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EXHIBIT 10.13
Form of Management Stock Option Plan and Agreement between Registrant and
certain executive officers.
The Following Form Agreement was entered into between the Registrant and the
listed executives except that certain executives were also granted a
Signing Option (See Item 5 above), as noted below. The variable data is listed
in the tables below.
Sign Up Options
--------------------------------------- -------------------------------------- --------------------------------------
Name Number of Shares Exercise Price
--------------------------------------- -------------------------------------- --------------------------------------
Mr. .▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 20,542.0000 $12.17
--------------------------------------- -------------------------------------- --------------------------------------
▇▇. ▇▇▇ ▇. ▇▇▇▇▇ 10,271.0000 $12.17
--------------------------------------- -------------------------------------- --------------------------------------
Time Vested Options and Exit Participation Options (EPO)
----------------------------- ------------------------- ------------ ----------- ----------- ----------- ------------
Name Number of Time Vested EPO IRR EPO IRR EPO IRR EPO IRR EPO IRR
Option Shares Hurdle of Hurdle of Hurdle of Hurdle of Hurdle of
20% or 25% or 30% or 35% or 40% or
Multiple Multiple Multiple Multiple Multiple
of 4.0 of 5.0 of 6.0 of 7.0 of 8.0
----------------------------- ------------------------- ------------ ----------- ----------- ----------- ------------
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 4,000(1) 5,000 15,000 25,000 35,000 45,000
----------------------------- ------------------------- ------------ ----------- ----------- ----------- ------------
▇▇. ▇▇▇ ▇. ▇▇▇▇▇ 1,500 (2) 1,500 3,000 5,000 7,000 9,000
----------------------------- ------------------------- ------------ ----------- ----------- ----------- ------------
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 1,500 (2) 1,500 3,000 5,000 7,000 9,000
----------------------------- ------------------------- ------------ ----------- ----------- ----------- ------------
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇ 1,500 1,500 3,000 5,000 7,000 9,000
----------------------------- ------------------------- ------------ ----------- ----------- ----------- ------------
▇▇. ▇▇▇▇ ▇. ▇▇▇▇ 1,500 1,500 3,000 5,000 7,000 9,000
----------------------------- ------------------------- ------------ ----------- ----------- ----------- ------------
(1) Except that in the year ending December 31, 1997 the number of shares is 2000.
(2) Except that in the year ending December 31, 1997 the number of shares is 750.
---------------------------------------
PENDA CORPORATION
MANAGEMENT STOCK OPTION PLAN AND AGREEMENT
FOR XXXX
---------------------------------------
1. Purpose. The purpose of this Management Stock Option Plan is to
advance the interests of Penda Corporation, a Florida corporation (the
"Company"), by providing an additional incentive to XXXX as the Company's XXXX,
through the encouragement of stock ownership in the Company by XXXX
2. Definitions. As used herein, the following terms shall have the
meaning indicated:
"Approved Sale" shall have the meaning set forth in Section
5(a) hereof.
"Board" means the Board of Directors of the Company.
"Cause" means (i) the commission of any act by the Executive
constituting financial dishonesty against Company or its affiliates, (ii) the
conviction by the Executive of a felony or other crime involving moral
turpitude, (iii) gross dereliction of duty to the Company or its Subsidiaries,
(iv) the Executive's breach of the fiduciary duty of loyalty to the Company or
its Subsidiaries or (v) conduct by the Executive which could reasonably be
expected to have a material adverse effect on the business, properties, results
of operations, financial condition or prospects of the Company or its
Subsidiaries..
"Common Stock" means the Company's common stock, par value
$.01 per share.
"Company" shall have the meaning set forth in ss.1 hereof.
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"Executive" means XXXX or any person who succeeds to the
rights of XXXX under this Plan or any Option by reason of his death.
"Exercise Price Per Share" means Original Cost Per Share.
"Exit Participation Options" shall have the meaning set
forth in ss.5(a) hereof.
"Independent Third Party" means any person who, prior to any
Approved Sale, does not own in excess of 5% of the Company's Common Stock on a
fully-diluted basis, who is not controlling, controlled by or under common
control with any such 5% owner of the Company's Common Stock and who is not the
spouse, ancestor or descendant (by birth or adoption) of any such 5% owner of
the Company's Common Stock.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended from time to time.
"Lead Investors" means, collectively, Trivest Fund I,
Ltd. and Trivest Equity Partners I, Ltd.
"Option" (when capitalized) shall mean any option granted
under this Plan.
"Original Cost Per Share" means $25.00 per share plus the
per Share amount of any contribution to the capital of the Company made by
either Lead Investor after the effective date of this Plan.
"Plan" means this Management Stock Option Plan and
Agreement for XXXX.
"Pro Forma IRR" means , with respect to an Approved Sale,
the compounded annual return (expressed as a percentage) on the shares of Common
Stock being sold by the Lead Investors in such Approved Sale, computed from
March 18, 1994 through the date such Approved Sale is consummated. Pro Forma IRR
shall be determined in good faith by the Board, based upon generally accepted
financial valuation methodologies.
"Realized Exit Multiple" means the number obtained by
dividing the net proceeds per Share realized by the Lead Investors with respect
to an Approved Sale by the Original Cost Per Share.
"Sale of the Company" means a sale of the Company by merger,
consolidation, sale of all or substantially all of its assets, sale of all of
the outstanding Common Stock or otherwise
"Share" means a share of Common Stock.
"Shareholders' Agreement" means the Shareholders' Agreement,
of even date herewith, among the Executive, the Company and the Lead Investors,
as the same may be amended from time to time.
"Subsidiary" means any corporation (other than the Company)
in any unbroken chain of corporations beginning with the Company if, at the time
of the granting of the Option, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50 percent or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
"Time Vested Options" shall have the meaning set forth in
ss.4 hereof.
3. Shares Available for Option Grants. On the terms and subject to the
provisions hereof, Options to purchase an aggregate of up to XXXX Shares from
the Company's authorized and unissued Shares shall be available for grant to the
Executive under this Plan.
4. Grant of Time Vested Options. Subject to the provisions hereof,
Options relating to XXXX Shares shall be granted to the Executive with respect
to each of the Company's fiscal years ending December 31, 1997, December 31,
1998, 1999, 2000 and 2001 (the "Time Vested Options"); provided that the
Executive is
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employed by the Company on the last day of such fiscal year. The Time Vested
Options shall be exercisable at a purchase price per Share equal to the Exercise
Price Per Share.
5. Exit Participation Options.
(a) Upon the sale of any of the shares of Common Stock owned
by the Lead Investors to an Independent Third Party (including, without
limitation, a Sale of the Company) (an "Approved Sale"), then, in addition to
any other Options granted to the Executive pursuant to this Plan, Options (the
"Exit Participation Options") shall be granted to the Executive, in accordance
with the formula set forth on Exhibit A hereto, if and only if the Executive is
employed by the Company immediately prior to the consummation of such Approved
Sale. Any such Exit Participation Options granted in connection with an Approved
Sale shall be granted immediately prior to the consummation of such Approved
Sale. The Exit Participation Options shall be exercisable at a purchase price
per Share equal to the Exercise Price Per Share. The Company shall provide the
Executive with written notice at least 30 days prior to the consummation of an
Approved Sale, which notice shall set forth in reasonable detail the terms of
such Approved Sale.
(b) Notwithstanding any provision hereof which may be to the
contrary, any such Exit Participation Options granted in connection with an
Approved Sale pursuant to Section 5(a) shall terminate and be deemed canceled
in the event that such Approved Sale shall not be consummated (in which case
new Exit Participation Options relating to the Shares subject to such Exit
Participation Options shall thereafter be available for grant in connection
with any subsequent Approved Sale in accordance with the provisions of this
Section 5).
(c) Notwithstanding the foregoing, if an Approved Sale shall
be approved within 180 days after the effective date of the termination of the
Executive's employment with the Company without Cause and shall be consummated,
then solely for purposes of Section 5(a), the Executive shall, be deemed to be
employed by the Company immediately prior to the consummation of such Approved
Sale.
6. Grant of Options.
(a) Time Vested Options described in Section 4 hereof with
respect to any fiscal year of the Company shall be deemed granted as of the
last day of such fiscal year upon the determination of the Exercise Price
Per Share of such Time Vested Options. Exit Participation Options described in
Section 5 hereof shall be deemed granted upon the satisfaction of the
conditions to grant as described Section 5.
(b) The Options granted to the Executive under this
Plan shall be in addition to regular salary, pension, life insurance or other
benefits related to his employment with the Company or any of its Subsidiaries.
Neither this Plan nor any Option granted under this Plan shall confer upon the
Executive any right to employment or continuance of employment by the Company or
any of its Subsidiaries.
(c) All Options granted hereunder shall be subject to the
terms and provisions of the Shareholders' Agreement.
7. Exercise of Options.
(a) Written notice of an election to exercise any portion of
an Option, specifying the portion thereof being exercised, shall be delivered by
the Executive, or his personal representative in the event of the Executive's
death (i) in the case of Exit Participation Options granted in connection with
an Approved Sale, by delivering such notice in accordance with written
instructions provided to the Executive by the Company, which instructions shall
be provided to the Executive no later than three business days prior to the
consummation of such Approved Sale (or, if the Executive does not exercise such
Exit Participation Options in connection with such Approved Sale, then either in
accordance with the provisions of clause (ii) hereof or by delivering such
notice in accordance with written instructions provided to the Executive by the
Company no later than three business days prior to the consummation of a Sale of
the Company), and (ii) in the case of all other Options, (A) by delivering such
notice to the principal executive offices of the Company or (B) by mailing such
notice, postage prepaid, addressed to the Secretary of the Company at the
principal executive offices of the Company.
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(b) An Option shall be deemed exercised when (i) the Company
has received written notice of such exercise pursuant to Section 6(a) above,
(ii) full payment of the aggregate option price of the Shares as to which
the Option is exercised has been made, and (iii) arrangements that are
satisfactory to the Board in its sole discretion have been made for the
Executive's payment to the Company of the amount that is necessary for the
Company to withhold in accordance with applicable Federal or state tax
withholding requirements. The Company shall promptly advise the Executive, upon
the Executive's request, made no earlier than five days prior to the proposed
date of exercise, of the amount of such withholding Taxes which the Company
will require to be paid pursuant to clause (iii) of the immediately preceding
sentence. The option price of any Shares purchased shall be paid in cash, by
certified or official bank check, by money order, or by a combination of the
above; provided, however, that the Board in its sole discretion may accept a
personal check in full or partial payment of any Shares; and provided, further,
that in the case of any exercise of Options in connection with an Approved
Sale, the Company shall, at the Executive's request, pay or cause to be paid to
the Executive, in cancellation of all such Options and in lieu of any such
exercise, an amount equal to (x) the net amount of proceeds that the Executive
would had have received had he exercised such Options and sold the underlying
Shares concurrently with the closing of such Approved Sale, minus (y) the
Aggregate Exercise Price Per Share of such Options, minus (z) the aggregate
amount that is necessary for the Company to withhold in accordance with
applicable Federal or state tax withholding requirements. The Executive shall
not be deemed to be a holder of any Shares subject to an Option unless and
until a stock certificate or certificates for such Shares are issued to him
under the terms of this Plan. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
such stock certificate is issued, except as expressly provided in Section 10
hereof.
8. Exercisability of Options. Options shall become exercisable as
follows:
(a) Each Time Vested Option shall be exercisable in whole or
in part and cumulatively according to the following schedule; provided in each
case that the Executive is employed by the Company or its Subsidiaries on the
date of reference:
20% after the first anniversary date of the date of
grant thereof 40% after the second anniversary date
of the date of grant thereof 60% after the third
anniversary date of the date of grant thereof 80%
after the fourth anniversary date of the date of
grant thereof 100% after the fifth anniversary date
of the date of grant thereof
Notwithstanding the foregoing, in the event a Sale of the Company shall occur,
any unvested portion of the Time Vested Options shall become immediately fully
exercisable immediately prior to the consummation of the Sale of the Company.
(b) Each Exit Participation Option granted hereunder shall be
immediately fully exercisable upon the grant thereof; provided, however, that it
shall be a condition to the exercise of any Exit Participation Option that the
Executive shall consent to any Approved Sale in respect of which such Options
are granted and shall waive, in writing, any dissenter or appraisal rights
applicable thereto pursuant to the provisions of the Florida Business
Corporation Act.
(c) No Option granted hereunder shall be exercisable after the
consummation of a Sale of the Company.
(d) The Board may in its sole discretion accelerate the date
on which any Option may be exercised and may accelerate the vesting of any
Shares subject to any Option.
9. Termination of Option Period. Unless otherwise provided in any
Option, the unexercised portion of any Option shall automatically and without
notice terminate and become null and void at the time of the earliest to occur
of the following:
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(a) in the case of the Time Vested Options, upon the
termination of the Executive's employment with the Company for Cause or upon the
Executive's voluntary resignation as an employee of the Company; or
(c) immediately following the consummation of a Sale of the
Company.
10. Adjustments.
(a) If at any time while this Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the number
of issued and outstanding Shares through the declaration of a stock dividend or
through any recapitalization resulting in a stock split-up, combination or
exchange of Shares, then and in such event:
(i) appropriate adjustment shall be made in the
maximum number of Shares available for grant under this Plan, so that
the same percentage of the Company's issued and outstanding Shares
shall continue to be subject to being so optioned and appropriate
adjustment shall be made in the Exercise Price Per Share; and
(ii) appropriate adjustment shall be made in the
number of Shares and the Exercise Price Per Share thereof then subject
to any outstanding Options, so that the same percentage of the
Company's issued and outstanding Shares shall remain subject to
purchase at the same aggregate exercise price.
(b) If, prior to the consummation of an Approved Sale, the
Board shall declare any dividend or other distribution on the Common Stock
(except by way of a stock dividend payable in Common Stock on the Common Stock),
then appropriate adjustment shall be made in the Exercise Price Per Share of all
unexercised Options issued or issuable hereunder so as to reflect the effect of
such dividend on the shareholders equity of the Company.
(c) The Board may change the terms of Options outstanding
under this Plan, with respect to the Exercise Price Per Share or the number of
Shares subject to the Options, or both, when, in the Board's discretion, such
adjustments become appropriate by reason of a significant corporate transaction
so as to preserve but not increase or decrease benefits under this Plan.
(d) Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class, or
securities convertible into shares of capital stock of any class, either in
connection with direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made to, the number of or exercise price
for Shares then subject to outstanding Options granted under this Plan.
(e) Without limiting the generality of the foregoing, the
existence of outstanding Options granted under this Plan shall not affect in any
manner the right or power of the Company to make, authorize or consummate (i)
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issue by the Company of debt securities,
or preferred or preference stock that would rank above the Shares subject to
outstanding Options; (iv) the dissolution or liquidation of the Company; (v) any
sale, transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
11. Transferability of Options and Shares. Unless the Board's prior
written consent is obtained, no Option shall be subject to alienation,
assignment, pledge, hypothecation, charge or other transfer other than by the
Executive by will or the laws of descent and distribution, and any attempt to
make any such prohibited transfer shall be void. Options shall not be subject,
in whole or in part, to execution, attachment, or similar process. Each Option
shall be exercisable during the Executive's lifetime only by the Executive.
12. Issuance of Shares.
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(a) Notwithstanding any other provision of this Plan, the
Company shall not be obligated to issue any Shares unless it is advised by
counsel of its selection that it may do so without violation of the applicable
federal and state laws pertaining to the issuance of securities, and may require
any stock so issued to bear a legend, may give its transfer agent instructions,
and may take such other steps, as in its judgment are reasonably required to
prevent any such violation.
(b) As a condition to any sale or issuance of Shares upon
exercise of any Option, the Board may require such agreements or undertakings as
the Board may deem necessary or advisable to facilitate compliance with any
applicable law or regulation including, but not limited to, the following:
(i) a representation and warranty by the Executive to
the Company, at the time any Option is exercised, that he is acquiring
the Shares to be issued to him for investment and not with a view to,
or for sale in connection with, the distribution of any such Shares;
and
(ii) a representation, warranty and/or agreement to
be bound by any legends endorsed upon the certificate(s) for such
Shares that are, in the opinion of the Board, necessary or appropriate
to facilitate compliance with the provisions of any securities laws
deemed by the Board to be applicable to the issuance and transfer of
such Shares.
13. Administration of Plan. This Plan shall be administered by the
Board. The Board's determinations and its good faith interpretation and
construction of any provision of this Plan or any Option shall be final and
conclusive.
14. Withholding or Deduction for Taxes. If at any time specified herein
for the making of any issuance or delivery of any Option or Common Stock to the
Executive, any law or regulation of any governmental authority having
jurisdiction in the premises shall require the Company or any of its
Subsidiaries to withhold, or to make any deduction for, any taxes or take any
other action in connection with the issuance or delivery then to be made, such
issuance or delivery shall be deferred until such withholding or deduction shall
have been provided for by the Executive, or other appropriate action shall have
been taken.
15. Interpretation.
(a) Headings contained in this Plan are for convenience only
and shall in no manner be construed as part of this Plan.
(b) Any reference to the masculine, feminine, or neuter gender
shall be a reference to such other gender as is appropriate.
(c) Notwithstanding any provision hereof which may be to the
contrary, Options granted hereunder are not intended to qualify as incentive
stock options within the meaning of ss.422 of the Internal Revenue Code.
16. Effective Date. The effective date of this Plan is October 20,
1997.
17. Notices. Any notice provided for in this Plan must be in writing
and must be either personally delivered, or mailed by certified or registered
mail, return receipt requested, postage prepaid to the recipient at the address
below indicated:
To the Company:
c/o Trivest II, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Attention: General Counsel
To Executive:
c/o Penda Corporation
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
P.O. Box 449
Portage, Wisconsin 53901-0449
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Plan will be deemed to have been given when so delivered or
mailed.
18. Severability. Whenever possible, each provision of this Plan will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Plan is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Plan will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.
19. Choice of Law. This Plan shall be governed and construed in
accordance with the laws of the State of Florida without regard to conflicts of
laws principles thereof and all questions concerning the validity and
construction hereof shall be determined in accordance with the laws of said
state. The Company and the Executive hereby irrevocably submit to the exclusive
jurisdiction of any state or federal court sitting in the County of Dade, State
of Florida in any action or proceeding arising out of or relating to this Plan
and each such person hereby irrevocably agrees, on behalf of himself or itself
and on behalf of such person's heirs, personal representatives, successor's and
assigns, that all claims in respect of such action or proceeding may be heard
and determined in any such court and irrevocably waives any objection such
person may now or hereafter have as to the venue of any such suit, action or
proceeding brought in such a court or that such court is an inconvenient forum.
The Company and the Executive further agree that the mailing by certified or
registered mail, return receipt requested, to the addresses specified for notice
in this Plan, of any process or summons required by any such court shall
constitute valid and lawful service of process against them, without the
necessity for service by any other means provided by statute or rule of court.
In the event that an action or proceeding arising out of or relating to this
Plan shall be commenced in a court described in the second sentence of this
ss.19 and such court, by a final and nonappealable order, shall refuse to
exercise in personam jurisdiction over the Company or the Executive, as the case
may be, then the parties hereto shall not be precluded from litigating such
action or proceeding in any other court of competent jurisdiction.
20. Waiver of Jury Trial. THE COMPANY AND THE EXECUTIVE HEREBY WAIVE
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS PLAN OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
21. Amendments and Waivers. No provision of this Plan may be amended or
waived without the prior written consent of the Company and the Executive. In
the event an Option shall be exercised in part, or a change in the number or
designation of the Common Stock shall be made, this Plan shall be amended for
the purpose of reflecting such change, or of otherwise reflecting, in such
manner as the Company shall determine, the partial exercise or the change in the
number or designation of the Common Stock.
22. Business Days. Whenever the terms of this Plan call for the
performance of a specific act on a specified date, which date falls on a
Saturday, Sunday or legal holiday, the date for the performance of such act
shall be postponed to the next succeeding regular business day following such
Saturday, Sunday or legal holiday.
23. No Third Party Beneficiary. Except for the Company and the
Executive and their respective successors and assigns, nothing expressed or
implied in this Plan is intended, or will be construed, to confer upon or
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give any person other than the parties hereto and their respective heirs,
personal representatives, successors and assigns any rights or remedies under or
by reason of this Plan.
IN WITNESS WHEREOF, the parties have executed this Plan and hereby
indicate their acceptance of the foregoing terms and conditions as of October
20, 1997.
PENDA CORPORATION
By:
--------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President and Chief Executive Officer
-----------------------------
XXXX
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EXHIBIT A
TO
PENDA CORPORATION
MANAGEMENT STOCK OPTION PLAN FOR XXXX
Exit Participation Option Formula
A. If, with respect to an Approved Sale, both (i) the Pro Forma IRR is
less than 20%, and (ii) the Realized Exit Multiple is 4.0 or less, then
(subject to the provisions of P. D, below)Exit Participation Options
shall be granted with respect to a number of shares equal to the
greater number of Shares resulting from the following calculations:
(Pro Forma IRR ) 20%) x XXXX or (Realized Exit Multiple ) 4.0) x XXXX
B. If, with respect to an Approved Sale, either (i) the Pro Forma IRR is
20% or more but less than 40%, or (ii) the Realized Exit Multiple is
greater than 4.0 but less than 8.0, then (subject to the provisions of
P. D, below) Exit Participation Options shall be granted with respect
to a number of shares equal to the greater number of Shares resulting
from the following calculations:
Applicable Share Amount opposite next lowest IRR Hurdle below
Pro Forma IRR amount (see Table)
+
((Pro Forma IRR - such next lowest IRR Hurdle) ) 5%) x XXXX
or
Applicable Share Amount opposite next lowest Exit Multiple
Hurdle below Realized Exit Multiple (see Table)
+
((Realized Exit Multiple - such next lowest Exit Multiple
Hurdle) ) 1.0) x XXXX
IRR Hurdle Exit Multiple Hurdle Applicable Share Amount
------------------------------ ---------------------------- --------------------------------------------------------
20% 4.0 XXXX
------------------------------ ---------------------------- --------------------------------------------------------
25% 5.0 XXXX
------------------------------ ---------------------------- --------------------------------------------------------
30% 6.0 XXXX
------------------------------ ---------------------------- --------------------------------------------------------
35% 7.0 XXXX
------------------------------ ---------------------------- --------------------------------------------------------
40% 8.0 XXXX
------------------------------ ---------------------------- --------------------------------------------------------
C. If, with respect to an Approved Sale, either (i) the Pro Forma IRR is
40% or more, or (ii) the Realized Exit Multiple greater than 8.0, then
(subject to the provisions of P. D, below) Exit Participation Options
shall be granted with respect to XXXX Shares.
D. For purposes of P. A, P. B and P. C above, if the Approved Sale is not
a Sale of the Company, then the Exit Participation Options shall be
granted proportionately (i.e., the number of shares subject to Exit
Participation Options calculated before application of this P. D shall
be multiplied by a fraction: (i) the numerator of which shall be number
of Shares sold by the Lead Investors in such Approved Sale, and (ii)
the denominator of which shall be the total number of Shares held by
the Lead Investors immediately prior to such Approved Sale).
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EXAMPLE:
Assume that the Lead Investors hold, in the aggregate, 30,000 Shares
and that they sell 15,000 Shares in an Approved Sale. Assume further
that the Pro Forma IRR achieved with respect to such Approved Sale is
38% and that the Realized Exit Multiple is 6.0. Based on the table, a
larger Applicable Share Amount corresponds to Pro Forma IRR than to the
Realized Exit Multiple. Accordingly, the Executive will be granted
4,100 Exit Participation Options in connection with such Approved Sale,
calculated as follows:
Next Lowest IRR Hurdle: 35%
Applicable Share Amount
Opposite Next Lowest IRR Hurdle: 7,000
Calculation: ((38% - 35%) ) 5%) x 2,000 = 1,200
Exit Participation Options: 7,000 + 1,200 = 8,200
Proportionate Reduction: 2 of Lead Investors= Shares sold;
therefore 4,100 Exit
Participation Options granted
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