Document:

EXHIBIT 10.72

 

[Form of Amended and Restated Registration Rights Agreement]

 

This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT, dated as of [•], 2014 (as it may be amended from time to time, this “Agreement”), is made among ServiceMaster Global Holdings, Inc., a Delaware corporation (the “Company”), each Holder listed on the signature pages of this Agreement and any other stockholder of the Company that may become a party to this Agreement pursuant to the terms hereof.  Capitalized terms used in this Agreement without definition have the meaning set forth in Section 11.

 

W  I  T  N  E  S  S  E  T  H:

 

WHEREAS, the Company, the CD&R Investors, the StepStone Investors and certain other stockholders of the Company entered into a Second Amended and Restated Stockholders Agreement, dated as of the date hereof, which sets forth the terms and conditions of the ownership of the Common Shares, and which contemplates the execution and delivery of this Agreement.

 

WHEREAS, pursuant to the Registration Rights Agreement, dated as of July 24, 2007 (the “Original Agreement”), the Holders have certain registration rights with respect to the Common Shares.

 

WHEREAS, the Company is undertaking an underwritten initial public offering (the “IPO”) of Common Shares; and

 

WHEREAS, in connection with the IPO, and effective as of the date of the listing of the Common Shares on the NYSE in connection with the IPO (the “Listing Date”), pursuant to Section 12(c) of the Original Agreement, the Company and the Holders party hereto desire to amend and restate the Original Agreement to set forth their respective rights and obligations on and after the Listing Date.

 

NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto hereby agree as follows:

 

1.             Demand Registrations.

 

(a)           Requests for Registration.  At any time the Lead Investor, and at any time following the date that is eighteen months after the consummation of the IPO the Additional Investors (if determined by the Holders of a majority of the Registrable Securities of the Additional Investors (the “Requisite Additional Investors”)), may request in writing that the Company effect the registration of all or any part of the Registrable Securities held by the CD&R Investors or such Holders, as the case may be, (each, a “Registration Request”).  Promptly after its receipt of any Registration Request, the Company will give written notice of such request to all other Holders, and will use its reasonable best efforts to register, in accordance with the provisions of this Agreement, all Registrable Securities that have been requested to be registered in the Registration

 

 

Request or by any other Holders by written notice to the Company given within five Business Days after the date the Company has given such Holders notice of the Registration Request; provided that the Company will not be required to effect a registration pursuant to this Section 1(a) requested by the Additional Investors, unless the Additional Investors have, in the aggregate, sole voting control with respect to at least 12% of the Common Shares outstanding at the time of such Registration Request.  The Company will pay all Registration Expenses incurred in connection with any registration pursuant to this Section 1.  Any registration requested pursuant to Section 1(a) or 1(c) is referred to in this Agreement as a “Demand Registration”.

 

(b)           Limitation on Demand Registrations.  The Lead Investor will be entitled to initiate no more than five Demand Registrations (other than Short-Form Registrations permitted pursuant to Section 1(c)).  The Requisite Additional Investors will together be entitled to initiate no more than one Demand Registration.  Unless otherwise agreed by the Lead Investor, the Company will not be obligated to effect a Demand Registration during the six-month period following the date any other Company registration statement is declared effective with respect to the registration of Common Shares.  The Company shall not be obligated to effect a Demand Registration unless the aggregate proceeds expected to be received from the sale of the Registrable Securities requested to be included in such Demand Registration equals or exceeds $100 million, unless otherwise agreed by the Lead Investor and the Requisite Additional Investors.  No request for registration will count for the purposes of the limitations in this Section 1(b) if (i) the Requesting Holder(s) determine in good faith to withdraw (prior to the effective date of the Registration Statement relating to such request) the proposed registration due to marketing or regulatory reasons, (ii) the Registration Statement relating to such request is not declared effective within 180 days of the date such Registration Statement is first filed with the Commission (other than solely by reason of the Requesting Holder(s) having refused to proceed) and such Requesting Holder(s) withdraw the Registration Request prior to such Registration Statement being declared effective, (iii) prior to the sale of at least 90% of the Registrable Securities included in the applicable registration relating to such request, such registration is adversely affected by any stop order, injunction or other order or requirement of the Commission or other governmental agency or court for any reason and the Company fails to have such stop order, injunction or other order or requirement removed, withdrawn or resolved to the reasonable satisfaction of the Requesting Holder(s) within 30 days of the date of such order, (iv) more than 10% of the Registrable Securities requested by such Requesting Holder(s) to be included in such registration are not so included pursuant to Section 1(f), or (v) the conditions to closing specified in the underwriting agreement or purchase agreement entered into in connection with the registration relating to such request are not satisfied (other than as a result of a material default or breach thereunder by any member of such Requesting Holder(s)).  Notwithstanding the foregoing, the Company will pay all Registration Expenses in connection with any request for registration pursuant to

 

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Section 1(a) regardless of whether or not such request counts toward the limitation set forth above.

 

(c)           Short-Form Registrations.  The Company will use its reasonable best efforts to qualify for registration on Form S-3 or any comparable or successor form or forms or any similar short-form registration (“Short-Form Registration”), and, if requested by the Lead Investor and available to the Company, such Short-Form Registration will be a “shelf” registration statement providing for the registration of, and the sale on a continuous or delayed basis of the Registrable Securities, pursuant to Rule 415, and to that end the Company will register (whether or not required by law to do so) the Common Shares under the Exchange Act in accordance with the provisions of that Act following the effective date of the first registration of any securities of the Company on Form S-1 or any comparable or successor form or forms.  In no event shall the Company be obligated to effect any shelf registration other than pursuant to a Short-Form Registration.  Following the IPO, the Lead Investor will be entitled to request at any time and from time to time an unlimited number of Short-Form Registrations, if available to the Company, with respect to the Registrable Securities held by the CD&R Investors, in addition to the registration rights provided in Section 1(a), provided that the Company will not be obligated to effect any registration pursuant to this Section 2 (i) within 90 days after the effective date of any Registration Statement of the Company hereunder or (ii) unless the value of Registrable Securities of the CD&R Investors included in the applicable Registration Request is at least $20 million or such lower amount as agreed by the Requisite Additional Investors.  Promptly after its receipt of any request for a Short-Form Registration, the Company will give written notice of such request to all other Holders, and will use its reasonable best efforts to register, in accordance with the provisions of this Agreement, all Registrable Securities that any Holder has requested in writing to be registered by no later than the fifth Business Day after the date of such notice.  The Company will pay all Registration Expenses incurred in connection with any Short-Form Registration.  If any Demand Registration is proposed to be a Short-Form Registration and an underwritten offering, if the managing underwriter shall advise the Company that, in its opinion, it is of material importance to the success of such proposed offering to file a registration statement on Form S-1 (or any successor or similar registration statement) or to include in such registration statement information not required to be included in a Short-Form Registration, then the Company will file a registration statement on Form S-1 or supplement the Short-Form Registration as reasonably requested by such managing underwriter (it being understood and agreed that any such registration shall not count as a “Demand Registration” for purposes of calculating how many “Demand Registrations” the Lead Investor has initiated).

 

(d)           Restrictions on Demand Registrations.  If the filing, initial effectiveness or continued use of a registration statement, including a shelf registration statement pursuant to Rule 415, with respect to a Demand Registration would require the Company to make a public disclosure of material non-public information, which disclosure in the good faith

 

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judgment of the Board (after consultation with external legal counsel) (i) would be required to be made in any Registration Statement so that such Registration Statement would not be materially misleading, (ii) would not be required to be made at such time but for the filing, effectiveness or continued use of such Registration Statement and (iii) would reasonably be expected to have a material adverse effect on the Company or its business or on the Company’s ability to effect a material proposed acquisition, disposition, financing, reorganization, recapitalization or similar transaction, then the Company may, upon giving prompt written notice of such action to the Holders participating in such registration, delay the filing or initial effectiveness of, or suspend use of, such Registration Statement; provided that the Company shall not be permitted to do so (x) more than four times during any 12 month period or (y) for periods exceeding, in the aggregate, 90 days during any 12 month period.  In the event the Company exercises its rights under the preceding sentence, such Holders agree to suspend, promptly upon their receipt of the notice referred to above, their use of any prospectus relating to such registration in connection with any sale or offer to sell Registrable Securities.  If the Company so postpones the filing of a prospectus or the effectiveness of a Registration Statement, the Requesting Holder(s) will be entitled to withdraw such request and, if such request is withdrawn, such registration request will not count for the purposes of the limitation set forth in Section 1(b).  The Company will pay all Registration Expenses incurred in connection with any such aborted registration or prospectus.

 

(e)           Selection of Underwriters.  If the Requesting Holder(s) intend that the Registrable Securities covered by their Registration Request shall be distributed by means of an underwritten offering, such Holders will so advise the Company as a part of the Registration Request, and the Company will include such information in the notice sent by the Company to the other Holders with respect to such Registration Request.  In such event, the lead underwriter to administer the offering will be chosen by the Lead Investor if the Lead Investor requested the Demand Registration, subject to the prior written consent, not to be unreasonably withheld or delayed, of the Company, or otherwise by the Requisite Additional Investors, subject to the prior written consent, not to be unreasonably withheld or delayed, of the Company and the Lead Investor.  If the offering is underwritten, the right of any Holder to registration pursuant to this Section 1 will be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting (unless otherwise agreed by the Requesting Holder(s)), and each such Holder will (together with the Company and the other Holders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting.  If any Holder disapproves of the terms of the underwriting, such Holder may elect to withdraw therefrom by written notice to the Company, the managing underwriter and the Lead Investor.

 

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(f)            Priority on Demand Registrations.  The Company will not include in any underwritten registration pursuant to Section 1 any securities that are not Registrable Securities without the prior written consent of the Requesting Holder(s).  If the managing underwriter advises the Company that in its reasonable opinion the number of Registrable Securities (and, if permitted hereunder, other securities requested to be included in such offering) exceeds the number of securities that can be sold in such offering without adversely affecting the marketability of the offering (including an adverse effect on the per share offering price), the Company will include in such offering only such number of securities that in the reasonable opinion of such underwriters can be sold without adversely affecting the marketability of the offering, which securities will be so included in the following order of priority:  (i) first, Registrable Securities of the CD&R Investors, the StepStone Investors, JPMorgan, Ridgemont and Citigroup, pro rata on the basis of the aggregate number of Registrable Securities owned by each such Holder, (ii) second, Registrable Securities of any other Holders, pro rata in on the basis of the aggregate number of Registrable Securities owned by each such Holders and (iii) third, any other securities of the Company that have been requested to be so included, subject to the terms of this Agreement.

 

2.             Piggyback Registrations.

 

(a)           Right to Piggyback.  Whenever the Company proposes to register any of its securities, other than a registration pursuant to Section 1 or a Special Registration, and the registration form to be filed may be used for the registration or qualification for distribution of Registrable Securities, the Company will give prompt written notice to all Holders of its intention to effect such a registration and will include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within five Business Days after the date of the Company’s notice (a “Piggyback Registration”); provided the registration by the Company of its securities in connection with the IPO shall not constitute a Piggyback Registration.  Any Holder that has made such a written request may withdraw its Registrable Securities from such Piggyback Registration by giving written notice to the Company and the managing underwriter, if any, on or before the fifth Business Day prior to the planned effective date of such Piggyback Registration.  The Company may terminate or withdraw any registration under this Section 2 prior to the effectiveness of such registration, whether or not any Holder has elected to include Registrable Securities in such registration, and except for the obligation to pay Registration Expenses pursuant to Section 2(c) the Company will have no liability to any Holder in connection with such termination or withdrawal.

 

(b)           Underwritten Registration.  If the registration referred to in Section 2(a) is proposed to be underwritten, the Company will so advise the Holders as a part of the written notice given pursuant to Section 2(a).  In such event, the right of any Holder to registration pursuant to this Section 2 will be conditioned upon such Holder’s

 

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participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting, and each such Holder will (together with the Company and the other Holders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company.  If any Holder disapproves of the terms of the underwriting, such Holder may elect to withdraw therefrom by written notice to the Company, the managing underwriter and the Lead Investor.

 

(c)           Piggyback Registration Expenses.  The Company will pay all Registration Expenses in connection with any Piggyback Registration, whether or not any registration or prospectus becomes effective or final.

 

(d)           Priority on Primary Registrations.  If a Piggyback Registration relates to an underwritten primary offering on behalf of the Company, and the managing underwriter(s) advise the Company that in their reasonable opinion the number of securities requested to be included in such registration exceeds the number which can be sold without adversely affecting the marketability of such offering (including an adverse effect on the per share offering price), the Company will include in such registration or prospectus only such number of securities that in the reasonable opinion of such underwriters can be sold without adversely affecting the marketability of the offering (including an adverse effect on the per share offering price), which securities will be so included in the following order of priority:  (i) first, the securities the Company proposes to sell, (ii) second, (subject to the rights of any Senior Shares) Registrable Securities of any Holders and Parity Shares of any Person, pro rata on the basis of the aggregate number of such securities or shares owned by each such Holder or Person and (iii) third, any other securities of the Company that have been requested to be so included, subject to the terms of this Agreement.

 

(e)           Priority on Secondary Registrations.  If a Piggyback Registration relates to an underwritten secondary registration on behalf of other holders of the Company’s securities (other than a registration pursuant to Section 1), and the managing underwriter(s) advise the Company that in their reasonable opinion the number of securities requested to be included in such registration exceeds the number which can be sold without adversely affecting the marketability of the offering (including an adverse effect on the per share offering price), the Company will include in such registration only such number of securities that in the reasonable opinion of such underwriters can be sold without adversely affecting the marketability of the offering, which securities will be so included in the following order of priority (subject to the rights of any Senior Shares):  (i) first, Registrable Securities of any Holders and Parity Shares of any Person, pro rata on the basis of the aggregate number of such securities or shares owned by each such Holder or Person and (ii) second, any other securities of the Company that have been requested to be so included, subject to the terms of this Agreement.

 

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3.             Registration Procedures.  Subject to Section 1(d), whenever the Holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to Sections 1 and 2 of this Agreement, the Company will use its reasonable best efforts to effect the registration and sale of such Registrable Securities in accordance with the intended method of disposition thereof.  Without limiting the generality of the foregoing, the Company will, as expeditiously as possible:

 

(a)           prepare and (within 45 days after the end of the five Business Day Period within which requests for registration may be given to the Company pursuant hereto) file with the Commission a Registration Statement with respect to such Registrable Securities, make all required filings with FINRA and thereafter use its reasonable best efforts to cause such Registration Statement to become effective, provided that before filing a Registration Statement or any amendments or supplements thereto, the Company will furnish to Holders’ Counsel copies of all such documents proposed to be filed, which documents will be subject to review of such counsel at the Company’s expense.

 

(b)           prepare and file with the Commission such amendments and supplements to such Registration Statement and such free writing prospectuses under Rule 433 (each, a “Free Writing Prospectus”) as may be necessary to keep such Registration Statement effective for a period of either (i) not less than six months or, if such Registration Statement relates to an underwritten offering, such longer period as in the opinion of counsel for the underwriters a prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer or two years in the case of shelf registration statements (or such shorter period ending on the date that the securities covered by such shelf registration statement cease to constitute Registrable Securities) or (ii) such shorter period as will terminate when all of the securities covered by such Registration Statement have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such Registration Statement (but in any event not before the expiration of any longer period required under the Securities Act), and to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement until such time as all of such securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such Registration Statement;

 

(c)           furnish to each seller of Registrable Securities such number of copies, without charge, of such Registration Statement, each amendment and supplement thereto, including each preliminary prospectus, final prospectus, any Free Writing Prospectus, all exhibits and other documents filed therewith and such other documents as such seller may reasonably request including in order to facilitate the disposition of the Registrable Securities owned by such seller;

 

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(d)           use its reasonable best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things that may be necessary or reasonably advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller (provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subsection, (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction);

 

(e)           use its reasonable best efforts to cause all Registrable Securities covered by such Registration Statement to be registered with or approved by such other governmental agencies, authorities and self-regulatory bodies as may be necessary or reasonably advisable in light of the business and operations of the Company to enable the seller or sellers thereof to consummate the disposition of such Registrable Securities in accordance with the intended method or methods of disposition thereof;

 

(f)            promptly notify each seller of such Registrable Securities and Holders’ Counsel, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the discovery of the happening of any event as a result of which, the prospectus contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made, and, as promptly as practicable, prepare and furnish to such seller a reasonable number of copies of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made;

 

(g)           notify each seller of any Registrable Securities covered by such Registration Statement and Holders’ Counsel (i) when the prospectus or any prospectus supplement or post-effective amendment or any Free Writing Prospectus has been filed and, with respect to such Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission for amendments or supplements to such registration statement or to amend or to supplement such prospectus or for additional information, and (iii) of the issuance by the Commission of any stop order suspending the effectiveness of such registration statement or the initiation of any proceedings for any of such purposes;

 

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(h)           use its reasonable best efforts to cause all such Registrable Securities to be listed on the NYSE or such other national securities exchange on which the Common Shares are listed or, if no Common Shares issued by the Company are then listed on any securities exchange, use its reasonable best efforts to cause all such Registrable Securities to be listed on the NYSE or NASDAQ, as determined by the Company;

 

(i)            provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of, or date of final receipt, for such Registration Statement;

 

(j)            enter into such customary agreements (including underwriting agreements with customary provisions) and take all such other actions as the Requesting Holder(s) (if such registration is a Demand Registration) or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, effecting a share split or a combination of shares);

 

(k)           make available for inspection by any seller of Registrable Securities and Holders’ Counsel, any underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate documents and documents relating to the business of the Company, and cause the Company’s officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such Registration Statement; provided that each Holder will, and will use its commercially reasonable efforts to cause each such underwriter, accountant or other agent to (i) enter into a confidentiality agreement in form and substance reasonably satisfactory to the Company and (ii) minimize the disruption to the Company’s business in connection with the foregoing;

 

(l)            otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first day of the Company’s first full calendar quarter after the effective date of the Registration Statement, which earnings statement will satisfy the provisions of Section 11(a) of the U.S. Securities Act and Rule 158 thereunder;

 

(m)          in the event of the issuance of any stop order suspending the effectiveness of a Registration Statement, or of any order suspending or preventing the use of any related prospectus or ceasing trading of any securities

 

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included in such Registration Statement for sale in any jurisdiction, use every reasonable effort to promptly to obtain the withdrawal of such order;

 

(n)           take such other actions as the underwriters reasonably request in order to expedite or facilitate the disposition of such Registrable Securities, including, without limitation, preparing for and participating in such number of “road shows” and all such other customary selling efforts as the underwriters reasonably request in order to expedite or facilitate such disposition;

 

(o)           obtain one or more comfort letters, addressed to the sellers of Registrable Securities, dated the effective date of or the date of the final receipt issued for such Registration Statement (and, if such registration includes an underwritten public offering dated the date of the closing under the underwriting agreement for such offering), signed by the Company’s independent public accountants in customary form and covering such matters of the type customarily covered by comfort letters as the Holders of a majority of the Registrable Securities being sold in such offering reasonably request;

 

(p)           provide legal opinions of the Company’s outside counsel, addressed to the Holders of the Registrable Securities being sold, dated the effective date of or the date of the final receipt issued for such Registration Statement, each amendment and supplement thereto (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), with respect to the Registration Statement, each amendment and supplement thereto (including the preliminary prospectus) and such other documents relating thereto in customary form and covering such matters of the type customarily covered by legal opinions of such nature; and

 

(q)           use its reasonable best efforts to take or cause to be taken all other actions, and do and cause to be done all other things, necessary or reasonably advisable in the opinion of Holders’ Counsel to effect the registration of such Registrable Securities contemplated hereby.

 

The Company agrees not to file or make any amendment to any Registration Statement with respect to any Registrable Securities, or any amendment of or supplement to the prospectus or any Free Writing Prospectus used in connection therewith, that refers to any Holder covered thereby by name, or otherwise identifies such Holder as the holder of any securities of the Company, without the consent of such Holder, such consent not to be unreasonably withheld or delayed, unless and to the extent such disclosure is required by law.

 

The Company may require each Holder of Registrable Securities as to which any registration is being effected to furnish the Company with such information regarding

 

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such Holder and pertinent to the disclosure requirements relating to the registration and the distribution of such securities as the Company may from time to time reasonably request in writing.

 

4.             Registration Expenses.

 

(a)           Except as otherwise provided in this Agreement, all expenses incidental to the Company’s performance of or compliance with this Agreement, including, without limitation, all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, word processing, duplicating and printing expenses, messenger and delivery expenses, and fees and disbursements of counsel for the Company and all independent certified public accountants, underwriters and other Persons retained by the Company (all such expenses, “Registration Expenses”), will be borne by the Company.  The Company will, in any event, pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit or quarterly review, the expenses of any liability insurance and the expenses and fees for listing the securities to be registered on the NYSE or such other national securities exchange on which the Common Shares are listed.  All Selling Expenses will be borne by the holders of the securities so registered pro rata on the basis of the amount of proceeds from the sale of their shares so registered.

 

(b)           In connection with each Demand Registration and each Piggyback Registration, the Company will reimburse the holders of Registrable Securities covered by such registration for the reasonable fees and disbursements of one United States counsel (“Holders’ Counsel”) selected by the Lead Investor (which, in the case of a Piggyback Registration in which any Additional Investors are participating, shall be selected after the Lead Investor consults with the Additional Investors participating in such Piggyback Registration it being understood that such consultation shall not limit the Lead Investor’s selection rights), if the Lead Investor is participating in such registration, and if not, selected by Holders of the majority of the Registrable Securities participating in such registration, and the reasonable fees and disbursements, if any, of one counsel for each holder of Registrable Securities covered by such registration, incurred solely in connection with delivering any opinion required under the applicable underwriting agreement.

 

5.             Indemnification.

 

(a)           The Company agrees to indemnify and hold harmless, and hereby does indemnify and hold harmless, each Holder, each Affiliate thereof, any Person who is or might be deemed to be a controlling Person of the Company or any of its subsidiaries within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, their respective direct and indirect general and limited partners, advisory board members, directors, officers, trustees, managers, members, Affiliates and shareholders,

 

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and each other Person, if any, who controls any such Holder or any such controlling person within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each such person being referred to herein as a “Covered Person”) against, and pay and reimburse such Covered Persons for any losses, claims, damages, liabilities, joint or several, to which such Covered Person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon (i) any untrue or alleged untrue statement of material fact contained or incorporated by reference in any Registration Statement, prospectus or preliminary prospectus or Free Writing Prospectus or any amendment thereof or supplement thereto or any document incorporated by reference therein, or any other such disclosure document (including reports and other documents filed under the Exchange Act and any document incorporated by reference therein) or other document or report, (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, or (iii) any violation by the Company of any rule or regulation promulgated under the Securities Act or any state securities laws applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, and the Company will pay and reimburse such Covered Persons for any legal or any other expenses actually and reasonably incurred by them in connection with investigating, defending or settling any such loss, claim, liability, action or proceeding, provided that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged untrue statement, or omission or alleged omission, made or incorporated by reference in such Registration Statement, any such prospectus or preliminary prospectus or Free Writing Prospectus or any amendment or supplement thereto, or any document incorporated by reference therein, or any other such disclosure document (including reports and other documents filed under the Exchange Act and any document incorporated by reference therein) or other document or report, or in any application (x) in reliance upon, and in conformity with, written information prepared and furnished to the Company by such Covered Person expressly for use therein or (y) if such untrue statement or alleged untrue statement or omission or alleged omission is completely corrected in an amendment or supplement to such prospectus and such Holder thereafter fails to deliver such prospectus as so amended or supplemented prior to or concurrently with the sale of Registrable Securities to the person asserting such loss, claim, damage, liability or expense after the Company had furnished such Holder with a sufficient number of copies of the same (and the delivery thereof would have resulted in no such loss, claim damage, liability or expense) prior to oral confirmation of such sale of Registrable Securities.  In connection with an underwritten offering, the Company, if requested, will indemnify such underwriters, their officers and directors and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the Covered Persons.

 

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(b)           In connection with any Registration Statement in which a Holder is participating, each such Holder will furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Registration Statement or prospectus and, will indemnify and hold harmless the Company, its directors and officers, each underwriter and any Person who is or might be deemed to be a controlling person of the Company or any of its subsidiaries within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and each such underwriter against any losses, claims, damages, liabilities, joint or several, to which such Holder or any such director or officer, any such underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon (i) any untrue or alleged untrue statement of material fact contained in the Registration Statement, prospectus or preliminary prospectus or Free Writing Prospectus or any amendment thereof or supplement thereto or in any application or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is made in such Registration Statement, any such prospectus or preliminary prospectus or Free Writing Prospectus or any amendment or supplement thereto, or in any application, in reliance upon and in conformity with written information prepared and furnished to the Company by such Holder expressly for use therein, and such Holder will reimburse the Company and each such director, officer, underwriter and controlling Person for any legal or any other expenses actually and reasonably incurred by them in connection with investigating, defending or settling any such loss, claim, liability, action or proceeding, provided that the obligation to indemnify and hold harmless will be individual and several to each Holder and will be limited to the net amount of proceeds received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement.

 

(c)           Any Person entitled to indemnification hereunder will (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party.  If such defense is assumed, the indemnifying party will not, without the indemnified party’s prior consent, settle or compromise any action or claim or consent to the entry of any judgment unless such settlement or compromise includes as an unconditional term thereof the release of the indemnified party from all liability, which release shall be reasonably satisfactory to the indemnified party.  An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of

 

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interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim.

 

(d)           The indemnification provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and will survive the registration and sale of any securities by any Person entitled to any indemnification hereunder and the expiration or termination of this Agreement.

 

(e)           If the indemnification provided for in this Section 5 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party thereunder, will contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other hand in connection with the statements or omissions which resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable considerations. The relevant fault of the indemnifying party and the indemnified party will be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  Notwithstanding the foregoing, the amount any Holder will be obligated to contribute pursuant to this Section 5(e) will be limited to an amount equal to the net proceeds to such Holder of the Registrable Securities sold pursuant to the registration statement which gives rise to such obligation to contribute (less the aggregate amount of any damages which the Holder has otherwise been required to pay in respect of such loss, claim, damage, liability or action or any substantially similar loss, claim, damage, liability or action arising from the sale of such Registrable Securities).  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

 

6.             Participation in Underwritten Registrations.

 

(a)           No Holder may participate in any registration hereunder that is underwritten unless such Holder (i) agrees to sell its Registrable Securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements (including, without limitation, pursuant to the terms of any over-allotment or “green shoe” option requested by the managing underwriter, provided that no Holder will be required to sell more than the number of Registrable Securities that such Holder has requested the Company to include in any

 

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registration), (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements, and (iii) cooperates with the Company’s reasonable requests in connection with such registration or qualification (it being understood that the Company’s failure to perform its obligations hereunder, which failure is caused by such Holder’s failure to cooperate, will not constitute a breach by the Company of this Agreement).  Notwithstanding the foregoing, no Holder will be required to agree to any indemnification obligations on the part of such Holder that are greater than its obligations pursuant to Section 5(b).

 

(b)           Each Holder that is participating in any registration hereunder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(f), such Holder will forthwith discontinue the disposition of its Registrable Securities pursuant to the Registration Statement until such Holder receives copies of a supplemented or amended prospectus as contemplated by such Section 3(f).  In the event the Company gives any such notice, the applicable time period mentioned in Section 3(b) during which a Registration Statement is to remain effective will be extended by the number of days during the period from and including the date of the giving of such notice pursuant to this Section 6(b) to and including the date when each seller of a Registrable Security covered by such Registration Statement will have received the copies of the supplemented or amended prospectus contemplated by Section 3(f).

 

7.             Shelf Take-Downs.  At any time that a shelf registration statement covering Registrable Securities is effective, if the Lead Investor delivers a notice to the Company (a “Take-Down Notice”) stating that it intends to effect an underwritten offering of all or part of the CD&R Investors’ Registrable Securities included by it on the shelf registration statement (a “Shelf Underwritten Offering”) and stating the number of the Registrable Securities to be included in the Shelf Underwritten Offering, then, the Company shall amend or supplement the shelf registration statement or related prospectus as may be necessary in order to enable such Registrable Securities to be distributed pursuant to the Shelf Underwritten Offering (taking into account the inclusion of Registrable Securities by any other Holders pursuant to this Section 7), provided that the Lead Investor shall not be entitled to deliver (i) an aggregate of more than five Take-Down Notices in any twelve month period other than with respect to a Specified Non-Marketed Offering, or (ii) any Take-Down Notice within 30 days after the effective date of any Registration Statement of the Company hereunder.  In connection with any Shelf Underwritten Offering:

 

(a)           the Lead Investor shall also deliver the Take-Down Notice to all other Holders included on such shelf registration statement and permit each Holder to include its Registrable Securities included on the shelf registration statement in the Shelf Underwritten Offering if such Holder notifies the Lead

 

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Investor and the Company within two Business Days after delivery of the Take-Down Notice to such Holder; and

 

(b)           in the event that the underwriter advises the Company in its reasonable opinion that marketing factors (including an adverse effect on the per share offering price) require a limitation on the number of shares which would otherwise be included in such take-down, the underwriter may limit the number of shares which would otherwise be included in such take-down offering in the same manner as is described in Section 2(e) with respect to a limitation of shares to be included in a registration.

 

8.             Rule 144 Reporting.  With a view to making available the benefits of certain rules and regulations of the Commission which may permit the sale of the Restricted Securities to the public without registration, the Company agrees to:

 

(i)            make and keep public information available as those terms are understood and defined in Rule 144 under the Securities Act, at all times from and after 90 days following the effective date of the first registration under the Securities Act filed by the Company for an offering of its securities to the general public, and

 

(ii)           to use its reasonable best efforts to then file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act at any time after it has become subject to such reporting requirements.

 

9.             Holdback.  In consideration for the Company agreeing to its obligations under this Agreement, each Holder agrees in connection with any registration of the Company’s securities (whether or not such Holder is participating in such registration) upon the request of the Company and the underwriters managing any underwritten offering of the Company’s securities other than with respect to any Specified Non-Marketed Offerings, not to effect (other than pursuant to such registration) any public sale or distribution of Registrable Securities, including, but not limited to, any sale pursuant to Rule 144 or Rule 144A, or make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any Registrable Securities, any other equity securities of the Company or any securities convertible into or exchangeable or exercisable for any equity securities of the Company without the prior written consent of the Company or such underwriters, as the case may be, during the Holdback Period so long as all Holders or stockholders holding more than (including any Holders who are members of a Group holding more than) 5% of the outstanding Common Shares are bound by a comparable obligation, provided that nothing herein will prevent any Holder that is a partnership or corporation from making a distribution of Registrable Securities to the partners or shareholders thereof or a transfer to an Affiliate that is otherwise in

 

16

 

compliance with applicable securities laws, so long as such distributees agree to be so bound.  The Company further agrees not to effect (other than pursuant to such registration or pursuant to a Special Registration) any public sale or distribution, or to file any registration statement (other than such registration or a Special Registration) covering any, of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the Holdback Period with respect to an underwritten offering other than a Specified Non-Marketed Offering, if required by the managing underwriter, provided that notwithstanding anything to the contrary herein, the Company’s obligations under this Section 9 shall not apply during any twelve month period for more than an aggregate of 180 days with respect to any Short Form Registrations or Shelf Underwritten Offerings.

 

10.          Term.  This Agreement will be effective as of the date hereof and will continue in effect thereafter until the earliest of (a) its termination by the consent of all parties hereto or their respective successors in interest, (b) the date on which no Registrable Securities remain outstanding and (c) the dissolution, liquidation or winding up of the Company.

 

11.          Defined Terms.  As used in this Agreement:

 

“Additional Investors” means Citigroup, JPMorgan, Ridgemont and the StepStone Investors.

 

“Affiliate” means, with respect to any Person, (i) any Person directly or indirectly Controlling, Controlled by or under common Control with such Person, (ii) any Person directly or indirectly owning or Controlling 10% or more of any class of outstanding voting securities of such Person or (iii) any officer, director, general partner or trustee of any such Person described in clause (i) or (ii).

 

“Applicable Law” means all applicable provisions of (i) constitutions, treaties, statutes, laws (including the common law), rules, regulations, ordinances, codes or orders of any Governmental Entity, (ii) any consents or approvals of any Governmental Entity and (iii) any orders, decisions, injunctions, judgments, awards, decrees of or agreements with any Governmental Entity.

 

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

 

“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required to close.

 

“CD&R Investors” means the Lead Investor, Clayton, Dubilier & Rice Fund VII (Co-Investment), L.P., CD&R Parallel Fund VII, L.P., CDR SVM Co-Investor L.P. and CDR SVM Co-Investor No. 2 L.P.

 

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“Citigroup” means Citigroup Capital Partners II Employee Master Fund, L.P.

 

“Commission” means the Securities and Exchange Commission or any other federal agency administering the Securities Act.

 

“Common Shares” means the shares of Common Stock of the Company, par value $0.01 per share.

 

“Company” has the meaning set forth in the Preamble, and any successor in interest thereto.

 

“Control”, “Controlled” and “Controlling” means the power to direct the affairs of a Person by reason of ownership of voting securities, by contract or otherwise.

 

“Covered Person” has the meaning set forth in Section 5(a).

 

“Demand Registration” has the meaning set forth in Section 1(a).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar federal statute and the rules and regulations thereunder, as in effect from time to time.

 

“FINRA” means the Financial Industry Regulatory Authority.

 

“Free Writing Prospectus” has the meaning set forth in Section 3(b).

 

“Governmental Entity” means any federal, state, local or foreign court, legislative, executive or regulatory authority or agency.

 

“Group” has the meaning assigned to such term in Section 13(d)(3) of the Exchange Act.

 

“Holdback Period” means, with respect to the IPO, 180 days after and during the 10 days before, and with respect to any registered offering other than an IPO covered by this Agreement, 90 days after and during the 10 days before, the effective date of the related registration statement or, in the case of a takedown from a shelf registration statement, 90 days after the date of the prospectus supplement filed with the SEC in connection with such takedown and during such prior period (not to exceed 10 days) as the Company has given reasonable written notice to the holder of Registrable Securities.

 

“Holder” means any holder of outstanding Registrable Securities who is a party to this Agreement or to whom the benefits of this Agreement have been validly assigned.

 

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“Holders’ Counsel” has the meaning set forth in Section 4(b).

 

“IPO” has the meaning set forth in the Recitals.

 

“JPMorgan” means JPMorgan Chase Funding Inc.

 

“Lead Investor” means Clayton, Dubilier & Rice Fund VII, L.P.

 

“Listing Date” has the meaning set forth in the Recitals.

 

“NYSE” means the New York Stock Exchange.

 

“Original Agreement” has the meaning set forth in the Recitals.

 

“Parity Shares” means any shares, other than Registrable Securities, with respect to which the Company, in accordance with Section 12(a), has granted registration rights that are to be treated on an equal basis with Registrable Securities for the purpose of the exercise of any underwriter cutback permitted pursuant to Section 2.

 

“Person” means an individual, a partnership, a joint venture, a corporation, a limited liability company, a trust, an unincorporated organization or a government or department or agency thereof.

 

“Piggyback Registration” has the meaning set forth in Section 2(a).

 

“Primary Investors” means each of the Lead Investor, StepStone, JPMorgan, and Ridgemont.

 

“Register,” “registered” and “registration” refers to a registration effected by preparing and filing a Registration Statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such Registration Statement, and compliance with applicable state securities laws of such states in which Holders notify the Company of their intention to offer Registrable Securities.

 

“Registrable Securities” means (i) any Common Shares held by a Holder, (ii) any other stock or securities that the Holders of the Common Shares may be entitled to receive, or will have received, upon exercise of the Common Shares or otherwise pursuant to such Holders’ ownership of the Common Shares, in lieu of or in addition to Common Shares, or (iii) any equity securities issued or issuable directly or indirectly with respect to the securities referred to in the foregoing clause (i) or (ii) by way of conversion or exchange thereof or share dividend or share split or in connection with a combination of shares, recapitalization,

 

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reclassification, merger, amalgamation, arrangement, consolidation or other reorganization.  As to any particular securities constituting Registrable Securities, such securities will cease to be Registrable Securities when (x) they have been effectively registered or qualified for sale by prospectus filed under the Securities Act and disposed of in accordance with the Registration Statement covering therein, (y) they have been sold to the public pursuant to Rule 144 or Rule 145 or other exemption from registration under the Securities Act or (z) they are able to be sold by their Holder without restriction as to volume or manner of sale pursuant to Rule 144 under the Securities Act and are held by a Holder of no more than 3% of the applicable class outstanding.

 

“Registration Expenses” has the meaning set forth in Section 4(a).

 

“Registration Request” has the meaning set forth in Section 1(a).  The term Registration Request will also include, where appropriate, a Short-Form Registration request made pursuant to Section 1(c).

 

“Registration Statement” means the prospectus and other documents filed with the Commission to effect a registration under the Securities Act.

 

“Related Person” means, with respect to any Person, (i) any Person directly or indirectly Controlling, Controlled by or under common Control with such Person and Person or (ii) any investment fund managed by any Person set forth in clause (i).

 

“Requisite Additional Investors” has the meaning set forth in Section 1(a).

 

“Requesting Holder(s)” means, with respect to a Demand Registration, the Lead Investor, if the Lead Investor makes the applicable Registration Request, or the Requisite Additional Investors, if the Additional Investors make the applicable Registration Request.

 

“Ridgemont” means Ridgemont Partners Secondary Fund I, L.P.

 

“Rule 144” means Rule 144 under the Securities Act or any successor or similar rule as may be enacted by the Commission from time to time, as in effect from time to time.

 

“Rule 144A” means Rule 144A under the Securities Act or any successor or similar rule as may be enacted by the Commission from time to time, as in effect from time to time.

 

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“Rule 145” means Rule 145 under the Securities Act or any successor or similar rule as may be enacted by the Commission from time to time, as in effect from time to time.

 

“Rule 415” means Rule 415 under the Securities Act or any successor or similar rule as may be enacted by the Commission from time to time, as in effect from time to time.

 

“Rule 433” means Rule 433 under the Securities Act or any successor or similar rule as may be enacted by the Commission from time to time, as in effect from time to time.

 

“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations thereunder, as in effect from time to time.

 

“Selling Expenses” means all underwriting discounts, selling commissions and transfer taxes applicable to the sale of Registrable Securities hereunder and any other Registration Expenses required by law to be paid by a selling Holder.

 

“Senior Shares” means any shares, other than Registrable Securities, with respect to which the Company, in accordance with Section 12(a), with the prior written consent of the Additional Investors as and to the extent required thereunder, has granted registration rights that are to be treated on a senior basis with Registrable Securities for the purpose of the exercise of any underwriter cutback permitted pursuant to Section 2.

 

“Shelf Underwritten Offering” has the meaning set forth in Section 7.

 

“Short-Form Registration” has the meaning set forth in Section 1(c).

 

“Special Registration” means the registration of (i) equity securities and/or options or other rights in respect thereof solely registered on Form S-4 or Form S-8 or (ii) shares of equity securities and/or options or other rights in respect thereof to be offered to directors, members of management, employees, consultants or sales agents, distributors or similar representatives of the Company or its direct or indirect subsidiaries or in connection with dividend reinvestment plans.

 

“Specified Non-Marketed Offering” means a distribution of Registrable Securities pursuant to a shelf registration statement pursuant to Section 7, where the Registrable Securities covered by the applicable Take-Down Notice (i) constitute less than 2% of the outstanding equity securities of the Company and (ii) are not to be marketed to the general public pursuant to the applicable plan of distribution.

 

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“StepStone” means StepStone Co-Investment (ServiceMaster) LLC.

 

“StepStone Investors” means StepStone, 2007 Co-Investment Portfolio L.P., StepStone Capital Partners II Cayman Holding, L.P. and StepStone Capital Partners II Onshore, L.P.

 

“Take-Down Notice” has the meaning set forth in Section 7.

 

12.          Miscellaneous.

 

(a)           No Inconsistent Agreements.  The Company will not hereafter enter into any agreement with respect to its securities which is inconsistent with or violates the rights granted to the holders of Registrable Securities in this Agreement or grant any demand registration rights exercisable prior to the time the Primary Investors may first exercise their rights under Section 1.  Except as provided in this Agreement, the Company will not grant to any holder or prospective holder of any securities of the Company registration rights with respect to such securities that are pari passu to the rights granted hereunder without the prior written consent of the Lead Investor, and the Company will not grant to any holder or prospective holder of any securities of the Company registration rights with respect to such securities that are senior to the rights granted hereunder to the Additional Investors without the prior written consent of each of the Primary Investors.

 

(b)           Stock Splits, etc.  Each party hereto agrees that it will vote to effect a stock split (forward or reverse, as the case may be) with respect to any capital stock of the Company in connection with any registration of such capital stock, if the Board determines, following consultation with the managing underwriter (or, in connection with an offering that is not underwritten, an investment banker) that a stock split would facilitate or increase the likelihood of success of the offering.  Each party hereto agrees that any number of shares of capital stock of the Company referred to in this Agreement shall be equitably adjusted to reflect any stock split, stock dividend, stock combination, recapitalization or similar transaction.

 

(c)           Amendments and Waivers.  Except as otherwise provided herein, the provisions of this Agreement may be amended or waived only upon the prior written consent of the Company and each of the Primary Investors, or if no Primary Investors remain, the Holders of a majority of the Registrable Securities, provided that in the event that such amendment or waiver would treat a Holder or group of Holders in a manner different from any other Holders, then such amendment or waiver will require the consent of such Holder or the Holders of a majority of the Registrable Securities of such group adversely treated.  A copy of each such amendment shall be sent to each Holder and shall be binding upon each party hereto; provided further that the failure to deliver a copy of such amendment shall not impair or affect the validity of such amendment.

 

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(d)           Successors and Assigns.  This Agreement will be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns.  In addition, the provisions of this Agreement which are for the benefit of Holders will be for the benefit of and enforceable by any subsequent holder of any Registrable Securities (or of such portion thereof) who becomes a party to this Agreement by completing and executing a signature page hereto (including the address of such party), subject to the provisions with respect to minimum numbers or percentages of shares of Registrable Securities (or of such portion thereof) required in order to be entitled to certain rights, or take certain actions, contained herein; provided that no Holder may assign any of its rights hereunder except in connection with the transfer of its Common Shares to any Related Person.  Notwithstanding anything to the contrary in this Agreement, the Company may assign this Agreement in connection with a merger, reorganization or sale, transfer or contribution of all or substantially all of the assets or stock of the Company to any of its subsidiaries or Affiliates, and, upon the consummation of any such merger, reorganization, sale, transfer or contribution, such subsidiary or Affiliate shall automatically and without further action assume all of the obligations and succeed to all the rights of the Company under this Agreement.

 

(e)           Severability.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under Applicable Law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any Applicable Law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or the effectiveness or validity of any provision in any other jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

(f)            Counterparts.  This Agreement may be executed simultaneously in multiple counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same Agreement.

 

(g)           Descriptive Headings.  The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

 

(h)           Governing Law.  This Agreement will be governed by and construed in accordance with the laws of the State of New York (regardless of the laws that might otherwise govern under applicable principles or rules of conflicts of law to the extent such principles or rules are not mandatorily applicable by statute and would require the application of the laws of another jurisdiction).

 

(i)            Consent to Jurisdiction.  Each party irrevocably submits to the exclusive jurisdiction of (a) the Supreme Court of the State of New York, New York County, and

 

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(b) the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby (and agrees not to commence any such suit, action or other proceeding except in such courts).  Each party further agrees that service of any process, summons, notice or document by U.S. registered mail to such party’s respective address set forth or referred to in Section 12(m) shall be effective service of process for any such suit, action or other proceeding.  Each party irrevocably and unconditionally waives any objection to the laying of venue of any such suit, action or other proceeding in (i) the Supreme Court of the State of New York, New York County, and (ii) the United States District Court for the Southern District of New York, that any such suit, action or other proceeding brought in any such court has been brought in an inconvenient forum.

 

(j)            Waiver of Jury Trial.  Each party hereby waives, to the fullest extent permitted by Applicable Law, any right it may have to a trial by jury in respect of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby.  Each party (a) certifies and acknowledges that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver, and (b) acknowledges that it understands and has considered the implications of this wavier and makes this waiver voluntarily, and that it and the other parties have been induced to enter into the Agreement by, among other things, the mutual waivers and certifications in this clause (j)

 

(k)           Enforcement; Attorney’s Fees.  Each party hereto acknowledges that money damages would not be an adequate remedy in the event that any of the covenants or agreements in this Agreement are not performed in accordance with its terms, and it is therefore agreed that in addition to and without limiting any other remedy or right it may have, the non-breaching party will have the right to an injunction, temporary restraining order or other equitable relief in any court of competent jurisdiction enjoining any such breach and enforcing specifically the terms and provisions hereof, provided that no Holder will have any right to an injunction to prevent the filing or effectiveness of any Registration Statement of the Company. In any action or proceeding brought to enforce any provision of this Agreement, the successful party shall be entitled to recover reasonable attorneys’ fees in addition to its costs and expenses and other available remedies.

 

(l)            No Third Party Beneficiaries.  Except as set forth in Section 5, nothing in this Agreement shall confer any rights upon any Person other than the parties hereto and each such party’s respective heirs, successors and permitted assigns.

 

(m)          Notices.  All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered personally, (b)

 

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mailed, certified or registered mail with postage prepaid, (c) sent by reputable overnight courier or (d) sent by fax (provided a confirmation copy is sent by one of the other methods set forth above), as follows (or to such other address as the party entitled to notice shall hereafter designate in accordance with the terms hereof):

 

If to the Company, to it at:

 

ServiceMaster Global Holdings, Inc.

860 Ridge Lake Boulevard

Memphis, TN  38120
 Attention:  General Counsel

Facsimile:  (901) 597-8821

 

with a copy to (which shall not constitute notice) each of the CD&R Investors and the StepStone Investors and their respective counsel at the addresses listed below:

 

If to any CD&R Investor, to it at:

 

c/o M&C Corporate Services Limited
 P.O. Box 309
 Ugland House
 South Church Street
 George Town, Grand Cayman KY1-1104
 Cayman Islands, British West Indies
 Facsimile: (345) 949-8080

 

with a copy to (which shall not constitute notice):

 

Clayton, Dubilier & Rice, LLC
 375 Park Avenue
 18th Floor
 New York, New York  10152
 Attention:  David H. Wasserman
 Facsimile:  (212) 893-7061

 

with a copy to (which shall not constitute notice):

 

Debevoise & Plimpton LLP
 919 Third Avenue
 New York, New York  10022
 Attention:  Peter J. Loughran, Esq.
 Facsimile:  (212) 909-6836

 

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If to any StepStone Investor, to it at:

 

c/o StepStone Group LP
 4350 LaJolla Village Drive, Suite 800
 San Diego, CA  92122
 Attention:  Chief Financial Officer

Facsimile:  (858) 558-9701
 Email: reporting@stepstoneglobal.com

 

If to any other Holder, to its address set forth on the signature page of such Holder to this Agreement with a copy (which shall not constitute notice) to any party so indicated thereon.  All such notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed duly given (i) on the date of delivery if delivered personally, or by facsimile, upon confirmation of receipt, (ii) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service or (iii) on the third Business Day following the date of mailing if delivered by domestic registered or certified mail, properly addressed, or on the fifth Business Day following the date of mailing if sent by airmail from a country outside of North America, to the party at the address shown on the signature page of this Agreement, to the Companies at the addresses shown on the signature page of this Agreement, or in either case as subsequently modified by written notice.

 

(n)           Entire Agreement.  This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.

 

[the remainder of this page left intentionally blank]

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement by their authorized representatives as of the date first above written.

 

 

	
 
    	
SERVICEMASTER   GLOBAL HOLDINGS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

	
 
    	
CLAYTON,   DUBILIER & RICE FUND VII, L.P.
    
	
 
    	
By:   CD&R Associates VII, Ltd., its general partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CLAYTON,   DUBILIER & RICE FUND VII (CO-INVESTMENT), L.P.
    
	
 
    	
By:   CD&R Associates VII (Co-Investment), Ltd., its general partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CD&R   PARALLEL FUND VII, L.P.
    
	
 
    	
 
    
	
 
    	
By:   CD&R Parallel Fund Associates VII, Ltd., its general partner
    
	
 
    	
 
    
	
 
    	
By:   
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CDR   SVM CO-INVESTOR L.P.
    
	
 
    	
By: CDR SVM Co-Investor GP Limited, its general   partner
    
	
 
    	
 
    
	
 
    	
By:   
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

	
 
    	
CDR   SVM CO-INVESTOR NO. 2 L.P.
    
	
 
    	
By: CDR SVM Co-Investor No. 2 GP Limited, its   general partner
    
	
 
    	
 
    
	
 
    	
By:   
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

	
 
    	
STEPSTONE   CO-INVESTMENT (SERVICEMASTER) LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   StepStone Co-Investment Funds GP, LLC, its managing member
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
2007   CO-INVESTMENT PORTFOLIO L.P.
    
	
 
    	
 
    
	
 
    	
By:   StepStone Co-Investment Funds GP, LLC, its general partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
STEPSTONE   CAPITAL PARTNERS II ONSHORE, L.P.
    
	
 
    	
 
    
	
 
    	
By:   StepStone Co-Investment Funds GP, LLC, its general partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

	
 
    	
STEPSTONE   CAPITAL PARTNERS II CAYMAN HOLDING, L.P.
    
	
 
    	
 
    
	
 
    	
By:   StepStone Co-Investment Funds GP, LLC, its general partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

	
 
    	
CITIGROUP   CAPITAL PARTNERS II EMPLOYEE MASTER FUND, L.P.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   Citigroup Private Equity LP, its general partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

Notice Address:
 Citi Private Equity

Citi Employee Private Equity Management

153 East 53rd Street, 20th Floor

New York, NY 10022

Attention: Matthew Coeny

Attention: Geoffrey Collette

Facsimile: (646) 291-5725

 

 

	
 
    	
JPMORGAN   CHASE FUNDING INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Notice Address:
 JPMorgan Chase Funding Inc.

270 Park Avenue

New York, New York 10017

Attention:  Chris Linneman

Facsimile:  (212) 270-1063

 

 

	
 
    	
RIDGEMONT   PARTNERS SECONDARY FUND I, L.P.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: Ridgemont Secondary Management I, L.P., its   general partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: Ridgemont Secondary I, LLC, its general   partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

	
Notice Address:
   Ridgemont Partners Secondary Fund I, L.P.

c/o   Ridgemont Partners Management, LLC

150   North College Street, Suite 2500

Charlotte,   NC 28202

Attention:   Edward Balogh

Facsimile:   (704) 944-0973

Email: ebalogh@ridgemontep.com
    	
with a copy to (which shall not constitute notice):

Kirkland &   Ellis LLP

300   North LaSalle

Chicago, IL   60654

Attention:   Margaret A. Gibson

Facsimile: (312) 862-2200Exhibit 10.73

 

SERVICEMASTER GLOBAL HOLDINGS, INC.
 2014 OMNIBUS INCENTIVE PLAN

 

ARTICLE I

 

PURPOSES

 

ServiceMaster Global Holdings, Inc. (the “Company”), a Delaware Corporation, has adopted this ServiceMaster Global Holdings, Inc. 2014 Omnibus Incentive Plan, as may be amended from time to time (the “Plan”), for the following purposes:

 

(1)                                 To further the growth, development and financial success of the Company and its Subsidiaries (as defined herein) by providing additional incentives to Associates, consultants and directors of the Company and its Subsidiaries, who have been or will be given responsibility for the management or administration of the Company’s (or one or more of its Subsidiaries’) business affairs by assisting them to become owners of Company Common Stock, thereby benefiting directly from the growth, development and financial success of the Company and its Subsidiaries.

 

(2)                                 To enable the Company and its Subsidiaries to obtain and retain the services of the type of professional, technical and managerial Associates, consultants and directors considered essential to the long-range success of the Company and its Subsidiaries by providing and offering them an opportunity to become owners of Company Common Stock pursuant to the Awards granted hereunder.

 

The Plan is intended to replace and succeed the Amended and Restated ServiceMaster Global Holdings, Inc. Stock Incentive Plan (the “Stock Incentive Plan”), and, from and after the Effective Date, no further awards shall be made under the Stock Incentive Plan (but, for the avoidance of doubt, the adoption of this Plan will have no effect on the terms and conditions of outstanding awards under the Stock Incentive Plan).

 

ARTICLE II

 

DEFINITIONS

 

Whenever the following terms are used in this Plan, they shall have the meanings specified below unless the context clearly indicates to the contrary.  The singular use of a term shall include the plural where the context so indicates.

 

 

Section 2.1                                    “Administrator” shall mean the Board or any committee of the Board designated by the Board to administer the Plan, in each case as further provided in Article III.

 

Section 2.2                                    “Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with, such Person where “control” shall have the meaning given such term under Rule 405 of the Securities Act.

 

Section 2.3                                    “Alternative Award” shall have the meaning set forth in Section 14.2.

 

Section 2.4                                    “Applicable Laws” shall mean the requirements relating to the administration of stock option, restricted stock, restricted stock unit and other equity-based compensation plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Company Common Stock is listed or quoted and the applicable laws of any other country or jurisdiction where Awards are granted under the Plan.

 

Section 2.5                                    “Associate” shall mean any individual classified as an employee by the Company or one of its Subsidiaries, whether such associate is employed by the Company or one of its Subsidiaries at the time this Plan is adopted or becomes so employed subsequent to the adoption of this Plan, including any person to whom an offer of employment has been extended (except that any Award granted to such person shall be conditioned on his or her commencement of service).  A person shall not cease to be an Associate in the case of (a) any leave of absence approved by the Company or (b) transfers between locations of the Company or between the Company, any of its Subsidiaries, or any successor.  For purposes of Incentive Stock Options, no such leave may exceed three (3) months, unless reemployment upon expiration of such leave is guaranteed by statute or contract.  If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, the employment relationship shall be deemed to have terminated on the first day immediately following such three (3)-month period, and such Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Non-Qualified Stock Option on the first day immediately following a three (3)-month period from the date the employment relationship is deemed terminated.

 

Section 2.6                                    “Award” shall mean any Option, Stock Purchase Right, Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit, SAR, Dividend Equivalent, Deferred Share Unit or other Stock-Based Award granted to a Participant pursuant to the Plan, including an Award combining two or more types of Awards into a single grant.

 

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Section 2.7                                    “Award Agreement” shall mean any written agreement, contract or other instrument or document evidencing an Award, including through an electronic medium.  The Administrator may provide for the use of electronic, internet or other non-paper Award Agreements, and the use of electronic, internet or other non-paper means for the Participant’s acceptance of, or actions under, an Award Agreement unless otherwise expressly specified herein. In the event of any inconsistency or conflict between the express terms of the Plan and the express terms of an Award Agreement, the express terms of the Plan shall govern.

 

Section 2.8                                    “Base Price” shall have the meaning set forth in Section 2.52.

 

Section 2.9                                    “Board” shall mean the Board of Directors of the Company.

 

Section 2.10                             “Cause” shall mean, unless otherwise defined in an Award Agreement, any of the following:  (a) the Participant’s willful and continued failure to perform substantially the Participant’s duties with the Company or any of its Subsidiaries (other than any such failure resulting from the Participant’s incapacity as a result of physical or mental illness) after a written demand for substantial performance specifying the manner in which the Participant has not performed such duties is delivered to the Participant by the person or entity that supervises or manages the Participant; (b) the Participant’s engaging in willful and serious misconduct that is injurious to the Company or any of its Subsidiaries; (c) the Participant’s commission of one or more acts of fraud or personal dishonesty resulting in or intended to result in personal enrichment at the expense of the Company or any of its Subsidiaries; (d) the Participant’s substantial abusive use of alcohol, drugs or similar substances that, in the sole judgment of the Company, impairs the Participant’s job performance; (e) the Participant’s material violation of any Company policy that results in harm to the Company or any of its Subsidiaries; or (f) the Participant’s indictment for or conviction of (or plea of guilty or nolo contendere to) a felony or of any crime (whether or not a felony) involving moral turpitude.  A termination for Cause shall be deemed to include a determination by the Administrator following a Participant’s termination of service that circumstances existing prior to such termination would have entitled the Company or one of its Subsidiaries to have terminated such Participant’s employment for Cause.

 

Section 2.11                             “Change in Control” shall mean the first to occur of any of the following events after the Effective Date:

 

(a)                                 the acquisition, directly or indirectly, by any person, entity or “group” (as defined in Section 13(d) of the Exchange Act) of beneficial ownership of more than 50% of the combined voting power of the Company’s then outstanding voting securities, other than any such acquisition by the Company, any of its Subsidiaries, any employee benefit plan of the Company or any of its Subsidiaries, or by the Investors, or any Affiliates of the foregoing;

 

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(b)                                 the merger, consolidation or other similar transaction involving the Company, as a result of which persons who were holders of voting securities of the Company immediately prior to such merger, consolidation, or other similar transaction do not, or any of the Investors does not, immediately thereafter, beneficially 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;

 

(c)                                  within any 24-month period, the persons who were directors of the Company at the beginning of such period (the “Incumbent Directors”) shall cease to constitute at least a majority of the Board, provided  that any director elected or nominated for election to the Board by any Investor or a majority of the Incumbent Directors still in office shall be deemed to be an Incumbent Director for purpose of this clause (c);

 

(d)                                 the approval by the Company’s shareholders of the liquidation or dissolution of the Company other than a liquidation of the Company into any Subsidiary or a liquidation as a result of which persons who were stockholders of the Company immediately prior to such liquidation, or any or all of the Investors, own, directly or indirectly, more than 50% of the combined voting power entitled to vote generally in the election of directors of the entity that holds substantially all of the assets of the Company following such event; or

 

(e)                                  the sale, transfer or other disposition of all or substantially all of the assets of the Company to one or more persons or entities that are not any of the Investors and are not, immediately prior to such sale, transfer or other disposition, Affiliates of the Company;

 

in each case, provided  that, as to Awards subject to Section 409A of the Code, such event also constitutes a “change in control” within the meaning of Section 409A of the Code.  In addition, notwithstanding the foregoing, (i) a Change in Control shall not be deemed to occur if the Company files for bankruptcy, liquidation or reorganization under the United States Bankruptcy Code or as a result of any restructuring that occurs as a result of any such proceeding and (ii) a Public Offering shall not constitute a Change in Control.

 

Section 2.12                             “Change in Control Price” shall mean the highest price per share of Company Common Stock offered in conjunction with any transaction resulting in a Change in Control.  If any part of the offered price is payable other than in cash, the value of the non-cash portion of the Change in Control Price shall be determined in good faith by the Administrator as constituted immediately prior to the Change in Control.

 

Section 2.13                             “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

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Section 2.14                             “Company” shall have the meaning set forth in Article I and shall include any successor.

 

Section 2.15                             “Company Common Stock” shall mean the common stock, par value $0.01 per share, of the Company and such other stock or securities into which such common stock is hereafter converted or for which such common stock is exchanged.

 

Section 2.16                             “Competing Business” shall mean (a) in the case of any Participant whose duties and responsibilities are primarily applicable to the Company and its Subsidiaries taken as a whole, any entity which has operations that compete with any of the businesses of the Company and its Subsidiaries; and (b) in the case of any Participant whose duties and responsibilities are primarily applicable to one or more discrete businesses of the Company or any of its Subsidiaries, any entity which has operations that compete with any of such discrete businesses; and, in the case of each of (a) and (b); in any jurisdiction in which such business or businesses are engaged, or in which any of the Company or such Subsidiary has documented plans to become engaged of which the Participant has knowledge at the time of the Participant’s separation from service.

 

Section 2.17                             “Competitive Activity” shall mean any of the following:

 

(a)                                 the Participant’s directly or indirectly owning any interest in, operating, joining, controlling or participating as a partner, director, principal, officer or agent of, entering into the employment of, acting as a consultant to, or performing any services for any Competing Business; provided, that Competitive Activity shall not include any such relationship with an entity (or group of Affiliated entities) that includes both a Competing Business and one or more business units that are not Competing Businesses if (i) the Participant’s interest in or association with such entity is unrelated to any Competing Business, (ii) such entity’s gross revenue from all Competing Businesses is less than 10% of such entity’s total gross revenue, and (iii) the Participant’s interest is directly or indirectly less than two percent (2%) of all Competing Businesses.

 

(b)                                 the Participant’s directly or indirectly soliciting for employment, employing or otherwise interfering with the relationship of the Company or any of its Affiliates with any natural person throughout the world who is, or during the twelve-month period preceding such solicitation, employment, or interference was, employed by or otherwise engaged to perform services for the Company or any of its Affiliates; provided, that this Section 2.17(b) shall not apply to any such natural person whose employment was involuntarily terminated, other than for Cause, by the Company or any of its Affiliates; or

 

(c)                                  the Participant’s directly or indirectly misusing or (other than in the course of his normal duties on behalf of the Company and its Subsidiaries) disclosing any confidential information of the Company or any of its Affiliates.

 

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Section 2.18                             “Consultant” shall mean any natural person who is engaged by the Company or any of its Subsidiaries to render consulting or advisory services to such entity.

 

Section 2.19                             “Corporate Event” shall mean, as determined by the Administrator in its sole discretion, any transaction or event described in Section 4.3(a) or any unusual or nonrecurring transaction or event affecting the Company, any Subsidiary of the Company, or the financial statements of the Company or any of its Subsidiaries, or changes in applicable laws, regulations or accounting principles (including, without limitation, a recapitalization of the Company).

 

Section 2.20                             “Deferred Share Unit” shall mean a unit credited to a Participant’s account in the books of the Company under Article X each of which represents the right to receive one Share of Company Common Stock or cash equal to the Fair Market Value thereof on settlement of the account.

 

Section 2.21                             “Director” shall mean a member of the Board.

 

Section 2.22                             “Disability” shall mean (x) for Awards that are not subject to Section 409A of the Code, “disability” as such term is defined in Section 22(e)(3) of the Code and (y) for Awards that are subject to Section 409A of the Code, “disability” as defined in Section 409A(a)(2)(c) of the Code.

 

Section 2.23                             “Dividend Equivalent” shall mean the right to receive payments, in cash or in Shares, based on dividends paid with respect to Shares.

 

Section 2.24                             “Effective Date” shall have the meaning set forth in Section 15.7.

 

Section 2.25                             “Eligible Representative” for a Participant shall mean such Participant’s personal representative or such other person as is empowered under the deceased Participant’s will or the then applicable laws of descent and distribution to represent the Participant hereunder.

 

Section 2.26                             “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

Section 2.27                             “Executive Officer” shall mean each person who is an officer of the Company or any Subsidiary and who is subject to the reporting requirements under Section 16(a) of the Exchange Act.

 

Section 2.28                             “Fair Market Value” of a Share as of any date of determination shall be:

 

(a)                                 If the Company Common Stock is listed on any established stock exchange or a national market system, then the closing price on such date per 

 

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Share as reported on such stock exchange or system shall be the Fair Market Value for the date of determination;

 

(b)                                 If there are no transactions in the Company Common Stock that are available to the Company on any date of determination pursuant to clause (a) but transactions are available to the Company as of the immediately preceding trading date, then the Fair Market Value determined as of the immediately preceding trading date shall be the Fair Market Value for the date of determination; or

 

(c)                                  If neither clause (a) nor clause (b) shall apply on any date of determination, then the Fair Market Value shall be determined in good faith by the Administrator with reference to (x) the most recent valuation of the Company Common Stock performed by an independent valuation consultant or appraiser of nationally recognized standing selected by the Administrator, if any, (y) sales prices of securities issued to investors in any recent arm’s length transactions and (z) any other factors determined to be relevant by the Administrator.

 

Section 2.29                             “Incentive Stock Option” shall mean an Option which qualifies under Section 422 of the Code and is expressly designated as an Incentive Stock Option in the Award Agreement.

 

Section 2.30                             “Investors” means, collectively, (i) Clayton, Dubilier & Rice Fund VII, L.P., Clayton, Dubilier & Rice Fund VII (Co-Investment), L.P., CDR SVM Co-Investor, L.P., CD&R SVM Co-Investor No. 2, L.P. and CD&R Parallel Fund VII, L.P., (ii) any Affiliate of any thereof and (iii) any legal successor to any thereof.

 

Section 2.31                             “Non-Qualified Stock Option” shall mean an Option which is not an Incentive Stock Option.

 

Section 2.32                             “Non-U.S. Awards” shall have the meaning set forth in Section 3.5.

 

Section 2.33                             “Option” shall mean an option to purchase Company Common Stock granted under the Plan.  The term “Option” includes both an Incentive Stock Option and a Non-Qualified Stock Option.

 

Section 2.34                             “Option Price” shall have the meaning set forth in Section 6.3.

 

Section 2.35                             “Optionee” shall mean a Participant to whom an Option or SAR is granted under the Plan.

 

Section 2.36                             “Participant” shall mean any Service Provider who has been granted an Award pursuant to the Plan.

 

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Section 2.37                             “Performance Award” shall mean Performance Shares, Performance Units and all other Awards that vest (in whole or in part) upon the achievement of specified Performance Goals.

 

Section 2.38                             “Performance Cycle” shall mean the period of time selected by the Administrator during which performance is measured for the purpose of determining the extent to which a Performance Award has been earned or vested.

 

Section 2.39                             “Performance Goals” means the objectives established by the Administrator for a Performance Cycle pursuant to Section 9.5 for the purpose of determining the extent to which a Performance Award has been earned or vested.

 

Section 2.40                             “Performance Share” means an Award granted pursuant to Article IX of the Plan of a contractual right to receive a Share (or the cash equivalent thereof) upon the achievement, in whole or in part, of the applicable Performance Goals.

 

Section 2.41                             “Performance Unit” means a Dollar-denominated unit (or a unit denominated in the Participant’s local currency) granted pursuant to Article IX of the Plan, payable upon the achievement, in whole or in part, of the applicable Performance Goals.

 

Section 2.42                             “Person” shall mean an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or any other entity of whatever nature.

 

Section 2.43                             “Plan” shall have the meaning set forth in Article I.

 

Section 2.44                             “Public Offering” shall mean the first day as of which (i) sales of Company Common Stock are made to the public in the United States pursuant to an underwritten public offering of the Company Common Stock led by one or more underwriters at least one of which is an underwriter of nationally recognized standing or (ii) the Administrator has determined that the Company Common Stock otherwise has become publicly traded for this purpose.

 

Section 2.45                             “Replacement Awards” shall mean Shares issued in assumption of, or in substitution for, any outstanding awards of any entity acquired in any form of combination by the Company or any of its Subsidiaries.

 

Section 2.46                             “Restricted Stock” shall mean an Award granted pursuant to Section 8.1.

 

Section 2.47                             “Restricted Stock Unit” shall mean an Award granted pursuant to Section 8.2.

 

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Section 2.48                             “Returned MSIP Shares” shall have the meaning set forth in Section 4.1(b).

 

Section 2.49                             “Securities Act” shall mean the Securities Act of 1933, as amended.

 

Section 2.50                             “Service Provider” shall mean an Associate, Consultant or Director.

 

Section 2.51                             “Share” shall mean a share of Company Common Stock.

 

Section 2.52                             “Stock Appreciation Right” or “SAR” shall mean the right to receive a payment from the Company in cash and/or Shares equal to the product of (i) the excess, if any, of the Fair Market Value of one Share on the exercise date over a specified price (the “Base Price”) fixed by the Administrator on the grant date (which specified price shall not be less than the Fair Market Value of one Share on the grant date), multiplied by (ii) a stated number of Shares.

 

Section 2.53                             “Stock Incentive Plan” shall have the meaning set forth in Article I.

 

Section 2.54                             “Stock-Based Award” shall have the meaning set forth in Section 11.1.

 

Section 2.55                             “Stock Purchase Right” shall mean an Award granted pursuant to Section 5.4.

 

Section 2.56                             “Subplans” shall have the meaning set forth in Section 3.5.

 

Section 2.57                             “Subscription Agreement” shall mean the agreement to be entered into between the Company and the Participant upon the issuance of Company Common Stock subject to an Award establishing the rights and obligations of each of them relating to the Company Common Stock so issued to the Participant.

 

Section 2.58                             “Subsidiary” shall mean any entity that is directly or indirectly controlled by the Company or any entity in which the Company directly or indirectly has at least a 50% equity interest; provided that, to the extent required under Section 422 of the Code when granting an Incentive Stock Option, “Subsidiary” shall mean any corporation in an unbroken chain of corporations beginning with such entity if each of the corporations other than the last corporation in the unbroken chain then owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

Section 2.59                             “Termination of employment,” “termination of service” and any corollary or similar term or terms shall mean (x), with respect to a Director who is not an 

 

9

 

Associate of the Company or any of its Subsidiaries, the date upon which such Director ceases to be a member of the Board; (y) with respect to a Consultant who is not an Associate of the Company or any of its Subsidiaries, the date upon which such Consultant ceases to provide consulting or advisory services to the Company or any of its Subsidiaries; and (z), with respect to an Associate, the date the Participant ceases to be an Associate; provided, that, with respect to any Award subject to Section 409A of the Code, such terms shall mean a “separation from service,” as defined in Section 409A of the Code and the rules, regulations and guidance promulgated thereunder.

 

Section 2.60                             “Withholding Taxes” shall mean the statutory minimum of any federal, state, local or foreign income taxes, withholding taxes or employment taxes required to be withheld under Applicable Law.

 

ARTICLE III

 

ADMINISTRATION

 

Section 3.1                                    Administrator.  The Plan shall be administered by the Board or an Administrator appointed by the Board, which Administrator, unless otherwise determined by the Board, shall be constituted to comply with Applicable Laws, including, without limitation, Section 16 of the Exchange Act and Section 162(m) of the Code.

 

Section 3.2                                    Powers of the Administrator.  Subject to the provisions of the Plan and, in the case of a committee, the specific duties delegated by the Board to such Administrator, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion to:

 

(a)                                 determine the Fair Market Value;

 

(b)                                 determine the type or types of Awards to be granted to each Participant;

 

(c)                                  select the Service Providers to whom Awards may from time to time be granted hereunder;

 

(d)                                 determine the number of Awards to be granted and the number of Shares to which an Award will relate;

 

(e)                                  approve forms of agreement for use under the Plan, which need not be identical for each Service Provider;

 

(f)                                   determine the terms and conditions of any Awards granted hereunder (including, without limitation, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria),

 

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any vesting acceleration or waiver of forfeiture restrictions and any restriction or limitation regarding any Awards or the Company Common Stock relating thereto) based in each case on such factors as the Administrator, in its sole discretion, shall determine;

 

(g)                                  determine all matters and questions related to the termination of service of a Service Provider with respect to any Award granted to him or her hereunder, including, but not by way of limitation of, all questions of whether a particular Service Provider has taken a leave of absence, all questions of whether a leave of absence taken by a particular Service Provider constitutes a termination of service, and all questions of whether a termination of service of a particular Service Provider resulted from discharge for Cause;

 

(h)                                 prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to Subplans established for the purpose of satisfying applicable foreign laws;

 

(i)                                     determine whether, to what extent, and pursuant to what circumstances an Award may be settled in, or the exercise or purchase price of an Award may be paid in, cash, Company Common Stock, other Awards, or other property, or an Award may be canceled, forfeited or surrendered;

 

(j)                                    suspend or accelerate the vesting of any Award granted under the Plan;

 

(k)                                 construe and interpret the terms of the Plan and Awards granted pursuant to the Plan; and

 

(l)                                     make all other decisions and determinations that may be required pursuant to the Plan or as the Administrator deems necessary or advisable to administer the Plan.

 

Any determination made by the Administrator under the Plan, including, without limitation, under Section 4.3, shall be final, binding and conclusive on all Participants and other persons having or claiming any right or interest under the Plan.

 

Section 3.3                                    Delegation by the Administrator.  The Administrator may delegate, subject to such terms or conditions or guidelines as it shall determine, to any officer or group of officers, or director or group of directors of the Company or its Affiliates any portion of its authority and powers under the Plan with respect to Participants who are not Executive Officers; provided, that any delegation to one or more officers of the Company shall be subject to and comply with Section 157(c) of the Delaware General Corporation Law (or successor provision).  In addition, (i) with respect to any Award intended to qualify as “performance-based” compensation under Section 162(m) of the Code, the

 

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Administrator shall mean the Compensation Committee of the Board or such other committee or subcommittee of the Board or the Compensation Committee as the Board or the Compensation Committee of the Board shall designate, consisting of two or more members, each of whom is an “outside director” within the meaning of Section 162(m) of the Code and (ii) with respect to any Award intended to qualify for the exemption contained in Rule 16b-3 promulgated under the Exchange Act, the Administrator shall consist solely two or more “non-employee directors” within the meaning of such Rule, or, in the alternative, the entire Board.

 

Section 3.4                                    Compensation, Professional Assistance, Good Faith Actions.  The Administrator may receive such compensation for its services hereunder as may be determined by the Board.  All expenses and liabilities incurred by the Administrator in connection with the administration of the Plan shall be borne by the Company.  The Administrator may, in its sole discretion, elect to engage the services of attorneys, consultants, accountants, appraisers, brokers or other persons.  The Administrator, the Company and its officers and Directors shall be entitled to rely upon the advice, opinions or valuations of any such persons.  All actions taken and all interpretations, decisions and determinations made by the Administrator, in good faith shall be final and binding upon all Participants, the Company and all other interested persons.  The Administrator’s determinations under the Plan need not be uniform and may be made by the Administrator selectively among persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated.  The Administrator (and its members) shall not be personally liable for any action, determination or interpretation made with respect to the Plan or the Awards, and the Administrator (and its members) shall be fully protected by the Company with respect to any such action, determination or interpretation.

 

Section 3.5                                    Participants Based Outside the United States.  To conform with the provisions of local laws and regulations, or with local compensation practices and policies, in foreign countries in which the Company or any of its Subsidiaries or Affiliates operate, but subject to the limitations set forth herein regarding the maximum number of shares issuable hereunder and the maximum award to any single Participant, the Administrator may (i) modify the terms and conditions of Awards granted to Participants employed outside the United States (“Non-U.S. Awards”), (ii) establish subplans with such modifications as may be necessary or advisable under the circumstances (“Subplans”) and (iii) take any action which it deems advisable to obtain, comply with or otherwise reflect any necessary governmental regulatory procedures, exemptions or approvals with respect to the Plan.  The Administrator’s decision to grant Non-U.S. Awards or to establish Subplans is entirely voluntary, and at the complete discretion of the Administrator.  The Administrator may amend, modify or terminate any Subplans at any time, and such amendment, modification or termination may be made without prior notice to the Participants.  The Company, Subsidiaries, Affiliates and members of the Administrator shall not incur any liability of any kind to any Participant

 

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as a result of any change, amendment or termination of any Subplan at any time.  The benefits and rights provided under any Subplan or by any Non-U.S. Award (x) are wholly discretionary and, although provided by either the Company, a Subsidiary or Affiliate, do not constitute regular or periodic payments and (y) except as otherwise required under Applicable Laws, are not to be considered part of the Participant’s salary or compensation under the Participant’s employment with the Participant’s local employer for purposes of calculating any severance, resignation, redundancy or other end of service payments, vacation, bonuses, long-term service awards, indemnification, pension or retirement benefits, or any other payments, benefits or rights of any kind.  If a Subplan is terminated, the Administrator may direct the payment of Non-U.S. Awards (or direct the deferral of payments whose amount shall be determined) prior to the dates on which payments would otherwise have been made, and, in the Administrator’s discretion, such payments may be made in a lump sum or in installments.

 

ARTICLE IV

 

SHARES SUBJECT TO PLAN

 

Section 4.1                                    Shares Subject to Plan.

 

(a)                                 Subject to Section 4.3, the aggregate number of Shares which may be issued under this Plan is equal to the sum of (i) 7,629,757 shares (which is comprised of 2,629,757 unissued shares under the MSIP as of June 13, 2014 and 5,000,000 additional shares) and (ii) the Returned MSIP shares, all of which may be issued in the form of Incentive Stock Options under the Plan.  The Shares issued under the Plan may be authorized but unissued, or reacquired Company Common Stock.  No provision of this Plan shall be construed to require the Company to maintain the Shares in certificated form.

 

(b)                                 Upon the grant of an Award, the maximum number of Shares set forth in Section 4.1(a) shall be reduced by the maximum number of Shares that are issued or may be issued pursuant to such Award.  Upon the exercise, settlement or conversion of any Award or portion thereof, there shall again be available for grant under the Plan the number of Shares subject to such Award or portion thereof minus the actual number of Shares issued in connection with such exercise, settlement or conversion.  If any such Award or portion thereof is for any reason forfeited, canceled, expired or otherwise terminated without the issuance of Shares, the Company Common Stock subject to such forfeited, canceled, expired or otherwise terminated Award or portion thereof shall again be available for grant under the Plan.  If Shares are withheld from issuance with respect to an Award by the Company in satisfaction of any tax withholding or similar obligations, such withheld Shares shall again be available for grant under the Plan.  Awards granted prior to the Effective Date under the Stock Incentive Plan which are outstanding as of the Effective Date and which are not issued for the reasons specified in any of the immediately preceding three sentences (the “Returned MSIP Shares”) shall again be available for grant under the Plan.  Awards which the Administrator reasonably determines will be settled in cash shall not reduce the Plan maximum set forth in Section

 

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4.1(a).  Notwithstanding the foregoing, and except to the extent required by Applicable Laws, Replacement Awards shall not be counted against Shares available for grant pursuant to this Plan.

 

Section 4.2                                    Individual Award Limitations.  Subject to Section 4.1(a) and Section 4.3, the following individual Award limits shall apply to the extent Section 162(m) of the Code is applicable to the Company and the Plan, and for those Awards intended to qualify as performance-based compensation under Section 162(m) of the Code:

 

(a)                                 No Participant may be granted more than 2,000,000 Options, SARs or any other Award based solely on the increase in value of the Shares from the date of grant under the Plan in any calendar year.

 

(b)                                 No Participant may be granted more than 1,000,000 Performance Shares, shares of performance-based Restricted Stock or performance-based Restricted Stock Units under the Plan in any calendar year.

 

(c)                                  No Participant may be granted Performance Units under the Plan in any calendar year with a value of more than US $10,000,000 (or the equivalent of such amount denominated in the Participant’s local currency).

 

Section 4.3                                    Changes in Company Common Stock; Disposition of Assets and Corporate Events.

 

(a)                                 If and to the extent necessary or appropriate to reflect any stock dividend, extraordinary dividend, stock split or share combination or any recapitalization, merger, consolidation, exchange of shares, spin-off, liquidation or dissolution of the Company or other similar transaction affecting the Company Common Stock (each, a “Corporate Event”), the Administrator shall adjust the number of shares of Company Common Stock available for issuance under the Plan and the number, class and exercise price of any outstanding Award, and/or make such substitution, revision or other provisions or take such other actions with respect to any outstanding Award or the holder or holders thereof, in each case as it determines to be equitable to prevent the diminution or enlargement of the rights of the Company and Participants hereunder by reason of such Corporate Event.  Without limiting the generality of the foregoing sentence, in the event of any such transaction, the Administrator shall have the power to make such changes as it deems appropriate in (i) the number and type of shares or other securities covered by outstanding Awards, (ii) the prices specified therein (if applicable), (iii) the securities, cash or other property to be received upon the exercise, settlement or conversion of such outstanding Awards or otherwise to be received in connection with such outstanding Awards and (iv) and any applicable Performance Goals.  After any adjustment made by the Administrator pursuant to this Section 4.3, the number of shares subject to each outstanding Award shall be rounded down to the nearest whole number.

 

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(b)                                 Any adjustment of an Award pursuant to this Section 4.3 shall be effected in compliance with Section 422 and 409A of the Code to the extent applicable.

 

Section 4.4                                    Award Agreement Provisions.  The Administrator may include such further provisions and limitations in any Award Agreement as it may deem equitable and in the best interests of the Company and its Subsidiaries.

 

Section 4.5                                    Prohibition Against Repricing.  From and after a Public Offering, except to the extent (i) approved in advance by holders of a majority of the Shares entitled to vote generally in the election of directors or (ii) pursuant to Section 4.3 as a result of any Corporate Event, the Administrator shall not have the power or authority to reduce, whether through amendment or otherwise, the exercise price of any outstanding Option or Base Price of any outstanding SAR or to grant any new Award, or make any cash payment, in substitution for or upon the cancellation of Options or SARs previously granted.

 

ARTICLE V

 

GRANTING OF OPTIONS AND SARS
 AND SALE OF COMPANY COMMON STOCK

 

Section 5.1                                    Eligibility.  Non-Qualified Stock Options and SARs may be granted to Service Providers.  Subject to Section 5.2, Incentive Stock Options may only be granted to Associates.

 

Section 5.2                                    Qualification of Incentive Stock Options.  No Associate may be granted an Incentive Stock Option under the Plan if such Associate, at the time the Incentive Stock Option is granted, owns stock possessing more than ten (10) percent of the total combined voting power of all classes of stock of the Company or any then existing Subsidiary of the Company or “parent corporation” (within the meaning of Section 424(e) of the Code) unless such Incentive Stock Option conforms to the applicable provisions of Section 422 of the Code.

 

Section 5.3                                    Granting of Options and SARs to Service Providers.

 

(a)                                 Options and SARs.  The Administrator may from time to time:

 

(i)                                     Select from among the Service Providers (including those to whom Options or SARs have been previously granted under the Plan) such of them as in its opinion should be granted Options and/or SARs;

 

(ii)                                  Determine the number of Shares to be subject to such Options and/or SARs granted to such Service Provider, and determine whether

 

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such Options are to be Incentive Stock Options or Non-Qualified Stock Options; and

 

(iii)                               Determine the terms and conditions of such Options and SARs, consistent with the Plan.

 

(b)                                 SARs may be granted in tandem with Options or may be granted on a freestanding basis, not related to any Option.  Unless otherwise determined by the Administrator at the grant date or determined thereafter in a manner more favorable to the Participant, SARs granted in tandem with Options shall have substantially similar terms and conditions to such Options to the extent applicable, or may be granted on a freestanding basis, not related to any Option.

 

(c)                                  Upon the selection of a Service Provider to be granted an Option or SAR under this Section 5.3, the Administrator shall issue, or shall instruct an authorized officer to issue, such Option or SAR and may impose such conditions on the grant of such Option or SAR as it deems appropriate.  Subject to Section 15.2 of the Plan, any Incentive Stock Option granted under the Plan may be modified by the Administrator, without the consent of the Optionee, even if such modification would result in the disqualification of such Option as an “incentive stock option” under Section 422 of the Code.

 

Section 5.4                                    Sale of Company Common Stock to Service Providers.  The Administrator, acting in its sole discretion, may from time to time designate one or more Service Providers to whom an offer to sell Shares shall be made and the terms and conditions thereof, provided, however, that the price per Share shall not be less than the Fair Market Value of such Shares on the date any such offer is accepted.  Each Share sold to a Service Provider under this Section 5.4 shall be evidenced by a Subscription Agreement in a form approved by the Administrator, which shall contain terms consistent with the terms hereof.  Any Shares sold under this Section 5.4 shall be subject to the same limitations, restrictions and administration hereunder as would apply to any Shares issued pursuant to the exercise of an Option under this Plan including, without limitation, conditions and restrictions set forth in Sections 7.6 and 7.7 below.  Unless otherwise determined by the Administrator, Shares acquired pursuant to this Section 5.4 shall also be subject to the terms and conditions of a Subscription Agreement, which shall be executed by the Participant and an authorized officer.

 

ARTICLE VI

 

TERMS OF OPTIONS AND SARS

 

Section 6.1                                    Award Agreement.  Each Option and each SAR shall be evidenced by a written Award Agreement, which shall be executed by the Optionee and an authorized officer and which shall contain such terms and conditions as the Administrator

 

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shall determine, consistent with the Plan.  Award Agreements evidencing Incentive Stock Options shall contain such terms and conditions as may be necessary to qualify such Options as “incentive stock options” under Section 422 of the Code.

 

Section 6.2                                    Exercisability and Vesting of Options and SARs.

 

(a)                                 Each Option and SAR shall vest and become exercisable according to the terms of the applicable Award Agreement; provided, however, that by a resolution adopted after an Option or SAR is granted the Administrator may, on such terms and conditions as it may determine to be appropriate, accelerate the time at which such Option or SAR or any portion thereof may be exercised.

 

(b)                                 Except as otherwise provided by the Administrator or in the applicable Award Agreement, no portion of an Option or SAR which is unexercisable on the date that an Optionee incurs a termination of service as a Service Provider shall thereafter become exercisable.

 

(c)                                  The aggregate Fair Market Value (determined as of the time the Option is granted) of all Shares with respect to which Incentive Stock Options are first exercisable by a Service Provider in any calendar year may not exceed $100,000 or such other limitation as imposed by Section 422(d) of the Code, or any successor provision.  To the extent that Incentive Stock Options are first exercisable by a Participant in excess of such limitation, the excess shall be considered Non-Qualified Stock Options.

 

(d)                                 SARs granted in tandem with an Option shall become vested and exercisable on the same date or dates as the Options with which such SARs are associated vest and become exercisable.  SARs that are granted in tandem with an Option may only be exercised upon the surrender of the right to exercise such Option for an equivalent number of Shares, and may be exercised only with respect to the Shares for which the related Option is then exercisable.

 

Section 6.3                                    Option Price and Base Price.  Excluding Replacement Awards, the per Share purchase price of the Shares subject to each Option (the “Option Price”) and the Base Price of each SAR shall be set by the Administrator and shall be not less than 100% of the Fair Market Value of such Shares on the date such Option or SAR is granted.

 

Section 6.4                                    Expiration of Options and SARs.  No Option or SAR may be exercised after the first to occur of the following events:

 

(a)                                 The expiration of ten (10) years from the date the Option or SAR was granted; or

 

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(b)                                 With respect to an Incentive Stock Option in the case of an Optionee owning (within the meaning of Section 424(d) of the Code), at the time the Incentive Stock Option was granted, more than 10% of the total combined voting power of all classes of stock of the Company or any Subsidiary, the expiration of five (5) years from the date the Incentive Stock Option was granted.

 

ARTICLE VII

 

EXERCISE OF OPTIONS AND SARS

 

Section 7.1                                    Person Eligible to Exercise.  During the lifetime of the Optionee, only the Optionee may exercise an Option or SAR (or any portion thereof) granted to him or her; provided, however, that the Optionee’s Eligible Representative may exercise his or her Option or SAR or portion thereof during the period of the Optionee’s Disability.  After the death of the Optionee, any exercisable portion of an Option or SAR may, prior to the time when such portion becomes unexercisable under the Plan or the applicable Award Agreement, be exercised by his or her Eligible Representative.

 

Section 7.2                                    Partial Exercise.  At any time and from time to time prior to the date on which the Option or SAR becomes unexercisable under the Plan or the applicable Award Agreement, the exercisable portion of an Option or SAR may be exercised in whole or in part; provided, however, that the Company shall not be required to issue fractional Shares and the Administrator may, by the terms of the Option or SAR, require any partial exercise to exceed a specified minimum number of Shares.

 

Section 7.3                                    Manner of Exercise.  Subject to any generally applicable conditions or procedures that may be imposed by the Administrator, an exercisable Option or SAR, or any exercisable portion thereof, may be exercised solely by delivery to the Administrator or its designee of all of the following prior to the time when such Option or SAR or such portion becomes unexercisable under the Plan or the applicable Award Agreement:

 

(a)                                 Notice in writing signed by the Optionee or his or her Eligible Representative, stating that such Option or SAR or portion is being exercised, and specifically stating the number of Shares with respect to which the Option or SAR is being exercised (which form of notice shall be provided by the Administrator upon request and may be electronic);

 

(b)                                 A copy of the Subscription Agreement in use by the Company at the time of exercise (which shall be provided by the Administrator upon request);

 

(c)                                  (i)                                     With respect to the exercise of any Option, full payment (in cash (through wire transfer only) or by personal, certified, or bank cashier check)

 

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of the aggregate Option Price of the Shares with respect to which such Option (or portion thereof) is thereby exercised; or

 

(ii)                                  With the consent of the Administrator, (A) Shares owned by the Optionee duly endorsed for transfer to the Company or (B) Shares issuable to the Optionee upon exercise of the Option, with a Fair Market Value on the date of Option exercise equal to the aggregate Option Price of the Shares with respect to which such Option (or portion thereof) is thereby exercised; or

 

(iii)                               With the consent of the Administrator, payment of the Option Price through a broker-assisted cashless exercise program established by the Company; or

 

(iv)                              With the consent of the Administrator, any form of payment of the Option Price permitted by Applicable Laws and any combination of the foregoing methods of payment.

 

(d)                                 Full payment to the Company (in cash or by personal, certified or bank cashier check or by any other means of payment approved by the Administrator) of all minimum amounts necessary to satisfy any and all Withholding Taxes arising in connection with the exercise of the Option or SAR (notice of the amount of which shall be provided by the Administrator as soon as practicable following receipt by the Administrator of the notice of exercise);

 

(e)                                  Such representations and documents as the Administrator deems necessary or advisable to effect compliance with all applicable provisions of the Securities Act and any other federal or state securities laws or regulations.  The Administrator shall provide the Optionee or Eligible Representative with all such representations and documents as soon as practicable following receipt by the Administrator of the notice of exercise.  The Administrator may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance including, without limitation, issuing stop-transfer orders to transfer agents and registrars; and

 

(f)                                   In the event that the Option or SAR or portion thereof shall be exercised as permitted under Section 7.1 by any person or persons other than the Optionee, appropriate proof of the right of such person or persons to exercise the Option or SAR or portion thereof.

 

Section 7.4                                    Exercise by the Administrator.  If an Optionee has not exercised an Option immediately prior to the expiration of such Option and the Fair Market Value on the date of expiration exceeds the Option Price of such Option, the Administrator may, in its sole discretion, exercise the Option on behalf of the Optionee by causing the exercise price to be paid through a broker-assisted cashless exercise program established by the

 

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Company.  For the avoidance of doubt, the Administrator will not be required to obtain the Optionee’s consent prior such exercise.

 

Section 7.5                                    Optionee Representations.  The Administrator, in its sole discretion, may require an Optionee to make certain representations or acknowledgements, on or prior to the purchase of any Shares pursuant to any Option or SAR granted under this Plan, in respect thereof including, without limitation, that the Optionee is acquiring the Shares for an investment purpose and not for resale, and, if the Optionee is an Affiliate, additional acknowledgements regarding when and to what extent any transfers of such Shares may occur.

 

Section 7.6                                    Settlement of SARs.  Unless otherwise determined by the Administrator, upon exercise of a SAR, the Participant shall be entitled to receive payment in the form, determined by the Administrator, of Shares, or cash, or a combination of Shares and cash having an aggregate value equal to the amount determined by multiplying:

 

(a)                                 any increase in the Fair Market Value of one Share on the exercise date over the Base Price of such SAR, by

 

(b)                                 the number of Shares with respect to which the SAR is exercised;

 

provided, however, that on the grant date, the Administrator may establish, in its sole discretion, a maximum amount per Share that may be payable upon exercise of a SAR, and provided, further, that in no event shall the value of the Company Common Stock or cash delivered on exercise exceed the excess of the Fair Market Value of the Shares with respect to which the SAR is exercised over the Fair Market Value of such Shares on the grant date of such SAR.

 

Section 7.7                                    Conditions to Issuance of Shares.  The Company shall evidence the issuance of Shares delivered upon exercise of an Option or SAR in the books and records of the Company or in a manner determined by the Company.  Notwithstanding the above, the Company shall not be required to effect the issuance of any Shares purchased upon the exercise of any Option or SAR or portion thereof prior to fulfillment of all of the following conditions:

 

(a)                                 The admission of such Shares to listing on any and all stock exchanges on which such class of Company Common Stock is then listed;

 

(b)                                 The completion of any registration or other qualification of such Shares under any state or federal law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body, which the Administrator shall, in its sole discretion, deem necessary or advisable;

 

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(c)                                  The obtaining of any approval or other clearance from any state or federal governmental agency which the Administrator shall, in its sole discretion, determine to be necessary or advisable; and

 

(d)                                 The payment to the Company (or its Subsidiary, as applicable) of all amounts which it is required to withhold under Applicable Law in connection with the exercise of the Option or SAR.

 

The Administrator shall not have any liability to any Optionee for any delay in the delivery of Shares to be issued upon an Optionee’s exercise of an Option or SAR.

 

Section 7.8                                    Rights as Stockholders.  The holder of an Option or SAR shall not be, nor have any of the rights or privileges of, a stockholder of the Company in respect of any Shares purchasable upon the exercise of any part of an Option or SAR unless and until such holder has signed the Subscription Agreement provided by the Administrator and the Shares attributable to the exercise of the Option or SAR have been issued by the Company to such holder.

 

Section 7.9                                    Transfer Restrictions.  Shares acquired upon exercise of an Option or SAR shall be subject to the terms and conditions of the Subscription Agreement.  In addition, the Administrator, in its sole discretion, may set forth in an Award Agreement such further restrictions on the transferability of the Shares purchasable upon the exercise of an Option or SAR as it deems appropriate.  Any such restriction may be referred to in the Share register maintained by the Company or otherwise in a manner reflecting its applicability to the Shares.  The Administrator may require the Associate to give the Company prompt notice of any disposition of Shares acquired by exercise of an Incentive Stock Option, within two (2) years from the date of granting such Option or one (1) year after the transfer of such Shares to such Associate.  The Administrator may cause the Share register maintained by the Company to refer to such requirement.

 

ARTICLE VIII

 

RESTRICTED STOCK AWARDS AND RESTRICTED STOCK UNIT AWARDS

 

Section 8.1                                    Restricted Stock.

 

(a)                                 Grant of Restricted Stock.  The Administrator is authorized to make Awards of Restricted Stock to any Service Provider selected by the Administrator in such amounts and subject to such terms and conditions as determined by the Administrator.  All Awards of Restricted Stock shall be evidenced by an Award Agreement.

 

(b)                                 Issuance and Restrictions.  Restricted Stock shall be subject to such restrictions on transferability and other restrictions as the Administrator may impose (including, without limitation, limitations on the right to vote Restricted Stock or the right

 

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to receive dividends on the Restricted Stock).  These restrictions may lapse separately or in combination at such times, pursuant to such circumstances, in such installments, or otherwise, as the Administrator determines at the time of the grant of the Award and specified in the Award Agreement or otherwise in writing or determined thereafter in a manner more favorable to a Participant.  The Administrator shall specify the purchase price, if any, to be paid by the grantee to the Company for such Shares.

 

(c)                                  Issuance of Restricted Stock.  The issuance of Restricted Stock granted pursuant to the Plan may be evidenced in such manner as the Administrator shall determine.

 

Section 8.2                                    Restricted Stock Units.  The Administrator is authorized to make Awards of Restricted Stock Units to any Service Provider selected by the Administrator in such amounts and subject to such terms and conditions as determined by the Administrator.  At the time of grant, the Administrator shall specify the date or dates on which the Restricted Stock Units shall become fully vested and nonforfeitable, and may specify such conditions to vesting as it deems appropriate.  At the time of grant, the Administrator shall specify the settlement date applicable to each grant of Restricted Stock Units which shall be no earlier than the vesting date or dates of the Award and may be determined at the election of the grantee.  On the settlement date, the Company shall, subject to the terms of this Plan, issue to the Participant one Share for each Restricted Stock Unit scheduled to be paid out on such date and not previously forfeited.  The Administrator shall specify the purchase price, if any, to be paid by the grantee to the Company for such Shares.

 

Section 8.3                                    Rights as a Stockholder.  A Participant shall not be, nor have any of the rights or privileges of, a stockholder of the Company in respect of Restricted Stock Units awarded pursuant to the Plan unless and until such Participant has signed the Subscription Agreement provided by the Administrator and the Shares attributable to such Restricted Stock Units have been issued to such Participant.

 

ARTICLE IX

 

PERFORMANCE SHARES AND PERFORMANCE UNITS

 

Section 9.1                                    Grant of Performance Awards.  The Administrator is authorized to make Awards of Performance Shares and Performance Units to any Participant selected by the Administrator in such amounts and subject to such terms and conditions as determined by the Administrator.  All Performance Shares and Performance Units shall be evidenced by an Award Agreement.

 

Section 9.2                                    Issuance and Restrictions.  The Administrator shall have the authority to determine the Participants who shall receive Performance Shares and Performance Units, the number of Performance Shares and the number and value of

 

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Performance Units each Participant receives for any Performance Cycle, and the Performance Goals applicable in respect of such Performance Shares and Performance Units for each Performance Cycle.  The Administrator shall determine the duration of each Performance Cycle (and the duration of Performance Cycles may differ from one another), and there may be more than one Performance Cycle in existence at any one time.  An Award Agreement evidencing the grant of Performance Shares or Performance Units shall specify the number of Performance Shares and the number and value of Performance Units awarded to the Participant, the Performance Goals applicable thereto, and such other terms and conditions not inconsistent with the Plan as the Administrator shall determine.  No Company Common Stock will be issued at the time an Award of Performance Shares is made, and the Company shall not be required to set aside a fund for the payment of Performance Shares or Performance Units.

 

Section 9.3                                    Earned Performance Shares and Performance Units.  Performance Shares and Performance Units shall become earned, in whole or in part, based upon the attainment of specified Performance Goals or the occurrence of any event or events, as the Administrator shall determine, either in an Award Agreement or thereafter on terms more favorable to the Participant to the extent consistent with Section 162(m).  In addition to the achievement of the specified Performance Goals, the Administrator may condition payment of Performance Shares and Performance Units on such other conditions as the Administrator shall specify in an Award Agreement.  The Administrator may also provide in an Award Agreement for the completion of a minimum period of service (in addition to the achievement of any applicable Performance Goals) as a condition to the vesting of any Performance Share or Performance Unit Award.

 

Section 9.4                                    Rights as a Stockholder.  A Participant shall not be, nor have any of the rights or privileges of, a stockholder of the Company in respect of Performance Shares or Performance Units awarded pursuant to the Plan unless and until such Participant has signed the Subscription Agreement provided by the Administrator and the Shares attributable to such Performance Shares or Performance Units have been issued to such Participant.

 

Section 9.5                                    Performance Goals.  The Administrator shall establish the Performance Goals that must be satisfied in order for a Participant to receive an Award for a Performance Period or for an Award of Performance Shares or Performance Units to be earned or vested.  At the discretion of the Administrator, the Performance Goals may be based upon (alone or in combination): (a) cash flow, (b) free cash flow, (c) revenue, (d) gross profit, (e) gross profit margin, (f) earnings before income taxes, (g) net income, (h) earnings per share, (i) earnings before interest, taxes, depreciation and amortization (“EBITDA”), (j) net income (loss) before: income (loss) from discontinued operations, net of income taxes; provision (benefit) for income taxes; gain (loss) on extinguishment of debt; interest expense; depreciation and amortization expense; non-cash goodwill and trade name impairment; residual value guarantee charge; non-cash impairment of software and other related costs; non-cash impairment of property and equipment; non-cash stock-based compensation expense; restructuring charges; management and consulting fees; non-cash effects attributable to the application of purchase accounting and other non-operating expenses (“Adjusted EBITDA”), (k) return on equity, (l) return on invested capital, (m) customer count, (n) total shareholder return or (o) customer retention;

 

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or, for any period of time in which Section 162(m) is not applicable to the Company and the Plan, or at any time in the case of (A) persons who are not “covered employees” under Section 162(m) of the Code or (B) Awards (whether or not to “covered employees”) not intended to qualify as performance-based compensation under Section 162(m), such other criteria as may be determined by the Administrator.

 

Performance Goals may be established on a Company-wide basis or with respect to one or more business units, divisions, Subsidiaries, or products and may be expressed in absolute terms, or relative to (i) current internal targets or budgets, (ii) the past performance of the Company (including the performance of one or more Subsidiaries, divisions, or operating units), (iii) the performance of one or more similarly situated companies, (iv) the performance of an index covering a peer group of companies, or (v) other external measures of the selected performance criteria.  Any performance objective may measure performance on an individual basis, as appropriate.  The Administrator may provide for a threshold level of performance below which no Shares or compensation will be granted or paid in respect of Performance Shares or Performance Units, and a maximum level of performance above which no additional Shares or compensation will be granted or paid in respect of Performance Shares or Performance Units, and it may provide for differing amounts of Shares or compensation to be granted or paid in respect of Performance Shares or Performance Units for different levels of performance.  When establishing Performance Goals for a Performance Cycle, the Administrator may determine that any or all “extraordinary items” as determined under U.S. generally accepted accounting principles and as identified in the financial statements, notes to the financial statements or management’s discussion and analysis in the annual report, including, without limitation, the charges or costs associated with restructurings of the Company, discontinued operations, extraordinary items, capital gains and losses, dividends, Share repurchases, other unusual or non-recurring items, and the cumulative effects of accounting changes shall be excluded from the determination as to whether the Performance Goals have been met.  Except in the case of Awards to “covered employees” intended to qualify as performance-based compensation under Section 162(m) of the Code, the Administrator may also adjust the Performance Goals for any Performance Cycle as it deems equitable in recognition of unusual or non-recurring events affecting the Company, changes in applicable tax laws or accounting principles, or such other factors as the Administrator may determine.

 

Section 9.6                                    Special Rule for Performance Goals.  If, at the time of grant, the Administrator intends a Performance Share Award, Performance Unit or other Performance Award to qualify as performance-based compensation within the meaning of Section 162(m) of the Code, the Administrator must establish Performance Goals for the applicable Performance Cycle prior to the 91st day of the Performance Cycle (or by such other date as may be required under Section 162(m) of the Code) but in any event not later than the date on which 25% of the Performance Cycle has elapsed.

 

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Section 9.7                                    Negative Discretion.  Notwithstanding anything in this Article IX to the contrary, the Administrator shall have the right, in its absolute discretion, (i) to reduce or eliminate the amount otherwise payable to any Participant under Section 9.9 based on individual performance or any other factors that the Administrator, in its discretion, shall deem appropriate and (ii) to establish rules or procedures that have the effect of limiting the amount payable to each Participant to an amount that is less than the maximum amount otherwise authorized under the Award or under the Plan.

 

Section 9.8                                    Affirmative Discretion.  Notwithstanding any other provision in the Plan to the contrary, but subject to the maximum number of Shares available for issuance under Article IV of the Plan, (i) the Administrator shall have the right, in its discretion, to grant an Award in cash, Shares or other Awards, or in any combination thereof, to any Participant (except for Awards intended to qualify as performance-based compensation under Section 162(m) of the Code, to the extent Section 162(m) of the Code is applicable to the Company and the Plan) in a greater amount than would apply under the applicable Performance Goals, based on individual performance or any other criteria that the Administrator deems appropriate and (ii) in connection with the hiring of any person who is or becomes a “covered employee” as defined in Section 162(m)(3) of the Code, the Administrator may provide for a minimum bonus amount in any Performance Cycle, regardless of whether the Performance Goals are attained.  Notwithstanding any provision of the Plan to the contrary, in no event shall the Administrator have, or exercise, discretion with respect to a Performance Award intended to qualify as performance-based compensation under Section 162(m) of the Code if such discretion or the exercise thereof would cause such qualification not to be available.

 

Section 9.9                                    Certification of Attainment of Performance Goals.  As soon as practicable after the end of a Performance Cycle and prior to any payment or vesting in respect of such Performance Cycle, the Administrator shall certify in writing the number of Performance Shares or other Performance Awards and the number and value of Performance Units that have been earned or vested on the basis of performance in relation to the established Performance Goals.

 

Section 9.10                             Payment of Awards.  Payment or delivery of Company Common Stock with respect to earned Performance Shares and earned Performance Units shall be made to the Participant or, if the Participant has died, to the Participant’s Eligible Representative, as soon as practicable after the expiration of the Performance Cycle and the Administrator’s certification under Section 9.9 above and (unless an applicable Award Agreement shall set forth one or more other dates) in any event no later than the earlier of (i) ninety (90) days after the end of the fiscal year in which the Performance Cycle has ended and (ii) ninety (90) days after the expiration of the Performance Cycle.  The Administrator shall determine and set forth in the applicable Award Agreement whether earned Performance Shares and the value of earned Performance Units are to be distributed in the form of cash, Shares or in a combination thereof, with the value or

 

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number of Shares payable to be determined based on the Fair Market Value of the Company Common Stock on the date of the Administrator’s certification under Section 9.9 above or such other date specified in the Award Agreement.  The Administrator may set forth in an Award Agreement conditions with respect to the award or delivery of Shares, including conditioning the vesting of such Shares on the performance of additional service.

 

Section 9.11                             Newly Eligible Participants.  Notwithstanding anything in this Article IX to the contrary, the Administrator shall be entitled to make such rules, determinations and adjustments as it deems appropriate with respect to any Participant who becomes eligible to receive Performance Shares, Performance Units or other Performance Awards after the commencement of a Performance Cycle.

 

ARTICLE X

 

DEFERRED SHARE UNITS

 

Section 10.1                             Grant.  The Administrator is authorized to make awards of Deferred Share Units to any Participant selected by the Administrator at such time or times as shall be determined by the Administrator without regard to any election by the Participant to defer receipt of any compensation or bonus amount payable to him.  The grant date of any freestanding Deferred Share Unit under the Plan will be the date on which such freestanding Deferred Share Unit is awarded by the Administrator or on such other future date permitted by Applicable Laws as the Administrator shall determine in its sole discretion.  Upon the grant of Deferred Share Units pursuant to the Plan, the Company shall establish a notional account for the Participant and shall record in such account the number of Deferred Share Units awarded to the Participant.  No Shares will be issued to the Participant at the time an award of Deferred Share Units is granted.  Subject to Article III and Applicable Laws (including Section 409A of the Code), Deferred Share Units may become payable on a Corporate Event, termination of employment or on a specified date or dates set forth in the Award Agreement evidencing such Deferred Share Units.

 

Section 10.2                             Rights as a Stockholder.  A Participant shall not be, nor have any of the rights and privileges of, a stockholder of the Company in respect of Deferred Share Units awarded pursuant to the Plan unless and until such Participant has signed the Subscription Agreement provided by the Administrator and the Shares attributable to such Deferred Share Units have been issued to such Participant.

 

Section 10.3                             Vesting.  Unless the Administrator provides otherwise at the grant date or provides thereafter in a manner more favorable to the Participant, Deferred Share Units shall be fully vested and nonforfeitable when granted.

 

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Section 10.4                             Further Deferral Elections.  A Participant may elect to further defer receipt of Shares issuable in respect of Deferred Share Units (or an installment of an Award) for a specified period or until a specified event and in a manner consistent with Section 409A of the Code, subject in each case to the Administrator’s approval and to such terms as are determined by the Administrator, all in its sole discretion.  Subject to any exceptions adopted by the Administrator pursuant to Applicable Laws, such election must generally be made at least twelve (12) months prior to the prior settlement date of such Deferred Share Units (or any such installment thereof) and must defer settlement for at least five (5) years after such prior settlement date.  A further deferral opportunity need not be made available to all Participants, and different terms and conditions may apply with respect to the further deferral opportunities made available to different Participants.

 

Section 10.5                             Settlement.  Subject to this Article X, upon the date specified in the Award Agreement evidencing the Deferred Share Units, for each such Deferred Share Unit the Participant shall receive, as specified in the Award Agreement, (i) a cash payment equal to the Fair Market Value of one (1) Share as of such payment date, (ii) one (1) Share or (iii) any combination of clauses (i) and (ii).

 

ARTICLE XI

 

OTHER STOCK-BASED AWARDS

 

Section 11.1                             Grant of Stock-Based Awards.  The Administrator is authorized to make Awards of other types of equity-based or equity-related awards (“Stock-Based Awards”) not otherwise described by the terms of the Plan in such amounts and subject to such terms and conditions as the Administrator shall determine.  All Stock-Based Awards shall be evidenced by an Award Agreement.  Such Stock-Based Awards may be granted as an inducement to enter the employ of the Company or any Subsidiary or in satisfaction of any obligation of the Company or any Subsidiary to an officer or other key associate, whether pursuant to this Plan or otherwise, that would otherwise have been payable in cash or in respect of any other obligation of the Company.  Such Stock-Based Awards may entail the transfer of actual Shares, or payment in cash or otherwise of amounts based on the value of Shares and may include, without limitation, Awards under Subplans designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.

 

Section 11.2                             Automatic Grants for Directors.  The Administrator may institute, by resolution, grants of automatic Awards to new and continuing Directors, with the number and type of such Awards, the frequency of grant and all related terms and conditions, including any applicable vesting conditions, as determined by the Administrator in its sole discretion.

 

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ARTICLE XII

 

DIVIDEND EQUIVALENTS

 

Section 12.1                             Generally.  Dividend Equivalents may be granted to Participants at such time or times as shall be determined by the Administrator.  Dividend Equivalents may be granted in tandem with other Awards, in addition to other Awards, or freestanding and unrelated to other Awards.  The grant date of any Dividend Equivalents under the Plan will be the date on which the Dividend Equivalent is awarded by the Administrator, or such other date permitted by Applicable Laws as the Administrator shall determine in its sole discretion.  Dividend Equivalents may, at the discretion of the Administrator, be fully vested and nonforfeitable when granted or subject to such vesting conditions as determined by the Administrator.  For the avoidance of doubt, Dividend Equivalents with respect to Performance Awards shall not be fully vested until the Performance Awards have been earned and shall be forfeited if the related Award is forfeited.  Dividend Equivalents shall be evidenced in writing, whether as part of the Award Agreement governing the terms of the Award, if any, to which such Dividend Equivalent relates, or pursuant to a separate Award Agreement with respect to freestanding Dividend Equivalents, in each case, containing such provisions not inconsistent with the Plan as the Administrator shall determine, including customary representations, warranties and covenants with respect to securities law matters.

 

ARTICLE XIII

 

TERMINATION AND FORFEITURE

 

Section 13.1                             Termination for Cause.  Unless otherwise determined by the Administrator at the grant date and set forth in the Award Agreement covering the Award or otherwise in writing or determined thereafter in a manner more favorable to the Participant, if a Participant’s employment or service terminates for Cause, all Options and SARs, whether vested or unvested, and all other Awards that are unvested or unexercisable or otherwise unpaid (or were unvested or unexercisable or unpaid at the time of occurrence of Cause) shall be immediately forfeited and canceled, effective as of the date of the Participant’s termination of service.

 

Section 13.2                             Termination for Any Other Reason.  Unless otherwise determined by the Administrator at the grant date and set forth in the Award Agreement covering the Award or otherwise in writing or determined thereafter in a manner more favorable to the Participant, if a Participant’s employment or service terminates for any reason other than Cause:

 

(a)                                 All Awards that are unvested or unexercisable shall be immediately forfeited and canceled, effective as of the date of the Participant’s termination of service;

 

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(b)                                 All Options and SARs that are vested shall remain outstanding until (x) in the case of termination for death, Disability or retirement at normal retirement age, the first anniversary of the date of the Participant’s death, Disability or retirement at normal retirement age, (y) the three-month anniversary of the effective date of the Participant’s termination for any reason other than death, Disability or retirement at normal retirement age or (z) the Award’s normal expiration date, whichever is earlier, after which any unexercised Options and SARs shall immediately terminate; and

 

(c)                                  All Awards other than Options and SARs that are vested shall be treated as set forth in the applicable Award Agreement (or in any more favorable manner determined by the Administrator).

 

Section 13.3                             Post-Termination Informational Requirements.  Before the settlement of any Award following termination of employment or service, the Administrator may require the Participant (or the Participant’s Eligible Representative, if applicable) to make such representations and provide such documents as the Administrator deems necessary or advisable to effect compliance with Applicable Law and determine whether the provisions of Section 13.1 or Section 13.4 may apply to such Award.

 

Section 13.4                             Forfeiture of Awards.  Awards granted under this Plan (and gains earned or accrued in connection with Awards) shall be subject to such generally applicable policies as to forfeiture and recoupment (including, without limitation, upon the occurrence of material financial or accounting errors, financial or other misconduct or Competitive Activity) as may be adopted by the Administrator or the Board from time to time and communicated to Participants.  Any such policies may (in the discretion of the Administrator or the Board) be applied to outstanding Awards at the time of adoption of such policies, or on a prospective basis only.  The Participant shall also forfeit and disgorge to the Company any Awards granted or vested and any gains earned or accrued due to the exercise of Options or SARs or the sale of any Company Common Stock to the extent required by Applicable Law or regulations in effect on or after the Effective Date, including Section 304 of the Sarbanes-Oxley Act of 2002 and Section 10D of the Exchange Act.  For the avoidance of doubt, the Administrator shall have full authority to implement any policies and procedures necessary to comply with Section 10D of the Exchange Act and any rules promulgated thereunder, and the implementation of such policies and procedures pursuant to this Section 13.4 shall not be subject to any restrictions on amendment or modification of Awards.

 

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ARTICLE XIV

 

CHANGE IN CONTROL

 

Section 14.1                             Accelerated Vesting and Payment.  Except as otherwise provided in this Article XIV or in an Award Agreement or thereafter on terms more favorable to a Participant, upon a Change in Control:

 

(a)                                 each vested and unvested Option or SAR shall be canceled in exchange for a payment equal to the excess, if any, of the Change in Control Price over the Option Price or Base Price;

 

(b)                                 the vesting restrictions applicable to all other unvested Awards (other than freestanding Dividend Equivalents not granted in connection with another Award) shall lapse, all such Awards shall vest and become non-forfeitable and be canceled in exchange for a payment equal to the Change in Control Price;

 

(c)                                  all other Awards (other than freestanding Dividend Equivalents not granted in connection with another Award) that were vested prior to the Change in Control but that have not been settled or converted into Shares prior to the Change in Control shall be canceled in exchange for a payment equal to the Change in Control Price; and

 

(d)                                 all freestanding Dividend Equivalents not granted in connection with another Award shall be cancelled without payment therefor.

 

To the extent any portion of the Change in Control Price is payable other than in cash and/or other than at the time of the Change in Control, equity holders under the Plan may (to the extent consistent with Section 409A) receive the same time and form of payment in the Change in Control in the same proportion as the Company’s stockholders, or the Administrator may, in its sole discretion, cause equity holders under the Plan to be paid in cash at the time of the Change in Control.  For avoidance of doubt, upon a Change in Control, the Administrator may cancel Options and SARs for no consideration if the aggregate Fair Market Value of the Shares subject to Options and SARs is less than or equal to the Option Price of such Options or the Base Price of such SARs.

 

Section 14.2                             Alternative Award.  No cancellation, acceleration of vesting or other payment shall occur with respect to any Award if the Administrator reasonably determines in good faith, prior to the occurrence of a Change in Control, that such Award shall be honored or assumed, or new rights substituted therefor following the Change in Control (such honored, assumed or substituted award, an “Alternative Award”), provided, that any Alternative Award must:

 

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(a)                                 give the Participant who held such Award rights and entitlements substantially equivalent to or better than the rights and terms applicable under such Award immediately prior to the Change in Control, including, without limitation, an identical or better schedule as to vesting and/or exercisability, and for Alternative Awards that are stock options, identical or better methods of payment of the exercise price thereof; and

 

(b)                                 have terms such that if, within two years following a Change in Control, the Participant’s employment is involuntarily (other than for Cause) or constructively terminated (in each case as the terms “involuntarily” and “constructively” are determined by the Administrator as constituted prior to the Change in Control), at a time when any portion of the Alternative Award is unvested, the unvested portion of such Alternative Award shall immediately vest in full and such Participant shall be provided with either cash or marketable stock equal to the fair market value of the stock subject to the Alternative Award on the date of termination (and, in the case of Alternative Awards that are stock options or stock appreciation rights, in excess of the Option Price or Base Price that the Participant would be required to pay in respect of such Alternative Award).

 

Section 14.3                             Section 409A.  Notwithstanding the discretion in Sections 14.1 and 14.2, if any Award is subject to Section 409A of the Code and an Alternative Award would be deemed a non-compliant modification of such Award under Section 409A, then no Alternative Award shall be provided and such Award shall instead be treated as provided in Section 14.1 or in the Award Agreement (or in such other manner determined by the Administrator that is a compliant modification under Section 409A).

 

ARTICLE XV

 

OTHER PROVISIONS

 

Section 15.1                             Awards Not Transferable.  Unless otherwise agreed to in writing by the Administrator, no Award or interest or right therein or part thereof shall be liable for the debts, contracts or engagements of the Participant or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law, by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect; provided, however, that nothing in this Section 15.1 shall prevent transfers by will or by the applicable laws of descent and distribution.

 

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Section 15.2                             Amendment, Suspension or Termination of the Plan or Award Agreements.

 

(a)                                 The Plan may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator; provided that without the approval by a majority of the shares entitled to vote at a duly constituted meeting of shareholders of the Company, no amendment or modification to the Plan may (i) except as otherwise expressly provided in Section 4.3, increase the number of shares of Stock subject to the Plan or the individual Award limitations specified in Section 4.2; (ii) modify the class of persons eligible for participation in the Plan; (iii) modify the prohibition against repricing in Section 4.5 or (iv) materially modify the Plan in any other way that would require shareholder approval under Applicable Law.  Except as otherwise expressly provided in the Plan, neither the amendment, modification, suspension nor termination of the Plan shall, without the consent of the holder of the Award, adversely alter or impair any rights or obligations under any Award theretofore granted.

 

(b)                                 Except as provided by Section 4.3, the Administrator at any time, and from time to time, may amend the terms of any one or more existing Award Agreements, provided, however, that the rights of a Participant under an Award Agreement shall not be adversely impaired without the Participant’s written consent.  The Company shall provide a Participant with notice of any amendment made to such Participant’s existing Award Agreement(s) in accordance with the terms of this Section 15.2(b).

 

(c)                                  Notwithstanding any provision of the Plan to the contrary, in no event shall adjustments made by the Administrator pursuant to Section 4.3 or the application of Section 13.4, Section 14.1, Section 15.6 or Section 15.12 to any Participant constitute an amendment of the Plan or of any Award Agreement requiring the consent of any Participant.

 

(d)                                 No Award may be granted during any period of suspension nor after termination of the Plan, and in no event may any Award be granted under this Plan after the expiration of ten (10) years from the Effective Date.

 

Section 15.3                             Effect of Plan upon Other Award and Compensation Plans.  The adoption of this Plan shall not affect any other compensation or incentive plans in effect for the Company or any of its Subsidiaries.  Nothing in this Plan shall be construed to limit the right of the Company or any of its Subsidiaries (a) to establish any other forms of incentives or compensation for Service Providers or (b) to grant or assume options or restricted stock other than under this Plan in connection with any proper corporate purpose, including, but not by way of limitation, the grant or assumption of options or restricted stock in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of any corporation, firm or association.

 

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Section 15.4                             At-Will Employment.  Nothing in the Plan or any Award Agreement hereunder shall confer upon the Participant any right to continue as a Service Provider of the Company or any of its Subsidiaries or shall interfere with or restrict in any way the rights of the Company and any of its Subsidiaries, which are hereby expressly reserved, to discharge any Participant at any time for any reason whatsoever, with or without Cause.

 

Section 15.5                             Titles.  Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Plan.

 

Section 15.6                             Conformity to Securities Laws.  The Plan is intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated under any of the foregoing, to the extent the Company, any of its Subsidiaries or any Participant is subject to the provisions thereof.  Notwithstanding anything herein to the contrary, the Plan shall be administered, and Awards shall be granted and may be exercised, only in such a manner as to conform to such laws, rules and regulations.  To the extent permitted by applicable law, the Plan and Awards granted hereunder shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

 

Section 15.7                             Term of Plan.  The Plan shall become effective on the date that it is approved by the Board (the “Effective Date”) and shall continue in effect, unless sooner terminated pursuant to Section 15.2, until the tenth (10th) anniversary of the Effective Date.  The provisions of the Plan shall continue thereafter to govern all outstanding Awards.

 

Section 15.8                             Governing Law.  To the extent not preempted by federal law, the Plan shall be construed in accordance with and governed by the laws of the State of Delaware regardless of the application of rules of conflict of law that would apply the laws of any other jurisdiction.

 

Section 15.9                             Severability.  In the event any portion of the Plan or any action taken pursuant thereto shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provisions had not been included, and the illegal or invalid action shall be null and void.

 

Section 15.10                      Governing Documents.  In the event of any express contradiction between the Plan and any Award Agreement or any other written agreement between a Participant and the Company or any Subsidiary of the Company that has been approved by the Administrator, the express terms of the Plan shall govern, unless it is expressly specified in such Award Agreement or other written document that such express provision of the Plan shall not apply.

 

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Section 15.11                      Withholding Taxes.  In addition to any rights or obligations with respect to Withholding Taxes under the Plan or any applicable Award Agreement, the Company or any Subsidiary employing a Service Provider shall have the right to withhold from the Service Provider, or otherwise require the Service Provider or an assignee to pay, any Withholding Taxes arising as a result of grant, exercise, vesting or settlement of any Award or any other taxable event occurring pursuant to the Plan or any Award Agreement, including, without limitation, to the extent permitted by law, the right to deduct any such Withholding Taxes from any payment of any kind otherwise due to the Service Provider or to take such other actions (including, without limitation, withholding any Shares or cash deliverable pursuant to the Plan or any Award) as may be necessary to satisfy all or any portion of such Withholding Taxes; provided, however, that in the event that the Company withholds Shares issued or issuable to the Participant to satisfy the Withholding Taxes, the Company shall withhold a number of whole Shares having a Fair Market Value, determined as of the date of withholding, not in excess of the minimum tax required to be withheld by law (or such lower amount as may be necessary to avoid liability award accounting); and provided, further, that with respect to any Award subject to Section 409A of the Code, in no event shall Shares be withheld pursuant to this Section 15.11 (other than upon or immediately prior to settlement in accordance with the Plan and the applicable Award Agreement) other than to pay taxes imposed under the U.S. Federal Insurance Contributions Act (FICA) and any associated U.S. federal withholding tax imposed under Section 3401 of the Code and in no event shall the value of such Shares (other than upon immediately prior to settlement) exceed the amount of the tax imposed under FICA and any associated U.S. federal withholding tax imposed under Section 3401 of the Code.  The Participant shall be responsible for all Withholding Taxes and other tax consequences of any Award granted under this Plan.

 

Section 15.12                      Section 409A.  To the extent that the Administrator determines that any Award granted under the Plan is subject to Section 409A of the Code, the Award Agreement evidencing such Award shall incorporate any terms and conditions required by Section 409A of the Code.  To the extent applicable, the Plan and Award Agreements shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the adoption of the Plan.  Notwithstanding any provision of the Plan to the contrary, in the event that following the adoption of the Plan, the Administrator determines that any Award may be subject to Section 409A of the Code and related regulations and Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the adoption of the Plan), the Administrator may adopt such amendments to the Plan and the applicable Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Administrator determines are necessary or appropriate to (a) exempt the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, (b) comply with the requirements of Section 409A of

 

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the Code and related Department of Treasury guidance or (c) comply with any correction procedures available with respect to Section 409A of the Code.  Notwithstanding anything else contained in this Plan or any Award Agreement to the contrary, if a Service Provider is a “specified employee” (as determined pursuant to Section 409A under any Company Specified Employee policy in effect at the time of the Service Provider’s “separation from service” (as determined under Section 409A) or, if no such policy is in effect, as defined in Section 409A of the Code), then, to the extent necessary to comply with, and avoid imposition on such Service Provider of any tax penalty imposed under, Section 409A of the Code, any payment required to be made to a Service Provider hereunder upon or following his or her separation from service shall be delayed until the first to occur of (i) the six-month anniversary of the Service Provider’s separation from service and (ii) the Service Provider’s death.  Should payments be delayed in accordance with the preceding sentence, the accumulated payment that would have been made but for the period of the delay shall be paid in a single lump sum during the ten-day period following the lapsing of the delay period.  No provision of this Plan or an Award Agreement shall be construed to indemnify any Service Provider for any taxes incurred by reason of Section 409A (or timing of incurrence thereof), other than an express indemnification provision therefor.

 

Section 15.13                      Notices.  Except as provided otherwise in an Award Agreement, all notices and other communications required or permitted to be given under this Plan or any Award Agreement shall be in writing and shall be deemed to have been given if delivered personally, sent by email or any other form of electronic transfer approved by the Administrator, or sent by certified or express mail, return receipt requested, postage prepaid or by any recognized international equivalent of such delivery, (i) in the case of notices and communications to the Company, to 860 Ridge Lake Boulevard, Memphis, Tennessee, 38120 to the attention of the Corporate Secretary of the Company or (ii) in the case of a Participant, to the last known address, or email address or, where the individual is an Associate employed by the Company or one of its subsidiaries, to the individual’s workplace address or email address or by other means of electronic transfer approved by the Administrator.  All such notices and communications shall be deemed to have been received on the date of delivery, if sent by email or any other form of electronic transfer, at the time of delivery, if delivered personally, or on the third business day after the mailing thereof, if sent by mail.

 

*   *   *   *   *   *   *

 

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