INCENTIVE UNIT GRANT AGREEMENT
EXHIBIT
10.47
This INCENTIVE UNIT GRANT AGREEMENT (this “Agreement”) is made as of October 28, 2005,
by and between V.G.A.T. Investors, LLC, a Delaware limited liability company (the
“Company”), and (the “Executive”).
WHEREAS, pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), dated
as of September 13, 2005, by and among the Company, ▇▇▇▇▇▇ Merger Sub, Inc., a Delaware corporation
and a direct wholly-owned subsidiary of the Company (“Merger Sub”), AT Holdings
Corporation, a Delaware corporation, (“AT Holdings”), Argo-Tech Corporation, a Delaware
corporation (“Argo Tech”), and GreatBanc Trust Company as Trustee for the Argo-Tech
Corporation Employee Stock Ownership Plan (the “ESOP Trustee”), on the date hereof Merger
Sub will merge (the “Merger”) with and into AT Holdings with AT Holdings surviving as a
wholly owned Subsidiary of the Company;
WHEREAS, pursuant to a Unit Purchase Agreement (the “Unit Purchase Agreement”), dated
as of the date hereof, by and among Vestar Capital Partners IV, L.P., a Delaware limited
partnership (“Vestar IV”), Vestar/V.G.A.T. Investors, LLC, a Delaware limited liability
company (“Vestar/V.G.A.T.” and, together with Vestar IV, “Vestar”), Greenbriar Equity Fund,
L.P. a Delaware limited partnership (“GEF”), Greenbriar Co-Investment Partners, L.P. a
Delaware limited partnership (“GCP”), Greenbriar Co-Investment-AT, LLC, a Delaware limited
partnership (“GC” and, together with GEF and GCP, “Greenbriar”), GS Mezzanine
Partners III Onshore Fund, L.P., a Delaware limited partnership (“GS Onshore”), GS
Mezzanine Partners III Offshore Fund, L.P., an exempted limited partnership organized under the
laws of the Cayman Islands (“GS Offshore” and together with GS Onshore, “GS
Mezzanine”), and the Management Investors (as defined therein), Vestar, Greenbriar, GS
Mezzanine and the Management Investors have purchased membership interests in the Company;
WHEREAS, following the Merger the Executive will render services to or for the benefit of the
Company and its Subsidiaries; and
WHEREAS, on the terms and subject to the conditions contained herein, the Company desires to
grant to the Executive such Class B Units and Class C Units (as defined herein) of the Company as
are set forth on Schedule I attached hereto.
NOW, THEREFORE, in order to implement the foregoing and in consideration of the mutual
representations, warranties, covenants and agreements contained herein, the parties hereto agree as
follows:
| 1. | Definitions. |
1.1. Activity Date. The term “Activity Date” shall mean the first date on
which Executive engages in Competitive Activity.
1.2. Affiliate. The term “Affiliate” shall have the meaning set forth in the
LLC Agreement.
1.3. Agreement. The term “Agreement” shall have the meaning set forth in the
preface.
1.4. AT Holdings. The term “AT Holdings” shall have the meaning set forth in
the preface.
1.5. Argo Tech. The term “Argo Tech” shall have the meaning set forth in the
preface.
1.6. Board. The term “Board” shall mean the Management Committee (as defined
in the LLC Agreement) of the Company.
1.7. Cash Deferral Conditions. The term “Cash Deferral Conditions” shall have
the meaning set forth in Section 6.1.
1.8. Cause. The term “Cause” shall mean:
(a) Executive is indicted or charged with, or pleads guilty or nolo contendere to, (A) a
felony or (B) a crime involving moral turpitude that is either materially detrimental to the
Company or that brings the Company into public disgrace or disrepute;
(b) in carrying out his duties to the Company, the Executive engages in conduct that
constitutes gross neglect or willful misconduct;
(c) Executive engages in willful misconduct resulting in or intended to result in direct
personal gain to Executive at the Company’s expense or that brings the Company into public disgrace
or disrepute, or the Executive has made, or is aware of, any material and knowing misrepresentation
to the Company or any of its Subsidiaries in any Transaction Document (as defined in the Merger
Agreement);
(d) the Executive breaches any material provision of this Agreement, any employment agreement
with the Company or any Subsidiary, if any, or breaches in any material respect any Company policy
governing employee conduct in the workplace, including, without limitation, policies relating to
the use of illicit drugs, alcohol abuse and sexual harassment, and such breach has not been cured
prior to 30 days following notice from the Company;
(e) the Executive’s repeated refusal to perform duties or responsibilities as reasonably
directed by the Board in writing; or
(f) the Executive’s material breach of a fiduciary obligation to the Company or a material
breach of any confidentiality or non-competition obligations.
1.9. Class A Units. The term “Class A Units” shall have the meaning set forth
in the LLC Agreement and shall include any securities of the Company or any other Person that may
be received in respect thereof.
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1.10. Class B Units. The term “Class B Units” shall have the meaning set
forth in the LLC Agreement and shall include any securities of the Company or any other Person that
may be received in respect thereof.
1.11. Class C Units. The term “Class C Units” shall have the meaning set
forth in the LLC Agreement and shall include any securities of the Company or any other Person that
may be received in respect thereof.
1.12. Code. The term “Code” means the United States Internal Revenue Code of
1986, as amended.
1.13. Company. The term “Company” shall have the meaning set forth in the
preface.
1.14. Company Sale. The term “Company Sale” shall mean the dissolution of the
Company in accordance with this Agreement or the consummation of a transaction, whether in a single
transaction or in a series of related transactions that are consummated contemporaneously (or
consummated pursuant to contemporaneous agreements), with any other Person or group of related
Persons (other than Vestar or Greenbriar) on an arm’s-length basis, pursuant to which such Person
or group of related Persons (i) acquire (whether by merger, stock purchase, recapitalization,
reorganization, redemption, issuance of capital stock or otherwise) more than 50 percent of (A) the
Company’s Units or (B) the total number of shares of AT Holdings Corporation’s or Argo-Tech
Corporation’s common stock outstanding (in each case assuming that all equity securities
convertible into or exercisable for the Company’s Units or for shares of common stock of AT
Holdings or Argo-Tech, as the case may be, have been so converted or exercised), or (ii) acquire
assets constituting all or substantially all of the assets of the Company’s Subsidiaries on a
consolidated basis; provided that in no event shall a Company Sale be deemed to include any
transaction effected for the purpose of (x) changing, directly or indirectly, the form of
organization or the organizational structure of the Company or any of its Subsidiaries or (y)
contributing equity securities to entities controlled by the Company.
1.15. Competitive Activity. Executive shall be deemed to have engaged in
“Competitive Activity” if: while employed by the Company or any of its Subsidiaries, and
during the period from the date of termination of Executive’s employment by the Company or any of
its Subsidiaries for any reason until the first anniversary of the date of such termination,
Executive, directly or indirectly, either for himself or for any other individual, corporation,
partnership, joint venture or other entity:
(a) participates in any business (including, without limitation, any division, group or
franchise of a larger organization) anywhere in the Non Competition Area (defined below) which
engages or which proposes to engage in the promotion, development, sale, distribution or production
of any (i) aircraft engine fuel pumps, (ii) commercial and military airframe fuel system products
and services, (iii) aerial refueling pumps, (iv) ground fueling components, (v) fuel management
systems, (vi) cryogenic pumps, or (vii) any products or product lines that compete with any of the
foregoing or other products or product lines of the Company or any Subsidiary (a “Competitive
Business”) (A) at any time during the Executive’s employment with the Company, if the
determination of whether or not Executive has engaged in “Competitive
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Activity” is being made during his employment with the Company or (B) at the time of Executive’s termination of employment
by the Company; or
(b) (i) induces or attempts to induce any employee of the Company or any of its Subsidiaries
to leave the employ of the Company or such Subsidiary, or in any way interferes with the
relationship between the Company or any Subsidiary and any employee thereof, including inducing or
attempting to induce any union, employee or group of employees to interfere with the business or
operations of the Company or its Subsidiaries, (ii) hires any person who was an employee of the
Company or any Subsidiary unless at least twelve months has elapsed since the termination of such
employee’s employment by the Company or any Subsidiary, as the case may be, or (iii) induces or
attempts to induce any customer, supplier, distributor, franchisee, licensee or other business
relation of the Company or any Subsidiary to cease doing business with the Company or such
Subsidiary, or in any way interferes with the relationship between any such customer, supplier,
distributor, franchisee, licensee or business relation and the Company or any Subsidiary.
For purposes of this Agreement, the term “participate in” shall include, without limitation,
having any direct or indirect interest in any corporation, partnership, joint venture or other
entity, whether as a sole proprietor, owner, stockholder, partner, joint venturer, creditor or
otherwise, or rendering any direct or indirect service or assistance to any individual,
corporation, partnership, joint venture or other business entity (whether as a director, officer,
manager, supervisor, employee, agent, consultant or otherwise). For the purposes of this
Agreement, “Non Competition Area” means anywhere in the world. Notwithstanding the above,
Executive shall not be prohibited from (i) owning up to 3% of the outstanding stock of a
corporation which is publicly traded, so long as Executive has no active participation in the
business of such corporation; or (ii) becoming employed by any entity or organization that has a
division, group, Subsidiary or franchise that engages in any Competitive Business (a “Competing
Employer”); provided, that (A) Executive’s employment with such Competing Employer does not
require Executive to provide any services on behalf of, or otherwise interact with, such division,
group, Subsidiary or franchise that engages in any Competing Business, (B) Executive causes the
Competing Employer to screen Executive from the Competing Employer’s activities involving a
Competing Business and (C) the disclosure by Executive of any confidential or proprietary
information concerning the Company or any of its Subsidiaries to a Competing Employer or any of its
affiliates shall be deemed to be a Competing Activity.
1.16. Credit Agreement. The term “Credit Agreement” shall mean AT Holdings’
principal credit facility, which shall initially be that certain Fourth Amended and Restated Credit
Agreement, dated September 13, 2005 by and among Argo Tech, AT Holdings, the Lenders (as defined
therein) and National City Bank, as Administrative Agent, any successor principal credit facility
in replacement thereof and any ancillary and related documents thereto.
1.17. ESOP Trustee. The term “ESOP Trustee” shall have the meaning set forth
in the preface.
1.18. Executive. The term “Executive” shall have the meaning set forth in the
preface.
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1.19. Executive Group. The term “Executive Group” shall have the meaning set
forth in Section 5.1(a).
1.20. Fair Market Value. The term “Fair Market Value” means, with respect to
any asset or securities, the fair market value for such assets or securities as between a willing
buyer and a willing seller in an arm’s length transaction occurring on the date of valuation,
taking into account all relevant factors determinative of value, as is determined in good faith by
the Board, and subject to the approval of the Majority Unitholders (as such term is defined in the
LLC Agreement). The Board shall communicate its determination of Fair Market Value to Executive
and, unless Executive objects to such determination within fifteen days of receipt of such
determination, Fair Market Value shall be the value so notified by the Board. If Executive
disagrees with such determination of Fair Market Value, then it shall notify the Company and
Executive and a representative identified by the Board shall negotiate regarding the determination
for a period of up to fifteen days. If Executive and the Board are unable to reach agreement
within 30 days after the Board has notified Executive of its determination of Fair market Value,
then an Expert (as defined in the LLC Agreement) shall be selected jointly by Executive and the
Board or, if such selection cannot be made within 15 days, by an Expert selected by the American
Arbitration Association in accordance with its commercial arbitration rules for arbitrators. The
Expert shall determine Fair Market Value in accordance with the terms and provisions of this
definition. The Board and Executive each shall deliver to the Expert promptly, and in any event
within five days, after the selection of the Expert, a written statement setting forth its
respective determination of Fair Market value and shall provide reasonable supporting documentation for such
determination. The Expert shall deliver to the Board and Executive, as promptly as practicable and
in any event within 30 days after its selection, a written report setting forth the determination
of Fair Market Value as determined in accordance with the terms of this definition. The Expert
shall select the position of either the Board or Executive as its determination of Fair Market
Value and may not impose an alternative resolution. The Expert shall make its determination based
on presentations and supporting material provided by the parties and, at its election, based upon
its independent review. Fair Market Value as determined by the Expert shall be, absent manifest
error or fraud, final, conclusive and binding upon the parties. The fees, costs and expenses of
the Expert shall be borne by (x) the Company, if Fair Market Value as determined by Executive is
selected by the Expert or (y) Executive, if Fair Market Value as determined by Board is selected by
the Expert.
1.21. Greenbriar. The term “Greenbriar” shall have the meaning set forth in
the preface.
1.22. GS Mezzanine. The term “GS Mezzanine” shall have the meaning set forth
in the preface.
1.23. Investors. The term “Investors” shall mean Vestar and Greenbriar.
1.24.
LLC Agreement. The term “LLC Agreement” shall mean the Amended and
Restated Limited Liability Company Agreement of the Company, dated as of the date hereof, entered
into by and among the Company and its members, as amended from time to time in accordance with its
terms.
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1.25. Losses. The term “Losses” shall have the meaning set forth in
Section 8.5.
1.26. Merger Agreement. The term “Merger Agreement” shall have the meaning
set forth in the preface.
1.27. Merger Sub. The term “Merger Sub” shall have the meaning set forth in
the preface.
1.28. Permitted Transferee. The term “Permitted Transferee” means any
transferee of Units pursuant to clause (v) of the definition of “Exempt Transfer” in the
Securityholders Agreement.
1.29. Person. The term “Person” shall mean any individual, corporation, partnership, limited
liability company, trust, joint stock company, business trust, unincorporated association, joint
venture, governmental authority or other entity of any nature whatsoever.
1.30. Public Offering. The term “Public Offering” shall have the meaning set
forth in the Securityholders Agreement.
1.31. Return Hurdle. The term “Return Hurdle” shall have the meaning set
forth in Section 4(a)(ii).
1.32. Rollover Amount. The term “Rollover Amount” shall have the meaning set
forth in the Merger Agreement.
1.33. Rollover Securities. The term “Rollover Securities” shall have the
meaning set forth in Section 4(b).
1.34. Securities Act. The term “Securities Act” shall mean the United States
Securities Act of 1933, as amended, and all rules and regulations promulgated thereunder, as the
same may be amended from time to time.
1.35. Securityholders Agreement. The term “Securityholders Agreement” shall
mean the Securityholders Agreement, dated as of the date hereof, among the Company, Vestar,
Greenbriar, GS Mezzanine and the other securityholders party thereto, as it may be amended or
supplemented thereafter from time to time.
1.36. Subsidiary. The term “Subsidiary” shall have the meaning set forth in
the LLC Agreement.
1.37. Subordinated Note. The term “Subordinated Note” shall have the meaning
set forth in Section 6.1.
1.38. Tax or Taxes. The terms “Tax” or “Taxes” shall mean (i) any
United States federal, state or local, or any non-United States, net or gross income, gross
receipts, net proceeds, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Section 59A of the Code), customs,
capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real
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property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated
or other taxes, assessments, duties, fees, levies or other governmental charges of any kind
whatever, whether disputed or not, including any interest, penalty or addition thereto; or (ii) any
liability for or in respect of the payment of any amount described in clause (i) of this definition
as a member of a consolidated, affiliated, unitary or similar group, as a transferee or successor,
by contract or otherwise.
1.39. Unit Purchase Agreement. The term “Unit Purchase Agreement” shall have
the meaning set forth in the preface.
1.40. Units. The term “Units” shall mean the Class A Units, the Class B Units
and/or the Class C Units issued by the Company to the Executive pursuant to this Agreement and/or
the Unit Purchase Agreement, as applicable.
1.41. Vestar. The term “Vestar” shall have the meaning set forth in the
preface.
| 2. | Grant of Units. |
2.1. Closing Events. Subject to the Executive executing and delivering to the Company
the LLC Agreement and the Securityholders Agreement and the other terms and conditions set forth in
this Agreement, the Company hereby grants to Executive, as of the date hereof, 1,705 Class B Units
and 1,705 Class C Units. Upon the execution and delivery of this Agreement by the parties hereto,
the Company shall modify the unit register of the Company to reflect Executive’s ownership of the
number of Class B Units and Class C Units set forth above.
2.2. Section 83(b) Election. With respect to the Class B Units and Class C Units
received by Executive, within 30 days after the Closing, Executive shall make a timely election
with the Internal Revenue Service under Section 83(b) of the Code and the regulations promulgated
thereunder, in the form of Exhibit A attached hereto.
2.3. Equity Agreements. Simultaneously with the execution of this Agreement, the
Executive shall execute joinders, in form and substance acceptable to the Company, to each of the
LLC Agreement and the Securityholders Agreement.
3. Representations and Warranties. The Executive represents and warrants to the
Company that the statements contained in this Section 3.1 are correct and complete as of the date
of this Agreement, with respect to himself:
3.1. Power and Authority. The Executive has full power and authority to execute and
deliver this Agreement and perform his obligations hereunder.
3.2. Noncontravention. To the knowledge of the Executive, neither the execution and
the delivery of this Agreement nor the consummation of the transactions contemplated hereby will
violate any provision of law, statute, rule or regulation to which the Executive is subject.
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3.3. Brokers’ Fees. The Executive has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions contemplated by this
Agreement for which the Company or any of its affiliates could become liable or obligated.
3.4. Units Unregistered. The Executive acknowledges and represents that Executive has
been advised by the Company that:
(a) the grant of the Units hereunder has not been registered under the Securities Act;
(b) the Units must be held indefinitely and the Executive must continue to bear the
economic risk of the investment in the Units unless the offer and sale of such Units are
subsequently registered under the Securities Act and all applicable state securities laws or
an exemption from such registration is available;
(c) there is no established market for the Units and it is not anticipated that there
will be any public market for the Units in the foreseeable future;
(d) a restrictive legend in the form set forth below and the legends set forth in
Section 8.2 of the Securityholders Agreement and on the cover page of the LLC
Agreement shall be placed on the certificates representing the Units if any such
certificates shall be issued in the future:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
REPURCHASE OPTIONS AND OTHER PROVISIONS SET FORTH IN A UNIT GRANT AGREEMENT BETWEEN THE ISSUER AND THE
EXECUTIVE DATED AS OF OCTOBER 28, 2005, AS AMENDED AND MODIFIED FROM TIME TO
TIME, A COPY OF WHICH MAY BE OBTAINED BY THE HOLDER HEREOF AT THE ISSUER’S
PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE”; and
(e) a notation shall be made in the appropriate records of the Company indicating that
the Units are subject to restrictions on transfer and, if the Company should at some time in
the future engage the services of a securities transfer agent, appropriate stop-transfer
instructions will be issued to such transfer agent with respect to the Units.
| 4. | Vesting and Forfeiture. |
(a) General. None of the Class B Units or Class C Units granted to the Executive
pursuant to this Agreement are vested as of the date hereof.
(i) Vesting of Class B Units. Subject to Sections 4(b) and
4(c) below, 20% of the Class B Units granted hereunder will vest effective as of the
end of each fiscal year commencing at the end of the fiscal year ended October 31, 2006, so
long as the Executive remains continuously employed by the Company or any of its
Subsidiaries until the end of each such fiscal year; provided that for fiscal years
following October 31, 2006, unless the Executive’s employment by the Company and its
Subsidiaries is
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terminated by the Company for Cause or voluntarily by the Executive, the
Class B Units that would vest in such fiscal year will vest on a daily basis, such that if
Executive’s employment by the Company terminated during such fiscal year the number of Class
B Units that would vest with respect to such fiscal year would be equal to (i) the product
of 0.20 multiplied by the number of Class B Units held by the Executive, multiplied by (ii)
a fraction, the numerator of which is equal to the number of days that have elapsed in such
fiscal year prior to the date such termination occurs, and the denominator of which is 365.
(ii) Vesting of Class C Units. Subject to Sections 4(b) and
4(c) below, as of the end of each fiscal year commencing with the fiscal year ended
October 31, 2006, 20% of the Class C Units granted hereunder will be eligible to vest as
described in this Section 4(a)(ii), so long as the holder of such Class C Units
remains continuously employed by the Company or any of its Subsidiaries until the end of
each such fiscal year (the “Time Condition”). Class C Units for which the Time
Condition has been satisfied shall vest in total to the extent that each of Vestar and
Greenbriar receives a pre-tax cash on cash return (from sources including, but not limited
to, cash distributions on the Class A Units by the Company, the sale of any Class A Units by
the Investors, and the sale for cash of securities received in exchange for, as a
distribution on, or in respect of Class A Units) on the aggregate amount of its equity
invested in the Company that is at least equal to the greater of (A) an annualized internal
rate of return of 25% on its aggregate equity investment in the Company and (B) 2.5 times
the amount of its aggregate equity investment in the Company, in each case after giving
effect to the vesting of such Class C Units (the “Return Hurdle”). To the extent that the Return Hurdle has not been
met at the time that Vestar or Greenbriar are to receive the final amounts with respect to
their equity investments in the Company, including upon a Company Sale, and there are
amounts on deposit in the Catch-up Account (as defined in Section 4.5 of the LLC
Agreement) or proceeds in respect of a Company Sale that would be payable with respect to
the Class C Units if they were to vest (in each case, a “Class C Amount”), then all
or a portion of the Class C Amount first will be distributed or paid to the Class A
Unitholders until the Return Hurdle is met for each of Greenbriar and Vestar. To the extent
that only a portion of the Class C Amount is required to be distributed or paid to the Class
A Unitholders in order for the Return Hurdle to be met, then the Class C Units for which the
Time Condition has been met and that have not been forfeited or repurchased prior to that
time will vest and the remainder of the Class C Amount shall be distributed or paid to the
Class C Unitholders in respect of such Class C Units. Any Class C Units that cannot be
vested without resulting in a failure of the Return Hurdle to be achieved in connection with
a Company Sale will not vest and will be forfeited.
(b) Effect of Termination. In the case of a termination of the Executive’s employment
by the Company or any of its Subsidiaries for any reason (i) all Class A Units and options to
purchase Class A Units (collectively, the “Rollover Securities”), and all vested Class B
Units and all Class C Units which have satisfied the Time Condition granted to the Executive
pursuant to this Agreement shall be subject to the repurchase provisions in Section 5 below
and (ii) all unvested Class B Units and all Class C Units that have not satisfied the Time
Condition granted to the Executive pursuant to this Agreement shall be immediately and permanently
forfeited, and the Executive’s rights as a holder of such unvested Units shall immediately expire.
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(c) Effect of Company Sale. Upon the occurrence of a Company Sale prior to the fourth
anniversary of the end of the fiscal year ended October 31, 2006, provided that the Executive has
been continuously employed with the Company or any of its Subsidiaries until the time such sale
occurs (i) all of the Class B Units granted to the Executive pursuant to this Agreement that have
not previously vested or been forfeited pursuant to Section 4(b) above shall vest and (ii) all of
the Class C Units granted to the Executive pursuant to this Agreement that have not previously been
forfeited pursuant to Section 4(b) above shall vest to the extent the Return Hurdle is achieved as
contemplated in Section 4(a)(ii) above.
| 5. | Certain Sales Upon Termination of Employment. |
5.1. Call Options.
(a) If the Executive’s employment by the Company or any of its Subsidiaries terminates for any
reason, the Company shall have the right and option to purchase in its sole discretion, and, to the
extent the Company exercises such right, the Executive and the Executive’s Permitted Transferees
(hereinafter referred to as the “Executive Group”) shall be required to sell to the Company
(i) any or all of the Class B Units then held by such member of the Executive Group that have vested in accordance with
Section 4, and any or all of Class C Units then held by such member of the Executive Group that have satisfied the Time
Condition in accordance with Section 4 and (ii) in the event that following such
termination of Executive’s employment with the Company or any of its Subsidiaries the Executive
engages in Competitive Activity, any or all of the Rollover Securities then held by such member of
the Executive Group, in each case at a price per Unit equal to the applicable purchase price
determined pursuant to Section 5.1(c).
(b) If the Company desires to exercise one of its options to purchase Class B Units, Class C
Units or Rollover Securities pursuant to this Section 5.1, the Company shall, not later
than the six month anniversary of (i) the date of termination of Executive’s employment by the
Company or any of its Subsidiaries or (ii) the Activity Date (in the event that following a
termination of the Executive’s employment by the Company or any of its Subsidiaries, the Executive
engages in Competitive Activity), send written notice to the Executive of its intention to purchase
all or a portion of such Class B Units, Class C Units and Rollover Securities, specifying the
number of Class B Units, Class C Units and Rollover Securities to be purchased (the “Call
Notice”). Subject to the provisions of Section 6, the closing of the purchase shall
take place at the principal office of the Company on the later of the 30th day after the
giving of the Call Notice and, if applicable, the date that is 10 business days after the final
determination of Fair Market Value. Subject to the provisions of Section 6, the Executive
shall, and, to the extent securities held by other members of the Executive Group are being
repurchased, shall cause such member(s) of the Executive Group to, deliver to the Company duly
executed instruments transferring title to the applicable Class B Units, Class C Units and Rollover
Securities to the Company, against payment of the appropriate purchase price by cashier’s or
certified check payable to the Executive or by wire transfer of immediately available funds to an
account designated by the Executive. It being understood that any Units or Rollover Securities to
be repurchased hereunder shall be purchased from Executive and/or from other members of the
Executive Group at the Company’s option and if the Company first elects to purchase any Units or
Rollover Securities from one member of the Executive Group who fails to honor such
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Person’s obligations hereunder, then the Company may elect to purchase Units or Rollover Securities from any
one or more other members of the Executive Group so that it can repurchase the entire amount of
securities it desires to repurchase.
(c) In the event of a purchase by the Company pursuant to Section 5.1, (i) the
purchase price for each Class B Unit and Class C Unit purchased by the Company shall be (x) in the
case of a termination other than for Cause, the Fair Market Value of such Class B Unit and Class C
Unit as of the date of termination of Executive’s employment by the Company or any of its
Subsidiaries and (y) in the case of a termination for Cause or if the Executive engages in
Competitive Activity following the termination of his employment, the lesser of (A) the Executive’s
cost for such Unit and (B) the Fair Market Value of such Unit as of the date of termination of the
Executive’s employment by the Company or any of its Subsidiaries or the Activity Date, as
applicable, and (ii) the purchase price for any Rollover Security shall be the lesser of (A) the
Executive’s cost for such Rollover Security and (B) the Fair Market Value of such Rollover Security
as of the Activity Date.
5.2. Obligation to Sell Several. If there is more than one member of the Executive Group, the failure of any one member
thereof to perform its obligations hereunder shall not excuse or affect the obligations of any
other member thereof, and the closing of the purchases from such other members by the Company shall
not excuse, or constitute a waiver of its rights against, the defaulting member.
| 6. | Certain Limitations on the Company’s Obligations to Purchase Class B Units, Class C Units and Rollover Securities. |
6.1. Payment for Class B Units, Class C Units and Rollover Securities. If at any time
the Company elects to purchase any Class B Units, Class C Units or Rollover Securities pursuant to
Section 5, the Company shall pay the purchase price for the Class B Units, Class C Units
and Rollover Securities it purchases (i) first, by offsetting indebtedness, if any, owing from the
Executive to the Company or any of its Subsidiaries or Affiliates (which indebtedness shall be
applied pro rata against the proceeds receivable by each member of the Executive Group receiving
consideration in such repurchase) and (ii) then by the Company’ delivery of a cashier’s or
certified check or wire transfer of immediately available funds for the remainder of the purchase
price, if any, against delivery of the certificates or other instruments representing the Class B
Units, Class C Units and Rollover Securities so purchased, duly endorsed; provided that if
such cash payment would result in a violation of any (A) law, statute, rule, regulation, policy,
order, writ, injunction, decree or judgment promulgated or entered by any federal, state, local or
foreign court or governmental authority applicable to the Company or any of its Subsidiaries or
Affiliates or any of its or their property or (B) terms, provision or covenants of the Credit
Agreement or any other agreement governing funded indebtedness of the Company or its Subsidiaries
(the “Cash Deferral Conditions”), the portion of the cash payment so affected may be made
by the Company’s delivery of a junior subordinated note of the Company (a “Subordinated
Note”) with a principal amount equal to the balance of the purchase price for the Class B Units
or Rollover Securities to be purchased pursuant to Section 5 above. The Subordinated Note
will be subordinated to all other funded debt of the Company, payable on the earlier of such time
as the Company is no longer restricted from paying the purchase price as
11
described in the preceding
sentence and the eighth anniversary of the date such note was issued and accrue interest at a rate
equal to the then current rate of the Company’s senior credit facility.
| 7. | Miscellaneous. |
7.1. Deemed Transfer of Class B Units, Class C Units and Rollover Securities. If the
Company shall deliver, at the time and place and in the amount and form provided in this Agreement,
the consideration for the Class B Units, Class C Units or Rollover Securities, as applicable, to be
repurchased in accordance with the provisions of this Agreement, then from and after such time, the
Person from whom such Class B Units, Class C Units or Rollover Securities are to be repurchased
shall no longer have any rights as a holder of such Class B Units, Class C Units or Rollover
Securities (other than the right to receive payment of such consideration in accordance with this
Agreement), and such Class B Units, Class C Units or Rollover Securities shall be deemed purchased in accordance with the applicable provisions
hereof and the Company shall be deemed the owner and holder of such Class B Units, Class C Units or
Rollover Securities, as applicable, whether or not certificates therefor have been delivered as
required by this Agreement.
7.2. Recapitalizations, Exchanges, Etc., Affecting Class A Units, Class B Units and Class
C Units. The provisions of this Agreement shall apply, to the full extent set forth herein
with respect to Class A Units, Class B Units and Class C Units, to any and all securities of the
Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets
or otherwise) which may be issued in respect of, in exchange for, or in substitution of the Class A
Units, Class B Units and Class C Units, by reason of any distribution payable in Class A Units,
Class B Units or Class C Units, as applicable, issuance of securities, combination,
recapitalization, reclassification, merger, consolidation or otherwise.
7.3. Executive’s Employment by Company. Nothing contained in this Agreement shall be
deemed to obligate the Company or any of its Subsidiaries or Affiliates to employ the Executive or
otherwise to receive services from the Executive in any capacity whatsoever (including as an
employee or independent contractor) or to prohibit or restrict the Company and (or any such
Subsidiary or Affiliate) from terminating the employment of, and provision of services by, the
Executive at any time or for any reason whatsoever, with or without Cause.
7.4. Indemnification by Executive. Executive agrees to indemnify and hold harmless
the Company and its Subsidiaries and Affiliates against any and all Taxes arising in connection
with any failure to withhold Taxes in respect of the grant, transfer or vesting of the Units
acquired by the Executive hereunder or pursuant to the Unit Purchase Agreement. Each of Executive,
on the one hand, and the Company and its Subsidiaries and Affiliates, on the other hand, shall
notify the other (in a manner described in Section 8.11 of this Agreement) within 20 days
of first receiving notice of an audit or other proceeding being conducted by the Internal Revenue
Service or any state or local taxing authority relating to the Class B Units and Class C Units
acquired herein by the Executive or the Class A Units acquired by Executive pursuant to the Unit
Purchase Agreement, and each of the Executive, the Company and its Subsidiaries and Affiliates
shall assist each other during the course of such audit or other proceeding to the extent that such
assistance is reasonably requested.
12
7.5. Withholding Tax Requirements. The Company and its Subsidiaries may withhold from
amounts otherwise due or payable to Executive hereunder or under the LLC Agreement or in connection
with the provision of services by the Executive to the Company or any of its Subsidiaries any
amount in respect of Taxes that the Company or its Subsidiaries determine in good faith that it is
required to withhold, in each case in connection with (a) any payment, allocation or distribution
hereunder, pursuant to the LLC Agreement or in connection with the Executive’s employment by the
Company or any of its Subsidiaries, (b) the transfer of any Class A Units acquired pursuant to the Unit
Purchase Agreement, or (c) the transfer or vesting of any Class B Unit or Class C Unit granted
hereunder. Executive shall furnish such information as the Company or its Subsidiaries requests in
good faith to make any such determination of Taxes.
7.6. Binding Effect. The provisions of this Agreement shall be binding upon and
accrue to the benefit of the parties hereto and their respective heirs, legal representatives,
successors and assigns; provided, however, that no Permitted Transferee shall
derive any rights under this Agreement unless and until such Permitted Transferee has executed and
delivered to the Company a valid undertaking and becomes bound by the terms of this Agreement.
7.7. Amendment; Waiver. This Agreement may be amended only by a written instrument
signed by the parties hereto. No waiver by any party hereto of any of the provisions hereof shall
be effective unless set forth in a writing executed by the party so waiving.
7.8. Governing Law. THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE FOR CONTRACTS ENTERED INTO AND TO BE PERFORMED
SOLELY WITHIN SUCH STATE, EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE
GOVERNANCE OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION.
7.9. Arbitration.
(a) Any dispute with regard to this Agreement that is not resolved by mutual agreement, other
than as provided in Section 7.9(b), shall be resolved by binding arbitration before the
American Arbitration Association (“AAA”) in New York City pursuant to the rules of AAA.
The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. §§1-16 and shall
be conducted in accordance with the rules and procedures of AAA. Any judgment upon the reward
rendered by the arbitrator may be entered in any court having jurisdiction thereof. The
arbitrator’s decision shall set forth a reasoned basis for any award of damages or findings of
liability. The arbitrator shall not have the power to award damages in excess of actual
compensatory damages and shall not multiply actual damages or award punitive damages, and each
party hereby irrevocable waives any claim to such damages. The costs of AAA and the arbitrator
shall be borne by the Company. Each party shall bear its own costs (including, without limitation,
legal fees and fees of any experts) and out-of-pocket expenses.
(b) The parties hereby agree and stipulate that in the event of any breach or violation or
violation of this Agreement by any other party hereto, either threatened or actual, the
non-breaching parties’ rights shall include, in addition to any and all other rights available to
any
13
such non-breaching party at law or in equity, the right to seek and obtain any and all
injunctive relief or restraining orders available to it in courts of proper jurisdiction, so as to
prohibit, bar, and restrain any and all such breaches or violations by any other party hereto. Each of the
parties hereto further agrees that no bond need be filed in connection with any request by any
other party hereto for a temporary restraining order or for temporary or preliminary injunctive
relief.
7.10. WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE
OF ACTION (A) ARISING UNDER THIS AGREEMENT OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE
TRANSACTIONS RELATED HERETO, IN EACH CASE, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
IN CONTRACT, TORT, EQUITY OR OTHERWISE.
7.11. Notices. All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given when personally delivered, telecopied (with confirmation of
receipt), one day after deposit with a reputable overnight delivery service (charges prepaid) and
three days after deposit in the U.S. Mail (postage prepaid and return receipt requested) to the
address set forth below or such other address as the recipient party has previously delivered
notice to the sending party.
| (a) | If to the Company: |
V.G.A.T. Investors, LLC
c/o Vestar Capital Partners
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
c/o Vestar Capital Partners
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
c/o Greenbriar Equity Group LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇-▇▇▇
▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇-▇▇▇
▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies (which shall not constitute notice to the Company) to:
| ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP | ||
| Citigroup Center | ||
| ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ | ||
| ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
Attention:
|
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq. | |
| ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq. | ||
Facsimile:
|
(▇▇▇) ▇▇▇-▇▇▇▇ | |
14
| (b) | If to the Executive, to the address as shown on the unit register of the Company. |
7.12. Integration. This Agreement and the documents referred to herein or delivered
pursuant hereto which form a part hereof contain the entire understanding of the parties with
respect to the subject matter hereof and thereof. There are no restrictions, agreements, promises,
representations, warranties, covenants or undertakings with respect to the subject matter hereof
other than those expressly set forth herein and therein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject matter.
7.13. Counterparts. This Agreement may be executed in separate counterparts
(including by means of telecopied signature pages), and by different parties on separate
counterparts each of which shall be deemed an original, but all of which shall constitute one and
the same instrument.
7.14. Rights Cumulative; Waiver. The respective rights and remedies of the Executive
and the Company under this Agreement shall be cumulative and not exclusive of any rights or
remedies which either would otherwise have hereunder or at law or in equity or by statute, and no
failure or delay by either party in exercising any right or remedy shall impair any such right or
remedy or operate as a waiver of such right or remedy, nor shall any single or partial exercise of
any power or right preclude such party’s other or further exercise or the exercise of any other
power or right. The waiver by any party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any preceding or succeeding breach and no failure
by either party to exercise any right or privilege hereunder shall be deemed a waiver of such
party’s rights or privileges hereunder or shall be deemed a waiver of such party’s rights to
exercise the same at any subsequent time or times hereunder.
[END OF PAGE]
[SIGNATURE PAGE FOLLOWS]
[SIGNATURE PAGE FOLLOWS]
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SIGNATURE PAGE TO UNIT GRANT AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.
| V.G.A.T. INVESTORS, LLC |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
SIGNATURE PAGE TO UNIT GRANT AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.
| EXECUTIVE |
||||