Registration of Securities Issued in a Business-Combination Transaction — Form S-4
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-4 Global Decisions Group LLC 380 1.49M
2: EX-2.1 Plan of Merger and Exchange Agreement 138 436K
3: EX-3.1 Certificate of Formation of Global Decisions Group 1 15K
4: EX-3.2 LLC Agreement of Global Decisions Group LLC 5 24K
5: EX-3.3 Amended and Restated LLC Agreement 107 371K
6: EX-10.1 Secured Grid Note With Cambridge Trust Company 2 19K
15: EX-10.10 Tax Sharing Agreement 17 62K
16: EX-10.11 Indemnification Agreement 14 55K
17: EX-10.12 Consulting Agreement 10 43K
18: EX-10.13 Indemnification Agreement 7 33K
19: EX-10.14 Employment Agreement With D.H.Nixon 73 232K
20: EX-10.15 Service Agreement 19 56K
21: EX-10.16 Employment Agreement With Anthony Napolitano 19 56K
22: EX-10.17 Service Agreement 19 57K
23: EX-10.18 Optional Service Agreement 31 73K
24: EX-10.19 Letter Agreement With Dow Jones Telrate 18 58K
7: EX-10.2 Inventory and A/R Security Agreement 10 44K
25: EX-10.20 Optional Service Delivery Agreement 22 51K
26: EX-10.21 Optional Service Agreement 49 122K
27: EX-10.22 Direct Feed Delivery Agreement 8 27K
28: EX-10.23 Amendment Dated as of October 31, 1995 12 44K
29: EX-10.24 Optional Service Delivery Agreement 64 181K
30: EX-10.25 Optional Service Delivery Agreement 58 138K
31: EX-10.26 Optional Service Delivery Agreement 18 61K
32: EX-10.27 Optional Service Delivery Agreement 17 63K
33: EX-10.28 Letter Agreement 3 23K
34: EX-10.29 Agreement to Supply Information 14 33K
8: EX-10.3 Lease Agreement With Ksa Realty Trust 74 189K
35: EX-10.30 Service Agreement 29 84K
36: EX-10.31 Amendment to Services Agreement 30 97K
37: EX-10.32 Amendment T0 Services Agreement 2 20K
38: EX-10.33 Software License Agreement 19 62K
39: EX-10.34 Option Agreement 5 26K
40: EX-10.35 Lease Dated December 7, 1993 208 654K
41: EX-10.36 Cera LLC Unit Grant Plan 5 22K
42: EX-10.37 Cera LLC Unit Option Plan 73 223K
43: EX-10.38 Contingent Option Agreement 11 41K
44: EX-10.39 Mgi Special Stock Option Plan 62 206K
9: EX-10.4 Advisory Agreement With Goldman Sachs Group Lp 22 61K
45: EX-10.40 Mgi Stock Option Plan 18 62K
10: EX-10.5 Form of Employment Agreement 21 68K
11: EX-10.6 Letter Agreement With Philippe A. Michelon 4 26K
12: EX-10.7 Severance Agreement With D.H.Lucking, Jr. 4 23K
13: EX-10.8 Registration and Participation Agreement 42 154K
14: EX-10.9 Interim Services Agreement 7 35K
46: EX-21.1 Subsidiaries of the Registrant 1 12K
47: EX-23.1 Consent of Cooper & Lybrand LLP 1 13K
48: EX-23.2 Consent of Coopers & Lybrand LLP 1 14K
49: EX-23.3 Consent of Kpmg Peat Marwick LLP 1 14K
50: EX-23.4 Consent of Kpmg Peat Marwick LLP 1 14K
51: EX-27 Financial Data Schedule 1 15K
EXHIBIT 10.14
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of August 31, 1996, among McCarthy,
Crisanti & Maffei, Inc., a New York corporation ("Employer"), MCM Group, Inc.,
a Delaware corporation ("Holding"), and David D. Nixon (the "Employee").
W I T N E S S E T H :
WHEREAS, on August 31, 1996, 100% of the outstanding shares of common
stock of Holding was distributed to the stockholders of record of VK/AC Holding,
Inc. on the record date for such distribution (such distribution, the
"Spin-off");
WHEREAS, in order to secure the continued services of the Employee
following the Spin-off, Employer desires to enter into an agreement embodying
the terms of such employment (the "Agreement"); and
WHEREAS, the Employee desires to accept such continued employment and
enter into such Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, Employer and the
Employee hereby agree as follows:
1. Agreement to Employ. Upon the terms and subject to the conditions of
this Agreement, Employer hereby employs the Employee and the Employee hereby
accepts employment by Employer.
2. Term; Position and Responsibilities.
(a) Term of Employment. Unless the Employee's employment shall sooner
terminate pursuant to Section 7, Employer shall employ the Employee for an
initial term commencing on the date hereof and ending on the third anniversary
thereof. Employment shall thereafter be deemed to be automatically extended,
upon the same terms and conditions, for successive periods of two years each,
unless either party, at least one year prior to the expiration of the initial
term or any extended term, shall give written notice to the other of its
intention not to renew such employment. The period during which Employee is
employed pursuant to this Agreement, including any extension thereof in
accordance with the preceding sentence, shall be referred to as the "Employment
Period".
(b) Position and Responsibilities. During the term of the Employee's
employment hereunder, the Employee will serve as President and Chief Executive
Officer of Holding and Employer and the Employee will devote all of his skill,
knowledge and working time (except for (i) reasonable vacation time and absence
for sickness or similar disability and (ii) to the extent that it does not
interfere with the performance of the Employee's duties hereunder, (A) such
reasonable time as may be devoted to service on boards of directors or the
fulfillment of civic responsibilities, (B) reasonable time as may be necessary
from time-to-time for personal financial matters and (C) reasonable time as may
be devoted to the teaching of university courses and similar activities to
enhance Employee's professional reputation to the conscientious performance of
such duties. The Employee represents that he is entering into this Agreement
voluntarily and that his employment hereunder and compliance by him with the
terms and conditions of this Agreement will not conflict with or result in the
breach of any agreement to which he is a party or by which he may be bound.
3. Base Salary. As compensation for the services to be performed by the
Employee hereunder, Employer will pay the Employee an annual base salary of
$234,000 during the Employment Period and, in the event that employment
hereunder is terminated by death, for six months thereafter. Employer will
review the Employee's base salary from time to time during the Employment
Period, but not less than on an annual basis, and, in the discretion of the
Board of Directors of Employer ("Employer's Board"), may increase such base
salary from time to time based upon the performance of the Employee, the
financial condition of Employer, prevailing industry salary scales and such
other factors as Employer's Board shall consider relevant. (The annual base
salary payable to the Employee under this Section 3, as the same may be
increased from time to time, shall hereinafter be referred to as the "Base
Salary".) The Base Salary payable under this Section 3 shall be reduced to the
extent that the Employee elects to defer such Base Salary under the terms of any
deferred compensation or savings plan maintained or established by Employer.
Employer shall pay the Employee the Base Salary in semi-monthly installments, or
in such other installments as may be mutually agreed upon by Employer and the
Employee.
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4. Incentive Compensation Arrangements.
(a) Incentive Compensation. During the Employment Period, the Employee
shall participate in Employer's incentive compensation programs for its
executive officers existing from time to time, including an annual performance
bonus program pursuant to which the Employee shall be entitled to receive an
annual incentive award if Employer achieves the annual operating targets and
Employee achieves the performance goals established by Employers' Board from
time to time, such performance bonus (i) to equal 100% of the Employee's Base
Salary for a fiscal year of Employer if Employer and the Employee achieve 100%
of the performance objectives established for such fiscal year and (ii) to be
increased or reduced if Employer and the Employee exceed or fail to achieve 100%
of such performance objectives for such fiscal year, respectively, on a
proportionate basis, in accordance with the Performances Ranges and
corresponding Bonus Award levels set forth in the letter, dated May 15, 1995,
from Dennis J. McDonnell, President of Van Kampen American Capital Investment
Advisory Corp., to the Employee, provided that, if Employer fails to achieve at
least 80% of the performance objectives established by the Board for such fiscal
year, any incentive award paid to the Employee hereunder for such fiscal year
shall be paid in the sole discretion of the Board.
(b) Opportunity to Purchase Shares. The Employee shall be given the
opportunity to purchase up to 3,000 shares (the "Shares") of the Class C Common
Stock of Holding, par value $.01 per share (the "Common Stock"), at a purchase
price of $100 per share, but in no event shall Holding be required to offer to
sell or to sell any Shares to the Employee at any time at which making such an
offer or selling any such Shares would violate any applicable securities law.
The terms and conditions of the Employee's purchase of any Shares, including the
right of first refusal of Holding with respect to such Shares, the right of
Holding to purchase such Shares from the Employee under certain circumstances
and the right of the Employee to require Holding to purchase such Shares under
certain circumstances, shall be set forth in a separate Management Stock
Subscription Agreement, substantially in the form attached hereto as Exhibit A,
to be entered into by Holding and the Employee.
(c) Options. Upon the purchase of the Shares pursuant to Section 4(b),
the Employee shall be granted non-qualified stock options to purchase
additional shares of the
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Common Stock, each such option to be granted pursuant to the terms of the MCM
Group, Inc. Stock Option Plan (the "Stock Option Plan") and to have a ten year
term, as follows: (i) Employee shall be granted options to purchase up to an
aggregate of 7,260 shares of Common Stock (or, if less, a number of shares of
Common Stock equal to the product of (x) the number of Shares purchased by the
Employee pursuant to Section 4(b), multiplied by (y) 2.42) (the Options"), (ii)
one-half of the Options shall be granted at an exercise price per share equal to
$100 (the "Initial Value Options") and the remaining one-half of such Options
shall be granted at an exercise price of $143.60 (the "Premium Options"), (iii)
one-half of the Initial Value Options and one-half of the Premium Options shall
generally become exercisable in five equal annual installments on each of the
first five anniversaries of the date of grant and (iv) the remaining one-half of
the Initial Value Options and the remaining one-half of the Premium Options
shall generally become exercisable (A) as of the third anniversary of the date
of grant, if and only if Holding and its subsidiaries shall have achieved the
maximum EBITDA target provided for under the terms of the Option Agreement (as
defined below), provided that if Holding and its subsidiaries shall have
achieved EBITDA as of such anniversary date greater than the minimum EBITDA
target specified in the Option Agreement but less than the maximum EBITDA target
so specified, a proportionate share of the Performance Options shall become
exercisable as of such date, or (B) nine years following the date of grant,
subject, in each such case under the following clauses (iii) and (iv), to the
Employee's continuous employment through the applicable vesting date. The terms
and conditions of the Options (including those described herein) shall be set
forth in the Stock Option Plan and a separate Management Stock Option Agreement,
substantially in the form attached hereto as Exhibit B, to be entered into by
the Employee and Holding (the "Option Agreement").
5. Employee Benefits. During the term of the Employee's employment
hereunder, employee benefits, including life, medical, dental and disability
insurance, will be provided to the Employee in accordance with programs of
Employer then available to executive employees. The Employee shall also be
entitled to participate in all of Employer's profit sharing, pension,
retirement, deferred compensation and savings plans, as the same may be amended
and in effect from time to time, at levels and having interests commensurate
with the Employee's then current period of service, compensation and position.
The benefits
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to be provided pursuant to this Section 5 shall be at least generally comparable
in the aggregate to those prevailing from time to time in Employer's industry.
6. Perquisites and Expenses.
(a) General. During the term of the Employee's employment hereunder,
the Employee shall be entitled to participate in any special benefit or
perquisite program generally available from time to time to executive officers
of Employer on the terms and conditions then prevailing under such program.
(b) Business Travel, Lodging, etc. Employer shall reimburse the
Employee for reasonable travel, lodging and meal expenses incurred by him in
connection with his performance of services hereunder upon submission of
evidence, satisfactory to Employer, of the incurrence and purpose of each such
expense.
(c) Vacation and Sick Days. The Employee shall be entitled to four
weeks of paid vacation per year, or such other longer period as Employer's Board
may determine to be appropriate, without, except as permitted in the discretion
of the chairman of Employer's Board, carry-over accumulation. The Employee shall
be entitled to continue to accumulate paid sick days in accordance with the
current policies of the Employer.
7. Termination of Employment.
(a) Termination Due to Death or Disability. In the event that the
Employee's employment hereunder terminates due to death or is terminated by
Employer due to the Employee's Disability (as defined below), no termination
benefits shall be payable to or in respect of the Employee except as provided in
Section 7(f)(ii). For purposes of this Agreement, "Disability" shall mean a
physical or mental disability that prevents the performance by the Employee of
substantially all of his duties hereunder lasting for a continuous period of six
months or longer. The reasoned and good faith judgment of Employer's Board as to
the Employee's Disability shall be final and shall be based on such competent
medical evidence as shall be presented to it by the Employee or by any physician
or group of physicians or other competent medical experts employed by the
Employee or Employer to advise Employer's Board.
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(b) Termination by Employer for Cause. The Employee's employment may be
terminated for "Cause" by Employer. "Cause" shall mean (i) the willful failure
of the Employee substantially to perform his duties hereunder (other than any
such failure due to Disability) for a period of three business days after a
written demand for substantial performance is delivered to the Employee by
Employer's Board, which written notice identifies the manner in which Employer's
Board believes that the Employee has not substantially performed his duties,
(ii) in the reasonable judgment of the Board, the Employee's engaging in willful
and serious misconduct that is injurious to Employer or any of its affiliates,
(iii) the Employee's conviction of, or entering a plea of nolo contendere to, a
crime that constitutes a felony, (iv) the violation by the Employee of any
federal or state securities law, other than an immaterial violation of a
procedural law, or (v) the willful and material breach by the Employee of any of
his material obligations hereunder, or the breach by the Employee of any written
covenant or agreement with Employer or any of its affiliates not to disclose any
information pertaining to Employer or any of its affiliates, not to compete or
interfere with Employer or any of its affiliates or with respect to any
take-along or similar covenants applicable to the Shares, Options or any other
common stock of Holding held by the Employee, including without limitation the
covenants set forth in Sections 8, 9, 10 and 11 hereof.
(c) Termination Without Cause. A termination "Without Cause" shall mean
a termination of employment by Employer other than due to Disability as
described in Section 7(a) or Cause as defined in Section 7(b).
(d) Termination by the Employee. The Employee may terminate his
employment for "Good Reason". "Good Reason" shall mean a termination of
employment by the Employee within 30 days following (i) any assignment to the
Employee of any duties that are significantly different from, and result in a
substantial diminution of, the duties that he is to assume on the date hereof,
(ii) the failure of Employer to obtain the assumption of this Agreement by any
successor as contemplated by Section 14 or (iii) any reduction of the Employee's
Base Salary or incentive compensation opportunity from the levels set forth in
Sections 3 and 4(a) hereof, respectively.
(e) Notice of Termination. Any termination by Employer pursuant to
Section 7(a), 7(b) or 7(c), or by the Employee pursuant to Section 7(d), shall
be communicated by
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a written "Notice of Termination" addressed to the other parties to this
Agreement. A "Notice of Termination" shall mean a notice stating that the
Employee's employment hereunder has been or will be terminated, indicating the
specific termination provisions in this Agreement relied upon and setting forth
in reasonable detail the facts and circumstances claimed to provide a basis for
such termination of employment.
(f) Payments Upon Certain Terminations.
(i) In the event of a termination of the Employee's employment by
Employer Without Cause or a termination by the Employee of his employment
for Good Reason during the Employment Period, subject to Section 7(h),
Employer shall pay to the Employee (A) the sum of (1) his Base Salary, if
any, for the period from the Date of Termination and ending on the later of
(x) the last day of the Employment Period, determined without regard to this
Section 7, and (y) the first anniversary of the Date of Termination, and (2)
the excess of (I) the pro rata amount of incentive compensation for the
portion of the calendar year preceding the Employee's Date of Termination
(such portion, the "Proportionate Period"), that would have been payable to
the Employee if he had remained employed for the entire year and assuming
that all applicable targets had been met, over (II) the amount of incentive
compensation previously paid or, at the election of the Employee, deferred
for the Proportionate Period, less (B) any amount paid or to be paid to the
Employee under the terms of any severance plan or program of Employer, if
any, as in effect on the Date of Termination, provided that Employer may, at
any time, pay to the Employee in a single lump sum an amount equal to (x)
Employer's good faith determination of the sum of the present values of the
installments of the Base Salary remaining to be paid to the Employee
pursuant to clause (A)(1) above, and the amount determined under clause
(A)(2) above not paid at that time, in each case as of the date of such lump
sum payment, calculated using a discount rate equal to the weighted average
cost of Employer's bank indebtedness obligations outstanding on the Date of
Termination or, if there are no such obligations outstanding, one percentage
point greater than the average prime rate charged on such date by Chase Bank
or such other nationally recognized bank designated by Employer, less (y)
the amount determined under clause (B) above. If the Employee's employment
shall
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terminate and he is entitled to receive salary continuation payments
under this Section 7(f)(i), (1) Employer shall continue to provide to the
Employee the welfare benefits (other than disability insurance) referred to
in Section 5 for the greater of (a) the remainder of the calendar year in
which the Date of Termination occurs, or (b) six months from the Date of
Termination and (2) if the Employee's employment shall terminate hereunder
pursuant to circumstances under which he is entitled to receive payments
under this Section 7(f)(i), and the Employer has not paid a lump sum to
Employee pursuant to the proviso to the first sentence of Section 7(f)(i),
the Employee shall have an affirmative duty to seek new employment which is
suitable to his skills and training, provided that the Employee's conduct in
satisfaction of such duty shall be consistent with Section 9, unless
Employer elects to waive its rights under Section 9. If the Employee obtains
new employment, any salary continuation payments to which the Employee may
be entitled pursuant to this Section 7(f)(i) shall be reduced or cancelled
to the extent that any salary or other cash compensation from such
employment is paid or payable to or on behalf of the Employee. Any benefits
payable to the Employee under any otherwise applicable plans, policies and
practices of Employer shall not be limited by this provision.
(ii) If, during the Employment Period, the Employee's employment shall
terminate upon his death, Disability or retirement on or after age 60, or if
the Employee shall terminate his employment without Good Reason or if
Employer shall terminate the Employee's employment for Cause, subject to
Section 7(h), Employer shall pay the Employee his full Base Salary through
the Date of Termination or, in the case of the Employee's death, through one
month following the Date of Termination, plus, in the case of termination
upon the Employee's death, Disability or retirement on or after age 60, the
excess of (x) the pro rata amount of incentive compensation for the
Proportionate Period preceding the Employee's Date of Termination (exclusive
of any time between the onset of the Disability and the resulting Date of
Termination), that would have been payable to the Employee if he had
remained employed for the entire year and assuming that all applicable
targets had been met, over (y) the amount of incentive compensation
previously paid or, at the election of the Employee, deferred for the
Proportionate Period. Any
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benefits payable to or in respect of the Employee under any otherwise
applicable plans, policies and practices of Employer shall not be limited by
this provision.
(g) Date of Termination. As used in this Agreement, the term "Date of
Termination" shall mean (i) if the Employee's employment is terminated by his
death or retirement on or after age 60, the date of his death or retirement,
(ii) if the Employee's employment is terminated by the Employee without Good
Reason, the date of his termination, (iii) if the Employee's employment is
terminated by Employer for Cause, the date on which Notice of Termination is
given as contemplated by Section 7(e), and (iv) if the Employee's employment is
terminated by Employer Without Cause, due to the Employee's Disability or by the
Employee for Good Reason, 30 days after the date on which Notice of Termination
is given as contemplated by Section 7(e) or, if no such Notice is given, 30
days after the date of termination of employment.
(h) Resignation from Offices and Board Memberships. Effective as of any
Date of Termination under this Section 7 or otherwise as of the date of the
Employee's termination of employment with Employer, the Employee shall resign
from all (i) offices then held by him in Holding, Employer or any of their
respective subsidiaries and (ii) Board memberships then held by him on the
Boards of (x) Holding, Employer or any of their respective subsidiaries or (y)
any other organization with which he is affiliated by virtue of his position
with Holding, Employer or any of their respective subsidiaries. The Employee
shall execute all documents and instruments and take all other actions
reasonably requested by Holding or Employer to effectuate such resignations. All
payments due or to become due to the Employee pursuant to this Agreement,
including any such payments pursuant to Section 7(f), and, to the fullest extent
permitted by applicable law, pursuant to any otherwise applicable plan, policy,
program or practice of Holding, Employer or any of their respective subsidiaries
shall be subject to such resignations by the Employee and the performance by
Employee of each of his obligations under this Section 7(h).
8. Unauthorized Disclosure. During and after the term of his
employment, the Employee shall not, without the written consent of the
Employer's Board or a person authorized thereby, disclose to any person (other
than an officer, other employee or director of Employer or its affiliates, or a
person to whom disclosure is reasonably
9
necessary or appropriate in connection with the performance by the Employee of
his duties as an executive of Employer) any confidential or proprietary
information, knowledge or data that is not theretofore publicly known and in the
public domain obtained by him while in the employ of Employer with respect to
Employer or any of its subsidiaries or affiliates or with respect to any
products, improvements, customers, methods of distribution, sales, prices,
profits, costs, contracts, suppliers, business prospects, business methods,
techniques, research, trade secrets or know-how of Employer or any of its
subsidiaries or affiliates (collectively, "Proprietary Information"), except as
may be required by law or as may be required in connection with any judicial or
administrative proceedings or inquiry.
9. Non-Competition. During the period commencing on the date hereof and
ending on the later of (i) the greater of (x) twelve months and (y) the number
of months, if any, providing the basis for calculating any termination payment
to the Employee under Section 7(f)(i) and (ii) in the event that the Employee
had, but did not exercise, the contractual right to put to Holding for
repurchase securities of Holding, the expiration of any period following
termination of the Employee's employment during which the Employee is a
beneficial owner of securities of Holding (except any time during which a
repurchase by Employer, pursuant to a repurchase commitment permitted or
required under Section 6(a) of the Management Stock Subscription Agreement is
prevented solely by the terms of Section 11(a) of the Management Stock
Subscription Agreement), the Employee shall not engage directly or indirectly
in, become employed by, serve as an agent or consultant to, or become a partner,
principal or stockholder of any partnership, corporation or other entity in
connection with a business of any such partnership, corporation or other entity
which competes with the financial information, financial analysis or any other
business of Holding, the Employer or any of their respective subsidiaries in any
geographical area in which Holding, Employer or any of their respective
subsidiaries is then engaged in such business.
10. Non-Solicitation of Employees. Except in connection with the
performance of his duties for Holding, Employer and their respective
subsidiaries during the period of the Employee's employment with Employer,
during the period of the Employee's employment and thereafter for three years
(the "Non-Solicitation Restriction Period") the Employee shall not, directly or
indirectly, for his own account or the account of any other person or entity
with
10
which he shall become associated in any capacity, (a) solicit for employment or
employ the services of any person who at the time of such solicitation for
employment is employed by or otherwise engaged to perform services for Holding,
Employer or any of their respective subsidiaries, regardless of whether such
employment is direct or through an entity with which such person is employed or
associated, or otherwise intentionally interfere with the relationship of
Holding, Employer or any of their respective subsidiaries with, any person or
entity who or which is at the time employed by or otherwise engaged to perform
services for Employer, including under this clause (a) any person who performs
services on behalf of Holding, Employer or any of their respective subsidiaries
as an independent sales agent or sales representative, or (b) induce any
employee of Holding, Employer or any of their respective subsidiaries to engage
in any activity which the Employee is prohibited from engaging in under Sections
9, 10 and 11 hereof or to terminate his employment with Holding, Employer or any
of their respective subsidiaries.
11. Non-Solicitation of Clients. Except in connection with the
performance of his duties for Holding, Employer and their respective
subsidiaries during the period of the Employee's employment with Employer,
during the Non-Solicitation Restriction Period, the Employee shall not solicit
or otherwise attempt to establish for himself or any other person, firm or
entity any business relationship with any person, firm or corporation which
during the twelve-month period preceding the date his employment terminates was
a customer, client or distributor of Holding, Employer or any of their
respective subsidiaries (an "Employer Client"), provided that nothing in this
Section 11 shall prohibit the Employee from (i) attempting to establish any
business relationship for the provision of services other than financial
information or financial analysis services; or (ii) advertising or promoting his
provision of services generally to the investing public so long as such
advertising does not include direct written or oral solicitation of any Employer
Clients.
12. Return of Documents. In the event of the termination of the
Employee's employment for any reason, the Employee will deliver to Employer all
non-personal documents and data of any nature pertaining to his work with
Employer, and he will not take with him any documents or data of any description
or any reproduction thereof, or any documents or data containing or pertaining
to any Proprietary Information.
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13. Injunctive Relief with Respect to Covenants. The Employee
acknowledges and agrees that the covenants and obligations of the Employee with
respect to noncompetition, nonsolicitation, confidentiality and Employer
property relate to special, unique and extraordinary matter and that a violation
of any of the terms of such covenants and obligations will cause Employer
irreparable injury for which adequate remedies are not available at law.
Therefore, the Employee agrees that Employer shall be entitled to an injunction,
restraining order or such other equitable relief (without the requirement to
post bond) as a court of competent jurisdiction may deem necessary or
appropriate to restrain the Employee from committing any violation of the
covenants and obligations referred to in this Section 13. These injunctive
remedies are cumulative and in addition to any other rights and remedies
Employer may have at law or in equity.
14. Assumption of Agreement. Employer will require any successor (by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of Employer, by agreement in form and substance
reasonably satisfactory to the Employee, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that Employer
would be required to perform it if no such succession had taken place. Failure
of Employer to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the Employee to
compensation from Employer in the same amount and on the same terms as the
Employee would be entitled hereunder if Employer terminated his employment
Without Cause as contemplated by Section 7, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
15. Entire Agreement. Except as otherwise expressly provided herein,
this Agreement (including the Exhibits hereto) constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof, and all
promises, representations, understandings, arrangements and prior agreements
relating to such subject matter (including those made to or with the Employee by
any other person or entity) are merged herein and superseded hereby.
16. Indemnification. Employer agrees that it shall indemnify and hold
harmless the Employee to the
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fullest extent permitted by Delaware law from and against any and all
liabilities, costs, claims and expenses including without limitation all costs
and expenses incurred in defense of litigation, including attorneys' fees,
arising out of the employment of the Employee hereunder, except to the extent
arising out of or based upon the gross negligence or willful misconduct of the
Employee. Costs and expenses incurred by the Employee in defense of litigation,
including attorneys' fees, shall be paid by Employer in advance of the final
disposition of such litigation upon receipt of an undertaking by or on behalf of
the Employee to repay such amount if it shall ultimately be determined that the
Employee is not entitled to be indemnified by Employer under this Agreement.
17. Miscellaneous.
(a) Binding Effect. This Agreement shall be binding on and inure to the
benefit of Employer and its successors and permitted assigns. This Agreement
shall also be binding on and inure to the benefit of the Employee and his heirs,
executors, administrators and legal representatives.
(b) Arbitration. Any dispute or controversy arising under or in
connection with this Agreement (except any dispute or controversy arising under
Section 8, 9, 10, 11 or 13 hereof) shall be resolved by binding arbitration. The
arbitration shall be held in the City of New York, New York and except to the
extent inconsistent with this Agreement, shall be conducted in accordance with
the Commercial Arbitration Rules of the American Arbitration Association then in
effect at the time of the arbitration, and otherwise in accordance with
principles which would be applied by a court of law or equity. The arbitrator
shall be acceptable to both Employer and the Employee. If the parties cannot
agree on an acceptable arbitrator, the dispute shall be heard by a panel of
three arbitrators one appointed by each of the parties and the third appointed
by the other two arbitrators. Any expense of arbitration shall be borne by the
party who incurs such expense and joint expenses shall be shared equally,
provided that in the event that the Employee prevails in any such arbitration on
all disputes raised by the Employee, Employer shall bear all expenses thereof,
including those of the Employee.
13
(c) Governing Law. This Agreement shall be governed by and constructed
in accordance with the laws of the State of New York.
(d) Taxes. Employer may withhold from any payments made under the
Agreement all federal, state, city or other applicable taxes as shall be
required pursuant to any law, governmental regulation or ruling.
(e) Amendments. No provisions of this Agreement may be modified, waived
or discharged unless such modification, waiver or discharge is approved by
Employer's Board or a person authorized thereby and is agreed to in writing by
the Employee and such officer as may be specifically designated by Employer's
Board. No waiver by any party hereto at any time of any breach by any other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No waiver of any provision of this Agreement shall be implied
from any course of dealing between or among the parties hereto or from any
failure by any party hereto to assert its rights hereunder on any occasion or
series of occasions.
(f) Severability. In the event that any one or more of the provisions
of this Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not be affected thereby.
(g) Notices. Any notice or other communication required or permitted to
be delivered under this Agreement shall be (i) in writing, (ii) delivered
personally, by courier service or by certified or registered mail, first-class
postage prepaid and return receipt requested, (iii) deemed to have been received
on the date of delivery or on the third business day after the mailing thereof,
and (iv) addressed as follows (or to such other address as the party entitled to
notice shall hereafter designate in accordance with the terms hereof):
(A) if to Employer, to it at:
McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza, 37th Floor
New York, New York 10005
14
Attention: General Counsel
(B) if to Holding, to it at:
c/o McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza, 37th Floor
New York, New York 10005
Attention: General Counsel
(C) if to the Employee, to him at the address listed on
the signature page hereof.
Copies of any notices or other communications given under this Agreement shall
also be given to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue
New York, New York 10152
Attention: Mr. Alberto Cribiore
and
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Franci J. Blassberg, Esq.
(h) Survival. Sections 7(h), 8, 9, 10, 11, 12, 13, 14, 16 and 17 and,
if the Employee's employment terminates in a manner giving rise to a payment
under Section 7(f), Section 7(f) shall survive the termination of the
employment of the Employee hereunder.
(i) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original and all of which together shall constitute
one and the same instrument.
(j) Headings. The section and other headings contained in this
Agreement are for the convenience of the parties only and are not intended to be
a part hereof or to affect the meaning or interpretation hereof.
15
IN WITNESS WHEREOF, Employer and Holding have duly executed this
Agreement by their authorized representatives and the Employee has hereunto set
his hand, in each case effective as of the date first above written.
McCARTHY, CRISANTI & MAFFEI, INC.
By: /s/ David Nixon
------------------------------------
Name: David Nixon
Title:
MCM GROUP, INC
By: /s/ David Nixon
------------------------------------
Name: David Nixon
Title:
DAVID D. NIXON
/s/ David D. Nixon
------------------------------------
David D. Nixon
Address:
16
EXHIBIT A
[Form of Management Stock
Subscription Agreement]
Exhibit A
MANAGEMENT STOCK SUBSCRIPTION AGREEMENT
MANAGEMENT STOCK SUBSCRIPTION AGREEMENT, dated as of October
8, 1996, between MCM Group, Inc., a Delaware corporation (the "Company"), and
the Purchaser whose name appears on the signature page hereof (the "Purchaser").
W I T N E S S E T H:
WHEREAS, on August 31, 1996, 100% of the outstanding Class A
common stock of the Company (the "Company Common Stock") was distributed to the
stockholders of record of VK/AC Holding, Inc. ("VK/AC") on the record date for
such distribution (such distribution, the "Spin-off"), including the Clayton &
Dubilier Private Equity Fund IV Limited Partnership, a Connecticut limited
partnership and majority stockholder of VK/AC (together with any successor
investment vehicle managed by Clayton, Dubilier & Rice, Inc., the "C&D Fund");
WHEREAS, immediately prior to the Spin-off, the Company
granted options to purchase an aggregate of approximately 48,359 shares of the
Class A common stock of the Company to those members of management of VK/AC and
its subsidiaries, including the Company and its subsidiaries, who, on the
effective date of the Spin-off, held options to purchase the common stock of
VK/AC;
WHEREAS, in connection with the Spin-off, the Board of
Directors of the Company has adopted the MCM Group, Inc. Stock Purchase Plan
(the "Stock Purchase Plan");
WHEREAS, following the Spin-off, the Company will issue up to
an aggregate of 18,200 shares of its Class C Common Stock, par value $.01 per
share (the "Common Stock"), to the Purchaser and to certain other purchasers who
are executives, senior officers or other key employees of the Company or one of
its direct or indirect subsidiaries, pursuant to the Stock Purchase Plan, this
Agreement and other substantially identical management stock subscription
agreements and will grant options to purchase up to 44,052 shares of Common
Stock to the Purchaser and such other executive officers and key employees
pursuant to the MCM Group, Inc. Stock Option Plan;
WHEREAS, the Purchaser (an executive, senior
officer or other key employee of the Company or one of its
direct or indirect subsidiaries) desires to subscribe for and purchase, and the
Company desires to sell to the Purchaser, the aggregate number of shares of
Common Stock set forth on the signature page hereof (each a "Share" and,
collectively, the "Shares");
NOW, THEREFORE, to implement the foregoing and in
consideration of the mutual agreements contained herein, the parties hereto
hereby agree as follows:
1. Purchase and Sale of Common Stock.
(a) Purchase of Common Stock. Subject to all of the terms and
conditions of this Agreement, the Purchaser hereby subscribes for and shall
purchase, and the Company shall sell to the Purchaser, the Shares at a purchase
price of $100.00 per Share, at the Closing provided for in Section 2(a) hereof.
Notwithstanding anything in this Agreement to the contrary, the Company shall
have no obligation to sell any Common Stock to (i) any person who will not be an
employee of the Company or a direct or indirect subsidiary of the Company
immediately following the Closing at which such Common Stock is to be sold or
(ii) any person who is a resident of a jurisdiction in which the sale of Common
Stock to him would constitute a violation of the securities, "blue sky" or other
laws of such jurisdiction.
(b) Consideration. Subject to all of the terms and conditions
of this Agreement, the Purchaser shall deliver to the Company at the Closing
referred to in Section 2(a) hereof (i) immediately available funds in an amount
equal to 40% of the aggregate purchase price set forth on the signature page
hereof and (ii) a fully executed promissory note (the "Promissory Note")
substantially in the form attached hereto as Annex A, evidencing the full
recourse interest bearing loan by the Company to the Purchaser of a principal
amount equal to 60% of such aggregate purchase price.
2. Closing.
(a) Time and Place. Except as otherwise agreed by the Company
and the Purchaser, the closing (the "Closing") of the transaction contemplated
by this Agreement shall be held at the offices of Debevoise & Plimpton, 875
Third Avenue, New York, New York at 10:00 a.m. (New York time) on October 8,
1996.
2
(b) Delivery by the Company. At the Closing the Company shall
deliver to the Purchaser a stock certificate registered in such Purchaser's name
and representing the Shares, which certificate shall bear the legends set forth
in Section 3(b).
(c) Delivery by the Purchaser. At the Closing the Purchaser
shall deliver to the Company the consideration referred to in Section 1(b)
hereof.
3. Purchaser's Representations, Warranties and Covenants.
(a) Investment Intention. The Purchaser represents and
warrants that he is acquiring the Shares solely for his own account for
investment and not with a view to or for sale in connection with any
distribution thereof. The Purchaser agrees that he will not, directly or
indirectly, offer, transfer, sell, pledge, hypothecate or otherwise dispose of
any of the Shares (or solicit any offers to buy, purchase or otherwise acquire
or take a pledge of any Shares), except in compliance with the Securities Act of
1933, as amended (the "Securities Act"), and the rules and regulations of the
Securities and Exchange Commission (the "Commission") thereunder, and in
compliance with applicable state and foreign securities or "blue sky" laws. The
Purchaser further understands, acknowledges and agrees that none of the Shares
may be transferred, sold, pledged, hypothecated or otherwise disposed of (i)
unless the provisions of Sections 4 through 8 hereof, inclusive, shall have
been complied with or have expired, (ii) unless the provisions of the
Certificate of Incorporation have been complied with or have expired, (iii)
unless (A) such disposition is pursuant to an effective registration statement
under the Securities Act, (B) the Purchaser shall have delivered to the Company
an opinion of counsel, which opinion and counsel shall be reasonably
satisfactory to the Company, to the effect that such disposition is exempt from
the provisions of Section 5 of the Securities Act or (C) a no-action letter from
the Commission, reasonably satisfactory to the Company, shall have been
obtained with respect to such disposition and (iv) unless such disposition is
pursuant to registration under any applicable state securities laws or an
exemption therefrom.
(b) Legends. The Purchaser acknowledges that the certificate
or certificates representing the Shares shall bear an appropriate legend, which
will include, without limitation, the following language:
3
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TRANSFER RESTRICTIONS, HOLDBACK AND OTHER PROVISIONS OF A
MANAGEMENT STOCK SUBSCRIPTION AGREEMENT, DATED AS OF OCTOBER
8, 1996, AND NEITHER THIS CERTIFICATE NOR THE SHARES
REPRESENTED BY IT ARE ASSIGNABLE OR OTHERWISE TRANSFERABLE
EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH MANAGEMENT
STOCK SUBSCRIPTION AGREEMENT, A COPY OF WHICH IS ON FILE WITH
THE SECRETARY OF THE COMPANY. THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE ENTITLED TO CERTAIN OF THE BENEFITS OF AND ARE
BOUND BY THE OBLIGATIONS SET FORTH IN A REGISTRATION AND
PARTICIPATION AGREEMENT, DATED AS OF AUGUST 31, 1996, AND ANY
AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS THERETO, AMONG THE
COMPANY AND CERTAIN STOCKHOLDERS OF THE COMPANY, A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY."
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE
TRANSFERRED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF UNLESS (i) (A) SUCH DISPOSITION IS PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (B) THE HOLDER HEREOF SHALL HAVE DELIVERED TO THE
COMPANY AN OPINION OF COUNSEL, WHICH OPINION AND COUNSEL SHALL
BE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT
SUCH DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF
SUCH ACT OR (C) A NO-ACTION LETTER FROM THE SECURITIES AND
EXCHANGE COMMISSION, REASONABLY SATISFACTORY TO COUNSEL FOR
THE COMPANY, SHALL HAVE BEEN OBTAINED WITH RESPECT TO SUCH
DISPOSITION AND (ii) SUCH DISPOSITION IS PURSUANT TO
REGISTRATION UNDER ANY APPLICABLE STATE SECURITIES LAWS OR AN
EXEMPTION THEREFROM."
(c) Securities Law Matters. The Purchaser acknowledges
receipt of advice from the Company that (i) the Shares have not been registered
under the Securities Act or any state or foreign securities or "blue sky" laws,
(ii) it is not anticipated that there will be any public market for the Shares,
(iii) the Shares must be held indefinitely and the Purchaser must continue to
bear the economic risk of the investment in the Shares unless the Shares are
subsequently registered under the Securities Act and such state or foreign laws
or an exemption from registration is available,
4
(iv) Rule 144 promulgated under the Securities Act ("Rule 144") is not presently
available with respect to sales of securities of the Company and the Company has
made no covenant to make Rule 144 available, (v) when and if the Shares may be
disposed of without registration in reliance upon Rule 144, such disposition can
generally be made only in limited amounts in accordance with the terms and
conditions of such Rule, (vi) the Company does not plan to file reports with the
Commission or make information concerning the Company publicly available, (vii)
if the exemption afforded by Rule 144 is not available, sales of the Shares may
be difficult to effect because of the absence of public information concerning
the Company, (viii) a restrictive legend in the form heretofore set forth shall
be placed on the certificates representing the Shares and (ix) a notation shall
be made in the appropriate records of the Company indicating that the Shares are
subject to restrictions on transfer set forth in this Agreement and, if the
Company should in the future engage the services of a stock transfer agent,
appropriate stop-transfer restrictions will be issued to such transfer agent
with respect to the Shares.
(d) Compliance with Rule 144. If any of the Shares are to be
disposed of in accordance with Rule 144, the Purchaser shall transmit to the
Company an executed copy of Form 144 (if required by Rule 144) no later than the
time such form is required to be transmitted to the Commission for filing and
such other documentation as the Company may reasonably require to assure
compliance with Rule 144 in connection with such disposition.
(e) Ability to Bear Risk. The Purchaser represents and
warrants that (i) the financial situation of the Purchaser is such that he can
afford to bear the economic risk of holding the Shares for an indefinite period
and (ii) he can afford to suffer the complete loss of his investment in the
Shares.
(f) Questionnaire. The Purchaser agrees to furnish such
documents and comply with such reasonable requests of the Company as may be
necessary to substantiate his status as a qualifying investor in connection
with the private offering of shares of Common Stock to the Purchaser and the
other purchasers to whom such shares are being sold in connection with the
Spin-off. The Purchaser represents and warrants that all information contained
in such documents and any other written materials concerning the status of the
Purchaser furnished by the Purchaser to the Company in connection with such
requests will be true, complete and
5
correct in all material respects.
(g) Access to Information. The Purchaser represents and
warrants that (i) he has carefully reviewed the materials furnished to him in
connection with the transaction contemplated hereby, (ii) he has been granted
the opportunity to ask questions of, and receive answers from, representatives
of the Company concerning the terms and conditions of the purchase of the Shares
and to obtain any additional information that he deems necessary to verify the
accuracy of the information contained in such materials and (iii) his knowledge
and experience in financial and business matters is such that he is capable of
evaluating the risks of the investment in the Shares.
(h) Registration; Restrictions on Sale upon Public Offering.
The Purchaser shall be entitled to the rights and subject to the obligations
created under the Registration and Participation Agreement, dated as of August
31, 1996, as the same may be amended from time to time, among the Company and
certain stockholders of the Company, to the extent provided therein. The
Purchaser agrees that, in the event that the Company files a registration
statement under the Securities Act with respect to an underwritten public
offering of any shares of its capital stock, the Purchaser will not effect any
public sale (including a sale under Rule 144) or distribution of any shares of
the Common Stock (other than as part of such underwritten public offering)
during the 20 days prior to and the 180 days after the effective date of such
registration statement.
(i) Section 83(b) Election. The Purchaser agrees that, within
20 days after the Closing, he shall give notice to the Company as to whether or
not he has made or will make an election pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, with respect to the Shares purchased
at such Closing, and acknowledges that he will be solely responsible for any and
all tax liabilities payable by him in connection with his receipt of the Shares
or attributable to his making or failing to make such an election.
4. Restrictions on Disposition of Shares. Neither the
Purchaser nor any of his heirs or representatives shall sell, assign, transfer,
pledge or otherwise directly or indirectly dispose of or encumber any of the
Shares to or with any other person, firm or corporation (including, with out
limitation, transfers to any other holder of the Company's capital stock,
dispositions by gift, by will, by a
6
corporation as a distribution in liquidation and by operation of law other than
a transfer of Shares by operation of law to the estate of the Purchaser upon the
death of the Purchaser, provided that such estate shall be bound by all
provisions of this Agreement and the Certificate of Incorporation of the
Company) except as provided in Sections 5 through 8 hereof, inclusive and in
the transfer restrictions contained in the Certificate of Incorporation of the
Company. The restrictions contained in this Section 4 (but not the restrictions
contained in the Certificate of Incorporation which shall terminate only as
provided therein) shall terminate in the event that an underwritten public
offering of the Class A common stock of the Company led by one or more
underwriters at least one of which is of nationally recognized standing (a
"Public Offering") has been consummated and shall not apply to a sale as part
of a Public Offering or at any time thereafter.
5. Options of the Company and the C&D Fund Upon Proposed
Disposition.
(a) Rights of First Refusal. If the Purchaser desires to
accept an offer (which must be in writing and for cash, be irrevocable by its
terms for at least 60 days and be a bona fide offer as determined in good faith
by the Board of Directors of the Company (the "Board") or the Executive
Committee thereof) from any prospective purchaser to purchase all or any part of
the Shares at any time owned by him, he shall give notice in writing to the
Company and the C&D Fund (i) designating the number of Shares proposed to be
sold, (ii) naming the prospective purchaser of such Shares and (iii) specifying
the price (the "Offer Price") at and terms (the "Offer Terms") upon which he
desires to sell the same. During the 30-day period following receipt of such
notice by the Company and the C&D Fund (the "First Refusal Period"), the Company
shall have the right to purchase from the Purchaser all (but not less than all)
of the Shares specified in such notice, at the Offer Price and on the Offer
Terms. The Company hereby undertakes to use reasonable efforts to act as
promptly as practicable following receipt of such notice to determine whether it
shall elect to exercise such right. If the Company fails to exercise such rights
within the First Refusal Period, the C&D Fund shall have the right to purchase
all (but not less than all) of the Shares specified in such notice, at the Offer
Price and on the Offer Terms, at any time during the period beginning at the
earlier of (x) the end of the First Refusal Period and (y) the date of receipt
by the C&D Fund of written notice that the Company has elected not to exercise
7
its rights under this Section 5(a) and ending 30 days thereafter (the "Second
Refusal Period"). The rights provided hereunder shall be exercised by written
notice to the Purchaser given at any time during the applicable period. If such
right is exercised, the Company or the C&D Fund, as the case may be, shall
deliver to the Purchaser a certified or bank check for the Offer Price, payable
to the order of the Purchaser, against delivery of certificates or other
instruments representing the Shares so purchased, appropriately endorsed by the
Purchaser. If such right shall not have been exercised prior to the expiration
of the Second Refusal Period, then at any time during the 30 days following the
expiration of the Second Refusal Period, the Purchaser may sell such Shares to
(but only to) the intended purchaser named in his notice to the Company and the
C&D Fund at the Offer Price and on the Offer Terms specified in such notice,
free of all restrictions or obligations imposed by, and free of any rights or
benefits set forth in, Sections 5 through 8, inclusive, of this Agreement,
provided that such intended purchaser shall have agreed in writing to make and
be bound by the representations, warranties and covenants set forth in Section 3
hereof, other than those set forth in Sections 3(g), the first sentence of 3(h)
and 3(i), pursuant to an instrument of assumption satisfactory in substance and
form to the Company. The right of the Purchaser to sell Shares set forth in this
Section 5(a), subject to the rights of first refusal set forth in this Section
5(a), shall be suspended during the Option Periods referred to in Section 6
hereof, but the provisions of Section 6 shall not otherwise restrict the
ability of the Purchaser to sell the Shares, whether before or after such
Option Periods, pursuant to the terms and subject to the restrictions set forth
in this Section 5(a). The rights of the Company and the C&D Fund under the
Certificate of Incorporation of the Company shall not be effected by the
provisions of this Section 5(b).
(b) Public Offering. In the event that a Public Offering has
been consummated, neither the Company nor the C&D Fund shall have any rights to
purchase the Shares from the Purchaser pursuant to this Section 5 and this
Section 5 shall not apply to a sale as part of a Public Offering or at any time
thereafter.
6. Options Effective on Termination of Employment or
Unforeseen Personal Hardship of the Purchaser.
(a) Termination of Employment. If the Purchaser's active
employment with the Company and any direct and
8
indirect subsidiaries of the Company that employ the Purchaser is terminated
for any reason whatsoever the Company shall have an option to purchase all or a
portion of the Shares then held by the Purchaser (or, if his employment was
terminated by his death, his estate) and shall have 60 days from the date of the
Purchaser's termination (such 60-day period being hereinafter referred to as the
"First Option Period") during which to give notice in writing to the Purchaser
(or his estate) of its election to exercise or not to exercise such option, in
whole or in part. The Company hereby undertakes to use reasonable efforts to act
as promptly as practicable following such termination to make such election. If
the Company fails to give notice that it intends to exercise such option within
the First Option Period or the Company gives notice that it intends to exercise
such option with respect to only a portion of the Shares, the C&D Fund shall
have the right to purchase all or a portion of the Shares then held by the
Purchaser (or his estate) that will not be repurchased by the Company and shall
have until the expiration of the earlier of (x) 60 days following the end of the
First Option Period, or (y) 60 days from the date of receipt by the C&D Fund of
written notice that the Company does not intend to exercise such option or
intends to exercise such option with respect to only a portion of the Shares
(such 60-day period being hereinafter referred to as the "Second Option
Period"), to give notice in writing to the Purchaser (or his estate) of the C&D
Fund's exercise of its option, in whole or in part. If the options of the
Company and the C&D Fund to purchase the Shares pursuant to this subsection are
not exercised with respect to all of the Shares as provided herein (other than
as a result of Section 11 hereof), the Purchaser (or his estate) shall be
entitled to retain the Shares which could have been acquired on exercise
thereof, subject to all of the provisions of this Agreement (including without
limitation Section 5(a)). If the Company and the C&D Fund have failed to
exercise their respective options pursuant to this Section 6(a) with respect to
all of the Shares within the time periods specified herein, and if the
Purchaser's active employment with each of the Company and any direct and
indirect subsidiaries of the Company that employ the Purchaser is terminated (A)
by such employer or employers without Cause, (B) by the Purchaser by Retirement
at Normal Retirement Age, (C) by reason of the Permanent Disability or death of
the Purchaser, or (D) if, as of the effective date of such termination, the
Purchaser is employed by the Company under an effective Employment Agreement,
dated as of the date hereof (the "Employment Agreement"), among the Company or
any of its direct or indirect subsidiaries and
9
the Purchaser, by the Purchaser for Good Reason (as such term is defined in the
Employment Agreement), then on notice from the Purchaser (or his estate) in
writing and delivered to the Company within 30 days following the end of the
Second Option Period, the Company shall purchase all (but not less than all) of
the Shares then held by the Purchaser (or his estate). All purchases pursuant to
this Section 6(a) by the Company or the C&D Fund shall be for a purchase price
and in the manner prescribed by Section 7 hereof.
(b) Unforeseen Personal Hardship. In the event that the
Purchaser, while in the employment of the Company or any direct or indirect
subsidiary of the Company, experiences Unforeseen Personal Hardship, the Board
will carefully consider any request by the Purchaser that the Company repurchase
the Purchaser's Shares at a price determined in accordance with Section 7
hereof, but the Company shall have no obligation to repurchase such Shares. The
Board shall consider such request with respect to Unforeseen Personal Hardship
as soon as practicable after receipt by the Company of a written request by the
Purchaser, such request to include sufficient details of the Purchaser's
Unforeseen Personal Hardship to permit the Board to review the request and the
circumstances in an informed manner.
(c) Certain Definitions. As used in this Agreement the
following terms shall have the following meanings:
(i) "Cause" shall mean (A) the willful failure by the
Purchaser to perform substantially his duties as an employee of the
Company or any Subsidiary (other than any such failure due to physical
or mental illness) after a demand for substantial performance is
delivered to the Purchaser by the executive to which the Purchaser
reports or by the Board, which notice identifies the manner in which
such executive or the Board, as the case may be, believes that the
Purchaser has not substantially performed his duties, (B) the
Purchaser's engaging in willful and serious misconduct that is or is
expected to be injurious to the Company or any Subsidiary, (C) the
Purchaser's having been convicted of, or entered a plea of guilty or
nolo contendere to, a crime that constitutes a felony, (D) the willful
and material breach by the Purchaser of any written covenant or
agreement with the Company or any Subsidiary, not to disclose any
information pertaining to the Company, any Subsidiary or any Affiliate
or not to compete or interfere with the Company, any Subsidiary
10
or any Affiliate or (E) any violation by the Purchaser of any federal,
state or foreign securities laws; provided that in the event that the
Purchaser is employed by the Company or a Subsidiary under an effective
employment agreement on the date of determination and such employment
agreement shall contain a different definition of Cause, the definition
of Cause contained in such employment agreement shall be substituted
for the definition set forth above for all purposes hereunder.
(ii) "Retirement at Normal Retirement Age" shall mean retirement at
age 60 or later.
(iii) "Permanent Disability" shall mean a physical or mental
disability or infirmity that prevents the performance of a Purchaser's
employment-related duties lasting (or likely to last, based on
competent medical evidence presented to the Board) for a period of six
months or longer. The Board's reasoned and good faith judgment as to
Permanent Disability shall be final and shall be based on such
competent medical evidence as shall be presented to it by the Purchaser
or by any physician or group of physicians or other competent medical
expert employed by the Purchaser or the Company to advise the Board.
(iv) "Unforeseen Personal Hardship" shall mean financial hardship
arising from (x) extraordinary medical expenses or other expenses
directly related to illness or disability of the Purchaser, a member
of the Purchaser's immediate family or one of the Purchaser's parents
or (y) payments necessary or required to prevent the eviction of the
Purchaser from the Purchaser's principal residence or foreclosure on
the mortgage on that residence. The Board's reasoned and good faith
determination of Unforeseen Personal Hardship shall be binding on the
Company and the Purchaser.
(d) Notice of Termination. The Company shall give written notice of
any termination of the Purchaser's active employment with each of the Company
and any direct or indirect subsidiaries of the Company that employ the Purchaser
to the C&D Fund, except that if such termination (if other than as a result of
death) is by the Purchaser, the Purchaser shall give written notice of such
termination to the Company and the Company shall give written notice of such
termination to the C&D Fund.
11
(e) Public Offering. In the event that a Public Offering has
been consummated, none of the Company, the C&D Fund or the Purchaser shall have
any rights to purchase or sell the Shares, as the case may be, pursuant to this
Section 6 and this Section 6 shall not apply to a sale as part of a Public
Offering.
7. Determination of the Purchase Price; Manner of Payment.
(a) Purchase Price. For the purposes of any purchase of the
Shares pursuant to Section 6, and subject to Section 11(c), the purchase price
per Share to be paid to the Purchaser (or his estate) for each Share shall be a
net amount (such net amount, the "Purchase Price") equal to the excess of (i)
the fair market value (the "Fair Market Value") of such Share as of the
effective date of the termination of employment that gives rise to the right or
obligation to repurchase or, in the case of a repurchase as a result of
Unforeseen Personal Hardship, as of the date such Shares are repurchased (such
date of termination or repurchase, as applicable, the "Determination Date"),
over (ii) the principal balance and accrued interest outstanding under the
Promissory Note as of the closing date for such repurchase; provided that if the
Purchaser's employment is terminated by the Company or any of its direct or
indirect subsidiaries for Cause, the Purchase Price for such Share shall be the
lesser of (i) the Fair Market Value of such Share as of the effective date of
the termination of employment that gives rise to the right or obligation to
repurchase and (ii) the price at which the Purchaser purchased such Share from
the Company. Whenever determination of the Fair Market Value of such Shares is
required by this Agreement, such Fair Market Value shall be such amount as is
determined in good faith by the Board. In making a determination of Fair Market
Value, the Board shall give due consideration to such factors as it deems
appropriate, including, without limitation, the earnings and certain other
financial and operating information of the Company and its subsidiaries in
recent periods, the potential value of the Company and its Subsidiaries as a
whole, the future prospects of the Company and its subsidiaries and the
industries in which they compete, the history and management of the Company and
its subsidiaries, the general condition of the securities markets, the fair
market value of securities of companies engaged in businesses similar to those
of the Company and its subsidiaries and the Applicable Share Valuation (as
defined below). The determination of Fair Market Value will not give effect to
any restrictions
12
on transfer of the Shares or the fact that such Shares would represent a
minority interest in the Company. For purposes of this Agreement, the term
"Applicable Share Valuation" shall mean the annual valuation of the Shares
performed by an independent valuation firm chosen by the Board as of the last
day of the last fiscal year of the Company ending prior to the Determination
Date, except that, in the case of a Determination Date occurring during the
fourth fiscal quarter of any fiscal year of the Company beginning with the
fourth quarter of the 1996 fiscal year of the Company, the term "Applicable
Share Valuation" shall mean the annual valuation of the Shares performed by an
independent valuation firm chosen by the Board as of the last day of such fourth
fiscal quarter. Such annual valuations shall be performed as promptly as
practicable following the end of each fiscal year of the Company, beginning with
the 1996 fiscal year of the Company. The Fair Market Value as deter mined in
good faith by the Board and in the absence of fraud shall be binding and
conclusive upon all parties hereto. If the Company at any time subdivides (by
any stock split, stock dividend or otherwise) the Common Stock into a greater
number of shares, or combines (by reverse stock split or otherwise) the Common
Stock into a smaller number of shares, the Purchase Price (including any minimum
or maximum Purchase Price specified herein or in effect as a result of a prior
adjustment) shall be appropriately adjusted to reflect such subdivision or
combination.
(b) Closing of Purchase; Payment of Purchase Price. Subject to
Section 11, the closing of a purchase pursuant to this Section 6 shall take
place at the principal office of the Company on the tenth business day following
whichever of the following is applicable: (i) the receipt by the Purchaser (or
his estate) of the notice of the C&D Fund or the Company, as the case may be, of
its exercise of its option to purchase pursuant to Section 6(a) or (ii) the
Company's receipt of notice by the Purchaser (or his estate) to sell Shares
pursuant to Section 6(a) or (iii) the Board's determination (which shall be
delivered to the Purchaser) that the Company is authorized to purchase Shares as
a result of Unforeseen Personal Hardship pursuant to Section 6(b). At the
closing, (i) subject to the proviso below, the Company shall pay to the
Purchaser (or his estate) an amount equal to the Purchase Price and (ii) the
Purchaser (or his estate) shall deliver to the Company such certificates or
other instruments representing the Shares so purchased, appropriately endorsed
by the Purchaser (or his estate), as the Company may reasonably require;
provided, however, that if the Determination Date occurs during the
13
first or last fiscal quarter of any fiscal year of the Company, the Company may
elect to pay the Purchase Price in two installments. In any such event, (i) at
the closing of the purchase of the Shares, the Company shall pay to the
Purchaser (or his estate) a net amount (the "First Installment Amount") equal to
80% of the Fair Market Value of the Shares, determined pursuant to Section 7(a)
hereof on the basis of the most recent available valuation of the Shares,
reduced by the principal balance and accrued interest then outstanding under the
Promissory Note, and (ii) no later than the tenth business day following receipt
by the Company of the Applicable Share Valuation, the Company shall pay an
additional amount to the Purchaser (or his estate) equal to the sum of (1) the
excess (the "Excess Payment"), if any, of (A) the Purchase Price for the Shares,
over (B) the First Installment Amount and (2) an amount calculated by
multiplying the Excess Payment by a percentage equal to the average annual cost
to the Company of its bank indebtedness obligations outstanding during the
period commencing on the closing date of the purchase of the Shares and ending
on the date of payment of such additional amount pursuant to this clause (ii)
or, if there are no such obligations outstanding, one percentage point greater
than the average annual prime rate charged during such period by Chase Bank or
such other nationally recognized bank designated by the Company.
(c) Application of the Purchase Price to Certain Loans. The
Purchaser agrees that the Company and the C&D Fund shall be entitled to apply
any amounts to be paid by the Company or the C&D Fund, as the case may be, to
repurchase Shares pursuant to Section 5 or 6 hereof to discharge any
indebtedness of the Purchaser to the Company or any of its direct or indirect
subsidiaries, including, without limitation, indebtedness of the Purchaser
incurred to purchase the Shares or indebtedness that is guaranteed by the
Company or any of its direct or indirect subsidiaries.
8. Take-Along Rights.
(a) Take-Along Notice. If the C&D Fund intends to effect a
sale of all of its shares of common stock of the Company to a third party (a
"100% Buyer") and elects to exercise its rights under this Section 8, the C&D
Fund shall deliver written notice (a "Take-Along Notice") to the Purchaser,
which notice shall (i) state (w) that the C&D Fund wishes to exercise its rights
under this Section 8 with respect to such transfer, (x) the name and address of
the 100% Buyer, (y) the per share amount and form of consideration the C&D Fund
proposes to receive for its shares of common stock of the Company and (z) drafts
of purchase and sale documentation setting forth the terms and conditions of
payment of such considera-
14
tion and all other material terms and conditions of such transfer (the "Draft
Sale Agreement"), (ii) contain an offer (the "Take-Along Offer") by the 100%
Buyer to purchase from the Purchaser all of the Shares, on and subject to the
same price, terms and conditions offered to the C&D Fund and (iii) state the
anticipated time and place of the closing of such transfer (a "Section 8
Closing"), which (subject to such terms and conditions) shall occur not fewer
than five (5) days nor more than ninety (90) days after the date such Take-Along
Notice is delivered, provided that if such Section 8 Closing shall not occur
prior to the expiration of such 90-day period, the C&D Fund shall be entitled to
deliver another Take-Along Notice with respect to such Take-Along Offer.
(b) Conditions to Take-Along. Upon delivery of a Take-Along
Notice, the Purchaser shall have the obligation to transfer all of the Shares
pursuant to the Take-Along Offer, as such offer may be modified from time to
time, provided that the C&D Fund transfers all of its shares of common stock of
the Company to the 100% Buyer at the Section 8 Closing and that all shares of
common stock of the Company held by the C&D Fund are sold to the 100% Buyer at
the same price, and on the same terms and conditions. Within 10 days of receipt
of the Take-Along Notice, the Purchaser shall (i) deliver to the C&D Fund or an
affiliate thereof designated in the Take-Along Notice certificates representing
the Shares, duly endorsed for transfer or accompanied by duly executed stock
powers, and (ii) execute and deliver to the C&D Fund a power of attorney and a
letter of transmittal and custody agreement in favor, and in form and substance
reasonably satisfactory to, the C&D Fund appointing the C&D Fund or one or more
persons designated by the C&D Fund (the "Custodian") as the true and lawful
attorney-in-fact and custodian for the Purchaser, with full power of
substitution, and authorizing the Custodian to execute and deliver a purchase
and sale agreement substantially in the form of the Draft Sale Agreement and to
take such actions as the Custodian may deem necessary or appropriate to effect
the sale and transfer of the Shares to the 100% Buyer, upon receipt of the
purchase price therefor set forth in the Take-Along Notice at the Section 8
Closing, free and clear of all security interests, liens, claims, encumbrances,
charges, options, restrictions on transfer, proxies and voting and other
agreements of whatever nature, together with all other documents delivered with
such notice and required
15
to be executed in connection with the sale thereof pursuant to the Take-Along
Offer. The Custodian shall hold the Shares and other documents in trust for the
Purchaser pending completion or abandonment of such sale. If, within 90 days
after the C&D Fund delivers the Take-Along Notice, the C&D Fund has not
completed the sale of all of the shares of common stock of the Company owned by
the C&D Fund and the Purchaser to the 100% Buyer and another Take-Along Notice
with respect to such Take-Along Offer has not been sent to the Purchaser, the
C&D Fund shall return to the Purchaser all certificates representing the Shares
and all other documents that the Purchaser delivered in connection with such
sale. The C&D Fund shall be permitted to send only two Take-Along Notices with
respect to any one Take-Along Offer. Promptly after the Section 8 Closing, the
C&D Fund shall give notice thereof to the Purchaser, shall remit to the
Purchaser the total consideration for the Shares sold pursuant thereto, and
shall furnish such other evidence of the completion and time of completion of
such sale and the terms thereof as may reasonably be requested by the Purchaser.
(c) Remedies. The Purchaser acknowledges that the C&D Fund
would be irreparably damaged in the event of a breach or a threatened breach by
the Purchaser of any of its obligations under this Section 8 and the Purchaser
agrees that, in the event of a breach or a threatened breach by the Purchaser of
any such obligation, the C&D Fund shall, in addition to any other rights and
remedies available to it in respect of such breach, be entitled to an injunction
from a court of competent jurisdiction (without any requirement to post bond)
granting it specific performance by the Purchaser of his obligations under this
Section 8. In the event that the C&D Fund shall file suit to enforce the
covenants contained in this Section 8 (or obtain any other remedy in respect of
any breach thereof), the prevailing party in the suit shall be entitled to
recover, in addition to all other damages to which it may be entitled, the costs
incurred by such party in conducting the suit, including reasonable attorneys'
fees and expenses. In the event that, following a breach or a threatened breach
by the Purchaser of the provisions of this Section 8, the C&D Fund does not
obtain an injunction granting it specific performance of the Purchaser's
obligations under this Section 8 in connection with any proposed sale prior to
the time the C&D Fund completes the sale of its shares of common stock of the
Company or the C&D Fund, in its sole discretion, abandons such sale, then the
Company shall have the option to purchase the Shares from the Purchaser at a
purchase price per Share
16
equal to the lesser of (i) the price per share at which the Purchaser purchased
the Shares from the Company pursuant to this Agreement and (ii) the price per
share offered in the applicable Take-Along Offer.
(d) Public Offering. In the event that a Public Offering has
been consummated, the provisions of this Section 8 shall terminate and cease to
have further effect.
9. Representations and Warranties of the Company. The Company
represents and warrants to the Purchaser that (a) the Company has been duly
incorporated and is an existing corporation in good standing under the laws of
the State of Delaware, (b) this Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding obligation
of the Company enforce able against the Company in accordance with its terms,
and (c) the Shares, when issued, delivered and paid for in accordance with the
terms hereof, will be duly and validly issued, fully paid and nonassessable, and
free and clear of any liens or encumbrances other than those created pursuant to
this Agreement, or otherwise in connection with the transactions contemplated
hereby.
10. Covenants of the Company.
(a) Rule 144. The Company agrees that at all times after it
has filed a registration statement after the date hereof pursuant to the
requirements of the Securities Act or Section 12 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), relating to any class of equity
securities of the Company (other than (i) the registration of equity securities
of the Company and/or options in respect thereof to be offered primarily to
directors and members of management and employees of the Company, any of its
direct or indirect subsidiaries or any of their respective predecessors, and
senior executives of, or consultants to, corporations in which entities managed
or sponsored by Clayton, Dubilier & Rice, Inc. have made equity investments, or
(ii) the registration of equity securities and/or options in respect thereof
solely on Form S-4 or S-8 or any successor form), it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the Commission thereunder (or, if the Company
is not required to file such reports, it will, upon the request of the
Purchaser, make publicly available such information as necessary to permit sales
pursuant to Rule 144 under the Securities Act), and will take such further
action as the Purchaser may
17
reasonably request, all to the extent required from time to time to enable the
Purchaser to sell Shares without registration under the Securities Act within
the limitation of the exemptions provided by (i) Rule 144, as such Rule may be
amended from time to time, or (ii) any successor rule or regulation hereafter
adopted by the Commission.
(b) State Securities Laws. The Company agrees to use its best
efforts to comply with all state securities or "blue sky" laws applicable to the
sale of the Shares to the Purchaser, provided that the Company shall not be
obligated to qualify or register the Shares under any such law or to qualify as
a foreign corporation or file any consent to service of process under the laws
of any jurisdiction or subject itself to taxation as doing business in any such
jurisdiction.
11. Certain Restrictions on Repurchases.
(a) Financing Agreements, etc. Notwithstanding any other
provision of this Agreement, the Company shall not be permitted or obligated to
repurchase any Shares from the Purchaser if (i) such repurchase would result in
a violation of the terms or provisions of, or result in a default or an event of
default under any financing or security agreement or document entered into in
connection with the Spin-off or in connection with the operations of the Company
or its subsidiaries from time to time (such agreements and documents, as each
may be amended, modified or supplemented from time to time, are referred to
herein as the "Financing Agreements"), in each case as the same may be amended,
modified or supplemented from time to time, or (ii) such repurchase would
violate any of the terms or provisions of the Certificate of Incorporation of
the Company, or (iii) the Company has no funds legally available therefor under
the General Corporation Law of the State of Delaware.
(b) Delay of Repurchase. In the event that a repurchase by the
Company otherwise permitted or required under Section 6(a) is prevented solely
by the terms of Section 11(a), (i) such repurchase will be postponed and will
take place without the application of further conditions or impediments (other
than as set forth in Section 7 hereof or in this Section 11) at the first
opportunity thereafter when the Company has funds legally available therefor and
when such repurchase will not result in any default, event of default or
violation under any of the Financing Agreements or in a violation of any term or
provision of the Certificate of Incorporation of the Company and (ii) such
repur-
18
chase obligation shall rank against other similar repurchase obligations with
respect to shares of Common Stock or options in respect thereof according to
priority in time of (A) the effective date of the termination of employment in
connection with any repurchase obligation arising pursuant to an exercise of the
option of the Company (x) under Section 6(a) of this Agreement or under the
comparable provision of any other applicable management stock subscription
agreement or (y) under any comparable provisions regarding the repurchase of
options of any applicable management stock option agreement, or (B) as to any
repurchase obligation arising pursuant to an exercise of any purchaser's right
to require a repurchase under Section 6(a) of this Agreement or the comparable
provisions of any other applicable management stock subscription agreement, the
date upon which the Company receives written notice of such exercise, provided
that any such repurchase obligations as to which a common date determines
priority under clause (A) or (B) above shall be of equal priority and shall
share pro rata in any repurchase payments made pursuant to clause (i) above and
provided, further, that any repurchase commitment arising from Permanent
Disability, death or Retirement at Normal Retirement Age or any repurchase
commitment made by the Board pursuant to Section 6(b) or the comparable
provisions of any other applicable management stock subscription agreement shall
have priority over any other repurchase obligation.
(c) Purchase Price Adjustment. In the event that a repurchase
of Shares from the Purchaser is delayed pursuant to this Section 11, the
purchase price per Share when the repurchase of such Shares eventually takes
place as contemplated by Section 11(b) shall be (i) if the repurchase is
pursuant to an exercise of the option of the Company under Section 6(a), the sum
of (A) the Purchase Price deter mined in accordance with Section 7 hereof at the
time that the repurchase of such Shares would have occurred but for the
operation of this Section 11, plus (B) an amount equal to interest on such
Purchase Price for the period from the date on which the completion of the
repurchase would have taken place but for the operation of this Section 11 to
the date on which such repurchase actually takes place (the "Delay Period") at a
rate equal to the weighted average cost of the Company's bank indebtedness
obligations outstanding during the Delay Period or, if there are no such
obligations outstanding, one percentage point greater than the average prime
rate charged during such period by Chase Bank or such other nationally
recognized bank designated by the Company, or (ii) if the repurchase is pursuant
to an exercise of the
19
Purchaser's right to require a repurchase under Section 6(a), the Fair Market
Value of such Shares (determined as set forth in Section 7(a)) on the date on
which such repurchase actually takes place.
12. Miscellaneous.
(a) Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified or
express mail, return receipt requested, postage prepaid, or by any recognized
international equivalent of such delivery, to the Company, the C&D Fund or the
Purchaser, as the case may be, at the following addresses or to such other
address as the Company, the C&D Fund or the Purchaser, as the case may be, shall
specify by notice to the others:
(i) if to the Company, to it at:
c/o McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza, 37th Floor
New York, New York 10005
Attention: General Counsel
(ii) if to the Purchaser, to the Purchaser at the address
set forth on the signature page hereof.
(iii) if to the C&D Fund, to:
The Clayton & Dubilier Private Equity
Fund IV Limited Partnership
270 Greenwich Avenue
Greenwich, Connecticut 06830
Attention: Clayton & Dubilier Associates
IV Limited Partnership,
Joseph L. Rice, III
All such notices and communications shall be deemed to have been received on the
date of delivery if delivered personally or on the third business day after the
mailing thereof. Copies of any notice or other communication given under this
Agreement shall also be given to:
20
Clayton, Dubilier & Rice, Inc.
375 Park Avenue, 18th Floor
New York, New York 10152
Attention: Alberto Cribiore
and
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Franci J. Blassberg, Esq.
The C&D Fund also shall be given a copy of any notice or other communication
between the Purchaser and the Company under this Agreement at its address as set
forth above.
(b) Binding Effect; Benefits. This Agreement shall be binding
upon and inure to the benefit of the parties to this Agreement and their
respective successors and assigns. Except as provided in Sections 4 through 8,
inclusive, nothing in this Agreement, express or implied, is intended or shall
be construed to give any person other than the parties to this Agreement or
their respective successors or assigns any legal or equitable right, remedy or
claim under or in respect of any agreement or any provision contained herein.
(c) Waiver; Amendment.
(i) Waiver. Any party hereto may by written notice to the
other parties (A) extend the time for the performance of any of the
obligations or other actions of the other parties under this Agreement,
(B) waive compliance with any of the conditions or covenants of the
other parties contained in this Agreement and (C) waive or modify
performance of any of the obligations of the other parties under this
Agreement, provided that any waiver of the provisions of Sections 4
through 8, inclusive, must be consented to by the C&D Fund. Except as
provided in the preceding sentence, no action taken pursuant to this
Agreement, including, without limitation, any investigation by or on
behalf of any party, shall be deemed to constitute a waiver by the
party taking such action of compliance with any representations,
warranties, covenants or agreements contained herein. The waiver by any
party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any preceding or succeeding
breach and no failure by a party to exercise
21
any right or privilege hereunder shall be deemed a waiver of such
party's rights or privileges hereunder or shall be deemed a waiver of
such party's rights to exercise the same at any subsequent time or
times hereunder.
(ii) Amendment. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the Purchaser and
the Company, provided that any amendment adversely affecting the rights
of the C&D Fund hereunder must be consented to by the C&D Fund. The
parties hereto acknowledge that the Company's consent to an amendment
or modification of this Agreement is subject to the terms and
provisions of the Financing Agreements.
(d) Assignability. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company or the Purchaser without the prior written consent of
the other parties. The C&D Fund may assign from time to time all or any portion
of its rights under Sections 4 through 8, inclusive, to one or more persons or
other entities designated by it.
(e) Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, REGARDLESS OF THE
LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICT OF LAWS.
(f) Section and Other Headings, etc. The section and other
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument.
22
IN WITNESS WHEREOF, the Company and the Purchaser have
executed this Agreement as of the date first above written.
MCM GROUP, INC.
By: _____________________________________
Name:
Title:
THE PURCHASER:
Name
By: _____________________________________
Name:
Attorney-in-fact
Address of the Purchaser:
Address
Total Number of Shares of
Common Stock to be
Purchased: (Amount1) Shares
Aggregate Purchase Price: (Amount3)
23
EXHIBIT B
[Form of Management Stock
Option Agreement]
18
Exhibit B
MANAGEMENT STOCK OPTION AGREEMENT
MANAGEMENT STOCK OPTION AGREEMENT, dated as of October 8,
1996, between MCM Group, Inc., a Delaware corporation (the "Company"), and the
Grantee whose name appears on the signature page hereof (the "Grantee").
W I T N E S S E T H:
WHEREAS, on August 31, 1996, 100% of the outstanding Class A
common stock of the Company and 100% of the outstanding Class B common stock of
the Company was distributed to the stockholders of record of VK/AC Holding, Inc.
("VK/AC") on the record date for such distribution (such distribution, the
"Spin-off");
WHEREAS, immediately prior to the Spin-off, the Company
granted options to purchase an aggregate of approximately 48,359 shares of the
Class A common stock of the Company to those members of management of VK/AC and
its subsidiaries, including the Company and its subsidiaries, who, on the
effective date of the Spin-off, held options to purchase common stock of VK/AC;
WHEREAS, in connection with the Spin-off, the Board of
Directors of the Company has adopted the MCM Group, Inc. Stock Purchase Plan
(the "Stock Purchase Plan");
WHEREAS, on the date hereof, the Grantee and certain other
purchasers who are executives, senior officers or other key employees of the
Company or one of its direct or indirect subsidiaries have purchased an
aggregate of 18,200 shares of the Class C common stock of the Company, par value
$0.01 per share (the "Common Stock"), for a purchase price of $100.00 per
share, pursuant to the Stock Purchase Plan and separate management stock
subscription agreements between the Company and each such purchaser;
WHEREAS, in connection with the Spin-off, the Board of
Directors of the Company has adopted the MCM Group, Inc. Stock Option Plan (the
"Plan");
WHEREAS, pursuant to the terms of the Plan, the Board has
approved the grant to the Grantee of non-qualified stock options to purchase the
aggregate number of shares of Common Stock set forth under the heading "Initial
Value Options" on the signature page hereof, at an exercise price
of $100 per share, and non-qualified options to purchase the aggregate number of
shares of Common Stock set forth under the heading "Premium Options" on the
signature page hereof, at an exercise price of $143.60 per share; and
WHEREAS, the Grantee and the Company desire to enter into an
agreement to evidence and confirm the grant of the options on the terms and
conditions set forth herein;
NOW, THEREFORE, to evidence the options so granted, and to set
forth its terms and conditions under the Plan, the Company and the Grantee
hereby agree as follows:
1. Definitions. Whenever used herein, the following terms
shall have the respective meanings set forth below:
(a) "Affiliate" means an entity controlling, controlled by or
under common control with the Company.
(b) "Alternative Option" has the meaning given in Section
9(c).
(c) "Applicable Portion" means, with respect to Performance
Options granted hereunder, the percentage obtained by dividing (i) the excess of
(x) the EBITDA actually achieved as of the Target Date (or other applicable date
of determination) over (y) the Minimum EBITDA Target by (ii) the excess of the
Maximum EBITDA Target over the Minimum EBITDA Target.
(d) "Board" means the Board of Directors of the Company.
(e) "C&D Fund" means The Clayton & Dubilier Private Equity
Fund IV Limited Partnership, a Connecticut limited partnership, and any
successor investment vehicle managed by Clayton, Dubilier & Rice, Inc.
(f) "Cause" means (i) the willful failure by the Grantee to
perform substantially his duties as an employee of the Company or any Subsidiary
(other than any such failure due to physical or mental illness) after a demand
for substantial performance is delivered to the Grantee by the executive to
which the Grantee reports or by the Board, which notice identifies the manner in
which such executive or the Board, as the case may be, believes that the Grantee
has not substantially performed his duties, (ii) the
2
Grantee's engaging in willful and serious misconduct that is or is expected to
be injurious to the Company or any Subsidiary, (iii) the Grantee's having been
convicted of, or entered a plea of guilty or nolo contendere to, a crime that
constitutes a felony, (iv) the willful and material breach by the Grantee of any
written covenant or agreement with the Company or any Subsidiary not to disclose
any information pertaining to the Company, any Subsidiary or any Affiliate or
not to compete or interfere with the Company, any Subsidiary or any Affiliate or
with respect to any take-along or similar covenants applicable to any Common
Stock of the Grantee or (v) any violation by the Grantee of any federal, state
or foreign securities laws; provided that in the event that the Participant is
employed by the Company or a Subsidiary under an effective employment agreement
on the date of determination and such employment agreement shall contain a
different definition of Cause, the definition of Cause contained in such
employment agreement shall be substituted for the definition set forth above for
all purposes hereunder.
(g) "Change of Control" means the first to occur after
the Grant Date of the following events:
(i) the acquisition by any person, entity or
"group" (as defined in Section 13(d) of the Securities
Exchange Act of 1934, as amended), other than the Company, the
Subsidiaries, any employee benefit plan of the Company or the
Subsidiaries, or the C&D Fund, of 50% or more of the combined
voting power of the Company's then outstanding voting
securities;
(ii) the merger or consolidation of the Company, as
a result of which persons who were stockholders of the Company
immediately prior to such merger or consolidation, do not,
immediately thereafter, own, directly or indirectly more than
50% of the combined voting power entitled to vote generally in
the election of directors of the merged or consolidated
company;
(iii) the liquidation or dissolution of the Company;
and
(iv) the sale of all or substantially all of the
assets of the Company to one or more persons or entities that
are not, immediately prior to such sale, Affiliates.
3
(h) "Change in Control Price" means the price per share of
Common Stock paid in conjunction with any transaction resulting in a Change in
Control (as determined in good faith by the Board if any part of such price is
payable other than in cash).
(i) "Committee" means the Compensation Committee of the Board
(or such other committee of the Board which shall have jurisdiction over the
compensation of officers). If at any time no Committee shall be in office, the
Board shall perform the functions of the Committee.
(j) "Common Stock" means the Class C Common Stock, par value
$.01 per share, of the Company.
(k) "Company" means MCM Group, Inc., a Delaware corporation,
and any successor thereto.
(l) "EBITDA", for any period, shall mean the consolidated net
income of the Company and the Subsidiaries, determined prior to any reduction
for interest expense, taxes, depreciation or amortization.
(m) "Grant Date" means the date of this Agreement as of which
the Options are granted hereby.
(n) "Initial Value Options" means those Options granted
hereunder to purchase the number of Shares set forth under the heading "Initial
Value Options" on the signature page hereof, at an option exercise price equal
to $100.00 per share.
(o) "Involuntary Termination" means termination of the
Grantee's employment by the New Employer for any reason.
(p) "Maximum EBITDA Target" means, with respect to the
Performance Options granted hereunder, cumulative EBITDA of $25.8 million, which
shall be the cumulative EBITDA that the Company and the Subsidiaries must
achieve during the period commencing on the Grant Date and ending on the Target
Date for 100% of such Performance Options to become exercisable as of the Target
Date.
(q) "Minimum EBITDA Target" means, with respect to the
Performance Options granted hereunder, cumulative EBITDA of $22.2 million, which
shall be the minimum cumulative EBITDA that the Company and the Subsidiaries
must achieve during the period commencing on the Grant Date and
4
ending on the Target Date for any portion of such Performance Options to become
exercisable as of the Target Date.
(r) "New Employer" means the Participant's employer, or the
parent or a subsidiary of such employer, immediately following a Change in
Control.
(s) "Option" means the right granted pursuant to Section 2
hereof to purchase one share of Common Stock at the price and on the terms and
conditions specified in this Agreement.
(t) "Permanent Disability" means a physical or mental
disability or infirmity that prevents the performance of the Grantee's
employment-related duties lasting (or likely to last, based on competent medical
evidence presented to the Board) for a period of six months or longer. The
Board's reasoned and good faith judgment as to Permanent Disability shall be
final and shall be based on such competent medical evidence as shall be
presented to it by the Grantee or by any physician or group of physicians or
other competent medical expert employed by the Grantee or the Company to advise
the Board.
(u) "Performance Option" means those Options granted hereunder
which become exercisable in accordance with the provisions of Section 3(b) based
upon the financial performance of the Company and the Subsidiaries.
(v) "Plan" means the MCM Group, Inc. Stock Option Plan, as the
same may be amended from time to time.
(w) "Premium Options" means Options granted hereunder to
purchase the number of Shares set forth under the heading "Premium Options" on
the signature page hereof, at an option exercise price of $143.60 per share.
(x) "Public Offering" means the first day as of which sales of
Class A common stock of the Company are made to the public in the United States
pursuant to an underwritten public offering of the Class A common stock of the
Company led by one or more underwriters, at least one of which is of nationally
recognized standing.
(y) "Retirement" means the Grantee's retirement at or after
age 60.
5
(z) "Service Options" means those Options granted hereunder
which become exercisable in accordance with the provisions of Section 3(a) based
upon the Grantee's completion of service with the Company and the Subsidiaries.
(aa) "Shares" means the shares of Common Stock
covered by the Options.
(bb) "Spin-off" means the distribution by VK/AC of 100% of the
outstanding Class A common stock of the Company and 100% of the outstanding
Class B common stock of the Company to the holders of record of the common stock
of VK/AC at the close of business on the record date for the distribution.
(cc) "Special Termination" means a termination of the
Grantee's active employment with the Company and the Subsidiaries that employ
the Grantee by reason of a termination by such employer Without Cause or a
termination due to death, Permanent Disability or Retirement or, in the event
that the Grantee is, at the time of such termination, party to an effective
employment agreement with the Company or any Subsidiary, dated as of the date
hereof, by the Grantee for "good reason," as defined in such employment
agreement.
(dd) "Subsidiary" means any corporation a majority of whose
outstanding voting securities is owned, directly or indirectly, by the Company.
(ee) "Target Date" means, with respect to Performance Options
granted hereunder, the third anniversary of the Grant Date.
2. Confirmation of Grant; Option Price. The Company hereby
evidences and confirms its grant to the Grantee, effective as of the date
hereof, of (a) the Initial Value Options, at an option exercise price of $100.00
per share, and (b) the Premium Options, at an option exercise price of $143.60
per share. The Options are not intended to be incentive stock options under the
U.S. Internal Revenue Code of 1986, as amended. This Agreement is subordinate
to, and the terms and conditions of the Options granted hereunder are subject
to, the terms and conditions of the Plan.
6
3. Exercisability.
(a) Service Options. Except as otherwise provided in this
Agreement, 50% of the Initial Value Options and 50% of the Premium Options (such
Initial Value Options and Premium Options, the "Service Options") shall become
available for exercise, subject to the provisions hereof, in 20% installments,
with the first installment becoming exercisable on the first anniversary of the
date of this Agreement and with an additional 20% becoming exercisable on each
of the second, third, fourth and fifth anniversaries of the date of this
Agreement, subject in each such case to the Grantee's continued employment with
the Company or a Subsidiary until such anniversary date.
(b) Performance Options. Except as otherwise provided in this
Agreement, the remaining 50% of the Initial Value Options and the remaining 50%
of the Premium Options (such remaining Initial Value Options and Premium
Options, the "Performance Options") shall become exercisable based on the
financial performance of the Company and the Subsidiaries during the period from
the Grant Date to the Target Date as follows. Except as otherwise provided in
this Agreement, the Applicable Portion of the Performance Options shall become
exercisable as of the Target Date, if and only if (i) the Company shall have
achieved at least the Minimum EBITDA Target as of such Target Date and (ii) the
Grantee shall have been continuously employed by the Company or one of the
Subsidiaries from the Grant Date until the Target Date; provided that, if the
Grantee's employment is sooner terminated by reason of a Special Termination,
then a proportionate share of the Applicable Portion of the Performance Options
(such proportionate share to be determined by multiplying (x) the Applicable
Portion, if any, determined as of the last day of the calendar quarter ending
prior to the date of the Special Termination for which the applicable financial
information is available, on the basis of the cumulative EBITDA achieved as of
such date, by (y) the product of (A) the number of Performance Options
multiplied by (B) a fraction, the numerator of which is equal to the number of
days in the period commencing on the Grant Date and ending on the date of the
Special Termination and the denominator of which is equal to 1,095) shall become
exercisable as of the date of such Special Termination. In the event of the
acceleration of the exercisability of any Performance Options by reason of a
Special Termination of the Grantee's employment prior to the Target Date,
one-half of such accelerated Performance Options shall be Initial
7
Value Options and the remaining one-half of such accelerated Performance Options
shall be Premium Options.
Notwithstanding the foregoing provisions of this paragraph
(b), subject to the continuous employment of the Grantee with the Company or one
of the Subsidiaries, Performance Options shall become exercisable nine years
following the Grant Date, regardless of whether the EBITDA Target has been
achieved.
(c) Conditions. The Board may accelerate the exercisability of
any Option, all Options or any class of Options, at any time and from time to
time. Shares eligible for purchase may, subject to the provisions hereof,
thereafter be purchased, at any time and from time to time until the date one
day prior to the date on which the Options terminate, provided that any such
purchase shall be effected pursuant to and subject to the provisions contained
in the management stock subscription agreement related to such Shares. Any
Options held by the Grantee as of the date of the termination of his active
employment with the Company and the Subsidiaries that have not become
exercisable on or prior to the date of such termination in accordance with
Section 3(a) or 3(b) shall terminate and be cancelled immediately on such date.
4. Termination of Option.
(a) Normal Termination Date. Unless an earlier termination
date shall occur as specified in Section 4(b), the Options shall terminate on
the tenth anniversary of the date hereof (the "Normal Termination Date").
(b) Early Termination. If the Grantee's active employment with
the Company and the Subsidiaries that employ the Grantee is voluntarily or
involuntarily terminated for any reason whatsoever prior to the Normal
Termination Date, any Options that have not become exercisable on or before the
effective date of such termination of employment shall terminate on such
effective date. Any Options that have become exercisable on or before the
effective date of such termination of the Grantee's active employment shall,
subject to the provisions of Section 5(c), remain exercisable for whichever of
the following periods is applicable, and if not exercised within such period,
shall terminate upon the expiration of such period: (i) if the Grantee's active
employment is terminated by reason of a Special Termination, any Options held by
the Grantee and then exercisable shall remain exercisable solely until the
8
first anniversary of the Grantee's termination of employment and (ii) if the
Grantee's active employment is terminated for any reason other than a Special
Termination or for Cause, any then exercisable Options held by such Grantee
shall remain exercisable for a period of sixty days after the earlier of (x) the
expiration of the Second Purchase Period (as defined in Section 5(c)(i)) and (y)
receipt by the Grantee of written notice that the C&D Fund does not intend to
exercise its right to purchase pursuant to Section 5(c)(i), provided that in no
event shall any Options be or remain exercisable on or after the Normal
Termination Date. Notwithstanding anything else contained in this Agreement, if
the Grantee's active employment with the Company and Subsidiaries that employ
the Grantee is terminated by any such employer for Cause, then all Options
(whether or not then exercisable) shall terminate and be cancelled immediately
upon such termination. Nothing in this Agreement shall be deemed to confer on
the Grantee any right to continue in the employ of the Company or any of the
Subsidiaries, or to interfere with or limit in any way the right of the Company
or any of the Subsidiaries to terminate such employment at any time.
5. Restrictions on Exercise; Non-Transferability of Option;
Repurchase of Option.
(a) Restrictions on Exercise. The Options may be exercised
only with respect to full shares of Common Stock. No fractional shares of Common
Stock shall be issued. Notwithstanding any other provision of this Agreement,
the Options may not be exercised in whole or in part, and no certificates
representing Shares shall be delivered, (i) unless all requisite approvals and
consents of any governmental authority of any kind having jurisdiction over the
exercise of options shall have been secured, (ii) unless the purchase of the
Shares upon the exercise of the Options shall be exempt from registration under
applicable U.S. federal and state securities laws, and applicable non-U.S.
securities laws, or the Shares shall have been registered under such laws, (iii)
unless all applicable U.S. federal, state and local and non-U.S. tax withholding
requirements shall have been satisfied and (iv) if such exercise would result in
a violation of the terms or provisions of or a default or an event of default
under any of the Financing Agreements (as such term is defined in Section 10).
The Company shall use commercially reasonable efforts to obtain the consents and
approvals referred to in clause (i) of the preceding sentence, to satisfy the
withholding requirements referred to in clause (iii) of the preceding sentence
and,
9
if applicable, to obtain the consent of the parties to the Financing Agreements
referred to in clause (iv) of the preceding sentence so as to permit the Options
to be exercised.
(b) Non-Transferability of Options. The Options may be
exercised only by the Grantee or by his estate. The Options are not assignable
or transferable, in whole or in part, and may not, directly or indirectly, be
offered, transferred, sold, pledged, assigned, alienated, hypothecated or
otherwise disposed of or encumbered (including without limitation by gift,
operation of law or otherwise) other than by will or by the laws of descent and
distribution to the estate of the Grantee upon his death, provided that the
deceased Grantee's beneficiary or the representative of his estate shall
acknowledge and agree in writing, in a form reasonably acceptable to the
Company, to be bound by the provisions of this Agreement and the Plan as if such
beneficiary or the estate were the Grantee.
(c) Repurchase of Option on Termination of Employment.
(i) Termination of Employment. If the Grantee's active
employment with the Company and any direct and indirect subsidiaries of
the Company that employ the Grantee is terminated for any reason, the
Company shall have an option to purchase all of those Options that have
become exercisable on or prior to the effective date of termination of
employment (the "Covered Options"), and shall have 60 days from the
date of the Grantee's termination (the "First Purchase Period") during
which to give notice in writing to the Grantee (or if his employment
was terminated by his death, his estate) of its election to exercise or
not to exercise such right to purchase all or any of the Covered
Options. The Company hereby undertakes to use reasonable efforts to act
as promptly as practicable following such termination to make such
election. If the Company fails to give notice that it intends to
exercise its right to purchase the Covered Options within the First
Purchase Period or the Company has given notice of its exercise of its
right to purchase only a portion of the Covered Options, the C&D Fund
shall have the right to purchase all or a portion of the Covered
Options that will not be purchased by the Company and shall have until
the expiration of the earlier of (x) 60 days following the end of the
First Purchase Period, or (y) 60 days from the date of receipt by the
10
C&D Fund of written notice that the Company does not intend to exercise
such right in full (the "Second Purchase Period"), to give notice in
writing to the Grantee (or his estate) of the C&D Fund's exercise of
its right to purchase all or any of the Covered Options. If the rights
to purchase the Covered Options of the Company and the C&D Fund granted
in this subsection are not exercised in full as provided herein, the
Grantee (or his estate) shall be entitled to retain the Covered Options
that will not be so repurchased, subject to all of the provisions of
this Agreement.
(ii) Purchase Price, etc. All purchases pursuant to this
Section 5(c) by the Company or the C&D Fund shall be for a purchase
price and in the manner prescribed by Sections 5(f), (g), and (h).
(d) Notice of Termination. The Company shall give written
notice of any termination of the Grantee's active employment with each of the
Company and any direct or indirect subsidiaries of the Company that employ the
Grantee to the C&D Fund, except that if such termination (if other than as a
result of death) is by the Grantee, the Grantee shall give written notice of
such termination to the Company and the Company shall give written notice of
such termination to the C&D Fund.
(e) Public Offering. In the event of a Public Offering, none
of the Company or the C&D Fund shall have any rights to purchase the Covered
Options pursuant to this Section 5, and this Section 5 shall not apply to a
sale as part of a Public Offering or at any time thereafter.
(f) Purchase Price. Subject to Section 10(c), the purchase
price to be paid to the Grantee (or his estate) for the Covered Option (the
"Purchase Price") shall be equal to the excess, if any, of (A) the fair market
value of the Shares which may be purchased upon exercise of the Covered Option
(the "Fair Market Value") as of the effective date of the termination of
employment that gives rise to the right or obligation to repurchase (such
effective date, the "Determination Date"), over (B) the aggregate exercise price
of the Covered Option. Whenever determination of the Fair Market Value of such
Shares is required by this Agreement, such Fair Market Value shall be such
amount as is determined in good faith by the Board. In making a determination of
Fair Market Value, the Board shall give due consideration to such factors as it
deems appropriate, including, without limitation, the earnings and certain other
financial and
11
operating information of the Company and the Subsidiaries in recent periods, the
potential value of the Company and the Subsidiaries as a whole, the future
prospects of the Company and the Subsidiaries and the industries in which they
compete, the history and management of the Company and the Subsidiaries, the
general condition of the securities markets, the fair market value of securities
of companies engaged in businesses similar to those of the Company and the
Subsidiaries and the Applicable Share Valuation, as defined below. The
determination of Fair Market Value will not give effect to any restrictions on
transfer of the Shares or the fact that such Shares would represent a minority
interest in the Company. For purposes of this Agreement, the term "Applicable
Share Valuation" shall mean the annual valuation of the Shares performed by an
independent valuation firm chosen by the Board as of the last day of the last
fiscal year of the Company ending prior to the Determination Date, except that,
in the case of a Determination Date occurring during the fourth fiscal quarter
of any fiscal year of the Company beginning with the fourth quarter of the 1996
fiscal year of the Company, the term "Applicable Share Valuation" shall mean the
annual valuation of the Shares performed by an independent valuation firm chosen
by the Board as of the last day of such fourth fiscal quarter. Such annual
valuations shall be performed as promptly as practicable following the end of
each fiscal year of the Company, beginning with the 1996 fiscal year of the
Company. The Fair Market Value as determined in good faith by the Board and in
the absence of fraud shall be binding and conclusive upon all parties hereto. If
the Company at any time subdivides (by any stock split, stock dividend or
otherwise) the Common Stock into a greater number of shares, or combines (by
reverse stock split or otherwise) the Common Stock into a smaller number of
shares, the Purchase Price shall be appropriately adjusted to reflect such
subdivision or combination.
(g) Closing of Purchase; Payment of Purchase Price. Subject to
Section 10, the closing of a purchase pursuant to this Section 5 shall take
place at the principal office of the Company on the tenth business day following
the receipt by the Grantee (or his estate) of the C&D Fund's or the Company's
notice of exercise of the right to purchase any of the Covered Options pursuant
to Section 5(c). At the closing, (i) subject to the proviso below, the Company,
shall pay the Purchase Price to the Grantee (or his estate) by delivery of a
check for the Purchase Price payable to the order of the Grantee (or his estate)
and (ii) the Grantee (or his estate) shall deliver to the Company such instru-
12
ments as the Company may reasonably request signed by the Grantee (or his
estate); provided, however, that if the Determination Date occurs during the
first or last fiscal quarter of any fiscal year of the Company, the Company may
defer the payment of a portion of the Purchase Price until the tenth business
day following receipt by the Company of the Applicable Share Valuation (such
tenth business day, the "Deferred Payment Date"). In the event of any such
deferral, (i) at the closing of the purchase of the Covered Option, the Company
shall pay to the Grantee (or his estate) an amount (the "First Installment
Amount") equal to 80% of the excess of (A) the Fair Market Value of the Shares
which may be purchased upon exercise of the Covered Option, determined pursuant
to Section 5(f) hereof on the basis of the most recent available valuation of
the Shares, over (B) the aggregate exercise price of the Covered Option, and
(ii) no later than the Deferred Payment Date, the Company shall pay an
additional amount to the Grantee (or his estate) equal to the excess, if any, of
(A) the sum of (1) the Purchase Price for the Covered Option and (2) an amount
calculated by multiplying the First Installment Amount by a percentage equal to
the average annual cost to the Company of its bank indebtedness obligations
outstanding during the period that payment of a portion of the Purchase Price is
delayed hereunder or, if there are no such obligations outstanding, one
percentage point greater than the average annual prime rate charged during such
period by Chase Bank or such other nationally recognized bank designated by the
Company, over (B) the First Installment Amount.
(h) Application of the Purchase Price to Certain Loans. The
Grantee agrees that the Company and the C&D Fund shall be entitled to apply any
amounts to be paid by the Company or the C&D Fund, as the case may be, to
repurchase the Covered Option pursuant to this Section 5 to discharge any
indebtedness of the Grantee to the Company or any of its direct or indirect
subsidiaries, or indebtedness that is guaranteed by the Company or any of its
subsidiaries, including, but not limited to, any indebtedness of the Grantee
incurred to purchase any shares of Common Stock.
(i) Withholding. Whenever Shares are to be issued pursuant to
the Option, the Company may require the recipient of the Shares to remit to the
Company an amount sufficient to satisfy any applicable U.S. federal, state and
local and non-U.S. tax withholding requirements. In the event any cash is paid
to the Grantee or his estate or beneficiary pursuant to this Section 5, the
Company shall have the right to withhold an amount from such payment sufficient
13
to satisfy any applicable U.S. federal, state and local and non-U.S. tax
withholding requirements. If shares of Common Stock are traded on a national
securities exchange or bid and ask prices for shares of Common Stock are quoted
on the NASDAQ National Market System ("NASDAQ") operated by the National
Association of Securities Dealers, Inc., the Company may, if requested by the
Grantee, withhold Shares to satisfy applicable withholding requirements, subject
to the provisions of the Plan and any rules adopted by the Board or the
Committee regarding compliance with applicable law, including, but not limited
to, Section 16(b) of the U.S. Securities Exchange Act of 1934, as amended (the
"Exchange Act").
6. Manner of Exercise. To the extent that the Options shall
have become and remain exercisable as provided in Section 3 and subject to such
reasonable administrative regulations as the Board or the Committee may have
adopted, such Options may be exercised, in whole or in part, by notice to the
Secretary of the Company in writing given 15 business days prior to the date on
which the Grantee will so exercise any of the Options (the "Exercise Date"),
specifying the number of Shares with respect to which the Options are being
exercised (the "Exercise Shares") and the Exercise Date, provided that if shares
of Common Stock are traded on a U.S. national securities exchange or bid and ask
prices for shares of Common Stock are quoted over NASDAQ, notice may be given
five business days before the Exercise Date. On or before the Exercise Date, the
Company and the Grantee shall enter into a management stock subscription
agreement (the "Exercise Management Stock Subscription Agreement") substantially
in the form attached to the Plan as Exhibit B, or in such other form as may be
agreed upon by the Company and the Grantee. In accordance with the Exercise
Management Stock Subscription Agreement, (a) on or before the Exercise Date, the
Grantee shall deliver to the Company full payment for the Exercise Shares in
United States dollars in cash, or cash equivalent satisfactory to the Company,
and in an amount equal to the aggregate option exercise price for the Exercise
Shares and (b) on the Exercise Date, the Company shall deliver to the Grantee a
certificate or certificates representing the Exercise Shares, registered in the
name of the Grantee. If shares of common stock of the Company are listed for
trading on a national securities exchange or bid and ask prices for shares of
common stock of the Company are quoted over NASDAQ, the Grantee may, in lieu of
cash, tender shares of common stock of the Company having a market price on the
Exercise Date equal to the aggregate option exercise price for the Exercise
Shares or may deliver a combination
14
of cash and shares of common stock of the Company having a market price equal to
the difference between such aggregate exercise price and the amount of such cash
as payment for the aggregate option exercise price for the Exercise Shares,
subject to such rules and regulations as may be adopted by the Board or the
Committee to provide for the compliance of such payment procedure with
applicable law, including Section 16(b) of the Exchange Act. The Company may
require the Grantee to furnish or execute such other documents as the Company
shall reasonably deem necessary (i) to evidence such exercise, (ii) to determine
whether registration is then required under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and (iii) to comply with or satisfy the
requirements of the Securities Act, applicable state or non-U.S. securities laws
or any other law.
7. Grantee's Representations, Warranties and Covenants.
(a) Investment Intention. The Grantee represents and warrants
that the Options have been, and any Exercise Shares will be, acquired by him
solely for his own account for investment and not with a view to or for sale in
connection with any distribution thereof. The Grantee agrees that he will not,
directly or indirectly, offer, transfer, sell, pledge, hypothecate or otherwise
dispose of any of the Options or Exercise Shares (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of any of the Options or Exercise
Shares), except in compliance with the Securities Act and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
thereunder, and in compliance with applicable state and foreign securities or
"blue sky" laws. The Grantee further understands, acknowledges and agrees that
none of the Exercise Shares may be transferred, sold, pledged, hypothecated or
otherwise disposed of unless the provisions of the related Exercise Management
Stock Subscription Agreement and the Certificate of Incorporation of the
Company shall have been complied with or have expired.
(b) Legend. The Grantee acknowledges that any certificate
representing the Exercise Shares shall bear an appropriate legend, which will
include, without limitation, the following language:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE TRANSFER RESTRICTIONS, HOLDBACK AND
OTHER PROVISIONS OF A MANAGEMENT STOCK
SUBSCRIPTION AGREEMENT, DATED AS OF OCTOBER 8,
15
1996, AND NEITHER THIS CERTIFICATE NOR THE SHARES REPRESENTED
BY IT ARE ASSIGNABLE OR OTHERWISE TRANSFERABLE EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF SUCH MANAGEMENT STOCK
SUBSCRIPTION AGREEMENT, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY. THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE ENTITLED TO CERTAIN OF THE BENEFITS OF AND ARE
BOUND BY THE OBLIGATIONS SET FORTH IN A REGISTRATION AND
PARTICIPATION AGREEMENT, DATED AS OF AUGUST 31, 1996, AND ANY
AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS THERETO, AMONG THE
COMPANY AND CERTAIN STOCKHOLDERS OF THE COMPANY, A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE
TRANSFERRED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF UNLESS (i) (A) SUCH DISPOSITION IS PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (B) THE HOLDER HERE OF SHALL HAVE DELIVERED TO THE
COMPANY AN OPINION OF COUNSEL, WHICH OPINION AND COUNSEL SHALL
BE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT
SUCH DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF
SUCH ACT OR (C) A NO-ACTION LETTER FROM THE SECURITIES AND
EXCHANGE COMMISSION, REASONABLY SATISFACTORY TO COUNSEL FOR
THE COMPANY, SHALL HAVE BEEN OBTAINED WITH RESPECT TO SUCH
DISPOSITION AND (ii) SUCH DISPOSITION IS PURSUANT TO
REGISTRATION UNDER ANY APPLICABLE STATE SECURITIES LAWS OR AN
EXEMPTION THEREFROM."
(c) Securities Law Matters. The Grantee acknowledges receipt
of advice from the Company that (i) the Exercise Shares will not be registered
under the Securities Act or any state or foreign securities or "blue sky" laws,
(ii) it is not anticipated that there will be any public market for the Exercise
Shares, (iii) the Exercise Shares must be held indefinitely and the Grantee must
continue to bear the economic risk of the investment in the Exercise Shares
unless the Exercise Shares are subsequently registered under the Securities Act
and such state or foreign laws or an exemption from registration is available,
(iv) Rule 144 under the Securities Act ("Rule 144") is not presently available
with respect to sales of securities of the Company and the Company has made no
covenant to make
16
Rule 144 available, (v) when and if the Exercise Shares may be disposed of
without registration in reliance upon Rule 144, such disposition can generally
be made only in limited amounts in accordance with the terms and conditions of
such Rule, (vi) the Company does not plan to file reports with the Commission or
make information concerning the Company publicly available, (vii) if the
exemption afforded by Rule 144 is not available, sales of the Exercise Shares
may be difficult to effect because of the absence of public information
concerning the Company, (viii) a restrictive legend in the form heretofore set
forth shall be placed on the certificates representing the Exercise Shares and
(ix) a notation shall be made in the appropriate records of the Company
indicating that the Exercise Shares are subject to restrictions on transfer set
forth in this Agreement and, if the Company should in the future engage the
services of a stock transfer agent, appropriate stop-transfer restrictions will
be issued to such transfer agent with respect to the Exercise Shares.
(d) Compliance with Rule 144. If any of the Exercise Shares
are to be disposed of in accordance with Rule 144 under the Securities Act, the
Grantee shall transmit to the Company an executed copy of Form 144 (if required
by Rule 144) no later than the time such form is required to be transmitted to
the Commission for filing and such other documentation as the Company may
reasonably require to assure compliance with Rule 144 in connection with such
disposition.
(e) Ability to Bear Risk. The Grantee covenants that he will
not exercise all or any portion of any of the Options prior to the registration
of the Shares under the Securities Act unless (i) the financial situation of the
Grantee is such that he can afford to bear the economic risk of holding the
Exercise Shares for an indefinite period and (ii) he can afford to suffer the
complete loss of his investment in the Exercise Shares.
(f) Registration; Restrictions on Transfer; Holdback upon
Public Offering. In respect of any Exercise Shares purchased upon exercise of
any of the Options, the Grantee shall be entitled to the rights and subject to
the obligations created under the Registration and Participation Agreement,
dated as of August 31, 1996, as the same may be amended from time to time, among
the Company and certain stockholders of the Company, to the extent set forth
therein. The Grantee shall also be subject to the restrictions on transfer
contained in the Exercise
17
Management Stock Subscription Agreement. Further, the Grantee agrees that, in
the event that the Company files a registration statement under the Securities
Act with respect to an underwritten public offering of any shares of its capital
stock, the Grantee will not effect any public sale (including a sale under Rule
144) or distribution of any shares of Common Stock (other than as part of such
underwritten public offering) during the 20 days prior to and the 180 days after
the effective date of such registration statement.
(g) Section 83(b) Election. The Grantee agrees that, within 20
days after any Exercise Date, he shall give notice to the Company as to whether
or not he has made or will make an election pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, with respect to the Exercise Shares
purchased on such date, and acknowledges that he will be solely responsible for
any and all tax liabilities payable by him in connection with his receipt of
the Exercise Shares or attributable to his making or failing to make such an
election.
8. Representations and Warranties of the Company. The Company
represents and warrants to the Grantee that (a) the Company has been duly
incorporated and is an existing corporation in good standing under the laws of
the State of Delaware, (b) this Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding obligation
of the Company enforce able against the Company in accordance with its terms,
and (c) the Exercise Shares, when issued, delivered and paid for, upon exercise
of any of the Options in accordance with the terms hereof and the Exercise
Management Stock Subscription Agreement, will be duly and validly issued, fully
paid and nonassessable, and free and clear of any liens or encumbrances other
than those created pursuant to this Agreement or otherwise in connection with
the transactions contemplated hereby.
9. Change in Control.
(a) Accelerated Exercisability and Payment. Unless the Board
shall otherwise determine in the manner set forth in Section 9(c), in the event
of a Change in Control, each Service Option (whether or not then exercisable)
and the Applicable Portion of the Performance Options, determined as provided in
Section 9(b) below, shall be cancelled in exchange for a payment in cash of an
amount equal to the excess, if any, of the Change in Control Price
18
over the aggregate exercise price for such Options. Such payment shall be made
within 30 days following the closing of the transaction constituting the Change
in Control. Subject to Section 9(c) below, all Performance Options then
outstanding, other than the Applicable Portion of such Performance Options,
shall be canceled and forfeited effective as of the closing of such transaction.
(b) Determination of Exercisable Performance Options. For
purposes of Section 9(a), the Applicable Portion of the Performance Options that
shall be canceled in exchange for the payment described in Section 9(a) shall be
determined on the basis of the cumulative EBITDA achieved during the period from
the Grant Date to the last day of the calendar quarter ending prior to the date
of the consummation of the transaction constituting the Change in Control for
which the applicable financial information is available.
(c) Alternative Options. Notwithstanding Sections 9(a)
and 9(b), no cancellation, acceleration of exercisability, vesting or cash
settlement or other payment shall occur with respect to any Option if the Board
reasonably determines in good faith, prior to the occurrence of a Change in
Control, that such Option shall be honored or assumed, or new rights substituted
therefor (such honored, assumed or substituted Option being hereinafter referred
to as an "Alternative Option") by the New Employer, provided that any such
Alternative Option must:
(i) provide the Grantee with rights and entitlements
substantially equivalent to or better than the
rights, terms and conditions applicable under such
Option, including, but not limited to, an identical
or better exercise and vesting schedule, and
identical or better timing and methods of payment;
(ii) have substantially equivalent economic value to such
Option (determined at the time of the Change in
Control); and
(iii) have terms and conditions which provide that in the
event that the Grantee suffers an Involuntary
Termination within two years following a Change in
Control:
(1) any conditions on the Grantee's rights
under, or any restrictions on transfer
19
or exercisability applicable to, each such
Alternative Option shall be waived or shall
lapse, as the case may be; or
(2) the Grantee shall have the right to
surrender such Alternative Option within 30
days following such termination in exchange
for a payment in cash equal to the excess of
the Fair Market Value of the common stock
subject to the Alternative Option over the
price, if any, that the Grantee would be
required to pay to exercise such Alternative
Option.
10. Certain Restrictions on Repurchases.
(a) Financing Agreements, etc. Notwithstanding any other
provision of this Agreement, the Company shall not be permitted to repurchase
any Covered Options from the Grantee if (i) such repurchase would result in a
violation of the terms or provisions of, or result in a default or an event of
default under, any financing or security agreement or document entered into in
connection with the Spin-off or the operations of the Company or the
Subsidiaries from time to time (such agreements and documents, as each may be
amended, modified or supplemented from time to time, are referred to herein as
the "Financing Agreements"), in each case as the same may be amended, modified
or supplemented from time to time, or (ii) such repurchase would violate any of
the terms or provisions of the Certificate of Incorporation of the Company, or
(iii) the Company has no funds legally available therefor under the General
Corporation Law of the State of Delaware.
(b) Delay of Repurchase. In the event that a repurchase
by the Company otherwise permitted or required under Section 5(c) is prevented
solely by the terms of Section 10(a), (i) such repurchase will be postponed and
will take place without the application of further conditions or impediments
(other than as set forth in Section 5 hereof or in this Section 10) at the first
opportunity thereafter when the Company has funds legally available therefor and
when such repurchase will not result in any default, event of default or
violation under any of the Financing Agreements or in a violation of any term or
provision of the Certificate of Incorporation of the Company and (ii) such
repurchase obligation shall rank against other similar repurchase obligations
with respect to shares of Common Stock or
20
options in respect thereof according to priority in time of (A) the effective
date of the termination of employment in connection with any repurchase
obligation arising pursuant to an exercise of the option of the Company under
Section 5(c)(i) of the applicable management stock option agreements or under
the comparable provisions of any applicable management stock subscription
agreements, or (B) as to any repurchase obligation arising pursuant to an
exercise of any holder's right to require a repurchase under any applicable
management stock subscription agreement, the date upon which the Company
receives written notice of such exercise, provided that any such repurchase
obligations as to which a common date determines priority under clause (A) or
(B) above shall be of equal priority and shall share pro rata in any repurchase
payments made pursuant to clause (i) above and provided, further, that any
repurchase commitment with respect to shares of Common Stock arising from
Permanent Disability, death, Retirement or financial hardship pursuant to any
applicable management stock subscription agreement shall have priority over any
other repurchase obligation.
(c) Purchase Price Adjustment. In the event that a repurchase
of any Covered Options from the Grantee is delayed pursuant to this Section 10,
the purchase price for such Covered Options when the repurchase of such Covered
Options eventually takes place as contemplated by Section 10(b) shall be the
sum of (i) the Purchase Price of such Covered Option determined in accordance
with Section 5(f) at the time that the repurchase of such Option would have
occurred but for the operation of this Section 10, plus (ii) an amount equal to
interest on such Purchase Price for the period from the date on which the
completion of the repurchase would have taken place but for the operation of
this Section 10 to the date on which such repurchase actually takes place (the
"Delay Period") at a rate equal to the weighted average cost of the Company's
bank indebtedness obligations outstanding during the Delay Period or, if there
are no such obligations outstanding, one percentage point greater than the
average prime rate charged during such period by Chase Bank or such other
nationally recognized bank designated by the Company.
11. No Rights as Stockholder. The Grantee shall have no voting
or other rights as a stockholder of the Company with respect to any Shares
covered by the Options until the exercise of the Options and the issuance of a
certificate or certificates to him for such Shares. No adjustment shall be made
for dividends or other rights for
21
which the record date is prior to the issuance of such certificate or
certificates.
12. Capital Adjustments. The number and price of the Shares
covered by the Options shall be proportionately adjusted to reflect any stock
dividend, stock split or share combination of the Common Stock or any
recapitalization of the Company. Subject to any required action by the stock
holders of the Company, in any merger, consolidation, reorganization, exchange
of shares, liquidation or dissolution, the Options shall pertain to the
securities and other property, if any, that a holder of the number of shares of
Common Stock covered by the Options would have been entitled to receive in
connection with such event.
13. Miscellaneous.
(a) Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified or
express mail, return receipt requested, postage prepaid, or by any recognized
international equivalent of such delivery, to the Company, the C&D Fund or the
Grantee, as the case may be, at the following addresses or to such other address
as the Company, the C&D Fund or the Grantee, as the case may be, shall specify
by notice to the others:
(i) if to the Company, to it at:
c/o McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza, 37th Floor
New York, New York 10005
Attention: General Counsel
(ii) if to the Grantee, to the Grantee at the address set
forth on the signature page hereof.
22
(iii) if to the C&D Fund, to:
The Clayton & Dubilier Private Equity
Fund IV Limited Partnership
270 Greenwich Avenue
Greenwich, Connecticut 06830
Attention: Clayton & Dubilier Associates
IV Limited Partnership,
Joseph L. Rice, III
All such notices and communications shall be deemed to have been received on the
date of delivery if delivered personally or on the third business day after the
mailing thereof. Copies of any notice or other communication given under this
Agreement shall also be given to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue, 18th Floor
New York, New York 10152
Attention: Alberto Cribiore
and
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Franci J. Blassberg, Esq.
The C&D Fund also shall be given a copy of any notice or other communication
between the Grantee and the Company under this Agreement at its address as set
forth above.
(b) Binding Effect; Benefits. This Agreement shall be
binding upon and inure to the benefit of the parties to this Agreement and
their respective successors and assigns. Except as provided in Section 5,
nothing in this Agreement, express or implied, is intended or shall be
construed to give any person other than the parties to this Agreement or their
respective successors or assigns any legal or equitable right, remedy or claim
under or in respect of any agreement or any provision contained herein.
(c) Waiver; Amendment.
(i) Waiver. Any party hereto may by written notice to the
other parties (A) extend the time for the
23
performance of any of the obligations or other actions of the other
parties under this Agreement, (B) waive compliance with any of the
conditions or covenants of the other parties contained in this
Agreement and (C) waive or modify performance of any of the obligations
of the other parties under this Agreement, provided that any
waiver of the provisions of Section 5 must be consented to by the C&D
Fund. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants or agreements contained
herein. The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any
preceding or succeeding breach and no failure by a party to exercise
any right or privilege hereunder shall be deemed a waiver of such
party's rights or privileges hereunder or shall be deemed a waiver of
such party's rights to exercise the same at any subsequent time or
times hereunder.
(ii) Amendment. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the Grantee and
the Company, provided that any amendment adversely affecting the rights
of the C&D Fund hereunder must be consented to by the C&D Fund. The
parties hereto acknowledge that the Company's consent to an amendment
or modification of this Agreement is subject to the terms and
provisions of the Financing Agreements.
(d) Assignability. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company or the Grantee without the prior written consent of
the other parties. The C&D Fund may assign from time to time all or any portion
of its rights under Section 5 to one or more persons or other entities
designated by it.
(e) Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, REGARDLESS OF THE
LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICT OF LAWS.
(f) Section and Other Headings, etc. The section and other
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or
24
interpretation of this Agreement. In this Agreement all references to "dollars"
or "$" are to United States dollars.
(g) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument.
25
IN WITNESS WHEREOF, the Company and the Grantee have executed
this Agreement as of the date first above written.
MCM GROUP, INC.
By: _________________________________
Name:
Title:
THE GRANTEE:
Name
By: _________________________________
Name:
Attorney-in-fact
Address of the Grantee:
Address
Initial Value Options Premium Options
Total Number of
Shares of Common
Stock for the
Purchase of Which
Options have Been
Granted: Amount 4 Shares
26
ANNEX A
[Form of Promissory Note]
(Name)
PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned and its successors,
assigns, heirs and personal representatives ("Borrower"), hereby unconditionally
promises to pay to the order of McCarthy, Crisanti & Maffei, Inc., its
successors and assigns ("MCM") at the office of MCM, One Chase Manhattan Plaza,
New York, New York 10005, in lawful money of the United States and in
immediately available funds, the aggregate principal sum set forth on the
signature page hereof, as follows:
1. Repayment of Principal. On September 1, 2001, the entire
unpaid principal balance of this Note shall be due and payable, together with
all interest and other charges due hereunder, unless earlier due and payable by
reason of the acceleration of the maturity of this Note.
2. Interest. Borrower agrees to pay interest on this Note
("Note"), which interest payment shall be due and payable, quarterly in arrears
commencing January 1, 1997 and continuing on the first day of each and every
January, April, July and October thereafter while this Note is outstanding at a
rate per annum equal to seven percent (7%) (the "Interest Rate").
Interest at the Interest Rate shall be calculated by computing
a daily amount of interest for a hypothetical year of 360 days, then multiplying
such amount by the actual number of days elapsed in an interest calculation
period.
If any payment which is to be made hereunder is not paid when
due, such payment shall bear interest, payable on demand, at a rate per annum
equal to the Interest Rate plus 2 percent (2%), but not to exceed the maximum
amount permitted by law.
If the payment of principal or interest on this Note becomes
payable on a Saturday, Sunday or a day on which MCM is to be closed, then such
payment shall be extended to the next succeeding business day, and interest on
such payment shall be payable at the Interest Rate during such extension.
3. Use of Funds. Borrower covenants and agrees that the funds
advanced pursuant to this Note shall be used to finance Borrower's purchase of
shares of Class C common stock, par value $.01 per share (hereinafter referred
to as "Stock"), of MCM Group, Inc., a Delaware corporation
(Name)
("MGI"), pursuant to that certain Management Stock Subscription Agreement dated
as of the date hereof between Borrower and MGI.
4. Voluntary Prepayments. This Note may be prepaid in whole or
in part at any time without premium or penalty, but with interest on the amount
being prepaid through the date of prepayment, with written notice to MCM
received one (1) business day prior to such prepayment specifying the amount of
prepayment. Partial prepayments of principal shall be in whole multiples of
$1,000.
5. Mandatory Prepayment in connection with Sale of Stock.
Borrower hereby covenants and agrees that if Borrower shall sell, transfer or
otherwise dispose of any shares of Stock (a "Stock Sale") to any person,
including, but not limited to, MGI or MCM, or to any of either of their
respective successors or assigns, then Borrower shall be obligated to,
immediately after Borrower's receipt of the proceeds of such Stock Sale, prepay
this Note by the amount equal to the proceeds of such Stock Sale (less any
necessary fees, commissions or expenses paid by Borrower in connection
therewith), which amount shall be automatically due and payable under this Note
on such date. Such prepayment(s) shall be without penalty, but with interest on
the amount required to be prepaid through the date of prepayment. Borrower
covenants and agrees to notify MCM immediately in writing if Borrower sells,
transfers or otherwise disposes of any shares of Stock to any person other than
MCM.
6. Mandatory Prepayment in connection with Termination Event.
In the event a "Termination Event" (as defined below) occurs, MCM may demand
prepayment in full of the obligations evidenced by this Note by written notice
to Borrower (an "Acceleration Notice"). If MCM sends an Acceleration Notice to
Borrower requiring prepayment as set forth above, Borrower shall be required to
prepay the outstanding principal balance of this Note in full, together with all
unpaid accrued interest and other charges, on (i) if the Termination Date occurs
prior to an underwritten public offering of the common stock of MGM led by one
or more underwriters, at least one of which is a nationally recognized standing,
the first day immediately following the expiration of the periods during which
MGI or the Clayton & Dubilier Private Equity Fund IV Limited Partnership may
repurchase any shares of Stock or, if applicable, the Borrower may require MGI
to repurchase the shares of stock or (ii) in all other events, the date which is
ten (10) days after the occurrence of the Termination Event. For purposes of
this Note, a "Termination Event" shall be deemed to have
2
(Name)
occurred in the event that Borrower's employment with MCM is terminated for any
reason whatsoever.
7. Defaults. If any of the following events shall occur: (1)
default by Borrower in the payment of any of the obligations or liabilities of
Borrower to MCM hereunder; (2) Borrower's failure to make the mandatory
prepayment required under paragraph 5 of this Note in the event of a Stock Sale;
(3) Borrower's failure to make the mandatory prepayment required under paragraph
6 of this Note in the event of a Termination Event; or (4) the appointment of a
custodian, trustee, liquidator or receiver for or for any of the property of, or
an assignment for the benefit of creditors by, Borrower; then, at the option of
MCM, this Note and all other obligations of Borrower shall become due and
payable forthwith, upon declaration to that effect by MCM, without notice to
Borrower, anything contained herein or in any other document, instrument or
agreement to the contrary notwithstanding. This Note shall become immediately
and automatically due and payable, without presentment, demand, protest or
notice of any kind, upon the commencement by or against Borrower of a case or
proceeding under any bankruptcy, insolvency or other law relating to the relief
of debtors, the readjustment, composition or extension of indebtedness or
reorganization or liquidation.
8. Costs. Borrower agrees to pay on demand all reasonable
costs and expenses incurred by MCM incidental to or in any way relating to MCM's
collection of this Note, enforcement of the obligations of Borrower hereunder or
the administration, supervision, preservation or protection of MCM's rights in
connection herewith, including, but not limited to, reasonable attorneys' fees
and expenses.
9. WAIVER OF JURY TRIAL. BORROWER AND MCM HEREBY WAIVE THE
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF OR
IN ANY WAY CONNECTED WITH THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY.
10. GOVERNING LAW. THE PROVISIONS OF THIS NOTE SHALL BE
CONSTRUED AND INTERPRETED AND ALL RIGHTS AND OBLIGATIONS HEREUNDER DETERMINED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS.
11. Advice of Counsel. Borrower acknowledges that it has had
the opportunity to obtain the advice of counsel of its own choosing in entering
into this Note and the transactions contemplated hereby. Borrower is fully aware
of the contents of this Note and its legal effect and
3
(Name)
is entering into this Note without threat, coercion, fraud or duress of any
kind. Borrower is not relying on any representation, statement, warranty of any
party regarding this Note or the transaction contemplated hereby.
12. Miscellaneous. Borrower hereby authorizes MCM to date this
Note as of the date of the making of the loan evidenced hereby and to complete
any blank space herein according to the terms upon which said loan was granted.
13. Counter-Claims, Set-Off. Borrower waives the right to
interpose any counterclaim or set-off of any kind in any litigation relating to
this Note or the transaction contemplated hereby.
14. Assignment. This Note shall be assignable in full or in
part by MCM without the consent of Borrower. No obligation or rights of Borrower
hereunder can be assigned or transferred without the prior written consent of
MCM.
15. No Waiver; Cumulative Remedies. No failure on the part of
MCM to exercise, and no delay in exercising, any right, remedy or power
hereunder shall operate as waiver thereof, nor shall any single or partial
exercise by MCM of any right, remedy or power hereunder preclude any other or
future exercises of any other right, remedy or power.
Each and every right, remedy and power hereby granted to MCM
or allowed it by law or other agreement shall be cumulative and not exclusive
the one of any other, and may be exercised by MCM from time to time.
16. Severability. Every provision of this Note is intended to
be severable; if any term or provision of this Note shall be invalid, illegal or
unenforceable for any reason whatsoever, the validity, legality and
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired.
17. Headings. The section headings in this Note are for
convenience only and are not intended to effect the construction of the
provisions of this Note.
4
(Name)
18. ENTIRE AGREEMENT. THIS NOTE REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NOT
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Principal Amount of Loan: $______________
Social Security of Borrower: ___ __ ____
WITNESS BORROWER
By:__________________ _____________________________
Name (Name)
_____________________ _____________________________
Date Date
ADDRESS OF BORROWER
(Address)
5
Dates Referenced Herein
| Referenced-On Page |
|---|
| This ‘S-4’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 9/1/01 | | 69 | | | | | None on these Dates |
| Filed on: | | 8/27/97 |
| | 1/1/97 | | 69 |
| | 10/8/96 | | 18 | | 42 |
| | 8/31/96 | | 1 | | 58 |
| | 5/15/95 | | 3 |
| List all Filings |
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