments are
required to be made or, if no request for an Appraiser's
appraisal is made, on the day following the last day of the
Request Period (each such date being hereinafter called a
"Payout Date"), all unpaid amounts payable with respect to
Put Rights exercised prior to such a date, shall be
aggregated (the "Aggregate Payable Amount"), and the amount
payable to each Participant shall be determined by
multiplying the full amount owing to such Participant as of
such date by a fraction, the numerator of which shall be the
amount that the Company, as indicated by the Board of
Directors' determination or the Appraiser's written opinion,
shall then be financially capable of paying (which may be
zero if, as indicated by the Board of Directors'
determination or the Appraiser's written opinion, the
Company is not financially capable of making any of the Put
Right Payments then otherwise required to be made) and the
denominator of which shall be the Aggregate Payable Amount.
Elections to exercise Put Rights (or portions thereof) not
satisfied pursuant to such pro rata payment shall be deemed
revoked, and the remaining Awards (or portions thereof) with
respect thereto shall thereafter be subject to the
provisions of the Plan as if a Put Right election had not
been made, provided, however that such Options will not be
canceled pursuant to Section 8(a)(iv) or as a result of the
expiration of such Options' term pursuant to Section
8(a)(iii). In acting pursuant to this Section 8, the
Appraiser shall be entitled to the rights and immunities of
an arbitrator.
(c) Election and Delivery Procedures.
(i) The closing of any exercise of any Call Right or
Put Right pursuant to Section 10(a) or 10(b) shall take
place at the offices of the Company, or such other place as
may be mutually agreed, not less than 15 nor more than 30
days after the Valuation Date coincident with or following
the relevant termination of employment. The exact date and
time of closing shall be specified by the party exercising
such Call Right or Put Right.
(ii) At such closing (the "Closing"), the Participant
(or, following the Participant's death, the Participant's
Beneficiary or Beneficiaries) shall deliver certificates for
the shares of Common Stock to be sold to the Company duly
endorsed, or accompanied by written instruments of transfer
in form reasonably satisfactory to the Company duly
executed, by such transferor, free and clear of any
Encumbrances, and shall consent to the cancellation of the
Vested Options to be surrendered, which Vested Options shall
also be free and clear of any Encumbrances. The Company
shall pay the applicable purchase price for shares of Common
Stock and consideration for surrendered Vested Options in
cash; provided, however, that such payment may be deferred
under the circumstances, and to the extent, provided for in
Section 12.
11. Appraisal. If, in connection with the
determination of the Fair Market Value used to calculate the
purchase price for shares of Common Stock and Vested Options upon
the exercise of any Call Right or Put Right under Section 10(a)
or 10(b), a Participant reasonably believes that the Board of
Directors' determination of Fair Market Value (if applicable) is
not reasonable, then such Participant may challenge the Board of
Directors' determination of such Fair Market Value by giving
written notice to the Board of Directors no later than 15
business days after receipt of notice of the purchase price per
share which the Company intends to pay with respect to such
shares of Common Stock and Vested Options. In such event, the
Company shall engage at its own expense an appraisal or
investment banking firm that is independent of the Company and
its Subsidiaries and Affiliates and is knowledgeable in the
valuation of companies engaged in a business similar to the
business in which the Company is engaged to determine the Fair
Market Value of the Common Stock for purposes of determining the
purchase price; provided, however, that if such a determination
has been made by such an appraisal or investment banking firm
less than six months prior to the date as of which the Fair
Market Value of the Common Stock is to be determined, the Company
shall not be required to engage any such firm and shall instead
rely on such earlier valuation; provided further, however, that
the Company shall not rely on such earlier valuation if it
determines in good faith that such earlier valuation no longer
reflects Fair Market Value. Any such appraisal or investment
banking firm engaged by the Company shall be selected by the
Board of Directors and shall be reasonably satisfactory to such
Participant. Such independent appraisal or investment banking
firm's determination of Fair Market Value shall be conclusive and
binding on the parties. Anything in this Section 11 to the
contrary notwithstanding, if such an independent appraisal or
investment banking firm is appointed, no payment shall be made in
respect of the Participant's shares of Common Stock or Vested
Options pending the determination of Fair Market Value by such
firm, and payment of the purchase price shall instead be made no
later than the tenth business day following receipt by the
Company of the report of such firm establishing Fair Market
Value. If the Fair Market Value so determined by the independent
banking firm exceeds the Fair Market Value as determined by the
Board of Directors by more than 10%, the costs of such firm shall
be for the account of the Company; in all other cases, the costs
of such firm shall be borne by the Participant, and the Company
shall have the right to withhold such costs from any payment it
makes in respect of its repurchase of shares of Common Stock or
Vested Options from the Participant.
12. Legal Limitations. Anything in the Plan or any
Agreement to the contrary notwithstanding, to the extent that the
limitations or restrictions applicable to the Company or any
Subsidiary under the laws of their respective jurisdictions of
incorporation, the restrictions or limitations contained in the
Certificate of Incorporation or By-laws of the Company or any
Subsidiary or any other applicable law, rule or regulation or
under the terms of any indebtedness for borrowed money of the
Company or any Subsidiary prohibit the Company from making any
payment required under the Plan or any applicable Agreement with
respect to a share of Common Stock or Vested Option, then the
Company shall not be obligated to make such payment at such time,
and shall have the right to defer such payment until the Board of
Directors reasonably determines that such limitations and
restrictions no longer restrict the Company from making such
deferred payment. Any amounts the payment of which is so
deferred shall bear interest, compounded annually and calculated
at a rate equal to the Prime Rate, and shall be paid (with
interest) promptly after, and to the extent that, the Board of
Directors determines that the limitations and restrictions
referred to in the first sentence of this Section 12 no longer
restrict such payment. Notwithstanding a deferral of payment in
accordance with this Section 12 for shares of Common Stock or
Vested Options in respect of which a Call Right or Put Right
shall have been exercised, the closing of any exercise of such
Call Right or Put Right shall take place as provided in Section
10(c) and the right of a Participant and his Permitted
Transferees in respect of the shares of Common Stock and Vested
Options subject to such Call Right or Put Right (other than the
right to receive payment of amounts deferred in accordance with
this Section 12) shall terminate as of such closing.
13. Effect of Certain Corporate Changes and Changes in
Control.
(a) Dilution and Other Adjustments. In the event of a
stock dividend or split, the Committee shall make the following
adjustments as are necessary or advisable (the form of which
shall be determined by the Committee in its sole discretion) to
provide each Participant with a benefit equivalent to that which
he would have been entitled to had such event not occurred: (i)
adjust the number of Awards granted to each Participant and the
number of Awards that may be granted generally pursuant to the
Plan, (ii) adjust the Option Price of any Options, and (iii) make
any other adjustments, or take such action, as the Committee, in
its discretion, deems appropriate. Such adjustments shall be
conclusive and binding for all purposes. In the event of a
change in the Common Stock which is limited to a change in the
designation thereof to "Capital Stock" or other similar
designation, or to a change in the par value thereof, or from par
value to no par value, without increase or decrease in the number
of issued shares of Common Stock, the shares resulting from any
such change shall be deemed to be Common Stock within the meaning
of the Plan.
(b) Effect of Reorganization. In the event that (i)
the Company is merged or consolidated with another corporation,
(ii) all or substantially all the assets of the Company are
acquired by another corporation, person or entity, (iii) the
Company is reorganized, dissolved or liquidated (each such event
in (i), (ii) or (iii) being hereinafter referred to as a
"Reorganization Event") or (iv) the Board of Directors shall
propose that the Company enter into a Reorganization Event, then
the Committee shall make upon consummation of such Reorganization
Event any or all of the adjustments described in Section 13(a) as
are necessary or advisable in the sole discretion of the
Committee to provide the Participant with a benefit equivalent to
that which he would have been entitled to had such event not
occurred.
14. Incidental Registration.
(a) Registration Process. If the Company at any time
proposes to register any shares of Common Stock under the 1933
Act for sale in a Public Offering in the United States, whether
or not for its own account, on a form and in a manner that would
permit registration of Registrable Securities under the 1933 Act
for Sale in such Public Offering, it will each such time give
prompt written notice to all Participants holding Registrable
Securities (including Option Stock issuable upon exercise of any
Vested Options held by the Participants after giving effect to
the accelerated vesting, if any, that would result as a
consequence of such Public Offering) of its intention to do so,
specifying the form and manner and the other relevant facts
involved in such proposed registration (including, without
limitation, the identity of the managing underwriter). Upon the
written request of any such holder of Registrable Securities
delivered to the Company within 30 days after such notice shall
have been given to such holder (which request shall specify the
Registrable Securities intended to be disposed of by such holder
and the intended method of disposition thereof), the Company will
use its best efforts to effect the registration under the
Securities Act, as expeditiously as is reasonable, of all
Registrable Securities that the Company has been so requested to
register by the holders of Registrable Securities, to the extent
requisite to permit the Sale of the Registrable Securities to be
so registered in such Public Offering; provided, however, that:
(i) if, at any time after giving such written notice
of its intention to register any of such shares of Common
Stock proposed to be registered by the Company and prior to
the effective date of the registration statement filed in
connection with such registration, the Company shall
determine for any reason not to register such shares of
Common Stock, the Company may, at its election, give written
notice of such determination to each holder of Registrable
Securities that has requested to register Registrable
Securities and thereupon the Company shall be relieved of
its obligation to register any Registrable Securities in
connection with such registration (but not from its
obligation to pay the Registration Expenses in connection
therewith to the extent provided in Section 14(b));
(ii) if the managing underwriter of such Public
Offering shall advise the Company that, in its judgment, the
number of shares of Common Stock proposed to be included in
such Public Offering should be limited because the inclusion
of Registrable Securities is likely to adversely impact the
purchase price obtained for the shares of Common Stock
proposed to be included in such Public Offering, then the
Company will promptly advise each such holder of Registrable
Securities thereof and may require, by written notice to
each such holder accompanying such advice, that, to the
extent necessary to meet such limitation, all holders of
Registrable Securities proposing to sell shares of Common
Stock in such Public Offering shall share pro rata in the
number of shares of Common Stock to be excluded from such
offering, such sharing to be based on the respective numbers
of Registrable Securities as to which registration has been
requested by such holders and that the distribution of such
Registrable Securities as are so excluded be deferred (in
case of a deferral as to a portion of such Registrable
Securities, such portion to be allocated among such holders
in proportion to the respective numbers of shares of Common
Stock so requested to be registered by such holders) until
the completion of the distribution of such shares of Common
Stock and any other securities by such underwriters; and
(iii) the Company shall not be obligated to effect
any registration of Registrable Securities under this
Section 14 that is incidental to the registration of any of
its shares of Common Stock or other securities in connection
with any merger, acquisition, exchange offer, dividend
reinvestment plan or stock option or other employee benefit
plan.
(b) Registration Expenses. The Company will pay all
Registration Expenses in connection with each registration of
Registrable Securities effected by it pursuant to this
Section 14.
15. Right to Participate in Certain Dispositions.
(a) Right to Participate. (i) So long as F Purchaser
and B Purchaser together (for purposes of this Section 15 the
"Founding Stockholders") shall own at least 40% of the
outstanding shares of Common Stock, neither Founding Stockholder
shall in any transaction or series of related transactions,
directly or indirectly, sell or otherwise dispose of for value
any shares of Common Stock held by it to any Third Party or Third
Parties, unless the terms and conditions of such sale or other
disposition shall include an offer to include, at the option of
each of the Participants, in such sale or other disposition to
the Third Party or Third Parties, the Pro Rata Portion (as
hereinafter defined) of the shares of Common Stock, including
Management Shares and Option Shares then owned (or issuable upon
the exercise of any options owned) by each such Participant. For
purposes of this Section 15, "Pro Rata Portion" means, with
respect to each Participant, a number equal to the product of (a)
the total number of shares of Common Stock then owned (or
issuable upon the exercise of any Vested Options held after
giving effect to the accelerated vesting, if any, that would
result as a consequence of such sale or disposition) by such
Participant, times (b) a fraction, the numerator of which shall
be the total number of shares of Common Stock proposed to be sold
by the Prospective Sellers (as such term is defined in Section
15(a)(ii)), and the denominator of which shall be the total
number of shares of Common Stock owned (or issuable upon the
exercise of any Vested Options held after giving effect to the
accelerated vesting, if any, that would result as a consequence
of such sale or disposition) by the Prospective Sellers
(including such shares of Common Stock so proposed to be sold).
(ii) If, so long as the Founding Stockholders shall own
at least 40% of the outstanding shares of Common Stock, either
Founding Stockholder receives from a Third Party or Third Parties
a bona fide offer or offers to purchase or otherwise acquire (for
purposes of this Section 15, an "Offer") any shares of Common
Stock held by such Founding Stockholder (for purposes of this
Section 15, the "Offered Shares"), and such Founding Stockholder
intends to pursue a sale of such shares of Common Stock to such
Third Party or Third Parties, such Founding Stockholder (for
purposes of this Section 15, the "Prospective Seller") shall
provide written notice (for purposes of this Section 15, the
"Offer Notice") of such Offer to each of the Participants not
later than the tenth business day prior to the consummation of
the sale or other disposition contemplated by the Offer. The
Offer Notice shall identify the Offered Shares, the price offered
for such Offered Shares, all other material terms and conditions
of the Offer and, in the case of an Offer in which the
consideration payable for shares of Common Stock consists in
whole or in part of such other consideration as the Company may
reasonably determine, such other consideration. The Participants
shall have the right and option, for a period of 10 business days
after the date the Offer Notice is given to such Participants
(for purposes of this Section 15, the "Notice Period"), to notify
the Prospective Seller of such Participant's interest in selling
or otherwise disposing of up to the Pro Rata Portion of such
Participant's shares of Common Stock pursuant to the Offer).
Each Participant desiring to exercise such option shall, prior to
the expiration of the Notice Period, provide the Prospective
Seller with written notice (specifying the number of shares of
Common Stock as to which such Participant has an interest in
selling or otherwise disposing of pursuant to the Offer) (for
purposes of this Section 15, a "Notice of Interest") and, deliver
to the Prospective Seller (A) the certificate or certificates
evidencing the shares of Common Stock to be sold or otherwise
disposed of pursuant to such Offer by such Participant duly
endorsed in blank or accompanied by written instruments of
transfer in form satisfactory to the Prospective Seller executed
by such Participant, (B) an instrument of assignment reasonably
satisfactory to the Prospective Seller assigning, as of the
consummation of the sale or other disposition to the Third Party
or Third Parties, all such Participant's rights hereunder with
respect to the shares of Common Stock to be sold or otherwise
disposed of, and (C) a special irrevocable power-of-attorney
authorizing the Prospective Seller to sell or otherwise dispose
of such shares of Common Stock pursuant to the terms of the Offer
and to take all such actions as shall be necessary or appropriate
in order to consummate such sale or other disposition. Delivery
of such certificate or certificates evidencing the shares of
Common Stock to be sold, the instrument of assignment and the
special irrevocable power-of-attorney authorizing the Prospective
Seller to sell or otherwise dispose of such shares of Common
Stock shall constitute an irrevocable election by such
Participant to authorize and permit the Prospective Seller to
sell such shares of Common Stock pursuant to the Offer. Each
Participant that shall have delivered a Notice of Interest as
provided in this Section 15(a)(ii) shall deliver the documents
described in clauses (A) and (B) of the second preceding sentence
at the closing of the sale of the Offered Shares.
(iii) Promptly after the consummation of the sale
or other disposition of the shares of Common Stock of the
Prospective Seller and the Participants to the Third Party or
Third Parties pursuant to the Offer, the Prospective Seller shall
remit to each of the Participants the total sales price of the
shares of Common Stock of such Participants sold or otherwise
disposed of pursuant thereto.
(iv) If at the end of the Notice Period any Participant
shall not have given a Notice of Interest (and delivered all
other required documents) with respect to some or all of the Pro
Rata Portion of such Participant's shares of Common Stock, such
Participant will be deemed to have waived all its rights under
this Section 15 with respect to the sale or other disposition
pursuant to the Offer of the portion of the Pro Rata Portion of
the shares of Common Stock owned by such Participant with respect
to which a Notice of Interest shall not have been given. If, at
the end of the 120-day period following the giving of the Offer
Notice, the Prospective Seller has not completed the sale of all
the Offered Shares and the shares of Common Stock with respect to
which Participants shall have given Notices of Interest pursuant
to this Section 15, the Prospective Seller shall return to such
Participants all certificates evidencing the unsold shares of
Common Stock that such Participants delivered for sale or other
disposition pursuant to this Section 15 and such Participants'
related instruments of assignment and powers-of-attorney.
(v) Except as expressly provided in this Section 15,
the Prospective Seller shall have no obligation to any
Participant with respect to the sale or other disposition of any
shares of Common Stock owned by such Participant in connection
with this Section 15. Anything herein to the contrary
notwithstanding and irrespective of whether any Notice of
Interest shall have been given, the Prospective Seller shall have
no obligation to any Participant to sell or otherwise dispose of
any Offered Shares pursuant to this Section 15 or as a result of
any decision by the Prospective Seller not to accept or
consummate any Offer or sale or other disposition with respect to
the Offered Shares (it being understood that any and all such
decisions shall be made by the Prospective Seller in its sole
discretion). No Participant shall be entitled to sell or
otherwise dispose of shares of Common Stock directly or to any
Third Party pursuant to an Offer (it being understood that all
such sales and other dispositions shall be made only on the terms
and pursuant to the procedures set forth in this Section 15).
(b) Anything in this Section 15 to the contrary
notwithstanding, (i) the provisions of Section 15 will not be
applicable to any sale of shares of Common Stock pursuant to a
Public Offering, (ii) in the event that either Prospective Seller
shall exercise the option referred to in Section 16 to require
each of the Participants to participate in the sale of shares of
Common Stock referred to therein, the Participants shall
thereafter have no right pursuant to this Section 15 to
participate in any such sale and (iii) all rights to participate
conveyed by this Section 15 will become null and void upon an
IPO. Nothing in this Section 15 shall affect any of the
obligations of the Founding Stockholders under any other
provision of this Plan.
16. Right to Compel Participation in Certain Sales.
(a) Compelled Participation. If either Founding
Stockholder shall, individually or jointly, in any transaction or
series of related transactions, directly or indirectly, (for
purposes of this Section 16, collectively, the "Prospective
Sellers") propose to sell to a Third Party or Third Parties for
cash, cash equivalents or marketable securities all shares of
Common Stock held by them (for purposes of this Section 16, the
"Controlling Shares") to a Third Party or Third Parties (for
purposes of this Section 16, an "Offer") and as a result of such
sale such Third Party or Third Parties and all Affiliates of such
Third Party or Third Parties would own a number of shares of
Common Stock that constitutes a majority of the shares of Common
Stock then outstanding, the Prospective Sellers may, at their
option, require each of the Participants to sell all shares of
Common Stock owned or held by such Participant to the Third Party
or Third Parties, for the same consideration per share of Common
Stock and otherwise on the same terms and conditions upon which
the Prospective Sellers sell their shares of Common Stock.
(b) Compelled Sales Procedure. (i) the Prospective
Sellers shall provide a written notice (for purposes of this
Section 16, the "Offer Notice") of such Offer to each of the
Participants no later than the tenth business day prior to the
consummation of the sale contemplated by the Offer. The Offer
Notice shall contain written notice on the exercise of the
Prospective Sellers' rights pursuant to Section 16, setting forth
the consideration per share of Common Stock to be paid by the
Third Party or Third Parties and the other material terms and
conditions of Offer. Within 10 business days following the date
the Offer Notice is given, each of the Participants shall deliver
to the Prospective Sellers (A) the certificate or certificates
evidencing all the shares of Common Stock owned or held by such
Participant duly endorsed in blank or accompanied by written
instruments of transfer in form satisfactory to the Prospective
Sellers executed by such Participant, and (B) a special
irrevocable power- of-attorney authorizing the Prospective
Sellers to sell such shares of Common Stock pursuant to the terms
of the Offer and to take all such action as shall be necessary or
appropriate in order to consummate such sale, provided, however,
that if such delivery is not permitted by applicable law, such
Participant shall deliver an uncondition agreement to deliver
such shares of Common Stock pursuant to this Section 16(b) at the
closing for such Offer against delivery to such Participant of
the consideration therefor.
(ii) Promptly after the consummation of the sale of
shares of Common Stock of the Prospective Sellers and the
Participants to the Third Party or Third Parties pursuant to the
Offer, the Prospective Sellers shall remit to each of the
Participants the total sales price of the shares of Common Stock
of such Participant sold pursuant thereto.
(iii) If, at the end of the 120-day period
following the giving of the Offer Notice, the Prospective Sellers
have not completed the sale of all the Controlling Shares and the
shares of Common Stock delivered to the Prospective Sellers
pursuant to Section 16(b)(i), the Prospective Sellers shall
return to each of the Participants all certificates evidencing
unsold shares of Common Stock that such Participant delivered for
sale pursuant to this Section 16 and such Participant's related
powers-of-attorney.
(iv) Except as expressly provided in this Section 16,
the Prospective Sellers shall have no obligation to any
Participant with respect to the sale or other disposition of any
shares of Common Stock owned by such Participant in connection
with this Section 16. Anything herein to the contrary
notwithstanding, the Prospective Sellers shall have no obligation
to any Participant to sell or otherwise dispose of any
Controlling Shares pursuant to this Section 16 or as a result of
any decision by the Prospective Sellers not to accept or
consummate any Offer or sale with respect to the Controlling
Shares (it being understood that any and all such decisions shall
be made by the Prospective Sellers in their sole discretion). No
Participant shall be entitled to sell shares of Common Stock
directly to any Third Party pursuant to an Offer (it being
understood that all such sales and other dispositions shall be
made only on the terms and pursuant to the procedures set forth
in this Section 16). Nothing in this Section 16 shall affect any
of the obligations of either of the Founding Stockholders under
any other provisions of this Plan.
(c) Anything in this Section 16 to the contrary
notwithstanding, (i) the provisions of this Section 16 will not
be applicable to any sale of shares of Common Stock pursuant to a
Public Offering and (ii) all rights to compel sales under this
Section 16 shall become null and void upon an IPO.
17. Miscellaneous.
(a) No Rights to Grants or Continued Employment or
Engagement. No Participant shall have any claim or right to
receive grants of Awards under the Plan. Neither the Plan nor
any action taken or omitted to be taken hereunder shall be deemed
to create or confer on any Participant any right to be retained
in the employ of the Company or any Subsidiary or other Affiliate
thereof, or to interfere with or to limit in any way the right of
the Company or any Subsidiary or other Affiliate thereof to
terminate the employment or engagement of such Participant at any
time.
(b) Right of Company to Assign Rights and Delegate
Duties. The Company shall have the right to assign any of its
rights and delegate any of its duties hereunder to any of its
Affiliates, provided, however, that such assignment shall not
release the Company from any duty hereunder which remains
unfulfilled by such an assignee.
(c) Tax Withholding. The Company and its Subsidiaries
shall have the right to require any individual entitled to
receive shares of Common Stock pursuant to an Award to remit to
the Company, prior to the delivery of any certificates evidencing
such shares, any amount sufficient to satisfy any federal, state
or local tax withholding requirements. Prior to the Company's
determination of such withholding liability, such individual may
make an irrevocable election to satisfy, in whole or in part,
such obligation to remit taxes by directing the Company to
withhold shares of Common Stock that would otherwise be received
by such individual. Such election may be denied by the Committee
in its discretion, or may be made subject to certain conditions
specified by the Committee, including, without limitation,
conditions intended to avoid the imposition of liability against
the individual under Section 16(b) of the 1934 Act. The Company
and its Subsidiaries shall also have the right to deduct from all
cash payments made pursuant to the Plan or any applicable
Agreement any federal, state or local taxes required to be
withheld with respect to such payment.
(d) No Restriction on Right of Company to Effect
Corporate Changes. The Plan shall not affect in any way the
right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the
Company, or any issue of stock or of options, warrants or rights
to purchase stock or of bonds, debentures, preferred or prior
preference stocks whose rights are superior to or affect the
Common Stock or the rights thereof or which are convertible into
or exchangeable for Common Stock, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.
(e) 1934 Act. Notwithstanding anything contained in
the Plan or any Agreement to the contrary, if the consummation of
any transaction under the Plan would result in the possible
imposition of liability on a Participant pursuant to Section
16(b) of the 1934 Act, the Committee shall have the right, in its
sole discretion, but shall not be obligated, to
defer such transaction to the extent necessary to avoid such
liability, but in no event for a period in excess of 180 days.
(f) Registration of Plan. On the date, or as soon as
practicable after, the Company becomes a Public Company, the
Company shall file a form S-8 with respect to the Plan.
18. Amendment. The Board of Directors may at any time
and from time to time alter, amend, suspend or terminate the Plan
in whole or in part. No termination or amendment of the Plan
may, without the consent of the Participant to whom any Awards
shall previously have been granted, adversely affect the rights
of such Participant in such Awards.
19. Effective Date. The Plan shall be effective as of
the Effective Time of the Merger (the "Effective Date"), as such
terms are defined in the transaction agreement between F
Purchaser, B Purchaser and the Company.
20. Termination of the Plan. The Plan shall continue
until terminated by the Board of Directors pursuant to Section
18, and no further Awards shall be made hereunder after the date
of such termination.
21. Headings. The headings of sections and
subsections herein are included solely for convenience of
reference and shall not affect the meaning of any of the
provisions of the Plan.
22. Governing Law. The Plan and all rights hereunder
shall be governed by and construed in accordance with the laws of
the State of Delaware without reference to rules relating to
conflicts of law.
FREMONT PURCHASER II, INC. and RCBA PURCHASER I, L.P. acknowledge
the Plan and agree to be bound by Section 10 thereof.
By:_______________________ By:________________________
FREMONT PURCHASER II, INC. RCBA PURCHASER I, L.P.
Name: Name:
Title: Title: