1
EXHIBIT 10.40
MCM GROUP, INC. STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of this MCM Group, Inc. Stock Option Plan is to
foster and promote the long-term financial success of the Company and its
Subsidiaries and to increase materially stockholder value by (A) motivating
superior performance by participants in the Plan, (B) providing participants in
the Plan with an ownership interest in the Company and (C) enabling the Company
and the Subsidiaries to attract and retain the services of an outstanding
management team upon whose judgment, interest and special effort the successful
conduct of its operations is largely dependent.
SECTION 2. DEFINITIONS
2.1. DEFINITIONS. Whenever used herein, the following terms
shall have the respective meanings set forth below:
(a) "Affiliate" means an entity controlling, controlled by
or under common control with the Company.
(b) "Alternative Option" has the meaning given in
Section 8.2.
(c) "Applicable Share Valuation" means the annual valuation
of the Common Stock performed by an independent valuation firm chosen
by the Board as of the last day of the last fiscal year of the Company
ending prior to the Determination Date, except that, in the case of a
Determination Date occurring during the fourth fiscal quarter of any
fiscal year of the Company beginning with the fourth quarter of the
1996 fiscal year of the Company, the term "Applicable Share Valuation"
shall mean the annual valuation of the Common Stock performed by an
independent valuation firm chosen by the Board as of the last day of
such fourth fiscal quarter.
(d) "Board" means the Board of Directors of the Company.
(e) "C&D Fund" means The Clayton & Dubilier Private Equity
Fund IV Limited Partnership, a Connecticut limited partnership, and any
successor
2
investment vehicle managed by Clayton, Dubilier & Rice, Inc.
(f) "Cause" means (I) the willful failure by the Participant
to perform substantially his duties as an employee of the Company or
any Subsidiary (other than any such failure due to physical or mental
illness) after a demand for substantial performance is delivered to the
Participant by the executive to which the Participant reports or by the
Board, which notice identifies the manner in which such executive or
the Board, as the case may be, believes that the Participant has not
substantially performed his duties, (II) the Participant's engaging in
willful and serious misconduct that is or is expected to be injurious
to the Company or any Subsidiary, (III) the Participant's having been
convicted of, or entered a plea of guilty or NOLO CONTENDERE to, a
crime that constitutes a felony, (IV) the willful and material breach
by the Participant of any written covenant or agreement with the
Company or any Subsidiary not to disclose any information pertaining to
the Company, any Subsidiary or any Affiliate or not to compete or
interfere with the Company, any Subsidiary or any Affiliate or with
respect to any take-along or similar covenants applicable to any Common
Stock of the Participant or (V) any violation by the Participant of any
federal, state or foreign securities laws; PROVIDED that in the event
that the Participant is employed by the Company or a Subsidiary under
an effective employment agreement on the date of determination and such
employment agreement shall contain a different definition of Cause, the
definition of Cause contained in such employment agreement shall be
substituted for the definition set forth above for all purposes
hereunder.
(g) "Change of Control" means the first to occur of the
following events after the Effective Date:
(i) the acquisition by any person, entity or "group"
(as defined in Section 13(d) of the Securities Exchange Act of
1934, as amended), other than the Company, the Subsidiaries,
any employee benefit plan of the Company or the Subsidiaries,
or the C&D Fund, of 50% or more of the combined voting power
of the Company's then outstanding voting securities;
2
3
(ii) the merger or consolidation of the Company, as a
result of which persons who were stockholders of the Company
immediately prior to such merger or consolidation, do not,
immediately thereafter, own, directly or indirectly more than
50% of the combined voting power entitled to vote generally in
the election of directors of the merged or consolidated
company;
(iii) the liquidation or dissolution of the Company; and
(iv) the sale of all or substantially all of the assets
of the Company to one or more persons or entities that are
not, immediately prior to such sale, Affiliates.
(h) "Change in Control Price" means the price per share of
Common Stock paid in conjunction with any transaction resulting in a
Change in Control (as determined in good faith by the Board if any part
of such price is payable other than in cash).
(i) "Common Stock" means the Class C Common Stock, par value
$.01 per share, of the Company.
(j) "Company" means MCM Group, Inc., a Delaware corporation,
and any successor thereto.
(k) "Determination Date" means the date as of which the Fair
Market Value of the Common Stock is to be determined pursuant to the
applicable Option Agreement, generally the effective date of a
Participant's termination of employment for any reason.
(l) "EBITDA", for any period, shall mean the consolidated net
income of the Company and the Subsidiaries, determined prior to any
reduction for interest expense, taxes, depreciation or amortization,
unless provided otherwise in the Option Agreement evidencing an Option
granted hereunder.
(m) "Effective Date" means the effective date of the
Spin-off.
(n) "Employee" means any executive, senior officer or other
key employee of the Company or any Subsidiary.
3
4
(o) "Fair Market Value" means, as of any Determination Date,
the fair market value on such date per share of Common Stock as
determined in good faith by the Board. In making a determination of
Fair Market Value, the Board shall give due consideration for such
factors as it deems appropriate, including, without limitation, the
earnings and certain other financial and operating information of the
Company and the Subsidiaries in recent periods, the potential value of
the Company and the Subsidiaries as a whole, the future prospects of
the Company and the Subsidiaries and the industries in which they
compete, the history and management of the Company and the
Subsidiaries, the general condition of the securities markets, the fair
market value of securities of companies engaged in businesses similar
to those of the Company and the Subsidiaries and the Applicable Share
Valuation. The determination of Fair Market Value will not give effect
to any restrictions on transfer of the Shares or the fact that such
Shares would represent a minority interest in the Company.
(p) "Grant Date" means, with respect to any Option, the date
on which such Option is granted pursuant to the Plan.
(q) "Involuntary Termination" means termination of the
Participant's employment by the New Employer for any reason.
(r) "Maximum EBITDA Target" means, with respect to
Performance Options granted under the Plan, the cumulative EBITDA that
the Company and the Subsidiaries must achieve during the period
specified in the Option Agreement evidencing such Performance Options
for 100% of such Performance Options to become exercisable as of the
applicable Target Date.
(s) "Minimum EBITDA Target" means, with respect to
Performance Options granted under the Plan, the minimum cumulative
EBITDA that the Company and the Subsidiaries must achieve during the
period specified in the Option Agreement evidencing such Performance
Options for any portion of such Performance Options to become
exercisable as of the applicable Target Date.
(t) "New Employer" means the Participant's employer, or the
parent or a subsidiary of such employer, immediately following a Change
in Control.
4
5
(u) "Option" means the right granted pursuant to the Plan to
purchase one share of Common Stock at a price determined in accordance
with Section 6.2 and on terms and conditions established in accordance
with Section 6.3.
(v) "Option Agreement" means an agreement between the Company
and the Participant embodying the terms of any Options granted
hereunder, which agreement shall, unless the Board otherwise
determines, be substantially in the form attached hereto as Exhibit A.
(w) "Participant" means any Employee designated by the Board
to participate in the Plan.
(x) "Permanent Disability" means a physical or mental
disability or infirmity that prevents the performance of a
Participant's employment-related duties lasting (or likely to last,
based on competent medical evidence presented to the Board) for a
period of six months or longer. The Board's reasoned and good faith
judgment as to Permanent Disability shall be final and shall be based
on such competent medical evidence as shall be presented to it by the
Participant or by any physician or group of physicians or other
competent medical expert employed by the Participant or the Company to
advise the Board.
(y) "Performance Option" means an Option granted pursuant to
the Plan which becomes exercisable in accordance with the provisions of
Section 6.3(b) based upon the financial performance of the Company and
the Subsidiaries.
(z) "Plan" means this MCM Group, Inc. Stock Option Plan, as
the same may be amended from time to time.
(aa) "Public Offering" means the first day as of which sales
of Class A common stock of the Company are made to the public in the
United States pursuant to an underwritten public offering of the Class
A Common Stock of the Company led by one or more underwriters, at least
one of which is of nationally recognized standing.
(bb) "Retirement" means a Participant's retirement at or after
age 60 or such other age as may be specified in the applicable Option
Agreement.
5
6
(cc) "Service Option" means an Option granted pursuant to the
Plan which becomes exercisable in accordance with the provisions of
Section 6.3(a) based upon a Participant's completion of service with
the Company and the Subsidiaries.
(dd) "Spin-off" means the distribution by VK/AC Holding, Inc.
of 100% of the outstanding Class A common stock of the Company to the
holders of record of the common stock of VK/AC Holding, Inc. at the
close of business on the Effective Date.
(ee) "Special Termination" has the meaning given in
Section 7.1.
(ff) "Subsidiary" means any corporation a majority of whose
outstanding voting securities is owned, directly or indirectly, by the
Company.
(gg) "Target Date" means, with respect to Performance Options
granted under the Plan, the date specified in the Option Agreement
evidencing such Performance Options as of which the cumulative EBITDA
achieved by the Company and the Subsidiaries since the Grant Date of
such Performance Options (or such other date as may be specified by the
Board) is to be determined for purposes of determining the portion, if
any, of such Performance Options that will become exercisable as of
such date.
2.2. GENDER AND NUMBER. Except when otherwise indicated by
the context, words in the masculine gender used in the Plan shall include the
feminine gender, the singular shall include the plural, and the plural shall
include the singular.
SECTION 3. ELIGIBILITY AND PARTICIPATION
Participants in the Plan shall be those Employees selected by
the Board to participate in the Plan. The selection of an Employee as a
Participant shall neither entitle such Employee to nor disqualify such Employee
from participation in any other award or incentive plan.
SECTION 4. POWERS OF THE BOARD
6
7
4.1. POWER TO GRANT. The Board shall determine the
Participants to whom Options shall be granted and the terms and conditions of
any and all Options granted to Participants, PROVIDED that nothing in the Plan
shall limit the right of members of the Board who are Employees to receive
awards hereunder.
4.2. ADMINISTRATION. The Board shall be responsible for the
administration of the Plan. Any authority exercised by the Board under the Plan
shall be exercised by the Board in its sole discretion. Subject to the terms of
the Plan, the Board, by majority action thereof, is authorized to prescribe,
amend and rescind rules and regulations relating to the administration of the
Plan, to provide for conditions and assurances deemed necessary or advisable to
protect the interests of the Company and the Subsidiaries, and to make all other
determinations necessary or advisable for the administration and interpretation
of the Plan in order to carry out its provisions and purposes. Determinations,
interpretations or other actions made or taken by the Board pursuant to the
provisions of the Plan shall be final, binding and conclusive for all purposes
and upon all persons.
4.3. DELEGATION BY THE BOARD. All of the powers, duties and
responsibilities of the Board specified in the Plan may, to the full extent
permitted by applicable law, be exercised and performed by any duly constituted
committee of the Board, in any such case, to the extent authorized by the Board
to exercise and perform such powers, duties and responsibilities.
SECTION 5. OPTIONS SUBJECT TO PLAN
5.1. NUMBER. Subject to the provisions of Sections 5.2 and
5.3, the maximum number of Options (and the maximum number of shares of Common
Stock subject to Options) granted under the Plan may not exceed 49,000. The
shares of Common Stock to be delivered upon the exercise of Options granted
under the Plan may consist, in whole or in part, of treasury Common Stock or
authorized but unissued Common Stock, not reserved for any other purpose.
5.2. CANCELLED, TERMINATED OR FORFEITED OPTIONS. Any Option
(and the share of Common Stock subject to such Option) which for any reason is
cancelled, terminated or otherwise forfeited, in whole or in part, without
having been exercised, shall again be available for grant under the
7
8
Plan to the extent so canceled, terminated or otherwise forfeited.
5.3. ADJUSTMENT IN CAPITALIZATION. The number and class of
Options (and the number of shares of Common Stock available for issuance upon
exercise of such Options) granted under the Plan, and the number, class and
exercise price of any outstanding Options (and the number of shares of Common
Stock subject to outstanding Options), may be adjusted by the Board, in its sole
discretion, if it shall deem such an adjustment to be necessary or appropriate
to reflect any Common Stock dividend, stock split or share combination or any
recapitalization, merger, consolidation, exchange of shares, liquidation or
dissolution of the Company.
SECTION 6. TERMS OF OPTIONS
6.1. GRANT OF OPTIONS. Options may be granted to Participants
at such time or times upon or following the Effective Date as shall be
determined by the Board. The Board may provide that different terms apply to
Options granted to a Participant on the same Grant Date. Each Option granted to
a Participant shall be evidenced by an Option Agreement that shall specify the
exercise price at which a share of Common Stock may be purchased pursuant to
such Option, the duration of such Option and such other terms consistent with
the Plan as the Board shall determine, including customary representations,
warranties and covenants with respect to securities law matters. Unless
otherwise determined by the Board at the Grant Date, such Option Agreement shall
also state that the holder thereof is entitled to the benefits of and bound by
the obligations set forth in the Registration and Participation Agreement, dated
as of the Effective Date, among the Company and certain stockholders of the
Company (as the same may be amended, waived, modified or supplemented from time
to time), to the extent set forth therein. Such Option Agreement shall, unless
the Board otherwise determines, be substantially in the form attached hereto as
Exhibit A.
6.2. EXERCISE PRICE. The exercise price per share of Common
Stock to be purchased upon exercise of an Option shall be determined by the
Board but shall not be less than the Fair Market Value on the Grant Date.
6.3. EXERCISE OF OPTIONS. (a) SERVICE OPTIONS. Unless
otherwise determined by the Board at the Grant
8
9
Date and provided in the Option Agreement evidencing the Options
granted hereunder, 20% of any Service Options granted to a Participant
at any time shall become exercisable on each of the first five
anniversaries of the Grant Date of such Service Options, subject in
each such case to the Participant's continued employment with the
Company or a Subsidiary until such anniversary date; PROVIDED that 100%
of such Service Options shall become exercisable to the extent provided
in Section 8.1.
(b) PERFORMANCE OPTIONS. Unless otherwise determined by the
Board at the Grant Date and provided in the Option Agreement evidencing
the Options granted hereunder, subject to Sections 8.1 and 9, (i) no
portion of any Performance Options shall become exercisable unless, as
of the Target Date, the Company and the Subsidiaries shall have
achieved the Minimum EBITDA Target specified in the Option Agreement
evidencing such Performance Options, (ii) 100% of any Performance
Options shall become exercisable if, as of the Target Date, the Company
and the Subsidiaries shall have achieved the Maximum EBITDA Target
specified in the Option Agreement and (iii) a proportionate share of
Performance Options shall become exercisable if, as of the Target Date,
the cumulative EBITDA achieved by the Company and the Subsidiaries for
the period of determination exceeds the Minimum EBITDA Target but does
not exceed the Maximum EBITDA Target, provided, in each such case, that
the Participant is in the continuous employment of the Company or one
of the Subsidiaries from the Grant Date to the applicable Target Date.
Notwithstanding the foregoing provisions of this paragraph (b), subject
to the continuous employment of the Participant with the Company or one
of the Subsidiaries, Performance Options shall become exercisable in
full nine years following the Grant Date, regardless of whether the
applicable EBITDA target was achieved as of the applicable Target Date.
(c) CONDITIONS. Notwithstanding any other provision herein,
the Board may accelerate the exercisability of any Option, all Options
or any class of Options, at any time and from time to time. On or
before the date upon which any Participant will exercise any Option,
the Company and such Participant shall enter into a Management Stock
Subscription Agreement substantially in the form attached hereto as
Exhibit B. Notwithstanding any other provision of the
9
10
Plan, each Option shall terminate and shall not be exercisable on or
after the tenth anniversary of the Grant Date of such Option.
6.4. PAYMENT. The Board shall establish procedures governing
the exercise of Options, which procedures shall generally require that written
notice of the exercise thereof be given and that the exercise price thereof be
paid in full in cash or cash equivalents, including by personal check, at the
time of exercise. If so determined by the Board in its sole discretion at or
after the Grant Date, the exercise price of any Options exercised after there
has been a Public Offering may be paid in full or in part in the form of shares
of common stock of the Company already owned by the Participant, based on the
Fair Market Value of such common stock on the date of exercise. As soon as
practicable after receipt of a written exercise notice and payment in full of
the exercise price of any exercisable Options, the Company shall deliver to the
Participant a certificate or certificates representing the Shares of Common
Stock acquired upon the exercise thereof.
SECTION 7. TERMINATION OF EMPLOYMENT
7.1. SPECIAL TERMINATION. (a) Unless otherwise provided in
the Option Agreement evidencing the Options granted hereunder or
otherwise determined by the Board at or after the Grant Date, in the
event that a Participant's active employment with the Company and the
Subsidiaries terminates by reason of the Participant's death, Permanent
Disability or Retirement (each a "Special Termination") then (i) any
Options held by the Participant that are then exercisable and (ii) in
the case of any Performance Options then held by the Participant that
have not yet become exercisable in accordance with Section 6.3(b) and
with respect to which the Target Date has not yet occurred, a
proportionate share of such Performance Options, determined as provided
in Section 7.1(b) below, shall remain or, in the case of any such
Performance Options, become exercisable solely until the first to occur
of (x) the first anniversary of the Participant's termination of
employment or (y) the expiration of the term of the Option. Any Options
held by the Participant that are not exercisable at the date of the
Special Termination shall terminate and be cancelled immediately upon
such Special Termination, and any Options described in the preceding
sentence that are
10
11
not exercised within the period described in such sentence shall
terminate and be cancelled upon the expiration of such period.
(b) For purposes of Section 7.1(a), the proportionate share
of Performance Options that shall become exercisable as of the date of
a Participant's Special Termination shall be equal to the quotient
obtained by multiplying (i) all such Performance Options by (ii) the
percentage obtained by dividing (A) the cumulative EBITDA in excess of
the Minimum EBITDA Target achieved by the Company and the Subsidiaries
during the period from the Grant Date (or such other date specified in
the applicable Option Agreement) to the last day of the calendar
quarter ending prior to the date of the Participant's Special
Termination for which the applicable financial information is
available, by (B) the Maximum EBITDA Target specified in the Option
Agreement evidencing the grant of such Performance Options.
7.2. TERMINATION FOR CAUSE. Unless otherwise determined by
the Board at or after the Grant Date, in the event that a Participant's
employment with the Company and the Subsidiaries is terminated for Cause, any
Options held by such Participant (whether or not then exercisable) shall
terminate and be cancelled immediately upon such termination of employment.
7.3. OTHER TERMINATION OF EMPLOYMENT. Unless otherwise
provided in the Option Agreement or otherwise determined by the Board at or
after the Grant Date, in the event that a Participant's employment with the
Company and the Subsidiaries terminates for any reason other than (i) a Special
Termination or (ii) for Cause, any Options held by such Participant that are
exercisable as of the date of such termination shall remain exercisable for a
period of 60 days (or, if shorter, during the remaining term of the Options).
Any Options held by the Participant that are not exercisable at the date of the
Participant's termination of employment shall terminate and be cancelled
immediately upon such termination, and any Options described in the preceding
sentence that are not exercised within the period described in such sentence
shall terminate and be cancelled upon the expiration of such period.
7.4. CERTAIN RIGHTS UPON TERMINATION OF EMPLOYMENT PRIOR TO
PUBLIC OFFERING. Unless otherwise determined by the Board at the Grant Date, the
Board shall
11
12
provide in each Option Agreement governing Options granted hereunder that the
Company and the C&D Fund shall have successive rights to purchase any
exercisable Options from the Participant upon any termination of his employment
prior to a Public Offering for a purchase price per Option equal to the excess,
if any, of (x) the Fair Market Value on the date of termination over (y) the
exercise price per share of Common Stock pursuant to such Options, and upon such
additional terms and conditions as are set forth in the Option Agreement
evidencing such Options. If the rights of the Company and the C&D Fund to
purchase all of the exercisable Options are not fully exercised, other than as a
result of the inability of the Company to complete a purchase due to
restrictions under Delaware law or any applicable financing arrangement of the
Company or the Subsidiaries, the Participant (or the Participant's estate) shall
be entitled to retain any exercisable Options not so purchased, subject to all
of the provisions of the Plan and the Option Agreement evidencing the Options.
SECTION 8. CHANGE IN CONTROL
8.1. ACCELERATED EXERCISABILITY AND PAYMENT. (a) Unless the
Board shall otherwise determine in the manner set forth in Section 8.2,
in the event of a Change in Control, each Service Option (whether or
not then exercisable) and a proportionate share of the Performance
Options, determined as provided in Section 8.1(b) below, shall be
cancelled in exchange for a payment in cash of an amount equal to the
excess, if any, of the Change in Control Price over the exercise price
for such Option. All remaining Performance Options shall be cancelled
and forfeited as of the closing date of the transaction constituting
the Change in Control.
(b) For purposes of Section 8.1(a), the proportionate share
of Performance Options that shall be canceled in exchange for the
payment described in Section 8.1(a) shall be equal to the quotient
obtained by multiplying (i) all such Performance Options by (ii) the
percentage obtained by dividing (A) the cumulative EBITDA in excess of
the Minimum EBITDA Target achieved by the Company and the Subsidiaries
during the period from the Grant Date (or such other date specified in
the applicable Option Agreement) to the last day of the calendar
quarter ending prior to the date of the consummation of the transaction
constituting the Change
12
13
in Control for which the applicable financial information is available,
by (B) the Maximum EBITDA Target specified in the Option Agreement
evidencing the grant of such Performance Options.
8.2. ALTERNATIVE OPTIONS. Notwithstanding Section 8.1, no
cancellation, acceleration of exercisability, vesting or cash settlement or
other payment shall occur with respect to any Option if the Board reasonably
determines in good faith, prior to the occurrence of a Change in Control, that
such Option shall be honored or assumed, or new rights substituted therefor
(such honored, assumed or substituted Option being hereinafter referred to as an
"Alternative Option") by the New Employer, PROVIDED that any such Alternative
Option must:
(a) provide the Participant that held such Option with
rights and entitlements substantially equivalent to or better than the
rights, terms and conditions applicable under such Option, including,
but not limited to, an identical or better exercise and vesting
schedule, and identical or better timing and methods of payment;
(b) have substantially equivalent economic value to such
Option (determined at the time of the Change in Control); and
(c) have terms and conditions which provide that in the
event that such Participant suffers an Involuntary Termination within
two years following a Change in Control:
(i) any conditions on such Participant's rights under,
or any restrictions on transfer or exercisability applicable
to, each such Alternative Option shall be waived or shall
lapse, as the case may be; or
(ii) such Participant shall have the right to surrender
such Alternative Option within 30 days following such
termination in exchange for a payment in cash equal to the
excess of the Fair Market Value of the common stock subject to
the Alternative Option over the price, if any, that such
Participant would be required to pay to exercise such
Alternative Option.
13
14
8.3 CERTAIN TAKE-ALONG RIGHTS PRIOR TO A PUBLIC OFFERING.
Unless otherwise determined by the Board at the time of grant, the Board shall
provide in each Subscription Agreement evidencing Common Stock purchased upon
the exercise of Options granted hereunder that, upon certain transactions
described therein, the Participant will be required to sell such shares of
Common Stock then owned by him, for a cash payment per share of Common Stock
equal to the Change in Control Price, and upon such additional terms and
conditions as are set forth in such Subscription Agreement.
SECTION 9. AMENDMENT, MODIFICATION AND
TERMINATION OF THE PLAN
The Board at any time may terminate or suspend the Plan, and
from time to time may amend or modify the Plan. No amendment, modification,
termination or suspension of the Plan shall in any manner adversely affect any
Option theretofore granted under the Plan, without the consent of the
Participant holding such Option. Shareholder approval of any such amendment,
modification, termination or suspension shall be obtained to the extent mandated
by applicable law, or if otherwise deemed appropriate by the Board.
SECTION 10. MISCELLANEOUS PROVISIONS
10.1. NONTRANSFERABILITY OF AWARDS. No Options granted under
the Plan may be sold, transferred, pledged, assigned, encumbered or otherwise
alienated or hypothecated, other than by will or by the laws of descent and
distribution and provided that the deceased Participant's beneficiary or the
representative of his estate acknowledges and agrees in writing, in a form
reasonably acceptable to the Company, to be bound by the provisions of the Plan
(including the purchase rights described in Section 7.4 and the take-along
rights described in Section 8.3) and the Option Agreement covering such Options
as if such beneficiary or estate were the Participant. All rights with respect
to Options granted to a Participant under the Plan shall be exercisable during
his life-time by such Participant only. Following a Participant's death, all
rights with respect to Options that were exercisable at the time of such
Participant's death and have not terminated shall be exercised by his designated
beneficiary or by his estate.
14
15
10.2. BENEFICIARY DESIGNATION. Each Participant under the
Plan may from time to time name any beneficiary or beneficiaries (who may be
named contingently or successively) by whom any right under the Plan is to be
exercised in case of his death. Each designation will revoke all prior
designations by the same Participant, shall be in a form reasonably prescribed
by the Board, and will be effective only when filed by the Participant in
writing with the Board during his lifetime.
10.3. NO GUARANTEE OF EMPLOYMENT OR PARTICIPATION. Nothing in
the Plan or in any Option Agreement shall interfere with or limit in any way the
right of the Company or any Subsidiary to terminate any Participant's employment
at any time, or confer upon any Participant any right to continue in the employ
of the Company or any Subsidiary. No Employee shall have a right to be selected
as a Participant or, having been so selected, to receive any Options.
10.4. TAX WITHHOLDING. The Company or the Subsidiary
employing a Participant shall have the power to withhold, or to require such
Participant to remit to the Company or such Subsidiary, subject to such other
arrangements as the Board may set forth in the Option Agreement to which such
Participant is a party, an amount sufficient to satisfy all federal, state,
local and foreign withholding tax requirements in respect of any Option granted
under the Plan or any share of Common Stock purchased upon the exercise of any
such Option.
10.5. INDEMNIFICATION. Each person who is or shall have been
a member of the Board or any committee of the Board shall be indemnified and
held harmless by the Company to the fullest extent permitted by law from and
against any and all losses, costs, liabilities and expenses (including any
related attorneys' fees and advances thereof) in connection with, based upon or
arising or resulting from any claim, action, suit or proceeding to which he may
be made a party or in which he may be involved by reason of any action taken or
failure to act under the Plan and from and against any and all amounts paid by
him in settlement thereof, with the Company's approval, or paid by him in
satisfaction of any judgment in any such action, suit or proceeding against him,
PROVIDED that he shall give the Company an opportunity, at its own expense, to
defend the same before he undertakes to defend it on his own behalf. The
foregoing right of indemnification shall not be exclusive and shall be
independent of any other rights of
15
16
indemnification to which such persons may be entitled under the Company's
Certificate of Incorporation or By-laws, by contract, as a matter of law, or
otherwise.
10.6. NO LIMITATION ON COMPENSATION. Nothing in the Plan
shall be construed to limit the right of the Company or any Subsidiary to
establish other plans or to pay compensation to its employees, in cash or
property, in a manner that is not expressly authorized under the Plan.
10.7. REQUIREMENTS OF LAW. The granting of Options and the
issuance of shares of Common Stock pursuant to such Options shall be subject to
all applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required. No
Options shall be granted under the Plan, and no shares of Common Stock shall be
issued upon exercise of any Options granted under the Plan, if such grant or
exercise would result in a violation of applicable law, including the federal
securities laws and any applicable state or foreign securities laws.
10.8. FREEDOM OF ACTION. Subject to Section 9, nothing in
the Plan or any Option Agreement shall be construed as limiting or preventing
the Company or any Subsidiary from taking any action that it deems appropriate
or in its best interest.
10.9. TERM OF PLAN. Subject to the consummation of the
Spin-off, the Plan shall be effective as of the Effective Date. The Plan shall
thereafter continue in effect, unless sooner terminated pursuant to Section 9,
until the tenth anniversary of the Effective Date. The provisions of the Plan,
however, shall continue thereafter to govern all outstanding Options theretofore
granted.
10.10. NO VOTING RIGHTS. Except as otherwise required by law,
no Participant holding any Options granted under the Plan shall have any right,
in respect of such Options, to vote on any matter submitted to the Company's
stockholders until such time as the shares of Common Stock issuable upon
exercise of such Options have been so issued.
10.11. GOVERNING LAW. The Plan, and all agreements hereunder,
shall be construed in accordance with and governed by the laws of the State of
Delaware, regardless of the law that might be applied under principles of
conflict of laws.
16
17
EXHIBIT A
[Form of Management Stock Option Agreement]
See Exhibit A as filed with Exhibit 10.39
18
EXHIBIT B
[Form of Management Stock Subscription Agreement]
See Exhibit B as filed with Exhibit 10.39