Exhibit 10.8
CROSS COUNTRY STAFFING, INC.
EQUITY PARTICIPATION PLAN
TABLE OF CONTENTS
PAGE
ARTICLE I PURPOSE....................................................1
ARTICLE II DEFINITIONS................................................1
ARTICLE III ADMINISTRATION.............................................5
ARTICLE IV SHARE AND OTHER LIMITATIONS................................9
ARTICLE V ELIGIBILITY...............................................11
ARTICLE VI STOCK OPTIONS.............................................11
ARTICLE VII NON-TRANSFERABILITY AND TERMINATION OF
EMPLOYMENT................................................14
ARTICLE VIII CHANGE IN CONTROL PROVISIONS..............................16
ARTICLE IX TERMINATION OR AMENDMENT OF PLAN..........................18
ARTICLE X COMPANY CALL RIGHTS AND OTHER LIMITATIONS.................18
ARTICLE XI UNFUNDED PLAN.............................................19
ARTICLE XII GENERAL PROVISIONS........................................20
ARTICLE XIII EFFECTIVE DATE OF PLAN....................................23
ARTICLE XIV TERM OF PLAN..............................................23
CROSS COUNTRY STAFFING, INC.
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EQUITY PARTICIPATION PLAN
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ARTICLE I
PURPOSE
The purpose of this Cross Country Staffing, Inc. Equity Participation Plan
is to enhance the profitability and value of the Company for the benefit of its
stockholders by enabling the Company to offer key management employees of the
Company and its Affiliates stock-based incentives in the Company, thereby
creating a means to raise the level of stock ownership by key management
employees in order to attract, retain and reward such employees and strengthen
the mutuality of interests between such employees and the Company's
stockholders.
ARTICLE II
DEFINITIONS
For purposes of this Plan, the following terms shall have the following
meanings:
2.1 "Affiliate" means each of the following: (i) any Subsidiary;
(ii) any Parent; (iii) any corporation, trade or business (including,
without limitation, a partnership or limited liability company) which is
directly or indirectly controlled 50% or more (whether by ownership of
stock, assets or an equivalent ownership interest or voting interest) by
the Company or one of its Affiliates; and (iv) any other entity in which
the Company or any of its Affiliates has a material equity interest and
which is designated as an "Affiliate" by resolution of the Committee.
2.2 "Award" means any award under this Plan of a Stock Option.
2.3 "Board" means the Board of Directors of the Company.
2.4 "Cause" means, with respect to a Participant's Termination of
Employment: (i) in the case where there is no employment agreement,
consulting agreement, change in control agreement or similar agreement in
effect between the
Company or an Affiliate and the Participant at the time of the grant of
the Award (or where there is such an agreement but it does not define
"cause" (or words of like import)), termination due to a Participant's
insubordination, dishonesty, fraud, incompetence, moral turpitude,
misconduct, refusal to perform his or her duties or responsibilities for
any reason other than illness or incapacity or materially unsatisfactory
performance of his or her duties for the Company or an Affiliate as
determined by the Committee in its sole discretion; or (ii) in the case
where there is an employment agreement, consulting agreement, change in
control agreement or similar agreement in effect between the Company or an
Affiliate and the Participant at the time of the grant of the Award that
defines "cause" (or words of like import), "cause" as defined under such
agreement; provided, however, that with regard to any agreement that
conditions "cause" on occurrence of a change in control, such definition
of "cause" shall not apply until a change in control actually takes place
and then only with regard to a termination thereafter.
2.5 "CEP" means Charterhouse Equity Partners III, L.P., and its
successors.
2.6 "Change in Control" has the meaning set forth in Article VIII.
2.7 "Code" means the Internal Revenue Code of 1986, as amended. Any
reference to any section of the Code shall also be a reference to any
successor provision.
2.8 "Committee" means a committee or subcommittee of the Board
appointed from time to time by the Board, which committee or subcommittee
shall consist of 2 or more non-employee directors; provided, however, that
if and to the extent that no Committee exists which has the authority to
administer this Plan, the functions of the Committee shall be exercised by
the Board and all references herein to the Committee shall be deemed to be
references to the Board.
2.9 "Common Stock" means the Class A common stock, $.01 par value
per share, of the Company.
2.10 "Company" means Cross Country Staffing, Inc., a Delaware
corporation, and its successors.
2.11 "Consultant" means any advisor or consultant to the Company or
its Affiliates.
2.12 "Detrimental Activity" means (i) the disclosure to anyone
outside the Company or its Affiliates, or the use in other than the
Company's or its Affiliate's business, without written authorization from
the Company, of any confidential information or proprietary information,
relating to the business of the Company or its Affiliates, acquired by a
Participant prior to the Participant's Termination of
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Employment; (ii) activity while employed that results, or if known could
result, in the Participant's Termination of Employment that is classified
by the Company as a termination for Cause; (iii) any attempt, directly or
indirectly, to solicit, induce or hire (or the identification for
solicitation, inducement or hire) any non-clerical employee of the Company
or its Affiliates to be employed by, or to perform services for, the
Participant or any person or entity with which the Participant is
associated (including, but not limited to, due to the Participant's
employment by, consultancy for, equity interest in, or creditor
relationship with such person or entity) or any person or entity from
which the Participant receives direct or indirect compensation or fees as
a result of such solicitation, inducement or hire (or the identification
for solicitation, inducement or hire) without, in all cases, written
authorization from the Company; (iv) any attempt, directly or indirectly,
to solicit in a competitive manner any current customer of the Company or
its Affiliates without, in all cases, written authorization from the
Company; (v) the Participant's Disparagement, or inducement of others to
do so, of the Company or its Affiliates or their past and present
officers, directors, employees or products; (vi) without written
authorization from the Company, the rendering of services for any
organization, or engaging, directly or indirectly, in any business, which
is competitive with the Company or its Affiliates, or which organization
or business, or the rendering of services to such organization or
business, is otherwise prejudicial to or in conflict with the interests of
the Company or its Affiliates, provided, however, that competitive
activities shall only be those competitive with any business unit or
Affiliate of the Company with regard to which the Participant performed
services at any time within the 2 years prior to the Participant's
Termination of Employment; (vii) the Participant's breach of the terms of
any agreement between the Company and the Participant including, without
limitation, an employment agreement or non-competition agreement; or
(viii) except as otherwise provided in the applicable Stock Option
agreement, any other conduct or act determined by the Committee, in its
sole discretion, to be injurious, detrimental or prejudicial to any
interest of the Company or its Affiliates. For purposes of subparagraphs
(i), (iii), (iv) and (vi) above, the Chief Executive Officer and the
General Counsel of the Company shall each have authority, subject to the
prior approval of the Board, to provide the Participant with written
authorization to engage in the activities contemplated thereby and no
other person shall have authority to provide the Participant with such
authorization.
2.13 "Disability" means a disability which would qualify as such
under the Company's long-term disability plan. A Disability shall only be
deemed to occur at the time of the determination by the Committee of the
Disability.
2.14 "Disparagement" means (unless modified in the applicable Stock
Option agreement) making comments or statements to the press, the
Company's or its Affiliates' employees or any individual or entity with
whom the Company or its Affiliates has a business relationship which would
adversely affect in any manner: (i) the conduct of the business of the
Company or its Affiliates (including, without
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limitation, any products or business plans or business prospects), or (ii)
the business reputation of the Company or its Affiliates, or any of their
products, or their past or present officers, directors or employees.
2.15 "Effective Date" means the effective date of this Plan as
defined in Article XIII.
2.16 "Eligible Employee" means each key management employee of the
Company or an Affiliate.
2.17 "Exchange Act" means the Securities Exchange Act of 1934, as
amended. Any references to any section of the Exchange Act shall also be a
reference to any successor provision.
2.18 "Fair Market Value" means, for purposes of this Plan, unless
otherwise required by any applicable provision of the Code, any
regulations issued thereunder or as provided in the applicable Stock
Option agreement, as of any date, the price for Common Stock consistently
applied on such date, as determined in good faith by the Committee and,
prior to the initial public offering of the Common Stock of the Company,
as agreed to by CEP and MSDWCP.
2.19 "Family Member" means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law,
or sister-in-law, including adoptive relationships, any person sharing the
employee's household (other than a tenant or employee), a trust in which
these persons have more than 50% of the beneficial interest, a foundation
in which these persons (or the employee) control the management of assets,
and any other entity in which these persons (or the employee) own more
than 50% of the voting interests.
2.20 "Incentive Stock Option" means any Stock Option awarded to an
Eligible Employee under this Plan intended to be and designated as an
"Incentive Stock Option" within the meaning of Section 422 of the Code.
2.21 "MSDWCP" means a representative of Morgan Stanley Dean Witter
Capital Partners IV, L.P. and its affiliated funds, and their respective
successors.
2.22 "Non-Qualified Stock Option" means any Stock Option awarded
under this Plan that is not an Incentive Stock Option.
2.23 "Parent" means any parent corporation of the Company within the
meaning of Section 424(e) of the Code.
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2.24 "Participant" means any Eligible Employee to whom a Stock
Option has been awarded under this Plan.
2.25 "Plan" means this Cross Country Staffing, Inc. Equity
Participation Plan, as amended from time to time.
2.26 "Retirement" means a Termination of Employment without Cause by
a Participant at or after age 65 or such earlier date after age 50 as may
be approved by the Committee with regard to such Participant.
2.27 "Securities Act" means the Securities Act of 1933, as amended.
Any reference to any section of the Securities Act shall also be a
reference to any successor provision.
2.28 "Stock Option" or "Option" means any option to purchase shares
of Common Stock granted to Eligible Employees under Article VI.
2.29 "Subsidiary" means any subsidiary corporation of the Company
within the meaning of Section 424(f) of the Code.
2.30 "Ten Percent Stockholder" means a person owning stock
possessing more than 10% of the total combined voting power of all classes
of stock of the Company, its Subsidiaries or its Parent.
2.31 "Termination of Employment" means: (i) a termination of
employment (for reasons other than a military or personal leave of absence
granted by the Company) of a Participant from the Company and its
Affiliates; or (ii) when an entity which is employing a Participant ceases
to be an Affiliate, unless the Participant otherwise is, or thereupon
becomes, employed by the Company or another Affiliate. In the event that
an Eligible Employee becomes a Consultant upon the termination of his
employment, the Committee, in its sole and absolute discretion, may
determine that no Termination of Employment shall be deemed to occur until
such time as such Eligible Employee is no longer an Eligible Employee or a
Consultant. The Committee may otherwise define Termination of Employment
in the Award agreement or, if no rights of a Participant are reduced, may
otherwise define Termination of Employment thereafter.
2.32 "Transfer" means anticipate, alienate, attach, sell, assign,
pledge, encumber, charge, hypothecate or otherwise transfer and
"Transferred" has a correlative meaning.
ARTICLE III
ADMINISTRATION
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3.1 THE COMMITTEE. The Plan shall be administered and interpreted by
the Committee.
3.2 GRANTS OF AWARDS. The Committee shall have full authority to
grant Stock Options to Eligible Employees pursuant to the terms of this
Plan. All Stock Options shall be granted by, confirmed by, and subject to
the terms of, a written agreement executed by the Company and the
Participant. In particular, the Committee shall have the authority:
(a) to select from among those persons recommended by the
President of the Company the Eligible Employees to whom Stock
Options may from time to time be granted hereunder;
(b) to determine whether and to what extent Stock Options are
to be granted hereunder to one or more Eligible Employees after
receipt of a recommendation by the President of the Company;
(c) to determine, in accordance with the terms of this Plan,
the number of shares of Common Stock to be covered by each Stock
Option granted hereunder;
(d) to determine the terms and conditions, not inconsistent
with the terms of this Plan, of any Stock Option granted hereunder
(including, but not limited to, the exercise or purchase price (if
any), any restriction or limitation, any vesting schedule or
acceleration thereof and any forfeiture restrictions or waiver
thereof, regarding any Stock Option and the shares of Common Stock
relating thereto, based on such factors, if any, as the Committee
shall determine, in its sole discretion);
(e) to determine whether and under what circumstances a Stock
Option may be settled in cash, Common Stock and/or restricted stock
under Section 6.3(d);
(f) to determine whether, to what extent and under what
circumstances to provide loans to Eligible Employees in order to
exercise Stock Options under this Plan;
(g) to determine whether a Stock Option is an Incentive Stock
Option or Non-Qualified Stock Option; provided, however, that a
Stock Option shall be, to the extent practicable, designated as an
Incentive Stock Option;
(h) to determine whether to require an Eligible Employee, as a
condition of the granting of any Stock Option, not to sell or
otherwise dispose of shares of Common Stock acquired pursuant to the
exercise of an Option for a
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period of time as determined by the Committee, in its sole
discretion, following the date of the acquisition of such Option or
Award; and
(i) to modify, extend or renew an Award, subject to Article IX
herein, provided, however, that if an Award is modified, extended or
renewed and thereby deemed to be the issuance of a new Award under
the Code or the applicable accounting rules, the exercise price of a
Stock Option may continue to be the original exercise price even if
less than the Fair Market Value of the Common Stock at the time of
such modification, extension or renewal.
3.3 GUIDELINES. Subject to Article IX hereof, the Committee shall
have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing this Plan and perform all acts,
including the delegation of its administrative responsibilities, as it
shall, from time to time, deem advisable; to construe and interpret the
terms and provisions of this Plan and any Stock Option issued under this
Plan (and any agreements relating thereto); and to otherwise supervise the
administration of this Plan. The Committee may correct any defect, supply
any omission or reconcile any inconsistency in this Plan or in any
agreement relating thereto in the manner and to the extent it shall deem
necessary to effectuate the purpose and intent of this Plan. The Committee
may adopt special guidelines and provisions for persons who are residing
in or employed in, or subject to, the taxes of, foreign jurisdictions to
comply with applicable tax and securities laws and may impose any
limitations and restrictions that it deems necessary to comply with the
applicable tax and securities laws of such foreign jurisdictions.
3.4 DECISIONS FINAL. Any decision, interpretation or other action
made or taken in good faith by or at the direction of the Company, the
Board or the Committee (or any of its members) arising out of or in
connection with this Plan shall be within the absolute discretion of all
and each of them, as the case may be, and shall be final, binding and
conclusive on the Company and all employees and Participants and their
respective heirs, executors, administrators, successors and assigns.
3.5 PROCEDURES. If the Committee is appointed, the Board shall
designate one of the members of the Committee as chairman and the
Committee shall hold meetings, subject to the By-Laws of the Company, at
such times and places as it shall deem advisable, including, without
limitation, by telephone conference or by written consent to the extent
permitted by applicable law. A majority of the Committee members shall
constitute a quorum. All determinations of the Committee shall be made by
a majority of its members. Any decision or determination reduced to
writing and signed by all the Committee members in accordance with the
By-Laws of the Company, shall be fully as effective as if it had been made
by a vote at a meeting duly called and held. The Committee shall keep
minutes of its meetings and shall make such rules and regulations for the
conduct of its business as it shall deem advisable.
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3.6 DESIGNATION OF CONSULTANTS/LIABILITY.
(a) The Committee may designate employees of the Company and
professional advisors to assist the Committee in the administration of
this Plan and may grant authority to officers to execute agreements or
other documents on behalf of the Committee.
(b) The Committee may employ such legal counsel, consultants and
agents as it may deem desirable for the administration of this Plan and
may rely upon any opinion received from any such counsel or consultant and
any computation received from any such consultant or agent. Expenses
incurred by the Committee or Board in the engagement of any such counsel,
consultant or agent shall be paid by the Company. The Committee, its
members and any person designated pursuant to paragraph (a) above shall
not be liable for any action or determination made in good faith with
respect to this Plan. To the maximum extent permitted by applicable law,
no officer of the Company or member or former member of the Committee or
of the Board shall be liable for any action or determination made in good
faith with respect to this Plan or any Stock Option granted under it. To
the maximum extent permitted by applicable law or the Certificate of
Incorporation or By-Laws of the Company and to the extent not covered by
insurance directly insuring such person, each officer and member or former
member of the Committee or the Board shall be indemnified and held
harmless by the Company against any cost or expense (including reasonable
fees of counsel reasonably acceptable to the Company) or liability
(including any sum paid in settlement of a claim with the approval of the
Company), and advanced amounts necessary to pay the foregoing at the
earliest time and to the fullest extent permitted, arising out of any act
or omission to act in connection with the administration of this Plan,
except to the extent arising out of such officer's, member's or former
member's own fraud or bad faith. Such indemnification shall be in addition
to any rights of indemnification the employees, officers, directors or
members or former officers, directors or members may have under applicable
law or under the Certificate of Incorporation or By-Laws of the Company or
any Affiliate. Notwithstanding anything else herein, this indemnification
will not apply to the actions or determinations made by an individual with
regard to Stock Option granted to him or her under this Plan.
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ARTICLE IV
SHARE AND OTHER LIMITATIONS
4.1 SHARES.
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(a) The aggregate number of shares of Common Stock which may be
issued or used for reference purposes under this Plan or with respect to
which Stock Options may be granted shall not exceed 441,860 shares of
Common Stock (subject to any increase or decrease pursuant to Section 4.2)
which may be either authorized and unissued Common Stock or Common Stock
held in or acquired for the treasury of the Company or both.
(b) Stock Options granted under the Plan shall be sub-divided into 5
tranches (as described more fully in Section 6.2). The number of shares of
Common Stock available for each tranche shall be as follows:
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NUMBER OF SHARES
TRANCHE SUBJECT TO TRANCHE
------------------------------------------------
1 79,070
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2 148,837
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3 148,837
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4 32,558
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5 32,558
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(c) If any Stock Option granted under this Plan expires, terminates
or is forfeited for any reason other than by reason of its exercise, the
number of shares of Common Stock underlying such unexercised or forfeited
Stock Option shall again be available for the purposes of Awards under
this Plan.
4.2 CHANGES.
(a) The existence of this Plan and the Stock Options granted
hereunder shall not affect in any way the right or power of the Board or
the stockholders of the Company to make or authorize (i) any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, (ii) any merger or consolidation of the Company
or any Affiliate, (iii) any issuance of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock, (iv) the
dissolution or liquidation of the Company or any Affiliate, (v) any sale
or transfer of all or part of the assets or business of the Company or any
Affiliate, or (vi) any other corporate act or proceeding.
(b) In the event of any change in the capital structure or business
of the Company by reason of any stock split, reverse stock split, stock
dividend, combination or reclassification of shares, recapitalization, or
other change in the capital structure of the Company, merger,
consolidation, spin-off,
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reorganization, partial or complete liquidation, issuance of rights or
warrants to purchase any Common Stock or securities convertible into
Common Stock, or any other corporate transaction or event having an effect
similar to any of the foregoing, then the Committee may take such action,
if any, with respect to the Plan and outstanding Stock Options, as it may
deem equitable to prevent substantial dilution or enlargement of the
rights granted to, or available for, Participants under this Plan,
including, without limitation, adjustment of the aggregate number and kind
of shares which thereafter may be issued under this Plan, the number and
kind of shares or other property (including cash) to be issued upon
exercise of an outstanding Stock Option granted under this Plan and the
purchase price thereof. Any such action or adjustment determined by the
Committee in good faith shall be final, binding and conclusive on the
Company and all Participants and employees and their respective heirs,
executors, administrators, successors and assigns. Except as provided in
this Section 4.2, a Participant shall have no rights by reason of any
issuance by the Company of any class or securities convertible into stock
of any class of the Company, any subdivision or consolidation of shares of
stock of any class of the Company, the payment of any stock dividend, any
other increase or decrease in the number of shares of stock of any class
of the Company, any sale or transfer of all or part of the Company's
assets or business or any other change affecting the Company's capital
structure or business.
(c) Fractional shares of Common Stock resulting from any adjustment
in Options pursuant to Section 4.2(a) or (b) shall be aggregated until,
and eliminated at, the time of exercise by rounding-down for fractions
less than one-half and rounding-up for fractions equal to or greater than
one-half. No cash settlements shall be made with respect to fractional
shares eliminated by rounding. Notice of any adjustment shall be given by
the Committee to each Participant whose Option has been adjusted and such
adjustment (whether or not such notice is given) shall be effective and
binding for all purposes of this Plan.
4.3 MINIMUM PURCHASE PRICE. Notwithstanding any provision of this Plan to
the contrary, if authorized but previously unissued shares of Common Stock are
issued under this Plan, such shares shall not be issued for a consideration
which is less than as permitted under applicable law.
ARTICLE V
ELIGIBILITY
5.1 NON-QUALIFIED STOCK OPTIONS. All Eligible Employees are eligible to be
granted Non-Qualified Stock Options. Eligibility for the grant of a
Non-Qualified
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Stock Option and actual participation in this Plan shall be determined by the
Committee in its sole discretion.
5.2 INCENTIVE STOCK OPTIONS. All Eligible Employees of the Company, its
Subsidiaries and its Parent (if any) are eligible to be granted Incentive Stock
Options under this Plan. Eligibility for the grant of an Incentive Stock Option
and actual participation in this Plan shall be determined by the Committee in
its sole discretion.
ARTICLE VI
STOCK OPTIONS
6.1 STOCK OPTIONS. Each Stock Option granted hereunder shall be one of two
types: (i) an Incentive Stock Option intended to satisfy the requirements of
Section 422 of the Code; or (ii) a Non-Qualified Stock Option.
6.2 GRANTS. (a) Subject to the provisions of Article V, the Committee
shall have the authority to grant to any Eligible Employee one or more Incentive
Stock Options, Non-Qualified Stock Options or both types of Stock Options. To
the extent that any Stock Option does not qualify as an Incentive Stock Option
(whether because of its provisions or the time or manner of its exercise or
otherwise), such Stock Option or the portion thereof which does not qualify,
shall constitute a separate Non-Qualified Stock Option. Notwithstanding any
other provision of this Plan to the contrary or any provision in an agreement
evidencing the grant of a Stock Option to the contrary, any Stock Option granted
to an Eligible Employee of an Affiliate (other than an Affiliate which is a
Parent or a Subsidiary) shall be a Non-Qualified Stock Option.
(b) Each Stock Option granted under the Plan shall be sub-divided
into 5 tranches. The number of shares of Common Stock in each tranche for
any Stock Option shall be the total number of shares of Common Stock
subject to the Stock Option multiplied by the applicable percentage for
such tranche in the following table:
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PERCENTAGE OF SHARES
TRANCHE SUBJECT TO TRANCHE
------------------------------------------------
1 17.8947368%
------------------------------------------------
2 33.6842105%
------------------------------------------------
3 33.6842105%
------------------------------------------------
4 7.368421%
------------------------------------------------
5 7.368421%
------------------------------------------------
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6.3 TERMS OF STOCK OPTIONS. Stock Options granted under this Plan shall be
subject to the following terms and conditions, and shall be in such form and
contain such additional terms and conditions, not inconsistent with the terms of
this Plan, as the Committee shall deem desirable:
(a) EXERCISE PRICE. Stock Options under this Plan shall be
exercisable at the exercise prices set forth in the following table;
provided, however, that if an Incentive Stock Option is granted to a Ten
Percent Stockholder, the exercise price of the first tranche shall be no
less than 110% of the Fair Market Value of the Common Stock at the time of
grant:
------------------------------------------------------------------------
ACTUAL EXERCISE PRICE OF
EXERCISE PRICE OF OPTIONS GRANTED ON THE
TRANCHE OPTIONS GRANTED EFFECTIVE DATE
------------------------------------------------------------------------
1 100% of Fair Market $ 44.96
Value on Date of Grant
------------------------------------------------------------------------
2 150% of Fair Market $ 67.44
Value on Date of Grant
------------------------------------------------------------------------
3 200% of Fair Market $ 89.92
Value on Date of Grant
------------------------------------------------------------------------
4 250% of Fair Market $ 112.40
Value on Date of Grant
------------------------------------------------------------------------
5 300% of Fair Market $ 134.88
Value on Date of Grant
------------------------------------------------------------------------
(b) STOCK OPTION TERM. The term of each Stock Option shall be fixed
by the Committee; provided, however, that no Stock Option shall be
exercisable more than 10 years after the date such Stock Option is
granted; and further provided that the term of an Incentive Stock Option
granted to a Ten Percent Stockholder shall not exceed 5 years.
(c) EXERCISABILITY. Except as otherwise provided by the Committee in
accordance with the provisions of this Section, 25% of each tranche of any
Stock Option granted under this Article VI shall be exercisable on the
first anniversary of the date of grant and 12.5% of each tranche of any
Stock Option granted under this Article VI shall be exercisable at the end
of each six-month period thereafter. Notwithstanding the foregoing, Stock
Options shall be exercisable at such time or times and subject to such
terms and conditions as shall be determined by the Committee at grant. If
the Committee provides, in its discretion, that any Stock Option is
exercisable subject to certain limitations (including, without limitation,
that such Stock Option is exercisable only in installments or within
certain time periods), the Committee may waive such
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limitations on the exercisability at any time at or after grant in whole
or in part (including, without limitation, waiver of the installment
exercise provisions or acceleration of the time at which such Stock Option
may be exercised), based on such factors, if any, as the Committee shall
determine, in its sole discretion. Unless otherwise determined by the
Committee at grant, the grant shall provide that (i) in the event the
Participant engages in Detrimental Activity prior to any exercise of the
Stock Option, all Stock Options held by the Participant shall thereupon
terminate and expire, (ii) as a condition of the exercise of a Stock
Option, the Participant shall be required to certify at the time of
exercise in a manner acceptable to the Company that the Participant is in
compliance with the terms and conditions of the Plan and that the
Participant has not engaged in, and does not intend to engage in, any
Detrimental Activity, (iii) in the event the Participant engages in
Detrimental Activity during the 6 month period commencing on the date the
Stock Option is exercised, the Company shall be entitled to recover from
the Participant at any time within one year after such exercise, and the
Participant shall pay over to the Company, any gain realized as a result
of the exercise (whether at the time of exercise or thereafter), (iv) any
decision by the Committee to waive such limitations must be first approved
by each of CEP and MSDWCP and (v) the foregoing provisions described in
(i), (ii), (iii) and (iv) shall cease to apply upon a Change in Control.
(d) METHOD OF EXERCISE. Subject to whatever installment exercise and
waiting period provisions apply under subsection (c) above, Stock Options
may be exercised in whole or in part at any time and from time to time
during the Stock Option term by giving written notice of exercise to the
Committee specifying the number of shares to be purchased. Such notice
shall be accompanied by payment in full of the purchase price as follows:
(i) in cash or by check, bank draft or money order payable to the order of
the Company; (ii) if the Common Stock is traded on a national securities
exchange, The Nasdaq Stock Market, Inc. or quoted on a national quotation
system sponsored by the National Association of Securities Dealers,
through a "cashless exercise" procedure whereby the Participant delivers
irrevocable instructions to a broker approved by the Committee to deliver
promptly to the Company an amount equal to the purchase price; or (iii) on
such other terms and conditions as may be acceptable to the Committee
(including, without limitation, the relinquishment of Stock Options or by
payment in full or in part in the form of Common Stock owned by the
Participant for a period of at least 6 months (and for which the
Participant has good title free and clear of any liens and encumbrances)
based on the Fair Market Value of the Common Stock on the payment date).
No shares of Common Stock shall be issued until payment therefor, as
provided herein, has been made or provided for.
(e) INCENTIVE STOCK OPTION LIMITATIONS. To the extent that the
aggregate Fair Market Value (determined as of the time of grant) of the
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Common Stock with respect to which Incentive Stock Options are exercisable
for the first time by an Eligible Employee during any calendar year under
this Plan and/or any other stock option plan of the Company, any
Subsidiary or any Parent exceeds $100,000, such Options shall be treated
as Non-Qualified Stock Options. In addition, if an Eligible Employee does
not remain employed by the Company, any Subsidiary or any Parent at all
times from the time an Incentive Stock Option is granted until 3 months
prior to the date of exercise thereof (or such other period as required by
applicable law), such Stock Option shall be treated as a Non-Qualified
Stock Option. Should any provision of this Plan not be necessary in order
for the Stock Options to qualify as Incentive Stock Options, or should any
additional provisions be required, the Committee may amend this Plan
accordingly, without the necessity of obtaining the approval of the
stockholders of the Company.
(f) FORM, MODIFICATION, EXTENSION AND RENEWAL OF STOCK OPTIONS.
Subject to the terms and conditions and within the limitations of this
Plan, Stock Options shall be evidenced by such form of agreement or grant
as is approved by the Committee, and the Committee may (i) modify, extend
or renew outstanding Stock Options granted under this Plan (provided that
the rights of a Participant are not reduced without his consent), and (ii)
accept the surrender of outstanding Stock Options (up to the extent not
theretofore exercised) and authorize the granting of new Stock Options in
substitution therefor (to the extent not theretofore exercised).
(g) DEFERRED DELIVERY OF COMMON SHARES. The Committee may in its
discretion permit Participants to defer delivery of Common Stock acquired
pursuant to a Participant's exercise of an Option in accordance with the
terms and conditions established by the Committee.
ARTICLE VII
NON-TRANSFERABILITY AND
TERMINATION OF EMPLOYMENT
7.1 NON-TRANSFERABILITY. Except as provided herein, no Stock Option shall
be Transferable by the Participant otherwise than by will or by the laws of
descent and distribution. All Stock Options shall be exercisable, during the
Participant's lifetime, only by the Participant. No Stock Option shall, except
as otherwise specifically provided by law or herein, be Transferable in any
manner, and any attempt to Transfer any such Stock Option shall be void, and no
such Stock Option shall in any manner be liable for or subject to the debts,
contracts, liabilities, engagements or torts of any person who shall be entitled
to such Stock Option, nor shall it be subject to attachment or legal process for
or against such person. Notwithstanding the foregoing, the Committee may
determine at the time of grant or thereafter that a Non-Qualified Stock Option
that is otherwise not Transferable
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pursuant to this Section 7.1 is Transferable to a Family Member in whole or in
part and in such circumstances, and under such conditions, as specified by the
Committee. A Non- Qualified Stock Option that is Transferred to a Family Member
pursuant to the preceding sentence (i) may not be subsequently Transferred
otherwise than by will or by the laws of descent and distribution and (ii)
remains subject to the terms of this Plan and the Stock Option agreement. Any
shares of Common Stock acquired upon the exercise of a Stock Option by a
transferee of a Stock Option shall be subject to the terms of this Plan and the
Stock Option agreement, including, without limitation, the provisions of Article
X hereof.
7.2 TERMINATION OF EMPLOYMENT. The following rules apply with regard to
the Termination of Employment of a Participant. Unless otherwise determined by
the Committee at grant or, if no rights of the Participant are reduced,
thereafter:
(a) TERMINATION BY REASON OF DEATH, DISABILITY OR RETIREMENT. If a
Participant's Termination of Employment is by reason of death, Disability
or Retirement, all Stock Options held by such Participant which are
exercisable at the time of the Participant's Termination of Employment,
may be exercised by the Participant (or, in the case of death, by the
legal representative of the Participant's estate) at any time within a
period of one year from the date of such Termination of Employment, but in
no event beyond the expiration of the stated terms of such Stock Options;
provided, however, that, in the case of Retirement, if the Participant
dies within such exercise period, all unexercised Stock Options held by
such Participant shall thereafter be exercisable, to the extent to which
they were exercisable at the time of death, for a period of one year from
the date of such death, but in no event beyond the expiration of the
stated term of such Stock Options.
(b) INVOLUNTARY TERMINATION WITHOUT CAUSE. If a Participant's
Termination of Employment is by involuntary termination without Cause, all
Stock Options held by such Participant which are exercisable at the time
of such Termination of Employment, may be exercised by the Participant at
any time within a period of 90 days from the date of such Termination of
Employment, but in no event beyond the expiration of the stated term of
such Stock Options.
(c) VOLUNTARY TERMINATION. If a Participant's Termination of
Employment is voluntary (other than a voluntary termination described in
Section 7.2(d)(ii) below), all Stock Options held by such Participant
which are exercisable at the time of such Termination of Employment, may
be exercised by the Participant at any time within a period of 30 days
from the date of such Termination of Employment, but in no event beyond
the expiration of the stated terms of such Stock Options.
(d) TERMINATION FOR CAUSE. If a Participant's Termination of
Employment (i) is for Cause or (ii) is a voluntary termination (as
provided in
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subsection (c) above) at any time after an event which would be grounds
for a Termination of Employment for Cause, all Stock Options held by such
Participant shall thereupon terminate and expire as of the date of such
Termination of Employment.
ARTICLE VIII
CHANGE IN CONTROL PROVISIONS
8.1 BENEFITS. In the event of a Change in Control of the Company, except
as otherwise provided by the Committee upon the grant of a Stock Option, the
Participant shall be entitled to the following benefits:
(a) Except to the extent provided in the applicable Stock Option
agreement, the Participant's employment agreement with the Company or an
Affiliate, as approved by the Committee, or other written agreement
approved by the Committee (as such agreement may be amended from time to
time), Stock Options granted and not previously exercisable shall become
exercisable upon a Change in Control, subject to subsection 8.1(b).
(b) Notwithstanding anything to the contrary herein, unless the
Committee provides otherwise at the time a Stock Option is granted
hereunder or thereafter, no acceleration of exercisability shall occur
with respect to such Stock Options if the Committee reasonably determines
in good faith that the Stock Options shall be honored or assumed, or new
rights substituted therefor (each such honored, assumed or substituted
stock option hereinafter called an "Alternative Option"), by a
Participant's employer (or the parent or a subsidiary of such employer)
immediately following the Change in Control, provided that any such
Alternative Option must meet the following criteria:
(i) the Alternative Option must provide such Participant with
rights and entitlements substantially equivalent to or better than
the rights, terms and conditions applicable under such Stock Option,
including, but not limited to, an identical or better exercise
schedule; and
(ii) the Alternative Option must substantially comply and in
the case of an Incentive Stock Option must comply with the
requirements of Treasury Regulation ss. 1.425-1 (and any amendments
thereto), except that the Alternative Option need not be an
Incentive Stock Option.
(c) If the Company and the other party to a transaction constituting
a Change in Control agree that such transaction shall be treated as a
"pooling of interests" for financial reporting purposes, and if the
transaction is in fact so treated, then the acceleration of
exercisability, vesting or lapse of the applicable
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Restriction Period shall not occur to the extent that the Company's
independent public accountants determine in good faith that such
acceleration would preclude "pooling of interests" accounting.
8.2 CHANGE IN CONTROL. A "Change in Control" shall be deemed to have
occurred:
(a) upon any "person" as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than CEP, MSDWCP, the Company, any
trustee or other fiduciary holding securities under any employee benefit
plan of the Company, or any company owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of Common Stock of the Company), becoming the beneficial owner
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 50% or more of the combined
voting power of the Company's then outstanding securities;
(b) during any period of 2 consecutive years, individuals who at the
beginning of such period constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in paragraph (a), (c),
or (d) of this Section or a director whose initial assumption of office
occurs as a result of either an actual or threatened election contest (as
such term is used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board) whose election
by the Board or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of the two-year period
or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority of the Board;
(c) a merger or consolidation of the Company or a Subsidiary with
any other corporation, other than a merger or consolidation which would
result in 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 35% of the combined voting power of the voting securities of the
Company or such surviving entity or such surviving entity's parent
outstanding immediately after such merger or consolidation; or
(d) upon the approval by the stockholders of the Company 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 of the Company's
assets other than the sale or disposition of all or substantially all of
the assets of the Company to a person or persons who beneficially own,
directly or indirectly, at least 50% or
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more of the combined voting power of the outstanding voting securities of
the Company at the time of the sale.
8.3 INITIAL PUBLIC OFFERING NOT A CHANGE IN CONTROL. For purposes of the
Plan, an initial public offering of the Common Stock of the Company shall not be
deemed to be a Change in Control.
ARTICLE IX
TERMINATION OR AMENDMENT OF PLAN
Notwithstanding any other provision of this Plan, the Board or the
Committee may at any time, and from time to time, amend, in whole or in part,
any or all of the provisions of this Plan (including any amendment deemed
necessary to ensure that the Company may comply with any regulatory requirement
referred to in Article XII), or suspend or terminate it entirely, retroactively
or otherwise; provided, however, that, unless otherwise required by law or
specifically provided herein, the rights of a Participant with respect to Awards
granted prior to such amendment, suspension or termination, may not be impaired
without the consent of such Participant. In no event may this Plan be amended
without the approval of the stockholders of the Company in accordance with the
applicable laws of the State of Delaware to increase the aggregate number of
shares of Common Stock that may be issued under this Plan, decrease the minimum
exercise price of any Stock Option, or to make any other amendment that would
require stockholder approval under the rules of any exchange or system on which
the Company's securities are listed or traded.
The Committee may amend the terms of any Stock Option theretofore granted,
prospectively or retroactively, but, subject to Article IV above or as otherwise
specifically provided herein, no such amendment or other action by the Committee
shall impair the rights of any holder without the holder's consent.
ARTICLE X
COMPANY CALL RIGHTS AND OTHER LIMITATIONS
10.1 COMPANY CALL RIGHTS. (a) In the event of Termination of Employment
for Cause, the Company may repurchase from the Participant any shares of Common
Stock previously acquired by the Participant through the exercise of a Stock
Option granted under this Plan at a repurchase price equal to the lesser of (i)
the original purchase price or exercise price (as applicable), if any, or (ii)
Fair Market Value as of the date of termination.
(b) In the event of a Termination of Employment for any reason other than
for Cause (including termination due to Retirement, death, Disability,
involuntary termination without Cause or resignation), the Company may at any
time within 270
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days after a Participant incurs a Termination of Employment or acquires shares
of Common Stock upon the exercise of a Stock Option following his or her
Termination of Employment for any reason other than for Cause: (i) repurchase
from the Participant each outstanding vested Stock Option based on the greater
of (A) the difference between the exercise price of a share of Common Stock
relating to such Stock Option and the Fair Market Value of a share of Common
Stock on the date of termination and (B) $.01 and (ii) repurchase from the
Participant any shares of Common Stock previously acquired by the Participant
through the exercise of a Stock Option under this Plan at a repurchase price
equal to Fair Market Value as of the date of termination, but in no event less
than the exercise price of a share of Common Stock relating to such Stock
Option.
10.2 LIMITATIONS ON TRANSFER OF SHARES. A Participant only may, directly
or indirectly, Transfer shares of Common Stock acquired by the Participant (or
his or her estate or legal representative) through the exercise of an Option
under this Plan in the same proportion to the aggregate amount of shares of
Common Stock sold by CEP and MSDWCP to entities which are not Affiliates for
cash or marketable securities.
10.3 EFFECT OF IPO. Notwithstanding the foregoing, the Company shall cease
to have rights pursuant to Section 10.1 following an initial public offering of
the Common Stock of the Company.
ARTICLE XI
UNFUNDED PLAN
11.1 UNFUNDED STATUS OF PLAN. This Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments as to which a Participant has a fixed and vested interest but which are
not yet made to a Participant by the Company, nothing contained herein shall
give any such Participant any rights that are greater than those of a general
unsecured creditor of the Company.
ARTICLE XII
GENERAL PROVISIONS
12.1 LEGEND. The Committee may require each person receiving shares
pursuant to an Award under this Plan to represent to and agree with the Company
in writing that the Participant is acquiring the shares without a view to
distribution thereof. In addition to any legend required by this Plan, the
certificates for such shares may include any legend which the Committee deems
appropriate to reflect any restrictions on Transfer.
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All certificates for shares of Common Stock delivered under this Plan
shall be subject to such stock transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other requirements
of the Securities and Exchange Commission, any stock exchange upon which the
Common Stock is then listed or any national securities association system upon
whose system the Common Stock is then quoted, any applicable Federal or state
securities law, and any applicable corporate law, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
12.2 OTHER PLANS. Nothing contained in this Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.
12.3 NO RIGHT TO EMPLOYMENT. Neither this Plan nor the grant of any Award
hereunder shall give any Participant any right with respect to continuance of
employment by the Company or any Affiliate, nor shall they be a limitation in
any way on the right of the Company or any Affiliate by which an employee is
employed to terminate his employment at any time.
12.4 WITHHOLDING OF TAXES. The Company shall have the right to deduct from
any payment to be made to a Participant, or to otherwise require, prior to the
issuance or delivery of any shares of Common Stock or the payment of any cash
hereunder, payment by the Participant of, any Federal, state or local taxes
required by law to be withheld.
Any statutorily required withholding obligation with regard to any
Eligible Employee may be satisfied, subject to the consent of the Committee, by
reducing the number of shares of Common Stock otherwise deliverable or by
delivering shares of Common Stock already owned. Any fraction of a share of
Common Stock required to satisfy such tax obligations shall be disregarded and
the amount due shall be paid instead in cash by the Participant.
12.5 LISTING AND OTHER CONDITIONS.
(a) Unless otherwise determined by the Committee, as long as the
Common Stock is listed on a national securities exchange or system
sponsored by a national securities association, the issue of any shares of
Common Stock pursuant to a Stock Option shall be conditioned upon such
shares being listed on such exchange or system. The Company shall have no
obligation to issue such shares unless and until such shares are so
listed, and the right to exercise any Stock Option with respect to such
shares shall be suspended until such listing has been effected.
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(b) If at any time counsel to the Company shall be of the opinion
that any sale or delivery of shares of Common Stock pursuant to a Stock
Option is or may in the circumstances be unlawful or result in the
imposition of excise taxes on the Company under the statutes, rules or
regulations of any applicable jurisdiction, the Company shall have no
obligation to make such sale or delivery, or to make any application or to
effect or to maintain any qualification or registration under the
Securities Act or otherwise with respect to shares of Common Stock or
Stock Option, and the right to exercise any Stock Option shall be
suspended until, in the opinion of said counsel, such sale or delivery
shall be lawful or will not result in the imposition of excise taxes on
the Company.
(c) Upon termination of any period of suspension under this Section
12.5, a Stock Option affected by such suspension which shall not then have
expired or terminated shall be reinstated as to all shares available
before such suspension and as to shares which would otherwise have become
available during the period of such suspension, but no such suspension
shall extend the term of any Stock Option.
(d) A Participant shall be required to supply the Company with any
certificates, representations and information that the Company requests
and otherwise cooperate with the Company in obtaining any listing,
registration, qualification, exemption, consent or approval the Company
deems necessary or appropriate.
12.6 STOCKHOLDERS AGREEMENT. As a condition to the receipt of shares of
Common Stock pursuant to a Stock Option under this Plan, to the extent required
by the Committee, the Participant shall execute and deliver a stockholder's
agreement or such other documentation which shall set forth certain restrictions
on transferability of the shares of Common Stock acquired upon exercise or
purchase (including Section 10.2), a right of first refusal of the Company with
respect to shares, the right of the Company to purchase Common Stock in
accordance with this Plan and such other terms as the Board or Committee shall
from time to time establish. Such stockholder's agreement shall apply to all
Common Stock acquired under the Plan.
12.7 GOVERNING LAW. This Plan shall be governed and construed in
accordance with the laws of the State of Delaware (regardless of the law that
might otherwise govern under applicable Delaware principles of conflict of
laws).
12.8 CONSTRUCTION. Wherever any words are used in this Plan in the
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.
12.9 OTHER BENEFITS. No Award payment under this Plan shall be deemed
compensation for purposes of computing benefits under any retirement plan of the
Company or its subsidiaries nor affect any benefits under any other benefit plan
now or subsequently in effect under which the availability or amount of benefits
is related to the level of compensation.
12.10 COSTS. The Company shall bear all expenses included in administering
this Plan, including expenses of issuing Common Stock pursuant to any Awards
hereunder.
12.11 NO RIGHT TO SAME BENEFITS. The provisions of Stock Options need not
be the same with respect to each Participant, and such Stock Options to
individual Participants need not be the same in subsequent years.
12.12 DEATH/DISABILITY. The Committee may in its discretion require the
transferee of a Participant to supply it with written notice of the
Participant's death or Disability and to supply it with a copy of the will (in
the case of the Participant's death) or such other evidence as the Committee
deems necessary to establish the validity of the transfer of an Award. The
Committee may also require that the agreement of the transferee to be bound by
all of the terms and conditions of this Plan.
12.13 SUCCESSORS AND ASSIGNS. The Plan shall be binding on all successors
and permitted assigns of a Participant, including, without limitation, the
estate of such Participant and the executor, administrator or trustee of such
estate.
12.14 SEVERABILITY OF PROVISIONS. If any provision of this Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and this Plan shall be construed and
enforced as if such provisions had not been included.
12.15 HEADINGS AND CAPTIONS. The headings and captions herein are provided
for reference and convenience only, shall not be considered part of this Plan,
and shall not be employed in the construction of this Plan.
ARTICLE XIII
EFFECTIVE DATE OF PLAN
13.1 The Plan shall become effective upon adoption by the Board, subject
to the approval of this Plan by the stockholders of the Company in accordance
with the requirements of the laws of the State of Delaware, or such later date
as provided in the adopting resolution.
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ARTICLE XIV
TERM OF PLAN
14.1 No Stock Option shall be granted pursuant to this Plan on or after
the tenth anniversary of the earlier of the date this Plan is adopted or the
date of stockholder approval, but Stock Options granted prior to such tenth
anniversary may, and the Committee's authority to administer the terms of such
Options shall, extend beyond that date.
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