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Exhibit 10.5
STOCK OPTION AGREEMENT
PURSUANT TO THE
XXXXXX HOLDING CO. (PA), INC.
STOCK INCENTIVE PLAN
THIS STOCK OPTION AGREEMENT (this "Agreement") is made as of November
__, 1997 (the "Effective Date"), between Xxxxxx Holding Co. (PA), Inc., a
Pennsylvania corporation (the "Company"), and ____________ (the "Optionee").
R E C I T A L S
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A. The Company has adopted the Xxxxxx Holding Co. (PA) Inc. Stock
Incentive Plan (the "Plan"), a copy of which is attached hereto as Exhibit __.
B. The Company desires to grant the Optionee the opportunity to acquire
a proprietary interest in the Company to encourage the Optionee's contribution
to the success and progress of the Company.
C. In accordance with the Plan, the Committee (as defined in the Plan)
has as of the Effective Date granted to the Optionee a non-qualified option to
purchase shares of Class C Stock, $0.01 par value, of the Company (the "Class C
Stock") subject to the terms and conditions of the Plan and this Agreement.
AGREEMENTS
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1. DEFINITIONS. Capitalized terms used herein shall have the following
meanings:
"Act" is defined in Section 10(a).
"Agreement" means this Stock Option Agreement.
"Annual Valuation" is defined in Section 9(e).
"Approved Sale" means a transaction or a series of related
transactions which results in a BONA FIDE, unaffiliated change of economic
beneficial ownership of the Company or its business of greater than 50%
(disregarding for this purpose any disparate voting rights attributable to the
outstanding stock of the Company), whether pursuant to the sale of the stock of
the Company, the sale of the assets of the Company, or a merger or consolidation
(other than a sale of stock by an Initial Stockholder to (i) another Initial
Stockholder or affiliate thereof, or (ii) a non-U.S. entity with respect to
which an Initial Stockholder or affiliate thereof has an administrative
relationship).
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"Articles of Incorporation" means the Restated Articles of
Incorporation of the Company setting forth the rights, preferences and
privileges of and restrictions on the Class C Stock.
"Cause," when used in connection with the termination of
employment of the Optionee, has the meaning set forth in the employment
agreement between the Company and the Optionee, or if there is no such
employment agreement, means (a) conviction of the Optionee for a felony, or the
entry by the Optionee of a plea of guilty or NOLO CONTENDERE to a felony, (b)
the commission of an act of fraud involving dishonesty for personal gain which
is materially injurious to the Company, (c) the willful and continued refusal by
the Optionee to substantially perform his duties with the Company (other than
any such refusal resulting from his incapacity due to mental illness or physical
illness or injury), after a demand for substantial performance is delivered to
the Optionee by the Company's Board of Directors, where such demand specifically
identifies the manner in which the Company's Board of Directors believes that
the Optionee has refused to substantially perform his duties and the passage of
a reasonable period of time for the Optionee to comply with such demand or (d)
the willful engaging by the Optionee in gross misconduct materially and
demonstrably injurious to the Company or its Subsidiaries. For purposes of this
paragraph, no act or failure to act on the Optionee's part shall be considered
"willful" unless done, or omitted to be done, by the Optionee not in good faith
and without reasonable belief that his action or omission was in the best
interest of the Company or its Subsidiaries. Notwithstanding the foregoing, with
respect to termination for Cause arising out of conduct described in clause (b),
(c) or (d) above, a termination shall not be considered for Cause for purposes
of this Agreement unless there shall have been delivered to the Optionee a copy
of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire Board of Directors of the Company, at a meeting of
such board called and held for that purpose (after reasonable notice to the
Optionee and an opportunity for the Optionee, together with his counsel or other
advisors, to be heard at such meeting), finding that in the good faith opinion
of the board the Optionee had engaged in conduct described above in clause (b),
(c) or (d) of the first sentence of this paragraph and specifying the
particulars thereof in detail. Such a finding by the Board of Directors of the
Company is a prerequisite to a termination for Cause pursuant to clauses (b),
(c) or (d) above; PROVIDED, HOWEVER, that such a finding may be challenged, by
appropriate judicial process, on the merits (i.e., that Cause did not exist) or
on the basis that the board's finding was not made in good faith (provided that
proof that Cause for termination existed shall be a complete defense to any
showing that the board's findings was not made in good faith).
"Class C Stock" is defined in recital C.
"Closing Date" means the date on which occurs the closing of
the recapitalization of the Company pursuant to the Recapitalization Agreement
dated as of October 8, 1997 and amended as of October 27, 1997 by and between
the Company and the Investors, as such term is defined herein.
"Company" is defined in the preamble.
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"Disability" has the meaning set forth in the employment
agreement between the Company and the Optionee, or if there is no such
employment agreement, means the failure by the Optionee to render full-time
employment services to the Company for an aggregate of ninety (90) business days
in any continuous period of six (6) months on account of physical or mental
disability.
"EBITDA" is defined in Section 3(a).
"Effective Date" is defined in the preamble.
"Endorsed Certificate" is defined in Section 9(a).
"Exercise Price" is defined in Section 2.
"Fair Market Value" means the value of a Share, as of the
Termination Date, calculated pursuant to Section 9(e).
"Fiscal Year" means the fiscal year of the Company.
"Good Reason" means, unless the Optionee shall have consented
in writing thereto, any of the following:
(a) except as specifically provided in the Optionee's
employment agreement, if any, the assignment to the Optionee of duties,
or the assignment of the Optionee to a position, constituting a
material diminution in the Optionee's role, responsibilities or
authority compared with his role, responsibilities or authority on the
Effective Date;
(b) a reduction by the Company in the Optionee's
bonus opportunities or base salary as in effect on the Effective Date
or as the same may be increased from time to time;;
(c) unless the members of the Board appointed
pursuant to section 4(iii) of the Shareholder Agreement dated as of
November 24, 1997 agree to such reduction or other action, any material
reduction in the level of benefits (including participation in any
bonus plan) to which the Optionee is entitled under one or more
employee benefit plans on the Effective Date, or the taking of any
action by the Company which would adversely affect the Optionee's
accrued benefits under any such employee benefit plans or deprive the
Optionee of any material fringe benefit enjoyed by the Optionee on the
Effective Date;
(d) a demand by the Company to the Optionee to
relocate to any place that exceeds a fifty (50) mile radius beyond the
location at which the Optionee performed his duties on the Effective
Date; or
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(e) any material breach of this Agreement on the part
of the Company.
"Initial Public Offering" means the sale of any of the common
stock of the Company pursuant to a registration statement that has been declared
effective under the Act, if as a result of such sale (i) the issuer becomes a
reporting company under Section 12(b) or 12(g) of the Securities Exchange Act of
1934, as amended, and (ii) such stock is traded on the New York Stock Exchange
or the American Stock Exchange, or is quoted on the NASDAQ National Market
System or is traded or quoted on any other national stock exchange or national
securities system.
"Initial Stockholders" means the shareholders of the Company
who became shareholders as of the Closing Date (other than any such shareholders
who are also employees of the Company or were shareholders of the Company prior
to the Closing Date) and any transferees of such shareholders prior to an
Initial Public Offering or an Approved Sale.
"Investors" means those entities set forth on Schedule 1 of
the Recapitalization Agreement.
"Option" is defined in Section 2.
"Optionee" is defined in the preamble.
"Option Shares" is defined in Section 2.
"Plan" is defined in recital A.
"Put Date" is defined in Section 9(b).
"Repurchase" is defined in Section 9(a).
"Remaining Capital Stock" means the Company's capital stock
outstanding immediately prior to the Approved Sale other than the Company's
capital stock disposed of by stockholders of the Company as a result of such
Approved Sale in exchange for money or other property.
"Retirement" has the meaning set forth in the employment
agreement between the Company and the Optionee, or if there is no such
employment agreement, means the Optionee's retirement from employment with the
Company in accordance with the Company's normal retirement policy generally
applicable to its salaried employees.
"Shareholder Rights Agreement" is defined in Section 13.
"Stepup" is defined in Section 9(b).
"Subsidiary" means any joint venture, corporation, partnership
or other entity as to which the Company, whether directly or indirectly, has
more than 50% of the (i) voting rights or (ii) rights to capital or profits.
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"Termination Date" means the date on which the Optionee ceases
to be employed by the Company for any reason.
2. GRANT OF OPTION. The Company grants to the Optionee the right and
option (the "Option") to purchase, on the terms and conditions hereinafter set
forth, all or any part of the number of shares of Class C Stock set forth below
the Optionee's signature below (the "Option Shares"), at the purchase price of
$2,421.29 per Share (as such amount may be adjusted, the "Exercise Price"), on
the terms and conditions set forth herein.
3. EXERCISABILITY.
(a) The Option shall become exercisable to the extent of the
one-fifth (1/5) of the number of Option Shares as of the end of each fiscal year
set forth on Exhibit 2 of this Agreement if the Company's Earnings before
Interest, Taxes, Depreciation and Amortization ("EBITDA"), as defined on Exhibit
2, equals or exceeds the Target annual EBITDA amount set forth in column (B) of
Exhibit 2 with respect to such fiscal year, provided further that, if the EBITDA
for a fiscal year equals at least ninety percent (90%) of the Target annual
EBITDA set forth in column B of Exhibit 2 for such year, the Option shall become
exercisable to the extent provided in column (B) of Exhibit 3 of this Agreement.
If for any fiscal year set forth on Exhibit 2 the Company's cumulative annual
EBITDA amount for that and the preceding fiscal years equals or exceeds the
Cumulative Target EBITDA amount set forth in column (C) of Exhibit 2 with
respect to such fiscal year, the Option shall become exercisable to the extent
that it would have become exercisable had the Company achieved its Target annual
EBITDA amounts for that and each of the preceding fiscal years; provided,
however, that notwithstanding the Company's cumulative EBITDA amount equaling or
exceeding the Cumulative Target EBITDA amount, the Option shall not become
exercisable (subject to Section 3(b)) as to any year in which the Company's
EBITDA does not equal or exceed the Minimum Level EBITDA amount set forth in
column (A) of Exhibit 2 with respect to such fiscal year.
(b) Notwithstanding Sections 3(a), (i) upon the occurrence of
an Initial Public Offering, in which case the schedule set forth in Section 3(a)
shall not apply to the extent that Options are not yet exercisable, the Optionee
shall have the right (A) to exercise one-third (1/3) of all unexercisable
Options on the first anniversary of the Initial Public Offering, provided that
the Optionee remains continuously employed by the Company through such
anniversary; (B) to exercise an additional one third (1/3) of all unexercisable
Options (as of the first anniversary) on the second anniversary of the Initial
Public Offering, provided that the Optionee remains continuously employed by the
Company through such anniversary; and (C) to exercise the remaining one-third
(1/3) of all unexercisable Options on the third anniversary of the Initial
Public Offering, provided that the Optionee remains continuously employed by the
Company through such anniversary; (ii) upon the occurrence of an Approved Sale,
in which case the schedule set forth in Section 3(a) shall not apply to the
extent that Options are not yet exercisable, the Optionee shall have the right
to exercise up to fifty percent (50%) of all unexercisable Options, provided,
and to the extent, that the Initial Stockholders receive a twenty percent (20%)
annual internal rate of return (calculated on a fully diluted basis) from the
Closing Date until the date of closing of the Approved Sale (taking into account
the Approved Sale), and shall have the right to exercise up to one-hundred
percent (100%) of all unexercisable Options if
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the Initial Stockholders receive a thirty percent (30%) annual internal rate of
return (calculated on a fully diluted basis) from the Closing Date until the
date of closing of the Approved Sale (taking into account the Approved Sale),
and (iii) upon the seventh (7th) anniversary of the Effective Date, provided the
Optionee remains continuously employed by the Company through such anniversary,
any unexercisable Option shall immediately become fully exercisable.
4. EXPIRATION.
(a) Subject to Section 6(a), the exercisable portion of the
Option shall expire upon the thirtieth (30th) day following the seventh (7th)
anniversary of the Effective Date unless (i) at any time prior to the earlier of
an Approved Sale or January 1, 2001, the Optionee resigns without Good Reason,
in which case the exercisable portion of the option shall expire thirty (30)
days following the Termination Date, or (ii) the Optionee is terminated for
Cause from employment by the Company, in which case the exercisable portion of
the Option shall expire on the Termination Date, or (iii) in the event the
Optionee is terminated other than for Cause from employment by the Company and
the Company exercises the repurchase right pursuant to Section 9 hereof, or in
the event the Optionee or his or her representative exercises the put right
pursuant to Section 9 hereof, the exercisable portion of the Option shall expire
on the business day immediately preceding the Repurchase Date, the Put Date, or
the date on which the Company acquires any Option Shares pursuant to Section
9(c) hereof, as the case may be.
(b) The unexercisable portion of the Option shall expire on
the earlier to occur of (i) the Termination Date except in the case where the
employment of the Optionee is terminated without Cause, for Good Reason, or due
to Retirement, death or Disability, in which case the unexercisable portion of
the Option shall terminate on the thirtieth (30th) day following the date on
which the Optionee received notice of the EBITDA for the Fiscal Year during
which the Termination Date occurred, and a pro rata portion of the portion of
the Option scheduled to become exercisable in the year including the Termination
Date shall become exercisable as if the Optionee's employment had not been
terminated, such proration to be determined upon the number of days elapsed in
the year in which the Termination Date occurred, or (ii) except to the extent
provided in Section 3(b)(ii), an Approved Sale.
5. NONTRANSFERABILITY. Subject to Section 9 hereof, the Option shall
not be transferable by the Optionee except that the Optionee may transfer the
Option to (a) his or her spouse, child, estate, personal representative, heir or
successor (b) a trust for the benefit of the Optionee or his or her spouse,
child or heir, or (c) a partnership the partners of which consist solely of the
Optionee and/or his or her spouse, child, heir, and/or successor (each, a
"permitted transferee") and the Option is exercisable, during the Optionee's
lifetime, only by him or her or his or her spouse or child, or, in the event of
the Optionee's Disability, his or her guardian or legal representative. More
particularly (but without limiting the generality of the foregoing), the Option
may not be assigned, transferred (except as aforesaid), pledged or hypothecated
in any way (whether by operation of law or otherwise), and shall not be subject
to execution, attachment or similar process. Any assignment, transfer, pledge,
hypothecation or other disposition of the Option contrary to the provisions
hereof, and the levy of any attachment or similar process upon the Option that
would otherwise effect a change in the ownership of the Option, shall terminate
the Option; provided, however, that in the case of the involuntary levy of any
attachment or
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similar involuntary process upon the Option, the Optionee shall have thirty
(30) days after notice thereof to cure such levy or process before the Option
terminates. This Agreement shall be binding on and enforceable against any
person who is a permitted transferee of the Option pursuant to the first
sentence of this Section.
6. EFFECT OF APPROVED SALE; ADJUSTMENTS.
(a) Subject to Section 6(b), in the event of an Approved Sale,
the unexercised portion of the Option shall terminate upon such Approved Sale,
provided that, unless the agreement or plan of merger effecting such Approved
Sale provides that the Optionee shall receive upon such Approved Sale, with
respect to the entire exercisable but unexercised portion of the Option, the
same consideration that the holders of the Class C Stock shall be entitled to
receive upon such Approved Sale, less the Exercise Price attributable to such
exercisable but unexercised portion, then the Optionee shall be given at least
thirty (30) days' prior notice of the proposed Approved Sale and shall be
entitled to exercise such exercisable but unexercised portion of the Option at
any time during such thirty (30) day period up to and until the close of
business on the day immediately preceding the date of consummation of such
Approved Sale and upon exercise of the Option the Option Shares shall be treated
in the same manner as the shares of any other holder of Class C Stock.
(b) Notwithstanding Section 6(a), if the shares of the Class C
Stock, or to the extent it affects the economic rights of the holders of the
Class C Stock, shares of Class D stock or Class E stock of the Company, are
changed into or exchanged for a different number or kind of shares or
securities, as the result of any one or more reorganizations, recapitalizations,
mergers, acquisitions, stock splits, reverse stock splits, stock dividends or
similar events, an appropriate adjustment shall be made in the number and kind
of shares or other securities subject to the Option, and the price for each
share or other unit of any securities subject to this Agreement, in accordance
with Section 13 of the Plan. No fractional interests shall be issued on account
of any such adjustment unless the Committee specifically determines to the
contrary; provided, however, that in lieu of fractional interests, the Optionee,
upon the exercise of the Option in whole or part, shall receive cash in an
amount equal to the amount by which the fair market value of such fractional
interests exceeds the Exercise Price attributable to such fractional interests.
7. EXERCISE OF THE OPTION. Prior to the expiration thereof, the
Optionee may exercise the exercisable portion of the Option from time to time in
whole or in part. Upon electing to exercise the Option, the Optionee shall
deliver to the Secretary of the Company a written and signed notice of such
election setting forth the number of Option Shares the Optionee has elected to
purchase and shall at the time of delivery of such notice tender cash or a
cashier's or certified bank check to the order of the Company for the full
Exercise Price of such Option Shares and any amount required pursuant to Section
16 hereof. Alternatively, if the Company is not at the time prohibited from
purchasing or acquiring shares of its capital stock, the Exercise Price may be
paid in whole or in part by delivery of shares of the Class C Stock owned by the
Optionee or by the Optionee directing the Company to withhold shares otherwise
issuable upon exercise. The value of any such shares delivered or withheld as
payment of the Exercise Price shall be such shares' fair market value as
determined by the Committee. The Committee further may, in its
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discretion, permit payment of the Exercise Price in such form or in such manner
as may be permissible under the Plan and under any applicable law.
8. RESTRICTIONS ON TRANSFERS OF SHARES ISSUABLE UPON EXERCISE. Subject
to Section 9 hereof, prior to the earlier of (A) 180 days following an Initial
Public Offering or (B) an Approved Sale, the Option Shares shall not be
transferable or transferred, assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) except that the Optionee may transfer
the Option Shares (i) to a permitted transferee, as defined in Section 5 of this
Agreement, or (ii) [as permitted by the Articles of Incorporation]. This
Agreement shall be binding on and enforceable against any person who is a
permitted transferee of the Option Shares except a person who acquires the
Option Shares pursuant to (y) Section _ of the Articles of Incorporation or (z)
as part of the Initial Public Offering. The stock certificates issued to
evidence Option Shares upon exercise of the Option hereunder shall bear a legend
referring to this Agreement and the restrictions contained herein.
9. REPURCHASE OF OPTION SHARES.
(a) In the event that the Optionee ceases to be employed by
the Company for any reason prior to an Initial Public Offering or an Approved
Sale, the Company, during the sixty (60) days following the Termination Date
(the "Repurchase Period"), shall have a one-time right to purchase all, but not
less than all, of the Option Shares. The purchase price for each Option Share
shall equal Fair Market Value, or, if the Optionee resigns without Good Reason
prior to January 1, 2001 or is terminated for Cause at any time, the lower of
Fair Market Value or the Exercise Price. If the Company elects to purchase the
Option Shares, it shall notify the Optionee at or before the end of the
Repurchase Period of such election and the purchase price shall be paid in cash
at a time set by the Company (the "Repurchase Date") within thirty (30) days
after the end of the Repurchase Period, provided that the Optionee has presented
to the Company a stock certificate evidencing the Option Shares duly endorsed
for transfer (the "Endorsed Certificate"). If the Optionee fails to deliver the
Endorsed Certificate, the Option Shares represented thereby shall be deemed to
have been purchased upon (i) the payment by the Company of the purchase price to
the Optionee or his or her permitted transferee or (ii) notice to the Optionee
or such permitted transferee that the Company is holding the purchase price for
the account of the Optionee or such permitted transferee, and upon such payment
or notice the Optionee and such permitted transferee will have no further rights
in or to such Option Shares. If the Company does not purchase the Option Shares,
the restrictions on transfer thereof contained in Sections 5 and 8 of this
Agreement shall terminate and be of no further force and effect.
(b) If the Optionee's employment by the Company is terminated
prior to an Initial Public Offering or an Approved Sale (i) by the Company
without Cause or by the Optionee for any reason; (ii) due to the Optionee's
Retirement, death or Disability; or (iii) by the Company with Cause after
January 1, 2001, the Optionee or his or her representative, during the 120 days
following the Termination Date, shall have a one-time right to require Stepup
Limited, a Cayman Islands corporation ("Stepup") to purchase all, but not less
than all, of the Option Shares, unless, by the [thirtieth (30)] day after Stepup
and the Company have received notice of the Optionee's election to exercise his
put right to Stepup, the Company has notified the Optionee and Stepup of its
election, exercisable at the discretion of the Company, to purchase the Option
Shares on the
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same terms as such Option Shares were offered to Stepup, in which case such
Option Shares will be acquired by the Company. The purchase price shall be at
Fair Market Value, unless the employment of the Optionee is terminated for any
reason other than Retirement, death, or Disability prior to January 1, 2001, in
which case the purchase price will be the lower of Fair Market Value or the
Exercise Price. The purchase price shall be paid in cash on the thirtieth (30th)
day after Stepup and the Company have received notice of the Optionee's election
to exercise his put right (the "Put Date"), provided that Stepup or the Company,
as the case may be, need not pay the purchase price until such later time that
the Optionee presents to the Company the Endorsed Certificate.
(c) In the event that at the Termination Date a portion of the
Option may subsequently become exercisable in accordance with Section 4(b)
hereof, by notice to the Optionee delivered during the Repurchase Period, the
Company may elect to purchase any Option Shares that may subsequently be
acquired by the Optionee upon such Option becoming exercisable, and the Optionee
may elect to put said shares to the Company by notice to such effect during the
120 day period following the Termination Date. If notice with respect to the
purchase or put of such Option Shares was delivered as provided in the first
sentence of this paragraph, the Option Shares acquired upon such exercise shall
be acquired by the Company on the thirty-first (31st) day following the date on
which the Optionee received the notice of the determination of the EBITDA for
the Fiscal Year during which the Termination Date occurred at Fair Market Value
calculated as of the relevant Termination Date.
(d) The Fair Market Value of Option Shares to be purchased by
the Company or Stepup, as the case may be, hereunder shall be determined in good
faith by the Company's Board of Directors. The Board of Directors shall make its
determination of Fair Market Value annually (the "Annual Valuation") promptly
after the completion of the Company's audited financial statements for the year
then completed and such determination shall remain in effect until the Board of
Directors makes the next Annual Valuation. Notwithstanding the foregoing, if the
Board of Directors or an investment banker or appraiser appointed by the Company
makes a determination of Fair Market Value subsequent to an Annual Valuation,
such subsequent determination shall supersede the Annual Valuation then in
effect and shall establish the Fair Market Value until the next Annual
Valuation. The Fair Market Value shall be based on an assumed sale of 100% of
the outstanding capital stock of the Company (without reduction for minority
interest or lack of liquidity of the Option Shares or similar discount) and
determined in a manner consistent with the manner in which the purchase price to
be paid by the Investors pursuant to the Recapitalization Agreement was
determined. If such determination of the Fair Market Value is challenged by the
Optionee, a mutually acceptable investment banker or appraiser shall establish
the Fair Market Value as of the date of valuation referenced in the Annual
Valuation or a subsequent determination. The investment banker's or appraiser's
determination shall be conclusive and binding on the Company and the Optionee.
The Company shall bear all costs incurred in connection with the services of
such investment banker or appraiser unless the Fair Market Value established by
such investment banker or appraiser is less than 115% of the determination
challenged by the Optionee, in which case the Optionee shall promptly pay or
reimburse the Company for such costs (up to a maximum amount of $_________). If
the Optionee and the Company cannot agree upon an investment banker or
appraiser, they shall each choose an investment banker or appraiser and the two
shall choose a
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third investment banker or appraiser who shall establish the Fair Market Value.
Notwithstanding the foregoing, the Company shall obtain valuation of all of its
common stock at least once annually for purposes of the Optionee's estate and
gift planning; provided, however, that such valuation is not binding on the
Board of Directors for purposes of determining Fair Market Value.
(e) The Optionee shall not be considered to have ceased to be
employed by the Company for purposes of this Agreement if he or she continues to
be employed by the Company or a Subsidiary, or by a company of which the Company
is a Subsidiary.
10. COMPLIANCE WITH LEGAL REQUIREMENTS.
(a) No Option Shares shall be issued or transferred pursuant
to this Agreement unless and until all legal requirements applicable to such
issuance or transfer have, in the opinion of counsel to the Company, been
satisfied. Such requirements may include, but are not limited to, registering or
qualifying such Shares under any state or federal law, satisfying any applicable
law relating to the transfer of unregistered securities or demonstrating the
availability of an exemption from applicable laws, placing a legend on the
Shares to the effect that they were issued in reliance upon an exemption from
registration under the Securities Act of 1933, as amended (the "Act"), and may
not be transferred other than in reliance upon Rule 144 or Rule 701 promulgated
under the Act, if available, or upon another exemption from the Act, or
obtaining the consent or approval of any governmental regulatory body.
(b) The Optionee understands that the Company intends for the
offering and sale of Option Shares to be effected in reliance upon Rule 701 or
another available exemption from registration under the Act and intends to file
a Form 701 as appropriate, and that the Company is under no obligation to
register for resale the Option Shares issued upon exercise of the Option[,
subject to the Articles of Incorporation]. In connection with any such issuance
or transfer, the person acquiring the Option Shares shall, if requested by the
Company, provide information and assurances satisfactory to counsel to the
Company with respect to such matters as the Company reasonably may deem
desirable to assure compliance with all applicable legal requirements.
11. SUBJECT TO ARTICLES OF INCORPORATION. The Optionee acknowledges
that the Option Shares are subject to the terms of the Articles of
Incorporation.
12. NO INTEREST IN SHARES SUBJECT TO OPTION. Neither the Optionee
(individually or as a member of a group) nor any beneficiary or other person
claiming under or through the Optionee shall have any right, title, interest, or
privilege in or to any shares of stock allocated or reserved for the purpose of
the Plan or subject to this Agreement except as to such Option Shares, if any,
as shall have been issued to such person upon exercise of an Option or any part
thereof.
13. PLAN CONTROLS. The Option hereby granted is subject to, and the
Company and the Optionee agree to be bound by, all of the terms and conditions
of the Plan as the same may be amended from time to time in accordance with the
terms thereof, but no such amendment shall
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be effective as to the Option without the Optionee's consent insofar as it may
adversely affect the Optionee's rights under this Agreement.
14. NOT AN EMPLOYMENT CONTRACT. Nothing in the Plan, in this Agreement
or any other instrument executed pursuant thereto shall confer upon the Optionee
any right to continue in the employ of the Company or any Subsidiary or shall
affect the right of the Company or any Subsidiary to terminate the employment of
the Optionee with or without Cause.
15. GOVERNING LAW. All terms of and rights under this Agreement shall
be governed by and construed in accordance with the internal laws of the
Commonwealth of Pennsylvania, without giving effect to principles of conflicts
of law.
16. TAXES. The Committee may, in its discretion, make such provisions
and take such steps as it may deem necessary or appropriate for the withholding
of all federal, state, local and other taxes required by law to be withheld with
respect to the issuance or exercise of the Option including, but not limited to,
deducting the amount of any such withholding taxes from any other amount then or
thereafter payable to the Optionee, requiring the Optionee to pay to the Company
the amount required to be withheld or to execute such documents as the Committee
deems necessary or desirable to enable it to satisfy its withholding
obligations, or any other means provided in the Plan; provided further that the
Optionee may satisfy all aforesaid withholding tax obligations by directing the
Company to withhold that number of Option Shares with an aggregate Fair Market
Value equal to the amount of all federal, state, local and other taxes required
to be withheld, or delivering to the Company such number of previously held
shares.
17. NOTICES. All notices, requests, demands and other communications
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given if personally delivered, telexed or telecopied to, or, if mailed,
when received by, the other party at the following addresses (or at such other
address as shall be given in writing by either party to the other):
If to the Company to:
Xxxxxx Holding Co. (PA), Inc.
00 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
With a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: E. Xxxxxxx Xxxxxxx, Esq.
11
12
If to Stepup to:
Stepup Limited
X.X. Xxx 0000, Xxxx Xxxx Xxxxxxxx
Xxxxx Xxxxxx, Xxxxxx Xxxxxxx B.W.I.
With a copy to:
Investcorp Management Services Limited
x/x Xxxxxxxxxx Xxxx X.X.
X.X. Xxx 0000
Xxxxxx, Xxxxxxx
Attention: H. Xxxxxxx Xxxxxx, III
If to the Optionee to the address set forth below the Optionee's
signature below.
18. AMENDMENTS AND WAIVERS. This Agreement may be amended, and any
provision hereof may be waived, only by a writing signed by the party to be
charged.
19. ENTIRE AGREEMENT. This Agreement, together with the Plan, sets
forth the entire agreement and understanding between the parties as to the
subject matter hereof and supersedes all prior oral and written and all
contemporaneous oral discussions, agreements and understandings of any kind or
nature.
20. SEPARABILITY. In the event that any provision of this
Agreement is declared to be illegal, invalid or otherwise unenforceable by a
court of competent jurisdiction, such provision shall be reformed, if possible,
to the extent necessary to render it legal, valid and enforceable, or otherwise
deleted, and the remainder of this Agreement shall not be affected except to the
extent necessary to reform or delete such illegal, invalid or unenforceable
provision.
21. HEADINGS. The headings preceding the text of the sections
hereof are inserted solely for convenience of reference, and shall not
constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
22. COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
23. FURTHER ASSURANCES. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement.
24. REMEDIES. In the event of a breach by any party to this
Agreement of its obligations under this Agreement, any party injured by such
breach, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, shall be entitled to specific performance of its
rights under this Agreement. The parties agree that the provisions of this
Agreement shall be specifically enforceable, it being agreed by the parties that
the remedy at law,
12
13
including monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense in any action for specific
performance that a remedy at law would be adequate is hereby waived.
25. BINDING EFFECT. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective permitted successors
and assigns.
26. NO DILUTION. The Company hereby represents and warrants to the
Optionee that the Option Shares shall not be subject to dilution upon (i) the
conversion, pursuant to the terms of the Articles of Incorporation, of (A) any
of the Company's Class D Stock or Class E Stock, each with a par value of $0.01,
or (B) any of the Class C Stock, or (ii) the exercise of those certain warrants
issued by the Company on November __, 1997 entitling the holder thereof to
purchase shares of the Company's Class E Stock, $0.01 par value.
13
14
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
XXXXXX HOLDING CO. (PA), INC.
By:
---------------------------
Name:
Title:
-------------------------------
Address:
Number of Option Shares: _________
Accepted and agreed to for purposes
of Section 9(b) only:
STEPUP LIMITED
By:
------------------------------
Name:
Title:
14
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EXHIBIT [2]
EARNINGS BEFORE INTEREST, TAXES,
DEPRECIATION AND AMORTIZATION
(IN MILLIONS OF DOLLARS)
(A) (B) (C)
Cumulative
Fiscal Year Minimum Target Target
----------- ------- ------ ------
l998 60,240 75,300 75,300
l999 75,360 94,200 169,500
2000 95,440 119,300 288,800
2001 108,640 135,800 424,600
2002 118,480 148,100 572,700
Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA") is defined as Consolidated Net Income (loss) of the Company and its
subsidiaries as it would appear on a statement of income (loss), which shall (i)
exclude or be adjusted otherwise for all acquisitions and additional equity
contributions to the extent such acquisitions and/or equity contributions
materially change target EBITDA for any particular Fiscal Year, and which shall
(ii) reflect a reduction for all management and employment bonuses payable with
respect to the Fiscal Year of the Company prepared in accordance with U.S. GAAP,
consistently applied; plus (minus), to the extent such amounts are otherwise
taken into account in determining EBITDA (prior to adjustment), (iii) be
adjusted for any material Board approved amendment to the capital expenditure
plan, the following:
1. Any provision (benefit) for taxes (including franchise taxes)
deducted (added) in calculating such consolidated net income
(loss); plus
2. Any interest expense (net of interest income), deducted in
calculating such consolidated net income (loss); (minus)
3. Costs charged against any purchase accounting reserves
established in connection with the acquisition; (minus)
4. The effects of the reversal of any excess purchase accounting
reserves established in connection with the acquisition; plus
5. Amortization expenses deducted in calculating consolidated net
income (loss); plus
6. Depreciation expense deducted in calculating
consolidated net income (loss); plus
15
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7. Management fees paid to Investcorp; plus (minus)
8. Any unusual losses (gains) deducted (added) in calculating
consolidated net income (loss). (Unusual items are intended to
include transactions considered outside the ordinary course of
business. EBITDA will be adjusted to eliminate the effects, if
any, of such transactions, the intent being to calculate
EBITDA as if such transactions had not occurred); plus (minus)
9. Any compensation expense (income) deducted (added) in
calculating consolidated net income (loss) attributable to
transactions involving equity securities of the Company or its
subsidiaries.
The Participant and his or her representative shall be provided
reasonable opportunity to review the computation of EBITDA and reasonable access
to the data and information supporting such computation and shall have the right
to challenge in good faith such computation.
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EXHIBIT 3
---------
SLIDING SCALE FOR EXERCISABILITY OF OPTIONS
-------------------------------------------
(A) (B)
Portion of Applicable 1998 1999 2000 2001 2002
Percentage Option Shares ---- ---- ---- ---- ----
---------- Becoming Exercisable
--------------------
100% 100% 75.5 94.4 119.5 135.9 148.0
95% 75% 71.7 89.7 113.5 129.1 140.6
90% 50% 68.0 85.0 107.6 122.3 133.2
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Exhibit 10.10
XXXXXX HOLDING CO. (PA), INC.
STOCK INCENTIVE PLAN
l. ESTABLISHMENT AND PURPOSE OF THE PLAN. This Management
Stock Incentive Plan (the "Plan") is established by Xxxxxx Holding Co. (PA),
Inc., a Pennsylvania corporation (the "Company"), as of November 24, 1997. The
Plan is designed to enable the Company to attract, retain and motivate
directors, members of the management and certain other officers and key
employees the Company, and its subsidiaries, by providing for or increasing
their proprietary interest in the Company. The Plan provides for the grant of
options ("Options") that qualify as incentive stock options ("Incentive Stock
Options") under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), as well as Options that do not so qualify ("Non-Qualified
Options"), for the grant of stock appreciation rights ("Stock Appreciation
Rights") and for the sale or grant of restricted stock ("Restricted Stock").
2. STOCK SUBJECT TO PLAN. The number of shares of stock that
may be subject to Options or Stock Appreciation Rights granted hereunder plus
the number of shares of stock that may be granted or sold as Restricted Stock
hereunder shall not in the aggregate exceed 7,600 shares of the Company's Class
C Common Stock (the "Shares"), subject to adjustment under Section 13 hereof;
provided further that the number of Shares that a Participant (as hereinafter
defined) may receive pursuant to the Plan shall in no event exceed 2,500 in any
year. The Shares that may be subject to Options granted and Restricted Stock
sold or granted under the Plan may be authorized and unissued Shares or Shares
reacquired by the Company and held as treasury stock.
Shares that are subject to the unexercised portions of any
Options that expire, terminate or are canceled, and Shares that are subject to
any Stock Appreciation Rights that expire, terminate or are canceled, and Shares
of Restricted Stock that are reacquired by the Company pursuant to the
restrictions thereon, shall again be available for the grant of Options or Stock
Appreciation Rights and the sale or grant of Restricted Stock under the Plan. If
a Stock Appreciation Right is exercised, any Option or portion thereof that is
surrendered in connection with such exercise shall terminate and the Shares
theretofore subject to the Option or portion thereof shall not be available for
further use under the Plan.
3. SHARES SUBJECT TO ARTICLES OF INCORPORATION. All Shares
issuable under Options or Stock Appreciation Rights and all Shares of Restricted
Stock sold or granted pursuant to this Plan shall be subject to the terms and
restrictions contained in the Articles of Incorporation of the Company. A copy
of the Articles of Incorporation shall be delivered to the recipient of an
Option, Stock Appreciation Right or Restricted Stock at the time of grant or
issuance.
4. ADMINISTRATION OF THE PLAN. The Plan shall be administered
by a committee (the "Committee") appointed by the Board of Directors (the
"Board") of the
19
Company. If no persons are designated by the Board to serve on the Committee,
the Plan shall be administered by the Board and all references herein to the
Committee shall refer to the Board. The Board shall have the discretion to add,
remove or replace members of the Committee, and shall have the sole authority to
fill vacancies on the Committee; provided that one member of the Committee shall
be a member of the Board appointed pursuant to Section 4(iii) of the Shareholder
Agreement (the "Shareholder Agreement") by and among the Company, the holders of
Class D Common Stock of the Company, and the Designated Shareholders, as such
term is defined in the Shareholder Agreement.
All actions of the Committee shall be authorized by a majority
vote thereof at a duly called meeting. The Committee shall have the sole
authority, in its absolute discretion, to adopt, amend, and rescind such rules
and regulations as, in its opinion, may be advisable in the administration of
the Plan, to construe and interpret the Plan, the rules and regulations, and the
agreements and other instruments evidencing Options and Stock Appreciation
Rights granted and Restricted Stock sold or granted under the Plan, and to make
all other determinations deemed necessary or advisable for the administration of
the Plan. All decisions, determinations, and interpretations of the Committee
shall be final and conclusive upon the Participants, as hereinafter defined.
Notwithstanding the foregoing, any dispute arising under any Agreement (as
defined below) shall be resolved pursuant to the dispute resolution mechanism
set forth in such Agreement.
Subject to the express provisions of the Plan, the Committee
shall determine the number of Shares subject to grants or sales and the terms
thereof, including the provisions relating to the exercisability of Options and
Stock Appreciation Rights, lapse and non-lapse restrictions upon the Shares
obtained or obtainable under the Plan and the termination and/or forfeiture of
Options and Stock Appreciation Rights and Restricted Stock under the Plan. The
terms upon which Options and Stock Appreciation Rights are granted and
Restricted Stock is sold or granted shall be evidenced by a written agreement,
executed by the Company and the Participant (each, an "Agreement"), containing
such terms and conditions as may be approved by the Committee; provided that
such terms and conditions are not inconsistent with the express conditions of
the Plan.
5. ELIGIBILITY. Persons who shall be eligible for grants of
Options or Stock Appreciation Rights or sales or grants of Restricted Stock
hereunder shall be those directors, officers and employees of the Company or a
subsidiary of the Company who are members of a select group of directors,
management and other key employees that the Committee may from time to time
designate to participate under the Plan ("Participants") through grants of
Non-Qualified Options, Incentive Stock Options and, if applicable, Stock
Appreciation Rights, and/or through sales or grants of Restricted Stock.
6. TERMS AND CONDITIONS OF OPTIONS. No Incentive Stock Option
shall be granted for a term of more than ten years and no Non-Qualified Option
shall be granted for a term of more than ten years and thirty days. Options may,
in the discretion of the Committee, be granted with associated Stock
Appreciation Rights or be amended so as to provide for associated Stock
Appreciation Rights. The Agreement may contain such other terms,
2
20
provisions, and conditions as may be determined by the Committee as long as such
terms, conditions and provisions are not inconsistent with the Plan. The
Committee shall designate as such those Options intended to be eligible to
qualify and be treated as Incentive Stock Options and, correspondingly, those
Options not intended to be eligible to qualify and be treated as Incentive Stock
Options.
7. EXERCISE PRICE OF OPTIONS. The exercise price for each
Non-Qualified Option granted hereunder shall be set forth in the Agreement. For
so long as required under Section 422 of the Code and the regulations
promulgated thereunder (or any successor statute or rules), the exercise price
of any Option intended to be eligible to qualify and be treated as an Incentive
Stock Option shall not be less than the fair market value of the Shares on the
date such Incentive Stock Option is granted, except that if such Incentive Stock
Option is granted to a Participant who on the date of grant is treated under
Section 424(d) of the Code as owning stock (not including stock purchasable
under outstanding options) possessing more than ten percent of the total
combined voting power of all classes of the Company's stock, the exercise price
shall not be less than one hundred ten percent (110%) of the fair market value
of the Shares on the date such Incentive Stock Option is granted.
The fair market value of Shares for the purposes of this Plan
shall be determined by the Board, whose valuation shall be binding upon each
Optionee.
Payment for Shares purchased upon exercise of any Option
granted hereunder shall be in cash at the time of exercise, except that, if
either the Agreement so provides or the Committee so permits, and if the Company
is not then prohibited from doing so, such payment may be made in whole or in
part with surrendered or withheld shares of stock of the same class as the stock
then subject to the Option. The Committee also may on an individual basis permit
payment or agree to permit payment by such other alternative means as may be
lawful, including by delivery of an executed exercise notice together with
irrevocable instructions to a broker promptly to deliver to the Company the
amount of sale or loan proceeds required to pay the exercise price.
8. NON-TRANSFERABILITY. Unless provided otherwise in the
Agreement, any Option granted under this Plan shall by its terms be
nontransferable by the Participant other than by will or the laws of descent and
distribution (in which case such descendant or beneficiary shall be subject to
all terms of the Plan applicable to Participants) and is exercisable during the
Participant's lifetime only by the Participant or by the Participant's guardian
or legal representative.
9. INCENTIVE STOCK OPTIONS. The provisions of the Plan are
intended to satisfy the requirements set forth in Section 422 of the Code and
the regulations promulgated thereunder (including the aggregate fair market
value limits set forth in Section 422(d) of the Code) with respect to Incentive
Stock Options granted under the Plan. For so long as required under Section 422
of the Code and the regulations promulgated thereunder (or any successor statute
or rules), during the term of the Plan, the aggregate fair market value of the
Shares with respect to which Incentive Stock Options are first exercisable by a
Participant
3
21
during any calendar year shall not exceed $100,000. For the purpose of this
Section 9, the fair market value of the Shares shall be determined at the time
the Incentive Stock Option is granted.
10. STOCK APPRECIATION RIGHTS. The Committee may, under such
terms and conditions as it deems appropriate, grant to any Participant selected
by the Committee Stock Appreciation Rights, which may or may not be associated
with Options. Upon exercise of a Stock Appreciation Right, the Participant shall
be entitled to receive payment of an amount equal to the excess of the fair
market value, as defined by the Committee, of the underlying Shares on the date
of exercise over the Stock Appreciation Right's exercise price. Such payment may
be made in additional Shares valued at their fair market value on the date of
exercise or in cash, or partly in Shares and partly in cash, as the Committee
may designate. The Committee may require that any Stock Appreciation Right shall
be subject to the condition that the Committee may at any time in its absolute
discretion not allow the exercise of such Stock Appreciation Right.
11. RESTRICTED STOCK. The Committee may sell or grant
Restricted Stock under the Plan (either independently or in connection with the
exercise of Options or Stock Appreciation Rights under the Plan) to Participants
selected by the Committee. The Committee shall in each case determine the number
of Shares of Restricted Stock to be sold or granted, the price at which such
Shares are sold, if applicable, and the terms and duration of the restrictions
to be imposed upon those Shares.
12. INVESTMENT REPRESENTATION. Each Agreement may contain an
agreement that, upon demand by the Committee for such a representation, the
optionee shall deliver to the Committee at the time of any exercise of an Option
a written representation that the Shares to be acquired upon such exercise are
to be acquired for investment and not for resale or with a view to the
distribution thereof. Upon such demand, delivery of such representation prior to
the delivery of any Shares issued upon exercise of an Option and prior to the
expiration of the option period shall be a condition precedent to the right of
the optionee or such other person to purchase any Shares.
13. ADJUSTMENTS. In the event of any one or more
reorganizations, recapitalizations, stock splits, reverse stock splits, stock
dividends, extraordinary dividends, or distributions, or similar events, an
appropriate adjustment shall be made in the number, exercise or sale price
and/or type of shares or securities for which Options or Stock Appreciation
Rights may thereafter be granted and Restricted Stock may thereafter be sold or
granted under the Plan. The Committee also shall designate the appropriate
changes that shall be made in Options or Stock Appreciation Rights, or rights to
purchase Restricted Stock under the Plan, so as to preserve the value of any
such Options, Stock Appreciation Rights or Restricted Stock. Any such adjustment
in outstanding Options shall be made without changing the aggregate exercise
price applicable to the unexercised portions of such Options. Any such
adjustments in outstanding rights to purchase Restricted Stock shall be made
without changing the aggregate purchase price of such Restricted Stock.
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14. DURATION OF PLAN. Options may not be granted and
Restricted Stock may not be sold or granted under the Plan after November 24,
2007.
15. AMENDMENT AND TERMINATION OF THE PLAN. Subject to the
Section 5.4 of the Recapitalization Agreement, dated as of October 8, 1997 and
amended and restated as of October 27, 1997 (the "Recapitalization Agreement")
between the Company and the Investors set forth on Schedule 1 to the
Recapitalization Agreement, the Board may at any time amend, suspend or
terminate the Plan. The Committee may amend the Plan or any Agreement issued
hereunder to the extent necessary for any Option or Stock Appreciation Right
granted or Restricted Stock sold or granted under the Plan to comply with
applicable tax or securities laws. If the Board determines that the approval of
such action by the stockholders of the Company is advisable or necessary for
compliance with applicable securities law, tax law, stock exchange requirement
or other applicable federal or state law, no such action of the Board or the
Committee shall be permitted unless taken with or ratified by such approval.
No Option or Stock Appreciation Right may be granted or
Restricted Stock sold or granted during any suspension of the Plan or after the
termination of the Plan. No amendment, suspension or termination of the Plan or
of any Agreement issued hereunder shall, without the consent of the affected
holder of such Option or Stock Appreciation Right or Restricted Stock, adversely
alter or otherwise impair any rights or obligations in any Option or Stock
Appreciation Right or Restricted Stock theretofore granted or sold to such
holder under the Plan.
16. NATURE OF PLAN. This Plan is intended to qualify as a
compensatory benefit plan within the meaning of Rule 701 under the Act. This
Plan is intended to constitute an unfunded arrangement for a select group of
directors, management and other key employees.
17. CANCELLATION OF OPTIONS. Any Option granted under the Plan
may be canceled at any time with the consent of the holder and a new Option may
be granted to such holder in lieu thereof.
18. WITHHOLDING TAXES. Whenever Shares are to be issued with
respect to the exercise of Options or amounts are to be paid or income earned
with respect to Stock Appreciation Rights or Restricted Stock under the Plan,
the Committee in its discretion may require the Participant to remit to the
Company, prior to the delivery of any certificate or certificates for such
Shares or the payment of any such amounts, all or any part of the amount
determined in the Committee's discretion to be sufficient to satisfy federal,
state and local withholding tax obligations (the "Withholding Obligation") that
the Company or its counsel determines may arise with respect to such exercise,
issuance or payment. Pursuant to a procedure established by the Committee or as
set forth in the Agreement, the Participant may (i) request the Company to
withhold delivery of a sufficient number of Shares or a sufficient amount of the
Participant's compensation or (ii) deliver a sufficient number of
previously-issued Shares, to satisfy the Withholding Obligation.
5
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EXHIBIT
-------
EARNINGS BEFORE INTEREST, TAXES,
DEPRECIATION AND AMORTIZATION
(IN THOUSANDS OF DOLLARS)
(A) (B) (C)
Cumulative
Fiscal Year Minimum Target Target
----------- -------- ------- -----------
l998 60,320 75,400 75,400
l999 75,120 93,900 169,300
2000 94,720 118,400 287,700
2001 107,840 134,800 422,500
2002 117,520 146,900 569,400
Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA") is defined as Consolidated Net Income (loss) of the Company and its
subsidiaries as it would appear on a statement of income (loss), which shall (i)
exclude or be adjusted otherwise for all acquisitions and additional equity
contributions to the extent such acquisitions and/or equity contributions
materially change target EBITDA for any particular Fiscal Year,(ii) reflect a
reduction for all management and employment bonuses payable with respect to the
Fiscal Year of the Company prepared in accordance with U.S. GAAP, consistently
applied and (iii) be adjusted for any material Board approved amendment to the
capital expenditure plan; plus (minus), to the extent such amounts are otherwise
taken into account in determining EBITDA (prior to adjustment), the following:
1. Any provision (benefit) for taxes (including
franchise taxes) deducted (added) in calculating such
consolidated net income (loss); plus
2. Any interest expense (net of interest income),
deducted in calculating such consolidated net income
(loss); plus
3. Amortization expenses deducted in calculating
consolidated net income (loss); plus
4. Depreciation expense deducted in calculating
consolidated net income (loss); plus
5. Management fees paid to Investcorp; plus (minus)
6. Any unusual losses (gains) deducted (added) in
calculating consolidated net income (loss). (Unusual
items are intended to include transactions considered
outside the ordinary course of business. EBITDA will
be adjusted to eliminate the effects, if any,
24
of such transactions, the intent being to calculate
EBITDA as if such transactions had not occurred.);
plus (minus)
7. Any compensation expense (income) deducted
(added) in calculating consolidated net income (loss)
attributable to transactions involving equity
securities of the Company or its subsidiaries.
The Participant and his or her representative shall be
provided reasonable opportunity to review the computation of EBITDA and
reasonable access to the data and information supporting such computation, but
the Board's determination shall be conclusive and binding.
2
